February 1996

Managing for Performance

J. Christopher Mihm is an Assistant Director for Federal Management and Workforce Issues at the U.S. General Accounting Office (GAO). He manages GAO efforts to assess the implementation of the Government Performance and Results Act (GPRA) and other results-oriented management initiatives. He was a major contributor to the GAO reports: Managing for Results: Experiences Abroad Suggest Insights for Federal Management Reforms and Managing for Results: State Experiences Provide Insights for Federal Management Reforms.

• What are some of the Governmentwide performance initiatives that human resources managers should be aware of?
• What are the most important components of GPRA?
• What incentives encourage results-oriented management?
• How are human resources managers affected by these organizational performance initiatives?

What are some of the Governmentwide performance initiatives that human resources managers should be aware of?

Several initiatives are shifting the focus of Government managers from program inputs to program results. Managers are now required to look at how well their programs are meeting intended objectives rather than at compliance with detailed procedures. Results-oriented initiatives that most affect human resources managers are:

• The Vice President's National Performance Review (NPR). NPR efforts have initiated agencywide customer service standards, established a reinvention labs, and are restructuring agencies. The deregulation of performance management is a direct response to NPR recommendations.
• Changes to the Budget Process. The Office of Management and Budget (OMB) is requiring agencies to provide performance information with budget submissions. OMB is asking, What did the American people get for their investment and they're expecting answers in the form of results.
• The Government Management Reform Act of 1994 (GMRA). GMRA strengthens agency accountability by requiring audited financial statements that reflect the results of agency operations, beginning with fiscal year 1996.
• The Government Performance and Results Act of 1993 (GPRA). GPRA provides for the establishment of strategic planning and performance measurement in the Federal Government.

What are the most important components of GPRA?. GPRA has four key elements:

• GPRA requires agencies to develop a strategic plan for program activities beginning in fiscal year 1998. The strategic plan must include a mission statement, goals and objectives, and a description of how goals and objectives are to be achieved, evaluated, and revised.
• Beginning with fiscal year 1999, agencies must submit to OMB annual performance plans. Performance plans establish objective, quantifiable, and measurable goals; establish performance indicators; and provide a basis for comparing program results with plan goals.
• Agency performance plans may include proposals to waive administrative procedural requirements and controls. These proposed managerial flexibilities must be approved by the regulating agency and must show that they would be established in return for specific individual or organizational accountability to achieve a performance goal.
• Agencies must submit program performance reports. These reports must review the success in achieving the performance goals established in the performance plan. If a goal was not met, the agency must report the reason(s) why. The first of these annual reports is due by March 31, 2000.

What incentives encourage results-oriented management?. Three things come to mind:

• Top management's emphasis on results will promote a more results-oriented organization. By showing that they value results and by asking outcome-oriented questions, top managers will find that the agency as a whole will focus more strongly on results. At the same time, managers need to develop trust by focusing on performance improvement and avoiding punishing employees and groups for failing to reach a goal.
• OMB's insistence on including performance information in the budget process is already a forceful incentive to agencies to focus on the results of their programs.
• Awards programs should be aligned with and support results-oriented management. Recognizing and rewarding groups who have achieved their outcome goals will demonstrate to everyone what the organization values.

How are human resources managers affected by these organizational performance initiatives? As agencies focus on results, human resources planning must become an integral part of the strategic planning process. Managing for results challenges human resources managers to produce creative ways of developing employees capabilities and using them to get work done.

Managing for results requires training. Dan Kettl of the Brookings Institution has noted that when the Australian government began focusing on results, it found that training was essential, especially for middle managers. Australia spends about 5 percent of its personnel budget for training. Before budget cuts, the U.S. spent 1.3 percent for training. Now with tight budgets, Federal agencies will have difficulty keeping training money. Human resources managers will need to find alternatives to classroom training in order to develop employees without spending training dollars.

Human resources managers should focus on redesigning their programs especially their appraisal and awards programs to align with the results-oriented goals of the organization. Our work has shown that traditional human resources programs may not be compatible with managing for outcomes and results. But it's not easy to do, as we've found from our studies abroad. Our work on leading foreign countries has shown that, although there is broad agreement on holding agencies accountable for achieving results, there is as yet no consensus on the best approach for holding individuals accountable.

The challenge is to find the best approach to link individual performance to organizational performance. I think the flexibilities introduced in the new performance management regulations are very exciting and are a potentially important first step toward presenting agencies with the freedom to be able to develop appraisal programs that will produce accountability and management for results.

Finally, human resources offices and other support functions are under pressure to show that they are of value to the organization. If human resources offices do not show that they have a customer focus and that they are results oriented, it is unlikely that they will survive the downsizing efforts.