Commonwealth of Virginia Executive Branch Strategic Planning, Service Area

1. Commonwealth of Virginia Executive Branch Strategic Planning, Service Area Planning, and Performance-Based Budgeting Productivity Measurement June 2008 Office of the Secretary of Finance Department of Planning and Budget

2. Workshop Subject Matter Resources Don Darr, DPB Thomas Gates, SOTech Christopher Hewett, DPB John Ringer, DPB Gerry Ward, CoVF • Facilitators John Wheatley & Jacqueline Anderson International Consulting Services, LLC (ICS)

3. Agenda Productivity Measurement Overview Important Dates Productivity Ratio Developing Productivity Measures Entering Productivity Data into Virginia Performs Productivity Measurement Challenges (Review, Questions, Feedback)

4. Productivity Measurement Productivity measures represent the third component, along with agency key objectives and measures and the Management Scorecard, of Virginia’s outcome-driven performance management system. Productivity Measures Due in 2008 Version “2.0” Approval Pending Agency Management Practices Effective & Efficient Agency Operations Performance & Productivity Measures Virginia’s Performance Management System Management Scorecard Agency Planning and Budgeting Outcome-Based Key Measures Linked to Long-Term Objectives Key Measures Completed in 2006

5. Definition of Productivity Productivity is a measure of the efficiency and effectiveness of an organization in serving its customers. It provides a basis for assessing how specified resources (inputs) are managed to produce acceptable outputs.

6. Why Measure Productivity? The objective of productivity measurement is for organizations to focus attention on their use of resources by: measuring how productive they are, finding ways to optimize resource use, and finding ways to further increase efficiency in their operations, while maintaining or improving results.

7. What are agencies expected to do? Develop one productivity measure… An agency can develop more than one measure, but the emphasis should be on doing one measure well. …that is tied to a key process, A key process produces the agency’s most important service(s) or product(s) for customers and has a significant impact on customers, budget, or performance outcomes It is not an internal agency process. …and is cost-related. Example: cost per unit. Other types of productivity measures will be considered. Discuss other types with DPB budget analysts. Use the measure to identify ways to improve productivity and track the progress of your improvement initiatives.

8. Important Dates

9. Refresher: Definition of a Measure A measure is: A management tool to assist in the decision making process An indicator used to determine the effect that strategies, initiatives and activities are having in accomplishing desired results

10. What are Productivity Measures? Productivity measures are typically a ratio of the volume of input to the volume of output.

11. Basic Formulas for Calculating Productivity Cost-based productivity measures are preferred.

12. Examples of Agency Productivity Measures Virginia DMV Cost to renew vehicle registration (by registration method) Numerator: Vehicle Registration Costs Denominator: Number of Registrations Processed Virginia DMAS Cost of processing/adjudicating a provider claim Numerator: (Payment to Fiscal Agent + DMAS Admin Costs) Denominator: Number of Claims Processed

13. Suggested Steps for Developing & Implementing Productivity Measures 1 – Review source documents (e.g., strategic plan). 7 – Gather the data for the measure(s) and do the calculation. 2 – Identify key/critical processes. 8 – Get agency and other internal approvals (e.g., secretary) and enter the data to Virginia Performs. 3 – Determine where efficiency is most critical in your agency. 9 – Get secretary and Governor’s office approvals via DPB. 4 – Research other states or organizations. 10 – Report and review the productivity measure(s) at regular intervals. 5 – Decide what productivity measure(s) to use. 6 – Develop and refine required information about the measure(s). Use the measure(s) to stimulate improvement.

14. Steps 1 & 2 – Review source documents and Identify key/critical processes. • SOURCE DOCUMENTS • Strategic Plan • Executive Progress Report section on productivity • List of services and products • Key objectives and key measures • COOP Document • Critical processes • Armics Document • Key internal processes PROCESSES Key/critical processes are those that produce the agency's most important services or products for customers. They have a significant impact on the agency’s customers, budget or performance outcomes.

15. STEP 3 – EFFICIENCY NEEDS • Where do you most need to use resources wisely? • What process has a significant budget impact? • Measure what you can control or influence. • STEP 4 - RESEARCH • Professional associations • Other governments (state, local, Federal, other countries) • Academic studies • Survey your staff for ideas. Steps 3 & 4 – Determine where efficiency is most critical in your agency. Research how others are measuring productivity. Be cautious about comparisons to other states and organizations.

16. Steps 5 & 6 – Decide what productivity measure to use. Develop/refine required information about the measure. • STEP 5 – DECIDE WHAT PRODUCTIVITY MEASURE(S) TO USE • It should be a measure(s) that substantially affects your operation. • Set up the mathematical formula. • Define the output. What does it include/exclude? • Define the input. What does it include/exclude? • STEP 6 – DEVELOP AND REFINE REQUIRED INFORMATION ABOUT THE MEASURE(S). • The required information is the same as what is needed for all non-key measures in your strategic and service area plans. • Measure Name • Measure Class – Select Productivity Measure • Measure Type – Grayed Out • Frequency – Quarterly, if possible • Data Source & Calculation Method • Baseline – If it’s a new measure. • Target – Desired level of performance, if determined.

17. Exercise A: Case Study Information about two agencies will be provided by the facilitators. Please review the information and brainstorm ideas about how these agencies could measure productivity. Set up a possible mathematical formula that could be used for the productivity measure. Virginia Information Technologies Agency Virginia Department of Taxation

18. Exercise B: Productivity in Your Agency Work in small groups, with people from one or more agencies in addition to your own. Develop ideas about how your agency could measure productivity. Set up a possible mathematical formula that could be used for the productivity measure. Use this as an opportunity to share best practices and receive/provide different perspectives on productivity measurement.

19. Steps 7-10 • 7 - Gather the data and do the calculation. • Does it make sense? • Is it useful? • Will the information help you track progress in productivity improvements or identify opportunities for improvement? • 8 - Get agency and other internal approvals (e.g., secretary) and enter the data to Virginia Performs. • 9 - Get approvals. • Within your agency • At a Secretary level • From the Governor’s Office via DPB • 10 – Use the measure(s)! • Gather/report data as scheduled. • Examine the data to identify areas for improvement. • Launch improvement initiatives. • Celebrate improvements!

20. Entering Productivity Data into Virginia Performs Access VA Performs via the Agency Login screen

21. To reach the section where you enter productivity measures click on: Browse and Edityour active performance measures.

22. To enter a new productivity measure click on: New Measure If you wish to edit an existing productivity measure click on the actual measure (productivity measures are tagged with a bullet containing a ). Productivity measures can be setup at either the Agency Level or Service Area Level.

23. Productivity measures are established within VA Performs by setting the Class to Productivity(measure type will become inactive once measure class is set to productivity). • All fields on both this slide and the next are required.Remember to save the measure after you have made any changes to it. • Important Deadlines • August 1, 2008 -- Agencies enter productivity measures into VA Performs (not available to the public) • January 31, 2009 -- Agencies report for the first time the results of their productivity measures; data covers second quarter of FY 2009

25. Challenges What questions, issues or concerns do you have in reference to the development of productivity measures?

26. Where To Find Information on Productivity Measures Agency Productivity Measure Guidebook Agency Strategic Planning Handbook (coming soon) DPB Analyst Thank You Let’s Adjourn!