To Successfully Implement Performance Management Systems Accounting Essay

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Performance Management in the National Health Service (NHS) -

A review of the use of Performance Management models in the NHS and their success

1. Introduction

The focus of performance management in the National Health Service (NHS) is essentially about delivering results; particularly around delivery of high quality services in a safe environment.

The idea of performance measurement or management has become an essential aspect of public management reforms. Over recent years the public have become more knowledgeable about health care provision and have begun to demand and expect a higher level of standards from the health services they receive. The use of performance measurement systems is now more critical if we are to ensure that patients are satisfied with the health care they receive and are able to depend upon efficient and effective services offered by the NHS. This is reflected by Pidd (2005) in his definition of New Public Management as a "management culture that emphasises the central role and accountability of the patient".

On reviewing the various academic literatures on performance management models, they claim that whilst performance management practices are good in theory, they are profoundly difficult to put into practice with any degree of success within the Health Service.

This paper will seek to evaluate models and systems in respect of performance management; to discuss the pros and cons of those models and to understand the barriers to implementation of performance management practices within the NHS.

At the end of this paper is a personal reflection on implementing a sound, performance management system within the NHS, which is specifically in relation to managing variation within primary care medical services.

2. Performance management or measurement?

To successfully implement performance management systems within any organisation, it is necessary to understand what performance management means and its relationship to performance measurement.

Performance measurement is the process of quantifying the efficiency and effectiveness of action. It is the periodic measurement of progress toward explicit short and long term objectives and the reporting of the outcomes to appropriate decision makers in the organisation in an effort to improve service performance (Neely et al, 1995).

Performance measurement or monitoring models are used to measure performance, whereas performance management is about responding to the "outcome" measure and using it in order to manage the performance.

It can be said that performance measurement contributes to the cycle of performance management but they are not a 'means to an end' in themselves.

To appropriately measure performance, key success factors need to be identified for measurement, for instance, assessment of variations in performance or delivery activity, inputs and outputs and patient satisfaction.

Performance measurement can play an important role in focusing people and resources on particular aspects of a business. In most organisations, the things that are measured are considered the most important while the things not measured are generally considered of less importance (Waggoner et al, 1999).

Evidence suggests that many organisations have invested considerable resources to implementing appropriate measurement systems. Academic literature in respect of performance measurement emphasises the need to maintain relevant measures that continue to reflect the key success factors which are important to the business (Lynch and Cross, 1991).

However, it has been said that once a performance measurement system has been implemented within an organisation, little consideration is then given to their ongoing management. The required processes have not been implemented to manage the development of these performance management systems to ensure they continue to meet the organisation's values and objectives (Waggoner et al, 1999).

The definition of performance management is a series of management actions which include the setting of objectives (planning), the measurement of results and outcomes and using these measurements to assess and consider whether organisational goals and objectives have been met.

Figure 1 demonstrates the basic building blocks of a performance management model.


To ensure that continuously improving performance is being delivered in line with expectations


To ensure that individuals who are best placed to ensure delivery of targets have real ownership for doing so


To translate the aspirations into a set of specific metrics against which performance and progress can be measured


To stretch and motivate the organisation


To motivate individuals to deliver the targeted performance

Figure 1.

Source: Choosing the Right FABRIC, HM Treasury, Cabinet Office, National Audit Office, Audit Commission, Office for National Statistics, 2001,

Performance management is also about exploring performance issues and making appropriate changes to improve both strategic and operational outcomes - to effect a change in order to make improvements.

It could also be said that performance management systems are unique to an organisation and require specific integration thus they can not be applied using the same values and objectives which have been used by others.

For true performance management systems to be successful they must be linked at both organisational and individual performer level; the success of the organisation is dependent on individual performance. This is where individual objective setting and performance appraisals are relevant.

According to Kaplan and Norton (1996), four different areas of management need to be aligned in order to link strategy with execution. These are Measures, Processes, People and Technology - these four areas form the basis of the Performance Management Models.

3. Barriers to successful performance management?

Measuring the success of public health services is not without difficulty. Nationally imposed performance management frameworks and models create an environment where managers are required to shift their focus at any given time and any potential 'long term gains' are lost as the organisation flexes to meet new priorities and objectives.

It has been said that the main barriers to successful implementation of performance management practices are:-

Organisational culture;

Lack of 'working together' between strategic and operational departments in an organisation, and

The lack of integration among the various performance management tools available.

These possible 'barriers' are discussed in more detail below.

It is evident that Public Sector organisations have made significant investment in performance monitoring and measurement, however, little appears to be done with the results to improve organisational learning and to improve delivery of services.

Organisational Culture

The introduction of performance management practices is likely to be more effective in an organisation where the culture encourages achievement and responsibility within a supportive and trusting environment.

Within the NHS there is a focus on achievement, particularly in respect of the quality of NHS services being received by patients. However, whether there is sufficient level of trust available in which to discuss performance results, whether good or bad, is debatable.

Political Issues

It goes without saying that politics have a large part to play in any public sector organisation including the NHS. Government actions, particularly around NHS health care services, are closely monitored, and the level of political involvement in setting strategic outcomes is high.

It could be assumed that once strategic directions have been set, there would be less political involvement following implementation at a local level of any health service programme.

However, in reality this is rarely the case and consequently the application of objective, logical and forward looking analysis that are the backbone of a good performance management cycle is difficult.

Review of Performance Management Models

This section will review three key Performance Management Systems - the Balanced Scorecard, the Performance Prism and the Public Sector Excellence Model; to understand their advantages and disadvantages, with the intention of providing a summary on the benefits of utilising either Performance Management System within the NHS.

Figure 2: Improvement models and tools reviewed

Performance improvement model or tool

Summary description

1. Balanced Scorecard

A multi-dimensional framework for managing strategy by linking objectives, initiatives, targets and performance measures across key corporate perspectives.

2. The Performance Prism

A stakeholder centric, three dimensional framework for performance measurement and management.

3. The Public Sector Excellence model

Organisational improvement framework and diagnostic tool for identifying strengths and weaknesses within an organisation or programmes of work.

The Balanced Scorecard

What is the Balanced Scorecard? "The balanced scorecard is a strategic planning and management framework used to align business activities to the vision and strategy of the organisation, improve internal and external communications, and monitor organisational performance against strategic goals". (Direct Quote, Balanced Scorecard Institute). 

The Balanced Scorecard was developed by Kaplan and Norton to steer businesses beyond those traditional and reactive financial measures. It is known as a cause and effect business model (Ahn, 2001). The aim of the Balanced Scorecard is to support the successful implementation of organisational strategies through a balanced suite of performance measures across a number of key perspectives. These are typically Customer (or patient), financial, internal processes and organizational learning. However, these can be adapted to meet the particular requirements of an organization.

Figure 3: Diagram of the Balanced Scorecard

Source: Balanced Scorecard Institute.

According to the writers, such an approach promotes a completely holistic viewpoint, where one affects the other and each should only be considered in view of the other perspectives.

Johnsen (2001) states that to facilitate 'linkages' between departments, by improving communication, and by focusing the entire organisation on one key objective; the benefits of which promote a sound business entity which is capable of working independently but equally towards one long term goal.

However, Young and O'byrne (2001) suggest that a negative aspect of the Balance Scorecard approach is that businesses tend to become too focused on the process and by doing so lose sight of the real objective. When this essential feature is overlooked, the Scorecard becomes a justification to defend the organisation's failure to deliver.

In response to this, Kaplan & Norton (1996, 1997) maintain that the business strategy defines a reasoning of how value can be created to the shareholders in each four perspectives by defining actions and identifying resources required to meet the overall objective, and therefore it is a fundamental part of the approach, and where it does not exist the model has simply not been applied correctly.

In other words, strategic drift could occur and consequently strategies should be revisited regularly to assess the performance against the desired objectives.

Key strengths of the Balanced Scorecard can be summarised as follows:

It provides complex information at a glance;

It ensures that managers are focused on the important elements of the business which should link into the organisations overall strategy;

It facilitates communication and understanding of business goals and strategies at all levels;

Current performance as well as the drivers of future performance can be integrated into the scorecard, and

It prevents information overload by limiting the number of measures used.

Drawbacks of the Balanced Scorecard

Despite its documented successes, some organisations who have implemented the Balanced Scorecard have failed to reap the benefits expected. Some of the reasons for this are summarised below: -

Measures that do not focus on strategy - where an organisation implements new non-financial measures, but fails to align the measures appropriately with strategy. According to Dr. Norton, "The biggest mistake that organisations make is thinking that the scorecard is just about measures. Quite often they will develop a list of financial and non-financial measures and believe they have a scorecard. This, I believe, is dangerous."

Failure to communicate and educate - a scorecard is only effective if it is clearly understood throughout the organisation. Often, scorecards will be developed at executive level, but not communicated down through an organisation. Without effective communication throughout the organisation, a balanced scorecard will not prompt sustainable change and performance improvement.

Measures tied to remuneration - attaching a payment to the balanced scorecard has been viewed as a good idea. However, it can be a mistake to initiate this action too early.

If the scorecard is revised and an organisation has attached a payment to measures that are not driving the required behaviour, a motivator has been introduced that is in essence rewarding this behaviour.

If data is inaccurate or incomplete then the measures may not be correct. This can have a negative impact on morale and potentially invalidate the scorecard outcomes.

Accountability - Leadership and accountability are needed to drive change. This means that each measure, objective and data source must have an owner. Without this event a perfect scorecard will not be successful, as no one is being held accountable for performance.

The Performance Prism

The Performance Prism was developed by the Centre for Business Performance at Cranfield School of Management. It is a framework for both performance measurement and management.

Unlike the Balanced Scorecard which makes reference only to customers and shareholders (Anderson and McAdam, 2004), the performance prism provides a broader view of stakeholders. It does this by considering what the future wants and needs of the stakeholders are, together with what the organisation wants from its stakeholders. This 'give-and-take' arrangement is looked at in the context of improvement.

The Performance Prism framework covers three dimensions - strategies, processes and capabilities as well as considering the organisations relationship with its stakeholders.

Strategy maps are used to understand the primary aspects of the framework which need to be in place in order to meet the needs of both the organisation and its stakeholders.

In formulating the strategy maps, they will cover the five key areas of the Performance Prism model. Essential questions are posed covering all five elements in order to capture the essential performance measurement needs of the organisation. These are as follows:-

Stakeholder Satisfaction - who are our key stakeholders and what do they want and need?''.

In the same way that the Balanced scorecard makes no mention of Stakeholders, nor does it mention employees, suppliers, alliance partners or intermediaries. Nor does it refer to regulators, the local community or pressure groups. Yet all of these parties can have a substantial impact on the performance and success of an organisation (Neely, Adams & Crowe, 1991).

Stakeholder Contribution - what do we want and need from our Stakeholders on a 'give-and-take- basis?

Strategies - what are the strategies we need to put in place to ensure the wants and needs of our stakeholders and the organisation are satisfied?

Processes - what are the processes we have to put in place in order to allow our strategies to be delivered?

This relates to the common business processes which are inherent in the majority of organisations.

Capabilities - what are the capabilities we require to operate our processes?

Reference to capabilities in this context is the mixture of people, practices, technology and infrastructure that work together to ensure an organisation's business processes are carried out.

It has been said that Performance Prism should be seen as a framework or tool which can be used by managers to affect their thinking around key questions to help manage their businesses, rather than a rigid measurement framework.

Although the stakeholder approach is seen to be extremely relevant to the Public Sector, the Performance Prism does not appear to be widely used by public sector organisations.


There is little information available on which to draw a conclusion that the Performance Prism is a successful performance framework to use in the public sector.

Performance measures should be integrated with organisational strategy development in order to maximise the effectiveness of this model.

consideration needs to be given to how performance data will be used and how ultimately performance will be managed;

Organisations must ensure that users of the Performance Prism model do not see this as a measurement tool.

The Public Service Excellence Model (PSEM)

The Public Service Excellence Model is an improvement framework which incorporates a diagnostic tool which assesses strengths and areas of improvement within an organisation or within a work project. The model was developed by Public Futures Consultancy and it's design is similar to the European Foundation Quality Management model (EFQM).

The model is made up of 14 categories and 83 criteria. The aims of the PSEM is to:

provide a comprehensive overview of how well an organisation is operating, identifying strengths and possible areas for improvement;

provide substantiated levels of attainment that can be used for year on year assessment and improvement;

assist in measuring the impact of change programmes.

Although the PSEM was designed essentially for pubic service organisations, it can be used within other organisations. Although this model is in use in the United Kingdom, it is difficult to gauge it's current level of use.

Key benefits of the model

It provides an holistic framework for performance improvement in allowing organisations to assess their strengths and any areas for improvement;

It can be used to measure the success of change programmes;

It encourages learning and creativity and also promotes ownership and commitment to change through the self-assessment process.


The model does not appear to be widely used in the public sector;

There may be confusion with the EFQM Excellence Model;

There are 83 detailed criteria to work through which could be seen as arduous.

Conclusion: What Appears to Work Best in Managing Performance in these Services?

This assignment has sought to explain the purpose of performance management and that it is a very important concept and an invaluable source of information used to sustain an effective and efficient public sector.

It is only through understanding how well different service providers are progressing that enable primary care organisations to deliver the appropriate level of service standards. This is because the correct policies can be utilised and efficient competencies are determined.

In conclusion, PM will only be useful if it is used by management to make improvements, and as Talbot (2002) says, current performance management is rich in data but poor in information. This is because it is difficult to measure performance, especially since performance can be defined differently by different people.

Although the balanced scorecard was undeniably pioneering when it first appeared nearly a decade ago, particularly because it addressed the need for a balance between financial and non-financial measures, the world has moved on and priorities are changing in the so-called ``New Economy''

All organisations wishing either to implement a new set of measures or to upgrade their existing scorecard should consider applying the Performance Prism to the measures selection process.


Anderson, K., & McAdam, R. (2004) "A critique of benchmarking and performance measurement: Lead or lag?". Benchmarking: An International Journal, Vol. 11 Issue: 5, pp.465 - 483

Heinrich, C.J. (2002). "Outcomes-based Performance Management in the Public Sector: Implications for Government Accountability and Effectiveness." Public Administration Review, Vol 62, Issue 6: pp 712-725.

Johnsen, A. (2001) "Balanced scorecard: theoretical perspectives and public management implications", Managerial Auditing Journal, Vol. 16 Issue 6: pp.319 - 330

Kaplan, R. S. & Norton, D. P., 1996, "The balanced scorecard : translating strategy into action", Boston, MA: Harvard Business School Press.

Lynch, R.L. and Cross, K.F. (1991), "Measure Up - The Essential Guide to Measuring Business Performance", Mandarin, London.

Neely, A., Gregory, M. and Platts, K. (1995), "Performance measurement system design: A literature review and research agenda", International Journal of Operations and Production Management, Vol. 15, Issue 4: pp 80-116.

Neely, A., Adams, C. and Crowe, P. (2001), "The performance prism in practice measuring excellence", The Journal of Business Performance Management, Vol. 5 Issue. 2, pp. 6-12.

Pidd, M. (2005), "Perversity in public service performance measurement", International Journal of Productivity and Performance Management, Vol.54, (5/6), pp.482-493.

Waggoner, D.B., Neely, A.D. and Kennerley, M.P. (1999), "The forces that shape organisational performance measurement systems: on interdisciplinary review", International Journal of Production Economics, Vols 60-61, pp 53-60.

Websites - What is the Balance Scorecard

Personal reflection on my role as a NHS Manager

and the implementation of a new performance management model in medical practice

Charmaine Docherty

Student No. 09151797

Boud et al (1985) suggests that reflection in the context of learning is a generic for those intellectual and effective activities in which individuals engage to explore their experiences in order to lead to a new understanding and experience.


The purpose of this document is a reflective analysis of what I have learning about performance management as part of the MSc Commissioning: Performance Management in the NHS Module and evaluate this learning against the use of performance management models in my workplace.

This paper will mainly focus on the proposed introduction of a new performance management model / programme which has been developed to manage variation between medical practices.

This document will examines and analyse the operational issues involved with implementing this system and how it aligns to the my learning through the MSc module and additional research on the success of implementing performance management frameworks in the public sector.


Managing variation amongst medical practices has been a theme linked to improvement and change in the NHS for some time. However, it is only in recent months that the need for it to be a defined programme of work has emerged.

The 'managing variation' programme has currently been running on a part-time basis within one Cluster with an expectation that GP practices will work to deliver the changes required. It is believed that GPs and GP practices will change behaviours when faced with evidence of variation.

The importance of the delivery of this programme is critical for meeting the national quality, innovation, productivity and prevention agenda (QIPP). The QIPP agenda in essence means the NHS needs to deliver high quality care in a tighter economic climate.

In meeting this financial challenge, it is crucial that the PCT does not lose momentum in improving the standard of care we deliver. It is essential that we continue to protect and promote quality whilst realising savings everywhere.

For the managing variation programme to be successful it requires more attention and resource to be put in place in a structured way.

As we continue to face major financial challenges in the NHS around available resources, NHS Lincolnshire and the emerging GP consortia will need to address this challenge. Failure to address this challenge and manage within the resources available will have consequences at all levels and more importantly for patients.

Work undertaken by the Audit Commission, Yorkshire Public Health Observatory and the NHS Institute for Improvement has revealed that NHS Lincolnshire and the emerging GP Consortia have the potential to make significant resource savings whilst improving quality.

Under the programmes of planned care, unscheduled care and long term conditions, NHS Lincolnshire will work to:-

Minimise variation in surgical thresholds;

Minimise emergency admissions and variation in emergency admissions;

Minimise outpatient attendances and variation in outpatient attendances;

Manage our patients with long term conditions and manage the variation that exists currently between Clusters and GP practices, and

Implement effective prescribing in accordance with the Prescribing and Clinical Effectiveness Forum agenda and guidance.

The systems, processes and structures currently used by NHS Lincolnshire to deliver this agenda will need to be reviewed and changed to meet the challenges ahead.

In recognising the importance of delivery of this managing variation programme / model, it is necessary to recognise the investment of resources required (people, skills and money) to make the programme successful.

It has been identified that this programme has the potential to significantly deliver against the QIPP savings requirement. However, the delivery of managing variation is not only high impact it is difficult to deliver and sustain.

In order to increase the changes of success, complementary strategies need to be implemented. Through this programme NHS Lincolnshire is attempting to change the core behaviours and beliefs of over 400 General Practitioners, influence the behaviour of key clinical and managerial stakeholders and sustain the change in an environment where there are a number of disincentives and competing pressures.

There are a number of strategies which can be introduced to promote change in clinical practice (Lomas 1990 and Horder et al 1986). These include the following:-

Providing information - about the results of research and feedback on individual


Education - vocational and continuing

Peer review and audit methods

Person to person contact - by respected peers or opinion leaders, patients, drug

Representatives, and

Financial incentives.

Feedback to individual doctors about their own practice compared with that of other doctors has been used to try to influence practice. There are exceptions to the rule, but unless something else is added - for example, an audit process - passive information feedback is not likely to produce change (Fawkes, 1985).

A number of risks, issues and benefits have been associated with managing variation as a programme of work. The data requirements would need to include:-

Timely, monthly data by practice and wherever possible broken down to patient level;

Historical and planned activity data;

Benchmarking comparisons between practices in similar locations both inside and outside Lincolnshire;

A clear project timeline with agreed milestones;

Financial information;

Indentified input from all directorates (person days and whole time equivalents) to support the programme;

We must know what constitutes 'good practice' and care and be able to define and recognise it.

Even if the data is available, there are risks and issues associated with the programme, these include:-

Practices will challenge the truth of the data - lack of credibility and belief;

Lack of engagement of contractor, PCT and stakeholder staff;

Lack of resource;

Failure to prioritise and the programme is seen as 'another monitoring tool;

Poor relationships in the system;

Perverse incentives;

Changing context at local, regional or national level;

Patient choice;

How do we know what 'good' and 'best' practice is?

Failure to programme and project manage each of the elements of the work;

Inability to demonstrate impact and benefit;

Lack of clarity about who is responsible for what and by when (lack of ownership);

Poor communication;

Sustaining the change;

Competing priorities;

Tacking the belief that there is not a need to change;

If NHS Lincolnshire is committed to the programme of work and to ensuring that it is properly resourced, there is a high probability of success. If the programme is successful, there is every confidence that it will deliver sustainable change with positive outcomes.

Effectively performance managing medical practices is not without difficulty. Two years ago the contracting department worked hard to implement a balance scorecard for General Medical Practices but it failed to get off the ground for many of the reasons identified above - lack of credibility and belief in the data, lack of ownership from other directorates, lack of resource, poor communication etc.

Unfortunately the Balanced Scorecard is seen as a 'monitoring tool' which has the ability to say how good or bad a practice is operating. They see the Balance Scorecard as 'labelling' them against evidence and data for which they have no belief in. And then to make matters worse, it was told to the GP's that the results from the Balanced Scorecard would be published. Discussions broke down after this and the Balanced Scorecard was 'parked', which was a waste of the time and effort which had gone into producing it.


With the development of GP Consortias and the requirement for them to deliver high quality clinical services within a tight economic climate, I believe the GP's will engage more with the 'managing variation' programme. By implementing this performance system we are trying to make things better; to improve and effect a change, which is not easy to do in an environment which is governed by a political agenda which can change at any given time.

Insert something here about Bandura

The introduction of new legislation and directives means we often have to change gear and move focus thus 'long term' gains are not achieved.

If it is successful there will be tangible results and outcomes which should clearly demonstrate:-

Improved quality for patients through a standardisation process;

Efficiency savings;

To external stakeholders our ability to deliver tangible results;

More stable and sustainable services moving forward;

Improved working relationships across the system;

Improved clinical practice and improved practitioner knowledge;

Improved and better informed planning;

A more productive system