Performance Management in Not-For-Profit Organisations: Best Practice at the Motor Neurone Disease Association

Introduction

Like most charities and Third Sector organisations today, the MND Association is facing many challenges. The economic downturn is making it harder for organisations to maintain adequate funding levels and increasing expectation from regulators and stakeholders are demanding accountability for demonstrable performance outcomes. What sets the MND Association apart from many other charities is its best-in-class strategic performance management approach that has enabled the organisation to embrace the challenges and improve performance. Today, the MND Association has clarity about strategic priorities and is collecting meaningful performance indicators to monitor performance and guide decision making with one single aim: to improve organisational performance levels. However, this was not always the case. Here we outline the organisational journey.

The Changing World of Charities

Charities have always been concerned with providing benefit for those who fall within the definition of their mission or objectives. However, the time when it was assumed that charities are 'a good thing' are long gone and charities have to clearly demonstrate how they are making a difference. For many years now charities have been encouraged to become more transparent, more professional, and more efficient. In other words rather more like their commercial counterparts but without losing their unique purpose and role in society. Whilst charities need to demonstrate their real achievements, they also need to remain true to the nature of Caritas. The two go hand in hand provided the activities of the charity are carried out to the highest standards, for the right reasons and deliver genuine outcomes for beneficiaries.

About the MND Association

The Motor Neurone Disease (MND) Association is a charity dedicated to the support of people with MND and those who care for them. MND is a fatal, rapidly progressing disease of the brain and central nervous system. The disease attacks the motor neurones leading to weakness and wasting of muscles, causing increasing loss of mobility in the limbs, and difficulties with speech, swallowing and breathing. It leaves people locked into a failing body, unable to move, walk and talk while the mind is usually unaffected. MND kills 100,000 people every year and half of people with MND die within 14 months of diagnosis. There is no effective diagnostic test and there is no effective treatment or cure. The MND Association has a vision of a World free of MND. The mission of the organisation is to fund and promote research to bring about an end to MND. Until then it will do all that it can to enable everyone with MND to receive the best care, achieve the highest quality of life possible, and die with dignity. The charity will also do all that it can to support the families and carers of people with MND. The Association was formed in 1979 by a group of volunteers who wanted to co-ordinate support, guidance and advice for people affected by the illness. In 2008/09, the Association achieved a headline income of £14.2 million and it now has 3,000 active volunteers and 150 staff, all dedicated to improving the lives of people affected by MND, now and in the future.

The Need for Strategic Performance  Management

It is critical that the MND Association is focused on achieving outcomes for people with MND. The Association's Board of Trustees and Chief Executive recognise that delivering outcomes requires everyone to be focussed on achieving sustainable improvements in organisational performance. However, responsibility for delivering performance improvements is a management issue that rests, unequivocally, with the Chief Executive, whilst the Board of Trustees, as a tool of governance, is responsible for oversight of management performance. In order to allow both Chief Executive and Board take on their responsibilities for organisational performance, a sound system was needed for assessing, managing and monitoring performance against the Association's strategic goals and objectives. The Association decided that by designing and implementing a strategic performance management system the organisation would achieve this aim and fulfil the following purposes: 1. Inform decision making - to enable systematic review of performance to inform management decision-making and action across the Association. The intention here is to empower staff and to equip them with the information they need to learn and make management decisions - including challenging strategic assumptions - that lead to organisational improvements. 2. Enhance organisational accountability - to allow the Board of Trustees and external stakeholders to monitor progress against strategic goals and objectives by publishing information on the Association's performance. This also enables the Association to demonstrate compliance with Charity Commission guidance, issued through its Statement of Recommended Practice1, which encourages charities to report in depth on their objectives and performance. This is referred to as Impact Reporting2 and requires charities to report on outcomes achieved on behalf of beneficiaries, rather than inputs and outputs which often cannot be directly linked to the delivery of the charitable purpose.

The Performance Management Journey

In 2005 the MND Association developed its Strategic Review for 2006-2012 with clearly articulated Vision, Mission Goals and Objectives. Central to this were the Association's values which had been established in 2002 to underpin and guide individual, collective and corporate behaviour. Following the publication of the Strategic Review (A World Free of MND) in 2006 the organisation quickly realised that it needed a way of measuring progress and reporting objectively to members, supporters and the general public. At that stage the Association measured itself against a series of largely functional objectives. Whilst they did overlap, the connectivity and relevance of each to Mission and Vision were unclear to those without quite intimate knowledge of the Association. In addition, there were few ways of measurement that demonstrated impact and outcomes rather than outputs. An example would have been the multitude of statistics kept on the supply and delivery of equipment to people with MND. All very well, but more output than outcome. In other words the difference that equipment made to people with MND was not measured or explicit. The senior management team also recognised that, in order to be successful in a competitive supporter marketplace, the Association must demonstrate that it knew: • Where it was going • How it would get there • What was the reason for the journey • How it would demonstrate progress Providing coherent answers to these statements was identified as being critical to future success both in the search for causes, treatments and eventually a cure for the disease and also for the on-going care and support of people affected by MND. At that stage the MND Association engaged with the Advanced Performance Institute (API) to facilitate the construction of a Strategic Map and identify the Key Performance Questions (KPQs) and Key Performance Indicators (KPIs) that would demonstrate the degree to which the Mission, Vision, Goals and Objectives were being met.

Deciding to Map the Strategy

Clarification of the strategy is an essential prerequisite for successful performance management. Strategic maps clarify the strategic objectives by depicting the priorities of an organisation on a single page also outlining the cause-and-effect relationship between them. Strategy maps therefore help to visualise how inputs and outputs lead to desired outcomes. The senior management team decided to create a strategic map to link the outcomes it is seeking to achieve with the core activities and the inputs or resources required to deliver them.

Reaching Strategic Agreement

A number of facilitated workshops with the senior management team were used to draft and agree the Strategic Map. After some debate and not a little scepticism the senior management team started to thrash out the details of the strategic map. Vision and mission were straight forward. The Association is very focused in its overall value proposition which is important for an organisation dealing with a rapidly progressing terminal disease for which there is no cure and little respite. However, the next bit took far more time to debate and agree on: deciding on what the organisation needed to be really good at in order to achieve the mission objectives. Basically those things the organisations have to become experts in to be successful. The Association called these: Core Organisational Competencies (COCs). There was much discussion about where areas such as Information Communication Technology, Finance, Governance, HR and Fundraising sat within this map. Eventually, the senior management team concluded that these were not core competencies but part of infrastructure and support. It was recognised that the organisation could not achieve the COCs without being highly competent at all of these functional activities but, nevertheless, wanted to differentiate them from the more complex multi-disciplinary and aspirational elements. Whilst this made good sense to the senior management team it was not, at first, met with universal approval by managers and staff. There was initially a feeling that these infrastructure and support activities were being undervalued. Over time these feelings have been overcome and there is now a common view and understanding of the map.

The MND Association's Strategic Map

Figure 1 shows the final and agreed 2009 strategic map of the MND Association. The organisational vision at the top of the Strategic Map is to: See a world free of MND and until then, see people with MND achieve the highest quality of life possible and die with dignity. The MND Association identified two core activities (what it calls its mission) it needs focus on in order to deliver its vision, namely: Care and Research. On the care side the charity will ensure that everyone affected by MND receives the best care, achieves the highest quality of life possible, and dies with dignity. On the research side, it will promote, fund and make people realise the benefits of world class research into treatment, care and cure of MND. In order to deliver its core activities the MND Association identified the following COCs: • Understand the needs of people affected by MND. • Inspire and empower their staff and employees. • Share their vision and life their values. • To proactively share their knowledge and learning. • Engage and influence key stakeholders. • Effectively communicate internally and externally. • Build effective partnerships. Finally, the organisation agreed that the delivery of the Core Organisational Competencies is underpinned by the following resources and infrastructure objectives: • Manage their finance. • Develop their governance and organisational management. • Develop its staff and volunteers. • Develop the use of information and communication technology. • And the final underpinning enabler is to raise funds and generate income to support all the activities mentioned above .

Designing the Strategic Map has been a very definite intellectual challenge for the whole team. The main difficulty was in raising themselves above the immediate operational imperatives and work on a strategic level. Although they are individually and collectively used to writing functional and organisational strategy, this felt different to people. The real challenge here was the need to produce quite a simple diagrammatic map that encompassed the myriad of things that they set their sights on achieving. But of course that made them debate what really was important and has led to greater clarity of both purpose and action.

Validating the Strategic Map

The Strategic Map was validated through discussions with staff and has become an important communication tool. Managers and staff have found achieving strategic clarity through the design of the Strategic Map a stimulating and enlightening challenge.

Collecting Meaningful Management Information

The senior management team was clear that it wanted to create a system that informed management decision-making, leading to learning and performance improvement. Prior to the API facilitation the team made the mistake of designing performance indicators before being clear about the Association's information requirements. This error engendered disinterest in performance measurement. Through the facilitation, the team learned that performance indicators should simply help to measure the things that matter most. This meant tightly and directly linking the Association's indicators to the Association's strategic goals and objectives. In addition, it was recognised that performance indicators need to capture meaningful information to enable managers track progress and gain relevant insights leading to improved performance. The team went 'back to the drawing board' and worked with staff to clearly identify what it needs to know. For that purpose it decided to clearly articulate the questions it needed to have an answer to for each of the strategic objectives on the Strategic Map. It created so-called Key Performance Questions (KPQs).

Key Performance Questions

The objective was to identify between one and three KPQs for each strategic objective. To a senior management team more familiar with traditional KPIs this was a challenge, which was tackled at the senior management team Away Day. Working as a group released a great deal of energy and the team quickly started coming forward with ideas. As the team wrote these on flip chart sheets they were able to see patterns and linkages emerging. The team started with the Mission related areas of Research and Care and then moved into the area of COCs. Each area was revisited several times as new ideas came to the surface and as each KPQ impacted on the others. The senior management team found it an exhausting but very empowering process and one where everyone could contribute to areas 'owned' by others. Often it was not the functional expert who came up with the final KPQs for their particular areas and this helped with the principle of joint ownership of the performance framework. The team worked their way through the COCs and onto the Infrastructure/ Support areas. Here they were able to ensure the KPQs bore a close and necessary relationship to the COCs and Mission thus helping to ensure that the whole was greater than the sum of the parts. The whole process took about 4-5 hours which doesn't seem long but everyone felt tremendously drained at the end. The next job was to sanity check the KPQs which the team did about two weeks later. There was some refinement but essentially the KPQs were robust (See Appendix A for a list of sample KPQs). At this point the senior management team decided it was time to engage with the functional leads group. These are the managers and heads of department reporting to senior management team and numbers fifteen. A general briefing was carried out and the senior management team then worked team by team to set the Key Performance Indicators (KPIs).

Selecting Key Performance Indicators

The aim of the performance indicators was to provide staff with relevant performance insights to help them make better informed decisions. It was made clear from the beginning that the objective was not to 'just measure what is easy to measure' and not to 'measure for the sake of it'. The focus was on the generation of meaningful and relevant insights. Indicators could therefore take the form of qualitative or quantitative information, collected through existing as well as new collection routes. Taking this mixed approach is helping to reduce bias and increase reliability. This process was described by managers and staff as energising, empowering, exciting, and productive. Critically, it has provided a platform for managers to question assumptions about prioritisation and targeting of resources.

Setting Targets

It was recognised that in order to be meaningful every performance indicator needs a target or benchmark so that performance levels can be put into context. The Association is using a traffic light system to benchmark performance thresholds that identify the desired level of performance in a specified time frame. Stretching but achievable targets are being set through a mixture of absolute targets and proportional or percentage targets. However, because target setting relies on good information there are a number of areas in which assessments are currently based on trend analysis. Traffic lighting illustrates levels of performance, and is supported by written comments to clarify level of confidence and explain limitations of the indicators. Coding is based on four options: green, no action required; yellow, watching brief and incremental action; amber, medium priority for action; and red is highest priority, action required. The Association's performance indicator design template is shown in Figure 2. The experience of designing performance indicators in each team was very similar to that of the senior management team when designing the KPQs - empowering, exhausting and uplifting. The common experience for teams was that it took some while to get going but suddenly the ideas flowed and the tempo quickened. Because there was so much to consider when designing indicators most teams met several times over about a three month period to compile, review, amend and finalise their KPIs.

Engaging the Board

Simultaneously to designing KPIs the concept of strategy mapping was introduced to the Board of Trustees. The Board consists of a mixture of elected and co-opted members who come from a wide range of backgrounds with varied experiences but a common belief in the vision and mission and a passion for the work of the Association. A presentation was made at one of the regular Board meetings followed by a question and answer session. The Trustees became engaged with the principles very quickly and endorsed the Strategic Map enthusiastically.

Improved Performance Reporting

The senior management team now produce regular updates on the development of the map and the KPQs and have started writing board papers in strategic map form. This has been enlightening. The nature of Board papers has been transformed from reporting on activity to reporting on outcomes and impacts. Likewise the Association is gaining experience and confidence in impact reporting through its annual return to the Charity Commission. This return now reports progress in terms of what the Association set out to achieve, and what was actually achieved. It focuses on outputs and increasingly on outcomes thereby demonstrating progress to stakeholders.

Aligning Performance Reviews

In addition to improved reporting, the Board of Trustee agendas and management meeting agendas are now shaped by the Strategic Map. The senior management team is gaining experience in reporting retrospectively and prospectively to the Strategic Map. Likewise, Trustees are gaining experience in using this approach to monitor performance and thereby better hold the Chief Executive, and management, to account for organisational performance. Board of Trustee as well as senior management team agendas aim to integrate discussion of performance with individual items. Performance is not dealt with as a single issue agenda item any more. The intention is to ensure discussion of performance takes place in the context of key performance questions, assessment of what the level of performance means and whether action is required to make progress towards targets. The key benefit is that more Board time is now focused on strategic development and impacts and less on monitoring outputs.

Improving Management Decision Making

The main objective of implementing the performance management system in the MND Association was to improve management decision making. Let's look at some examples of how the new performance management regime is informing decisions. 1. Mitigating risks relating to current economic instability: Official assessments for the UK show recession (International Monetary Fund, 2009). The Association, other charities and analysts are predicting that it will be more difficult to raise charitable funds over 2009 and 2010. This represents a risk to the Association's ability to deliver for people with MND over the next two years at least. To mitigate this risk, the Association is enhancing its routine financial monitoring requirements for a range of income streams and fundraising activities, which the senior management team believes act as sensitive and surrogate markers for the potential detrimental impact of recession on income. These surrogates include income generated by the Association's volunteers and through application to Trust and charitable foundations. In addition, response rates to appeals together with direct debit cancellations are being closely monitored. The Association's Director of Operations & Finance is working with his opposite numbers in Multiple Sclerosis and Parkinson's Disease Societies to assess, whether by working together, the three organisations can enhance sensitivity of monitoring. Through early identification of an adverse trend in income generation, mitigation plans can be activated. The nature of such plans will be dependent upon circumstances at the time, but include: switching fundraising expenditure to other income streams; reducing fundraising resources to safeguard net contribution; and in extreme circumstances, activating the Association's risk policy for rapid and prolonged fall in income. 2. Alignment of resources to support improvements in quality of care for people with MND: An assessment of the quality of care provided for people with MND by the statutory services, the Association and other organisations is currently being conducted. This 'tracking survey' will combine results of the experiences of people with MND together with an analysis of staff and trained volunteers' experiences of local service provision. The results of this work - together with the results of other relevant surveys conducted by other organisations - will better identify local areas where the Association needs to work to achieve improvements in clinical practice and service provision for people with MND.

The Association will use the results of the 2009 tracking survey to target financial and human resources to areas of sub-standard care for people with MND. For example, the Association is already committing additional resources to improving the quality of care across London based on past evidence of inadequacies in the services being provided to people with MND in many London boroughs. Figure 3 indicates the shift in care performance from 2004 to 2009. Consideration is currently being given to whether tracking surveys should be conducted on an annual, rather than tri-annual, basis. 3. Informing strategic developments: Discussion of the Strategic Map has provided a useful tool to identify areas where the Association needs to see strategic development. For example, it is recognised that rapidly developing information communications technology offers significant potential to the Association in the way it provides information to people with MND and engages donors and supporters. Discussions helped bring together the various strands of thinking across the organisation and reinforced the need to strategically address this in a co-ordinated way. The Map also helped the Association to agree the allocation and prioritisation of appropriate resource to investigate these opportunities and a cross team working group was established as a result. The outcome is the introduction of new media technology: • to provide interactive forums for people with MND to share their experiences with each other in a safe and sympathetic environment • to inform the Association of the current needs of people with MND • to provide the means for supporters and potential supporters from all ages and backgrounds to engage with the Association. 4. Routine monitoring of progress towards targets: The following provides two examples of routine assessment of progress: • Raising awareness of MND and the Association. Over the last three years, the Association has increased its public awareness, which is measured independently and on a quarterly basis, from 20% to around 50%. • Increasing expenditure on charitable purpose. In 2008/09, 79% of expenditure was allocated to achieving the Association's charitable purpose as part of externally audited, annual accounting process. This is an increase from 78% in 2007/08 and 4% below the green light figure of 83%.

Creating the Right Culture

The Association has been able to avoid a bureaucratic approach overly focussed on data collection, which is often a key barrier to effective performance management. Rather, the Association's senior management team is seeking to create a culture of learning and performance improvement. In order to support this aim, the vast majority of information collected through the performance management system is available to the entire Association. Members of the senior management team are currently working with their teams to support staff on the use of performance information to improve performance. The aim is to create a culture in which performance data is discussed openly and honestly, and used by everybody to take decisions that improve future performance.

Next Steps

The publication of the Association's new Strategic Framework covering the period 2009 to 2015 provides a platform for work over the coming year to refresh the performance framework through a review of strategic objectives, key performance questions and indicators, benchmarks and targets. This will also include deleting outdated performance measures. In particular, there will be an increased focus on better alignment of the performance framework with the management of risk and with the setting of priorities for financial and human resource allocation. This approach will support implementation of the Association's recent strategic decision to delegate operational responsibility and authority for services to individuals and groups nearest to and with the best understanding of the needs of people with MND. Members of the senior management team will therefore increasingly focus on leading and managing their teams by setting direction, and then influencing that direction through personal interaction with staff. In addition, a staff survey will be conducted to assess progress with creating the performance driven culture.

Conclusion

The design and implementation of the Association's Strategic Performance Management System has generally been a positive experience for managers and staff. The Strategic Map has become an integral part of the way people in the Association think. The use of the associated KPQs and KPIs is informing performance improvements and supporting enhanced accountability. External facilitation was essential to the successful implementation because it prevented the team from getting stuck for too long and from going off on tangents. It kept the process on track and dissuaded the Association from creating unnecessary complexity. Another positive has been the response of stakeholder groups to the commitment the Association is making as an organisation to performance reporting. Donors are impressed and see this as a way of helping ensure their donations really do achieve outcomes and contribute towards mission achievement. The Association launched a £15 million research funding appeal in 2007 and has raised £6.0 million through its own fundraising resources plus receiving a commitment from government that it or the Medical Research Council will invest a minimum of £7.5 million in the search for causes, treatments and ultimately a cure for MND. The success of this appeal has undoubtedly benefitted from being able to demonstrate accountability for performance which is based on the performance management system.

Bernard Marr is a globally regognized big data and analytics expert. He is a best-selling business author, keynote speaker and consultant in strategy, performance management, analytics, KPIs and big data. He helps companies to better manage, measure, report and analyse performance.
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