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: Cabinet Training July 30, 2008 Office of the Secretary of Finance Department of Planning and Budget

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

3. Agenda Productivity Measurement Overview Agency Requirements Important Dates Productivity Ratio Developing Productivity Measures How You Can Help

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. Step 9: How You Can Help Important Dates Review the productivity measures to ensure they meet the following criteria: • Cost-based, if possible • Linked to a key objective, measure or process, if possible • Address a significant portion of the agency’s budget or activities • Can be used by the agency as a tool to optimize resources and identify improvement opportunities Approval Process: • Work with your agencies and with DPB, as needed, to evaluate your agencies’ productivity measures. • Notify DPB when you have completed your review and approval of your agencies’ productivity measures. • DPB will facilitate the Governor’s Office approval of productivity measures. Other Things to Consider: • Ensure agencies feel ownership for the measures. • Encourage agencies to use the measures to stimulate improvements. • Review the productivity measures at regular intervals with the agencies to track progress.

15. Exercise: 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. Virginia Information Technologies Agency Virginia Department of Taxation

16. 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).

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