A Summary of Performance
Management Best Practices for a
Public Sector Water Utility
By: Doug Spiers, Esq, P.E.
In this period of economic uncertainty, utilities Performance measurement is the discipline of
must focus on increasing overall business measuring the right things in order to affect a
efficiency in order to maintain customer service desired change. But there’s a catch.
and contain costs. As a first step to improving
In order to be effective, performance
performance, utility managers must understand
management must be tailored to the water or
existing service levels and associated costs. If
wastewater agency’s mission – ensure safe and
this were simple, however, every utility would do
reliable water supply, protect the environment,
it. Rather, many utility managers are:
maintain public infrastructure, meet customer
• Annoyed that key data from their systems is services levels, and do it all at reasonable rates.
difficult to access and that information in Moreover, an agency’s performance management
different systems may conflict; needs vary based on its size, governance, range
• Frustrated that key decisions are made without of services, and organizational maturity.
timely or accurate performance-based This following paper is a simple overview of
information; documented best practices for implementing an
• Unable to measure or trend progress toward effective performance-based management
desired goals; program within a water or wastewater utility.
• Lacking proper reporting tools to effectively
communicate with Board or Council members,
regulators, rate payers and utility staff.
The most effective approach for developing
Attributes of an Effective best-in-class performance management
Public Sector Approach programs for public sector agencies recognizes
There is no, single set of Key Performance that organizational buy-in is essential. One
Indicators (KPIs) that applies to every water and effective approach is to develop initial
wastewater utility. Rather, agencies should begin performance measures through focus group
with a suite of measures that support their core sessions discussing industry best practices; key
mission then add measures as necessary to staff interviews to understand the current
monitor their specific strategic initiatives and organizational culture and level of effort required
management concerns. Successful utilities: for change management; and facilitated
discussions regarding the Utility’s current state
• Maintain organization-wide focus in the and issues regarding water industry metrics and
development and institutionalizing of their industry benchmarks.
performance management program;
An effective Performance Management Program
• Develop KPIs that align with the Utility’s provides the following benefits:
Strategic Plan and annual budget process;
• Determine the gap between current
• Utilize a Balanced Scorecard approach that performance and desired goals;
applies proven criteria (e.g. Malcolm • Track progress in achieving desired
Baldridge Award); performance;
• Engage management and staff throughout • Control performance within predetermined
the process to train the organization on best boundaries;
industry practices and develop buy-in; • Identify problem areas and possible causes;
• Motivate desired behaviors or spur
• Develop a hierarchy of performance
measures that roll up and down from every
• Increase accuracy in planning; and
employee to the General Manager; and
• Illustrate to stakeholders that the
• Employ business intelligence information organization is achieving its desired results
solutions for efficient data collection,
It is imperative that the performance management
reporting efficiency, and decision support.
program ties directly to the Utility’s defined
strategies, goals, decision making, and annual
budget. The program must be supported by
accurate data collection and an efficient reporting
process that enables timely business analysis.
The resulting performance report must present
Utility performance in a clear, concise, and timely
manner in order to aid management-level
Best Practices Checklist
Effective performance management and reporting
programs are achieved through four steps:
1. Develop Appropriate Measures & Targets
Balanced Set of Measures – Develop
measures that represent a balanced spectrum of
organizational perspectives including customers,
financial performance, business processes and
employees. Ensure measures drive quality,
Performance Management Best Practices Page 2
efficiency, and effectiveness. Minimize the Data Efficiency – Maximize the use of business
number of simple output measures. information systems to efficiently gather in-
process measures. Evaluate where data
Multidimensional Measures – Measurements
collection time can be minimized with business
must serve both internal and external
intelligence and web-enabled solutions.
stakeholders, support both routine work and
special projects, and be responsive to the needs Accountability – Establish ownership for
of line employees, management and executives. obtaining and validating requisite performance
data prior to analysis and inclusion in the
3. Analyze Results Against
Accountability – Establish
appropriate accountability for
performing data analysis for each
Duplication – Minimize duplicate
data analysis by aligning reported
measures. Make measurement units
consistent including quality units per
Fiscal Year and Calendar Year.
In-Process and Outcome Measures – Develop
both in-process and outcome measures that help Activity Based Cost Accounting – Ensure that
managers understand the cause-and-effect significant activities are performed at a
relationship between activities and strategic goals. reasonable cost. Collect all major cost
components associated with core business tasks.
Meaningful – Ensure that all measures serve a
meaningful purpose and that they are expressed in Cause and Effect Linkage – Measure the effect
a consistent, simple, and understandable manner. of preventive programs by observing sustained
reductions in rates of things you want to prevent.
Appropriate Targets – Have a defined business
process for establishing appropriate targets, Projections – Eliminate analyzing numerical
usually in conjunction with the budgeting projections of random or uncontrollable events.
process. Reflect broad internal, external,
financial, and improvement goals in strategic 4. Communicate Results to Stakeholders
and operating plans. Key Stakeholders – Identify specific users for
Established Targets – Use historical data to each measure. Ensure that all contributors
establish initial targets for ALL performance towards performance are aware of actual
measures. Targets should challenge the performance against established targets.
organization and motivate improvement while Timely Reporting – Provide stakeholders near
being attainable. real time access to information to judge how a
given action impacts the associated outcome
2. Routinely Monitor Results indicator and progress toward a strategic goal.
Periodic Monitoring – Develop formal business
Standardize Performance Reporting Format –
process for periodic performance monitoring.
Ensure consistency between performance
Data Collection – Establish accountabilities and reports and graphs. Deliver information in an
formal data-collection processes for each intuitive and/or adequately explained manner.
performance report. Establish baseline time and
Electronic Reporting – Utilize electronic
effort for collecting the requisite data.
reporting formats where appropriate. Broaden
Performance Management Best Practices Page 3
the distribution of the performance reports via to the stakeholder’s role. Present measures that
the intranet or internet. Minimize the number of tie individual contributions to overall
hard copy performance reports. organizational performance. Limit dashboard
measures to approximately 20. Present simple,
Reduce Color Printing Costs – Maximize the
informative graphics with coding to indicate
use of electronic reporting. Minimize distribution
acceptable, marginal or unacceptable
of hard bound color performance reports. Use
legends that are easily discernable in black and
white for hard copy reports where needed. Utilize Business Intelligence Solutions –
Utilize business intelligence solutions to
Review Distribution Lists – Align distribution
accelerate data analysis, increase reporting
lists with the organization’s specific need for
effectiveness, and improve management
information based on roles and responsibilities.
Reporting Information vs. Data – Don’t
release data in raw form. Develop appropriate Summary
critical analysis and explain information
These best practices have proven effective in
graphically; not in tabular formats.
implementing sustainable performance
Trending – Compare performance metrics over management programs that provide management
annual or seasonal periods where historical data and staff with key information to manage the
is available. Use monthly comparisons only utility and drive continuous improvement. The
where appropriate to show seasonal events. result is management by objective performance
Eliminate monthly comparisons for random against predetermined target levels of service that
events or where there is only limited connection are aligned with the utility’s strategic goals and
to seasonal influences. annual budget process.
Graphics – Provide standard comparative
graphs, trend lines, pie charts, etc. Display Additional Information
tabular data to support charts only if necessary. For additional information contact:
Self Explanatory – Present information in a Douglas A. Spiers, P.E., Esq.
manner that can be quickly assimilated and Vice President Consulting Services
understood by all stakeholders. Westin Engineering, Inc.
3100 Zinfandel Drive, Suite 300
Analysis – Assess the performance against
Rancho Cordova, CA 95670
desired target levels and explain any gaps.
Corrective Actions – Articulate the remedial
action to achieve desired performance for each
reported performance measure.
Dashboard Report – Develop a monthly
Dashboard Report that delivers data appropriate
At Westin, we're passionate about improving utility performance. Through
practical knowledge earned in the water and wastewater industry and our
collaborative approach, Westin helps you implement dependable enterprise
solutions to retain knowledge, optimize processes, meet compliance
requirements, serve customers and improve asset life.
Performance Management Best Practices Page 4