by Rick Little, Performance Measures Director
Prospective home buyers ask a lot of questions. How much does the house cost? How many square feet does it have? Where is the property located? What are the current mortgage rates for 15 and 30 years? Almost unconsciously, the answers to these questions provide buyers with a sense of the size and desirable qualities of different properties relative to cost. Among other factors, the answers help those in the housing market decide what and where to invest – and how much it will cost.
Similarly, the Governor’s Office of Management and Budget (GOMB) asks agencies to define and measure key processes and outcomes relative to expenses in order to make better recommendations about what and where to invest – and how much it will cost. During the recent Utah OPS Conference, several attendees asked why GOMB uses QT/OE as the standard measure across all system—a good question in light of a somewhat common perception that some systems don’t fit the model.
So, why have a common approach?
- Alignment with the mission. QT/OE must be constructed to highlight the basic function or activity that aligns with the mission; throughput measures the “primary unit” of productivity; and quality describes how well the system does in achieving desired outcomes. Strategies implemented to improve the QT/OE ratio help set direction for operational tactics. Defining and monitoring QT/OE requires administrators and those directly responsible for systems to describe, manage, and improve processes.
- Accountability. Commercial businesses are accountable to shareholders as measured by profitability and growth. Government systems and agencies should be accountable to taxpayers for specific outcomes and to meet the demand for services at the lowest reasonable cost. The QT/OE ratio provides the accountability measure.
- Meeting increased demand. The QT/OE measure monitors the relationship between changing demand, increasing quality, and relative costs. QT/OE puts focus on increasing system capacity to meet demand without incurring corresponding jumps in expenses.
- Performance-based budgeting. The managed relationship between the quantity and quality of system outputs and corresponding costs provide ongoing validation of greater efficiencies over time and justifies continued and/or increased funding.
- Improved communications. A common measure helps communicate the impact of changes over time. Internally, team members can see the influence of changes in quality or operational pace on the ratio. Externally, financial analysts and others can gauge the relative gains in productivity per dollar expended.
- Detect and correct problems. Regular monitoring of the QT/OE ratio can assist administrators to detect procedures and plans that do not combine to improve the ratio and to make corrections as needed.
Just like home owners want to know what and how much their dollar will purchase, taxpayers and customers should be able to understand how and what their investment will purchase. The struggle of any organization is to balance good, cheap, and fast. Ideally, none of these factors should be sacrificed. Too often, organizations pursue cost reductions at the cost of quality or improve quality at the cost of getting things done on time. QT/OE ensures that these three elements (quality, cost, and capacity) improve in harmony with each other.