The 3E methodology for developing performance indicators for public sector organizations

Abstract

Measuring the performance of organizations in both the private and public sectors is an evergrowing phenomena and this is increasingly true of academic universities and research institutes. The results can have major financial and reputational consequences. Methods have been developed for generating performance indicators particularly in the private sector but these have limitations, especially when applied to public sector organizations which often have a diversity of missions, values and stakeholders. This paper describes a new methodology for constructing a set of indicators that was developed as part of a project to evaluate the performance of the Chinese Academy of Sciences (CAS). The methodology has several important characteristics: it works from the mission and values of the particular organization rather than a predefined template; it has a logical and transparent method for moving from high-level missions down to low-level indicators; and it is based on discussion and agreement with stakeholders at all stages. The methodology is illustrated through the CAS study but it is generalisable to any organization. It has a sound theoretical base from Soft Systems Methodology.

Developing a performance management system using soft systems methodology: A Chinese case study

“…They form the basis of our "3E" methodology that was developed in an earlier project with a Chinese university (Liu, Chen et al, 2010) and is now applied to a private sector organization in this project. The overall approach is to construct, after debate and discussion, a top-level root definition and conceptual model for the primary activities of the organization.…”

“…and How should it be done? with all the relevant stakeholders, following a carefully structured and constructive procedure as developed in previous projects with public sector organizations (Mingers et al 2009;Liu et al, 2010). Thus, the principles of SSM were used even though the language was not because it was felt that this would confuse the participants.…”

“…In Step 3) one can use the 3E framework for developing performance indicators (Liu et al, 2010). Then, in the end we will have key process (KP) and key performance indicators (KPI) for all departments, sub-groups and even individuals.…”

“…The promotion team chose to measure the performance of these targets and tasks by using the 3E performance indicator methodology (see Liu, Chen et al, 2010 for the details) to create a performance indicator system, which derives and classifies the indicators of the tasks into three: E1 -efficacy, the extent to which the system produces the outputs that it is supposed to; E2 -efficiency, the extent to which it produces the outputs efficiently and economically; and E3 -effectiveness, the extent to which the outputs contribute to the objectives of the wider system. Then, after discussing with the department managers about the indicators, the promotion team selected the most needed and feasible indicators to form the Key Performance Indicators (KPIs) and Key Processes (KPs) for each department and its managers.…”

Performance management and evaluation

“…Either understood as attempts to rollback the welfare state as the Thatcher reforms in the UK (Hood & Dixon 2015) or as attempts to limit the growth of public expenditure as in other public management reforms (Ejersbo & Greve, 2005;Pollitt & Bouckaert, 2011). Compared to classic economic performance criteria this is an expanded list, with economic performance typically only including the top three performance criteria -often called the three E's of performance in the international performance literature (Johnsen 2005;Liu et al, 2010). A review of the literature in public administration and political science, will, however, make it clear that the list is not exhaustive (see, eg, Boyne, 2003b;Christensen, 2003;Rothstein, 2011;Rothstein & Teorell, 2008).…”