Business Performance and Target Setting Professor Mike Bourne; Pietro Micheli and Monica Franco Mike Bourne A couple of months ago some colleagues and I sat down to talk about issues in the National Health Service. At the time there were deaths happening in one Hospital Trust that was causing great concern. And this topic comes up time and time again. We weren’t, and we never will be, in full knowledge of all the facts that happens in these cases, but there is an ongoing concern and debate about how targets drive performance and what the impact is of targets on the performance of the organisation, and particularly on the outcomes of patients. And I think the debate, which is coming now, should be seen in that light. Toby Thompson Hello, my name is Toby Thompson. I am here today with Mike Bourne, Professor of Business Management here at Cranfield; Pietro Micheli, who is the Lecturer in Business Performance and Monica Franco, Senior Research Fellow in Business Performance. We are talking about target setting, performance, clearly. Gentlemen, ladies, performance, targets – what is the relationship? There has been an incident recently in North Staffordshire Hospital in the UK anyway, where targets seem to end in the death of several patients in there. Is target setting going to be the death of performance – to be provocative? Mike? Mike Bourne No, I don’t think it is. But I think you have got to be very careful about how you set targets and the context in which you do it, because as you see from incidents like North Staffordshire Hospital and the Baby P case, and things like that, you can have dire consequences from setting targets in the wrong way and managing them incorrectly. Toby Thompson So is the expectation of the government that targets are simple and can be applied to those context situations, or is it down to the individuals in that context to say this is not appropriate for us in our context? Mike Bourne Well, I think the government try to get a simpler message across and target a very quick and simple way of doing it; the problem is that when you get down on the ground life is never, ever that simple. And therefore targets drag you off in different directions and can destroy what you are trying to do. Toby Thompson So Pietro, targets seem to be very monolithic, very simple, very Knowledge Interchange Online© Cranfield University December 2009 1 Mike Bourne, Pietro Micheli and Monica Franco
easy to pick up and handle – are they as simple as it sounds? Pietro Micheli No, especially depending in which context you apply them. In certain contexts they can be appropriate; almost in any case of course we will talk about how to design targets and how to use them. In certain cases, the particularly complex ones, like the public sector, they can be a very reductionist view – they can bring a reductionist view to what is a very complex … Toby Thompson Overly simplistic then? Pietro Micheli Yes – a very complex issue of delivering healthcare or social services or any type of service that the public sector provides. Toby Thompson But it seems that in the private sector targets are indispensable; you have to have them. Monica Franco Well, I think there is a lot of research done in the last thirty years that suggests that actually if you have targets that improves performance. So the private sector has followed that advice, so yes we use targets because that seems to improve performance. One problem is how you use them and, of course, how do you design them and in which context – so we are back to what my colleagues have said. Toby Thompson So is it an ideology then which has moved over to the public sector; that it works in the private sector and therefore it will work in the public sector, regardless of context? Mike Bourne We use targets to stretch people’s performance and that is what we try and do. The problem is when you overstretch them and even the research that has gone on over the last thirty years, we know that if you overstretch targets, people run round like headless chickens and that is an issue. Toby Thompson So explain a bit about the North Staffordshire case – the targets were set by the government, by the local PCT? Who set those? Mike Bourne Basically there is a set of government guidelines for NHS hospitals around waiting times, times that you spend in A&E. And in particular in North Staffordshire it was the A&E target that has been under pressure because if you measure that people go through A&E in four hours, then there are various ways that you can get them out of A&E. One is that you can treat them, which is actually quite hard. The other way is that you just throw them out of the hospital, let them go and if they are still ill that can be a real issue. Or you can admit them to the hospital. © Cranfield University December 2009 2 Mike Bourne, Pietro Micheli and Monica Franco
Toby Thompson So is it the target or the slavish adherence to meeting the target? Doesn’t it seem to be the individual? Pietro Micheli It is not that – the target is a tool; it is an aim, OK, like an indicator. It is something that indicates something about your performance. Now it is how you use it that makes the difference. It is not the target per se that is wrong. The target is an object; it is something that you can develop with people and use. The misuse of those can create a lot of problems. The delivery – because that is what it is – the delivery of public services cannot be driven solely by targets; that is one of the key things that we found in our research. Toby Thompson So it seems to squash autonomy? That you have no individual opinion, discretion, as an individual manager and you just have to … Monica Franco It depends on how the target has been set and how much say have you had in setting the target. Toby Thompson But it seems like an absolute; it seems like something that is sacred and handed down from somewhere. Isn’t it a construct of some sort in that local context? Monica Franco In what sense? Toby Thompson Isn’t it something that has been set by something which can be deconstructed, which can be taken apart, and it is not something which is handed down which you then have to do something with? Pietro Micheli Well that is the process of developing the targets. And that is why, for example, in smaller contexts of say small manufacturing firms that can be easier. When you are dealing with an organisation that has got a million or three hundred thousand people, it is very difficult for you to negotiate all targets – especially the national ones. Mike Bourne But the thing that you have got to remember is targets are something that communicates to everybody what they are trying to achieve. So the eighteen week reduction of waiting list time in the NHS was a great battle cry for the whole of the NHS. Toby Thompson So it there is a vision aspect around the target – not just something people will do? © Cranfield University December 2009 3 Mike Bourne, Pietro Micheli and Monica Franco
Mike Bourne There is a vision aspect, yeah, and so the government has latched on to that and told people in the NHS about it and people in the NHS have picked that up. But there is the other side of it: what does it do in individual cases? And overall we have seen this reduction and people have got within eighteen weeks. That has got to be a good thing because people are treated quicker, they are going to have better outcomes. Toby Thompson So targets are communication tools really? Pietro Micheli A target is also an aspiration and particularly when there is a political element that is fundamental and that is one of the things that makes the public sector more difficult because you are also communicating something that you aspire to and that is not necessarily supported by data of your previous performance, for example, that you would do say in a manufacturing context or in a service private sector company. So it is kind of differentiating between something that can be negotiated and is really based on capabilities and something that instead is an aspiration of saying a 100% of our patients are going to be treated within eighteen weeks or be seen within four hours and so on. Toby Thompson That negotiating aspect involves all stakeholders; all constituents around and who are affected by that target should be involved in setting that target. Monica Franco Yes; that is one of the key things that you have to bear in mind when you are setting a target. There are other things, people have to commit to the target, so that is one way of committing them – having them participate. And there is another one, you have to have feedback on how well you are doing against the target. You also have to have resources to be able to reach the target and knowledge about how to reach it. I think all those things have not been really taken into account when the government set this target setting approach. So in some places people have the target, but they don’t have the resources to reach it, they don’t have maybe the knowledge how to do it. So all those things then become more difficult to address when you are using targets. Toby Thompson © Cranfield University So here we are in a business school, we teach this – you guys teach this, you research it. What are the lessons that we can teach people around performance? Is it a debate around the relevance of target setting? Is it a debate around how December 2009 4 Mike Bourne, Pietro Micheli and Monica Franco
performance fits into the general neo‐liberal context that maybe we are not in any more? Mike Bourne We teach them how to design measures and we teach them how to set targets because we believe it is a very good way of communicating to the organisation what it is there to achieve. But we also teach people who go through a process of setting the targets think about the stakeholders, communicate what is trying to be achieved, prioritise and in particular resource what you are trying to do, as well as building the system to deliver the target. And if you don’t do that, you cause all sorts of problems because you set an aspiration that people can’t achieve and that is a real issue. You have got to have a system behind it that can be modified and developed to actually achieve the target and that is what it is really all about. Toby Thompson So the North Staffordshire context, that situation – that terrible situation – wouldn’t happen again, presumably? Pietro Micheli The other thing, there is a lot of research about, both from us and other people of course on target setting and that says that setting a target that is challenging, that is specific and all sorts of attributes that we have discussed so far, that can have a positive impact on performance and that is proven in many contexts. Now the big question is in very complex issues, like provision of healthcare, is the target approach the most appropriate one or not? That is an awkward question. And we are doing research on this, but it is not an easy thing to find, if you like. So in certain contexts it has been observed and proved this impact of targets on performance, but in a very complex situation it might not be the case that deliverable performance can be achieved through targets. Toby Thompson So it is one of those things it depends, it depends what you mean by target, it depends what you mean by context? Monica Franco Yes. A target is just a management tool, but there are others. One thing, picking up on what my colleague was saying, targets are very costly to manager and I just think probably for the public sector to analyse how much it is costing them to use these targets and look at the benefits – is it really delivering the benefits? – because it is just a management tool. Maybe there are others like investing on leadership. Toby Thompson So common sense, as an independent observer here, does common sense have any part to play in this target setting thing? © Cranfield University December 2009 5 Mike Bourne, Pietro Micheli and Monica Franco
Pietro Micheli Absolutely. Especially when people lose it, because in the case of these incidences, whether it is the North Staffordshire NHS Trust or Baby P or MRSA, all these things people have got fixated on the process and the target, rather than the objective, first of all, but also what they are there to do. They have kind of lost the plot sometimes. And that is because the system that is so much enforced and so much driven by targets and measurement can create that, and that is the cultural issue. Toby Thompson So the target takes a life on of its own? It becomes a thing in itself as opposed to a means to an end? Mike Bourne It will. But you have got to remember we employ managers to manage – that is what it is all about. And so they have got to take the target and then they have got to manage their way towards that target. You have got to also understand that you can’t achieve all targets in all situations; we have got a global recession going on now, people are not sticking to the targets they have twelve months ago. And you have got to adjust for that; if you don’t adjust for that, you get this really weird and dysfunctional behaviour because you can’t deliver targets all the time. A manager has got to realise that, they have got to know when they are doing their best. It is an aspiration and they have got to work towards it. Monica Franco For example, in complex situations like we were talking about – the public sector – research has suggested that actually you have to have a culture that is able to deal with failure and actually instead of setting outcome targets like the ones that they have, they set learning targets because it is seen as more a more effective way of driving performance. So for example, that is something that is not happening all the time you centre the outcome targets in a context that is very complex, which researchers say that will not work. Mike Bourne Well, I would actually disagree with it because I think that some of the NHS targets are not outcome targets, they are actually process targets – they are talking about eighteen weeks, they are talking about four hours. Monica Franco Yeah, but the eighteen becomes then a number … Mike Bourne It does become a number, absolutely, but it is not about the level of healthcare in the UK, it is not about patient outcomes. Pietro Micheli Absolutely, because that is also something that is much more difficult to measure and that is why. But there is something that we are working on which is the cultural aspect of all this © Cranfield University December 2009 6 Mike Bourne, Pietro Micheli and Monica Franco
and that is both how the existing culture affects the way in which you work on measurement and target setting and so on, and how these then shape or impact the culture of the organisation. So that is a key issue because what has happened in the more dramatic cases of this kind in which people are being ‘killed’ by targets has been a complete loss of the common sense that we need and the fact that managers need to have that common sense. And the people working with them. And the fact of getting fixated on the targets has taken that away. And basically you are just delivering against the targets – the rest doesn’t count anymore because there is no measure, it is not subject to a target. Toby Thompson It seems an interesting issue of causality. We have to leave it there, we can talk about this a lot longer. Mike Bourne, Pietro Micheli, Monica Franco thank you very much indeed. If you have any comments regarding this debate would you please leave them in the box below this window. Thank you very much. © Cranfield University December 2009 7