Wednesday, August 4, 2010

Accountability Follows the Money: The Power of Performance Contracting

Thoughts about accountability, money, and results from Marv, our founder and CEO -

Early in the life of our company, while I was working in a County that shall remain nameless, the head of the Design Unit within a Facilities Department was talking about accountability. He said that he wasn’t accountable for the design of buildings – that is, for the architectural plans – because his employees didn’t do the work. Those services were contracted out.

I thought his director was going to reach across the table and….

Fortunately for him, I intervened with a question. “So if a building designed by your contract architects collapses, who gets sued first?”

After a moment of recovery (and glancing up at his Director’s glare), he conceded the point. The County would be responsible even though – and maybe even particularly because – the services were contracted out.

This conversation was a very important learning moment. “Accountability follows the money” came out of that moment. If funds are appropriated by or conveyed to a government organization, that organization is responsible for how it is spent and what is accomplished.

There really are only two ways to deliver services: do it yourself through your own staff, or contract it out. (There is a third one, but it’s rare and doesn’t really count – get someone else to do it with their own money.)

So whether the services are provided by your staff or by your contractor, you are responsible for service delivery and results. This essential truth leads the way into performance-based contracting.

Here’s the choice: you can contract for results, or for something less. In Managing for Results, the clarity around the results you need to deliver makes it much easier to integrate performance measures from department Strategic Business Plans directly into performance-based contracts.

Unfortunately, though, most contracts are general in terms of performance expectations. At best, contracts typically will only detail what services will be provide and to whom. They may even have performance expectations around the number of people served or outputs. But if they aren’t built around results, you have no way to enforce that needed accountability.

You can Manage for Results – or you can manage for something less. You will most likely get what you contract for. If your contracts don’t include results….

This is the difference between Hoping for Results and Managing for Results.

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