Source: Newport, 2010

As indicated by the graphic above, the health insurance coverage is generally lowest in Americans’ mid-twenties and strongly related to income, ranging from a low of 44% among 35-year-olds making less than $24,000 a year to 100% among seniors in their 70s making more than $24,000 a year (Newport, F 2010).

An average of 16.2% of American adults lacked health insurance coverage in 2009, increasing up from 14.8% in 2008. The analysis indicates that lack of health insurance coverage is due to two main reasons:

• voluntary decision to do without
• economic circumstances, including lack of access to employer-paid insurance.

Source: Mendes, 2010

An average of 39.9% hispanics  lack healthcare coverage, this representing more than double the current national average. This level of the indicator makes hispanics the most likely demographic segment of the adult population to be uninsured. From 2008 to 2009, the percentage of uninsured low-income Americans, Hispanics, and blacks increased by 2.9 percentage points (Mendes, E 2010).

The results of the analysis are based on telephone interviews with more than 353,849 national adults, aged 18 and older, conducted Jan. 1-Dec. 31, 2009.

Resources:

Newport, F 2010, Health Insurance Coverage Varies Widely by Age and Income, available at: http://www.gallup.comhttp://www.gallup.com/poll/126143/health-insurance-coverage-varies-widely-age-income.aspx/poll/126143/health-insurance-coverage-varies-widely-age-income.aspx (accessed 19 July 2010)

Mendes, E 2010, More Americans Went Uninsured in 2009 Than in 2008, available at: http://www.gallup.com/poll/124973/Americans-Went-Uninsured-2009-2008.aspx (accessed 19 July 2010)

smartkpis.com 2010,  % Health Insurance Coverage, available at: http://www.smartkpis.com/kpi-key-performance-indicator/Health-insurance-coverage-2668.html (accessed 20 July 2010)

The report covers 28 focus areas and a set of 10 leading health indicators, used to measure the health of the nation over 10 years. The leading health indicators reflect the major public health concerns in the United States, being chose based on their ability to motivate action, the availability of data to measure their progress, and their relevance as broad public health issues.

Each indicator is first analyzed through its past 10 years performance, and afterward, objectives are set to monitor progress for the next 10 years. For example, one leading health indicator concerns physical activity. The participation in regular physical activity is analyzed between 1990-1999 through the graphic below.

Source: U.S. Department of Health and Human Services, 2000

The two objectives selected to measure progress among adolescents and adults for this leading health indicator are:

• Increase the proportion of adolescents who engage in vigorous physical activity that promotes cardiorespiratory fitness 3 or more days per week for 20 or more minutes per occasion.
• Increase the proportion of adults who engage regularly, preferably daily, in moderate physical activity for at least 30 minutes per day (U.S. Department of Health and Human Services, 2000)

Since 1979, Healthy People has established and monitored the United States national health objectives to meet a broad range of health needs. Healthy People 2020 report is currently being developed, aiming to present assessments of major determinants of health and wellness, and emerging issues related to the U.S. health preparedness and prevention at national level.

For further examples of performance indicators, explore the Government State / Federal – Healthcare KPI examples section of the library of KPI examples available on smartkpis.com (smartKPIs.com, 2010).

References:

U.S. Department of Health and Human Services 2000 , Healthy People 2010: Understanding and Improving Health, available at http://www.healthypeople.gov/Document/pdf/uih/2010uih.pdf (accessed 21 July 2010)

smartKPIs.com (2010), Government State / Federal- Healthcare KPI examples, available at http://www.smartkpis.com/kpi/industries/government-state-federal/healthcare/ (accessed 21 July 2010)

Source: INSEAD, 2010

The performance measures used for the ranking are:

• % Industry-adjusted total shareholder return (TSR);
• % Country-adjusted total shareholder return (TSR);
• $ Market capitalisation.

The ranking generated some unexpected aspects, such as:

• High-performance is fairly spread out across countries, industries and economic swings;
• No particular context was identified to have a monopoly on exceptional performance;
• The results indicate the importance of using objective, long-term measures to assess CEOs and to inform succession planning (Hansen, M, Ibarra, H, & Peyer, U, 2010).

References:

Hansen, M, Ibarra, H, & Peyer, U 2010, ‘The Best-Performing CEOs in the World,’ Harvard Business Review, Published January-February 2010, available at http://hbr.org/2010/01/the-best-performing-ceos-in-the-world/ar/1 (accessed 20 July 2010).

INSEAD 2010, The 200 top-performing CEOs in the world, available at http://knowledge.insead.edu/top-200-CEOs-091218.cfm (accessed 20 July 2010).

The prizes for the best essays consist in the opportunity to participate in the  Global Peter Drucker Forum 2010, held in Vienna, Austria. The complete details of the competition are available at: http://www.druckerchallenge.org/.

About Peter Drucker

Without doubt one of the most innovative personalities of the past century, Peter Drucker has had a crucial contribution to the development of Management as a discipline – the Man Who Invented Management – as he was once named by the New York Times (Lewis ,1998).

He has left behind a valuable collection of books that set the foundations for a great number of management concepts and described a suite of upcoming changes in the society, as they have been anticipated with great accuracy by Drucker. Among his most important titles are the following:

• The End of the Economic Man (1939)
• Concept of the Corporation (1946)
• The Practice of Management (1954)
• Frontiers of Management (1986)
• Peter Drucker on the Profession of Management (1998)

Photo by Joan Winstein

References:

Lewis, M 1998, ‘The Man Who Invented Management,’ New York Times, Published 11 January 1998, available at: http://www.nytimes.com/1998/01/11/books/the-man-who-invented-management.html?pagewanted=1 (accessed 20 July 2010).

Note: The photo was retrieved from the Austrian Embassy at Washington, D. C., website. Copyright © 2007, Austrian Press and Information Service, Washington, D.C.

The research has been conducted during 2005-2010, to provide independent results about the quality and performance of the healthcare provision. Its purpose is to provide answers to three questions regarding healthcare, considered fundamental (The Health Foundation 2010):

1. What is the current state of healthcare and performance?
2. What works to improve quality and performance?
3. Is value for money obtained from what is spent in the National Healthcare System (NHS)?

The program has had three different streams of research, as shown below:

Source: The Health Foundation, 2010

The Quality Enhancing Interventions were identified as six main areas where efforts should be put so as to improve quality and performance:

• Patient focused interventions
• Regulatory interventions
• Incentives
• Data-driven and IT based interventions (which was broken into Performance Reporting & Accountability and Information & Knowledge Management)
  
• Organizational interventions
• Healthcare delivery models.
  

Source: The Health Foundation, 2010

During the time interval of the research, several outputs in the shape of reports were produced, studying issues such as:

• Patient and public experience in the NHS
• Value from money in the English NHS
• Regulation and quality improvement
• Costs and benefits of health information technologies
• Safe and risk management in hospitals.

For more about the QQUIP initiative, visit The Health Foundation’s webpage, or directly download the research reports.

References:

The Health Foundation 2010, Quest for Quality and Improved Performance, available at: http://www.health.org.uk/current_work/research_development/qquip.html (accessed 3 July 2010).

The Health Foundation 2010, Quest for Quality and Improved Performance Brochure, available at: http://www.health.org.uk/document.rm?id=1178 (accessed 3 July 2010).

Registered members of the www.smartKPIs.com community can now select their Key Performance Indicators (KPIs) from over 4100 performance measures documented and published in the online repository. The team focused over the last few days on publishing examples from the the Utilities and Government sectors.

The functional areas with the highest number of KPI examples are:

• Information Technology (439)
• Human Resources (341)
• Supply Chain, Procurement, Distribution (334)
• Sales & Customer Service (218)
• Knowledge and Innovation (178)
• Marketing & Communications (173)

The industries with the highest number of documented performance measures are:

• Transportation (283)
• Utilities (279)
• Professional Services (216)
• Resources (179)
• Hospitality & Tourism (119)
• Real Estate / Property (113)

Example of a documented performance measure: # Customers affected by repeated unplanned gas supply outages

Registered member experience on http://www.smartKPIs.com

• Learn: To learn more about performance management and Key Performance Management visit the Resources section.
• Explore: To explore the library of KPI examples by navigating the functional area and industry directory, visit the Browse KPIs section.
• Customize: To build your customized KPI library by saving favorite examples for later use, visit the My KPIs section.
• Contribute: To propose a new example of KPI, visit the Submit KPIs section.
• Collaborate: To collaborate with other users and to discuss KPI examples, add comments on each KPI description page, ask questions on smartKPIs Answers, or contribute to the smartKPIs Forum.

Introduced by Fred Reichheld (Ritson, 2009), the Net Promoter Score® (NPS) promises to be one of the most popular and employed approach to measuring performance in marketing.

Its calculation is based on comparing the promoters (people who are likely to recommend the product or the company) to the detractors (people, who, on the contrary, would make a negative word-of-mouth).  It is also known as the “Willingness to Recommend“ metric and, along with level of customer satisfaction, it is suggested as a highly relevant leading indicator of future purchase intentions and loyalty (Farris et al., 2006).

Table: Net Promoter Scores for the airlines companies operating in Australia (Ritson, 2006)

In a practical context, its measurement would involve a customer survey, consisting of a simple question (“How likely is that you would recommend the product/company to a friend or colleague?”) with an 11 point scale answer, from 0 – not at all up to 10 – extremely likely (Ritson, 2006). The answers are divided into three categories: promoters, neutrals and detractors. While neutrals are left aside, further on the volume of promoters and the volume of detractors are extracted as a percentage from the total respondents, and the difference between the two percentages is the NPS.

Despite its increasing popularity due to its argued simplicity and ease in computing, the NPS is not exempt of criticism, coming mainly from behalf of market researchers.

In a 2010 Customer Loyalty Forum held in Boston, several limitations of the NPS method were outlined, such as (GreatBrook, 2010):

• Possible legal issues, due to the private copyright over the concept (from Satmetrix Systems, Bain & Co., Fred Reichheld);
• The issue of using scales with different points for the answers: some suggest 11, other use 10 and other use 5, which might alter the relevance in comparing results;
• Using incentives to increase the response rates, that might impact upon their subjectivity.

However, as we see it, the main issue of measuring the net promoter score would rely on the WHAT NEXT question. Moreover, this is an issue that would impact not only the NPS method, but any of the survey measurements investigating customer loyalty, satisfaction, content and so on.

Imagine that you obtain a NPS of 10%. What does this mean to you, how will you know that these 10%, which are the net difference between the promoters and the detractors, or the promoters themselves, will actually recommend your product? How will you know that there won’t be more detractors, people that will actually make a negative buzz on your product? Just knowing that you theoretically have more promoters than detractors does not say much on the future purchase intentions or other customer actions.

A possible solution would be that of doubling the measurement of possible intentions (what the NPS does) with a measurement of actual actions. Thus, maybe a more relevant question would be, for example:

“Have you recommended our product to a colleague or friend at least once in the last 6 months?”.

References

Farris, PW, Bendle, NT, Pfeifer, PE & Reibstein, DJ 2006, Marketing Metrics: 50+Metrics Every Executive Should Master, Wharton School Publishing, Upper Saddle River, New Jersey.

GreatBrook 2010, Net Promoter Score® Discussion at Customer Loyalty Forum, available at: http://www.greatbrook.com/net_promoter_score_criticism.htm (accessed 25 June 2010).

Ritson, M 2006, Net Promoter Scores Australia – Independent Research, Melbourne.

Ritson, M 2009, Net Promoter Score Defined, available at: http://www.brandingstrategyinsider.com/2009/07/net-promoter-score-defined.html (accessed 25 June 2010).

The following is an exerpt from a conference paper presented at the 2009 Performance Measurement Association Conference in Dunedin, New Zealand. An edited version of the paper was published in the Measuring Business Excellence Journal in 2010 (vol. 14, No. 1), under the title: “Rediscovering performance management: Systems, learning and integration”

Traditionally, organisational performance management has been concerned with control, by setting and monitoring achievement of targets at strategic, operational and individual levels. Measurement has its benefits as it provides valuable information and measuring in itself stimulates higher performance. The Hawthorn effect and the Westinghouse effect or “Observer’s paradox” (Cukor-Avila, 2000) demonstrate the delicate nature of the measuring process and the impact that measurement itself has on the results.

At strategic level, senior management supported by management accountants and finance professionals focus their efforts in translating organisational objectives in quantifiable targets. These objectives and targets are delegated to functional areas for implementation. Compliance with set targets is checked on a regular basis. These strategic objectives are then aligned with operational objectives and individual performance objectives. However, empirical evidence shows that the focus on the measurement and control in the context of performance management has started to diminish in the 1990s, driven by the increase in popularity of the Balanced Scorecard (BSC), Knowledge Management and Systems Thinking. Even the BSC was first presented in 1992 as a measurement tool promoted by the management accounting school and having roots in the quality movement. However it evolved quickly to become a complete management system supporting strategy implementation as a core competency. As a performance management concept, the BSC enables not only measurement and control, but also communication and learning.

This shift is supported by proponents of the knowledge management/intellectual capital school of thought who argue that “the main problem with all measurement systems is that it is not possible to measure social phenomena with anything close to scientific accuracy” (Sveiby and Armstong, 2004). They invoke Heisenberg’s uncertainty principle to illustrate the inherent imprecision in measurement that exists even in “exact” sciences such as physics. The principle states that uncertainties, or imprecision, always turn up if one tries to measure the position and the momentum of a particle at the same time (Cassidy, 1993, 1998). Neils Bohr famously stated that “Accuracy and clarity of statement are mutually exclusive” (for further details see Pais, 1994).

Measurement for rewards leaves room for interpretation in the process of setting targets and measuring results and quite often leads to abuse. Using targets for control and linking the achievement of these targets to individual performance has the risk of staff members manipulating the system to their benefit and the expense of other teams and even the entire organisation.

The alternative proposed to measurement for control is measurement for learning, as illustrated by the table below:

Table: Measurement for control compared to measurement for learning, Brudan, 2010

A mechanistic view on performance management, focused on measures and targets in isolation, pay-for-performance, control and rhetoric leads frequently to unoptimized results. Opposed to this is a Systems Thinking based view on managing performance, that coupled with the emphasis on learning, highlight the need for an integrated approach to performance management. Effective performance management requires more than measuring and reporting in isolation, more than control and rewards. It requires an organic performance architecture, that values more performance management for learning is informed by a more humanistic performance philosophy.

Stay smart! Enjoy smartKPIs.com!

Aurel Brudan

Performance Architect,
www.smartKPIs.com

References

Brudan A.N. (2010) “Rediscovering performance management: systems, learning and integration”, Measuring Business Excellence, Vol. 14, No. 1, pp. 109-123.

Cassidy, D. (1993) “Uncertainty: The Life and Science of Werner Heisenberg”, W. H. Freeman, New York, pp. 226-246.

Cassidy, D. C. (1998) “Answer to the Question: When Did the Indeterminacy Principle Become the Uncertainty Principle?” American Journal of Physics, Nr. 66, pp. 278-279

Cukor-Avila, P. (2000) “Revisiting the Observer’s Paradox”, American Speech, Vol.75, Nr. 3 pp. 253-254.

Pais, A. (1994), “Niels Bohr’s Times: In Physics, Philosophy, and Polity”, Oxford University Press, Oxford, England, pp. 304-309.

Sveiby, K. E. and Armstrong C.(2004). “Learn to Measure to Learn!”, opening keynote address at the Intellectual Capital Congress Helsinki, 2 Sept 2004.

Registered members of the www.smartKPIs.com community can now select their Key Performance Indicators (KPIs) from over 4000 performance measures documented and published in the online repository. The team focused over the last few days on publishing examples from the the Utility and Government sectors.

The functional areas with the highest number of KPI examples are:

• Information Technology (439)
• Human Resources (339)
• Supply Chain, Procurement, Distribution (334)
• Sales & Customer Service (218)
• Knowledge and Innovation (178)
• Marketing & Communications (173)

The industries with the highest number of documented performance measures are:

• Transportation (283)
• Professional Services (216)
• Utilities (210)
• Resources (179)
• Hospitality & Tourism (119)
• Real Estate / Property (113)

Example of a documented performance measure: # Customer Average Interruption Duration Index (CAIDI)

Registered member experience on http://www.smartKPIs.com

• Learn: To learn more about performance management and Key Performance Management visit the Resources section.
• Explore: To explore the library of KPI examples by navigating the functional area and industry directory, visit the Browse KPIs section.
• Customize: To build your customized KPI library by saving favorite examples for later use, visit the My KPIs section.
• Contribute: To propose a new example of KPI, visit the Submit KPIs section.
• Collaborate: To collaborate with other users and to discuss KPI examples, add comments on each KPI description page, ask questions on smartKPIs Answers, or contribute to the smartKPIs Forum.

The Billable Hour Model

Firms make money (revenue) by billing their clients for the time spent on a given matter. According to William S. Boyd School of Law at the University of Nevada (2007), one common billable hour model used by legal services firms is:

Profit = Revenue – (Costs + Expenses)

Each employee at the firm has an hourly rate which increases each additional year of practice. Thus, the firm’s revenue is the sum of each employee’s hourly rate multiplied by the hours billed. These  firms also have costs or expenses. Salaries, benefits, office space and other overhead are examples. Firms will expect you to bill enough time to cover your salary and overhead and to generate revenue for the firm.

When firms takes in consideration factors like recruiting costs and summer associate program costs, associates do not show a profit until approximately the fourth year. In order to ensure the firm will make sufficient revenue, some firms have “average,” “target” or “minimum” billable hour policies. In the legal services sector, these yearly billables typically range between 1700 and 2000 in Nevada and up to 2400 in New York and other primary markets.

“Working” vs. Billing

In order to accurately bill your time, employers need to meticulously track and record the time you spend on assignments down to a fraction of an hour (i.e., tenths of an hour, or six-minute increments). To give a sense for the “working” vs. billing distinction, below is a typical schedule for firms requiring 1800 billable hours:

Source: adapted from Yale Law School Career Development Office, 2009

Considering the above scenario and if you want to gain an extra 70 hours “to be respectable”,  you could add approximately 1 ½ hours a week (approximately 20 minutes a day): 1 ½ x 47 weeks = 70. So come in at 8:00 am and work until 6:20 pm Mon – Fri. You have achieved 1832, however you have been “at work” 2420.

It is also worth noting that this exercise does not factor in your non-billable training, pro bono work, writing an article, interviewing an applicant, etc.

Billable hours and performance measurement

Professional Services firms strive to engage workers in high-productivity work that earned the company more money. Time-tracking allows firms to know exactly how much labour time is sold to clients, and which workers contribute relatively more to the company’s revenue numbers.

However maximizing billable hours often comes at a cost: limited time spent on innovation, knowledge management, training and general business development. Oftentimes it leads to stress and burnout. Sometimes to abuse and unethical behavior. While monitoring it is a must, a balanced approach to using it should be considered. Performance management is both about achieving and learning.

References

Backer R., 2001, Burying the billable hours, available at: http://www.accaglobal.com/pubs/members/publications/sector_booklets/public_practice_sector/123727.pdf, accessed on 15 July 2010.

Ladner S., 2009,  Billable Hours: Time Reckoning, Technology and Labour Markets, working paper, available at: http://www.law.yale.edu/documents/pdf/CDO_Public/cdo-billable_hour.pdf, accessed on 15 July 2010.

Yale Law School Career Development Office, 2009, The truth about billable hours, available at: http://www.law.yale.edu/documents/pdf/CDO_Public/cdo-billable_hour.pdf, accessed on 15 July 2010.

University of Nevada, William S. Boyd School of Law, 2007, Keeping an Eye on the Clock: The Truth About Billable Hours, available at: http://extranet.law.unlv.edu/pdf/BillableHoursHandout.pdf, accessed on 15 July 2010.