What are Government KPIs?
What is a key performance indicator? A government key performance indicator (KPI) is a quantifiable measure that the public sector uses to evaluate its performance.
Government KPIs function like KPIs used by for-profit businesses — they demonstrate the organization’s overall performance and its accountability to its stakeholders. In more layman terms, public sector KPIs serve two important purposes:
- They report important information to citizens.
- They provide information that directly describes the government’s activities.
Governments are almost solely responsible for the the social welfare and growth of a community. The constituents cannot hold their government responsible without having access to periodic reporting on key performance metrics. Therefore, without understanding and evaluating KPIs, governments cannot fulfill their commitment to responsible spending and transparency, and the public cannot verify if the required services are being adequately performed.
How to Specify the Most Impactful Public Sector KPIs
We discussed the importance of having meaningful government KPIs, but now we must discuss the intricacies of choosing the right KPI from the many available options. This task might seem daunting at first, but insightsoftware’s how-to guide on creating useful KPI dashboards can help expedite this process. This tool will help you understand what performance measures to track, and which dashboards best suit your needs.
In most organizational structures, KPIs have two notable attributes:
- They determine what is important to the success of the organization.
- They indicate the expected level of performance by attaching a target to each metric.
The following steps are the most widely accepted rules for specifying, monitoring, and interpreting relevant government KPIs:
- Identify metrics: Aim for a balanced set of KPIs. Your KPIs should be a mix of:
- Leading and lagging metrics: Ensure that you have both predictive (leading) and corrective (lagging) measures to forecast and report performance, respectively.
- Efficient and effective metrics: Ensure that some of your measures highlight the use of available resources (efficient) and some demonstrate how the chosen resources accomplished the desired results (effective).
- Cross-sectional metrics: Ensure that you have KPIs for every department within the organization.
Remember that your key performance measures for government organizations should be SMART: specific, measurable, attainable, realistic, and timely.
- Assign weights to KPIs: Not all KPIs are valued the same in the operation of an organization; some have a higher impact on its success. Even though it’s important to have cross-sectional measures that encompass the entirety of the organization’s activities, it is also important to define the relative importance of the metrics to each other. For the public sector, financial and service KPIs should have a higher weight than other metrics.
- Verify the metrics against the mission: Organizations should regularly review the validity of their KPIs and ensure they’re still inline with their operational strategies. Examining these measures within various teams builds accountability in every department and allows everyone to share in the success of the organization. This feedback system allows the government to verify if the chosen KPIs are balanced and weighed. The frequency of review is usually determined by the available resources and budget.
- Set up target and stretch values for each KPI: All KPIs must have a target and a stretch value assigned. If the government meets its KPI targets, it is successful. If it reaches its stretch values, it is worthy of praise. Governments should use widely accepted and evidence-based benchmarks for their target and stretch values.
- Identify a baseline for each metric: All KPIs need a baseline to be compared to. The baseline is measured when the KPIs are first identified.
- Analyze metrics: In order to understand the current state of an organization, decision makers must evaluate the KPIs and their trend through time. If explored, KPIs tell an important story about where the organization has been and where it will go.
- Act on the KPIs: To fully benefit from setting, reviewing, and analyzing KPIs, the organization must learn to trust the KPIs when it comes to decision making. Organizations must treat these stories (even if unfavourable) as opportunities for maximization and optimization. If done properly, KPI tracking will allow the organization to reshape its story into one with a happy ending.
One of the most important and often overlooked factors affecting KPIs is the quality of data. Remember, garbage in, garbage out. For relevant and impactful KPIs, you must first have up-to-date and high quality data. Without “good” data to tap into, your organization won’t be able to make good decisions. If you are looking to consolidate data from multiple sources, or if you are struggling to align multiple departments, Business Intelligence Software is the perfect solution for your organization. With BI Software, your dashboard is accessible from anywhere and only one version of the truth exists amongst your organization.
Given the vast scope of public sector activities, there are many government KPI examples to choose from. This article has picked the 11 of the strongest for the public sector to consider. These KPIs are grouped into five cross-sectional groups of finance, operations, services, citizens, and human resources.
Financial KPIs for the Government
Much like a for-profit business, governments must also monitor financial KPIs to step closer to success. However, unlike for-profit businesses, the financial health of the government affects every citizen. The public’s expectation for its government is to spend its tax revenue wisely, and the government has a responsibility to meet this expectation.
- Budgeting ratio: This government KPI is the ratio of the public sector operating cost to its revenue. To better understand this metric, let’s break it down:
- Government revenue: Public sector revenue is most commonly generated by taxes or by grants awarded to it from other branches of the government. For example, a yearly fund transferred to a municipal sector by the federal government. In some countries, sub-central governments have control over the taxes that generate their revenue. This term is called tax autonomy. Governments that have tax autonomy are able to introduce or abolish a tax or set tax rates. In contrast, some countries share taxes between central and sub-central governments. In this case, the sub-central governments do not have tax autonomy, but they may be able to negotiate a tax sharing arrangement with the central government.
- Government operating cost: Much like for-profit or non-profit organizations, public sector operating cost is the amount spent on administration, personnel, and logistics.
To ensure utmost transparency and accountability to its constituents, governments must track their budgeting ratio. A rising ratio points to a potential expense mismanagement and must be immediately addressed. In turn, a falling ratio might suggest better control on expenditure, but a ratio falling too sharply could also be an indicator of a government not spending enough to improve the life of its citizens. Budgeting ratio is the most important financial key performance measures for government organizations. Without knowing the amount coming in and leaving the organization, it’s impossible to succeed. A closely related KPI to budgeting ratio is:
- Revenue per capita: this government KPI is the quotient of government revenue divided by the size of its population. A rising revenue per capita is not common, but it’s desirable as it means that the government can expand its scope of services. Alternatively, a falling revenue per capita is alarming and must be identified quickly as it hinders the government’s ability to deliver on its promises.
- Near-term solvency: This public sector KPI displays the ability of the government in meeting its near-term obligations. A low near-term solvency indicates that the public sector is struggling with its debt and must re-evaluate its priorities. Near-term solvency targets of the public sector are not nearly as high as the private sector, but nevertheless, a risk analysis should be performed, and a debt management strategy must be identified. A closely related KPI to near-term solvency is:
- Debt per capita: This public sector KPI is the quotient of total government debt divided by its population. Evaluating this measure will give the government insight to the magnitude of its debt relative to the number of its residents.
- Personnel and admin cost ratio: This government KPI is the ratio of personnel and admin cost to the operating cost of the public entity. Labor costs make up a large portion of the government operating cost and any small swing affects the performance of the sector. If the labor cost and operating cost do not raise or fall proportionally, the government’s ability to deliver services or maintain a budget will diminish. Therefore, personnel and admin cost ratio is one of the most notable KPIs for the public sector.
- Bond rating: This public sector KPI is a measure of financial stability. It signifies the credit quality of the government entity. If the bond rating is high, the interest rates are low. Private rating services assign a bond rating to a government by evaluating its capacity to pay a bond’s principal and interest.
To learn more about financial government KPIs and to download a dashboard template, continue reading here.
Operational KPIs for the Public Sector
In addition to financial key performance indicators for public sector, operational metrics play a major role in highlighting the government’s responsibility to its constituents. The following are the most important operational public sector KPIs:
- Regulatory practices quality: This government KPI is a measure for improving new and existing public sector practices. The purpose of this measure is to enhance transparency and communication between public entities and citizens. This KPI could be described as a quality assurance program on the services delivered by the government. The following tools are the most common methods to justify a government’s current processes and evaluate its effectiveness in the long run:
- Regulatory impact analysis
- Assessment of regulatory alternatives
- Consultation with affected parties
- Plain language drafting requirements
- Systematic evaluation of regulation program
- Total number of audit findings: This public sector KPI is the count of reported issues in audits. All public entities must be subjected to independent reviews on their operation. The purpose of these audits is to not only scrutinize the government on its shortcomings but to bring attention to opportunities for improvement. Total number of audit findings holds the public sector accountable for the promises that were made to its citizens.
Service KPIs for the Government
The primary objective of public entities is to serve their citizens and ensure their prosperity. These services encompass many aspects of day-to-day life such as transportation, environment, and housing. The following are some of the most important government KPI examples with regard to public services:
- Housing KPIs: There are many government KPIs available for assessing housing projects. The following measures are the most popular:
- Housing opportunity index: This KPI is a measure of housing affordability. Housing opportunity index is often expressed as a percentage. It is calculated by dividing the number of homes that were affordable to the families earning median income by the total number of homes.
- Number of chronically homeless individuals: This KPI is a measure of success in implementation of programs aimed to reduce homelessness. A low number of chronically homeless individuals demonstrates that the region enjoys a healthier lifestyle.
- Environmental KPIs: The following public sector KPIs have been chosen to highlight the government’s ability to fulfill its promises with regard to preserving the environment and reducing the carbon footprint of its citizens.
- Passenger trips on buses per gallon of fuel: This KPI is a measure of municipal bus service value. It provides insight about the quality of transportation services. Analyzing this metric allows the government to allocate resources where it’s needed the most.
- Landfill diversion rate: This KPI is a measure of effective waste recycling. Landfill diversion is the practice of redirecting municipal waste from landfills to recycling or biofuel facilities. Landfill diversion rate is calculated by dividing the portion of waste that has successfully been rerouted, by the total amount of collected waste. An increase in this metric demonstrates the government’s success in preserving the environment and creating a more sustainable waste management system.
- Infrastructure KPIs: One of the major services that government entities provide is upgrading and maintaining infrastructure. Without adequate roads and bridges, safety of citizens is constantly in jeopardy.
- Total miles of municipal streets paved: This KPI is a measure of the government’s ability to upgrade the current infrastructure to meet the needs of a growing population.
- Percentage of bridges with a sufficient rating: This KPI is a measure the of government’s ability to maintain the current infrastructure. Governments must regularly assess bridges to ensure they meet sufficiency standards developed by the Federal Highway Administration (FHA). This metric is calculated by dividing the number of bridges that meet the sufficiency standards by the total number of bridges. A high percentage of bridges with a sufficient rating leads to fewer road incidents and increases the quality of life for residents.
- Capital projects timely and on-budget completion: This KPI is a measure of the government’s ability to successfully plan and execute projects. It should be tracked individually and for all public sector developments. Completing projects on time and on-budget directly relates to the operating cost. Therefore, to guarantee an overall desirable budget ratio, it is crucial to scrutinize every project’s timeline and budget adherence.
- E-government Infrastructure KPIs: In the past few years, it has become increasingly important for governments to provide reliable online services to their citizens. Online platforms offer an easy way to communicate important information and complete transactions. The following are the top e-government infrastructure metrics that must be closely monitored and continuously improved:
- Capacity: This KPI measures the required bandwidth for providing uninterrupted online services.
- Accessibility: This KPI measures the ability of government in transferring its important services online.
- Interconnectivity and interoperability: This KPI measures the ease of connection between multiple branches of the government.
- Security: This KPI measures the quality of protection that the government has in place to secure data. Given the sensitivity of information that citizens enter on government databases, it is of utmost importance to prevent it from falling into the wrong hands.
Citizen KPIs for Public Sector
The relationship between citizens and governments is similar to shareholders and private entities. The citizens must be included in the decision making process and given the opportunity to voice their concerns.
- Public participation: This government KPI measures the amount of participation from the citizens in services, programs, and general meetings. Public participation KPI provides valuable information about budget and resource allocation. By monitoring the rate of increase and decrease of this metric, government entities can gain insight in what services and programs are required, and what issues are most dire to solve.
- Voter turnout: This public sector KPI is very closely related to public participation as it measures the involvement of citizens in the direction that the government is taking. A high voter turnout points to a more engaged public and should be taken as a sign that the government is performing its duties well.
- Resident satisfaction: This government KPI measures the level of public happiness with public sector services and performance. Resident satisfaction is often measured by self-reported surveys and could be implemented as part of any program and services offered by the government. This metric could also be measured by dividing the number of successfully resolved complaints by the total number of complaints received.
Human Resources KPIs for the Government
It shouldn’t come as a surprise that much like the private sector, the public sector’s success depends on the quality of its workforce. Without a robust human resources management system, the public sector won’t be able to run successful programs or fulfill its duties.
- Diversity of workforce: This public sector KPI offers a transparent look into the government’s workforce demographic and its hiring practices. Public entities must strive to promote an accepting environment and ensure representation of all members of the public in their employment. Diversity practices should be intersectional and consider factors such as: age, gender identity, race, religion, sexual orientation, physical and mental ability, neurodiversity, socioeconomics, education, and many more. A high diversity in a government is a leading indicator for high public engagement, resident satisfaction, and service delivery success.
- Employee retention rate: This government KPI is a measure of the government’s ability to retain its employees. Much like any for-profit or non-profit organization, a high retention rate is indicative of a healthy and thriving workplace, whereas a low retention rate points to a need for management overhaul. This metric is calculated by dividing the number of employees who have left the workforce by the total number of staff.
Here at insightsoftware, we acknowledge that getting started on a KPI dashboard is overwhelming. Reading this article and understanding the importance of evaluating performance measures is the first step. The real work starts when your organization starts on metric identification and specification.
Creating and maintaining KPIs is time consuming and requires a dedicated team. To aid you in this task, we have created a KPI dashboard that will help you visualize your data and customize your reporting format. Keep in mind that there is no advantage in burying your organization in too many KPIs. The key to successful implementation of performance monitoring is to start small and ensure that every chosen metric is thoroughly thought about and analyzed.