Mission and Metrics

October 24, 2008, 11:45 a.m.

Of Mission and Metrics:
Iowa Universities Presidents' "Performance Goals"
The presidents of Iowa's Board of Regents and its three universities have announced the "performance goals" for the universities' presidents -- goals that will guide the Regents in evaluating the presidents' annual bonuses for superior performance.

Since I've been advocating this for some years, it's rewarding to see the process started.

But, alas, if I were teaching management instead of law, and these proffered "performance goals" were presented to me by my students as part of a class writing exercise, I fear they would be graded somewhere between a "D" and an "F."

That's OK in one sense; I guess, as the Frenchman explained when asked why he kissed women on the hand, "You have to start somewhere." The effort has begun and I'm grateful for that.

Before explaining the rationale for the low grades, let me candidly acknowledge my limitations. I am not now teaching management, nor have I ever done so. I have a law degree, not an MBA. Most members of the Board of Regents, and many of the universities' administrators, have had much more education, training and day-to-day experience with management and administration than I have. So I cannot, and would not if I could, suggest that my reactions must be accepted because they come from someone with more authority than the authors of these documents.

My reactions must be evaluated on their merits. Either they make sense to you or they don't.

That's not to say I'm totally devoid of experience. As U.S. Maritime Administrator I had responsibility for roughly 100 programs and projects with a couple-billion-dollar impact, thousands of employees, reserve fleet ships, a four-year academic institution (U.S. Merchant Marine Academy), ship building and operating subsidy programs, sea lift to Viet Nam, work with NATO, and so forth. During that time I created the "MARAD Management Information Reporting System" (a description of which was written up and published by the Government Printing Office for the guidance of other government agencies). As a local school board member I studied and led the adoption of the John Carver board-CEO governance model. And occasionally some of the business literature has caught my eye over the years. But all together it's more of a hobby interest these days than the kind of expertise that a College of Business professor, or business executive on the Board of Regents, would bring to bear.

See, e.g., U.S. Department of Commerce Maritime Administration, "The MARAD Management Information Reporting System" (1965); Nicholas Johnson, "Board Governance: Theory and Practice" (2000-2001); John Carver, "Remaking Governance: The creator of 'Policy Governance' challenges school boards to change," American School Board Journal, March 2000, p. 26 (a very useful, summary presentation of the Carver basics for all institutions); Nicholas Johnson, "An Open Letter to Regents on 'Governance,'" April 17, 2007.

So, for what it's worth, from my perspective there are two basic steps to the creation of "performance goals," neither of which would appear to have been applied in this case.

The first is the extraordinarily difficult task of figuring out what the institution -- corporation or university -- is really about. John Carver talks in terms of "ends policies" (developed by boards and executed by CEOs, that, not incidentally, double as the CEO's "job description" and basis for raises and bonuses -- or firing). What's sometimes called a firm's "core competency" is related, as are "mission" statements, or more generally "purposes" or "goals." I used to put it to the school board and superintendent in the form of the question, "How would we know if we'd ever been successful?"

The second is "metrics" -- the creation of a standard capable of precise measurement of the CEO/institution's achievement of its goals/mission/ends policies.

Thinking through the most appropriate expression of mission for any institution, not to mention the metrics for measuring its accomplishment, is very, very tough work.

An example I sometimes use is a mythical non-profit organization (or school board) devoted to reducing teen pregnancy. New board members insist on some measure of the success of their well-intentioned, but not very precisely focused, staff. Two years later the annual report proudly reveals improvements in the number of presentations in schools, condoms and pamphlets distributed, column-inches of newspaper coverage, and drop-in teens who've come by the office. It's well received by the board members -- until one of them notes that the purpose of the organization is not presentations, publications, and publicity; it's the reduction in teen pregnancy. "How can that be measured?" she asks.

Of course, there's all kinds of jargon, and software, that invades this process and may or may not be of help. See, e.g., Wayne W. Eckerson, "See It Coming," February 1, 2006 (Eckerson is the author of Performance Dashboards: Measuring, Monitoring, and Managing Your Business (John Wiley & Sons, 2005)); the article is reproduced as Fredericksburg Speakers/The Center for Success, "CEO Goals Implementation Process," undated ("If you don't have a coherent business strategy or haven't translated that strategy into a series of interrelated objectives and metrics, a performance dashboard is going to drive the organization faster, but in the wrong direction.").

Here's an excerpt from a corporate board's agenda item reviewing its CEO's "performance goals."

The current CEO goals were adopted on February 23, 2005 and are attached as Table A. While they cover a lot of topics unfortunately few of the goals are measurable and there are few high level summary goals or outside measures . . ..

A previous Chugach mission statement said:

"Maximize the value customers receive by safely providing competitively priced, reliable energy and services through innovation, leadership and prudent management."

It has been said many times in many forums,

"If it isn't measured, it doesn't get done." [emphasis in original]

In order to monitor our progress in achieving these objectives the BOD, members, and staff need a reporting mechanism that is directly tied to the critical items in the mission statement.

Ray Kreig, "Chugach CEO Goals," prepared as agenda item for August 10, 2005, Chugach Electric Board of Directors Meeting, August 5, 2005.

(As a Procter & Gamble executive and former school board colleague of mine used to express this truism, "You get what you measure.")

Of course, setting CEO performance goals, however essential, is not enough. The CEO must have the capability to, as Larry the Cable Guy puts it, "Get 'er done," as this oft-quoted Fortune article notes:

Of course you have to deliver results, but you're unlikely to do so if you haven't developed performance forecasts for the next eight quarters, not just the usual four. You should have ideas now for changes you may have to make six to eight quarters out. . . .

Every company, even the most successful, has bad news, usually lots of it. If you're not hearing it, are you letting the trouble build? . . .

Effective CEOs use processes to drive decisions, not delay them. They start by focusing on initiatives that are clear, specific, and few, and they don't launch a new one until those in progress are embedded in the company's DNA. . . .

Yes, strategy matters. A good, clear strategy is necessary for success -- but not sufficient for survival. So look again at all those derailed CEOs . . . smart people who worried deeply about a lot of things. They just weren't worrying enough about the right things: execution, decisiveness, follow-through, delivering on commitments.

Ram Charan and Geoffrey Colvin, "Why CEOs Fail," Fortune Magazine, June 29, 1999, p. 69.

Against this background, let's use as an example UI President Sally Mason's "performance goals." Erin Jordan, "University Presidents' Bonuses Now Linked to Goals," Des Moines Register, October 23, 2008; in this morning's Press-Citizen as Erin Jordan, "Mason's Pay Tied to Performance; President Must Meet Goals to Net $80K," Iowa City Press-Citizen, October 24, 2008.

One goal involves new personnel: two vice presidents to replace those she fired, two others (including a new VP for "strategic communications"), and a new head of Equal Opportunity and Diversity (whose term is expiring), and to complete three of the searches by June 30, 2009.

A second involves flood recovery: (1) she will "continue restoration [and] reopening of facilities; [at a] minimum threshold . . . restoring reliabile utility service [from a power plant that sustained $20 million in damage]; and (2) "develop a comprehensive flood mitigation plan" especially "for seven campus buildings."

Third, sexual assaults: (1) "lead UI in developing a new sexual assault policy and investigation process," (2) "continue sexual harassment training for UI employees," with a "minimum threshold [of] (a) putting the sexual assault policy in place and (b) training a portion of faculty, staff and teaching assistants in the next year."

Alcohol, the fourth subject, led to a goal to "form a safety task force focused on reducing alcohol abuse."

Finally, fundraising: "to increase fundraising by the UI Foundation by 5 percent."

There may be more, but that's the full list from this morning's Press-Citizen.

So let's go through them one at a time.

For starters, all of them sound more like a "to-do" list than "goals," but we'll return to that in a minute.

The first, personnel, item at least has a specific deadline: June 30. Though it's not unfair to note that there's no reference to the actual hiring of these replacements, let alone their arrival at Iowa, only the search for them. And eight months seems a generous and easily attainable "goal" for any search. Isn't this a rather routine function, rather than a "goal," a change, or improvement of some sort in the institution's execution of its mission?

The same can be said for the second, the flood recovery effort that is to "continue." There's no offered metric for measuring what is "recovery," how it is to be measured, how much is the targeted goal for the remainder of the academic year, and so forth. As for the "plan," that's not difficult to come up with; the question is whether it's any good. Treasury Secretary Paulson came up with a two-page "plan" for reversing the economic downturn; it ended up being so far off the mark that he and the Congress agreed it needed to be radically changed. What kind of expert/peer review are we going to have of this plan? Is it really something that will reflect the UI president's personal input, or will it, like the Stolar Report, simply be farmed out to a "consultant" -- in which case why should she be paid all or part of an additional $80,000 for doing that?

The new sexual assault policy and investigation process is something the Regents have already asked of the universities and is underway. Some changes have already been put in place. Is coming up with a response to a Regents' command, one that involves and will represent the work product of staff from all three universities, really worthy of being called a "goal" which, if met, entitles a university president to a "bonus"? Moreover, to use "to continue sexual harassment training for UI employees" with a "minimum threshold [of] . . . training a portion of faculty" as the justification for a bonus is to reward the mere "continuation" of a program apparently already underway, without defining its content and change, the metrics for measuring its impact on the actual number and severity of incidents of "sexual harrassment" (presumably its purpose), what level of change would warrant reward, or how large a "portion" of faculty having been trained will meet this "goal."

Alcohol abuse is a serious problem on the UI campus. It is not unrelated to the sexual assault problem mentioned above, as President Mason has herself noted. Yesterday the new Provost, Wallace Loh, firmly spoke out in opposition to alcohol abuse -- certainly better than not speaking to the subject, or coming out in favor of alcohol abuse -- but without, however, proposing anything specific be done about it. But is the creation of "a safety task force focused on reducing alcohol abuse" worthy of financial reward? For starters, we have such a task force now, as I understand it, so any extra cash for this one is kind of a slam dunk. Second, we've kind of always had one for the last 20 years or more. Third, like my "reducing teen pregnancy" example, above, they've never really accomplished much in terms of either measuring or reducing alcohol abuse and its consequences -- aside from spending the grants for the "Stepping Up Project" over the years.

The State of Iowa provides only a small proportion of the University of Iowa's budget. That's sad for a "public" state university initially established to provide essentially free higher education for Iowans. But it's the reality, with the result that one of the major tasks to befall university presidents, including ours, is to raise money. But note how this goal is worded: "to increase fundraising by the UI Foundation." Why should the president -- as distinguished from those who actually did the work that brought about the increased fund raising -- be the one rewarded financially for this accomplishment? It goes on to specify "5 percent." That's commendable and much better than simply "to increase." If a given university president is especially adept at fund raising, and specific gifts and grants can be traced to his or her efforts, some recognition of that might be appropriate. Even in that case, however, should not a "bonus" represent performance above and beyond the expected normal? How much have grants and gifts normally increased from year to year? Would another 5 percent increase be a remarkable accomplishment, or the average expected increase, or even below average?

So even if these "goals" were the most high priority, central, appropriate aspirations for our University, I'm not convinced that they could not be improved with some rethinking and redrafting.

But put those concerns aside. I don't mean to be picky.

The far more fundamental disappointment is what they reflect about the Regents' and presidents' thinking about the purposes, missions, ends policies, and goals of our Regents institutions.

Do these goals reflect why we're here, or the most important things we're trying to accomplish with State higher education for our students and the citizens of Iowa: That we successfully hire replacements for those we peremptorily fire? That we get the water out of flooded buildings, negligently built on flood plains? That we raise more money?

Indeed, in order to raise that money, let alone spend it wisely, don't we first need to know what we're trying to accomplish with the money, and how those expenditures will contribute to the accomplishment of our mission?

What is our mission? (I have some ideas, but I'm not going to extend this by starting that discussion now.) How would we know if we'd ever been successful? What are the metrics by which we might find the answer to that question?

Once we figure that one out, aren't those the bases for coming up with the goals that truly matter, the goals that bring us closer to what we're really all about, the goals when met that might really be a solid reason for providing a bonus and "job well done" to an educational administrator?

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