# Presentation: 857970

##   Performance

*	**  **That*
*       **Pays*

**Notes:**
Earlier, Bill talked to us about the CFO Vision .  I think visions are important.  They let us know where we want to be as an organization and set a frame of reference against which we can judge current and proposed actions and gauge our progress toward achieving them.
Several years ago, PBS set its vision ....... (Next Slide)    

*The PBS Vision ... “to be recognized as the best public real estate organization in the world.”*

**Notes:**
Pretty powerful statement.  So what are we doing to get there?

Well, one of the things we’re doing is using performance measures and linking them to budgets and awards. 

## “Rewards for Employees

*	**Reap Rewards for Agency”*
*“**Streamlined Performance **	*
*	**Goals Get Results”*

*“**Federal Times”*
*Dated: March 6, 2000*

**Notes:**

We’ve gotten some positive press along the way.  Perhaps some of you saw this article in the March 6th Federal Times that highlights our “linking budget to performance” activities.

*Linking*
*	**Budget To*
*	**	**Performance*

**Notes:**
Our “Linking Budget To Performance” initiative is not just to reward, but to tell us where we’re doing well, who is doing well and where and how we might improve.  Our shift to a reliance on management by measures, rather than management by anecdote, is teaching us a lot about our business.  
The more we know, the more we can concentrate on those things that matter to our customers and to our bottom line.
Using measures is a very powerful tool but one that comes with cautions.  Let me tell you the PBS story with the help of a cartoon.  

## Slide 5

**Notes:**
2 pilots flying through the clouds when all of a sudden a mountain goat appears.  One pilot says to the other, “Say...

Using Measures is a lot like flying a plane

There are lots of dials and gauges in the cockpit that the pilots can focus their attention on.  But, the pilots who stay out of trouble are those who know which indicators to look at and when to look at them.

Let me tell you the PBS story with the help of this cartoon

Are you ready to take a plane ride?

## Conservation

**1975**

**Conservation**

**Energy**

**Notes:**
My first exposures to measures in PBS dates back to 1975.  Some of you may remember the energy crisis of the ‘70’s (well, most of you.)  PBS took on the challenge of reducing energy usage in our buildings.   
This was a highly focused effort and it was easy to keep our eye on this one indicator. 
And here’s how we did...

## Energy Usage Compared to Energy Goals

- Energy Usage Compared to Energy Goals

**Source of Data:  Energy Usage Analysis System**

**BTU/GSF**

**Notes:**
In 1973, we were using over 126,000 BTU’s per gross square foot.  By 1985, we had reduced this to 85,000.  We kept measuring and by 1999, we had gotten down to a little over 70,000.    

So, having experienced the sweet taste of success and operating under the philosophy of .. if one measure can make us look this good than lots of measures will make us look great, we approach 1995 with great amounts of enthusiasm.  

## 1995 - 38 Performance Measures

**1995 - 38 Performance Measures**

**Q Initiative**

**Succession Plans**

**Courts’ Design Efficiency**

**RWA’s & Service Calls**

**Reduced Crime Rates**

**Lease Payment vs. Apprised Rates**

**PBS Customer Service Plan**

**PBA Customer Service Plans**

**Improve IFMA Results**

**Operating Costs vs. Private Sector**

**Admin Contact Survey**

**Security Reviews**

**Transactional Report Cards**

**Vacancy Rates**

**Response Time to Emergency Situations**

**Reinvention Initiatives**

**Cost Sq.ft. Protected**

**Net Operating Income**

**Leases Under 10K**

**Reinvention Follow On**

**Cost of Operating Space**

**Reducing G&A**

**Property Disposal Survey**

**BPR’s, LABS**

**Form Analysis**

**Cost  to Occupy**

**Total Rate of Return**

**Bldg. Profitablity**

**Projected Delivered as Planned**

**Water Utilization**

**Notes:**
OK!  So we added a few more measures to our list.   (37 more to be exact) 

We became a victim of our own success.

We couldn’t see the forest for the trees. 
We had so many measures that we couldn’t see where we were going much less how we were doing.  
We couldn’t even remember 38 measures.  

## 1997 - 26 Performance Measures 

**Quality Culture Survey ****	**

**1997 - 26 Performance Measures **

**Notes:**
So being the masters of the obvious that we are, we retrenched and whacked the number to 26 in 1997.

The windshield cleared up a bit but still too many measures. 

We’re slow but we’re trainable.

## 1998 -13 Performance Measures

**Quality Culture Survey ****	**

**1998 -13 Performance Measures**

**Funds from Operations**

**Actual Income as % of Gross Potential Income**

**R&A and New Construction**

**New Construction - Budget**

**New Construction -Schedule**

**RWA Cycle Time**

**Cleaning Operating Cost**

**Maintenance Operating Cost**

**Tenant Customer Satisfaction**

**Leasing - Costs vs Private Sector**

**Overhead**

**Disposal**

**Protection**

**Notes:**
In 1998 we bumped our head and said lets just hone in on the ones that we really think are important.  

So we got the list down to a manageable 13.

But to those gamblers among us, 13 is unlucky , so we finally settled on 9.  [Next Slide]

## The Big “9” Measures

**The Big “9” Measures**

**Funds from Operations**

**Customer Satisfaction**

**Lease Costs**

**Maintenance Costs**

**Indirect Costs as a % of Revenue**

**Construction Costs within Budget**

**Non-Revenue Producing Space**

**Cleaning Costs**

**Construction Costs within  Schedule**

**Notes:**
The Big “nine” as they have come to be called.

And here’s where we got the idea to dangle an incentive in front of folks. 

## Linking Budget to Performance

**Linking Budget to Performance**
-  Measures were working - Commissioner decided that an incentive would boost performance gains
-  9 key measures were chosen to evaluate our regions performance
-  $69 Million was withheld from regional budget allocation

**Notes:**
We took a piece of our budget that would normally have been distributed to the regions and established an award pool that our regions would compete for.

## Linking Budget to Performance

**Linking Budget to Performance**
-  Developed regional targets and national goals for each measure based on previous performance
-  Tracked and reported progress toward meeting goals and targets
-  Distributed $69 Million based on regions performance against the targets

**Notes:**

. . . .and based on how each region did against their target, distributed the funding.  

. . . . And no, the employees only got a small percentage of that.  The remainder was plowed back into the inventory. 

## Linking Budget to Performance

- The Measures:
- 	FFO					35%
- 	Customer Satisfaction		15%
- 	Indirect Costs			10%
- 	Non Revenue Space		10%
- 	Cleaning Costs			10%
- 	Maintenance Costs		  5%
- 	Leasing Costs			  5%
- 	Construction
- 		Budget			  5%
- 		Schedule			  5%

**Notes:**
An important feature of the process was to weight the measures based on where we wanted folks to place their emphasis.

## What Gets Measured Gets Done

**Notes:**
And we did all this based on the philosophy that  “What gets measured gets done.  Let’s see how it worked for us.

## Customer Satisfaction Survey

**National**

- % Customers Satisfied

**Notes:**
We used to hear a lot of complaints about our buildings and our services.  However, our focus was more on building our budgets and spending all the money we were given   than on satisfying our tenants. 
When the budget cuts came in the mid nineties, and they hit us hard, we focused on making ends meet.  But, we still didn’t focus on our tenants.
Through a lot of hard work, PBS embarked on an effort to measure the satisfaction of our building tenants.  
Everyone in PBS didn’t welcome this with open arms.  It was new.  It would be a lot of work.  And what would it change?  We only had so much money to spend.  Of course we’d spend it wisely.  And where were these customers going to go anyway?
Well, PBS made a decision to release it’s monopoly on providing federal space and moved toward a role as provider of choice.  All of a sudden, having happy tenants was important to our business.  We plugged in the measures and added an incentive - look what happened!

## GSA Cleaning Expenses for Office Space ($/Sq.Ft.)

**Linking Budget  **

**Source of Data:  Infowizard & BOMA**

- %  of Space (rsf)

**Gov’t Cost **
**Industry Cost**

- $1.45
- $1.30

- $1.29
- $1.29

- $1.31
- $1.43

**Notes:**
Those same budget cuts got us looking at the spending side of things, in this case - cleaning costs.
Working with a contractor, we were able to compare our building operating costs against those paid by the private sector.  One thing we found early on, was that we were paying much more for cleaning our buildings than the private sector was paying.  That data set off a flurry of activity to figure out why.  And what we found caused us to move from prescriptive type cleaning contracts to performance based and save a bunch of money . 
 This chart depicts the % of our space that falls above, within and below what the private sector is paying (red/yellow/green} 
In ‘97, we were paying 15 cents/sq ft more than industry
In ‘98, we broke even and, In ‘99, we paid 8 cents less. 

## Cleaning Costs3rd Quarter 1998 to 2nd Quarter 2000

**Cost per Square Foot**

**Notes:**
Here’s a different look at this.   

## GSA Maintenance Expenses for Office Space

**GSA Maintenance Expenses for Office Space**

- GSA Wt. Avg: $1.30
- Industry Wt. Avg: $1.28
- 84.9 million SF

- GSA Wt. Avg: $1.35
- Industry Wt. Avg: $1.23
- 86.6 million SF

- GSA Wt. Avg: $1.43
- Industry Wt. Avg: $1.53
- 87.4 million SF

**Notes:**
We did the same thing with maintenance.  In ‘97 we were paying 12 cents more the the private sector.  By ‘99, we were paying 10 cents less.

## Maintenance Costs3rd Quarter 1998 to 2nd Quarter 2000 

**Cost per Square Foot**

**Notes:**
Now, if we can keep up this trend, we’ll probably be able to afford our GM&A payment

## Space in the PBS Inventory Producing No Revenue

****Value of Non-Revenue Producing space was $469.3 million in FY 1999 and $229.9 through March FY 200**

**Rentable Square Feet**

**Notes:**
PBS has a big space inventory.  Since we live and die on rental income, we started to measure the amount of that space that was not producing revenue - - space for which we don’t receive a rental payment.  Includes vacant space, space under alterations, space occupied by PBS employees, and other space not being billed.
Some neat stuff happened when we started to measure this stuff.   For one thing, we found that some of our space records were not accurate.   We found tenants that were in space that they weren’t being billed for.   And we found that the measurement of some space was inaccurate.  We also began to look at space that was assigned to PBS, and found that some of it was really joint use space that should be billed to tenants.   We became aggressive at marketing non-revenue producing space to customers needing additional space, and we also looked at reducing our own space needs.  This whole effort has had a significant impact on our revenue stream which, in turn, has had a major effect on our our net revenue.

## Average Fully Serviced Office Lease Cost/Sq.Ft. vs Industry RangeClass A Space1999 & 2nd Quarter FY00

**GSA**
**FY 00 - Outside CBD**

**GSA**
**FY00 - Inside CBD**

**GSA**
**FY99 - Inside CBD**

**GSA**
**FY99 - Outside CBD**

- $0.00

- SIOR Range

- Source of Data: STAR, SIOR, LMI

**Notes:**
Compares Class A inside and Out Side Central Business district  to private sector for FY99 and 2nd quarter 00

Although under our pricing scheme, we, GSA, doesn’t make any money off of this program, the fact that we are leasing at the mid-point or below of the market demonstrates some potential cost savings to the taxpayers and that helps me sleep well at night.

It’s not just us.

## Cultural Change

-   Although we are already a successful field office, the time has never been better to really “shine” and contribute to the ongoing effort of improving GSA’s image and “branding”.
-   Our way of approaching issues and service delivery has changed.  We always consider the resulting effect of our action on performance measures.  I have observed this in my employees, and it is really fun to see. Our language, in a sense, has changed to include measures as part of our “lingo”.
-   And finally, we are aware that if our customers are not satisfied, we are simply not doing our jobs.  In our office, performance measures have given us a tangible way of *measuring our success*.

**Cultural Change**
- Cecilia Serrano- Region 9

**Notes:**
Measures have not only told us where we have opportunities to improve, but have changed the culture in PBS from one centered on process to one focused on results. 
Now this is the point in the presentation where I’d go to the audience for a testimonial.  Not having a suitable plant available, I’ll read a couple of quotes from a field office manager on how measures have changed the culture of PBS.  

## Cultural Change 

- Sharon Jenkins - NCR

_***GSA changes:***_
- Re-negotiated cleaning contracts with NISH.  Industry private sector costs were used to open the negotiations.
- Industry costs were shared with NISH to improve understanding between the parties.
- Performance based contracts that concentrated on results._***NISH changes:***_
- Stopped depending upon GSA to do their quality assurance
- Become more business like.

## Cultural Change 

**GSA/NISH Partnership**

**National Industry for the Severely Handicapped (NISH):****	****- mandatory source required by Law (Javits-Wagner-O’day)****	****- outstanding program severely handicap employees to be productive ****	****	****  members of USA work force.****	****- clean approximately 60% (69 million sq.ft.) of our Office Buildings ****	****	****  and Courthouses ($97 million)****	****- High Customer Satisfaction scores for cleaning****	****  ****	****1.  NISH 82%****	****	****2.  Force Account 78%****	****	****3.  Other contracts 78%**

**Cleaning costs for NISH were significantly higher then private sector when ****	****	****  we began measuring.****	****   - Now costs are lower ($1.40 to $1.46)****	****   - Maintaining customer satisfaction scores**

## Lessons Learned 

-   Only pick the important few, choose wisely
-   Expect the unexpected
-   Beware the law of unintended consequence
-   Use the measured in developing the measures

**Notes:**
And we’ve learned a few things along the way
Only pick the important few measures:  Don’t find yourself in the same place as the pilots and mountain goat.
Expect the unexpected:  We thought for years that our old buildings were more expensive to operate then the new ones.  Our measures showed just the opposite.
Beware the Law of Unintended Consequences:  We use measures to foster certain behaviors. Sometimes you get  a behavior you never dreamed of - both good and bad.
Use the measured in developing the measures:  We’ve had the greatest success when we partnered with our regions in developing measures.  

## Lessons Learned 

-   Tell a complete story - not just the glitzy stuff
-   Continually review what your doing
-   Integrate your efforts

**Notes:**
Tell the story - people love stories and even better, they remember them.  But the measures aren’t the story.  What’s behind the measures causing the performance is.  Dig into it !!!
Don’t just focus on the glitz, you know, the ones where you’re doing well.  Chances are that the areas you’re not performing well in may offer the most opportunity.   Too much good stuff can cause complacency - and that’s not a good thing in the current environment.
Continually review what you’re doing - Measures evolve, they’re not cast in stone.  We’ve added a data accuracy measure this year.    
Integrate Your Efforts - 
There’s more to this measurement stuff than just developing measures and tracking them.  I’m reminded of a newspaper article I was reading the other day.  A do-it-yourselfer rented a steamer to remove her wallpaper.  She took the steamer home, put it on the floor,  plugged it in and went to bed.  She got up the next morning and couldn’t understand why the wallpaper was still hanging on the walls.  
Do more than just plug in the measures.  Integrate this stuff into what you do everyday. 

## Good Practices

***Good Practices***

**Mediocre Practices**

**Practices That Don’t Completely Reek**

**Great Practices**

- Superior Practices

- Pretty Good Practices

**Notes:**
OK.  So we developed some measures.  What next?   How do we keep improving our performance?

One way is to share Good Practices throughout the organization.  We grappled with a few different  names for  our information sharing team and settled on Good Practices.  Best Practices seemed a bit extreme and might intimidate some individuals from submitting ideas if they’re not “the best.”  Conversely, we didn’t think the right message would be sent by calling this “Practices that don’t completely reek.”

## Good Practices

- A good practice is any practice, experience, or lesson learned that is valuable or effective in improving performance.

**Notes:**
The definition of a “good practice” is “any practice, experience, or lesson learned 
that is valuable or effective in improving performance.”

## “Good practices are the flip side of performance measures” 

*- Bob Peck, 10/6/99*
- “If we only knew what we know”
*-  Bob Peck, later that same day*

**Notes:**
Measures tell us how we’ve performed, good practices help us to perform better.

There’s a lot of knowledge around. The trick is to tap into it.

## Market use of GPs & assist users

- Identify & collect
- GP’s via forums,
- meetings, regional
- visits, etc.

- Employees
- submit postcards
- and e-mails

**Market use of GPs & assist users**

- Targeted E-mail

- GP Forums/conferences

**Measures suggest good practices**

- Good Practices Team

**Notes:**
In PBS, Practices are identified and collected by several means.  Postcards and e-mails can be submitted by employees to the Good Practices Team.  We are also using various forums and meetings to identify and develop practices.  We disseminate good practices by targeted E-mail, our web site, newsletters and forums.  

## Strategy

- Identify &
- collect
- good practices

- Market good
- practices

- Track
- effectiveness
- of practices

- Effectively
- manage
- good practices

**Notes:**
This is the strategy developed and currently being implemented by our Good Practices Team.