Ask funders why they invest in human services, and their answer is clear: They want to improve people’s lives. Yet it has long been possible to secure funding primarily by providing figures like the number of people served and the overhead-program cost ratio (the assumption being that as little as possible should be spent on overhead).

Anyone familiar with human services knows that the number of people served means nothing unless accompanied by information about the number of people who truly benefited from those services. Who cares how many low-achieving children were “served” if they nevertheless drop out of school? Who cares how many young, single mothers at risk of abusing their children down the road were “served” if child abuse was not prevented?

I care. Funders care. We care that children’s life prospects are poorer than they need to be because services failed to help them stay in school. We care that babies and toddlers are abused because services failed to help their mothers overcome challenges to healthy childrearing.

Low overhead tells us nothing

Low overhead cost is passé as an indicator of whether funds are well spent. It says nothing about whether people’s lives were improved. In fact, organizations need reasonable levels of overhead to manage program performance. Even Charity Navigator CEO Ken Berger has recognized that his website’s financially based rating system needs to add a dimension about social value, and he has embarked on an effort to make that change. Those four-star charities may not have four stars much longer.

So if we care, then why have nonprofits been able to secure funding for so many years based on numbers that have nothing to do with social value? The reason is simple: funders have struggled to find meaningful information about outcomes. And most nonprofits have played along, providing figures about people “served” and overhead cost.

It is no surprise, then, that those organizations that can provide meaningful performance data to support anecdotal stories of success have an incredible competitive advantage. In Canada a number of organizations, including Covenant House Vancouver, Homeward Trust Foundation, Jewish Vocational Service of Metropolitan Toronto, Union Gospel Mission Vancouver and YWCA of Hamilton, have begun searching for meaningful performance data.

While many are in the early stages of the process – determining what criteria to measure, how best to train staff on new tools and technologies and how to address a culture change – those organizations and others who follow suit will find themselves better equipped to succeed and grow.

What is performance management?

Managing performance means tracking – in real time – and reviewing data that allows programs to ensure that they are 1) reaching people who will benefit from their services; 2) providing services at the quality, frequency and duration necessary for positive outcomes; and 3) intentionally contributing to measurable and relatively enduring changes in people’s lives.

Some of the questions to consider when selecting a performance management system, aside from cost, include user-friendliness; features that support direct service staffers’ daily work, such as easy access to phone lists, case notes and client progress reports; ability to track demographics, services and outcomes; easy aggregation of real-time management reports; support for capturing unique client records and flexibility to make changes and generate custom reports.

Performance management is different from evaluation, which is typically done for research by someone external to an organization. Performance management is internal, and its purpose is exactly what the name suggests – management. Evaluation is rigorous, time-consuming and makes results available after extensive analysis. Performance management, because of its function, is less rigorous in a research sense but timely and extremely meaningful for its purpose.

The challenge of culture change

Reaching the point of being able to use data to improve programming, however, takes a bit of a culture change. It requires a new way of thinking. Hard work does not necessarily equal results. Neither do good intentions. All staff and programs must be held accountable for implementing programs as they are intended, and collectively, staff and managers must look at the data to determine whether outcomes are achieved. If outcomes are not achieved, managers must adjust their services.

Performance management is not about claiming perfection immediately (not even to funders). It is about continuous improvement, as illustrated by Our Piece of the Pie in Hartford, Connecticut, which found that one staff member was getting much better results than others. It turned out that that person was connecting with the young people better than other staff because she had found a way to have lunch with them in the school cafeteria. For that simple reason, the youths felt comfortable and worked more effectively with her. The organization immediately helped its other staff adopt the same approach.

Organizations that embrace continuous improvement are the ones that are positioned for success in achieving positive outcomes, and consequently raising money. While performance management is not easy, it is not as difficult as many people seem to think. For any organization that cares about improving the lives of its clients and securing the funding to make that happen, it is simply necessary.