Improving Performance Management in Economic Development Programs

The Department of Commerce is tasked with enhancing and promoting the state’s economic vitality. State law requires Commerce to cooperate with the state Legislature and governor in developing and enacting strategic plans to address community and economic development. Strategic planning helps organizations determine what they plan to accomplish and how to measure their progress. Commerce’s Office of Economic Development and Competitiveness (OEDC) manages a number of economic development programs, which are overseen by its six units.

In light of OEDC’s recent leadership changes and planning activities, this audit focused on identifying leading practices around strategic planning and performance management to support its ongoing efforts. The audit also researched other states’ economic development plans to provide examples of how they have implemented these practices.

Read a two-page summary of the report.

Report Number 1038047 Report Credits

Key results

The audit found that OEDC does not currently have an economic development strategic plan. Agency officials acknowledged the need for a plan and that performance management is inconsistent across their economic development programs. At the time of publication, they were hiring a new Assistant Director; that person will be tasked with developing and implementing this plan that was paused in part due to the COVID-19 pandemic. OEDC also intends to develop an internal work plan for its division. This includes developing strategies its programs will use to meet the goals and objectives of the strategic plan, and the performance measures necessary to gauge progress. 

The audit also noted that contract management forms a large part of OEDC’s responsibilities because most of its programs are administered through grant agreements and vendor contracts. The audit reviewed six contracts, and noted one in particular applied leading practices effectively in grant contract management.

Background

To accomplish its work to promote economic development, the Legislature allocated around $260 million in the 2023-25 biennium to Commerce’s OEDC. The OEDC is the primary division within Commerce tasked with overseeing economic development initiatives and programs.

As of May 2025, the OEDC oversees six units, which in turn manage 16 economic development programs with various areas of focus. Focus areas include business development, export assistance, and marketing and entrepreneur training.

In 2025, the agency began addressing three types of plans:

  • Department of Commerce Agencywide Strategic Plan. This overarching plan is to be completed by early 2026, and will encompass the goals and work of all agency divisions.
  • OEDC Statewide Economic Development Strategic Plan. Stakeholder discussions around this five-year economic development strategy are due to start after the agency hires a new OEDC Assistant Director.
  • OEDC Internal Work Plan. Finally, OEDC will develop individual strategies for its programs, including goals, objectives and the performance measures necessary to gauge progress.

New leaders begin work

When new leadership at OEDC is in place, the division will work on the statewide economic development strategic plan. The agency is currently hiring a new Assistant Director; that person will be tasked with developing and implementing this plan, with a work plan to follow.

To gain an understanding of their current performance management efforts, we selected one program and vendor contract from each of the six units in OEDC to review. While all the reviewed programs set goals, only half set performance measures and targets to assess if they met their goals. Programs focused tracking efforts on contract deliverables, while only half tracked program outcomes. OEDC already includes some elements of leading practices that can support its efforts to create a strategic plan and performance management framework.

Leading practices in 4 areas

The audit reviewed leading practices that apply planning and monitoring activities to contract management because that is especially relevant to OEDC. Identified practices fall into four areas:

  1. Establish an economic development strategic plan, including goals and objectives
  2. Monitor progress toward plan goals and objectives, and communicate results to partners and others
  3. Ensure programs align with the strategic plan goals and objectives, and monitor their progress
  4. Include performance provisions in the contracts and grant agreements, and monitor contractors

By applying these practices, OEDC can be more certain of assembling a robust strategic plan that will help guide its programs to success and achieve their intended outcomes.

Essential framework

Experts advise beginning the strategic planning process by developing vision and mission statements, and then goals and objectives. Together, they guide how the organization should be designed to achieve its purposes.

  • Vision: A brief statement describing an organization when it achieves its desired goals and outcomes
  • Mission: A statement describing the organization’s reason for existence in broad terms that captures its unique purpose and function
  • Goals: Broad, high-level and issue-oriented statements of outcomes that the organization will strive to achieve
  • Objectives: Brief summaries that break down goals into smaller, more specific elements. Objectives should be specific, measurable, achievable, relevant and time-bound (known as the SMART format).

The illustration here shows these four elements plus two more: the development of performance measures and targets, and of short- and long-term outcomes to identify successes.

illustration of strategic planning framework pyramid

Other states’ practices

This audit reviewed the economic development plans of several other states. For example, the statewide economic development plans from five states – Massachusetts, New Mexico, North Carolina, Oregon and Texas – included sections on their vision, goals and objectives. North Carolina’s 2021 statewide economic development plan was unusual in that it focused narrowly on the objective of a talented workforce. Its strategic plan set out three goals:

  1. Prepare the workforce for career and entrepreneurial success
  2. Grow and attract a talented workforce
  3. Prepare communities to better grow and attract both talented workers and businesses to hire them

Our audit report also highlighted the work of New Mexico. That state has modeled the measurements and occasional revisions that are needed for long-term success. Staff there review what has worked well, what has not, and adjust the state’s plan accordingly. New Mexico also reports its progress to the public, displaying the kind of transparency that builds confidence in government programs.

Contract and grant management

Those agencies responsible for economic development planning and projects must think strategically about how their programs make the most of limited funds. Agencies may decide activities in their work plans are best delivered by employing contractors to perform certain work or by distributing money through grants. In these cases, leading practices offer more specific advice concerning contract management. While grants are distinct from employing contractors, they similarly involve establishing a contract with the grantee. Leading practices for contract management can also be applied to aspects of grant management, including these elements:

  • Scope of work
  • Deliverables and timelines
  • Performance targets and measures
  • Measurable outcomes
  • Language tying payments to deliverables

Since OEDC programming and funding are largely distributed through contracts and grants, we reviewed one contract from each of the six OEDC programs to learn more about the elements included in the contracts. We found the Associate Development Organization Grant Program in particular made good use of the elements listed above in its contract.

Recommendations

We made recommendations to the Department of Commerce’s Office of Economic Development and Competitiveness highlighting specific strategic planning and performance management practices. OEDC should apply these practices as it develops its economic development strategic plan and performance management framework. This will help OEDC gauge the plan’s progress, and monitor and evaluate its economic development programs.