Performance Measurement and Budgeting in the Public Sector

GEERT BOUCKAERT (Leuven, Belgium)

Towards a Comprehensive Reform of PublicTowards a Comprehensive Reform of Public GovernanceLisboa, January 28th, 2013

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1 Performance in the Public Sector1. Performance in the Public Sector

2. From Measuring to Managing Performance

3. From Managing to Increasing Performance

4 G tti t t d4. Getting started

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1 PERFORMANCE IN THE PUBLIC SECTOR1. PERFORMANCE IN THE PUBLIC SECTOR

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Policy development&

internal ex antel ti

Needs Environment

evaluation

externalex post

evaluationObjectives

externalex ante

evaluation

internalex post

evaluationInput OutputActivity Effect Trust

5321

decision

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monitoring & controlstrategy - finance - personnel - organization - communication

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• Efficiency or Productivity as expressions of Input-Output relationsy y p p p

• What is the difference between productivity and efficiency:

O

B

AAO

O

DC

DC OO

BO

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DB II AICI

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• Effectiveness as an expression of Output-Effect relationsp p

E

B

A

BE

AE

DC

DEEc

DB OO AOCO

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• Cost-Effectiveness as an expression of Input-Effect relationsp p

E

B

A

BE

AE

DC

DEEc

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DB II AICI

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• Five ways to improve the productivity numbersFive ways to improve the productivity numbers

Q(1) Q (2)

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Q (3) Q (4) Q(5)

O OQ min O

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• Measurement Policy Question:Measurement Policy Question:

– 1 Shall you focus on productivity or on input or output1.Shall you focus on productivity, or on input or output inefficiency, on effectiveness, on trust? And why? How are they related?

– -2.What are comparable clusters to compare efficiency/effectiveness/trust data? (See also DEA/FDH)

– -3.How does this connect to responsibility/accountability profiles?

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• Macro: government wideg• Meso: policy field or level• Micro: single organisation

MACRO

I O E

- Macro versus Meso versus Micro LevelsMESO

I O E

MICRO

I O E

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Public sector performance: the micro level

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Public sector performance: meso

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• Meso levelO t t ff t d lit t l l• - Output, effects and causality at meso-level

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Public sector performance: macro

Needs Environment

Objectives

Input OutputActivity Effect Trust

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5

4

321

1.input/input: economy2 i t/ t t ffi i / d ti it

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2.input/output: efficiency/productivity3.output/effect: effectiveness4.input/effect: cost-effectiveness5.effect/trust6.output/trust7.input/trust

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Management Accountability Framework (Canada)Management Accountability Framework (Canada)

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• -Conflicts between levels: micro versus meso

• -NPM focuses on Micro performance but had to take corrective action

• -Does the sum of all micros equal meso? Does the sum of all mesos equal macro?

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• Macro PerformanceMacro Performance

• -Impact on GDP?Impact on GDP?• -From Zero Hypothesis to Non-zero Hypothesis?• -Technical discussion: Laspeyre Paassche etc ?Technical discussion: Laspeyre, Paassche, etc. ?• -What about quality change over long time series ?

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• Measurement Policy Question:

• -4 Which level will you focus upon and for what reason?4.Which level will you focus upon and for what reason?

• -5 How do you integrate the different levels?• -5.How do you integrate the different levels?

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• -Features of individual indicators

• Listings of (sometimes conflicting) quality requirements of indicators:

• -Measurable• -Stable over timeStable over time• -Available data• -Accurate• -Understandable• -Comprehensive• -Congruent with other indicators• -Repeatable• -ObjectiveObjective• -Tangible• -Homogeneous• -Subject to control

A dit bl• -Auditable• -Acceptable cost

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• Measurement Policy Questions (Quality and Audit):Measurement Policy Questions (Quality and Audit):

• -6 What are the minimal features of a good indicator?6.What are the minimal features of a good indicator?

• -7 What is the strategy to improve the performance7.What is the strategy to improve the performance measurement system?

• -8.How are you coping with the most important (potential) pathologies of measurement?p g

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2. From Measuring to Managing Performance2. From Measuring to Managing Performance

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Managing Performance: typologiesManaging Performance: typologies• Performance Administration• Managements of PerformancesManagements of Performances• Performance Management• Performance GovernancePerformance Governance

Managing Performance: componentsManaging Performance: components-MeasuringIncorporating-Incorporating

-Using

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Policy development&

internal ex antel ti

Needs Environment

evaluation

externalex post

evaluationObjectives

externalex ante

evaluation

internalex post

evaluationInput OutputActivity Effect Trust

5321

decision

7

64

1

monitoring & controlstrategy - finance - personnel - organization - communication

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FeedbackContract Cycle

FeedbackFinancial Cycle

Feedback

Policy cycle

(Strategic)plan Evaluation

Evaluationcontract

Designcontract AuditBudget

Monitoring

Implementing

Accountancy

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p gcontract

2001 2002 2003 2004 2005

controlling

2002

controlling cyclus

2003

2004

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• Measurement Policy Question:Measurement Policy Question:

- 9 Are you going to integrate this information in financial9.Are you going to integrate this information in financial documents, contracts, policy documents? Who is responsible?

• - 10.How are you going to use this information as part of an y g gimprovement process? Who is accountable for what?

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3. From Managing to Increasing Performance3. From Managing to Increasing Performance

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-Focus on Performance in a context ofFocus on Performance in a context of Responsibility/Accountability (measure/incorporate/use)

-Agencies: Yes, but ….

-Markets: Yes, but …

-Partnerships: Private sector, other public sector organisations, NGOs, citizens as customers,

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4. Getting started4. Getting started

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Challenges to Implementing Performance Information in Public AgenciesInformation in Public Agencies

Institutional and Organizational challenges Country raising issue*

Fostering a climate for performance information (right incentives; ownership; developing learning culture) Chile, Finland, UK,

Setting realistic expectations for performance information (modesty; developing realistic demand; educating users) Finland, Netherlands, Chile, UK, US

Long-term development required; maintaining momentum (commitment of time & $) Finland, Netherlands, UK, US

S tti t f t ti Chil UK USSetting outcome performance expectations Chile, UK, US

Avoiding distorting behaviour (reviewing measures; outcomes focus) Finland, Chile

Accountability for outcomes (accountability meaning; shared outcomes) UK, US

Technical challengesTechnical challenges

Measurement Finland, Chile, Netherlands, UK, US

Selectivity in measurement; overload problems Chile, Netherlands, UK

Attributing outcomes to actions Finland, Netherlands, UKAttributing outcomes to actions Finland, Netherlands, UK

Linking financial & performance management: ‘costing’ outcomes Finland, US

Quality assurance of data and information Chile, Finland, Netherlands, UK, US

Credibly reporting performance UK

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y p g p

* Unpublished country reports by finance/treasury agencies and/or audit officesSource: Adapted from Mayne 2005

• Organisational Readiness ChecklistOrganisational Readiness Checklist

• Implementation policy: top down versus bottom up; ad hocImplementation policy: top down versus bottom up; ad hoc versus systematic; comprehensive versus incremental; de jure versus voluntary; with or without consultants;

• Measurement Policy Questions:y• -11.On what issues are you not ready to measure

performance?• -12.What concrete strategy and tactics will you use in your

organization to start measuring performance?

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• Measurement Policy Question: cluster oney• -1.Shall you focus on productivity, or on input or output inefficiency, on

effectiveness, on trust? And why? How are they related?2 Wh t bl l t t• -2.What are comparable clusters to compare

efficiency/effectiveness/trust data? • -3.How does this connect to responsibility/accountability profiles?p y y p

• Measurement Policy Question: cluster two• -4.Which level will you focus upon (micro/meso/macro) and for what

reason? Who is responsible/accountable? How are these levels audited?• -5.How do you integrate the different levels? Who is5.How do you integrate the different levels? Who is

responsible/accountable? How is the integration audited?

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• Measurement Policy Questions: cluster three6 Wh t th i i l f t f d i di t ? D• -6.What are the minimal features of a good indicator? Do you

have performance auditing?• -7.What is the strategy to improve the performance measurement gy p p

system? Who is responsible for performance auditing? • -8.How are you coping with the most important (potential)

pathologies of measurement?pathologies of measurement?

• Measurement Policy Question: cluster foury• - 9.Are you going to integrate performance information in financial

documents, contracts, policy documents? 10 H i t thi i f ti t f• - 10.How are you going to use this information as part of an

improvement process?

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• Measurement Policy Questions: cluster fiveMeasurement Policy Questions: cluster five• -11.On what issues are you not ready to measure

performance? Is this subject to audit?p j• -12.What concrete strategy and tactics will you use in your

organization to start measuring performance? Who is accountable for this?

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Some References• Pollitt Christopher, Bouckaert Geert (2011, 3rd Ed) Public Sector

Reform: A Comparative Analysis – NPM, Governance, and the Neo-Weberian State. Oxford University Press: Oxford.

• Van Dooren Wouter, Geert Bouckaert, John Halligan (2010) , , g ( )Performance Management in the Public Sector. Routledge: London, pp. 198.

• Bouckaert Geert, B.Guy Peters, Koen Verhoest (2010) The , y , ( )Coordination of Public Sector Organizations: Shifting Patterns of Public Management. Palgrave Macmillan, Basingstoke, pp. 326.

• OECD (2009) Measuring Government Activity. OECD, Paris (AuthoredOECD (2009) Measuring Government Activity. OECD, Paris (Authored and Edited by Christopher Pollitt, Geert Bouckaert, and Wouter Van Dooren), pp. 130.

• Pollitt Christopher Bouckaert Geert (2009) Continuity and Change inPollitt Christopher, Bouckaert Geert (2009) Continuity and Change in Public Policy and Management. Edward Elgar, Cheltenham, pp.223.

• Bouckaert Geert, Halligan John (2008) Managing Performance: International comparisons. Routledge, London, 440p.

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International comparisons. Routledge, London, 440p.

• K.U.LeuvenPublic Management Institute

• Parkstraat 45 bus 3609B-3000 LeuvenB-3000 Leuven• Belgium

• 0032 16 32 32 70

• io@soc.kuleuven.be• www.publicmanagement.be

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