Performance based management reforms: good practices and new challenges

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Performance based management reforms good
practices and new challenges
Baiba Petersone,Deputy Director of the State
Chancellery of the Republic of LatviaMartinš
Krievinš,Head of the Policy Coordination
Departmentof the State Chancellery of the
Republic of Latvia
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One goal different approaches

• No unified definition - Aims of performance
  management is to ensure transparency on goals and
  intended results, for better prioritization of
  expenditure and support of more efficient
  management in public sector
• A never ending story - majority of countries that
  had introduced performance management systems are
  constantly carrying on with their improvement and
  incorporation of the performance data into the
  budget process
• Budgeting for results - more than 2/3 of the OECD
  countries have non-finance performance
  information included in the budget documentation
• Changing accents not approaches all countries
  use the same terminology (inputs, outputs,
  outcomes, impacts), but puts different emphasis
  and chooses their own reform speed

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Major benefits

• Performance based management and budgeting
• improves the overall quality of policy making and
  budget planning by providing more information and
  data on Government priority fields and different
  sectoral policies, as well as budget programs
• provides a mechanism for setting clear, specific
  and SMART objectives and monitoring their
  implementation progress (signaling device)
• sharpens managements focus on achieving results
  and becoming more efficient in a day-to-day
  operations
• improves transparency and provides more
  information for citizens-taxpayers on the use of
  public funds.

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Performance budgeting experience

• There are three major experiences in
  incorporating performance data into budget, where
  performance information acts as
• a presentational tool (accountability)
• a support information tool (planning)
• a stick or carrot tool (resource allocation)
• a communication tool (information to society).

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Major challenges 1

• Introduction of performance management systems
  does not necesserily provide all of the indicated
  benefits per se, because
• Request for performance information bad
  performance measurement creates disillusionment.
  Governments and Parliaments are not diligent in
  using of performance information.
• Performance information is not analysed and used
  for on-going review of base expenditure, instead
  just collected and appendiced to budget
• Clear understanding of the system is crucial
  not to use it in inappropriate way (cutting the
  programs).
• Priority spending areas and areas to be cut are
  not clearly identified at the highest political
  level

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Major challenges 2

• There is no preference given to measurement of
  outputs or outcomes. Most countries use a
  combination of outputs and outcomes.
• What is measured is what counts it is important
  to measure the right thing
• the quality, credibility, relevance and
  timeliness of performance data is not evaluated -
  abundance of figures without sense and
  disbalance between accountability (outputs) and
  performance (outcomes)
• All countries face choices in defining programs
  and deciding on the number of programs. There is
  no unique way of defining a program.
• The budget process is not changed in a systematic
  manner building parallell and artificial
  systems
• Ministry of Finance does not OWN the process,
  habits of the traditional budget planning and
  execution process are strong.

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Main conclusions

• Main focus should be the budget process reform
  and not the introduction of a stand-alone
  performance management system
• A step by step approach rather than a big bang
  should be chosen in order not to start with
  advanced performance management systems without
  passing of initial stages of training, thinking
  and data collection (risk of reform overload)
• Leadership of the reform process alongside the
  recognition for the need of trained human
  resources and selectiveness about performance
  indicators should be taken into account
• Strategic planning systems lies grounds for the
  introduction of performance budgeting as it
  connects public policies together with a medium
  term view on available spending
• Performance measurement is only one of the
  elements of a wider system for making the public
  administration more results-oriented, efficient
  and transparent

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Integral approach toperformance management
Monitoring Reporting Evaluation
Quality management
Risk management
Human resources management
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Where to search for good examples and experience1

• 75 of countries having introduced new
  initiatives in the past five years
• Simplification of performance measures and
  evaluation - Sweden and USA.
• Program evaluation Sweden, the Netherlands, USA
  
• Information on inputs accrual accounting
  Australia, New Zealand, France (financial
  accounting)
• The medium-term budget approach has been a strong
  feature particularly in Australia and Sweden
• Implications from performance evaluation for
  salary system - only in New Zealand and only at
  the chief executives level.
• _______________________________________
• 1OECD COUNTRY EXPERIENCES IN PERFORMANCE BASED
  BUDGETING. David Shand, World Bank, 2007

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Where to search for good examples and experience
- LATVIA

• Attempts to create an integrated application of
  performance measurement in all the processes of
  public administration.
• Fighting with problems similar to those in
  Romania.
• Searching for best practises and good experience,
  networking with other countries
• Knowing developments and problems in Romania
• Having good friends and interested
• attitude to reforms in Romania