Orienting Public Spending for Performance Management

1. Orienting Public Spending towards Achieving Results: Performance and Performance Management Joel Turkewitz World Bank

2. Performance and Performance Management • Increasing selectivity in what the government does. • Letting managers manage • Letting the clients speak • Increasing transparency of what is being accomplished

3. What Drives Improved Performance in the Public Sector • Selectivity – focusing on core business • Combat – government solves all problems • Concentration on efficiency of production • Combat – over emphasis on process and rule following

4. Drivers of Performance (2) • Closely aligning program design with needs of clients • Combat – over emphasis on internal government design setting • Increase Transparency and Accountability • Combat excessive discretion for managers

5. Definition of Performance Management • Process of change • Initial starting point – line-item budget • Identifying what the government is doing • Grouping activities into larger programs • Determining what is produced in each program • Improving program performance through target setting • Establishing accountability for results

6. Terms for the Budget Reform Process Change • Grouping into Programs – Program-Based Budgeting • Allocations related to Program Outputs – Output-Based Budgeting • Setting of Performance Targets – Performance-Based Budgeting • Ensuring Accountability System – Performance Management

7. Terms (2) • Program • Group of activities • Under a single manager • Contributing to a specific objective

8. Dimensions of Orienting Budgeting Towards Performance • Defining Programs • Identifying Outputs • Selecting Indicators • Measuring and analyzing indicators • Utilizing performance information

9. Defining Programs • Not merely a reclassification exercise • Establish link between government objectives and the work done by government • Reconsider the roles and missions of government agencies. • Match organizational structure and function. • Revise and align accounting and financial reporting to improve management

10. Principles of Program Design • One program – one objective • Hierarchical structure: program –sub-program-activities-projects. • Size appropriate for efficient management • Clear connection between resources used and outputs produced (and outcomes). • Capture all related activities – integrate capital and recurrent spending

11. Principles (2) • Establish accountability for the outputs of programs, sub-programs, and activities. • Responsibility for implementing each program aligned with a single vote in the budget.

12. Keys to Success in Establishing Program Structure • Establish clear rules to guide program identification and the level of sub-program and activity aggregation. • Align programs and organizational structure of government. • Programs and their outputs need to be designed considering the informational resources of the government.

13. Defining Output and Monitoring Indicators • Internal Evaluation • Indicators Help Managers Manage • Need to be set to focus on what managers car about • Especially important for projects and activities • External Evaluation • Indicators focus on outcomes – are we achieving our objectives • Especially important for sub-programs and programs

14. Defining Indicators • For both external and internal monitoring, when performed exclusively by people in government • Too inward looking – outcomes become outputs, Outputs become inputs • Importance of broadening participation in indicator setting • Ensure legitimacy and relevance

15. Principles of Indicator Setting • Limited in Number • Measurable • Relevant • Feasible

16. Monitoring Performance • Data collection and analysis strategy • Internal and external dimension • Determination of reporting • Who • How Frequently • In What Form

17. Monitoring Performance Challenges • Technical – ensuring that the system captures all costs – direct and indirect • Culture – Agencies frequently unfamiliar with quantitative techniques and little experience • Managerial- Ensuring the accuracy of information and the usefulness of reporting

18. Utilizing Performance Information • Managers – Managing for results • “How are we doing” exercises • Central Agencies – Holding managers accountable • Evaluation of performance • Oversight – Parliament and Society – Are we getting what we want?

19. Experiences to Date • Assists in concentrating resources to government priorities. • Enhances efficiency primarily through managers managing for results. • Effectiveness continues to be an issue • The local government experience – letting the client have more voice.

20. Experiences (2) • Long term process – change of public sector culture and managerial culture • Core issue is incentives • For managers – monetary, professional, greater discretionary authority. • Providing information that people care about

21. Experiences • Sequencing • Programs with objectives • Identification of outcomes • Information on outcomes • Incorporating information into the Budget • Utilizing budgets to contain information