Negotiating performance agreements in the Belgian social Security network

1. Negotiating performance agreements in the Belgian social Security network Testing the principal-agent model and the network theory EGPA Conference 2006 Study Group VIGovernance of Public Sector Organizations Belgian Social Security network : Mgt contracts Page 1

2. 1. Social Security and performance agreements Belgian Social Security network : Mgt contracts Page 2

3. Social security : concept Direct contributions Employers’ organisations Trade unions Governance of the public institutions Performance agreements System of public social insurance covering social risks Belgian State Belgian Social Security network : Mgt contracts Page 3

4. Contract management • Performance agreements in 15 Social Security Public Institutions (SSPI) (2002/2003) : • Between the Federal State and the SSPI • 12.000 employees concerned • Budget 870 millions €/year • Three years period • Management autonomy (budget, HRM, facility) • Two-way agreement •  Output level : organizational performance levels •  Financial framework for three years •  Commitments from the State • Implying • Accountability • New relationship with the State Belgian Social Security network : Mgt contracts Page 4

5. 2. Mapping the negotiation process Belgian Social Security network : Mgt contracts Page 5

6. Basic assumptions from the theories Principal-Agent Network coordination 15 specialized and thus individual negotiation processes Divergent interests between State and SSPI Information advantage for the SSPI Behavior Belgian State determined by the results of the SSPI (quality of the information) Tripartite Negotiations Decision making network based on gradual common agreement Auto-coordination by SSPI and minister’s cabinets Autonomy and performance agreement are accepted by all parties Belgian Social Security network : Mgt contracts Page 6

7. Process- and chain management as backbone Secundary process Secundary process Secundary process Secundary process Primary process Original input Intermediary Output Final Output Step 1 Step 2 Involved actors Involved actors Involved actors Involved actors Basic assumptions led to chain management Process mapping has been agreed by all parties Belgian Social Security network : Mgt contracts Page 7

8. 3. Testing the theories Lessons learned Belgian Social Security network : Mgt contracts Page 8

9. Our observations and the theories Observations Principal-Agent Network Multipartite negotiations besides one to one Exclusively individual and one to one Multipartite and global Changing coalitions and oppositions Conflict between principal and agent Global cooperation Principal > Agent Principal < Agent Not needed Autonomy in danger Autonomy is accepted and is a pre-require Autonomy is accepted and is a pre-require Successful central steering No steering : contract relations No steering : auto-coordination Multiple logics are active Ex post results Global targets High transaction costs Low transaction costs Low transaction costs Belgian Social Security network : Mgt contracts Page 9

10. Lessons learned • The contracting cycle must be structured • as a compromise between both theories •  One to one relationship remains the model • Multipartite processes are sometimes inevitable •  Negotiation and evaluation processes increase the possibility of conflicts • Convergent interests and coalitions are the keys for successful processes • A central function facilitates the processes and limits the transaction costs • The contract cycle is not only structured by the contractual and rational logic Belgian Social Security network : Mgt contracts Page 10

11. For more information Amaury Legrain FPS Social Security – DGSOC amaury.legrain@minsoc.fed.be Tom.auwers@minsoc.fed.be 5E20 Place Victor Horta 40, 201060 Bruxelles 0032 (0)2/528.63.12 Belgian Social Security network : Mgt contracts Page 11