Performance Management in Government:
From Vision to Action
1. Background and Importance
There is a widespread perception around the World that Governments have not delivered what was expected from them. Repeated surveys by professional and independent organizations as well as newspaper stories suggest that SAARC region is no exception. The purpose of performance management in government is to respond to this challenge and improve our ability to deliver promised results.
It is clear that the returns from improving effectiveness of the government are immense. Further, given that the socially and economically weaker sections of our society have fewer alternatives to public services, we believe that the majority of these benefits will accrue to them. Hence, there is no trade-off between efficiency and equity. Extra effort spent on improving government efficiency is likely to do more good on the margin than spending it on a program that does not work effectively.
The goal of performance management is to create a government that not only does the right things but does them right, that is more efficiently and effectively. Enhanced government effectiveness not only improves the welfare of citizens in the short run but also in the long-run. In the increasingly globalized world, government effectiveness is the key determinant of a country’s competitive advantage. Experts agree that in the long run, the race among nations will be won or lost not on the basis of comparative advantage arising from resource endowment, but by the competitive advantage created by effective governments.
2. The Challenge
Traditionally governance structures in India have been characterized by rule-based approaches. The focus of the civil services in India is on process regulation: compliance with centrally prescribed standards and rules; in other words, how things should be done and how inputs should be aligned. With such focus on processes, systems in government are oriented towards input usage: how much resources, staff and facilities are deployed in a scheme, programme or project and whether such deployment is in accordance with rules and regulations. The main performance measure thus is the amount of money spent and the success of the schemes, programmes and projects is generally evaluated in terms of the inputs consumed.
While such an approach satisfies the considerations of economy of inputs and compliance with process regulation, it fails to indicate the results achieved by the activities of government in general and deployment of public funds in particular. In fact, the focus on inputs for accountability and control has led to a situation in which civil servants are rarely held accountable for the outcomes. Compliance with rules is not sufficient for achieving outcomes. Obviously, the objective must be to shift the focus away from traditional concerns such as expenditure and activity levels towards a framework that would manage for results by developing robust indicators to assess performance in terms of results.
3. Concept of Performance Management
There is a consensus among management experts that “what gets measured gets managed.” Thus the ability to measure performance of the government department lies at the core of the concept of performance management.
However, it is critical for the success of the performance management to focus on measuring “results” and “outcomes” and not compliance with “processes” and “inputs.” Not because the “procedures” and inputs” are not important, but because this aspect of performance has been overemphasized and it is time to correct the imbalance.
In the management literature, there are two ways to control a business—either by controlling results or, if results are difficult to specify, by controlling processes. Since many governments believe that it is difficult to measure results in the government, they find it convenient to specify procedures that will lead to the desired results. Unfortunately, experience has shown that doing so often leads to a situation where in spite of performing a perfect operation, the patient remains dead. Procedures in government have a tendency to spawn more procedures and eventually the government gets overwhelmed with its own rules and regulations.
Accountability for results requires an effective performance evaluation system in the government. If one can not measure results, then one should forget about achieving results in the government. There is no point in setting goals and objectives, if you can not determine whether you are achieving them or moving away from them. This is analogous to giving medicine to a diabetic patient without having the ability to monitor blood sugar levels.
Many governments claim they have a “performance evaluation” system in the government. The fact of the matter is that most governments tend to have a “performance explanation” system. Most of these systems tend to justify why targets could not be met.
To judge whether a government has an effective system they must evaluate the quality of their evaluation systems using the following four criteria: (a) Do they have an evaluation system that covers all aspects of a government department’s performance? Often many evaluation systems cover only processes or other easily measurable aspects of government functioning. (b) Does their evaluation system separate and make provision for performance areas that are within the control of government managers and those that are dependent on exogenous factors? (c) Do they prioritize their performance criteria? Often, evaluation reports claim that they have achieved, say, 12 out of 15 targets without indicating the relative priorities. It is however entirely possible that the three targets they missed were in fact the most important areas from the national welfare point of view? (d) Do they have a system to evaluate variation (divergence) of performance from targets? For example, if a government department creates 25 new primary health centers against a target of 30, how are we to judge its performance? Is it very good, just good, average, poor or unacceptable?
If an evaluation system in the government lacks any of these four necessary conditions, then it is not really an evaluation system. An effective evaluation system should be able to come to a definite conclusion about performance without being subjective. It should be such that all stakeholders using the evaluation system should come to a similar bottom-line result.
While an effective performance evaluation system is a necessary condition for designing a high-quality performance management system, it is not a sufficient condition for doing so. For an evaluation system to be meaningful, it must be based on robust information. Thus a sound performance information system that provides timely information in the required format is also an essential ingredient for an effective performance management system.
Even if we have a great performance evaluation system and a solid performance information system, there is still a need for a performance incentive system to ensure that officers are motivated to deliver the desired results. The key to success here lies in tying the self-interest of officers to the performance of the department. Figure 1 summarizes the entire concept of performance management system.
Figure 1: Components of a Performance Management System
4. Key Performance Management Initiatives in India
Government of India has embarked on a comprehensive reform of the exiting Performance Management System. Many interlinked and mutually reinforcing initiatives are being implemented.
4.1 Recent Initiatives Relating to Performance Evaluation System
4.1.1 Results-Framework Documents (RFD)
Recently the Prime Minister approved a system for Monitoring and Evaluating the Performance of Government departments and ministries. Under this system all departments are expected to prepare a Results-Framework Document summarizing the main objectives and corresponding action for the year.
The essence of the proposed system is simple. It seeks to address three basic questions: (a) What are the main objectives of the Government department for the year? (b) What actions are proposed to achieve these objectives? (c) How would we know at the end of the year the degree of progress made in implementing these actions? That is, what are the relevant success indicators?
4.1.2 Performance Appraisal Report (PAR)
Accountability for results only trickles-down and does not “trickle-up.” If you want to increase focus on performance and results, you have to start from the top and not from the bottom. In most governments, we tend to hold the lower echelons of bureaucrats accountable while the top is much less accountable, if at all. While such efforts may show some results in the short run, they are neither effective nor sustainable in the long run.
Thus, the design of the system should focus on holding the top accountable for performance and the rest will take care of itself. The Government Performance and Results Act passed by the US Congress in 1993 illustrates this point well. This Act required the President of the United States to sign a Performance Agreement with each of his cabinet secretaries. For example, President Bill Clinton signed a Performance Agreement with the Secretary of Energy outlining the mission, goals, objectives and annual targets for the Department of Energy. To deliver her commitments, the then Secretary of Energy, Hazel O’Leary, in turn, signed internal performance agreements with all her assistant secretaries in the Department of Energy. The latter, in turn, entered into similar performance agreements with their subordinates. By holding the top accountable for results, US President was able to let the accountability for results trickle down to all layers of the US bureaucracy.
The Government is in the process of reforming the existing system of Performance Appraisal Report (PAR). Under the new system, PARs will be linked to departmental Results-Frameworks.
4.1.3 Independent Evaluation Office
To strengthen public accountability of flagship programmes the Government of India has recently created an Independent Evaluation Office at an arm’s distance from the government supported by the Planning Commission. It is expected to work on a network model by collaborating with leading social science research organizations and concurrently evaluate the impact of flagship programmes and place the findings in the public domain.
4.1.4 Prime Minister’s Delivery Monitoring Unit
The Government of India has also created a Delivery Monitoring Unit in the Prime Minister’s Office to monitor flagship programmes and iconic projects and report on their status publicly.
All these initiatives are complementary to each other and part of a comprehensive approach to performance management in the Government. Each of these initiatives looks at an important aspect of the performance evaluation picture.
4.2 Recent Initiatives Relating to Performance Incentive System
The Sixth Pay Commission was set up by the Government of India on October 5, 2006, and it submitted its report on March 24, 2008. These recommendations were considered by the Government and a decision was taken to accept them (with some modifications) as a package on August 29, 2008.
These recommendations can be broadly divided into two categories: (a) level and structure of benefits; and (b) performance related incentives. The former have since been implemented whereas the latter are now being considered by the Government for implementation.
Given the central role that incentives play in improving performance of employees in public and private sectors, Government of India is attaching some urgency to the implementation of a performance related incentive scheme.
4.3 Recent Initiatives Relating to Performance Information System
Government is undertaking several initiatives to streamline the information flow to support performance management. One key initiative is the development of software called Results Framework Management System (RFMS). Its main objective is to speed up the drafting and follow-up on the Results-Framework Documents. Similarly, the E-office initiative to achieve a paperless government would also significantly enhance the information system as we know it. The latter initiative is part of the larger E-Government initiative.
5. Possible Areas of Cooperation among SAARC Countries
At the inception of the SAARC, the Integrated Programme of Action (IPA) consisting of a number of Technical Committees (TCs) was identified as the core areas of cooperation. Over the period of years, the number of TCs were changed in response to changing requirements. Given the emphasis laid down at successive SAARC Summits on the need to expand the areas of cooperation and strengthen the regional cooperation, the following areas of cooperation may be worth exploring:
Given the similarity among the SAARC countries, we could use comparators from SAARC countries to set targets in the performance evaluation exercise.
Knowledge Sharing on Performance Management Practices
Many, of our problems and their solutions are likely to be similar. This provides us with a great opportunity to learn from successful experiences in solving problems.
Training in Performance Management
Capacity building is a key requirement for the success for performance management. This is another area where countries can cooperate.