Public Sector Reform and Performance Management in Developed Economies

Outcomes-Based Approaches in Practice

Zahirul Hoque

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000349023
• Edition: 1
• Topic: Business
• Subtopic: Organisational Development
• Index: Business

Over the past two decades, there has been a shift of paradigm in public administration and public sector accounting around the world with the increasing emphasis on outcomes as opposed to inputs and outputs focus. Understanding of how government departments and agencies develop and implement outcomes-based approaches to their services and programs to strengthen public accountability, financial scrutiny and good governance worldwide is limited.

Covering a selection of international practices on outcomes-based approaches to government departments, agencies and public higher educational institutions in developed economies, this comprehensive compilation provides an essential reading in the public sector accounting, accountability and performance management field. The contributions are grouped into three jurisdictions: Australasia, UK and Europe, and North America.

It incorporates outcomes-based practices in public services from advanced economies and will be of significant interest to global public sector regulators, consultants, researchers, and academic communities as well as academic researchers in public administration and development studies fields. The insights offered by a country-specific practice will also be useful to governments in other countries implementing similar systems and practices and facing similar socio-political environments. This book will also help to gain an understanding of the issues of government accountability from a management point of view as well as from a socio-political point of view.

Part I

Introduction and Context

1 Public Sector Reform and Performance Management in Developed Economies*

Outcomes-based Approaches in Practice: An Overview

Zahirul Hoque

Introduction

Over the past two decades, governments worldwide are increasingly focusing on being community-centric and outcomes-based (Hood 2002; Rana et al. 2019). Consequently, they are starting to move toward outcomes-based approaches to financial and management control systems in government agencies. The recent literature suggests how an outcomes-based approach allows the government or public service agencies and specific program areas to organize and communicate priorities to achieve what matters and make a difference rather than just going through the motions. According to Perrin (2006, 6), “An outcome focus potentially can provide a framework for an integrated ‘whole of government’ approach involving the coordination of different policy and program areas that are all expected to contribute in some way to the same outcome, such as employment creation, economic development, or the improved health of the population.”

This research-based edited book is a collection of chapters aimed at covering outcomes-based approaches from a selection of developed economies within both Westminster and non-Westminster models of government. Chapters from these countries on the topic written by renowned scholars will identify important issues pertinent to those interested in public sector governance, accounting and accountability, and effectiveness. The book’s content will be highly accessible to accounting, public administration, development studies, and other non-accounting audiences alike. The outcomes-based approaches in practice within developing economies will be covered in a separate volume.

New Public Management

In the public sector, interest in performance measures has grown enormously as evidenced by the large literature on New Public Management (NPM), benchmarking and balanced scorecards (Hoque and Adams 2011). The approach of UK Conservative governments of the 1980s and 1990s to public service reform is often referred to as NPM (Hood 1991, 1995). NPM is the most recent paradigm change in how the public sector is to be governed (Lane 2000). In contrast to the long-standing importance of rule compliance, NPM emphasizes managing for outcomes (Hood 1995; Hoque and Adams 2011; Lapsley 1999; Lapsley and Miller 2019). The increased attention on performance measures and management by public sector managers, consultants, and academics reflects the increased pressure on public sector organizations to improve performance to remain viable in today’s competitive and global operating environment (Hoque and Adams 2011). “NPM” doctrines advocate accountingization, which encompasses the introduction of commercial accounting practices such as accrual budgeting and key performance indicators. NPM encourages such managerial and commercial approaches to government entities and emphasizes managing for outcomes over simply rule compliance (Hood 1995). The public sector administration and management literature (e.g. Hood 1995) identifies several elements of NPM (see Box 1.1).

Box 1.1 Elements of NPM (adapted from Hood 1995)

• Hands on professional management: an emphasis on clear assignment of managerial responsibility for action.

• Private sector management styles: an emphasis on the adoption of private sector type management practices and employment conditions.

• Benchmarking and competition: a focus on monitoring performance, both internally and externally, and competition for the provision of products and services.

• Accrual budgeting: a focus on the adoption of accrual-based budgeting with an emphasis on cost cutting, process efficiency, greater discipline and parsimony in resource use.

• Customer-focus strategy: a focus on the processes in delivering products or services based on flexible outcomes influenced by clients, as opposed predetermined outcomes by service providers.

• Accountability (individually and departmentally): a focus on the degree of actual accountability that exists for senior managers and what constitutes an accountability standard.

Outcomes Framework

Recently, outcome-thinking instead of “outputs” in delivering government services to the public worldwide has been considered a new way of assessing the effectiveness of public services. Output measures capture the number of products and services completed or delivered (Ho and Ni 2005; see also, Ho – this volume). Examples of such measures would be road safety services, community safety, crime prevention and victim support, road maintenance, number of emergency treatments in hospitals, and providing educational programs or facilities. Outcome measures capture the results or consequences of service delivery that are important to the public and customers (Ho and Ni 2005; see also, Ho – this volume). Examples of outcomes would be maximizing employment and training opportunities for all; improving educational outcomes for all students in all key areas; ensuring safe employment, learning, and public environments; ensuring efficient and effective systems to facilitate improvement in above priority outcomes; enhanced community safety and protection; and safer, fairer, and expeditious handling of those involved in the judicial system.

In Australia, governments of all sorts – federal, state/territory, or local – require all providers/agencies to clearly define the outcomes of their services to the public as key performance indicators. In addition to the requirements for reporting on planning, efficiency, effectiveness, performance, and delivery of services to the community (where appropriate), the treasury (state/territory/federal) now sets out the following additional requirements for reporting under the “Managing (or working) for Outcomes” framework to (a) report actual achievements against the approved output performance targets (quantity, quality, timeliness, and unit cost), as specified in the budget paper, with explanations for significant variations in performance compared to targets; and (b) report performance against the original budget for the revised budget (Zawawi and Hoque 2020).

The framework provides agencies/departments with the tools necessary to effectively monitor, evaluate and improve their performance in the delivery of outputs to the community. It promotes efficient and effective agency management with value for money service delivery. This is a contemporary financial management system derived from an accrual output-based framework. Agencies/departments are required to provide treasury with quarterly performance information on actual performance compared to targets during the year. This information is then reported to ministers and the cabinet (Hoque and Adams 2011; see also Hoque and Thiagarajah – Chapter 2, this volume).

Victoria’s approach to outcomes – “Driving a modern public sector”

The state of Victorian Public Service in Australia has adopted an outcome architecture to provide a consistent language for its departments and agencies to communicate their priorities and determine the actions they take as public servants (Outcomes Reform in Victoria). Box 1.2 outlines the key terms used in an outcome approach to governments.

Box 1.2 Key terms used in outcomes approach by the state of Victoria:

• ACTIVITIES: Activities are what we deliver. The programs, services and initiatives we undertake, and the everyday work we do.

• INPUTS: Inputs are the resources or investments allocated to deliver activities (funding, staffing, capital, or infrastructure).

• OUTPUTS: Outputs are how we count what we deliver. The number of activities delivered, products produced, or clients served.

• OUTCOMES: Outcomes articulate what success looks like and reflect our ambition for Victoria. They are clear, unambiguous, and high-level statements about the things that matter for people and communities.

• OUTCOME INDICATORS: Outcome indicators specify what needs to change in order to achieve a desired outcome and set the direction of change. Outcome indicators reflect the key drivers and influences on progress toward an outcome.

• OUTCOME MEASURES: Outcome measures provide the more granular, specific detail about what will change and how you will know if you are making progress. Outcome measures are the specific way we know or count the size, amount or degree of change achieved.

• MEASURING SUCCESS requires us to be specific about what success looks like, what needs to change to get there, and how we will know if we are getting there.

(Source: Outcomes framework - the State of Victoria, Australia - adapted)

In general, the outcomes approach to governments focuses on measuring the impact of government activity. According to the state government outcomes framework:

“Victoria’s Public Sector Reform statement identifies outcomes as one of the key drivers in achieving the public service of the future.

Outcomes are clear and concrete statements about the difference we want to make for Victorians. Outcomes set direction, focus our efforts where we can have the greatest impact, and allow us to measure the difference we are making.

A focus on outcomes is one of the ways we will drive a modern public sector that is fit-for-purpose and focuses on the things that matter.”

An outcomes approach does not replace the essential work of measuring inputs, activities and outputs. These allow us to show we have delivered on time and budget and are essential for meaningful accountability. The change an outcomes approach brings is that we don’t stop at measuring what and how much we delivered. Outcomes prompt the next question – did we achieve our intended impact?”

(Source: vic.gov.au/publicsectorreform/outcomes)

The outcomes concept and its application vary greatly within government departments/agencies in various contexts around the world. This book is intended to contribute to the field by reporting empirical evidence and reflections on outcomes-based approaches from selected jurisdictions around developed economies across the globe. The next section presents a general overview of the key areas covered by each chapter included in this book. The final section of this chapter concludes with outlining implications of the contributors’ findings for practice and future research.

Overview of the Chapters

Chapter 2 by Hoque and Thiagarajah presents an overview of the development of the outcomes-based approach to the Australian government’s budgetary process. Drawing from archival research within the Federal Department of Defence, they illustrate how the agency embedded outcomes-orientation in its conventional inputs/outputs budgeting and accountability framework. The authors show that the outcomes-focused calculative mechanisms are on the rise in the Australian Defence Forces due to the rapidly changing public sector environment in Australia.

In a different context, Ann and Guthrie in Chapter 3 explore how four decades of neoliberalist policies have transformed a historically erudite and collegial culture within Australian universities into a mass-delivery mechanism for education and research outputs. The authors examine the pervasiveness of NPM accounting and auditing in academic performance measurement. It is concluded that academic performance in Australian universities has become increasingly characterized by a managerial audit culture.

In Chapter 4, Rana highlights and reflects on the importance of embedding a risk-management framework in public sector governance and accountability practices. To this end, his chapter focuses on Australian public sector reforms over the past five decades. The current status of practices and challenges is discussed concerning accountability, governance, and risk management. The findings reported in this chapter provide insights for future research, governments, managers, and policymakers to expand understanding and knowledge on transforming public sector reforms into a collective organizational practice.

Chapter 5 by Sharma presents an overview of the development of well-being outcomes-based approach to public sector accountability in New Zealand. Using the Ministry of Pacific Peoples and the Ministry of Social Development, the author has outlined outcome-related planning and control mechanisms that are put in place in these two government organizations. The well-being outcomes-based calculative practices are on the rise within the New Zealand public sector...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Dedication
• Contents
• List of figures
• List of tables
• Biography of editor
• Preface
• Acknowledgments
• Part I: Introduction and Context
• Part II: Australasia
• Part III: U.K. and Europe
• Part IV: North America
• Review Process
• Index