GOVERNMENTPerformance agenda:an international government surveyFocusing public sector performanceK P M G I N T E R N AT I ...
Performance agenda: an international government survey 2                                                              Cont...
Performance agenda: an international government survey 3                                                              Fore...
Performance agenda: an international government survey 4                                                              Exec...
Performance agenda: an international government survey 5                                                              4. P...
Performance agenda: an international government survey 6                                                              Abou...
Performance agenda: an international government survey 7                                                              Intr...
Performance agenda: an international government survey - Focus on service, not thrift 8                                   ...
Performance agenda: an international government survey - Focus on service, not thrift 9                                   ...
Performance agenda: an international government survey - Focus on service, not thrift 10                                  ...
Performance agenda: an international government survey - Working smarter, or just harder? 11                              ...
Performance agenda: an international government survey - Working smarter, or just harder? 12                              ...
Performance agenda: an international government survey - Working smarter, or just harder? 13                              ...
Performance agenda: an international government survey - Working smarter, or just harder? 14                              ...
Performance agenda: an international government survey - The human capital challenge 15                                   ...
Performance agenda: an international government survey - Making it happen 16                                              ...
Performance agenda: an international government survey - Partnering with the private sector 17                            ...
Performance agenda: an international government survey - Partnering with the private sector 18                            ...
Performance agenda: an international government survey - Partnering with the private sector 19                            ...
Performance agenda: an international government survey - Partnering with the private sector 20                            ...
Performance agenda: an international government survey - Shaking up funding 21                                            ...
Performance agenda: An international government survey
Performance agenda: An international government survey
Performance agenda: An international government survey
Performance agenda: An international government survey
Performance agenda: An international government survey
Performance agenda: An international government survey
Performance agenda: An international government survey
Performance agenda: An international government survey
Performance agenda: An international government survey
Performance agenda: An international government survey
Performance agenda: An international government survey
Performance agenda: An international government survey
Upcoming SlideShare
Loading in...5
×

Performance agenda: An international government survey

392

Published on

KPMG’s Global Government Services commissioned the Economist Intelligence Unit to produce this report on the Performance agenda: an international government survey, which indicates a number of areas where innovation is
taking place. KPMG’s view is that in each area significant benefit can be created for citizens through enhanced performance, accountability and
operational efficiency.

The report is based on the following research activities:

The Economist Intelligence Unit conducted a global survey of 254 public sector executives from five countries: Australia, Canada, Germany, the United Kingdom and the United States. The respondents represented every major government department. All had management roles, and 37 percent were heads of departments, financial chiefs, directors, deputy directors or their equivalents. About half of respondents came from departments with budgets of up to US$500m, while another one-third represented departments that spend US$1bn or more per annum.

To supplement the survey results, the Economist Intelligence Unit conducted in-depth interviews with senior public sector officials from across the five countries surveyed.

Ursula Brennan, chief executive of the Office of Criminal Justice Reform, UK
Ken Cochrane, chief information officer for the Canadian Government
Tony Dean, secretary of cabinet, Government of Ontario, Canada
Dr David Dombkins, national president of the Australian Institute of Project Management
Dr Barbara Hendricks, parliamentary state secretary at the Federal Ministry of Finance, Germany
Ed Killesteyn, deputy president, Repatriation Commission Department of Veteran Affairs, Australia
Ian McPhee, auditor general of Australia Phillip Prior, chief financial officer, Department of Defence, Australia
John Thomas, acting director of construction, Washington Metropolitan Area Transit Authority, US
Sir David Varney, author of public service transformation report, UK
Ian Watmore, head of the Prime Minister's Delivery Unit, UK
Danny Werfel, deputy controller in the Office of Management and Budget Office of Federal Financial Management, US
Wayne Wouters, secretary of the Treasury Board, Canada

The Economist Intelligence Unit wishes to thank everyone who shared their time and insights during the research.

Published in: Business, Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
392
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
11
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "Performance agenda: An international government survey"

  1. 1. GOVERNMENTPerformance agenda:an international government surveyFocusing public sector performanceK P M G I N T E R N AT I O N A L
  2. 2. Performance agenda: an international government survey 2 Contents Foreword 3 Executive summary 4 About the research 6 Introduction 7 1. Focus on service, not thrift 8 2. Working smarter, or just harder? 11 3. The human capital challenge 15 4. Making it happen 16 5. Partnering with the private sector 17 6. Shaking up funding 21 7. The difficulty of reliable forecasting 23 8. Technology’s role in raising productivity 25 9. Getting the best from procurement 29 Conclusion 32With the exception of the “foreword” and “KPMG perspective” sections, the views and opinions expressed herein arethose of the Economist Intelligence Unit and the entities surveyed and do not necessarily represent the views and opinionsof KPMG International or KPMG member firms. The information contained is of a general nature and is not intended toaddress the circumstances of any particular individual or entity.Due to rounding, graph totals may not equal 100 percent. Unless otherwise stated, the analysis reflects total responsesfrom participating countries – individual country results may differ.© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  3. 3. Performance agenda: an international government survey 3 Foreword The Economist Intelligence Unit research provides insight into how senior government officials think. For anyone concerned about government, the results provide an interesting perspective on the deepening performance agenda around the world. As the first in a new series of thought-provoking research commentaries, KPMG’s Global Government Services is proud to present the results of the Economist Intelligence Unit survey. Our objective is to stimulate thought, contribute to knowledge about government, and to participate in the public debate on how governments can enhance their performance for citizens. The Performance agenda indicates a number of areas where innovation is taking place. KPMG’s view is that in each area significant benefit can be created for citizens through enhanced performance, accountability andJohn Herhalt operational efficiency; we are pleased to learn that senior government leaders in Australia, Canada, Germany, the United Kingdom and the United States feel the same way. I encourage all readers of the Performance agenda to join in the discussion about how, just like organizations in other sectors, governments can strive to work better. I hope that KPMG’s contribution to this debate is a helpful one. John Herhalt Global Government Services Chair KPMG LLP (Canada) The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2007 KPMG International. KPMG International is a Swiss cooperative. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  4. 4. Performance agenda: an international government survey 4 Executive summary Governments in the twenty-first century are under pressure to operate better. This has been brought about by a wide array of societal and technological changes, ranging from globalization and the information technology (IT) revolution to demographic change and rising public expectations. As citizens the world over become more demanding, public sector organizations are being forced to focus on performance. This white paper – based on a major international survey and in-depth interviews with senior civil servants – reviews how governments in Australia, Canada, Germany, the UK and the US are working to improve their operational efficiency. It examines what the priorities are, where the main obstacles lie, and what strategies work best to overcome them. Some of the key findings include: 1. Governments are focused on quality of services, ahead of value for money. Across much of the public sector, service quality and improved productivity are the imperatives. This is especially true for front-line services such as education or health. These priorities come in ahead of greater transparency and accountability and better value for money – although all of these remain important. Given the overall focus on service quality, it is a surprise to discover that although many departments have a formal system for feedback, some do not, or don’t know if they have one or not. 2. Current efficiency projects may not be the ones that deliver the most benefits. The report highlights a possible mismatch between the initiatives currently under way in the public sector, and those that executives believe provide the biggest benefit. For example, much attention is paid to competitive sourcing and e-government schemes, even though these are perceived as providing limited efficiency gains, whereas human capital management and process re-engineering are acknowledged to provide clear benefits. 3. IT can do much to boost productivity, but is held back by poor management and a lack of skills. Technology can enhance productivity, but the public sector suffers too many problematic IT projects. Poor management of IT initiatives, along with little or no choice of available technologies, is part of the problem. Another issue is the ongoing difficulty involved in determining the true costs and benefits of projects. It does not help that only a limited number of technology vendors are big enough to cope with the demands and scale of public sector projects.© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  5. 5. Performance agenda: an international government survey 5 4. Private financing and user fees are favored over direct taxation. As a clear signal that the revenue-side of government is also open to innovation, respondents indicate that public-private partnerships and private finance initiatives are seen as more effective than direct taxation when it comes to financing projects more efficiently. When user fees are added to the equation, more than half of all respondents favor a market-based approach to project financing. 5. Forecasting the costs and benefits of new projects is a major challenge. Even though governments are keen to do more, they struggle to determine the true benefits and costs of potential projects. Forecasting costs and predicting benefits emerged as two of the top three challenges associated with the funding of projects. In turn, this has a direct impact on a department’s ability to secure spending for new initiatives and ideas. Even where projects have cost reduction as a specific objective, nearly eight out of ten respondents admitted that achieving cost reduction targets was a major/moderate problem. 6. The global skills shortage is hitting the public sector. The battle for skills is fast becoming a major problem for many public sector organizations, especially within specialist functions such as IT and procurement. This is particularly vital, given that the strategic management of human capital is regarded as the top measure for delivering efficiency and performance gains. Overall, government officials indicate their strong commitment to performance, efficiency and innovation. The survey shows that governments are increasingly intent on operating more like the private sector, but in a manner that embraces and respects the unique responsibilities and constraints of the public sector. And much like their private-sector colleagues, the government performance agenda is characterized by a tough competition for skills, improvement to project management, and a very strong focus on enhancing service delivery.© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  6. 6. Performance agenda: an international government survey 6 About the research KPMG’s Global Government Services commissioned the Economist Intelligence Unit to produce this report on the Performance agenda: an international government survey. The report is based on the following research activities: • The Economist Intelligence Unit conducted a global survey of 254 public- sector executives from five countries: Australia, Canada, Germany, the United Kingdom and the United States. The respondents represented every major government department. All had management roles, and 37 percent were heads of departments, financial chiefs, directors, deputy directors or their equivalents. About half of respondents came from departments with budgets of up to US$500m, while another one-third represented departments that spend US$1bn or more per annum. • To supplement the survey results, the Economist Intelligence Unit conducted in-depth interviews with senior public sector officials from across the five countries surveyed. Ursula Brennan, chief executive of the Office of Criminal Justice Reform, UK Ken Cochrane, chief information officer for the Canadian Government Tony Dean, secretary of cabinet, Government of Ontario, Canada Dr David Dombkins, national president of the Australian Institute of Project Management Dr Barbara Hendricks, parliamentary state secretary at the Federal Ministry of Finance, Germany Ed Killesteyn, deputy president, Repatriation Commission Department of Veteran Affairs, Australia Ian McPhee, auditor general of Australia Phillip Prior, chief financial officer, Department of Defence, Australia John Thomas, acting director of construction, Washington Metropolitan Area Transit Authority, US Sir David Varney, author of public service transformation report, UK Ian Watmore, head of the Prime Ministers Delivery Unit, UK Danny Werfel, deputy controller in the Office of Management and Budget Office of Federal Financial Management, US Wayne Wouters, secretary of the Treasury Board, Canada The Economist Intelligence Unit wishes to thank everyone who shared their time and insights during the research.© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  7. 7. Performance agenda: an international government survey 7 Introduction Whether privatizing their probationary services or supplying online self-service for millions of citizens, governments of Western democracies are implementing an array of measures to improve efficiency, value for money and performance. Many are borrowing ideas from large commercial enterprises in an attempt to enhance the service they provide. The two types of organizations have plenty in common: keeping thousands of “customers” satisfied, staying within budget, fighting to acquire and retain scarce skills, managing unwieldy IT projects and weighing up the pros and cons of outsourcing certain services. But government agencies have further challenges of their own: the ebb and flow of political parties and greater accountability to the public – not to mention the constant monitoring by a fierce press corps. The Performance agenda reports on the insights of senior civil servants on many related issues. It highlights the major areas of focus, the tools of reform, and the challenges governments can face in implementation. While these challenges are acknowledged openly, it is encouraging that senior government officials recognize opportunities for enhancement; these are further explored in this white paper.© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  8. 8. Performance agenda: an international government survey - Focus on service, not thrift 8 1. Focus on service, not thrift Survey results point to a clear desire to improve the quality of services to the public and a strong focus on performance targets as a way to achieve this. What are the priorities of today’s public sector leaders when it comes to the operational issues they face? This report, based on a survey of public sector executives in five major Western economies, suggests that the majority place quality of services ahead of all other factors. This is especially pronounced in certain countries, such as the UK, and within smaller departments, such as those with budgets of less than US$500m per annum. Overall, 84 percent of survey respondents rated quality of services as either “important” or “very important” within their department. Improved productivity (75 percent), greater transparency and accountability (68 percent), better value for money (67 percent) and improved citizen engagement (52 percent) all trailed the drive for quality improvement. Where’s the focus? Question: Rate the importance of the operational issues within your organization/department. Improved quality of services 84% Improved productivity 75% Greater transparancy / accountability 68% Better value for money 67% Improved citizen engagement 52% 0 10 20 30 40 50 60 70 80 90 Source: Economist Intelligence Unit survey shows percentage respondents selecting initiatives as “important” or “very important” . “It’s about restoring public confidence in government,” says Tony Dean, secretary of cabinet for the Government of Ontario, Canada. By raising service and productivity levels, governments can strive to overcome the notion that the public sector, as a monopoly provider, is unresponsive and inefficient. Overall, 61 percent of government executives agree or “strongly” agree that a tight focus on performance targets is the best way to achieve the goal of better quality services. The US government has made a particular thrust towards performance targets for its agencies, as part of its President’s Management Agenda strategy launched in 2001. The agenda covers five main areas, including strategic management of human capital, competitive sourcing, improved financial performance, expanded electronic government, and budget and performance integration. It requires “clear, specific performance goals” to help direct management efforts, systems of accountability to motivate better performance© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  9. 9. Performance agenda: an international government survey - Focus on service, not thrift 9 and the development of “skills, disciplines, and information needed to achieve performance goals”. “The strategy has been very successful,” says Danny Werfel, deputy controller in the U.S. government’s Office of Management and Budget Office of Federal Financial Management. “Without question, the most important element in improving performance is an accountability framework – how to measure and hold agencies accountable.” Efficiency targets Question: To what extent do you agree with the following statement: A strong focus on performance targets is the best way to introduce improvements to the public sector. 17 Strongly disagree and disagree Strongly agree and agree 61 Source: Economist Intelligence Unit survey shows percentage respondents who “strongly agree” and “agree” and “strongly disagree” and “disagree” , . The cost of accountability Accountability is a major issue for the public sector. Crucial services, funded with taxpayers’ money, need clear chains of responsibility, yet charges of un- responsive bureaucracy are central to the sector’s lack of efficiency. In the UK, a combination of voter expectation and modern technological capability is shifting the emphasis from services answerable to management in London, to account-ability to citizens for the services they want to receive. When it first came to power, the UK’s Labour government favored central targets to improve performance. The first wave of Public Service Agreements, in 1998, set 600 targets across 35 areas of the sector. The approach was not without success. Educational attainment for 16-year-olds is up 45 percent, overall crime levels are down 35 percent and there are nearly 400,000 fewer people on NHS outpatient waiting lists than in 1997. But top-down performance management causes problems of its own. Efficiency can be worsened as organizations pursue the specifics, rather than the spirit, of the goals.© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  10. 10. Performance agenda: an international government survey - Focus on service, not thrift 10 The rules governing a £277m Crime Fighting Fund, for example, were relaxed after complaints that the requirement to spend the money on more police officers was constraining forces’ ability to determine the best response to their local situation. In June 2006, the UK government launched a new strategy for public service reform, based on four parts: fewer targets, a greater emphasis on citizen engagement and measures to address capacity and supply issues. “The first phase had a lot of precise targets that organizations were accountable for delivering against,” says Ian Watmore, head of the Prime Minister’s Delivery Unit. “The new model has four components that, put together, create public services that are accountable to the people that are served rather than the people in the central agency or department.” The intention is to balance accountability with the continued requirement to promote efficiency and value for money. The shift to more integrated, citizen-focused services sometimes creates new problems. Different parts of a service, delivered by different organizations, raise thorny questions about who pays for what and where responsibilities lie. Sir David Varney, author of an influential public service transformation report commissioned by the Chancellor, says the problems must not be allowed to delay progress because citizens’ experiences as customers of the public sector are vital to retaining support. “The service sector is now dominant in the UK economy and unless the government keeps up, the public service record will deteriorate and with that will come less willingness to invest,” he says. The Varney report includes recommendations for the development of a government-wide citizen identification system and the creation of a single point for citizens to change their details, both of which will come up against issues of blurred accountability and budgeting. The only way to find the answers is to tackle the questions in practice, and apply lessons learned from smaller projects. “You can sit down and have a theoretical discussion about potential problems, or you can visit local authorities who are already getting on with this stuff,” says Sir Varney.© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  11. 11. Performance agenda: an international government survey - Working smarter, or just harder? 11 2. Working smarter, or just harder? Results show that many tools for change exist, but these need to be implemented strategically to have the best effect. Even with the desire to improve public sector performance, the survey suggests that governments are not always focusing on the right initiatives to improve organizational effectiveness. The survey suggests this mismatch is partly due to the fact that, in general, performance and efficiency measures are most often introduced as government-wide initiatives, rather than by individual agencies. Overall, competitive sourcing and e-government initiatives are shown to be the most widespread programs for reform, having already been implemented by 60 percent of government bodies. But when asked which efficiency measure was likely to provide most benefit, executives rated both of these measures relatively poorly, with e-government being cited by just 8 percent and competitive sourcing by a mere 5 percent. This suggests that often time and resources would be better invested in areas where there will be quicker or more substantial rewards. By contrast, strategic management of human capital emerged not only as a widely implemented initiative, but also as far and away the most beneficial performance measure. Canada’s Mr Dean is in no doubt about its merits: “We need to move HR to the front,” he says. “It’s about who we hire, how we keep them, how we develop them. If we don’t have employees engaged, how can they engage with the public?” Of course, situations differ across countries. For example, human capital management is especially important in Australia, where the buoyant economy has contributed to a major skills shortage. In contrast, Dr Barbara Hendricks, parliamentary state secretary within Germany’s Federal Ministry of Finance, says her government has a large pool of highly skilled staff, especially within senior management. Outside of strategic management of human capital, which was selected by 28 percent of respondents, process re-engineering was rated as the second-best efficiency measure, in terms of the benefits it delivered – chosen by 16 percent. However, it lies seventh in a list of 12 performance initiatives when it comes to implementation priority. More encouragingly, there is no shortage of zeal when it comes to implementing performance initiatives, although executives do flag the risk of “initiative fatigue”. The survey shows that more than half of government bodies have already implemented a wide array of performance improvement projects, or plan to do so within two years. These range from smarter procurement and joined-up (integrated) government to increased private-sector partnerships and improved transactional performance, as well as those aimed at improving financial accountability and management, and financial performance; it is up to public managers to choose the ones best-suited to their needs.© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  12. 12. Performance agenda: an international government survey - Working smarter, or just harder? 12 Where the effort is being made … Question: Which of the following has your organization/department implemented, or plans to implement over the next two years? E-Government 23% 60% Strategic management 19% 55% of human capital Process re-engineering 29% 38% Shared services 21% 39% Joined-up government 29% 28% Headcount reduction 15% 32% 0 10 20 30 40 50 60 70 80 90 Plan to implement Implemented … isn’t always where the benefits lie Question: Which of the following performance/efficiency measures is likely to provide the greatest benefits? Strategic management of 28% human capital Process re-engineering 16% Improved financial 10% accountability & management E-government 8% Competitive sourcing 5% Headcount reduction 2% 0 5 10 15 20 25 30 Source: Economist Intelligence Unit survey. Shows six initiatives from a list of 10, including top three.© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  13. 13. Performance agenda: an international government survey - Working smarter, or just harder? 13 KPMG perspective Share and share alike The survey responses around the issues of human capital management come as no great surprise. In the modern workplace, with skills shortages often in evidence, the challenge is to make the most of the existing workforce, utilizing training and development programs and making the more straight-forward business processes as interesting as possible for employees. However, once an employer has gone as far down this route as possible, then a shift towards a shared service arrangement becomes much more likely. The experience of KPMG firms closely matches the results of the survey in a number of important areas. The survey signals quite clearly that officials are looking to pursue initiatives such as process re-engineering, e-government and joined-up government along with their attention to shared services. Our experience suggests it is often the case that leading governments and organizations will pursue these initiatives together: process re-engineering can make shared services much more efficient; shared services are a tool to promote more joined-up government; and e-government projects often lead to necessary investments in technology to facilitate a move to shared services. As one example of initiatives aimed at maximizing the value of human capital in operations, our member firms work internationally demonstrates to us that organizations are ever more aware of the savings and service level improvements that can be realized through strategic sourcing decisions. What the survey confirms, is that while there is an understandable desire on the part of government officials to focus first on shared service models within and across their organizations, there is an emerging appetite for outsourcing and even off-shoring. One can only assume that this attitude reflects officials desire to improve the overall quality of public services delivery, and they are willing to consider a variety of options to leverage their complement of people and skills to its maximum advantage. If this requires augmentation externally, and can be managed well, then there is a wide range of possibility open to them. With a more internally focused look, the growing popularity of shared services is also apparent from the survey, and officials expect to see this growing still further in the coming years. Increasingly large number of public and private sector organizations now appreciate the value of using shared services, especially in the area of basic transaction processing, a means to work smarter, not just harder. Available technology solutions are improving almost by the day. And perhaps most importantly, as the success of well-managed shared services implementation grows across governments, there is a real opportunity to learn from each other - shared services indeed. Written by KPMG© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  14. 14. Performance agenda: an international government survey - Working smarter, or just harder? 14 Quality or accountability? Question: Which of the following operational issues do you think will be most urgent for each of the following areas of government in your country? 55% Education / skills 6% 9% Treasury / finance 47% 24% Citizenship / immigration 29% 44% Health 10% 45% Transportation 5% 0 10 20 30 40 50 60 70 80 90 Quality of service Accountability Source: Economist Intelligence Unit survey. Shows most urgent operational challenges selected for five departments. Departmental differences Outside of their own departments, the survey also probed executives on what operational issues they believe are most urgent within other areas of govern- ment. Responses show a dramatic variation in priorities, and some mismatches with what executives from these departments are actually focused on. The focus on quality of services is most acute within front-line services such as Health, Education, Transport and Social Services, as these customers are likely to voice their concerns the loudest. Other respondents think transparency should be the leading initiative within departments such as the Treasury, Home or State department and Citizenship and Immigration. As regards the Treasury, this dominates all else, and is regar- ded as five times more important than improved service quality. But Treasury executives think differently: they rated quality of service as second only to transparency in terms of what they’re focused on. Meanwhile, officials reckon value for money should be highest on the agenda within Transport, Social Services and Health, while within those departments it vies with improved productivity for second place, but lies behind improved quality of services. Perhaps the overall lesson from this is that the definition of “working harder” varies by department – not a surprising result given the breadth of responsibilities delivered by governments.© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  15. 15. Performance agenda: an international government survey - The human capital challenge 15 3. The human capital challenge The search for talent is a competitive one and sometimes can be satisfied by looking outside government. To improve performance and service delivery, a depth of talent and skills is obviously critical. But the public sector faces two main barriers when it comes to “people issues,” neither of which is easily overcome: compensation, especially when competing against private enterprises; and skills shortages, in some cases connected again with the salaries that can be offered to attract talent. “People issues are very important,” says Wayne Wouters, secretary of Canada’s Treasury Board. “You can change business processes but won’t make progress if you haven’t got a very motivated and professional public service.” The Canadian government, along with several others, is faced not only with an ageing public service, exacerbated by a long period of cut-backs in new appointments, but also low unemployment and a very competitive job market in the broader economy. “It’s a big challenge,” says Mr Wouters. “We need to brand the public service and sell it better to graduates and experienced hires. We don’t pay as high as the private sector but we can offer a varied and interesting career and the work is challenging.” He also advocates greater mobility between the private sector, government and academia. “It’s been a tradition to spend a whole career in one or the other. That’s got to change,” argues Mr Wouters. Ian McPhee, Australia’s auditor general, agrees that it is hard to vie with the private sector but points out that job packages in Australia are competitive up to the level of middle management. Even so, “at a more senior level, the gap opens,” he concedes. Management skills have meanwhile been eroded following higher staff turnover (some taking early retirement), and because more opportunities are available now for part-time and consulting work. Agencies are reviewing approaches to retention, such as offering flexible working to provide better work/ life balance, and the government has given them flexibility for setting salary levels. When looking at ways to ease the problem, not as many are against outsourcing services to foreign countries as might be imagined. True, more than half of respondents are against this, but about one in five disagree that outsourcing must remain within the country and one-quarter remain neutral on the point. In or out? Question: To what extent do you agree or disagree with the statement that outsourced services should remain within the country? 22 Strongly disagree and disagree Strongly agree and agree 53 Source: Economist Intelligence Unit survey.© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  16. 16. Performance agenda: an international government survey - Making it happen 16 4. Making it happen Implementing positive change requires skill, focus on performance, and the right incentives for success. Faced with the range of challenges in implementing performance programs, what is the best way forward? Executives are pinning hopes on several strategies, but skills development stands out far above the others. Worldwide, two-thirds of executives back skills development as the best way to help realize their aims. The ratio is even higher within smaller departments with sub-US$500m budgets, at 70 percent. In the UK and Australia, skills development is seen as even more key, cited by three-quarters of respondents. Focus on skills Question: Which of the following initiatives do you think will be the most effective in helping implement performance/efficiency measures? Increased skills development 66% Improved performance measures 38% Different incentive structures 35% 0 10 20 30 40 50 60 70 80 Source: Economist Intelligence Unit survey. Shows top three from a list of eight. Targets and incentives On a different tack, 38 percent also believe that improving performance measures would be highly effective in supporting better implementation of performance programs, while 35 percent see different incentive structures as the answer. The US government, for example, has decided to discard intricate performance measures that are baffling to the general public. Instead, it has introduced a simple grading system of red, yellow or green for each agency. Each quarter, agencies are rated on their status on overall goals for stated initiatives and progress on implementing action plans. The scorecard detailing each agency’s progress is published quarterly. If an agency is charged with disposing of a certain amount of surplus property or reducing improper payments by a certain date, it gets a red card for failing to do so – simple as that. Results indicate that this approach has succeeded in concentrating the minds of agency chiefs. What lies at the heart of successful efficiency measures, however, is “a fundamental questioning of the business processes,” says Ed Killesteyn, deputy president of the Australian government’s Repatriation Commission Department of Veterans Affairs. “You need to get to the core of the process and work out what value you can bring to the process, and what value other organizations can bring. Otherwise you’ll only tinker.” Mr Killesteyn points out that the objective of government departments is always “better services, but at what cost?”© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  17. 17. Performance agenda: an international government survey - Partnering with the private sector 17 5. Partnering with the private sector Partnerships with the private sector remain a key area of focus, but so too are strong connections directly with citizens. Another important finding relates to the growing importance of public-private partnerships. Nearly two-thirds of respondents are working with the private sector, and 45 percent of respondents agreed that it needs to play a greater role in driving public sector efficiency. Many joint projects are highly successful, although the relationship can be challenging at times. One successful example comes from the Australian government, which has greatly increased the efficiency of its visa-processing by teaming up with local travel agents in foreign countries, as well as tweaking existing software used by airlines. The previous processing system was far too slow for the rush of visitors for the Olympics Games in Sydney in 2000. In one fell swoop, the government both cut back visa-processing offices around the world and dramatically speeded up the visa process: important, as delays cause tourists to look elsewhere. Furthermore the quicker processing of visas was achieved without compromising border integrity. KPMG perspective Partnerships: the way forward for major projects? The increased reliance on Public Private Partnerships (PPP) as a way of financing major projects is indicative of the pressure mounting on governments around the world to deliver improvements in public sector services, without necessarily dipping into the public purse through income taxation. It has been widely accepted that the private sector can deliver innovation, risk management and cost efficiency on major infrastructure projects. The question that governments have to ask is whether those efficiency gains are sufficient to outweigh the fact that they (the government) can sometimes borrow money at a lower rate if they were to finance the project themselves. The evidence from the EIU survey that the “approval rating” for PPP appears to have sneaked past direct taxation as the preferred financing route, indicates which way governments are leaning. However, it is worth noting that the status of the debate over the merits of PPP can vary from country to country, and is also coupled with a countrys willingness to introduce user-fees such as tolls (which rank as third- preferred in the EIU study). This debate will be colored by how much experience a country has with PPP financing, and while some countries have been running PPP projects for many years, other major economies are only now getting their first taste of it. The relative preference for partnerships over taxation will ultimately rest on the first-hand experience of how the partners – public and private sector – work together. Significant improvements in structuring and managing large scale infrastructure partnerships have been witnessed in recent years, even given some© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  18. 18. Performance agenda: an international government survey - Partnering with the private sector 18 fairly fundamental differences in the core objectives of public and private sector organizations. Still, if there is one overall lesson that is emerging in the debate, it is that whereas aligning objectives takes investment, care and effort, reconciliation and true partnership can be achieved, and be achieved successfully. Written by KPMG Connecting with citizens Given the general focus on improved quality – and on emulating and working with the private sector – one might expect citizen engagement to be something of a priority. In fact, about one-third of all executives polled admitted that their government department didn’t have a formal system for gathering and analyzing feedback from citizens at all – or they didn’t know whether they did or not. In the US and Germany, the total is even higher. Those departments that have actually tried to embrace deeper engagement with citizens say it has in fact helped them improve the service they deliver. “We now have more open engagement with stakeholders,” says Mr McPhee from the Australian government. “It’s a better way of managing risk for many processes. The challenge now is to look at service provision through the eyes of the citizen.” The Australian government is working to make it easier for a citizen to deal with a range of different agencies. In the process, however, each must retain accountability, adds Mr McPhee. Dr Hendricks says there is now more of a “service-orientation” in the German government, especially where it is in direct contact with the citizen. One example is for tax and passport offices to make opening hours more customer-friendly. There is also an effort for different departments to present a single face to the individual citizen. Canada has been working on an e-government program to put 130 of the most commonly used services online in both French and English. As well as building the horizontal structures to get it to work across different departments and even jurisdictions, input was gained from the public from the outset. The results are a double-digit increase in user satisfaction with government services between 2000 and 2005. “The project was client-centric from the start,” says Mr Wouters. “It started with the question: What’s best for the citizen? We set user satisfaction targets and regularly measure feedback from citizens.”© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  19. 19. Performance agenda: an international government survey - Partnering with the private sector 19 Getting feedback? Question: Does your organization/department have a formal system for gathering and analyzing feedback from citizens who use your services? No 26 Yes 59 7 Don’t know 9 Not applicable Source: Economist Intelligence Unit survey. Get engaged! Question: To what extent do you agree with the statement that deeper engagement with citizens has helped us to improve the service we offer Deeper engagement with the citizens has helped you improve the services you offer? Strongly Disagree and disagree 15 Strongly Agree and agree 62 Strongly disagree and disagree 15 Strongly agree and agree 62 Source: Economist Intelligence Unit survey shows percentage respondents who “strongly agree” and “agree” and “strongly disagree” and “disagree” , .© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  20. 20. Performance agenda: an international government survey - Partnering with the private sector 20 The public v private debate The term public-private partnership (PPP) covers a multitude of deal structures where a government service is funded or operated, or both, through a partnership between the public sector and private business. It is widely used but still controversial in some settings. The collapse of Sydney’s AU$680m Cross-City Tunnel scheme is held up by critics as a classic example of why the PPP Private Finance Initiative (PFI) does not work. In PFI deals the company often expects a return on its capital investment through service charges. In the case of the Sydney toll tunnel, which opened in August 2005, the revenue structure relied on assumed traffic volumes that proved unrealistic. The operators anticipated initial throughput of 35,000 vehicles per day, rising to 90,000 over the first year. But actual usage hovered around the 30,000-per-day mark and the Cross City Motorway company went into receivership with debts of more than AU$560m in December 2006. Reality is too complex for PFI, say critics. “The private sector wants boundaries wrapped around the infrastructure for the duration of the deal, but in reality things change,” says Dr David Dombkins, national president of the Australian Institute of Project Management. Attempts to force vehicles through the Sydney tunnel by changing street-level traffic systems worsened both congestion and public support. “PFI is financial engineering focused on getting the deal done rather than serving the community,” says Dr Dombkins. Despite problems, PPP is still popular with governments. Australia’s Partnerships Victoria scheme, for example, covers 16 projects worth AU$4.5bn. And the UK government PFI program is currently worth around £40bn. In Washington DC, a different model of PPP is gaining ground. The city’s US$102m metro station at New York Avenue used private funding as the crucial lever to get the plan off the ground. The scheme to regenerate a light industrial area by improving transport links was first raised in the city mayor’s economic development plan. But the scheme only went from the “wish list” to the “to do” list when local landowners agreed to pitch in US$25m to get it started, according to John Thomas, acting director of construction for the Washington Metropolitan Area Transit Authority. “Local landowners knew the station would make their property more valuable and that it was an investment that would reward them handsomely,” he says. The New York Avenue deal included US$25m of cash funding and another US$10m-worth of real estate donated for the site. The US$25m was provided up-front by the city, to be paid back through adjusted business property tax rates over the next 30 years. And as real estate values rise thanks to the area’s improved transport links, so too will the rate of payback. The model has proved so successful it is now being used for the scheme to extend a rail link to Dulles airport. And the costs involved to expand the metro entrance serving a newly-built baseball stadium are to be shared between the city authorities and a local property developer building a new office block on the site.© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.
  21. 21. Performance agenda: an international government survey - Shaking up funding 21 6. Shaking up funding Reform and change are costly, but evidence is clear that taxes are not the only source of funding. A striking finding is that tax instruments are generally ranked lower than market-based instruments when it comes to financing projects most effectively. While handling a mixture of funding sources, many survey respondents feel that public-private partnerships and private-finance initiatives are better than taxation and direct funding from the national budget for effective delivery of public sector projects. About one-fifth also support user fees, such as toll roads, while long-term government bonds are seen as the least effective approach. Any alternatives to tax-based funding are usually decided on a case-by-case basis, based on their individual merit. In the case of Australia, about one-third of the cost of the Department of Immigration and Citizenship is covered by visa fees, whereas in other agencies the opportunities for this kind of independent funding are far lower. Private financing is especially popular in Germany, where less than one-quarter of respondents believe tax instruments are more important. There, levying for services is widespread in local government, and federal government is now taking an interest. Early private-public partnerships have led to ventures such as the construction of army barracks and road tunnels. Others are simply much further behind the curve: Canada, geographically one of the world’s largest countries, has just two toll roads. Look beyond tax Question: Assuming a mix of funding sources, which of the following types of funding approaches should be emphasized most for effective delivery of public sector projects? Public-private partnerships / 36% private finance initiatives Taxation / direct funding 33% User-fees, where applicable 18% Long-term government bonds 9% Other 4% 0 5 10 15 20 25 30 35 40 Source: Economist Intelligence Unit survey.© 2007 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated.

×