Measuring performance of the public sector-problems and appraoches

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Measuring performance of the public sector-problems and appraoches

  1. 1. Performance Measurement IF YOU CANNOT MANAGE , YOU CANNOT DELIVER IF YOU CANNOT CONTROL , YOU CANNOT MANAGE IF YOU CANNOT MEASURE , YOU CANNOT CONTROL
  2. 2. PRESENTATION STRUCTURE
  3. 3. <ul><li>Performance Measurement is the design, implementation and use of quantifiable indicators to judge success. </li></ul>Performance Measurement Political Managerial Technical PERFORMANCE MEASUREMENT
  4. 4. Performance Measurement Culture Strategy Customer Strategy Control Strategy Consequence Strategy Core Strategy PERFORMANCE MEASUREMENT A CORE COMPETENCE
  5. 5. Program Outcome OUTPUT INPUT PROCESS Policy Outcome Resources to build process Effectiveness of Government Policies Effectiveness of Government Programs Efficiency of Systems Activities to create output Are we doing things right? Are we doing the right things? COMPONENTS OF PERFORMANCE MEASUREMENT
  6. 6. Performance Measurement Tools UNI-DIMENSIONAL MULTI-DIMENSIONAL Traditional methods Public Sector Value Model Performance Prism Performance Pyramid Earning Per Share Return On Investment Net Economic Value Traditional methods Balance Scorecard
  7. 7. <ul><li>Financial Measures (input measures ) </li></ul><ul><li>Linked to the budget of the organization </li></ul><ul><li>Controlled by the central office </li></ul><ul><li>Costs of line budget items. </li></ul><ul><li>Grants made on the basis of amount spent the previous years. </li></ul><ul><li>Sometimes estimates taken from the regional or field offices. </li></ul><ul><li>Circuitous method of funds release leads to delay -surrender of funds </li></ul>TRADITIONAL METHODS
  8. 8. TRADITIONAL METHODS <ul><li>Effectiveness (output measures) </li></ul><ul><li>Quantitative( # of cases disposed, recoveries made, targets achieved during year) </li></ul><ul><li>Qualitative measures (Mistakes made in computation, incorrect interpretation of law) </li></ul><ul><li>Internal and external audit </li></ul><ul><li>Points out mistakes and losses to exchequer </li></ul><ul><li>Fix responsibility </li></ul>
  9. 9. <ul><ul><li>NEV is a sophisticated tool that enhances managerial cost consciousness and provides more accurate financial data to optimize resource utilization </li></ul></ul><ul><ul><li>Enables more effective prioritization of initiatives/ development projects </li></ul></ul><ul><ul><li>It accounts for the cost of capital in addition to normal operating costs and is thus a primary means to achieve maximum value from the capital and resources of an organization </li></ul></ul><ul><ul><li>NEV = Net Operating Surplus After Tax - Capital Charge </li></ul></ul>Operating Revenue – Operating Expenses less Tax Cost of Capital X Capital Base NET ECONOMIC VALUE ( NEV)
  10. 10. <ul><li>The negative delta NEV means that there has been a decline in financial performance compared to the previous year. </li></ul><ul><li>Analysis shows that it occurred due to – </li></ul><ul><li>Increase in operating expenditure & decrease in income. </li></ul><ul><li>High cost of capital and capital base </li></ul>Performance measurement on NEV (National Council of Social Services)
  11. 11. <ul><li>Missing link between vision & mission of the agency to actual performance </li></ul><ul><li>Main Focus on avoidance of misuse of funds rather than EFFICIENCY </li></ul><ul><li>Outcomes of an organization may not be always measurable in quantitative terms </li></ul><ul><li>Ex-post facto analysis- Lagging in nature </li></ul><ul><li>Lack of flexibility (rules-governed) </li></ul><ul><li>Does not emphasize learning as the end product of performance assessment. </li></ul>LIMITATIONS OF UNI-DIMENSIONAL TOOLS
  12. 12. RATIONALE OF MULTI-DIMENSIONAL TOOLS <ul><li>Movement from only a financial perspective to a holistic performance analysis </li></ul><ul><li>Mission translated into measurable outcomes </li></ul><ul><li>Incorporates leading performance measures (predictors of success) </li></ul><ul><li>along with lagging measures (indicators of success) </li></ul><ul><li>Focus on Organizational learning </li></ul>
  13. 13. <ul><li>Provides a balanced view of performance by integrating both financial and non-financial information. </li></ul><ul><li>A communication tool that helps in the implementation of a strategy or a change management programme. </li></ul><ul><li>Creates a better linkage between the performance measurement system and the organization’s strategy </li></ul>BALANCE SCORECARD- developed by Kaplan and Norton
  14. 14. Traditional Framework of BSC FINANCIAL CUSTOMER Modified Framework of BSC INTERNAL PROCESS LEARNING & GROWTH FINANCIAL Desired Outcome: Public trust and confidence in the government organizations COMMUNITY
  15. 15. Annex B2 Maximising Inmates’ Reintegration Potential &quot;Enhancing inmates’ potential for reintegration by providing rehabilitative programmes and opportunities” STAKEHOLDERS / CUSTOMERS INTERNAL PROCESSES LEARNING & GROWTH FINANCE Developing a system of seamless throughcare by collaborating with our partners and the community Effective rehabilitation through the delivery of programmes that target risk & needs Developing our capabilities in managing alternative sentencing options Integrating inmates as part of our human resource Increasing employability Increasing inmates’ propensity to change Improving public perception of ex-offenders Forging strong family bonds Enhancing KM capabilities Developing staff in programme delivery Leveraging on Technology Leveraging on Mass Media Operationalizing New Budgeting Framework Denotes Department’s key thrusts Denotes Department’s key levers Note: STRATEGIC FOCAL AREAS & THRUSTS (FY 2003 - 2005)
  16. 16. Actual Perspective BUILDING SCORECARD: An Illustration
  17. 17. Needed! <ul><li>TARGET MEETING VALUE MAXIMISING BEHAVIOR </li></ul><ul><li>Public Service Value Model is based on Mark Moore’s Strategic Triangle. </li></ul><ul><li>Government organizations are often caught between competing pressures to increase outcomes, while reducing costs. “Do More with Less” </li></ul><ul><li>The PSV framework enables Government organizations to understand and balance these competing pressures to create increased value. </li></ul>PUBLIC SECTOR VALUE MODEL(PSV)
  18. 18. <ul><li>How to measure if an organization is imparting public value? </li></ul><ul><li>Two KEY drivers : </li></ul><ul><li>Achievement of outcomes or thrust areas which are weighted basket of social achievements </li></ul><ul><li>Cost effectiveness (cost vis-à-vis outcome) </li></ul><ul><li>= Outcome/ (operating cost + Capital charge) </li></ul><ul><li>Hypothesis: Greater value is created through </li></ul><ul><li>generating improved outcomes in a more cost </li></ul><ul><li>effective manner </li></ul><ul><li>A Trade off between cost effectiveness & outcomes </li></ul>PSV – A STEP AHEAD
  19. 19. Outcome Focused Budget Focused Value Driven Sleeping Giant Value Destroying Movement Value Creation Movement PRINCIPAL PRODUCT OF PSV ANALYSIS (Revenue Department of Arizona)
  20. 20. PSV COMPASS
  21. 21. REVENUE OUTCOME MODEL(Dept of Arizona)
  22. 22. REVENUE OUTCOME MODEL(Dept of Arizona)
  23. 23. <ul><li>Promotes a “value” mindset so greater focus is on CITIZENS </li></ul><ul><li>Alignment of outcomes to vision and mission with rigorous measurement of outcome metrics </li></ul><ul><li>Incentivising ‘right’ sort of behavior </li></ul><ul><li>Allows agencies to plan for future by evaluating spending decisions and investment trade-offs by using Future metrics </li></ul><ul><li>Compares historical performance with the average performance over a specified period of time </li></ul><ul><li>Facilitates deeper process analysis to study which programs worked or failed </li></ul>WHAT PSV DOES
  24. 24. <ul><li>Tells you the “what” but not “why </li></ul><ul><li>Simplifies complexity- loss of richness of analysis </li></ul><ul><li>May rely on proxy measures when there are intangible outcomes </li></ul><ul><li>Difficulty in making comparisons between organizations except where multiple agencies work to deliver similar Outcomes e.g. local education authorities. </li></ul><ul><li>Weightings have to be assigned with utmost caution (Risk of Manipulation) </li></ul>WHAT PSV DOES ‘NOT’ DO
  25. 25. LESSON DRAWING……. <ul><li>The tragedy in life doesn't lie in not reaching your goal. The tragedy lies in having no goal to reach. </li></ul><ul><li>Goal setting has traditionally been based on past performance. This practice has tended to perpetuate the sins of the past </li></ul><ul><li>Risk of Potential over performance </li></ul><ul><li>Developing adequate set of performance measures is a difficult task. </li></ul>
  26. 26. LINKING CONSEQUENCES TO PERFORMANCE <ul><li>What gets measured gets done, what gets measured and fed back gets done well, what gets rewarded gets repeated. </li></ul><ul><li>BUT THE IRONY IS …… </li></ul><ul><li>Everything that counts cannot be counted and everything that can be counted does not count – Albert Einstein </li></ul><ul><li>WHICH CAN LEAD TO…… </li></ul><ul><li>You get what you measure. Measure the wrong thing and you get the wrong behaviors </li></ul>
  27. 27. LOOKING FOR ANSWERS!!!!!! <ul><li>How to assign value to Experimentation and innovation in public sector </li></ul><ul><li>Shared public private operations-how is it to be measured </li></ul><ul><li>What constitutes ‘adequate’ performance? How well are we doing it in absolute and not just in relative terms </li></ul><ul><li>PERFORMANCE – from whose perspective? </li></ul>
  28. 28. TO CONCLUDE WITH…….. <ul><li>The only man I know who behaves sensibly is my tailor; he takes my measurements anew each time he sees me. The rest go on with their old measurements and expect me to fit them .&quot; - George Bernard Shaw </li></ul>

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