Presentation of Alex Matheson, International consultor an Associate of the Economics and Strategy Group (ESG), in the "I International Seminar on Strategic Management in the Public Sector" in Ceplan, Perú

1. International Seminar on Strategic
Management in the Public Sector
CEPLAN : 17 August 2014
“Public Sector Strategic Management
a Whole-of Government Perspective”
Alex Matheson
1

2. Strategic Management
The application of Strategic Thinking through
Strategy Formulation, Strategic Planning and
Strategy Deployment (Fred Nichols)
Translates readily to public agencies – but its
implementation requires a different
management approach and capacities from
traditional bureaucracies

3. Whole of Government SM means taking account
of the dynamics of key interfaces between:
• Separated Powers
• Politics and Administration
• Planning and Budgeting
• Central agencies and line ministries
• Government and Citizens
And of phase of national
development(“basics first”)

4. OECD members have diverse systems
of government
• Republics and constitutional monarchies, unitary or federal, with
presidents or prime ministers, bicameral or unicameral legislatures
• Under administrative law or common law, with a strong Executive or a
strong Parliament, under close or distant judicial scrutiny, with a Corps
des Compts or an Auditor General, within a written or an unwritten
constitution,
• Heads of Government may be directly or indirectly elected, Ministers may
be voted or appointed. General elections may be proportional , or first
past the post.
• Powers are differently separated, and each branch of government
differently organised.
These reflect constitutional history. But more importantly they signify that
nations are animated and distinguished by cultural forces rooted in their past.
These differences, formal and cultural, are equally influential in the
organisation of public administration.

5. But governance elements in common
• From the evolution of the modern state has emerged
– democracy and citizenship which originated in Greece;
– civil service in China;
– rule of law, separated powers and secularity in Rome;
– representation, in the city republics of mediaeval Europe;
– the nation state belonging to its people, from France;
– the constitutional monarchy and competitive political
party from England ;
– and written constitution. judicial review and federalism
from the United States.
• Each OECD state has its own mix of these elements

6. Governance is a Work in Progress
• A third of OECD members, were under non democratic forms of
government in recent history. The key “reinvention” has been the
spread of constitutional and democratic systems of government
since the middle of last century.
• Governance is therefore a work in progress. Not only are many
countries still in transition from regimes which lacked core
elements of what we now consider good governance, but that idea
itself is in motion.
• Governance has to continue to adapt in response to such pressures
as the spread of national and international commerce, shifting of
powers between levels of government, technologies of mass
persuasion- and mass destruction, the permeability of national
borders, the vulnerability of free societies to terrorism, and the
influence of globalized communities of values and interests- for
good and for bad.

7. Trends in OECD public management
• Governments try to adapt to a fast –changing
environment – while holding the nation together
• Key factors for change are
– the scale and sophistication of commerce
– the demand for extended reach of govt regulation
– widening disparities amongst citizens
– More complex public policy problems
• Reponses have been top down budgeting, agencies
more autonomous and tailored to purpose, contracting
in and out.
• High – and so far unmet -demand for better whole of
government strategic management

8. New Zealand public sector
reforms
• Born from political and economic crisis early ‘80s
• Big bang economic liberalisation and followed by far
reaching management reforms
– Modernised performance budgeting and reporting
– National regulatory reform
– Wide Delegation of management authority to departmental
(CEOs)- reduced central personel management regulations
– More use of non-public service public agencies under new
governance framework
– Govt withdrawal from many activities and creation of SOEs for
infrastructure network
– CEOs and most public servants on term contracts
– Use of GAAP accounting for department and government
accounts -

9. 20 years later..
• NZ continues to be rated as least corrupt by TI
• Open economy a considerable success
• Budgeting and accounting continue to be world class
• Proportional representation (PR )system electoral has
replaced first past post- as part of general reaction
against high-handed style of reforms
• Fragmented Public service structure has impeded
knowledge management & policy coordination.
(structural churning and silos)
• Policy advisory role/capacity of PS declined

10. 20 year later continued
• Feedback on public policy impact has been
unsystematic and weak overall
• New-style regulation has contributed to some
high profile disasters
• (Some) sector ministers getting too involved in
departmental management and structure
• Impact of reforms considered to have further
strengthened Executive (despite move to PR)

11. On reflection
• The extreme emphasis on operational efficiency, and the
organisational ideology employed, produced an unbalanced public
service system in which the collective interest of government was
inadequately protected.
• The radical nature of the public service reforms had an adverse
impact on governance values in particular relating to the political
administrative interface.
• There have been attempts by a number of NZ governments to
retro-fit a greater capacity for strategic management on the NZ PS
system . The current government has recently passed legislation to
try to strengthen the influence of the three central agencies over
ministries and departments.
• New Legislation on “Policy Stewardship” to reinforce professional
policy advisory responsibility of public service chief executives

12. Enhancing strategic management – a
NZ case study
Output reporting too detailed for CE/departmental performance
management- so CEs were responsible for KRAs (Key Result Areas)
In mid 90s public service developed SRAs (Strategic Result Areas)
to capture govt’s principal goals for their term in office
SRAs were used in resource planning as a basis for providing “new
money” to ministries which made a good case for contributing to
one or more SRA

13. NZ SRAs on reflection..
This process was not continued by subsequent
governments.
Nevertheless a number of governments set up
other processes for the same purpose .
Government s felt a need to steer and monitor
their major political undertakings- perhaps more so
since PR inspired produced Coalition Agreements.
But do the political priorities for a 3 year term
equate to strategic goals from national perspective?

14. From Evaluation of OECD country assistance to Public
Governance Reform in developing countries
• Least successful area was support for public
service reform
• Most successful were for audit and PFM reforms
• Why ? Latter have “high specificity and low
transactions” –compared with civil service
systems with low specificity /high transactions
• Also civil service not under organised scrutiny –or
sharp demand pressure (unlike PFM and audit
with role of Legislature and market pressure)

15. For Consideration..
Because public management arrangements are
imbedded in a complex governance system – it is
important that initiatives – such as Strategic
Management-or Budget reform , be developed and
managed and monitored as part of a wider vision of
how the overall national system must change.
Lessons from other countries
• avoid “instrument fixation” in promoting
systemic change
• Governance system and public management
design interact – for better or for worse