Center of Government The Engine of Modern Public Institutions

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1 Perspective Chucrallah Haddad Moncef Klouche Youssef Heneine Center of Government The Engine of Modern Public Institutions

2 Contact Information Beirut Chucrallah Haddad Partner Youssef Heneine Senior Associate Dubai Moncef Klouche Principal Farah Hussein also contributed to this Perspective.

3 EXECUTIVE SUMMARY Public administrations throughout the world depend on effective centers of government to ensure proper development, coordination, and execution of national policies and programs. The center of government underpins the entire government system: This central entity supports the government s highest decisionmaking body (the cabinet or council of ministers) and plays an instrumental role in facilitating all government work. It ensures that the government s functioning is consistent with national objectives and makes the best use of government resources. Although its importance is universal, its structure and emphasis are not. Countries have developed different models depending on their priorities, conditions, and power structures. However, there is one common factor shared among the most effective centers of government: They take a holistic approach, melding four critical roles. First, centers of government are instrumental in steering overall policy making, facilitating the formulation of national vision and strategy, synchronizing planning and budgeting, and coordinating legislation. Second, many centers of government take a leading role in managing performance, evaluating government entities against predetermined targets, and overseeing the implementation of high-impact programs. The third role is in helping governments reinvent themselves: Governments continually develop new and improved versions of themselves through enhanced institutional efficiency, strategic human resources management, and innovative public service delivery. Finally, effective centers of government provide secretarial support to the cabinet, serve as gatekeepers, and coordinate internal and external communications. Some countries in the Middle East and North Africa (MENA) region have already started down the path to establishing fully integrated, holistic centers of government, recognizing their importance as a fundamental part of governance. Others are not quite there yet and can improve dramatically the efficiency of their government by channeling their key functions, responsibilities, and oversight through a central organization. 1

4 KEY HIGHLIGHTS Centers of government have four overarching roles: steering policy making, managing performance and programs, reinventing government, and supporting the cabinet. Establishing an optimal center of government has emerged as a leading priority for MENA region governments. It is critical for governments to take a holistic approach in designing an effective center of government to ensure consistency and continuity. A HOLISTIC APPROACH TO DESIGNING THE CENTER OF GOVERNMENT Governments in the MENA region are at a critical juncture in their evolution. Their citizens are demanding more effective delivery of government services. At the same time, a wave of decentralization has washed over major sectors, making it more difficult for governments to maintain oversight and facilitate coordination among multiple stakeholders. There is a need for a more results-oriented approach to government work, which requires a single entity working to drive reforms and ensure accountability through performance monitoring. At present, a number of governments in the MENA region are hindered in their ability to address these imperatives either because of the way their center of government works or their lack of such a single organization. To effectively address this obstacle, countries across the MENA region must migrate toward a rigorous, more empowered center of government structure. Although variations exist in the types of structures of the center of government and its positioning and interaction with other government entities, all centers of government should take a holistic approach to performing 10 critical functions that fall into four key areas (see Exhibit 1): Steering overall policy making Managing performance and programs Reinventing government Supporting the cabinet Exhibit 1 Center of Government Roles and Functions D. Supporting the Cabinet A. Steering Overall Policy Making D2. Government Communication A1. National Strategic Planning A2. Planning and Budgeting Synchronization D1. Cabinet Administrative Support C3. Service Delivery Improvement CENTER OF GOVERNMENT A3. Policy and Legislation Coordination B1. Performance Management C2. Strategic Government HR Management C1. Institutional Governance and Efficiency B2. Government Program Management C. Reinventing Government B. Managing Performance and Programs Source: 2

5 Not all MENA countries are focusing on the same functions, or need to be. Some are stressing one over another for example, a country may be focused more on performance management than service delivery improvement. There are no prescriptions or unified models to emulate: There are too many constituents, powerful stakeholders, and varied interests to consider in each country. Furthermore, each country has its own vision and hierarchical structure to contend with. All countries, however, will benefit from integrating a centralized entity to facilitate government work, foster cooperation between entities that have operated in relative isolation, and support existing programs. Center of Government Size and Structure There are no standard models for either the structure or size of centers of government. These entities take myriad forms and have different compositions across countries, depending on the country s respective government set-up, priorities, historical context, and power base. Furthermore, governments are continually evolving and changing to meet the needs of their citizens, leaving no room for a single, all-encompassing organizational model for policymakers to emulate as a best-in-class example. Centers of government do typically include a cabinet secretariat i.e., an entity that provides administrative support to the cabinet. They also usually include an entity that manages the affairs of the head of government, typically known as the prime minister s office. Some centers of government are larger in scope and include entities responsible for administering government human resources and service delivery improvement. To illustrate the difference in structure among centers of government, one can look at countries such as Australia, Canada, Ireland, and the UAE, each of which has an integrated center of government, in that the prime minister s office and cabinet secretariat operate as departments or units under the same central entity. By contrast, in India, the center of government is nonintegrated, with the prime minister s office and cabinet secretariat each carrying out its respective roles independently and completely separate from the other. The size of the center of government staff also varies, depending on a number of factors such as the size of the country, as well as the scope of the functions the center of government assumes. Ireland and Norway have relatively small centers of government with fewer than 15 staff in each. Large centers of government exist in Australia and Canada, where staff size ranges from 300 to 800 employees. The UAE and the U.K. fall in the middle, with approximately 100 and 200 staff members, respectively. Centers of government have some other common traits. Many of them comprise two major groups of stakeholders: the public administration and the partisan political entities. As a result, more and more centers of government today embody a nexus between the administrative and political spheres, requiring them to manage up to ministers in their capacity as cabinet members and manage down to public service departments. Furthermore, today s centers of government are expanding their outward reach to encompass the private sector and civil society, both of which are essential players that contribute to informed policy making. This partnership is commonly known as government by network. 3

6 STEERING OVERALL POLICY MAKING A center of government plays a pivotal role in steering a nation s coherent and unified policy making. This entity helps define vision, agendas, and strategic and operating plans for the country which is the starting point for all of the other nine functions. The center of government also has a major role in synchronizing planning and budgeting, and facilitating policy coordination throughout numerous government entities. National Strategic Planning To help develop long-term and shortterm policy planning, the center of government guides government entities in formulating the country s vision and driving the nation s agendas, such as the economic agenda (fiscal, monetary, and trade), social agenda (education, health, labor, and social welfare), and the like; and in establishing actionable strategic plans consistent with the longterm vision. Saudi Arabia, Kuwait, UAE, Qatar, and Jordan are examples of countries in the region that have undertaken such policy planning. The center of government formulates the country s long-term vision in conjunction with various government entities and other stakeholders, and then translates that vision into long-, medium-, and short-term plans (see Exhibit 2). Exhibit 2 Integrated Framework for Long-term to Short-term Policy Planning Economic Agenda Country Vision Geopolitical Social Agenda Agenda Driving Agenda Long-term View 10- to 20-Year Public Policy Agendas Human Infrastructure Capital Agenda Agenda Services Agenda Fiscal, Monetary, and Trade Agenda Sectoral and Enabler Development Strategies Ministerial/Government Entities Strategies Ministries/Government Entities Operating Plans Enabling Agenda Strategies Plans Medium-term View 5-Year Strategic Plans Short-term View 1- to 2-Year Operating Plans Source: 4

7 Over the long term, after the leadership of the country sets the overall direction, the center of government guides public officials and private-sector senior members through the process of formulating a vision. It encourages government departments and private-sector management teams to provide input and feedback through consultations, interviews, and workshops. This participatory and inclusive approach ensures that all stakeholders buy into the vision, and provides a streamlined way forward in terms of economic, social, and geopolitical development models. In the medium term, the center of government determines how the overarching country vision translates into specific strategies for various sectors and sets priorities for those sectors. These specific, targeted sector strategies are typically led by a taskforce, including key government stakeholders and related nongovernment organizations. These entities are responsible for building and sustaining ownership of priority areas, performing detailed analysis, identifying key initiatives, and ensuring accountability and relevance with other high-priority areas. In the short term, these sector strategies are used as a basis for ministries and government entities to develop their annual or twoyear operating plans, enabling the execution of policy agendas. The operating plans detail a battery of programs and initiatives that should specify actions, responsibilities, time line, human resources, and budget requirements, as well as key performance indicators (KPIs). Most countries in the MENA region have either launched or are in the process of launching national strategic planning, recognizing the importance of this central government function. However, all are at different stages in articulating their vision and implementing the resulting strategy in a systematic way across all government entities, as well as establishing performance management systems to measure progress. Planning and Budgeting Synchronization The process of synchronizing planning and budgeting processes catalyzes government policies by allocating funds to carry out national initiatives. The center of government plays a crucial role in linking the allocation of financial resources with the broader national strategic plan, aligning the annual process with government priorities, and ensuring that the budget is prepared in a manner conducive to the implementation of government policies. For example, in Qatar, the Ministry of Economy and Finance takes the lead on the budgeting and financial performance management process, but coordinates closely with the General Secretariat for Development Planning (GSDP), the ministry of cabinet affairs, and the cabinet secretariat to ensure that priorities for development are aligned with the overall government budget. It is particularly challenging to separate the various elements of government planning strategic planning and budgeting due to their inherent interdependencies. However, it is useful to look at the sequencing of government planning to understand the various roles that centers of government can play in financial resource allocation. The two primary models for government planning are the sequential and 5

8 integrated models; the choice of model will be determined by the degree of coordination between the center of government and the budget department, as well as the maturity of the government system. The sequential model is a relatively basic approach that entails separate development of the strategic planning and budget processes, typical of the governments in Canada, Finland, and Denmark, among others. In this model, the center of government kicks off the planning cycle by setting overall government priorities, and then develops plans and performance targets for each department (see Exhibit 3). Budget setting takes place in the middle of the planning cycle, and the overall government budget development follows a topdown approach. The sequential model yields a single consolidated departmental planning document (with multiyear budget forecasts). In the integrated model, departmental plans and budgets are developed simultaneously: The determination of government priorities and budget targets kicks off the planning and budgeting cycles (see Exhibit 4). In contrast to the sequential model, the integrated model follows a bottom-up approach. This model requires mature systems and effective coordination mechanisms more so than the sequential model to ensure synchronization between strategic planning and budgeting. It requires feedback and communication between entities that too often work in silos. The U.K. and Singapore Exhibit 3 Sequential Strategic Planning and Budgeting Model Strategic Planning Set Government Priorities Set Strategic Planning Guidelines Develop Strategic Plan Review Strategic Plan Approve Preliminary Strategic Plan II. Departmental Annual Budgets Approve Final Strategic Plan Budgeting I. Departmental Strategic Plans and Performance Targets Set Budget Strategy and Targets Develop Departments' Budgets Review and Endorse Departments' Budgets Approve Departments' Budgets Develop Overall Government Budget Approve Overall Government Budget Source: 6

9 both have adopted the integrated model of government planning. The center of government can play a role in mediating between government entities and the budget department on budgetary issues to ensure sufficient financial flexibility within a clearly established governance framework. Responsibility for setting sectoral ceilings for the government budget varies from one country to another and depends on the budgeting process that each country adopts. In countries that use zero-based budgeting, for instance, the budget department typically takes the lead in setting sectoral ceilings in coordination with the center of government. In other countries, a joint committee composed of representatives from various ministries determines such ceilings. Regardless of which entity is driving the financial resource allocation process, it is crucial to link all groups to ensure that the budgeting process is done in step with government s broader strategic plan. In the MENA region, planning and budgeting largely are not linked, presenting opportunities to develop more effective and efficient systems. Policy and Legislation Coordination The center of government also facilitates coordination among multiple stakeholders to develop policies that are consistent with the national strategy. Countries typically have a multitude of entities that undertake government work individually for the collective wellbeing of society. Yet, due to the Exhibit 4 Integrated Strategic Planning and Budgeting Model One Consolidated Departmental Planning Document Strategic Planning Set Government Priorities Set Strategic Planning Guidelines Develop Strategic Plan Review Strategic Plan Approve Strategic Plan Budgeting Set Budget Strategy and Targets Develop Departments' Budgets Review and Endorse Departments' Budgets Approve Departments' Budgets Develop Overall Government Budget Approve Overall Government Budget Source: 7

10 increasing complexity of many of the policy issues facing governments today and the need to get input and buy-in from myriad entities, centers of government are finding it more important than ever to ensure coordinated responses that cut across traditional boundaries. The center of government facilitates coordination among key executive entities, such as ministries and agencies, to ensure consistent, coherent, and integrated national policy making. It also encompasses other relevant stakeholders (such as parliamentary committees) to enable an effective legislative process that yields timely and high-quality legislation. Policy Coordination Mechanisms Centers of government vary in their capacity to provide policy advice and expertise on major proposals originating from ministries. In some cases, centers of government set overall policy coordination mechanisms, but do not get involved in the policy making. In such cases, line ministries and departments typically drive the policy development process independently or through consultation with other ministries or departments. In other countries, centers of government, supported by sectoral experts, vet proposals and provide relevant advice to ministries, ensuring that matters raised to the cabinet are consistent with overall government strategy. For example, Australia s center of government, the Department of the Prime Minister and Cabinet, has extensive in-house policy expertise and resources to provide advice regularly. MENA governments should establish centers of government that provide such policy advice, either by creating permanent committees or informal coordination processes. This will help foster interaction between various sectors that have long operated in silos. Cabinet committees are one of the most effective policy coordination mechanisms that centers of government can establish. These committees can be either ad hoc or permanent in nature. They typically are formed to address government issues that involve multiple entities, to achieve a key government objective, or to undertake a shortterm intervention on a particular issue necessitating immediate and coordinated action, such as a national health epidemic or natural disaster. These cabinet committees relieve the cabinet of some of the burden it bears, as many policy issues require coordination but need not be deliberated by the highest decisionmaking authority in the country. Some centers of government such as those in Australia, Ireland, and New Zealand develop frameworks to assess whether the creation of a new cabinet committee is needed or whether the work can be carried out through an existing committee or government entity. In doing so, centers of government can retain control of the number of such committees and avoid potential gaps and overlaps. Finally, more and more centers of government are looking outside 8

11 traditional boundaries to coordinate and implement policies through public private partnerships and expanded government networks. Centers of government are realizing that cultivating a collaborative network of partnerships with the private sector, NGOs, and civil society is paramount to achieve meaningful government policies that address citizen expectations. Legislative Coordination Centers of government also play a prominent role in the legislative process, providing advice on proposals originating from ministries or departments. In some cases, the center of government reviews laws to ensure that they are consistent with the national policies and are not outdated or defunct. Additionally, the center of government coordinates between various entities involved in the legislative process to ensure that laws are issued in a timely manner and adhere to necessary procedures. In many parliamentary systems, legislative coordination between the executive and legislative branches of government is carried out in large part by the ministry of parliamentary affairs. Having a coordination apparatus between the executive and legislative branches allows better alignment between national policymakers and legislators. Ministries responsible for parliamentary affairs are characteristic of parliamentary systems such as Lebanon and India. There are numerous variations on how centers of government coordinate legislative issues, depending on the respective roles of the center of government and the parliament. In the U.K., the Economic and Domestic Affairs Secretariat advises the legislation committee on the content and management of the legislative program by tracking bills, coordinating closely with various entities, and reporting back to the legislation committee as necessary. Additionally, that cabinet office has strong legal expertise to support departments in developing and delivering legislative commitments. In Australia, cabinet legislative and liaison officers in each department provide support to the cabinet secretariat by managing the legislative functions of their respective departments and by coordinating the department s legislative program. The UAE s cabinet secretariat plays a vital role in ensuring liaison between the different entities involved in the legislative process. In Qatar, the legislative department within the cabinet secretariat assists in legislation formulation and also undertakes reviews of the existing laws and suggests updates or amendments if needed. Despite the variations in how they are structured within the government, centers of government play a key role in ensuring that legislative proposals are not turned back for lack of clarity or procedure, once they are presented for cabinet consideration and that they are consistent with the national strategic plan. 9

12 MANAGING PERFORMANCE AND PROGRAMS Dedicated units within the center of government monitor overall government performance against established goals; they also coordinate the various implementation programs generated by the national strategic plan. In this role, the center of government undertakes the two key functions of managing performance and managing government programs. Performance Management The center of government works with government entities to define KPIs in line with national priorities. It communicates the results of these evaluations to internal and external stakeholders, including the prime minister, ministers, parliament, and the public, among others. The center of government then can analyze these results to improve decision making for budgetary allocation decisions and strategic revisions (see Exhibit 5). It is essential for centers of government to lead, establish, and champion performance across the government. In most cases, the performance management function is governed by the cabinet office, whereas the ministry of finance focuses on monitoring financial KPIs. In the initial stages of establishing a performance management framework, centers of government play a particularly important role in assisting in capacity development across government entities especially in advising entities on setting up performance management units and actively managing their performance. At later stages, the center of government s role evolves into coordinating activities and providing support to performance management units within government entities. Jordan and the UAE are examples of MENA countries that have started developing ambitious, achievable performance targets. Exhibit 5 Performance Management Cycle Starting Point - Revised priorities and strategies for ministries - Target outcomes in line with national priorities - Activities and resources to deliver Update Ministries Priorities Define Ministries Measures and Targets - Key Performance Indicators - Performance management results used to enhance decision making in: - Budget allocations - Policy and programs reviews Modify Required Ministries Budgets Monitor Performance - Department performance data update - Results measurement and gaps - Dashboard report drafting and communication - Follow-up on actions and results - Annual performance reporting process - Reporting guidelines to departments - Ministries Annual Reports - Consolidated Government Performance Report Report and Communicate Performance Evaluate Performance - In-depth performance analysis - Critical issues assessment - Value-for-money reporting Source: 10

13 Centers of government also play an important role in gauging the performance of cabinet committees and assessing their effectiveness. Typically, they handle this process via an evaluation process, using reporting tools, in which committees must submit periodic progress reports; these allow the center of government to maintain close oversight. For example, in Ireland, cabinet committees submit a work program to the cabinet secretariat and are assessed annually according to predetermined criteria that take into account committee meeting frequency, member attendance, and alignment of work with the committee s initial mandate. Governments are increasingly using performance management frameworks as they strive to be more results oriented. More and more, centers of government are relying on performance results to inform budgetary allocation and other strategic decisions. The use of performance management also has expanded to encompass measuring progress on issues that span many sectors and involve multiple stakeholders. This is especially vital for centers of government to maintain a government-wide perspective on key issues. The Role of Public Service Agreements The public service agreement (PSA) is a popular performance management tool, which centers of government use to improve performance results in public service delivery. Governments are increasingly turning to PSAs to set definitive performance targets for public services that are in line with citizen expectations. The use of PSAs creates a set of mutually agreed upon minimum standards for public services, which helps reduce disparities in outcomes and establishes a clear mechanism for accountability. In the U.K., the center of government uses PSAs to spell out the key priority outcomes that the government is set on achieving in each spending cycle. These PSAs typically are underpinned by a single agreement, which is shared across all contributing departments and developed in consultation with partners and frontline workers, delineating the role of each stakeholder. The PSAs also describe a limited amount of national outcome-focused performance indicators, set by the center of government, which would be used to measure progress. For example, one such delivery agreement is focused on building more cohesive, empowered and active communities. The body of the PSA spells out the vision, the measurement indicators, and the strategy and stakeholders that will be involved in delivering this overarching objective. Such PSAs offer a clear direction and create accountability by explicitly stating what the government wants to achieve, how it will measure progress, how it intends to get there, and who will be involved in the process. 11

14 Government Program Management The center of government is well positioned to manage the implementation of national strategies and programs, or large-scale systemic organization changes. It also may coordinate programs to ensure efficient implementation of a master plan, and report high-level implementation status to the cabinet. In managing the implementation of national strategies, the center of government typically faces various risks and challenges. It is incumbent upon the center of government to play several roles. It must manage large-scale, highly complex, and interdependent programs that involve numerous stakeholders. In addition, the center of government needs to address capability gaps in specific government entities and ensure political buy-in along all phases of implementation. Finally, the center of government needs to communicate continuously with various stakeholders to ensure alignment and public support. If not addressed effectively and cautiously, these challenges may delay or even jeopardize the implementation of national strategies. To mitigate these challenges, the center of government must demonstrate leadership, conveying an image of a strong authority empowered to make decisions, with the capacity to work in full coordination with all government entities. Managing the Implementation Process To manage implementation of national strategies, the center of government should establish a central implementation unit (CIU) a time-limited, structured entity to effectively manage largescale, interdependent, and highly complex programs. This CIU should be the eyes and ears of the center of government, monitoring implementation, tracking progress, and bridging competency gaps. Depending on the level of complexity of the programs, their expected impact, and the capabilities of the various government entities, the center of government may opt to establish different types of CIUs. The most basic CIUs focus on core program management activities, such as aligning and developing individual project plans, setting key performance indicators for special programs, tracking progress, addressing implementation risks and issues, and communicating progress and achievements. More sophisticated CIUs would cover special project execution, content assurance, or capacity building, according to their 12

15 level of complexity, impact, and organizational capabilities. Special Project Execution: The CIU takes the lead on directly executing high-impact or highly sensitive programs in cases when the relevant government entities lack adequate implementation capabilities (e.g., developing a strategy for a government agency lacking planning capabilities, or undertaking an audit on a highly sensitive government issue). As such, the CIU would determine the scope of the special project, define its concept, develop its design, and undertake execution and follow-up activities. Content Assurance: The CIU supports government entities in reviewing their deliverables, assessing recommendations, validating assumptions, and testing key findings. Through content assurance, the CIU can guarantee a high quality of implementation. Capacity Building: The CIU builds capacity within government entities by transferring knowledge, delivering training, providing assistance, and deploying new capabilities. These activities would ensure that all stakeholders have the common skills and adequate tools to work together. Managing People As the CIU focuses on processes, management, and tasks, it also needs to ensure proper implementation of large-scale government programs by focusing on the people who will manage the process. As a result, the CIU should provide the tools to garner the buy-in of the various stakeholders. In doing so, it often applies change management programs to build awareness, cultivate understanding and capacity, and sustain change and transition among all government workers, through tailored communication, culture, and training programs. Such programs aim to capture the thoughts and ideas of all affected stakeholders, clarify implementation challenges, and secure the buy-in of stakeholders throughout the entire implementation program. Finally, various lessons have emerged from implementation programs undertaken in the Middle East. The center of government should: Ensure consistency of leadership direction Be capable of managing a large number of stakeholders, as the chaotic intervention of too many stakeholders could lead to failure Include highly skilled people within the CIU to fill organizational gaps when needed Introduce change management early in the implementation process. The central implementation unit needs to ensure proper implementation of large-scale government programs by focusing on the people who will manage the process. 13

16 REINVENTING GOVERNMENT Government continually reinvents itself striving to create or develop an improved version of itself. It may do so by defining key institutional requirements for an effective, efficient, and accountable government; establishing a capable civil service; or supporting individual ministries and departments in developing new (or improving existing) service delivery. In this role, the center of government enables institutional governance and efficiency, strategic government human resources management, and service delivery improvement. Institutional Governance and Efficiency Centers of government are seeking to improve overall governance, due to an emerging landscape of greater decentralization requiring better oversight and accountability. This imperative is especially vital in light of the share of public resources spent on government entities in the MENA region and elsewhere. Consequently, organizational structure reform has emerged as a top priority on most government agendas, and centers of government continuously are engaged in the design, assessment, and monitoring of the overall institutional governance framework. The center of government designs the overall institutional governance framework to promote lean and responsive public administration. It reviews the executive branch s internal decision making for effectiveness and transparency, and establishes high-level organizational guidelines for executive bodies to adopt best practices conducive to operational efficiency. Governments reform their organizational structure for a variety of reasons. The central government may decide to merge programs that are related but handled by separate entities in order to capture synergies, reduce overlap, and centralize accountability. The center of government also may decide to shift policy directions and create a new entity to manage and champion new governmental priorities. Sometimes, governments react to national exigencies, as was the case in the United States in the aftermath of September 11, 2001, when the executive branch of the government swiftly established the Department of Homeland Security, requiring the merger of 22 agencies encompassing 170,000 employees. In all cases, such massive reorganizations can offer the center of government opportunities to improve management and performance. 14

17 Structuring Government Entities Government entities typically differ in their jurisdiction, legal status, and mandate. However, most government entities, including those in the MENA region, fall into one of five main categories, each with a distinct level of involvement in key governmental jurisdiction areas (see Exhibit A): Ministries: Independent entities functioning under public law; directly accountable to government and highly involved in policy and planning, as well as setting standards and regulations. Ministerial agencies: Single-purpose bodies that are considered part of a ministry and retain no separate legal identity and function under public law; focused on delivery of noncommercial services to citizens or support services to other government bodies. Public law administrations or authorities: Partially or completely separate institutional bodies from ministries; they undertake administrative activities with a focus on regulation. Advisory and coordination bodies: Entities that are ad hoc or standing in nature and function under public law; they provide external advice during policy planning and regulation formulation. Private law bodies: Entities operating under private law; they encompass stateowned enterprises undertaking commercial for-profit activities and not-for-profit enterprises focused on service delivery activities within a limited budget. Government entities also tend to differ along the key dimensions of governance and control, human resources, and financing. These typical structures and dimensions should be considered by centers of government when devising organizational guidelines or advising executive bodies on the optimal organizational structure and governance for institutional efficiency. Exhibit A Government Entity Types Level of Involvement, by Jurisdiction Areas Jurisdiction Areas 1. MINISTRIES 2. MINISTERIAL AGENCIES 3. PUBLIC LAW ADMINISTRATIONS AUTHORITIES 3A. EXECUTIVE AUTHORITIES 3B. REGULATORY AUTHORITIES 4. ADVISORY AND COORDINA- TION BODIES 5. PRIVATE LAW BODIES 5A. STATE-OWNED ENTERPRISES 5B. NOT-FOR-PROFIT ENTERPRISES Policy and Planning High Low Low Low Medium Low Low Standards and Regulations High Low Medium High Medium Low Low Service Delivery Low/High 1 High High Low Low High High 1 Ministries could have different levels of involvement in service delivery depending on their main functions, e.g., sovereign ministries tend to be less involved in service delivery. Source: Derek Gill, Signposting the Zoo: From Agencification to a More Principled Choice of Government Organisational Form, OECD Journal of Budgeting, vol. 2, no. 1, 2002; analysis 15

18 Decisions to create new government entities should be based on the entities contribution to the public interest (see Exhibit 6). The center of government first must assess the purpose behind the proposed creation of a new entity, and whether it will improve the quality of administration in the public sector. Once the center of government determines that there is a need and that it will benefit the people, the next step is to evaluate options on how to fulfill the function, ensuring that it is distinguishable from other entities with no overlap or ambiguity regarding its future role. The process of delineating the legal basis for the creation of a new government entity must be submitted to cabinet for final approval. In addition, centers of government are taking concerted steps to improve government performance and structure by clarifying the roles and functions of top management, governing boards, and associated ministries and setting criteria for membership and operation. Qatar s cabinet secretariat, for example, has a department dedicated to government development and regulation. It reviews organization structure proposals from government entities and ensures alignment with established organizational principles before approval. Exhibit 6 Guidelines for Creating New Government Entities No End the Process Public Interest Is the activity/function essential to meeting the needs of the country? No Yes Government Role Is there a legitimate and necessary role for government in this activity/function? KEY CRITERIA - Fit with government strategic plan Yes Questions End of Process Existing / New Entity Type Default: No Need for Government Involvement Yes Current Situation Is the function currently provided in an optimal way? - Operational efficiency - Financial efficiency No End the Process Yes Default: Contract Out to Private Sector Commercial vs. Non-commercial Can it be done by the private sector (with some regulation)? - Regulatory capabilities - Operational and financial efficiency No Control What type of public body is best suited? - Functional area (policy, regulation, service delivery) - Level of independence and governance Retain/Create Function in Ministry/Agency Create New Non-commercial Agency within Ministry Create New Government Entity Source: 16

19 Countries in the MENA region need to take a systematic approach to creating such entities. There are a common set of questions that each government must address, such as: Should such an entity be an agency, an authority, or a ministry? Once that is decided, additional questions will determine the type of organizational structure and then its role and the types of people it should attract to work there. Systems of this sort will arrive at different answers, different solutions, but all should drive toward creating an entity that interacts in a seamless fashion with existing government entities. Strategic Government Human Resources Management The successful development and implementation of a national strategic plan largely is driven by highly qualified and committed people. The center of government should develop a government-wide human resources strategy to support the country s national strategic plan. In OECD countries, many centers of government have moved toward decentralization of human resources management (HRM) responsibilities, shifting them from central bodies to line departments (see Exhibit 7). This is an astute progression as long as Exhibit 7 Human Resources Management Systems in Public Service CENTRALIZED Delegation DECENTRALIZED Characteristics - A central body oversees formulation and implementation of human resources policies and procedures - This system features a high level of control and standardization - Central body mainly sets the policy guidelines, advises on the implementation of these policies and regulations, and monitors performance - This system increases decisional autonomy of departments and line managers on personnel matters Benefits - Increases potential for consistency across departments - Enables high level of control in order to meet financially approved limits - Allows for some economies of scale within the human resources function - Alignment of authority with accountability decisions on HR-related matters are made by the individual agencies - Reduces central controls, and therefore allows managers to make rapid personnel management decisions Challenges - Decisions on key issues that affect the individual departments are taken elsewhere - Responses to demands coming from the departments are slow - Employees in the personnel agency may have restricted view of the overall goals and challenges of the departments - Requires strong control and monitoring systems to ensure consistent execution of policies - Requires sufficient technical and management capacity in each department and at the central level - Requires sophisticated systems to feed personnel information back to the central agency Source: 17

20 the center of government maintains standardized guidelines and oversight. Its emphasis should be on providing guidelines and defining basic standards, rather than maintaining in-depth control, as is appropriate to the strategic role of central government bodies. This decentralization empowers individual government agencies, departments, and line managers, while maintaining clear mechanisms for individual accountability. In addition to human resources (HR) strategy and policy development, the HRM value chain consists of organization and manpower; compensation and benefits; recruitment, staffing, and succession planning; personnel services; and training, appraisal, and career planning (see Exhibit 8). The center of government typically defines policies and guidelines to ensure that civil servants are motivated and productive, and it monitors their performance. Exhibit 8 Human Resources Management Value Chain in a Decentralized Model HUMAN RESOURCES MANAGEMENT (HRM)/INFORMATION TECHNOLOGY (IT) HR STRATEGY AND POLICY DEVELOPMENT ORGANIZATION AND MANPOWER COMPENSATION AND BENEFITS RECRUITMENT, STAFFING, AND SUCCESSION PLANNING PERSONNEL SERVICES TRAINING, APPRAISAL, AND CAREER PLANNING Center of Government - Develop and plan HR strategies (e.g., nationalization) - Develop new HR policies and communication plans - Assess efficiency and effectiveness and enhance: - Organization structures - Manpower plans - Job families and job descriptions - Employee classifications and specifications - Working processes - Assess and design compensation strategies - Perform salary surveys and develop: - Grading structure - Salary, benefits, and allowances plans - Employee recognition and incentives schemes - Retirement plans - Assess and develop: - Training strategies - Performance management strategies - Career path plans - Training curriculum Government Entities - Define: - Manpower needs - Staffing levels - Administer: - In-service benefits - End of service benefits - Assess and develop recruiting strategies, staffing, succession, and retention plans - Develop and manage relationships with employee sources - Perform candidate sourcing, screening, interviewing, recruiting, and placement - Administer: - Payroll - Leaves - Promotion - Dispute resolution - Manage labor relations - Define training needs - Deliver training - Manage training results (e.g., employee feedback) - Perform employee appraisals Source: 18

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