Targeting and reporting performance - Finnish experiences

Transcription

1 1.2.6 Performance Management and Performance Based Budgeting Day 4 Targeting and reporting performance - Finnish experiences Mr Heikki Joustie 20 January 2011

2 20 years of result orientation Lump sum budgets for operative actors Government Agencies Yearly State Budget as a key document of performance management Performance agreements between sector Ministries and underpinning Agencies Result targets presented in the 4 years running framework-budget Yearly reports to Ministries and merged report to the Parliament

3 Division of roles in the public administration machinery Keeping responsibilities clear requires hierarchal division of work between tiers of government. Targeting outcomes is predominantly political issue sector specific approach to be done by ministries Targeting outputs is something to be negotiated and agreed between policy level actors and operative units government agencies or similar

4 Distinguishing outcomes and outputs Outcomes mean normally policy level targeting for societal impacts derived from Government Programs or other high level political line drawings Outputs mean operational targets for public service delivery like - amount of services provided in fixed time period - improvement in production efficiency (costefficiency) - keeping or improving the quality standard

5 Societal impacts - outcomes Political targets are often challenging to be based on clear indicators like diminishing open unemployment by 50% One actor (e.g. Ministry of Labour) can very seldom alone achieve broad outcome targets without co-operation from other ministries and social actors Political responsibility is often sector specific, in this case the Minister of labour, while problems tend to be widely horizontal

6 Operational results - outputs The playground of outputs is efficiency (cost benefit thinking) rather than effectiveness (political goals) It looks like quite easy to produce different type of output indicators for all kind of administrative actions too easy More difficult is to select the most important ones You get what you measure

7 Performance negotiations Parts of negotiations are Ministry, represented by highest permanent officials and Agency, represented by Director General Preliminary discussions take place during the fiscal year by budget and substance experts of both organisations. In large organisations discussions normally take place between top management of an central gov. agency and its regional/local units.

8 Documents of performance management Four year financial frameworks Aannual state budgets Agreement Reports Statements upon results achieved

9 Key documents 1 Four year running plan for spending limits and performance targets This plan gives ground for yearly budget and performance negotiation exercise Planning is conducted by each ministry concerning it s domain. The plan consists of resources and annotated performance targets for four years. The resource part of the plan will be accepted by Government, co-ordinated and presented by the Ministry of Finance The plan is introduced to the Parliament for discussion but not for decision

10 Key documents 2 The annual State Budget the performance targets are presented to the Parliament in hierarchical manner: 1. Main title societal impact targets for each ministerial domain (outcome level) 2. Chapter policy specific outcome targets 3. Budget line agency specific output targets

11 Performance agreements between ministries and government agencies (operative actors) Drafted early Spring Key documents 3 Conducted and signed early Autumn after the budget bill has been forwarded to the parliament Amended after budget decisions if needed Published in common database with free entry for everybody

12 Key documents 4 Yearly performance reports in connection with the final accounts of the fiscal year Report from every agency which has been a partner of the agreement (output level) Ministry report concerning it s whole domain (outcomes) Government report to the Parliament (outcomes from the political accountability point of view)

13 Key documents 5 Every ministry is obliged annually to issue a statement upon all of the performance reports in it s domain. In the statement the ministry gives it s opinion concerning actions needed because of the rate of the fulfilment of targets. All the statements are published in the same public database where the agreements can be found.

14 Parliamentary discussions Government report of total performance is dealt together with the report of State Audit Office in the Parliament s Audit and Control Committee annually The Parliament adopts it s opinion on the basis of committee proposal

15 The use of indicators In the Finnish performance management system each ministry can freely opt the indicators it uses, in targeting the activities both for outcome and output levels and to be followed in reporting Indicators are required to be based on measurement or in systematic evaluation.

16 Hierarchy of indicators The basic hierarchy is seen in the budget book: Main title level (for each Ministry) verbal targeting for societal impacts is acceptable but indicators are desired Chapter level (outcomes) and budget line level (outputs) are required to be based on figure form indicators

17 Accountability 1 Non achievement in outcomes causes predominantly political discussion in the Government and it normally causes new and more effective policy formulation In case of non achieved outcome targets the more broad political responsibility issue is discussed and decided in the parliament The threshold for dramatic moves is rather high. The majority government normally gets release in parliamentary discussions

18 Accountability 2 Poor performance on the operative action in the agency causes corrective action depending on the circumstances Results will be analysed and corrective actions formulated in the discussions between the agreement partners If the reason is bad management, changes in management are one possible option used every now and then

19 The performance prism Societal impact targets (outcomes) Societal effectiveness Policy effectiveness: Societal impacts (outcomes) Operational performance targets (outputs) Operational efficiency Outputs and quality management How operations and use of finances have influenced the societal impacts economy productivity profitability costrecovery rate commodities and public goods service ability and quality Operational results (outputs) Human resources development