Background Paper Reforms in Public Administration Date 22 may 2012 FINAL Page 1/10 In the theme Reforms in public administration the Innovative Public Services Group has taken a glance back and drawn lessons from specific examples of reforms in central government administrations in order to adjust to the circumstances deriving from the crisis. Focus has been on the changes in public administrations that are now or in near future, stimulated by the crisis and other challenges for public administrations. Where the HRWG focused on the crisis impact on human resources and cost reductions initiatives e.g. downsizing of workforces and cutbacks in pay, the IPSG focused on reforms with an organisational and task oriented approach to answer the question: How can the public administration become more effective and efficient through modernisation and innovation of the public services? Focus has been on three focus areas for reforms: Performance management and austerity measures Citizen focus and involvement to enhance prioritisation Digitalisation and e-government to reduce cost. The brief gives an introduction to the debates and try to sum up on the following: 1. Some lessons learned on the three focus areas 2. Trends in ideas and reforms in public administration reforms 3. Challenges in implementation of public administration reforms Work methods During the Danish presidency the theme has been addressed through presentations from experts and scientist and cases from the member states. The IPSG has discussed presentations and different key questions on state of play in the member states. The findings are summarised in this paper that describes trends, lessons learned and challenges in designing and implementing reforms to create a more effective and efficient public administration.
2/10 1. Some lessons learned on the three focus areas The discussions at the IPSG meetings have shown that the challenges and approaches vary greatly between member states. Both the content of reforms and the institutional context and the process aspects differ from country to country. For example, a discussion arose during an IPSG meeting regarding the tendency to centralise or decentralise different areas of responsibility in public administration reform. Even though many countries have introduced reforms that centralise and integrate tasks, in for example shared service centres, other countries have implemented reforms that further decentralised tasks. The following lessons learned, based on the presentations and discussions of the IPSG, are therefore only tentative and will not be representative for the state of play in all member states. The reflections and lessons can be seen as provisional points inviting further discussion. Performance management and austerity measures A more effective, efficient and performance-oriented public sector is an important approach to the financial crisis, mounting demands for better public services and a need for public accountability and transparency. Performance reforms seek to refocus management and budgeting processes away from inputs towards results and outcomes, to ensure a focus on goals and customers. A lesson learned is, that performance management not only should address productivity but also outcome. Outcome in one case was defined as the results an institution attains in its surroundings via its services and products. If the efficient produced output doesn't have the intended outcome it is not necessarily an effective organization. It is therefore important to establish information and documentation whether the institutions output creates the desired values (outcome). The means to create outcomes are often dependent on agencies and other decentralised institutions. It is therefore a primary task in performance management to engage the employees, middle-management and top level management of these agencies and decentralised institutions. To be able to succeed the performance system and the defined outcomes needs to make sense to them. Citizen focus and involvement to enhance prioritisation Many member states have worked with strategies to mobilise and bridge the gap to citizens or customers (OECD 2011b). The strategies span many different approaches such as for example customer satisfaction management, customer journey mapping, citizen consultation and different types of co-design, co-decision and co-production initiatives. Some countries experiment with innovative co-production approaches to
3/10 service delivery based on partnerships that governments form with citizens, users and civil society organisations. These approaches can offer creative policy responses that enable governments to provide better public services in times of fiscal constraints. Although co-production and citizen involvement are still in the developmental stage in many countries, early efforts appear to lead to cost reductions, better service quality and improved user satisfaction (OECD 2011c). Many member states in the IPSG see citizen involvement as an important way to trigger innovation in the public sector and to bridge conflicting demands and expectations from users and staff while having to balance the budget. A lesson learned is, that senior management support is crucial when trying to implement citizen focused innovations in public administration. To be able to create the necessary commitment it is important to show solid business cases and establish systematically measured outcome of services. Clear outcome measures make it possible to show the results of the innovation in efficiency gains and cost savings. It is also the experience of some member states that the most difficult part of the innovation process is not to find issues to change, but to negotiate the proposed challenges with other agencies and ministries. A major challenge in co-production is, that the public administration needs to be able to distinguish between when to keep control and ensure rules and rights, and when to let go and harness the resources of external partners and citizens. Digitalisation and e-government to reduce cost The crisis and the resulting austerity initiatives have spurred many governments to rethink their e-government priorities and digitalisation strategies role in supporting the recovery. E-government is seen more than ever as at the core of public sector reforms, and policy makers consider it as a pivotal policy tool to enable governments to do more with less. E-government strategies aim to exploit new efficiencies, create more effective ways of working and improve productivity within the public sector (OECD 2011a). One aspect of digitalization is seen in the shared services initiatives conducted in many member states in e.g. Finance, HR and Procurement. Shared services reforms aim at streamlining and aligning processes and utilizing ICT to join-up various corporate functions. The initiatives often focus on standardized and simplified corporate processes across Government, to reduce the deficit, achieve sustainable savings and make Government more efficient. The introduction of shared service and centralized IT systems to some extent runs counter to the traditional NPM recommendations where disaggregation and decentralization are expected to result in efficiency gains.
4/10 A lesson learned is, that implementing shared service centres are not always a smooth and easy process. Some institutions resent that they lose control of the functions and funds are removed. The new shared service centres need to prove, that they are capable to ensure the same service and quality. In an implementation it is therefore important to set aside the necessary time to define the standards and the processes, so they encompass the important needs of the institutions. If a shared service centre is not implemented properly, it can possibly cost more than the former decentralised solutions. Some member states stated that we will see many more shared services initiatives including payroll, pensions and banking. 2. Trends in Ideas and Reforms in Public Administration reforms At the first IPSG meeting the work group examined some of the current and emergent trends in public management ideas and findings regarding public administration reforms in the scientific community. The discussion took its starting from the presentation by Mr. Carsten Greve, Associate Professor at Copenhagen Business School. Especially three perspectives have often been in focus in Public Administration reforms in the last couple of years: Digitalization (shared service centres, e-services, transparency) Value creation (performance, strategies for creating public value, innovation) Involvement (engaged citizens, networks, public-private partnerships, collaboration and networks). Initiatives will often share more than one of the three focuses. For example development of new digital e-services that makes it possible to engage citizen in new ways, or involvement of citizens in coproduction to enhance value creation.
5/10 Mr. Carsten Greve summarizes some of the emergent changes in the approaches to digitalization, involvement and value creation in the initiatives: From IT supporting efficiency to IT as part of a broader digital governance profile, including web 2.0. and social media From accountability for results (outputs) to a broader understanding of transparency and accountability in networks and a focus on longer-term results (outcomes) From economic efficiency challenges to a concern with broader societal challenges (including issues of sustainability) that no-one organization can solve by itself From managerialism and narrow results to a focus on public value management that include a focus on long-term outcomes From market-based governance to a focus on networks in the new public governance From citizens as consumers to citizens as co-producers, co-innovators and co-creators (Greve 2011) The three perspectives seen in many reform initiatives are loosely related to three schools of thought in the literature on public management depicted as conceptual alternatives to the dominant paradigm in recent years, the New Public Management (NPM): 1. Digital-Era Governance (Dunleavy 2006) 2. Public Value Management (Bennington and Moore 2011) 3. New Public Governance (NPG) (Osborne 2009) The new perspectives contrast with the previously dominant New Public Management (NPM) approach. The new trends often: Have a post-competitive focus that emphasizes collaboration between public sector institutions and with private sector, the third sector and the citizens. Define the public interest as collective preferences instead of aggregated individual preferences. Have multiple performance objectives, including service outputs, satisfaction, outcomes, trust and legitimacy, where NPM s performance objective traditionally focused more narrowly on managing inputs and outputs to ensure economy and responsiveness to consumers. Favor a range of systems of delivery pragmatically chosen to the specific context, where NPM favored the private sector or tightly defined arms-length public agencies. Favor multiple accountability systems, where NPM s accountability traditionally is upwards via performance contracts and outwards to customers via market mechanisms. (Greve 2011)
6/10 3. Challenges in implementation of Public Administration reforms The design and approach to implementation is paramount in the success of any reform initiatives. The discussion took its starting point from the presentation by Dr. William Tompson, OECD, on some of the main findings from the study Making Reform Happen. General lessons from the study Making Reform Happen (OECD 2010): Political context - Electoral mandates matter. Stealth and surprise are rarely promising strategies. Government cohesion is key for reforms: it appears to matter more than the size of a government s majority or the state of the opposition. In general, the government s ideological orientation seems to matter little. Economic factors - Fiscal stress can generate pressure for reform, but a weak fiscal position can make reform adoption more difficult, and a focus on immediate savings can pose problems. The state of public budgets is particularly critical when reforming basic public services or public administration. Timing, scope and sequencing - Events may open windows of opportunity, either by forcing action or easing constraints. Whether bundled or not, individual reforms tend to be easier to advance against the backdrop of a broad on-going reform process. More haste can make for less speed: complex reforms take time to design and adopt, as well as to bear fruit. Delay can raise the cost of reform, but reform can be harder if a policy regime is not ready for change. Communication, consultation & leadership - Effective communication and consultation are critical. But when undertaking stakeholder engagement, it is critical to remember that stakeholders represent the status quo that s what they hold stakes in. Public understanding of the costs of the status quo is often critical and can be difficult to achieve when these are opportunity costs. Government leadership and broad ownership of reforms is important: reform orphans are rarely successful. Dealing with winners and losers - Involving potential opponents may facilitate adoption of reforms but at a price. Acquired rights cannot easily be violated. Often this requires exempting some groups from the reform, but this is not always feasible. Tactical concessions to potential losers can often be coherent with the reform, rather than tending to compromise it. Resistance tends to increase with the political cost-benefit ratio the
7/10 relationship between a reform s redistributive impact and the efficiency gains it yields. The general lessons have some important implications for design of public administration reform: 1. Be aware of the relationship between political economy and policy design: Reform design and strategies for adoption must take into account the interests of those who will implement the reform. Good research is no fix for politics, but it helps. The quality of the analysis underlying a reform can affect prospects for both adoption and implementation. Creating early winners or new actors and institutions early in the course of a reform can help to sustain the momentum behind it. Where elements of a reform are to be implemented with a delay, it helps to render them as automatic as possible. Reform often requires learning by doing, so mechanisms for feedback and adjustment can be critical. 2. Be aware of the technical complexity of public administration reform: The critical success factors are often unknown, owing to the scope, scale and complexity of public administration. Sequencing is likewise difficult. Transplants typically do not take. Structures of governance are rooted in political compromises that can be quite fundamental. They often touch on quite basic notions of what the state is there to do. This points to the need for experimentation and patience. 3. Be aware of the perception of the reform and the reform setup when reforming the reformers with public administration reform: It is difficult to raise citizen awareness of the need for change. Public demand is typically low but public debates and consultation can help. Complementary reforms, though, may matter more to the general public. Important to engage civil servants. Important with clarity in values, objectives and roles and to introduce reforms in incremental steps thereby reducing uncertainty and allowing for feedback and adjustment. Public managers perception of political support for public administration reform appears to have a direct impact on implementation. It can be useful to make a reform institution to sustain the process to assure that gradualism and incrementalism in the reform is not overwhelmed by inertia.
8/10 4. Be aware that reform is a long process with many setbacks and often with few successes in the beginning: Major structural reforms are rarely successful at the first attempt: the more successful reforms in the study generally followed earlier setbacks and many of the less successful cases set the stage for subsequent reforms. Reforms do not have to be perfect to be successful. This is particularly true where reforms are at the frontier and reformers must learn by doing. Dr. William Tompson introduced a reformers checklist with urgent questions for all would-be reformers based on the experiences from the study: 1. Do the authorities have a clear mandate for change? 2. What more can be done to demonstrate the need for change and/or the desirability of the proposed solutions to the public and key stakeholders? 3. How strong is the evidence and analysis underlying the arguments for reform? 4. Are institutions in place that can manage the reform effectively, from design to implementation, or is there a need to create/strengthen such institutions? 5. Does the reform have clearly identifiable owners, in terms of both politicians and institutions responsible for taking it forward? 6. What is the expected timeframe for design, adoption and implementation? 7. What is to be the strategy for engaging those threatened by reform? Can they be persuaded to support it? To what extent can/should their objections be overridden? Should they be compensated for their anticipated losses and, if so, how and to what extent?
9/10 Presentations at the IPSG working group meetings Knowledge based Performance Management in the Danish National Labour Market Authority Mr. Simon Lamech, Head of Section, National Labour Market Authority, Denmark. Estonia s Shared Support Services project Mr. Agris Peedu, Head of Public Procurement and State Aid Departments and acting Deputy Secretary General for Public Governance Policy, Ministry of Finance, Estonia Experiences with Shared Administrative Service Centers and centralised IT-systems in Denmark PhD Ms. Karen Ejersbo Iversen, Adviser and PhD, the Agency for the Modernisation of Public Administration, Denmark. egovernment In Ireland - Supporting Public Service Reform Mr. Martin Troy, egovernment Policy Unit, Department of Public Expenditure and Reform, Ireland. Innovation in public services and French administration Ms. Françoise Waintrop, Chef de la mission Méthodes, Service Innovation, Direction Générale de la Modernisation de l'etat, France. Better outcomes, lower cost. Radical innovation through co-production? Mr. Christian Bason, Director of MindLab, Denmark. Ideas and Reforms in Public Management and Administration Mr. Carsten Greve, Associate Professor, MA and PhD, Copenhagen Business School, Denmark Making Reform Happen Dr. William Tompson, Head of the Regional Economies and Governance Unit, Public Governance and Territorial Development Directorate, OECD Cited literature: Dunleavy, Patrick et.al. (2006), Digital Era Governance. Oxford: Oxford University Press. Bennington, John & Moore, Mark (2011), Public Value. Theory and Practice. London: Palgrave. Carsten Greve (2011), Ideas in Public Management Reform for the 2010 s: Sharing Capacity for Change through Digitalization, Value Creation and Involvement. Paper presented on 27 February 2012 for the EUPAN IPSG WG.
10/10 OECD (2010), Making Reform Happen - Lessons from OECD Countries. Online: www.oecd.org/publishing/corrigenda OECD (2011a), Government at a Glance 2011, OECD Publishing. doi: 10.1787/gov_glance-2011-en OECD (2011b), The Call for Innovative and Open Government: An overview of country initiatives. Online: http://dx.doi.org/10.1787/9789264107052-en OECD (2011c),Together for Better Public Services: Partnering with Citizens and Civil Society, OECD Public Governance Reviews, OECD Publishing. doi: 10.1787/9789264118843-en Osborne, Stephen. Ed. (2010), The New Public Governance? London: Routledge.