2. Outline
• Measuring public sector productivity
• Driving productivity improvements in
the public sector
• Agreeing on a public sector
productivity agenda
4. Public sector
Public sector specificities
• Mainly services
• Heavy in intangibles /
tacit knowledge
• Absence of price signals
(non market goods and services)
• Process based
• Collective outputs
5. A significant share of GDP (excluding transfer)
Measuring Inputs: Resources (labour and capital)
used for the production of goods and services
Measuring outputs: eg. Health care: DRGs.
The measurement of inputs is more advanced
Quality of administrative data
(employment, ICT expenditure)
Moving to employment at the sector level
(COFOG)
Value for Money initiatives
Challenges
Where are we?
6. An illustration-public sector cost effectiveness
AUS
AUT
BEL
CAN
CHL
CZE
DNK
EST
FIN
FRA
DEUGRE
HUN
ISL
IRL
ISR
ITA
JPN
KOR LUX
MEX
NLDNZL NOR
POL
PRT
SVK
SLV
ESP
SWE
CHE
TUR
GBR
USA
OECD
72
74
76
78
80
82
84
86
0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000
Life expectancy at birth
(in years)
Total health expenditure per person (USD PPP)
High spenders
high results
Low spenders
high results
Low spenders
low results
High spenders
low results
Life expectancy at birth and total expenditure on
health per capita (2012)
Source: Government at a Glance 2015 based on health statistics database
7. Measuring productivity:
How can we integrate output quality ?
Measuring outputs: quantity and quality of products
and services
Macro
• Government wide level
Meso
• Sectoral level
Micro
• Individual organization
Challenges
Aggregation and standardisation of
administrative data
Non tangible outputs
Understanding outcomes
Measuring quality and satisfaction
Incentives to game
8. Satisfaction with public services: a
proxy for demand?
Source: Gallup World Poll
Confidence and satisfaction across government institutions (2012)
9. • Efficiency: transactional (benefit administration, tax collection) back
office (HRM, finance), front line (schools, health, etc.)
• Example: productivity in education: the total number of full-time
equivalent students in publicly funded schools, quality-adjusted by
the average score of the General Certificate of Secondary
Education.
UK
Public sector efficiency
group (CO)
• Detailed information on measurement of
inputs, outputs and outcomes on an annual
basis.
• Consistent with the Atkinson
recommendations
Australia
Productivity
commission
• Direct output measurement
• In line with the 2002 EU recommendations
• Use of the COFOG classification (e.g. social
expenditures, health)
Denmark
Statistics Denmark
What are the good practices in productivity
measurement?
10. How can we drive productivity improvements
in the public sector?
11. What can
Government
Act upon ?
Key policy levers
• Resources/budgets
• Human Resource Management
• IT Investment
• Innovation
12. The use of performance information in
the budgeting process is pervasive…
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Korea
Mexico
Canada
Switzerland
Netherlands
Slovenia
Turkey
Sweden
Estonia
SlovakRepublic
NewZealand
Chile
Finland
France
Ireland
Australia
UnitedKingdom
Denmark
Norway
Japan
UnitedStates
Luxembourg
Poland
Italy
Greece
Belgium
Austria
Spain
Hungary
CzechRepublic
Germany
Portugal
OECD average
Use of performance budgeting practices at the central level of government (2011)
Source: OECD 2011 Survey on Performance Budgeting
13. …But difficult in practice
1 1.5 2 2.5 3 3.5 4 4.5 5
Pay cut for head of programme/organisation
Programme transferred to other…
Negative consequences for leaders' evaluations
Programme eliminated
More staff assigned to programme/organisation
New leadership brought in
Budget freezes
Budget increases
More training provided to staff assigned
Budget decreases
More intense monitoring in the future
Poor performance made public
No consequences
2007 2011
What happens when performance objectives are not
met?
14. Mechanisms to ensure return on
investment are still weak
00-25%
25-50%
50-75%
75-100%
What is the
share of direct
financial
benefits realised
in government
ICT projects
(self-
assessment)?
15. Impact of the
Fiscal crisis
Public Employment
• Cutting staff
• Increasing working hours
• Improving financial incentives
through remuneration systems
16. Average number of employment reforms by
bundle per country (2008-2013)
Source: OECD (2014) survey on managing budgetary constraints: implications for HRM
17. But public employment is ‘sticky’
0
5
10
15
20
25
30
35
40
2013 2009
%
Public sector employment as a percentage of total employment
(2009 and 2013)
Source: International Labour Organization (ILO), ILOSTAT database.
18. Strategic
Investments
Investing in Human capital to increase
productivity
• Investing in skills
• Mobilising leadership
• Improving strategic human
resource management
19. Addressing mismatch of skills: strategic
workforce planning
Use of systematic strategic workforce planning
Source: Preliminary findings of the OECD SHRM survey 2016
20. Strategic workforce planning takes into
consideration…
Source: Preliminary findings of the OECD SHRM survey 2016
0 5 10 15 20 25 30
Others, please specify:
It includes specific targets for which senior managers…
Possibilities for restructuring (e.g. reallocating staff,…
Possibilities for outsourcing
Job profiling
Specific skill sets required to meet future objectives
Impact of technological changes
Efficiency savings (through e-government for example)
Civil service demographics
Possibilities for training and development
Possibilities for recruitment
Current HR capacity
Skills shortages in the national labour market
Organization's strategic objectives
Possibilities for coordination
Number of responding countries
21. Assessing mismatch of skills through
employee surveys?
0 5 10 15 20 25 30 35
Other
Inclusion
Harassment
Skills match
Effectiveness of HRM systems
Impacts on employees of workplace…
Integrity at the workplace
Discrimination
Perceived employer image
Stress levels
Work intensity
Employee Engagement
Effectiveness of management
Organizational commitment
Employee motivation
Work / life balance
Job satisfaction
Number of responding countries
Source: Preliminary findings of the OECD SHRM survey 2016
Employee surveys aim to assess:
22. The Digital
Challenge
Leveraging IT to increase productivity
• Streamlining IT investments
• Unleashing the power of data
• Building shared IT platforms
23. Capital investment: public sector ICT
expenditure data
0.0
0.5
1.0
1.5
2.0
2.5
%
Total ICT expenditures as a share of central government expenditures
(2011 or latest year available)
Source: OECD Survey of ICT expenditures, 2010-11. OECD National Accounts Statistics.
25. Innovation
Is the critical
Intangible
IT IS ALL ABOUT INNOVATION!
• Generating a dynamics of
innovation in the absence of
financial incentives
• Creating innovative ecosystems
• Fostering the diffusion of innovation
26. Strategies for diffusing public sector
innovation
Innovation Units / Labs Awards, Contest, Prizes
Innovation Networks
28. Towards a new public sector productivity
agenda: from measurement to insight
According to previous research:
HRM
(satisfaction,
engagement)
Scale of
operations
Decentralization Productivity
But what about?
Skills and
innovation
ICT
Data
29. • Inform a measurement agenda by putting forward data requirements
and collection methods
• Standardise quality adjustment methods for specific sectors/services
(e.g. exam scores for education); role of performance information
• Finer split between frontline and back-office/transactional services
• Case studies at different levels ( e.g. sectorial, institutional, micro
service provision)
• Better understanding of public sector innovation dynamics, and
mechanisms and processes for scaling up innovations
• Collect and advance evidence on the importance of institutional
drivers (e.g. data, ICT) and enabling conditions (e.g. disruptive
innovations)
How could the OECD contribute to this new
public sector productivity agenda?
Implementing accrual accounting and budgeting is a costly business that needs to be supported by ICT reforms, training and communication efforts.
Micro levels measures capture the outputs of individual organizations, intermediate measures capture outputs at the policy sector level, and macro measures capture measures at the government wide level.
Macro efficiency measurement of outputs may be useful to distinguish trends but less useful for managerial purposes. Typically macro level data encompass a diffuse set of activities of numerous units. However managers should only be accountable for concrete outputs that are managed by the units they manage. Moreover macro-level data do not show where an efficiency problem occurs and thus information does not tell managers where they need to intervene. It is fair to say that the micro-level measurement has more to offer to public managers since this micro-level focus is required if we want to gain an understanding of the underlying causes of inefficiency.
Furthermore, the aggregation of micro-level measurement into macro level data poses several problems: double counting if including intermediate outputs. Aggregation requires weights, and in the absence of price information there is no obvious way t add up. A final issue relates to how the quality of goods and services should be incorporated.
The output mix of many public sector organizations includes intangibles: routine based tasks, human relations based activities and process based activities.
Collective outputs such as defence and public order and safety
Measuring outputs can also create incentives to “game” or cheat particularly when output measures affect monetary or career incentives.
Citizens have higher confidence in – or satisfaction with – public services than in the abstract notion of the national government.
In 2012, OECD average, confidence/satisfaction was highest with police (72% of respondents expressing confidence in the police) followed very closely by health care (71%), education (66%) and, finally, the judicial system (51%).
Governments are increasingly incorporating performance
information in the budgeting and governance processes as a
means of achieving better results, promoting greater value
for money, and increasing the transparency of spending
decisions. Good performance information can contribute to
better decisions regarding the use of resources and how to
run particular programmes. Greater transparency of performance
and resource allocation also increases the accountability
of government agencies for their expenditures.
Lack of clarity about how exactly to respond to poor performance. More resources, or fewer? Is a management response required? There is – and perhaps should be – no “automaticity” about how to respond to performance budgeting challenges – a nuanced, case-specific judgement is required.
Most OECD member countries are aware that they do not harvest the lions share of the financial benefits of digital government. Instead they tend to make service and quality improvements that also create public value.
Still, to ensure that digital technologies help increase public sector efficiency and productivity, the financial benefits of digital government needs to be realised. Asked to assess the extent to which countries are currently succeeding in realising the financial benefits of IT projects, the majority of countries answer between 0 and 25%.
The data only provides an overall proxy of the challenge and are not based on specific calculation or analysis.
The data are preliminary findings only from the OECD Digital Government Performance Survey 2014; we are currently validating the data with the countries and expect to have analysed the results by early 2015. One important step in this analytical process is the OECD workshop on E-Government Indicators, taking place 26 November 2014 in Paris.
Changes in Public Employment includes various downsizing instruments such as recruitment freezes, dismissals, encouraging voluntary departures, privatization, or decentralisation of employment.
Training system reforms includes reductions of training time and budgets, as well as various efficiency mechanisms such as reducing travel costs and providing training through electronic means when possible.
Working time reforms includes changes to the number of paid holidays, various kinds of leave, or increase in working hours.
Salary reforms include salary reductions (for top-level or all staff) abolishment of allowances, reduction of performance-related pay, and pay freezes.
The bundle, “Cost Saving Measures in the field of HRM”, includes the use of furloughs, promotion freezes and reductions of hierarchical levels.
Job security reforms asked whether it had become easier to dismiss civil servants and public employees.
Status reforms include changes in the use of civil servants and other public employees, including fixed-term employees.
This presentation will focus on the three with the biggest implications: Employment Reforms, Remuneration system reforms and Training system reforms.
Data for Italy are from the National Statistical Institute and the Ministry of Finance. Data for Portugal are from the Ministry of Finance. Data for Korea were provided by national authorities.
29 OECD countries + 2 (Colombia and Indonesia)
LAC OURData Index
Getting more out of the data: Open up data to modernise the public sector by co-creating public value (economic, social and good governance)
By applying a “life-cycle” approach to the analysis of innovation, the OPSI is advising countries on what tools and approaches work from ideas generation to innovation implementation and diffusion. Three main approaches to diffusion emerges from OPSI analysis:
Innovation Units/Labs
The Central innovation hub (Canada) supports and coordinates innovative efforts in the federal government. It also supports diffusion of the use of techniques and tools such as behavioural economics, data analytics, design and social innovation. Works as a catalyst helping departments address specific policy, service or design challenges.
The Centre for Public Service Innovation (South Africa) is a Government Component in the portfolio of the Minister for Public Service and Administration. It was established to identify, support and nurture innovation in the public service, with a view to improve service delivery. The CPSI seeks to celebrate the successes of individuals, teams and departments in the quest for a more effective, efficient and accountable government.
Awards, Contest Prizes
The Innovation in American Government Awards (United States) celebrates innovative solutions which brings more effective government at state and federal level
Innopalkinto (Finland) is an annual recognition to the work of civil servants to drive new solutions. The competition Innovillage award an innovative solution. It challenges participants to outline the basic work or working solutions resulting in the development of an innovative output. The prize is 3,000 euros.
Networks
A network of Innovation Champions across the Australian government brings together civil servants to understand and use innovation to improve outcomes, sharing lessons and experience. The Innovation and Policy Co-ordination team (IPC) in the Department of Industry organises an annual Innovation Month to help build an understanding of innovation, involving events, workshops and training.
The Common Knowledge Network in Portugal is a collaborative platform to promote the sharing of best-practices and information about modernisation, innovation, and simplification of public administration.
In the Netherlands, the Ministry of the Interior manages the Slimmer Network (Smarter Network), a network of around 4,000 innovative officials and advisors within the government, provinces, municipalities, water authority and police. The networks help promote and support innovative initiatives underway.
Research and experience shows that innovations come from staff at all levels, from the political right down to those charged with front-line service delivery.
Furthermore, innovators don’t innovate in a vacuum, but inside an organisational culture that may support or hinder innovation.
In this way, our research could explore (slide)
Frontline services can be considered as those that are delivered directly to individuals/households, whereas back-office and transactional services are of a collective nature
– For example, in education, individual services would include all expenditures minus subsidies which are provided to individuals/households, whereas collective services are related to the formulation and administration of government policy; setting and enforcement of standards; regulation, licensing and supervision, etc.
• The advantage of the split between frontline/individual and collective/back-office/transactional services is that it also allows for some analysis of distributional impacts
– This complements the conventional incidence analysis of spending and tax across income groups