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Constraints to public sector performance

Constraints to public sector performance. How do we overcome those constraints?. Castries, St. Lucia, Nov 2 2009. Nick Manning Manager Public Sector & Governance Unit Latin America and the Caribbean. Summary. Some perspective – not bad performers Part 1: Public sector wide challenges

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Constraints to public sector performance

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  1. Constraints to public sector performance How do we overcome those constraints? Castries, St. Lucia, Nov 2 2009 Nick Manning Manager Public Sector & Governance Unit Latin America and the Caribbean

  2. Summary Some perspective – not bad performers Part 1: Public sector wide challenges Foundations for a stronger performance orientation are there - underused Part 2: Organizational challenges Centralization is striking Part 3: Staff management challenges Selection, retention and motivation Part 4: Conclusion Decentralize probably Just start – there’s a chance of a virtuous circle

  3. Important to maintain some perspective Health services performance and expenditures are similar to similar countries’ standards WORSE SERVICES MORE SPENDING Source: World Development Indicators (2009). Data circa 2006-07.

  4. Same story for education services Higher spending levels than other upper middle income countries, higher performance WORSE SERVICES MORE SPENDING Source: World Development Indicators (2009). Data circa 2006-07.

  5. Part 1: Public sector-wide challenges OECS countries have the foundations and are taking some early steps But could do more

  6. Foundations and early steps to improve performance

  7. But could do more: public management could look like this Source: World Bank (2009). Global Experts Team Note: Improving Performance.

  8. Part 2: Organizational challenges Strongly centralized managerial decision-making Even more centralizedHumanResources Management

  9. Strongly centralized managerial decision-making GovernmentlevelwhichisapproachedbySenior Civil Servantswhen a governmentactionisneeded… Extent of Political Micro-management Source: World Bank (2001). OECS Institutional and Capacity Review.

  10. Strongly centralized HRM The role and powers of autonomous Civil ServiceCommissions (staffing, promotions & discipline, paylevels) are constitutionallyentrenched in most Commonwealth countriessinceindependence Amending the constitution has proved very a high hurdle to clear for small countries (Singapore and Malta made progress) ChangingtheCommissionperspectivebyappointing more managerialistcommissioners has beenhelpful Furthercorporatization and agencycreation Delegation has beenverylimited, so far.

  11. Part 3: Staff management challenges Attraction of requiredhuman capital Retaininggoodstaff Motivation

  12. Selection • Do we overstate the need to avoid political involvement? • Political micro-management or favoritism clearly disastrous – but trust in senior appointments is key • Political involvement in senior appointments in the OECD is tightly circumscribed – but is more than is usually conceded. Source: OECD (2007). Performance-based arrangements for senior civil servants.

  13. Retention • Retaining good staff is the single largest driver of performance within the public sector. • Retention is affected by: • Predictability in remuneration: encourages competent staff to remain in a secure position • (OECD: base salary and benefits are 95% of total compensation) • Adequate compensation, terms and conditions vis-à-vis market levels for similar positions In decentralized hiring, agencies can use their specialized knowledge to better “adequate” labor conditions for new openings. • Other drivers: jobsecurity, prestige, reputation. Source: OECD (2007). Performance-based arrangements for senior civil servants.

  14. Motivation • Keep targets simple • Contracts are psychological and not legal devices • Limited usefulness • Some emerging ingenuity in using time-limited “mandates” • Performance pay is a very modest contributor to performance • Challenge: implementing effective staff performance appraisal systems in small states Source: OECD (2007). Performance-based arrangements for senior civil servants.

  15. Part 4: Conclusion Some decentralization to units and to managers is essential The best way to improve performance is to start

  16. Some decentralization to units and to managers is essential • Centralization of HRM decisionstoPublicServiceCommissionsleaveslittleroomfor effciency1: • Slowrecruitmentprocessesonwhich managers havelittle control preventthemfrom: • Hiringstaffquicklywhentheyneed • StaffappointedbythePSCsnotmatchingunit’sneeds • Centralizedpromotions and mostdisciplinarysystem: 2001 surveyshownthatthissystemisperceived as “cumbersome and ineffective”. • PSCsembody a criticalconstitutionalprinciple of merit • Buttheyprovide a paradox:2: • Whenweak, “theyfailtoprotectpoliticalinterference” • Whenstrong, “theytendtounderminemanagerialduties of seniorpublicofficers” . Sources: • World Bank, 2001. OECS: Institutional and Capacity Review of the Core Public Sector. Report 21844. • CARICAD, 2008. Reportonthe 1st Regional Conference of PublicServiceCommissionsand Commonwealth Secretariat, 1996. RedrawingtheLines.

  17. The OECD has gained little trust from public sector performance improvements • An unimpressed public - little return in terms of increased trust from all the OECD effort expended on improving service delivery • Why didn’t it work? – Theories: • This might be a consequence of the growth of entitlement cultures within the OECD • Or might be a corollary of managerialism/new public management • Erosion of values? • Unsettled political/administrative boundaries? • Too much change – continual revolution? • Low public servant morale? • Undermining of confidence in official statistics? • A loss of personality?

  18. The OECS is at a different point on the trust/distrust curve to the OECD • Performance improvements may have a bigger political bang for the buck in the OECS than in the OECD: • OECS citizens have not experienced the same increase in the coverage and quality of public service provision - and so have not acquired a sense of entitlement. • Managerialism is less damaging as the public service was a less respected institution • Marginal improvements in performance in OECS are more noticeable to citizens • Consequently, increasing performance in OECS might have a distinct political pay-off • An initial step to increasing performance is having reliable mechanisms to measure changes in performance

  19. OECS governments might gain more trust from performance improvements than the OECD did More trust in government means tougher decisions can be taken Short term performance gains can allow deeper reforms that lead to longer term performance improvements Succesful public sector reforms have been incremental, giving small but firm steps

  20. The big prize – the virtuous circle

  21. We know that governments can create a temporary improvement in popularity

  22. Can they produce a longer term improvement in trust in government?

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