Lecture 6 - Performance Management in Public Sector

 

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LEARNING OUTCOMES At the end of this chapter, chapter, students should be able to:

LECTURE 6 PERFORMANCE

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MANAGEMENT IN PUBLIC SECTOR

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  Define performance management   Identify and describe describe the concept, purpos purposes, es, characterist characteristics ics and types of performance management   Descri Describe be th the e use of key key perfo perform rman ance ce indic indicat ator orss (KPIs (KPIs)) as performance measurement tools   Explain performance measurement measurement and the concept of economy, economy, efficiency and effectiveness

UKAF3063 PUBLIC SECTOR ACCOUNTING TOPIC 2: MANAGEMENT ACCOUNTING ISSUES TOPIC 2

PERFORMANCE MANAGEMENT Van Dooren, Bouckaert & Halligan, 2010 Type of management that incorporates and uses performance information for decision-making

CONCEPT OF PERFORMANCE MEASUREMENT

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LECTURE 6 PERFORMANCE MANAGEMENT IN PUBLIC SECTOR UKAF3063 PUBLIC SECTOR ACCOUNTING

PERFORMANCE MANAGEMENT •

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  Performance Performance management drives performance improv improvement ement and should be designed to reflect their own priorities and drivers   An Anyy sy syst stem em should should inco incorpo rpora rate te a fee feedba dback ck loop loop so th that at performance measures monitor the implementation of strategy and crucially, feed back into strategy formulation, so organisation would have capabilities to deliver strategic plans and connect up goals with outcome

CONCEPT OF PERFORMANCE MANAGEMENT

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PERFORMANCE MANAGEMENT

  The process by which organisations organisations set strategy and devise devise the governance, values processes and controls to direct people and money to deliver their strategic objectives objectives in a cost-effect cost-effective ive way with due regard to risks and opportunities   It is more more tha than n a proces process, s, it must be the bedrock, bedrock, al along ong with with regularity and propriety, of good stewardship over public funds   Perfo Performa rmance nce man manage agement ment is action, action, based on perf perform ormance ance measures and reporting, which results in improvements in behavior, motivation and processes and promotes innovation   Performance Performance measurem measurement ent is quantifying, either quantitative quantitatively ly or qualitatively, the input output of level of activity of an event or process

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  A successful performance performance management system must consider consider the following key features:  – Alignment of the performance management system, and the existing system and strategies of the organisation  – Leadership commitment  – A culture in which it is seen as a way of improving and identifying good good performance and not a burden that is used to chastise poor performers  – Stakeholder involvement  – Continuous monitoring  – Adequate infrastructure Owen, Mundy Guild and Guild, 2001 and Fryer, Antony and Ogden, 2009

CONCEPT OF PERFORMANCE MANAGEMENT

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CONCEPT OF PERFORMANCE MANAGEMENT

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INITIATIVES IMPLEMENTED BY THE GOVERNMENT

PERFORMANCE MANAGEMENT •

  KPMG, 2010 reinstates reinstates that successf successful ul performance management management requires the following elements:  – Focus on performance management as opposed to p erformance measurement  – Recognition of the characteristics of the p ublic sector  – A culture of performance management through continuous, bottom-up improvement  – Effective performance management frameworks with sufficient authority at leadership level

CONCEPT OF PERFORMANCE MANAGEMENT

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PPBS

MAS

MB S

TQM

New Remuneration Scheme

Clients’ Char te ter

IS O

Benchmarking

NKRAs NK

OBB

KPIs

 

Star Rating System

 

CONCEPT OF PERFORMANCE MANAGEMENT

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PERFORMANCE MANAGEMENT AND INTERNAL CONTROL •

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  Increasing Increasing demand for better transparency transparency and services has made perf perform ormance ance measur measureme ement nt a vital vital com compone ponent nt in governm government ent planning and management   It provide providess inf inform ormat ation ion on the eff effici icienc encyy and eff effect ective ivenes nesss of  programmes designed by the government

PERFORMANCE MEASUREMENT

  Essence for continuous improveme improvements nts so that the public would have better services at greater levels of efficiency.   The public sector needs to constantly seek ways ways so processes can be improved before their services are delivered to the public at large.

LECTURE 6 PERFORMANCE MANAGEMENT IN PUBLIC SECTOR CONCEPT OF PERFORMANCE MANAGEMENT

PERFORMANCE MEASUREMENT

PERFORMANCE MEASUREMENT •

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UKAF3063 PUBLIC SECTOR ACCOUNTING

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  The process of quantifyin g the efficiency and effectiveness of action

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  Consists three three interrelated elements:

  Boekhorst, Boekhorst, 1995 - Begins with determining determining what the organisation organisation mission, goals, objectives and activities are

 – Individual measures that quantify the efficiency an d effectiveness of actions

  Measure Measure organisation activitie activitiess to make sure that the activities activities were aligned and reachable with the goals

 – A set of measures that combine to assess the performance of  an organisation as a whole  – A supporting that e nables data to be acquired, collated, sorted and analysed, interpreted and disseminated Fryer et al, 2009; Neely, Mills, Gregory & Platts, 1995

PERFORMANCE MEASUREMENT

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PERFORMANCE MEASUREMENT

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TYPES OF PERFORMANCE MEASUREMENT

FUNCTIONS OF PERFORMANCE MEASUREMENT

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Strategy formulation and implementation

Co Comm mmuni unica cati tion on

Pr Provi ovide de fe feedb edbac ack  k  •

  Evaluation

Benchmark and Motivation

  These measur measures es which which foc focus us on inpu input, t, proc process ess,, output output and outcome, outcom e, is able to better reflect the long-term value creation of  the organisation   Non-financial measures:  – Key Performance Performance Index (KPIs)

Encourage improvement and learning

 – Critical Success Factors (CSF)  – Activity-Based Costing (ABS)  – Benchmarking  – Balance Scorecard

Reward and celebration

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PERFORMANCE MEASUREMENT

BARRIERS IN IMPLEMENTING PERFORMANCE MEASUREMENT

FACTORS OF A SUCCESSFUL PERFORMANCE MEASUREMENT SYSTEM Commitment to a performance measurement culture

Commitment from top management

Adequate and appropriate resources

Initiatives and plans are clearly communicated

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PERFORMANCE MEASUREMENT

SYSTEM

Realistic expectations

Vision and strategy not actionable Implementation action plan with milestone should be clearly defined

Strategy is not linked to department, team and individual goals

Strategy is not linked to resource allocation

Feedback is tactical and not strategic Continuous improvement should be strived

Effective communication

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PERFORMANCE MEASUREMENT

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KEY PERFORM ANCE INDICA INDICATOR TOR

KEY PERFORMANCE INDICATOR THE CONCEPT OF 3ES

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  Repr Represent esentss a gener general al indicator of perfor performance mance that focuses on critical aspects of outputs or outcome and reflects the critical success factors of an organisation   A simple and an effectiv effective e measurement syste system m that helps org. to explain and manage the services’ progress for customers aligned with the vision and mission of the orga nisation

LECTURE 6 PERFORMANCE MANAGEMENT IN PUBLIC SECTOR UKAF3063 PUBLIC SECTOR ACCOUNTING

KEY PERFORMANCE INDICA INDICATOR TOR

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CHARACTERISTICS OF A GOOD CHARACTERISTICS KPI: •

  Provides nonfinanc ial measures

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  Measurement is done frequently

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  Clearly indicates the actions and expectation required from staff  staff 

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  Has a significant impact

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  Encourage appropriate appropriate aaction ction

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  Has leadership commitment and is acted on by the leader

GOVERNMENT TRANSFORMATION PROGRAMME •

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KEY PERFORMANCE INDICA INDICATOR TOR

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 – To encourage the development of Malaysia into an advanced, untied and just society with high-standards of living for all

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KEY PERFORMANCE INDICA INDICATOR TOR

CONCEPT OF 3E S

  Under Under GTP, six key key prio priorit rityy ar areas eas have been identif identified, ied, and challenges within each area have been divided into short-term priorities priorit ies and long-term long-term issues, known known as Natio National nal Key Res Result ultss Areass (NKRA Area (NKRAs) s) and  and each NKRA is headed by a ministry   The success of GTP is measured measured based on the performance both both NK NKRAs RAs an and d Min Minis iste teri rial al Key Res Result ultss Ar Area eass (M (MKR KRAs As)) usi using ng quantifiable National Key Performance Indicators (NKPIs)

KEY PERFORMANCE INDICA INDICATOR TOR

  Objectives of GTP:  – To improve the efficiency with which the government de livers services and the accountability accountability of outcomes outcomes relevant to the Rakyat

NATIONAL KEY RESULTS AREAS •

  KPIs in Malaysia is based on the measurement measurement of perfo performance rmance of  the GovernmentTransfo GovernmentTransformation rmation Programme (GTP) Programme (GTP)

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END OF LECTURE THANK YOU ☺ LECTURE 6 PERFORMANCE MANAGEMENT IN PUBLIC SECTOR UKAF3063 PUBLIC SECTOR ACCOUNTING

Economy

Efficiency

Effectiveness

• Concerned with inputs • Using minimum minimum input to achieve maximum outputs • To be prudent in spending

• Measure Measure by comparing output with input • The more more output for inpu t, the more efficient the organisation will be • Looking at the process, avoid wastage

• Concerned with output and outcome • Refers to to the success or failure in achieving organisation’s objective

CONCEPT OF 3ES

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