Assessing Performance Management

Assessing performance management systems in complex organisations, such as universities, which produce multiple goods and operate in a world of multiple stakeholders, complex funding flows and often contradictory demands is a difficult task. Study across six different higher education institutions (HEIs) England in 2005-6 developed distinction between two different PM namely transactional and relational. The TRANSACTIONAL has a high level of specification of ends to achieve (e.g. through performance measures and targets etc.) and means to achieve these ends. It is project based for a particular periodic activity. The RELATIONAL has a clear specification of ends to achieve (e.g. through mission and vision statements, key success factors etc.) but is less directional in relation to the means to achieve these ends. It is more organisationally based and is ongoing.

Effective leadership is said to be vital to the success of any organisation, so motivating good leadership practices should be a top priority. There is a wealth of economic literature relating the performance of private firms to the pay and leadership practices of CEOs, yet surprisingly, this has never been transposed onto the public sector. In England, the establishment of ‘City Academies’ and the lauding of ‘Super Heads’ for turning around failing schools has put increasing emphasis on leadership in education. Was Chris Woodhead, former chief of Ofsted, right to assert, “We don’t need report after report on the theory of turning around failing schools. It isn’t a matter of money; it’s leadership first and foremost”? a survey using open ended non leading questionnaire found an active head-teacher labour market where pay was sensitive to school performance, contrary to much recent debate on pay and performance premised on a view that teachers were not subject to wage incentives. The pilot survey suggested that performance tracking and evaluation at the school level was generally strong, but substantially weaker at teacher level

Both voice and choice are expected to improve PM in public services, choice forces public service providers to compete for ‘customers’ and voice enables service users to pressurize providers into action. But as choice provides people with exits, so dissatisfied people choose to exit rather than voice their dissatisfaction. An online panel survey of more than 4000 households found that social investment, or loyalty, lowers exit and increases voice. Similarly higher social class, Social investment/social capital also increases Voice activity.

One of the main things Voluntary Community Orgs are said to bring to public services is the capacity to deliver responsive, user-friendly as well as innovative public services. However A survey of three English local authorities (one urban, one rural, one suburban) found that the innovative capacity of VCOs is heavily conditioned by government funding rather than an intrinsic quality of VCOs, hence with increase of funding the innovation decreased.

The link between policies made at the centre and delivery of services on the ground is one of the perennial problems of public service management, and of central concern in an age of ‘delivery’. Failure to deliver policy on the ground has long been blamed on selective implementation by street-level bureaucrats with too much scope for discretion. Yet, many governments also advocate the detachment of delivery agencies from policy-makers and more local autonomy. To discover the mix of management mechanisms involved, 63 interviews was conducted with people at all stages of each of three different cases of delivery chains, from policy-makers in Whitehall to police officers ‘on the beat’. The study found when central targets were successfully delivered, local autonomy disappeared and street-level bureaucrats were exposed to command and control from the centre. While command appeared to be the most successful mechanism for ensuring short-term delivery, it seemed an unreliable way of achieving longterm delivery since it depended on an unsustainably high level of top-level political attention.


For all professionals providing public services, the way formal incentives interact with individual attitudes and professional norms to shape behaviour is central to policy and institutional design. The link between the quality of health care and incentive systems is much debated, and the 2004 General Medical Services Contract in the UK offers a key test of that connection. The contract linked 25% of practice income to performance on 147 publicly reported indicators that made up the Quality and Outcomes Framework. Most GP practices achieved over 90% of their QOF targets (pushing costs over the level budgeted for by approximately £1.5 billion in 2005*)

From 2001 to 2005, the UK Government introduced star ratings to evaluate the performance of NHS Trusts in England. Star ratings and the associated target system was subject of debate by health professionals while the relationship between performance on star rating type performance measures and hospital productivity remained unclear, and the need for a measure of output remains. Measuring output and thus productivity is difficult in the absence of the market prices used in the private sector to indicate the value of the services provided. One study found huge variation between Trusts’ productivity across and within star rating categories. The context in which trusts operated was important; trust productivity levels in 2003/04 correlated positively with social services expenditure on over 65s and negatively with the extent of patient deprivation.

Many PMs have been criticized for undermining the overall quality of service in pursuit of narrow targets, while private firms have increasingly adopted a ‘balanced scorecard’ approach, involving a range of measures that include finance, business processes, customers and innovation. But we have limited knowledge of how public service organisations develop and use PMs in practice, or of how far the public sector can learn from private sector PM systems. A qualitative study of four organizations across England found that there were sharp differences between the local government and university case studies, with a more pervasive PM culture observable in local government. There were also common features, notably a disjunction between PM reporting cycles, budget and strategic planning. Where there was a prevalent PM culture, such as in local government, dysfunctions of PMs for service outcomes were also prevalent reflecting a lack of useful outcome measures for management to focus on.

A proliferation in ranking the performance of public sector organisations, particularly in England, has led to an explosion of local government, school and health service league tables, as well as international league tables. One survey found changes in aggregation methods (either altering weightings or decision rules) could have a substantial impact on results, with individual hospitals jumping from a 0-star rating to a 3-star rating dependent on small alterations in the aggregation rules. Methods used indicate how uncertainty shrinks if we take account of random variation on performance indicators.

In recent years, many of ‘objective’ measures suggest that local government in
England has been improving. Yet public satisfaction arguably has been declining. Are citizens simply impossible to satisfy, or is something more complex at work? An on line survey of over 4000 households in two occasions used on statistical model of the relation between performance and satisfaction found that expectations of change in performance are evidently important, with expected future improvement increasing current satisfaction. Satisfaction was affected by frequency of use; heavy users of public services were more likely to be satisfied, but contrary to prevailing thought, age and income were not influential.

Environemtal Constraint on Performance Management

Public sectors come under increasing fiscal pressure to cut or control their spending levels, given that it represents between 35 and 50 per cent (in the case of the UK 38.5 per cent) of GDP which brings the need for policy makers to be able to evaluate their performances. The assumption of assessment regimes regards those overseen to be ultimately responsible for the performance on which they are measured: their policy priorities, capacities and capabilities (or lack thereof) influence the quality of the services they provide suggesting they should be sanctioned (or rewarded) accordingly. An explosion of oversight however resulted in hybrid rather than ‘pure’ mechanisms of oversight. The responsibilities and resources allocated to overseers have undoubtedly grown. In the case of the UK, for example, formal arms-length overseers doubled in size and real term resources during the 1980s and 1990s, at a time when UK civil service was cut by more than 30 per cent and local government by about 20 per cent (Hood et al. 1999).

An advance evaluation approach highlighted external conditions that constrain performance for public services to deliver and are not easily influenced by their policy decisions. Deprivation may affect authority performance in many ways. Some service functions may be put under particular strain if large sections of the population suffer from low income, unemployment, poor health, or low educational attainment levels and deficits in tax collection. The study found that performance assessment is flawed if it fails to take account of circumstances beyond the control of local policy makers. Performance may be wrongly criticised for the performance effects of difficult local conditions.

Local authorities are tied both to the economy as a whole and to factors that are specific to their local circumstances. Variables that controlled for external influences include political, economic, social and environmental divergence with regard to population-weighted average deprivation scores aiming to reveal the actual extent of the variation in deprivation which produces a more accurate analysis. The study that examined demographic characteristics, seven deprivation domains, political control, type of authority, and discretionary expenditure by local authorities concluded that when one and the same performance indicator (e.g., school examination results) is used to measure both deprivation and council performance, deeply perverse outcomes are possible. While sceptics believe that, because of Goodhart’s Law (‘When a measure becomes a target it ceases to be a valid measure’), the enterprise is doomed from the start.

* As reported by the Technical Steering Committee in the British Medical Journal, March 2006


Source:
The Public Services Programme, Oxford University
Public-service.ox.ac.uk

Prof Iain McLean, Dr Dirk Haubrich, Dr Roxana Gutiérrez-Romero, (2006) The limits of performance assessments of public bodies: the case of deprivation as an environmental constraint on English local government, Department of Social Policy and Social Work and Department of Politics and International Relations University of Oxford


Governance Accountability to Economic Voters

An empirical study based on 163 national surveys conducted in 19 countries over a 22 year period (1979-2001) found that open economies with an expansive state sector at one extreme and relatively closed economy with a limited state sector at the other are persistent models in democratic countries. The analysis suggest that global economic influences are contributing to the scope of the governments in unprecedented scale consequently raising question over democratic accountability for growing interference of the government in the economy. Does participation in the global economy represent a constraint on national government policy makers? One argument regards democratic accountability to be weakened due to lack of control over economy which result in convergence of economic policies and outcomes (Cerny 1995; Rodrik 1997).

But others (Garrett 1998, Hall and Soskice 2001; Steinmo 2002) contend that national governments flexibility and autonomy in designing and implementing policies are invulnerable to global forces. They conclude that national economic policy outcomes can be quite distinct from one another. These arguments on governance and globalization have important impacts on individual level, for constraints on decision makers associated with open-economies - more trade and capital mobility and privatization. Both trends decrease the chance of elected officials to influence policies hence, discard people holding governments accountable for economic outcomes. Freeman speculates that “… there is evidence that as privatization and globalization have progressed, democratic citizens have lost faith in their governments’ capacities to manage their economies (Freeman 2006).” The notion that voters have lost faith in the ability of their governments to manage the economy suggests that in vote decision economic preference has less weight.

Two types of decision makers was distinguished, the electorally-dependent decision makers” (EDDs) and “non-electorally dependent decision makers” (NEDDs). The first of these labels EDD refers to the elected officials that make up the national government and NEDD refers to everyone else whose decisions might impact the economy including individuals, firms, interest groups, non-electorally dependent (entrenched) bureaucrats, foreign leaders, the WTO, and many more. There is a relatively low level of voting for economic purposes in state or provincial elections where the importance of “non-elected” actors (i.e., the federal government) on economic outcomes is considerable (Stein 1990). An open economy is expected to reduce the room to maneuver of electorally dependent officials and hence undermine democratic accountability. David Cameron identifies these in his classic article exploring the impact of exposure to the global economy on the size of government (Cameron 1978). Because trade typically implies specialization resulting from the forces of comparative advantage, the production structure in open economies is often more concentrated than in closed economies (Rodrik 1998; IMF 2005). Globalization increases the number of non elected particularly foreign decision makers affecting macro economy while more open economy shows fluctuation in GDP. the competency signal in open economies is weaker than in closed economies which in turn leads to lower levels of economic voting.

Cameron (1978) and others (Katzenstein 1985; Rodrik 1998) argue that economies that are particularly vulnerable to global economic shocks historically have adopted institutions designed to moderate the potential social and economic dislocations resulting from exogenous shocks to the domestic economy. This includes higher levels of government spending on social programmes (unemployment benefits, medical insurance, and pension schemes, for example), greater government-industry-labor coordination on economic policy making, and initiatives designed to maintain international competitiveness (government investment in human capital).

Some see liberal convergence in economic policies resulting from the competitive pressures of globalization: Because of global constraints, national governments are forced to liberalize the economy in response to similar initiatives by competing nations, resulting in what some characterize as a race to the bottom phenomenon. These liberal policies typically involve reducing the scope of government in the economy either through the introduction of more liberal regulatory regimes or privatization of state-owned entities. This “privatization” of domestic economies results in a more limited role of the state in shaping macro-economic outcomes. The conventional wisdom in this case is that a reduced role of government in managing the macro-economy results in lower democratic accountability.

A policy context with an extensive state sector increases the number of domestic institutions and other constellations of political actors actively involved in making economic policies – in short, it produces a more “dense” policy making environment. Take as an example contexts in which government ownership of industry is quite pronounced. The economic decisions that are taken by government-owned firms– such as capital investment decisions, employment policies, and even marketing strategies – are subject to a much broader range of oversight by interested parties (labor unions, competitors and consumers) than would be the case for private entities.

The study suggests that openness to the global economy and the size of the government sector are positively correlated. It is not the case that countries with high levels of trade openness have privatized their economies and adopted liberal economic policies. Subsequent analyses suggest that democracies fall along a single dimension characterized by open economies with an expansive state sector at one extreme and relatively closed economies with a limited state sector at the other. These two trends – more open economies and an expansive state sector – seem to be reinforcing each other’s negative impact on democratic accountability.
This of course is a static snapshot of current global realities for advanced democracies of the world. But if this current correlation between the scope of government and exposure to global economic influences persists, then as globalization increases we can expect declining levels of economic voting and a growing crisis of democratic accountability.

Raymond M. Duch, (2006), Competency Signals in a Crowded Political Context, Nuffield College Working Papers in Politics 2006 #13, Oxford univ.
http://www.nuffield.ox.ac.uk/Politics/papers/2006/
duch_competency_signals_16_oct2006.pdf


Britain's worst drought for since 1920

Britain's first drought order in a decade came into force in south-east England for an estimated 13 million people, since March for areas of Sutton and East Surrey Water, Southern Water, Thames Water, South East Water, Mid Kent Water and Three Valleys Water. Last year has been the driest period since the 1976 drought, but there are some areas where it has been the driest since the 1920s. Range of measures was put in place such as banning car washes to standpipes in the streets and the idea of water recycling device sold quickly. Hosepipe bans resulted in a 15% reduction in water usage in the areas where they were imposed, according to Water UK. There was even a 10% reduction in areas without restrictions.

Statistics revealed that the water industry in England and Wales loses about 3.5 billion litres of water through broken and leaky pipes each day. The fact the region is densely populated in comparison with some parts of the country means even more water is used. The Environment Agency said turning the tap off when brushing you teeth can save up to five litres of water a minute. If the adult population of England and Wales did this 180 million litres a day could be saved - enough to supply nearly 500,000 homes.

Met Office figures show that rainfall in south-eastern and southern England was 36% above average this November. The rain has helped rivers and reservoirs to recover but has had little effect on the aquifers - underground water held in porous rocks - which provide 70% of public water supply in the South East. Recent rain has started to trickle down but the problem is that during the past two dry years the ground has hardened, making it more difficult for rainwater to seep through. It is assumed that if the rest of the winter is cold and dry, hosepipe bans across much of the South East must continue. In Kent and Thames Valley, about 70% of water comes from ground water sources which have become depleted over time. One solution would be to create new reservoirs and Thames Water is planning to build a new one in Oxfordshire.

A map of "water stressed areas" could be in place by 2009, with suppliers having to consider compulsory meters. It was found that customers with meters reduce their non-essential use of water by around 10-15%. A pilot project in Lydd, will see the installation of meters between January and March 2007 that marks the start of a programme to install 30,000 compulsory meters over the next nine years. According to the government it will decrease water bills for 70% of consumers.

Most of the industry in England and Wales was privatised in 1989, when regional monopolies were introduced under the regulation of industry watchdog Ofwat. Among its powers, Ofwat controls the maximum price at which water companies can sell their water. Every five years it conducts a "Periodic Review". After looking at business plans and investment requirements, it sets an annual price limit which is meant to allow enough revenue for operations, investment - and a profit. Ofwat's 2005-2010 review set price limits that allowed water companies to raise prices by an average of up to 4.2% a year on top of inflation - meaning that the average household bill would rise by £46, or 18%, to £295 during the period. It also said that companies could make a return on their assets of 5.1%

Thames Water
Thames Water is the biggest water company in England, supplying much of London and the surrounding counties.
• Population supplied: 8m
• Daily supply: 2,822m litres
• Mains pipe: 31,416 km
• Leakage: 895m litres/day (253 litres/property/day)
• Supply source: 83% surface, 17% ground

Water Calculator

Source: BBC on line, 14 Sept, 6 Oct, 4 Nov.,






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