3.30 4.15pm managing for results in pfm (jean baptiste sawadogo)

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ICGFM Winter Conference: Performance. Results. Outcomes. Understanding Impact in Managing Public Finance

‘Managing for Results’ (MfR) in‘Public Financial Management’ (PFM)

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December 2-4, 2009, Washington D.C.

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Jean-Baptiste SawadogoPresident

Leader One Inc

Tel. +1 613 721 8087; E-mail: JeanBSaw@aol.com

‘Managing for Results’ in‘Public Financial Management’

New ‘experiment’ in Public Sector Policy and Management

Very limited studies, literature and evidence Provide a bird’s view perspective Improve understanding of MfR Share observation and reflections on the topic Stimulate debate on MfR and its potentials for

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MfR and its Impact in PFM

MfR: results first; then resources, then … PFM : money first; then processes; then results?? MfR: impact mostly on developed country agencies MfR can potentially impact developing country PFM MfR to likely suffer from the ‘pendulum effect’ The impact of PFM: the improved wellbeing and

prosperity of citizens: girls, boys, women, men

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Managing for Results (MfR) is aStrategic Quest for Results MfR practiced for millenniums Strong military influence ‘Managing for Results’ - the precursor term for

‘Strategic Management’ MfR: envisioning results, aligning resources and

taking action to achieve results The private sector uses MfR to create wealth; The public sector can use MfR to deliver results to

citizens

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Global MfR Drivers & Milestones

Finance is finite AND “Do more with less!” - early 1990s recession Finance is not everything

o CIDA’s Strategic Review and Renewal Exercise (1990+)o The ‘Government Performance and Results Act’ is enacted in the U.S. (1993)o Results-Based Management (RBM) at CIDA (1993+)o Office of the Auditor General of Canada Report (1993+1995)o Aid Effectiveness Principles adopted by DAC-OECD (1996)o Assessing Aid: a World Bank report (1998)o Results for Canadians - a Government-wide RBM Policy (2000)o Many OEDC countries have adopted a results-focus (+ - 2000)o The Millennium Declaration on the MDGs at the UN (2000)o ‘Managing for Development Results’ – WB and OECD (2002)o Paris Declaration on Aid Effectiveness DAC-OECD-led process (2005+)

Global consensus on the need for a results focused approach

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A New Global Imperative:‘Managing for Results’

Demands on governments and their agencies to deliver results and be accountable

Demands on international organizations to “focus on results”

Demands on private firms to perform: financially and socially

Requirement for innovative results oriented management approaches

Increasing demand for Results-Focused PFM

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Performance Review Led toMfR in the Public Sector

Performance review : spotlight on “Spending” vs. “Results”

‘Performance Audit’: ‘Value for Re$ources’ (VfR) in external audit

‘Managing for Results’ is now fuelling ‘Performance Audit’ and ‘Performance Budgeting’

Leadership of ‘Public Finance’ functions is needed

The Role of Monitoring and Evaluation (M&E) Towards MfR

M&E: precursor practices towards MfR Monitoring during project and program

implementation Evaluation during and after

implementation M&E functions were first to promote

MfR

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The Role of ‘Performance Audit’

Comprehensive Audit: an early form of Performance Audit Performance Audit is: “… a systematic, purposeful, organized and objective

examination of government activities; … designed to promote accountable government; … includes the examination of economy, efficiency, cost effectiveness and environmental effects of government activities ...”

“A focus on performance covers both the benefits accomplished [for citizens] and due process and fairness in the delivery of services”(1)

Performance Audit calls for performance (1) Excerpts adapted from the Performance Audit Manual, Office of the Auditor

General of Canada - June 2004; pages 13 and 17)

Growing Impact of Supreme Audit Institutions On PFM Performance Improving SAIs capacity in Performance Audit Improving profile and independence Increasing innovative audit standards & specialties Increasing interaction with parliaments, civil

society, the media and citizens Increasing transparency, improved anti-corruption,

and increasing accountability Ultimately, improving PFM performance - results

for citizens

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Performance Budgeting -A First Step Towards MfR in PFM

Performance budgeting = Results-Based Budgeting Emerged within a decade or so Conveys government commitment to performance A Public Expenditures Management flavor Consists in ‘informing’ the ‘Budget’ with ‘Results’ Falls short of being truly ‘results-focused’ First step towards MfR in PFM for greater Public

Sector performance

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What is ‘Managing for Results’?

A deliberate, systematic, rigorous pursuit of results A way of thinking; of doing business Linking of ‘Re$ources’ with ‘Results’ committed to Two “brands” of results-focused Management

o Original: ‘Results-Based Management’ (‘RBM’)1 - Inputs vs. Results (outputs, outcomes, and impacts)

o Consensus: ‘Managing for Development Results’ (‘MfDR’)2 1Original “brand”: Canadian International Development Agency (CIDA); 1993+ 2Subsequent consensus “brand”: DAC-OECD-led consultative process 2002+

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‘Managing for Results’: A Nine-Point Overview1. ‘Misconceptions’2. Principles3. Precise vocabulary4. Logical hierarchy of results5. Tools6. Crosscutting Issues7. Performance Management8. Functional Stakeholders9. ‘Rewards’

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1. Top ‘Misconceptions’

‘Managing for Results’ is ‘Monitoring & Evaluation’

Attribution of ‘Results’ is impossible; so, MfR does not work

The ‘impact’? Don’t bother during project or program implementation.

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2. Top Principles

Partnership/Participation

Transparency

Broad application

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3. Precise Vocabulary

‘Reach’: the human element of MfR ‘Result’: an expected or actual achievement ‘Indicator’: ONLY a measure of progress or

achievement ‘Target’: desired level for an indicator ‘Activity’: NOT a ‘Result’; IS the ‘doing’, the

action to achieve a result

4. Logical hierarchy of results

Impact

Outcomes …

Outputs …

N.B.: Activities are not results

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5. Top Tools

The Logical Framework Analysis (LFA) or Logic Model (LM)

The Performance Measurement Framework (PMF)

The Implementation Plan - the business plan integrates all the parts of MfR

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6. Top Crosscutting Issues

Gender Equality Mainstreaming : responsiveness to specific issues of girls, boys, women and men

Sustainable Environment Mainstreaming: regulatory compliance and proactive developmental sustainability

Knowledge Management & Sharing; echoes a 4th RBM principle: ‘Learning by Doing’

7. Performance Management

Performance Management is a subset of MfR Expected results planned ahead Indicators selected and baseline data collected Performance management framework Implementation: activities; budgets; processes;

reports; risk mgt., work plans; etc. Continuous monitoring and analysis of results,

activities, risks, lessons learned Continuous improvement towards results

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8. Top Functional Stakeholders

Managerial functions - corporate and line Performance management/review functions

(Monitoring, Reporting and Evaluation, MfR) Financial functions (Budgeting, Accounting;

Control; Procurement; Internal Audit) Necessity for functional coordinated

contribution towards to results; while managing risk

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9. Top ‘Rewards’ of MfR

Results for citizens - girls, boys, women and men Strong focus: elimination of wasteful ‘activities’ ‘Guaranteed’ ‘Value for Re$ources’: right results at

right efficiency Capacity to demonstrate relevance and communicate

performance - ‘Results’ vs. ‘Re$ources’ ‘Rewards’: recognition; more funding; winning

competitive funding

MfR in PFM - Where Are We?

Application of MfR in PFM Developing country experiences Developed country experiences Selected country experiences Key challenges of MfR in PFM

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Application of MfR in PFM

Public Expenditures Management mentality Supremacy of the budget process Performance/Results-Based Budgeting mostly Some ‘Results for citizens’ reform: deliberate

whole-of-government approach; but… Strong agency/sector/functional orientation

rather than true ‘Results for Citizens’ focus

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MfR in PFM: Developing Countries

MfR is a by-product of development aid:o Applied to aid projects; then programso Application in ‘Program-based approaches’;

progressively in PRSPs Focus on Public Expenditures Management

and anticorruption Emerging whole-of-government approaches

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MfR in PFM: Developed Countries

MfR is a by-product of austerity and crisis management

Agency/departmental performance management Whole-of-government approaches Improvement of regulatory and policy frameworks Implementation through the budget process The pendulum effect after every crisis hardening vs.

easing of rules Dilemma of stimulus packages: quick results vs. fear

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MfR in PFM - Selected Experiences

Canada China France Sweden United States of America

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MfR in PFM: Key Challenges ‘Expenditure’ mentality; supremacy of the ‘Budget’ Risk-averse culture: across-the-board measures Complexity in government/self preserving structures Divided governance: Political; Legislative; Public

Service; Judiciary; Decentralized regimes… Short-to-medium term electoral cycle vision Increased discourse but still confusion and

insufficient practice Difficulty in moving beyond activities and outputs

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MfR in PFM:Where Are We Going? MfR is increasing in awareness and appeal Performance budgeting is increasing in popularity Citizens will keep pushing for results Do we have a choice to practice MfR or not? Yes - BUT… We must master the art and the science for MfR in

PFM

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MfR in PFM: How to Get There?

Strong MfR leadership at the top Long term orderly MfR implementation

(culture change takes time) Long-term results-focused country vision Comprehensive country results framework Results-focused country strategic documents Results-friendly risk-mitigation practices

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MfR in PFM: A Final Word

‘Managing for Results’ is here to stay - citizens will keep pushing for results

Private sector uses MfR; creates enormous wealth Private sector flexibility: the budget is a tool Public sector rigidity: the budget is the law! The Public Sector can and must master MfR to

deliver sustainable wellbeing and prosperity - for citizens: girls, boys, women and men…

If Public Finance professionals catch up with MfR and lead for performance; results; outcome; impact

To your results-focused leadership!

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For Additional Information:

OECD-World Bank: Managing for Development Results: www.mfdr.org

Canadian International Development Agency: RBM info: http://www.acdi-cida.gc.ca/acdi-cida/ACDI-CIDA.nsf/eng/NAT-92213444-N2H#intro

Office of the Auditor General of Canada; Performance Audit Methodology: http://www.oag-bvg.gc.ca/internet/English/oag-bvg_e_859.html

Leader One Inc: e-mail to: JeanBSaw@aol.com