Proposed Performance Management System for Indonesian Ministry

Proceedings of the 2016 International Conference on Industrial Engineering and Operations Management Kuala Lumpur, Malaysia, March 8-10, 2016

Proposed Performance Management System for Indonesian Ministry of Health Using Integrated Performance

Management System Indra Wirapraceka

Master of Business Administration School of Business and Management Institut Teknologi Bandung

Bandung, Indonesia [email protected]

Dermawan Wibisono Master of Business Administration School of Business and Management

Institut Teknologi Bandung Bandung, Indonesia

[email protected]

Abstract – The ministry task is to assist president in performing a part of state government affairs. To realize nation’s competitiveness in order to achieve a more prosperous society, the Ministry has to improve their performance by applying comprehensive, integrated and appropriate performance management system framework. Unfortunately, today the Ministries is applying different performance management system framework that lead to Ministry’s poor performance. This project aims to help the Ministry of Health by finding, designing and implementing the comprehensive, integrated and appropriate performance management system to be use. The methodology used is; identify the problems occur, determining objective of the research, conducting literature review for “best practice” performance management system, secondary data collecting from the Ministry, designing new performance management system for the Ministry and give a recommendation for the Ministry. The analysis of this project concludes that the integrated performance management system is the most suitable for the Ministry and has designed in the part of the project. Furthermore, the Ministry is suggested to follow the implementation plan of integrated performance management system in order to achieve it vision in 2025 through performance management system improvement.

Keywords: Indonesia, integrated performance management system, Ministry of Health, performance management system.

I. INTRODUCTIONMinistry’s task is to assist the president in performing a part of state government affairs. In carrying out this task, the Ministry is generally perform the function for setting national policy, implementing government affairs, overseeing implementation, and to represent the government in various forms international cooperation. To achieve its national strategic vision to realize the nation's competitiveness in order to achieve a more prosperous society 2025 the Ministry needs to have its performance management system updated.

Ministry of Health Ministry of Health is an institution which has the task of conducting affairs in the field of health in the government. National health development policy consistently refers to the direction of development in National Long-Term Development Plan 2005-2025. Health development priorities in presidential cabinets are improving access and quality of health services through the implementation of the health promotion program and prevention in an integrated and sustainable in order to decrease maternal mortality in childbirth and infant mortality were measured through service delivery by health personnel visits neonatal complete, monitoring the growth of children, providing access to clean water sources, and access to quality basic sanitation; improving the quality and range of family planning services through government and private clinics; availability and improved quality of service internationally accredited hospitals throughout Indonesia; the implementation of the national essential drug list as a basis for drug procurement throughout Indonesia and price restrictions on generic drugs bearing; and the implementation of health insurance for all poor families gradually extended to other Indonesian families. Ministry of Health has a vision that is “Independent and equitable healthy community”. In achieving its vision, Ministry of Health has four missions: 1. Increase the public health, through the empowerment of the community, including the private and civil society.2. Protect the public health by guaranteeing availability of health plenary efforts, prevalent, quality, and justice.3. Ensure availability and equitable distribution of health resources.4. Creating good national governance.

Ministry of Health organizational structure is illustrated in Figure 1.

1414© IEOM Society International


Figure 1. Ministry of Health Organizational Structure

II. BUSINESS ISSUE EXPLORATION In achieving Ministry vision, there are constraints within the system inside the Ministry, especially in term of performance management system. The symptoms of weakness in the system of the ministry in Indonesia can be seen on the ineffectiveness on public policy made by the Ministry, some performance indicators target in the Ministry’s LAKIP are not achieved properly, lack of coordination and synergy among Ministries and Indonesia is not competing compared to other countries.

The performance of the Ministry is regulated under Ministry of State Apparatus and Bureaucracy Reform regulation No. 12/2015 about Evaluation Guidelines of Performance Accountability System in Government Agencies. Under the regulation, the performance of Ministry is rated and diagnosed according to Table 1.

Table 1. Government Agency Performance Category No. Category Value Description

1 AA >90 - 100 Very Satisfactory

2 A >80 - 90 Satisfactory, leading in change, has high performance and accountable

3 BB >70 - 80 Excellent, accountable, performs well and has a reliable performance management system

4 B >60 - 70 Good, has a performance management system and good accountability, but needs a little improvement.

5 CC >50 - 60 Sufficient, performance accountability is good enough, policy obedient, has a system that can use to support the performance report, but need a lot of improvement

6 C >30 - 50 Insufficient, the system are less reliable and need lot of improvement

7 D 0 - 30 Very Insufficient, has a not reliable system, need a basic improvement

The category assessment consists of 5 components. The first component is performance planning, consisting of strategic plan, annual performance plan, and the determination of performance with a weight of 30. The second component is performance measurement, which include compliance measurement, quality measurement, and implementation of measurement with a weight of 25. Performance reporting is the third component, consists of a compliance report, performance information presentation, and the utilization of performance information, weighted of 15. The performance evaluation consist of compliance evaluation, quality evaluation, and utilization of evaluation results, weighted of 10 and the performance achievement weighted 20 consists of performance report, and any other performance.

Ministry of Health fills the grade “B” which means that the Ministry should have an improvement. However, in achieving the performance grade described before, the Ministries are not use the same framework. According to the Ministry performance report, Ministry of Health is using the balanced scorecard as a best practice for their performance management system but the other Ministries is using performance government agency accountability system (SAKIP). The disintegrated performance management system between Ministries can lead into conflict and friction both intra and extra-Ministerial decision.

Based on the problem, the improvement for Ministry in Indonesia can not be done by only choosing one or several components from the 5 as mentioned before because the 5 components has a different weight and difficulties. So, the solution for the Ministries problem is designing and implementing a comprehensive, appropriate, and integrated performance management system.

III. METHODOLOGY The methodology is used to deliver comprehensive analysis to the business solution. First of all is problem identification step, business issue arises at the Ministries regarding absence of a comprehensive, integrated and appropriate performance management system. After the problem is identified, the research question is assigned to clearly define the objective and

MINISTER OF HEALTH

GENERAL INSPECTORATE GENERAL SECRETARIAT

GENERAL DIR. OF HEALTH EFFORT GENERAL DIR. OF DISEASE

CONTROL& HEALTHY ENVIRONMENT GENERAL DIR. OF NUTRITION, MOTHER AND CHILD HEALTH

GENERAL DIR. OF PHARMACY AND HEALTH EQUIPMENTS

HEALTH RESEARCH & DEVELOPMENT AGENCY HEALTH RESOURCES DEVELOPMENT AND EMPOWERMENT


Proceedings of the 2016 International Conference on Industrial Engineering and Operations Management Kuala Lumpur, Malaysia, March 8-10, 2016 purpose of the project that is the performance improvement of Ministry trough a new performance management system implementation. The literature review used to determining the root cause to the problem happens and choosing the best alternatives for the Ministries, this step is using Integrated Performance Measurement System concept taken from book How to Create a World Class Company (Wibisono, 2012). The next step is data collection and processing, the data taken from the secondary data such as Ministry Performance Report both from Indonesian Ministry or overseas, literature study such as books and previous research also from government websites and newspaper. The data processing is conducted trough selecting and adjusting previous data format into the research data requirement. After the data is gathered and best alternative is chosen, the new design of performance management system for the Ministry is formulated and will be discussed for the implementation plan in the last step.

IV. BUSINESS SOLUTION After concluding the problem that is absence of a comprehensive, integrated and appropriate performance management system in Ministries, the business solution is related to the design of performance management system used in the Ministry. There are various kinds of performance management system methodology which usually used by the Ministries: Performance Prism, Balanced Scorecard, and Integrated Performance Management System.

Performance Prism (Neely et. al., 2002) is a performance management system to update the Balanced Scorecard methodology that includes only two stakeholders; shareholders and customers. Performance Prism methodology projecting satisfaction to all interlinked stakeholders, such as communities, activist, customers, employees, government and suppliers. Performance Prism has weaknesses including the benchmarking procedure is not discussed explicitly, only provide few performance standard, there is no template example to apply this performance management system step by step and the proposed model is very complicated because of the 5 interrelated perspectives (Lunger, 2006; Wibisono, 2006).

Balanced Scorecard (Kaplan and Norton, 1996) is a performance management system that is commonly used in the world and the standard for all performance management system developed thereafter. Balanced Scorecard is measures the organization's performance in four perspectives; financial, customer, internal process, and learning and growth. Balanced Scorecard does not provide the space for benchmarking and the perspective of learning and growth lead to confusion in its implementation, mainly due to the multi-interpretation in the implementation and measurement methods has not been explained (Wibisono, 2006).

Integrated Performance Management System (Wibisono, 2006) is a refinement of the Balanced Scorecard and Performance Prism methodology because Integrated Performance Management System combines the simplicity of Balanced Scorecard design by integrating the Performance Prism attention on stakeholders. Comparison between Integrated Performance Management System to Balanced Scorecard and Performance Prism is conceptually simpler and easier to understand because it only uses only three perspectives: organization output, internal process, and resource capability. Integrated Performance Management System methodology is complete and easy to understand; explanation of the process of designing is given from the beginning performance management systems foundation, methods of analysis of the business environment information, how to connect to the strategy, performance measurement frameworks, measures performance management system implementation and updating process performance management system. Integrated Performance Management System methodology also explains the benchmarking procedure very clearly and can easily implemented in Ministry of Health because they have been implemented the balanced scorecard. Table 2 is illustrates the methodologies comparison.

Table 2. Performance Management System Methodology Comparison Aspect The Balanced Scorecard Prism IPMS

PMS Design Procedures Stated clearly General description Stated Clearly

KPI Formulation General overview of with supported detail variable formula on the implementation

Formulation details on each variable

Formulation details on each variable and variable linkage

Number of KPI Grouped into 4 perspective, each variable can contain multiple variables More than 200 individual variables

Grouped into three major perspectives that are interrelated

KPI Reasoning Stated clearly in the perspective Stated clearly in the perspective Stated clearly in the perspective

Consideration of PMS applied No No Yes

Variable Linkage Described in the framework perspectives Distinguished Relationship between variables is specifically described

Final Output Financial Stakeholders satisfaction Integration between financial and stakeholders

Considering at the advantages of integrated performance management system (Figure 2), this project is designed using the integrated performance management system. So, it is expected that the formulation and implementation of integrated performance management system methodology in the Ministry of Health provides an opportunity to: 1. Provides a simple and structured approach that focuses on the performance process and results in the Ministerial level. 2. Support stakeholders to determine the strategy, targets, and evaluate the results.



Stage 4: Refreshment

OrganizationalOutput

InternalProcess

ResourceCapability

CauseEffect

WeightInfluence

Internal

External

Industry, Government and Society

Market and Competitor

Product and Service

Stage 0:Foundation

Framew

ork

Stage 2:Design

Latest Information and Knowledge

Business Environm

entInform

ation

Foundation: Guidelines Principle

Main

tenance and

Up

date

Stage 1: Basic Information

LinkagePerform

ance Variables

Benchm

ark

Strategy

Mission

Vision

Stage 3: Implementation

Report

Socialization

Current PM

S

Display Resource

Training

Process Modification

Ratio M/B

Measurement

Follow-up

DiagnosisEvaluation

3. Provides a fair performance measurement in terms of determining the roles, responsibilities and rewards. 4. Provide an excellent framework in determining Ministry’s accountability. 5. Sharing responsibilities to involved parties to improve performance.

Figure 2. Integrated Performance Management System Methodology

New performance management system design for Ministry of Health is constructed. The new performance management system (Integrated Performance Management System) would be elaborated into 5 stages. Stage 0: Foundation In developing a good performance management system in the Ministry, there are 4 guiding principles and 5 rules as a foundation in designing integrated performance management system. The four guiding principles: partnership between ministry’s stakeholders (minister, department, employee and related stakeholders), empowerment of employees, integrated performance improvement and Independent team. After 4 principles are understood, there are 5 rules need to be applied in designing integrated performance management system: easy to understand, long-term oriented, time based, focus on sustainable improvement, and using quantitative approach. Stage 1: Basic Information Basic information is required as input for the Ministry in designing the performance management system. Basic information is scanning the macro environment faced by the Ministry in doing its activities such as politic, economy, social and technology that will be summarized in a PEST analysis in the Table 3.

Table 3. PEST Analysis for Situation in Indonesia Aspect Scale

Political Weak 1 2 3 4 5 Strong Political Risk Low x High Political Stability Low x High Corruption and Relevantly Inefficient Government Low x High Economic Weak 1 2 3 4 5 Strong Economic Growth Low x High Economic Diversifying Low x High Purchasing Power Low x High Labor Availability Low x High Social Weak 1 2 3 4 5 Strong Literacy Rate Low x High Traditional Values Family x Liberal Technology Weak 1 2 3 4 5 Strong Technological Innovation and Application Infrequent x Frequent Internet Speed Slow x Fast

The political situation in Indonesia is strong; this is caused by a frequent criminalization for institutions and public officials. Moreover, it is common of corruption practice and lack of services both in public institutions and non-public. Economic situation in Indonesia moderate, indicated by still many commodities imported compared with exports performed that causing a decline in purchasing power, however, the number of workers in Indonesia is abundant with problems accompanying such as unemployment. The social conditions in Indonesia is moderate indicated by a high literacy rate in the cities but small to the people living in the remote area, however, the Indonesian people tend to have a family oriented values rather than driven by market or the environment. However, technological aspect in Indonesia is moderate, with a medium applications and the lack of technological innovation in supporting performance of public and non-public institutions as well as the weak level of internet connection speed compared to Singapore.


Proceedings of the 2016 International Conference on Industrial Engineering and Operations Management Kuala Lumpur, Malaysia, March 8-10, 2016 Stage 2: Design Integrated Performance Management System stage 2 consists of vision, mission and strategy. After the vision, mission and strategy were made, the framework of the performance management system is applied. Performance indicators of the integrated performance management system consist of three perspectives: organizational output, internal process, and resource capability. As shown in Table 4., each perspective can be break down into aspects, further, performance indicators is selected in accordance with the vision, mission and strategy of the Ministry.

Table 4. Integrated Performance Management System Perspective Perspective Aspect

Organizational Output Financial Non-Financial

Internal Process Innovation Operation Process Marketing Process Aftersales Service

Resource Capability Human Resource Technology and Infrastructure Resource Organizational Resource

The linkage between performance variables in the Ministry is cross-sector and even between departments that have different authorities. By having the linkage between the performance variables, it will facilitate the improvement process (emerge leading variable) for the Ministry because the problems in the Ministries and departments will be easily tracked and resolved is it using AHP, factor analysis, fishbone diagram or correlation analysis. The performance variables linkage within and between Ministries can occur in any situation, is it in normal situations and in special situations which require coordination among Ministries. Performance variable linkage is important because each Ministry is the sole entity in the Ministerial system that requires synergy between Ministries to realize the 2025 vision.

Benchmarking is performed to learn from external (foreign) ministry in addition to compared with the Indonesian ministry. Benchmarking is important because benchmarking can bring best practices in improving the ministry’s performance.

To define whether the vision is good or not, the vision will be analyzed using vision checklist table. Table 5. Vision Checklist for Ministry of Health

Criteria Yes NoSimple sentence ● Inspires, make employee feel comfortable work in an organization ● Written with good and right language, without empty words ● Easily understood by employees ● Focus on one or two performance aspects, not too much ● The level of achievements can be tested ● Developed by the organization leader, not by the committee ● The validity is re-examined each year ● Realistic, pointing out the department's current position and the limitation of the resources ● Can be changed, not to be hewn in an inscription ● Easy and remembered by the employee without should see the crib notes or brochures ●

It is concludes that the vision of Ministry of Health is good. The Ministry of Health vision statement could be changed into “To be world class public institution that deliver independent and equitable health for the people of Indonesia”.

To define whether the missions is good or not, it will be analyzed using mission checklist table. Table 6. Mission Checklist for Ministry of Health

Criteria Yes NoClearly distinguish between organization and competitors ●Define what that organization do and don’t ●Identify organization’s ability and key competence ●Encourage organization to make better decisions ●Defining organization’s product or service ●Short and brief ●Can be clearly understood by employees ●Written with good and right language, without empty words ●Focus on current conditions and not mixed/coupled with a vision statement ●Re-examined and re-written if organization undergoing change business scope ●Specific to affect individual behavior in the company ●Reflecting the department strength based on recognition of strength and weakness ●Realistic and can be achieved ●Flexible enough so that it can respond to environmental changes ●Referring to a competitive advantage ●Includes several logic statement and values to excite spirit and facilitate communication within and outside organization ●

The Ministry of Health mission has met the criteria of good mission statement. So, the mission can be translated into strategy in the designing of the new performance management system.

Ministry of Health strategies are: 1. Increasing public health and nutrition.2. Reducing morbidity due to infectious disease.3. Decreasing health status and nutrition disparity between region, socio-economic and gender.4. Increasing health public budget provision in order to reduce financial risk for entire population.


Proceedings of the 2016 International Conference on Industrial Engineering and Operations Management Kuala Lumpur, Malaysia, March 8-10, 2016 5. Increasing clean and healthy behavior in the household level. 6. Fulfill medical workforce in the lagging, remote, border and outer area. 7. Implementing non-infectious disease control program. 8. Implementing minimum service standard at the district/city.

The strategy further turned into performance variables that will be elaborated in the integrated performance management system framework. In the integrated performance management system framework, each performance variable is designed according to the perspective that presented in Table 7. Furthermore, the linkage between performance variables in each perspective will be illustrated in Figure 3., the benchmarking will be described in Table 8. and Table 9.

Table 7. Ministry of Health Performance Variable

Figure 3. Ministry of Health Performance Variable Linkage

KPI No. Perspective Aspect Performance Indicator Unit Target Actual Performance (%)

KPI 1 Organizational Output Non-FinancialPercentage of maternity mother who helped by trained health personnel

% 90 90.89 100.99

KPI 2 Organizational Output Non-Financial The percentage of coverage of the first neonatal visit % 90 96.72 107.5

KPI 3 Organizational Output Non-Financial The percentage of babies body weighed % 85 80.6 94.8

KPI 4 Organizational Output Non-Financial The percentage of new cases of TB that cured % 88 89.5 101.7

KPI 5 Organizational Output Non-FinancialThe number of health care facilities (hospitals and clinics) that meet standard infrastructure, and health equipment

Health care number

594 1300 218.8

KPI 6 Organizational Output Non-FinancialThe percentage of the population has health coverage

% 80.1 81.28 101.47

KPI 7 Organizational Output Non-Financial The percentage of households that implement PHBS % 70 56.6 84.71

KPI 8 Organizational Output Non-FinancialPercentage of the provinces have no smoking area regulations

% 100 100 100

KPI 9 Organizational Output Non-FinancialPercentage of district/cities that have minimum health budgets 10 percent from the APBD in the achievement of SPM

% 100 48.87 48.87

KPI 10 Organizational Output Non-Financial Number of deaths during a certain period Number 0 0 0

KPI 11 Organizational Output Non-Financial Position of the league table Position 0 0 0

KPI 12 Internal Process InnovationNumber of products/intervention models/prototypes/standard/formula the results of research and development in health

Number 54 61 112.96

KPI 13 Internal Process Operation processThe number of cities that have world class standards hospitals

City 5 11 220

KPI 14 Internal Process Operation processPercentage of health facilities which have appropriate human resources standards

% 80 85 106.88

KPI 15 Internal Process Operation processThe number of pos kesehatan desa (Poskesdes) operates

Number of Poskedes

58500 55517 94.9

KPI 16 Internal Process Operation processThe number of health care workforce harnessed and given incentives in DTPK

Number 7020 7491 106.7

KPI 17 Internal Process Operation process Percentage of medicines and vaccines availability % 100 100.51 100.51

KPI 18 Internal Process Operation processTotal amount of energy consumed from all sources in operation process

Number 0 0 0

KPI 19 Internal Process Operation process Average time to respond suggestions and feedback Day 0 0 0

KPI 20 Internal Process Operation process Government satisfaction survey % 0 0 0

KPI 21 Resources Capability Human resourceNumber of the inspection/audit of safety program hazards of enforced compared to plan per year

Number 0 0 0

KPI 22 Resources CapabilityTechnology and infrastructure resource

Percentage of personnel administration managed through the system of staffing services

% 70 84.45 115

KPI 23 Resources CapabilityTechnology and infrastructure resource

Procurement percentage of using e-procurement % 90 89 98.9

KPI 24 Resources Capability Organizational resourcePercentage of provincial and district/city that has a health data bank

% 76 79.79 105

KPI 25 Resources Capability Organizational resourcePercentage of work units that have implement accountable administration

% 100 100 100

To be Decided in the Meeti ng/New KPI (source: Wi bi sono, 2011)

Not Met the Ta rget (89% Bel ow) Met the Target (90-100%) Exceeded Target (>100%)

KPI 1KPI 12 KPI 2KPI 13 KPI 3

KPI 21 KPI 14 KPI 4KPI 22 KPI 15 KPI 5KPI 23 KPI 16 KPI 6KPI 24 KPI 17 KPI 7KPI 25 KPI 18 KPI 8

KPI 19 KPI 9KPI 20 KPI 10

KPI 11

Resource Capability Internal Process Organizational Output



Table 8. Ministry of Health Strategic Objective Benchmark With U.S. Department of Health and Human Services United States of America Indonesia

Trade and Investment: Expand the U.S. economy through increased exports and inward foreign investment that lead to more and better American jobs

Increasing Export Growth of Non-Oil and Gas Commodity Price stabilization of the staple product Price disparity decrease between province

Innovation: Foster a more innovative U.S. economy—one that is better at inventing, improving, and commercializing products and technologies that lead to higher productivity and competitiveness

Export Market Diversification Export product diversification Image improvement of the export product

Environment: Ensure communities and businesses have the necessary information, products, and services to prepare for and prosper in a changing environment n/a

Data: Improve government, business, and community decisions and knowledge by transforming Department data capabilities and supporting a data-enabled economy

Increasing role and ability of the diplomacy in international trade Domestic trade licensing simplification Simplification of licensing foreign trade

Operational Excellence: Deliver better services, solutions, and outcomes that benefit the American people

Increase in the output of the trade sector Infrastructures development of trade distribution

Table 9. Ministry of Health Performance Variable Benchmark With U.S. Department of Health and Human Services United States of America Indonesia United States of America Indonesia

Ensure access to quality, culturally competent care, including long-term services and supports, for vulnerable populations

The number of pos kesehatan desa (Poskesdes) operates Enhance access to and use of data to improve HHS programs and support improvements in the health and well-being of the American people

Percentage of provincial and district/city that has a health data bank

Improve health care and population health through the meaningful use of health information technology

n/a

Percentage of district/cities that have minimum health budgets 10 percent from the APBD in the achievement of SPM

Accelerate the process of scientific discovery to improve health n/a

Invest in the HHS workforce to help meet America’s health and human service needs

Percentage of health facilities which have appropriate human resources standards

Foster and apply innovative solutions to health, public health, and human services challenges

Number of products/intervention models/prototypes/standard/formula the results of research and development in health

The number of health care workforce harnessed and given incentives in DTPK

Advance the regulatory sciences to enhance food safety, improve medical product development, and support tobacco regulation

Percentage of the provinces have no smoking are regulations

Percentage of personnel administration managed through the system

Increase our understanding of what works in public health and human services practice

n/a

Improve HHS environmental, energy, and economic performance to promote sustainability

Percentage of work units that have implement accountable administration

Improve laboratory, surveillance, and epidemiology capacity n/a n/a Procurement percentage of using e-

procurement

Stage 3: Implementation 1. Current Performance Management System Ministry of Health is implementing disintegrated performance management system, this situation lead to a inter-Ministerial conflict, and friction between Ministerial-subordinate level such as the general secretariat, directorate, general inspectorate, echelon, the supporting units and the entity under the Ministerial level. Moreover, the Ministries in Indonesia is simply adopt a performance management system without adapting the performance management system, besides, the key success of the performance management system implementation based on the sense of belonging to the system, work culture changes, and the design of the integrated performance management system. The integrated performance management system will be adopted because the conceptual framework is needed by the ministries contextually. To adopt integrated performance management system framework Ministry of Health should adopt the current performance management system that has been imposed to be able to produce a significant improvement.

2. The report should be supported by the Performance Management System The report be supported by the new Performance Management System is defined at the beginning of the design. Specifications of the report is sorted by the purposes; minister, echelon, or tasks forces. Each level has a different regarding the depth, detail, and the time period of report. The report supported by a new performance management system is designed that it can be communicated immediately and connected in terms of both performance information and decision-making aspects. The report should be supported by the new performance management system will be illustrated in Table 10.



Table 10. Ministry Report Handling

3. Performance Management System Socialization The performance management system designed for the Ministry will be useless if not socialized intensively. Socialization is vital because there is a gap between the minister with subordinates in terms of knowledge and thoughts about the duty. In this socialization process, the understanding of subordinates is always being checked regularly by their leader/coordinator, considering possibility of vision, mission, strategies, and work program change.

Table 11. Performance Management System Socialization Plan

4. Analysis of Benefit to Cost Ratio Analysis of benefit to cost ratio is required to determine whether the application of integrated performance management system will provide significant benefit to the Ministry. The Ministry of Health has a “B” category according to Ministry of State Apparatus Exertion and Bureaucracy Reform (www.menpan.go.id). The “B” category means that the 5 ministry has a 61-70 score index which has a good accountability, but need an improvement in the performance management system (inability to define performance, inability to develop performance indicator, inconsistencies between planning and budgeting). As an assumption, the implementation of integrated performance management system will costs Rp. 20,000,000,000.00 (infrastructure, software development, consultant, expert, seminar, workshop, socialization, document adjustment, etc.) on each ministry and integrated performance management system can gain up to 25% the performance of the Ministry. The score index for each ministry after the implementation will reach 81.25 (the median score index for current performance multiplied by performance escalation percentage) which is reach “A” category. The “A” category means that the Ministry has a satisfying performance and very accountable, so the ministry has a benefit/gain in performance trillions of rupiah annually and can achieve its vision in 2025 without need to making improvement on the system anymore. Analysis of benefit to cost ratio should be done to a poor performance in a variable on each ministry, it is necessary to determine which performance variable will be improved so it can provide significant benefits for every Ministry.

5. Training Performance management system is a new understanding for Ministry of Health; therefore it is necessary to conduct training in the implementation of performance management systems in accordance with the needs of the Ministry. Training can be either a general understanding of the integrated performance management system or the tools that can be utilized in the implementation of performance management systems. The selection of training providers is very important in this case, because not all the training providers having competence in designing and implementation process of integrated performance management system.

MinistryBefore Ministry's Strategic Plan Preparation

5 Years KemenPAN-RBInspectorate and Secretariat General

Echelon IBefore Ec I Strategic Plan Preparation

5 Years Minister/undersecretaryInspectorate and Secretariat General

Echelon IIBefore Ec II Strategic Plan Preparation

5 Years Echelon IInspectorate and Secretariat General

Ministry4 - 5 months after president election

5 YearsBAPPENAS, KemenPAN-RB

Inspectorate and Secretariat General

Echelon I 5 months after minister election 5 Years Minister/undersecretaryInspectorate and Secretariat General

Ministry On July week IV year before AnnuallyBAPPENAS Minister/undersecretary


Echelon I On July week II year before Annually BAPPENASInspectorate and Secretariat General

Ministry March week II AnnuallyKemenPAN-RB Minister/undersecretary


Echelon I February week III current year Annually Minister/undersecretaryInspectorate and Secretariat General

Echelon II February week I current year Annually Echelon IInspectorate and Secretariat General

Ministry 15 March next year AnnuallyKemenPAN-RB Minister/undersecretary


Echelon I 30 March next year Annually Minister/undersecretaryInspectorate and Secretariat General

Echelon II 31 March next year Annually Echelon IInspectorate and Secretariat General

6 Monthly Report Echelon I Next Month Monthly Minister/undersecretaryInspectorate and Secretariat General

In the event of significant changes in the internal and external environment in the current year, the Ministry and Ec unit I / II strategic plan may be revised.

Organization Unit Delivery Period Document Period

2

No. Document Distribution Carbon Copy Explanation

In the event of significant changes in the internal and external environment in the current year, the Ministry KPIs, Ec unit I / II, may be revised.

3

4

5

Key Performance Indicator

Strategic Plan

Performance Plan

Performance Contract

Performance Accountability Report

1

Organization Unit Person in Charge Media Duration

MinistryKemenPAN-RB, Minister/undersecretary, Consultant

Online system, meeting, telegraph

Every month in 1 year

Echelon IMinister/undersecretary, Consultant

Online system, meeting, telegraph

Every 2 weeks in 1 year

Echelon II Echelon I, ConsultantOnline system, meeting, telegraph, poster, leaflet

Every 2 weeks in 1 year

Work UnitMinister, Echelon I/II, Consultant

Online system, meeting, telegraph, poster, leaflet, workshop, seminar.

Every week in 1 year


Proceedings of the 2016 International Conference on Industrial Engineering and Operations Management Kuala Lumpur, Malaysia, March 8-10, 2016 6. The resource allocation within the context of integrated performance management system is the responsible party for variable measurement, evaluation, diagnosis, and decision maker to the problem occurred. Resource allocation is important because there should be an independent party to obtain the objective-results from the evaluation and diagnosis to get relevant repair process. Process of measurement, evaluation, and diagnosis would be better if it is supported by a computerized system to avoid time and budget wasted, because the performance management system is only a tool to help the decision making.

Table 12. Ministerial Level Resource Allocation Organization Unit Measurement Key Performance Indicator

Ministry Strategic Objective Objective Performance Indicator

Echelon I Program Program Performance Indicator

Echelon II Action Action Performance Indicator Work Unit/Ec III List of Action List of Action Performance Indicator

7. Display Publishing performance data to the stakeholders will help the Ministry to be able to determine the each performance position of and will increase competition. With the publication of the data is expected the cooperation and positive competition both between ministries and between stakeholders. Ministry’s performance data must be published to the stakeholders in a form that is easily understood, attractive, and can be measured, because of that, quantitative data should be presented to reflect the performance of the ministry. Presenting data using graphic displays can be used to communicate the performance data of each Ministry, meanwhile, to facilitate stakeholders to understand and compare the performance with a more attractive, spider-web diagrams can be used in the presentation of the data as will illustrated in Figure 4.

Figure 4. Ministry of Health Display

Each performance indicator has a different meaning, depend on the Ministry angle of view, as an example, negative value doesn’t mean that the achievement is bad, but it is represents the reversibility achievement of the performance indicators, the zero value does not represent a bad achievement because it is a new performance indicator, although, the performance indicator value that exceeds the target doesn’t always reflecting a good performance, because it could be happen due to low targeting or lack of designing performance indicators. However, by displaying the entire performance of the ministry, it is expected that competition for the better is happen, improving spirit to produce an excellence performance and encourage cooperation in building synergy between Ministries.

8. Process Modification In the implementation of integrated performance management system, the Ministry can perform modification process to the performance management system that has been applied previously. Modification process is recommended in order to facilitate the implementation of integrated performance management system without the need to design the performance management system of the Ministry from the beginning. The modification process can be done at any step; it is from the measurement, evaluation, diagnosis and follow-up.

9. Performance Measurement Performance measurement is the starting point in Ministry’s performance management and the analysis can be made from the results. Performance measurement result illustrates the difference between performance realization with the target but does not provide the guidance to the gap occurred and solution to the gap.


Proceedings of the 2016 International Conference on Industrial Engineering and Operations Management Kuala Lumpur, Malaysia, March 8-10, 2016 10. Performance EvaluationPerformance evaluation is performance assessment compared with the plan or standard agreement. At the performanceevaluation, the performance standard should be established as a standard for the benchmarking, that can be done internal orexternally. Internal benchmarking can be done by considering best performance achieved by the Ministry, the pastperformance average in certain period, the performance of other department, the technical standards, and last yearperformance. Meanwhile, external benchmarking can be done by comparing with neighboring countries Ministry, Ministryin developed countries and the Ministries that have best practice in dealing with public policy. The most important thing inbenchmarking on evaluation purpose is the standard taken have to be realistic and challenging, because if there is noincentive for improvement, the people in the Ministry would not improve their performance.

11. Performance DiagnosisPerformance diagnosis defined as the process of obtaining the causes of the deviation of the performance and find way toachieve the targeted performance. Performance diagnosis is not obtained by aligning the possibilities and qualitativeexplanations without supported by accurate data because the assumption often does not representing the whole possibility.Therefore, it is important to have a root-cause diagram for every variable so the possibilities can be derived scientifically byusing factor analysis, correlation analysis, analytical hierarchy process, as well as other approaches. If the assumptions thatare based on qualitative explanation are correct, the causal analysis will scientifically reinforce the opinion so it can beapplied to the same case in the next period.

12. Follow-UpThere are two different aspects of the corrective action, technical and strategic aspects. Technical aspects carried out for theshort term, for example, correction of the specific performance variables if a problem occurs at the work unit. Strategicaspects aimed at the ministerial level and long-term, for example, if the activity and performance indicators at the echelon IIcan not run, then the echelon I performance will be hampered, so the follow-up is required at the Ministerial level.Stage 4: Maintenance and UpdatePerformance Management System that is designed have to be dynamic and have always kept up to date relating to thecompetitive environment changes, regulation, stakeholder demand, community needs, technology development,performance standards attainment and the latest methods of performance management system.

Wibisono (2012) stated that in addition to keeping-up designed performance management system, leadership, commitment, and stakeholders involvement should be maintained, which is basically to keep the spirit to always being excellence. Below are some things that should be kept in order to be excellence and updated: 1. Inspiring and transformational leadership.2. Commitment from entire organization.3. Stakeholder involvement.4. Communicate measurement, evaluation, diagnosis, and follow-up process.5. Feedback from all stakeholders to evaluate what has been implemented.6. Resources availability.7. Learning and growth occur must be adapted to technological development.8. Continuous scanning the internal and external environment to identify opportunities and challenges.9. The implementation should focus to the goal.10. Focus on organization capacity to support the process can be efficient and effective.

V. RESULT AND RECOMMENDATIONBased on the analysis describe, the best performance management system to be implemented in the Ministry of Health is integrated performance management system. To make sure that the proposed performance management system can provide solution to the problem, can be compared the performance management system differences before and after the implementation of integrated performance management system framework using 4 guiding principles and 5 rules. The comparison between 2 frameworks will be illustrated in Table 13 and 14.

Table 13. Guiding Principle Comparison Before IPMS After IPMS

Partnership Absence of partnership among stakeholders, where performance variables of the Ministry is set according the framework used. Emerge the partnership because IPMS deliver the same and integrated framework.

Empowerment Performance target oriented. System oriented that will encourage stakeholders to improve performance Integrated Performance Improvement

Integration of performance measurement through SAKIP. Variable linkage (intra- and extra Ministry), benchmarking, and the linkages between ministerial duties, vision, mission, strategy and performance variables.

Independent Centralize performance measurement. Stakeholders involvement in arranging performance indicator (decentralize).



Table 14. Rules Comparison Before IPMS After IPMS

Easy to Understand Have not used standardized and simple performance management system. Using a framework to facilitate each party know its responsibility and make them easy in understanding the concept of IPMS.

Long-Term Oriented Framework used only based on the interests of each Ministry and if there is a leader change, the framework will also change.

The system is build based on the vision, mission and integration based on the stakeholders’ interests, so it can be used for a long term period.

Time Based Performance measurement is done inconsistently, depending on the Ministry situation.

Standard and integrated system make it easier to control and making a continuous improvement

Sustainable Improvement Do not use feedback that can be used for making continuous improvement. Using performance variables linkage and benchmark that can foster continuous

improvement. Quantitative Approach Using quantitative approach. Using quantitative approach.

In order to achieve positive change that desired by the Ministry, there should be a structured implementation plan so the new performance management system can work precisely, on time and on budget. The integrated performance management system implementation plan according to stage 3 in the framework will follow the scheme in Figure 5.

Figure 5. Implementation Plan Scheme

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BIOGRAPHY Indra Wirapraceka is a graduate student from MBA School of Business and Management ITB in 2015. Receive his bachelor of management in 2012 from Parahyangan Catholic University.

Dermawan Wibisono is a professor in School of Business and Management ITB specialties in corporate performance management, received his bachelor of Industrial Engineering from ITB in 1989. He earned Master of Engineering from Royal Melbourne Institute of Technology, Australia in 1999. His Doctoral degree is in performance management from University of Bradford, the United Kingdom in 2003.


Documents

Proposed Performance Management System for Indonesian Ministry