Public Sector Performance Management · PDF filePublic Sector Performance Management. Daniel Lenardic. KPMG Croatia. 24 May 2016

Public Sector Performance Management

Daniel LenardicKPMG Croatia

24 May 2016


Introduction and Thought Leadership

2© 2016 KPMG Croatia d.o.o., a Croatian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG Thought Leadership on Public Sector Performance Management

An Achievable Quest: High Performing Public Sector Organisations

Rising to the challenge? - The impact of global demographic change on the public sector

Strengthening governance and accountability in the not-for-profit sector

Tough choices ahead- The future of the public sector

Performance agenda:-Focusing public sector performance

The wolf is at the door- The global economic crisis and the public sector

Holy Grail or Achievable Quest?International Perspectives on Public Sector Performance ManagementLaunched in September 2008, thisbook provides fresh perspectives on performance management from 12 internationally recognized academics from around the world.

The Public Governance JournalDeveloped by The Public Governance Institute and supported by KPMG, this magazine features new research and analysis from government sector practitioners and academics. This issue focuses on strategic and performance management.


The Servant of the People – a book by Muel Kaptain, KPMG Partner

Servants of the people, abbreviated to SPs, are those who hold a position, paid or unpaid, in the public sector. SPs gain power in office in order to be able to serve, and they must handle this power with integrity.

Rules serve to allow SPs to handle their power with integrity, providing clarity as to what counts as integrity and offering others possibilities for guiding and correcting SPs’behavior. Since the rules are inextricably bound up with the job, an SP in a particular position must accept the associated rules. Not knowing or recognizing these constitutes a denial of the position. SPs must therefore be proactive in finding out about relevantrules in advance and while in office.


Holy Grail or an Achievable Quest – High Performing Public Sector OrganisationsA book and study by a group of authors commissioned by KPMG on performance management in PSOs

Performance management operates within a political process• Respect the public sector realities – the interconnected nature of

most public delivery structures, the need to build consensus across many different stakeholders – and crucially – that incentives and accountabilities replace profit and competition in driving behavior.

Performance measurement is not synonymous with performance management• Focus on outcomes, not outputs. Be clear about the differences.Developing a performance management culture• Agree a small number of consistent measures and embed

performance management down throughout the organization.Authority, oversight and accountability• Establish clear lines of oversight and accountability and ensure

that those responsible for leading performance programs have the necessary authority.


Characteristics of a ‘leading practice’ government in the future

Reactive in addressing the issues of the day

Performance and results are talked about

Slow to medium technology adopter

Government-centric service delivery

Economy drives efficiency and effectiveness

Policy design is considered separately from operational delivery

Proactive in addressing the problems of tomorrow

Performance and results are acted upon

Medium to fast technology adopter

Effectiveness drives economy and efficiency

Citizen-centric service delivery

Policy design is considered together with operational delivery


A High Performing Public Service Organisation


What is a High Performing Public Sector Organization?

Governments are focused on quality of services, ahead of value for money.Across much of the public sector, service quality and improved productivity are the imperatives. This is especially true for front-line services such as education or health. These priorities come in ahead of greater transparency and accountability and better value for money – although all of these remain important. Current efficiency projects may not be the ones that deliver the most benefits.The report highlights a possible mismatch between the initiatives currently under way in the public sector, and those that executives believe provide the biggest benefit. For example, much attention is paid to competitive sourcing and e-government schemes, even though these are perceived as providing limited efficiency gains, whereas human capital management and process re-engineering are acknowledged to provide clear benefits.IT can do much to boost productivity, but is held back by poor management and a lack of skills.Technology can enhance productivity, but the public sector suffers too many problematic IT projects. Poor management of IT initiatives, along with little or no choice of available technologies, is part of the problem. Another issue is the ongoing difficulty involved in determining the true costs and benefits of projects. Private financing and user fees are favored over direct taxation.As a clear signal that the revenue-side of government is also open to innovation, respondents indicate that public-private partnerships and private finance initiatives are seen as more effective than direct taxation when it comes to financing projects more efficiently. Forecasting the costs and benefits of new projects is a major challenge.Even though governments are keen to do more, they struggle to determine the true benefits and costs of potential projects. Forecasting costs and predicting benefits emerged as two of the top three challenges associated with the funding of projects. In turn, this has a direct impact on a department’s ability to secure spending for new initiatives and ideas. The global skills shortage is hitting the public sector.The battle for skills is fast becoming a major problem for many public sector organizations, especially within specialist functions such as IT and procurement. This is particularly vital, given that the strategic management of human capital is regarded as the top measure for delivering efficiency and performance gains.

Overall, government officials indicate their strong commitment to performance, efficiency and innovation. The survey shows that governments are increasingly intent on operating more like the private sector, but in a manner that embraces and respects the unique responsibilities and constraints of the public sector.


What is a High Performing Public Sector Organization?


A Framework for Effective Performance Management

KPMG Perspective on Public Sector Performance ManagementPublic sector performance has never been under more scrutiny thanat present through increased community and political expectations.

To stimulate debate on how public sector agencies can best manageperformance, KPMG International commissioned the views of 12 leading academics worldwide. In a nutshell, the focus on performance has led to an array of performance management systems and techniques. However, many have fallen short of expectations.

Driving Improved PerformanceCritical factors for successful public sector performance managementare considered to be:• Recognizing the unique characteristics of the public sector in designing

performance management approaches• Focusing on performance management as opposed to performance

measurement• Continuous, bottom up improvement to better equip organizations to

withstand and adapt to change• Having sufficient authority at the leadership level to implement effective

performance management frameworks.

KPMG’s ExperienceAs trusted advisors to many government organizations, KPMGmember firms support an integrated performance managementapproach that takes into account the distinct and dynamicenvironment in which political leaders and civil servants operate.


Focus Areas for Performance Improvement


9 Levers of Change to become a HP PSO

1. Focus on service, not thrift 2. Working smarter, or just harder?3. The human capital challenge4. Making it happen5. Partnering with the private sector6. Shaking up funding7. The difficulty of reliable forecasting8. Technology’s role in raising productivity9. Getting the best from procurement


Focus on Service, Not Thrift

A clear desire to improve the quality of services to thepublic and a strong focus on performance targets as a way to achieve this.


Working smarter, or just harder?


The human capital challenge

The search for talent is a competitive one and sometimes can be satisfied by looking outside government.

To improve performance and service delivery, a depth of talent and skills is obviously critical. But the public sector faces two main barriers when it comes to “people issues,” neither of which is easily overcome: • compensation, especially when competing against private

enterprises; and • skills shortages, in some cases connected again with the salaries

that can be offered to attract talent.


Making it happen


Partnering with the Private Sector

Partnerships with the private sector remain a key area of focus, but so too are strong connections directly with citizens.

Another important finding relates to the growing importance of public-private partnerships. Nearly two-thirds of respondents are working with the private sector, and 45 percent of respondents agreed that it needs to play a greater role in driving public sector efficiency. Many joint projects are highly successful, although the relationship can be challenging at times.


Shaking up Funding


The difficulty of reliable forecasting


Technology’s role in raising productivity


Getting the best from procurement


Extent of Change Required


Redefining the role of a Public Service Organisation


Redefining the role of a Public Service Organisation


Croatian Experiences


Our local experiences

Public Organisations exposed to the Open Markets

Public Organisations partially exposed to the Open Markets

Public Organisations providing non-competitive public services

Zagrebački Velesajam

Croatia Airlines

Tržnice Zagreb

HPB

Narodne Novine

Razni hoteli u javnom vlasništvu

Arene Zagreb i Split

ACI

Brodogradilišta

HŽ Cargo

HRT

HŽ Putnički Prijevoz

Hrvatska Lutrija

ZETHrvatska Pošta

CROATIA osiguranje

Podravka

Petrokemija

HEP ODS

OiV

Plinacro

Zagrebačke ceste

Zrinjevac

Gradske Ljekarne

GSKG

RTZ

Čistoća

Vodovod i OdvodnjaAutobusni Kolodvor

Gradska Plinara

HOPS

Ministarstvo Uprave

Ministarstvo Znanosti

Ministarstvo Financija

Porezna Uprava

NCVO

UŠO

FZOEU

FINA

APISHAC

HEP


Key Framework Components

Organisational EIM / BI Framework

Integrated Information Management

Governance

Business Strategy Alignment

InfrastructureFinancial R

eporting and Analysis (E

xternal, Regulatory, M

anagerial)

Operational R

eporting (Custom

er, Product, C

apacity)

Tactical (KP

I. Scorecards, S

hort term decisions)

Strategic (E

nterprise Insights )

Business Intelligence Platform (Translation)

Performance Management Process and Reporting

Bus

ines

sTe

chni

cal

● Corporate Strategy and Alignment to Goals● Organizational Readiness and Staffing● Enterprise Business Intelligence Vision ● Executive Commitment and Sponsorship

● Organizational Structures and Accountabilities● Policies and Procedures (Master Data Mgmt)● Risk, Control, Compliance● Change Management / QA

● Performance Monitoring● Reporting Definition and Development

(content)● Performance Scorecards / Dashboards

Defined● Decision Support and Workflow Mapped

● Master Data Management Prioritization Processes

● Data Enrichment● Information Architecture● Information Integrity and Compliance

● Analytics Applications and Tool Portfolio / Selection

● OLAP Front End / Back End● Visual Development Tool● Information Access and Delivery Methods

● Technology Tool Portfolio and Selection● Data Warehousing / Mining Management /

Source Systems● Data Movement and Replication● Security and Data Access Technologies

Our Performance Management Framework


Strateška procjena

Strateškifeedback

Planiranje i budžetiranje

Mjerenje učinka i izvješćivanje

Inicijative za poboljšanje

Balanced Scorecard

Individualna procjena učinka

Individualno postavljanje

ciljeva

Sustav nagrađivanja

Razvoj zaposlenika

Strateška perspektiva

Operativna perspektiva

Organizacijska perspektiva

• Aktivnosti vezane uz poboljšavanje i povezivanje komponenti sustava poslovnog izvješćivanja u jedinstveni integralni proces

• Cilj procesa je operativno provođenje poslovne strategije i promoviranje strateški relevantnog ponašanja (BSC, ABC, EVA/SVA itd)

• Sustav poslovnog izvješćivanja mora biti podržan odgovarajućim tehnološkim alatima (MIS/BI itd)

Local Performance Management Improvements Experience


Our Performance Management Toolbox









1.0Review

Strategic Environment

1.2Review

Stakeholder Expectations

1.1 Evaluate

Forecasted Business

Performance

2.2Develop Baseline Strategic

Objectives and Drivers

4.0

Forecast Performance

2.0Develop

Strategic Plan

5.0Performance

Reporting

3.0Create Annual Operating and Financial Plan

4.3Evaluate Success

Achieving Operational

Priorities

2.1Communicate Performance

Expectations to BUs

3.3Develop Detailed

Functional Operating and Financial Plans

3.2Rationalize and

Prioritize Operational

Priorities

3.1Define

Operational Priorities

2.3Perform Strategic Scenario Analysis

4.2Refresh Forecast Scenario Analysis

5.1Prepare /

Deliver Periodic Performance

Reports / Scorecard

4.5Develop /

Update Cash Forecast (BS /

Cash)

4.1Refresh

Environmental Scan

5.2Prepare /

Deliver Ad-Hoc Analysis and

Decision Support

7.2Perform

Competency Certification

6.1Evaluate Actual Versus Plan / Forecasted

Performance

1.4Develop /

Refine Performance Expectations

1.3Perform

Environmental Scan

3.5Exec Review of

Operational Initiatives and Action Plans

4.4Develop / Update

Forecast (P&L)

6.0 Evaluate and

Manage Financial

Performance

6.3Develop Action

Plans to Resolve

Performance Gaps

6.4Manage and

Monitor Action Plans

8.0

Manage Process

8.2Manage

Reporting Requirements

8.1Develop

Planning / Budgeting /

Forecast Calendar

8.4Develop & Maintain Internal Controls

8.3Develop &

Communicate Policies &

Procedures

7.0

Capability Management

8.6Evaluate & Implement

Improvement Opportunities

3.4Develop Detailed

CAPEX Plan

3.6Finalize

Financial Plan / Budget and

Obtain Approvals

7.3Validate Forecast

Methodologies

7.1Maintain Finance

Competency Program

8.5 Issues Tracking and Resolution

2.4Define High-

level Strategic Initiatives

6.2Conduct

Performance Review

Meetings

Execution Management Process GovernanceForecastingIntegrated Planning / Budgeting

Strategic Planning

9.0

System Maintenance

9.2Maintain System

Interfaces

9.1Data

Governance and System Maintenance

9.4Perform System Updates

9.3Manage

Planning Cycle Master Data

2.5Board Approval

of Strategic Objectives and

Initiatives

Leve

l 2

Proc

ess

Gro

upLe

vel 3

Pro

cess


Local Performance Management Improvements Experience (2)

Budžetiranje

Izvješćivanje

Predviđanje

Strateško planiranje

Q2 Q3 Q4 Q1

Konceptualno postavljanje

ciljeva

Izdati upute za organiza

ciju

Mjesečno izvješćivanje o financijskim pokazateljima i kritičnim faktorima uspjehaPredviđanje po mjesecimaNapomena: Divizije će također trebati poslati ažurirane mjesečne podatke za kvartalno predviđanje (ključne rizike i mogućnosti)

Kolovoz Listopad Studeni OžujakProsinac Siječanj VeljačaRujanSvibanj Lipanj SrpanjTravanjOžujakStrateška

konferencija na razini

organizacije

Strateški pregled

Kaskadiranje ciljeva

Strateški pregled Uprave

Budžetiranje Org Jed(proces prilagođen za svaku Org Jed)

Kaskadiranje ciljeva

Pripremiti budžet Pregledati i proslijediti

Budžetiranje na razini

organizacije

Analiza na razini organizacije

Pregledati i odobriti

P4 P5 P6 P7 P8 P9 P11 P12 P1 P2 P3P3

Strateška procjena

Ciljevi vezani uz učinak

Identificirati jaz

Analiza opcija

Prikladno ažurirati kritične faktore

uspjeha

Legenda Predstavlja proces budžetiranja sadašnjem modelu

Kick-off sastanak

Neformalni pregled

Uprava odobrava ciljeve Org Jed

Povratna informacija

Ažurirati ugovore o učinku

Potvrditi trenutni plan Uvesti nedavne glavne događaje kao

prikladne Odobriti ključna strateška pitanja za

planiranje aktivnosti za sljedeću godinu

5+7+12 predviđanje

8+4+12 predviđanje

10+2+12 predviđanje

Projekcija do kraja godine

Ažuriranje ciljeva

Polugodišnji pregled Prvi dio analize jaza

QPR2 kraj

srpnja

QPR3 kraj

rujna

QPR4 kraj

studenog

Pregled na kraju godine Pregled budžeta

Fokus na kraju godine

Q12+10+12 predviđanje

P10P2

2+10+12 predviđanje

QPR1 kraj

ožujka

Thank You!

Daniel [email protected]

Documents

Public Sector Performance Management · PDF filePublic Sector Performance Management. Daniel Lenardic. KPMG Croatia. 24 May 2016