3.30 4.15pm Managing For Results In Pfm (Jean Baptiste Sawadogo)

© 2009 Leader One Inc. 1

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: [email protected]

‘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

PFM and good governance© 2009 Leader One Inc. 2

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


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



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


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


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

8© 2009 Leader One Inc.


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


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



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+


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


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.


2. Top Principles

Partnership/Participation

Transparency

Broad application


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



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


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



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


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


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


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


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

of risks© 2009 Leader One Inc. 26

MfR in PFM - Selected Experiences

Canada China France Sweden United States of America


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


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


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



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!


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: [email protected]

Economy & Finance

3.30 4.15pm Managing For Results In Pfm (Jean Baptiste Sawadogo)