Main Trends Among OECD Countries: A Deep Look into the Research Variables

In this section, we describe the major trends among OECD countries with regard to performance management practices and other structural changes that may affect government performance. In doing so we deconstruct the research variables into their components, thus further enriching the data set and the analysis.

Performance Management Practices Among OECD Countries

As explained earlier, performance management practices are expressed in three main dimensions: strategic planning, performance budgeting, and HRM. To assess strategic planning, we first consider the RIA, which has emerged as a main strategic policy tool in recent decades. RIA looks at all possible impacts of regulation, including costs and benefits, as well as sustainability. It allows decision makers to examine regulatory policy alternatives and plan accordingly. It also strengthens the transparency of regulatory decisions and their justification, making it a main component of strategic planning. The key elements of RIA to which countries’ government officials referred were: integrating RIA into the development, review, and revision of significant regulations; supporting RIA with expost evaluations to monitor quality and compliance; and ensuring that RIA plays a key role in improving the quality of regulation. The data collected by the OECD in that respect indicate a significant rise in adopting RIA, especially between 1994 and 2002, to the point that in 2009 all OECD member states reported that they had adopted this mechanism to a certain extent. However, there are differences between countries in terms of the scope of institutionalization and use of this mechanism depending on the history of public sector reforms and the managerial culture. For example, in Sweden and Japan, the RIA composite indicator grew from 0.3 and 0.4 in 2005 to 0.7 and 0.85 in 2008, respectively. In Canada, it did not change between those years but remained at the level of 0.92, while in Spain it remained at a low level of 0.23-0.25. Hence, there is a variance in this indicator both between different periods of time and between countries. The average value of the RIA index among 30 OECD countries was 0.66 on a scale of 0-1 in 2008 as compared to 0.53 in 2005.

The second indicator for strategic planning was strategic HRM as measured in 2010. This measure indicates the existence of a general accountability framework, as well as various elements related to the existence of forward planning to ensure adequate workforces to deliver services. The composite indicator rates countries according to the existence of a general accountability framework for middle and top managers that incorporates strategic HRM components, the use of HRM targets in the performance assessment of middle and top managers, evaluations of the performance of ministries and departments in terms of following good HRM practices, and the use of workplace planning. The OECD report (2011) indicates that there was a large variance among OECD countries in the use of such strategic HRM practices. Australia, Canada, and the United Kingdom were at the top, while the Czech Republic, the Slovak Republic, Greece, and Hungary had only a few of these practices in place in the central government. The average value of this indicator among 31 OECD countries was 0.5 on a scale of 0-1 in 2010.

Performance budgeting is usually regarded as an important component of strategic planning, because it both informs decision makers about outputs and outcomes, and allows them to control expenses in a way that motivates desired outputs (Holzer et al. 2016). The indicator for performance budgeting was the extent to which performance budgeting has been applied in a given country based on the responses of senior budget officials in OECD member countries to a survey conducted in 2011. This composite index contains 11 variables that cover information on the availability and type of performance information developed, processes for monitoring and reporting on results, and whether (and how) performance information is used in budget negotiations and decision making by the central budget authorities, line ministries, and politicians. The OECD also measured this indicator in 2007. The main trend that emerges in both 2007 and 2011 is that most countries report having some kind of performance budgeting mechanism, yet it is usually used to compile information, which enriches budgetary discussions (OECD 2007, 2011). Only rarely does performance budgeting include actual financial consequences such as reducing budgets for those who underperform and increasing finances for those who perform well.

Another general trend is that line ministries are more likely to use performance budgeting for allocation purposes for their agencies and divisions than the national government is to use it to fund the ministries. However, since there are major differences between the countries with respect to the specific subindicators, there is also variance in the composite indicator. There are also differences between the two points in time. It seems that many countries retreated from this approach between 2007 and 2011. For example, the composite indicator for Finland, Australia, Norway, and Poland declined from 0.62, 0.62, 0.58, and 0.57, respectively, in 2007, to 0.43, 0.4, 0.36, and 0.31, respectively, in 2011. For countries such as Korea, Mexico, and Canada, the composite indicator increased between 2007 and 2011, but for the majority of the countries it dropped. This trend may indicate some disappointment with the mechanism, possibly due to many obstacles in its implementation and use. The average value of this indicator among 32 OECD countries was 0.38 on a scale of 0-1 in 2011 as compared to 0.42 in 2007 among 30 OECD countries.

The indicators for HRM practices were based on the responses ofsenior officials in the central government’s HRM departments to the 2010 OECD Survey on Strategic Human Resources Management. As explained earlier, this is a leading component of performance management mechanisms. We considered three indicators. First, we weighed the extent to which performance assessment is used in HR decisions in the central government. This composite indicator reflects the existence of a formalized performance assessment, the use of performance assessment tools, the performance assessment criteria used, and the importance of good performance assessments for promotion, remuneration, and contract renewal. The OECD report (2011) indicates that all countries included in the survey had implemented performance assessment by 2010. In several countries such as Portugal and Denmark, these assessments are at the core of decision-making processes about individual staff. In other countries such as Finland and Greece, performance assessments are less central. In Canada, Iceland, Mexico, and Norway performance assessments are used for some staff only. The average value of this indicator among 31 OECD countries was 0.66 on a scale of 0-1 in 2010 as compared to 0.62 in 2005 among 19 OECD countries.

The second factor we considered was the extent to which PRP is used in the central government. This composite indicator reflects the use ofa PRP mechanism, the categories of staff to which it is applied, the use of onetime bonuses and merit increments, and the maximum proportion of the basic salary that PRP represents. The OECD report (2011) indicates that the United Kingdom, Switzerland, and the Czech Republic apply PRP more extensively than countries such as New Zealand, Austria, and the Netherlands. Belgium, Greece, Iceland, Mexico, Poland, and Turkey reported not using PRP at all. The average value of this indicator among 32 OECD countries was 0.65 on a scale of 0-1 in 2010.

The third factor we weighed was the extent to which separate HRM practices for SCS are used in the central government. SCS are key players in determining public sector performance and effectiveness. In Chapter 5, we highlight their role as institutional entrepreneurs. In the framework presented earlier, they comprise a managerial group whose quality is expected to determine government performance. This composite indicator reflects the existence of a separate group of SCS, the existence of policies for the identification of potential SCS early in their careers, the use of a centrally defined skills profile for SCS, and the use of separate recruitment, performance management, and PRP practices for SCS. The OECD report (2011) indicates that in countries that responded to the survey, greater emphasis was placed on capacity building and on incentivizing improved performance. For example, 22 OECD member countries reported paying greater attention to the management of SCS performance, and in 12 countries the portion of their remuneration that was performance related was higher than for other staff. However, only France, Israel, Korea, and the United Kingdom reported having mechanisms in place to identify potential SCS early in their careers. The average value of this indicator among 31 OECD countries was 0.45 on a scale of 0-1 in 2010.

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