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Operational Inefficiency & Poor Service Delivery

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In terms of performance, it is often asserted that efficiency is low within the public sector, and that quality of service is poor. These are two related but separate considerations – and both are distinctly hard to substantiate or refute.

Assessing organizational performance in the public sector is quite difficult. First, unlike private organizations, public organizations have no single performance indicator – such as profits or market share – that can be used to compare across different types of organization or product. Few organizations in the public sector work for profit; and the outputs of organizations such as an audit body or the planning division of the Ministry of Finance are used only by other organizations within the public sector.

Second, public sector organizations are often responsible for goods with low contestability and measurability. In such circumstances it is generally impossible to find performance measures that satisfy the ideal qualities of consistency, comparability, clarity, controllability, comprehensiveness, boundedness, relevance, and feasibility. The current debate on performance in the public sector provides illustrations of benchmarks that can be applied over time, but has done little to solve the problem of comparability between diverse agencies and sectors. When public agencies’ performance is measured, the metrics are distinctly organization or service-specific: the waiting time for a patient to see a doctor is not readily comparable to primary school enrollment rates. One popular approach in local government is to benchmark performance in a similar functional area across different, but comparable, governments. The Service Efforts and Accomplishments Report of San Diego provides comparisons of service delivery in San Diego with other American cities. Surveys by public service delivery team of the World Bank’s Development Research Group have been used to quantify service delivery in health and education in Ghana and Uganda."

Measuring operational efficiency                                                    

Efficiency in the provision of public services is a measure of resources expended relative to the outputs produced by these resources. (See A Contemporary Approach to Public Expenditure Management, Chapter 5: "Operational Efficiency") For the reasons noted, efficiency targets are likely to focus on relative measures of performance improvements over time, or a comparison of actual performance relative to performance targets, rather than absolute measures of ideal ratios. Recent performance plans for UK departments and agencies provide examples of how these are typically presented. The government of Alberta, Canada and the Commonwealth of Virginia, USA offer a range of guidance on the development of appropriate indicators of efficiency and other performance measures. At the agency level, improved efficiency is often associated with a requirement to reduce the running costs of services over time. Such "efficiency dividends" are a standard part of the Australian budgetary process. The ability to achieve efficiency dividends is dependent upon allowing greater administrative flexibility.

Measuring service quality                                                                

Service quality involves an even more complex set of issues. Timeliness is undoubtedly of significance, as is the provision of adequate information about the service and about systems for redress in the event of unacceptable quality. However, not all issues that matter can be monitored by the recipient. For instance, the technical expertise of doctors or teachers is unlikely to be immediately visible to patients or pupils. Advisory panels and other quality assurance mechanisms beyond client surveys are important.

Surveys can provide insights into users’ views of service quality and assess customer satisfaction. Surveys were used to obtain service delivery and corruption-related information for the World Bank’s World Development Report 1997.

Measuring the preconditions of efficiency and quality             

Given the complexity of measuring efficiency and quality, many approaches assess work processes or institutional arrangements that are reasonably thought to contribute to efficiency and service quality. Toolshave been developed to measure specific services. The Government Performance Project run by the Maxwell School of Citizenship & Public Affairs employs a set of criteria that seek to capture key underpinning elements of performance in relation to:

  • Financial Management
  • Human Resources Management
  • Information Technology Management
  • Capital Management
  • Managing For Results.

Similarly, in the 14 countries where public officials surveys have been funded by the Bank Netherlands Partnership Program (BNPP), indicators have been constructed that assess officials’ expectations of future incentives and constraints in terms of rule credibility, policy credibility and resource adequacy and predictability.

Rule credibility was measured by creating an indicator covering the existence and perceived quality of formal rules in four areas: record management, internal audit, performance appraisal, and project evaluation.

Policy credibility was measured by creating an indicator covering three dimensions: whether policies were consistent; whether they are coordinated between the units of government e.g. ministries; and whether political interference/micro- management was felt likely.

Resource adequacy and predictability was measured by creating an indicator compounded from six questions about: unpredictable seasonal absences of personnel due to severe weather conditions e.g. hurricane; anticipated supply of necessary skills; and about more general anticipated capacity.

In each of these areas, the questions dealt with both personnel and expenditure management.

Intermediate performance measures                                             

A complementary approach is to measure proxies for public sector performance. In the countries where public officials surveys have been funded by the Bank Netherlands Partnership Program (BNPP), surveys have measured three intermediate dimensions of performance: "results focus," accountability and employee morale.

Results-focus was measured by creating an indicator covering: whether an organization’s activities were geared to its objectives; whether the organization was considered efficient; and whether a merit-based reward and punishment system was in place. Results focus is evidence that public officials are striving to achieve organizational goals. It is a reasonable, though empirically contestable proposition that rewarding good performance and punishing bad performance encourages a results focus.

Accountability was measured by using 15 questions to create an indicator covering, inter alia, enforcement of regulations; demonstrated accountability to the public at large, and to civil society and parliament. In assessing the institutional environment, the existence of credible rules was tested in four areas: record management, project evaluation, internal audit and performance appraisal. In measuring performance, the past enforcement of these rules was tested in the same four areas. Accountability is performance in the distinctive sense of adhering to the formal rules that allow actual behavior to be tested against mandated standards. For public sector organizations, which work with public funds, accountability is an important element of performance. Corruption is a symptom of poor accountability performance, but accountability as a concept is broader than corruption.

Employee morale was measured by creating an indicator covering employee satisfaction and vertical solitude. (Vertical solitude is a measure of the disconnect between the managers of organizations and other officials working in them. It was first coined by Zussman and Jabes (1989). Organizational performance is thought to be directly linked to employee morale. Morale emerged as a critical factor in Australian and Canadian studies of public employees during the 1980s. Employee morale is raised by job satisfaction and reduced by a disconnect in orientation and attitudes between managers and their staff.

Recommended readings                                                                  

  • Girishankar, Navin. 1999. "Reforming Institutions for Service Delivery: A framework for Development Assistance with an Application to the Health, Nutrition and Population Portfolio." Policy Research Working Paper No. 2039. World Bank, Washington, D.C.

  • Gore, Al. 1993. Creating a Government that Works better and Costs Less: The Report of the NationalPerformance Review. New York: Plume.

  • Jans, Nick, and Judy Frazer-Jans. 1989. Careers and Culture in the SES. Canberra: Australian Government Publishing Service.

  • OECD (Organization for Economic and Cooperation and Development). 1994a. Public Service Pay Determination and Pay Systems in OECD Countries. Paris: OECD.

  • _______.1994b. "Performance Management in Government: Performance Measurement and Results-Oriented Government." Public Management Occasional Papers No. 3.

  • Osborne, David, and Peter Plastrik. 1997. Banishing bureaucracy: The Five strategies for Reinventing Government. New York: Plume.

  • Schein, Edgar H. 1996. "Three Cultures of Management: The Key to Organizational Learning." Sloan Management Review (Fall).

  • Shand, David. 1997. "The Role of Performance Indicators in Public Expenditure Management." Unpublished IMF document.

  • World Bank. 1998. "New Frontiers in Diagnosing and Combating Corruption." PREM Notes No. 7. World Bank, Washington D.C.

  • World Bank. 2000. "Public officials and their institutional environment: An analytical model for assessing the impact of institutional change on public sector performance." Policy Research Working Paper No. 2427, World Bank, Washington D.C.

  • Zussman, David, and Jak Jabes. 1989. The Vertical Solitude: Managing in the Public Sector. Halifax: The Institute for Research on Public Policy.

Recommended websites

This page was authored by Ranjana Mukherjee of the World Bank, with contributions from Donald Moynihan. It was submitted on 28 July 2000.