It is not uncommon to hear the above sentiment, or some variation thereof, expressed by many different groups of people when discussing the management of the nation’s finances.   More often than not, this line of argument is adopted by politicians trying to connect emotionally with voters on complex issues of public finance,  journalists and commentators for various and sundry reasons, and by the average voter when trying to relate national issues to personal issues that they have a much more nuanced and direct  understanding of.   This reduction of a complex issue to a piece of simply, folksy wisdom may resonate well with the public, yet in reality it does little to actually inform anyone of the real issues at hand.

From a technical standpoint, comparing the management of household finances to the management of public finances is about as useful as comparing, you guessed it, apples and oranges.  Households play a relatively simple role in a national economy as Canada’s; they can either save (invest) or consume (spend).  Households cannot raise their own revenues via changes in taxation, households cannot dictate national economic and fiscal policy, households are not responsible for the delivery of public services, households are not responsible for performance of the national economy, etc.  Simply put, the roles that households and governments play in a national economy like Canada are not directly comparable.  

For the sake of argument, let us assume that the Government of Canada, and the various provincial governments, were managed in the same manner as Canadian households have managed their own debt over the past decade.  Even though I reject the general premise of the comparison, I believe that comparing the relative debt positions of the various governments of Canada to the debt position of the average household can help to enhance understanding of the complexity of managing national public finances and the false comparison between managing personal finances and managing public finances.

We will use two main points for comparison; total gross debt expressed as a nominal dollar amount, as well as a per capita amount, and the ability to service that debt, measured as a percentage of GDP (for government) and as a percentage of disposable income (for households).  We will use the Statistics Canada 3rd Quarter 2011 National Balance Sheet Accounts as our data source.  I have decided to use total gross debt (accumulated federal and provincial deficits less central government assets and non financial assets plus current liabilities) as the indicator of government debt, instead of total net debt, due to the fact that I used the same approach when analysing household debt. 

On the issue of total debt, Canadian households owed $ 1.595 trillion dollars in total household debt, or $ 46,100 per capita at the end of the third quarter of 2011.  Combined federal and “other” (primarily provincial and territorial) government gross debt  was $ 1.852 trillion dollars, or approximately $ 54,500 per capita, with the federal government responsible for $ 842 billion and the other levels of government responsible for a tiny fraction over $ 1 trillion dollars.   

The nominal amount of debt an entity has is only one side of the debt management equation; the ability to pay for that debt is also, if not more important, than the total amount of debt that an entity accumulates.   Canadian households currently hold a debt-to-personal-disposable income ratio of 152.98 %, or for every dollar in disposable income (gross income less income and payroll taxes) earned by a Canadian household, nearly $ 1.53 dollars is owed in debt.  Combined, all levels of government in Canada hold a total gross debt-to-GDP ratio of  109.32 %, or for every dollar of GDP produced in Canada, all levels of government owed $ 1.09.   The gross debt-to-GDP ratio for the federal government is 49.7%, while the gross debt-to-GDP ratio for all other levels of government is 59.1%.

So what conclusions can we draw from this data ?  Nominally, we can see that all levels of government have indebted the Canadian taxpayer by about $ 8500 more than the average household.   However, nominal debt numbers are really meaningless as a basis of comparison unless the ability of the entity to afford that debt, or pay the interest owed on that debt, is taken into account.   On that basis, the average Canadian household is in a far more precarious financial position than the combined governments of Canada, as the average Canadian household is far more leveraged than the combined governments of Canada, when comparing the ability of each entity to afford its debt based on its income. 

One thing is clear; if the average Canadian household managed the public finances of the nation in the same manner that they managed their own household finances over the past decade, you could reasonably expect that the combined gross public debt of Canada could well be over 150% of GDP.  Not only have Canadian households not been balancing their budgets on a regular basis, but they have been on a credit fueled spending binge that, for all their shortcomings, has made the politicians and bureaucrats in the national and provincial capitals appear to be rather tight-fisted in comparison.

So the next time somebody argues that government should be managed like a household, take some solace in the fact that this has not been happening in Canada.

Admittedly, I know little about the program beyond what I have read about it in The Province and a few other websites, but on the surface, I have reservations about the value for money that this program offers, and  it certainly does not appear to be a program that would be a model for effective control of financial resources.   Based on the tenor of the comments that I have read that have been posted online by The Province readers, and submitted to the print edition of The Province on February 14th, I doubt that the program would have significant public support.

Yet for all the anger that this story has generated, and will likely generate, I cant help but think about the roles that emotion, perception and partisanship play in this and other financial stories.  Even if we assume that the program is a total waste, to the extent that it does not provide value for the money spent, it is only $ 1.5 million out of a total of  provincial budget of approximately $ 42 billion dollars.  Relatively speaking, this is an insignificant amount, about 1/28,000th of total government spending, or .028%.  At the risk of sounding glib, it is an amount less than a mathematical ”rounding error”.

It can be argued that in many other cases, the Government of British Columbia has taken actions that will waste (as defined above) far more than $ 1.5 million dollars, and in some of these  cases, such as the practice of purchasing carbon offsets or cost overruns on capital projects such as the Vancouver Convention Centre, I have not perceived a level of public anger or concern, outside of usual partisan circles, that its fiscal impact would suggest.  This isn’t to defend the ORP; it’s simply to show that how people feel about financial issues, and how people perceive financial issues, can often be at odds to the actual financial impact of an event.  If an issue resonates with the public on an emotional level, the actual anger expressed may be far greater than an issue with a greater financial impact that does not have the equivalent emotional resonance.

Partisanship is another  factor that can not be discounted in how people respond to financial news.  In the ORP example, you can often tell a writer’s political leanings from their commentary on the issue.  Those that dismiss the $ 1.5 million as an insignificant amount, or who blame the previous New Democrat government for introducing the program in 1999, while ignoring that the Liberals have now had 11 years to kill the program, are more likely than not to lean Liberal.  Those that portray the program as government profligacy run amok, or as “yet another example” of BC Liberal mismanagement, while ignoring the relatively small amount of money involved, are far more likely than not  to lean New Democrat or Conservative.  The danger with partisanship, similar to the danger with emotion or perception, is that is limits the ability of the observer or commentator to respond with  public policy options that don’t fit preconceived notions of what is, or is not, occurring.

Personally, I wish that the anger caused by the waste of $ 1.5 million could be matched by a proportional level of concern in the general public about some of the larger financial issues that affect British Columbians.  I concede that it is not always easy to detach your emotions, perceptions, and political leanings when discussing financial matters or public policy, but from a professional standpoint, it is of tantamount importance that an individual not only recognize that we all have inherent bias, but to strive to overcome that bias as much as is reasonably possible.   Doing so is what separates the professional from the pundit, and the informed voter from the uninformed voter, which is far more likely to result in public policy that is not only based on hard fact and data, but also generates the broad public support that major public policy initiatives require to be successful.

Tom is the author of  Partners for Good: Business, Government and the Third Sector - available July 2012

The Auditor General of British Columbia, John Doyle,  highlights a number of deficiencies in British Columbia’s public sector revenue management in his Summary Report for December 2011.  Specifically, Doyle expresses concerns regarding the consistent application of cost models on fee setting in British Columbia, concerns regarding the lack of transparency surrounding the government’s fee setting and approval process, and concerns surrounding the ability of the electorate to hold the government accountable for the fees it sets and collects.

Auditor General Doyle presents a number of examples as evidence for his concerns.   Doyle cites the Treasury Board for not offering sufficient guidance on the construction of costing models for fee setting within government departments and agencies, which “would ensure that submissions to Treasury Board are more accurate, complete, appropriate and consistently calculated”.  There are 2,332 fees tabulated by the Treasury Board, yet 33% have not been revised during the last decade, and for a further 44%, no information has been recorded to determine when the fees in questions were either created or  revised.   Doyle saves his strongest criticism for the Treasury Board’s lack of transparency with regards to the process and rational for reviewing and revising fees, pointing out that while the renewal fee for a BC drivers license is $ 75, the actual cost to  ICBC is only $10, which “appears to represent a significant profit” (note that ICBC only collects the fee, it does not keep any of it.  Therefore, ICBC absorbs the entire cost of collecting and renewing the fee without compensation from the provincial government.  In short,  if you aer unhappy with your driver’s license renewal fee, blame Victoria, not ICBC)

While this may seem to be a considerable amount of accounting jargon, the potential mismanagement of the revenue function of the government related to fees has serious potential consequences.  As noted in the report, fees currently account for 11% of total British Columbia government revenue, of which 80% originate from the health (MSP, user fees) and education (tuition) sectors, the largest components of the provincial budget.  Failure by the provincial government to collect and set properly costed fees could have serious negative impacts on the financial picture of the province, while failure by the provincial government to be transparent in the fee setting process makes it difficult for citizens to know if they are getting value for money paid by way of fees.

The Government of British Columbia owes it to the citizens and taxpayer’s of British Columbia to act on the recommendations and findings of the Auditor General’s report.  As things currently stand, 11% of total provincial revenues are being managed without clear rationale and costing models, without transparency, and in some instances, at a rate which produces significant profits for the provincial government.

Following the fell of Soeharto’s 32-year authoritarian regime, Indonesia experienced massive ‘big bang’ reforms (McLeod, 1998). With the onset of the reformation era, demand for new and effective means of managing the government’s budget was increased. This was due to the previous poor budget planning and lack of budget sustainability which tended to hinder the National Development goals of ‘pro-poor’, ‘pro-growth and ‘pro-job’ (MOF, 2010). The Indonesian budget reform then was introduced in the mid 2000s as mandated by Law no 17, 2003 State Financial Law. This reform was launched through a series of reform packages that covered Unified Budget, Medium Term Expenditure Framework and Performance-based Budgeting. Of these three reform pillars only the Unified Budget was implemented effectively across public spending units while the other two pillars are still being piloted.

Although the government recognizes that these two approaches will bring significant impact to the budgetary decision of Indonesia’s Public Expenditure Management, this set of donor-driven budget reforms are difficult to implement due to serious inherent internal managerial issues such as limited capacities and capabilities of the public officers, lack of ownership, lack of leaders and political supports, conflicting multiple budgeters’ interests and budget technicality constraints (e.g. USAID, 2007; WB, 2008). The Ministry of Finance (MOF) is one of the pilot project agencies.  The Planning and Financing Bureau (the Bureau) as a responsible agency to implement the reform agenda in MOF also faces dynamic challenges in managing the budget reform due to the above managerial problems.

The Key Issue

The key issue in this case is how the Bureau will effectively manage the reform challenges by balancing its internal capacity with the political environment and external expectations. This dilemma can be framed by using Moore’s ‘strategic triangle’ (1995) to define a balanced response over managing ‘upward’, ‘inward’ and ‘outward’ to accomplish the reform goals (O’Toole et al. 2005; Alford & Janine, 2009, pp.173). Managing reform in public sector is important because ‘the bureaucracy is the largest arm of modern government and the one that most regularly interacts with citizens in their ordinary lives’ (Van-Ryzin, 2011, p.11);  ‘whether sound policies are chosen, and then designed and implemented properly, depends… on the quality of the civil service’ (Ross McLeod, 2006, p.14).

Around the world, Public management practise develops and changes in response to society dynamic interactions. To respond this global trend, Ingstrup and Croockall (1998, p.13) suggest, public managers should ‘tackle change head on, leading it, treating it as an ally rather than an opponent’. However, budget reform implementations are different from country to country (Goldfinch & Wallis, 2009, p.iv).  Olsen and Peters (1996, cited in Wallis, 2009 p.353) find ‘significant variations’ in their study of comparative public sector reforms, and conclude that there was no ‘universal’ and ‘general’ pattern in managing the reforms. The variation occurs partly due to different conception and strategies of the reforms (Premfors, 1998 cited in Wallis, 2009 p.353).

Furthermore, managing change in public sector is ‘more complex’ than private sectors because public managers not only deal with ‘planned change’ but also ‘emergent change’ that can ‘neither control nor predict’ (Osborne & Brown, 2005 p.6). Additionally, public sector reforms in developing countries face more ‘serious’ managerial challenges compared to developed countries because they struggle with ‘political instability and problems of poverty’ (Kim, 2009, p.89). The public sector officials often ‘carry out great numbers of complex reforms and expect to have successful results in the short term’ (Kim, 2009, p.94).  Therefore with scarce resources (human and capital), ‘it will be better to manage few problems at a time by focusing on most important problem in a given period’ (Andrews, 2008, pp.178).

The reform should be adjusted to the internal capacity endowment as Pollit (2002, p.290) argues, ‘pulling grass up by the roots does not make it grow any faster’. Therefore, the Bureau needs to redefine a strategic managerial approach to balance the different values and interests among the budget actors and increase the internal capacity to better manage the reform challenges.

Alternative Solutions

Proposal 1: Enhancing the reform by focusing on top management commitment and support

In this proposal the Bureau should maintain the support from the top leaders within the MOF that consist of the Minister and 12 Echelons I or Directorate Generals. The role of this group is crucial in promoting organizational change to the MOF. The importance of the top management’s commitment and support has been identified by many practitioners and scholars. For instance, Wallis (2009, p.60) points out that strong leadership is important to exercise ‘windows of opportunity’ to impose reform. He adds, the ‘art of persuasion’ is essential and can be used effectively by the top leaders to demonstrate the need for major policy change (p.361). Similarly, ‘strong leadership with the ability to be ruthless in setting priorities becomes essential’ to gain a successful budget reform (IMF, 2008).

According to Gortner, Mahler and Nicholson (1997, p.230) ‘success in changing the attitudes and habits of individuals and groups usually depends on the commitments of the leaders’. They argue that ‘if they support change, it has a chance; if they do not support change, it probably will not occur’. Therefore, top managers in MOF can play effective roles as the champion team and set reform destination through a clear visionary rod mad. As Osborne and Brown (2005, p.103) argue, ‘strategic leaders create a vision that encompasses a view of the future state of the organization’. Similarly, Ingstrup and Croockall (1998, p.10) point out that the ‘visionary; and ‘long view’ are part of the well-performing leaderships’ characteristics. Through a clear and visionary mission, the higher level objectives can be cascaded to the lower levels’ goals.

Furthermore, managing upward is one of the public managers’ challenges which direct toward political leaders as an authorizing environment in generating public value based on mandated mission (Moore, 2000, p.198; O’Toole et al. 2005; Alford & Janine, 2009, pp.173). In this sense, top management in this proposal not only covers internal MOF leaders but the external central agencies and the political leaders because the latter also have authority in budget decision as granted by the law.  Budget is not merely about technicality but also deals with the political question of ‘who gets what, when, how’ (Lasswell, 1936) where ‘control over financial resources is (still) a form of power’ (Jacobs, 2008). Sri Mulyani, a former Indonesian reformist-minister, has identified that the first budget reform challenge is how to define ‘fruitful ways’ of interaction with the parliamentarians who also act as ‘budget decision-maker’ (Lienert, 2007).

With the leaders’ commitment in hand, a set of guiding values can be used to aim the organizational change accordingly. As Ingstrup and Croockall (1998, p.9) found in their study of well-performing organisations, leadership includes ‘the need for listening, involving, and delegating; commitment to employees; and consistency between the leadership style and mission’.

However, managing upward in Indonesia can be difficult for various reasons. First, there is a tendency that ‘bureaucrats or established officials prefer to maintain status quo’ and ‘often blindly take the path intended by top officials’ (Kim, 2009, pp.94, 99).  As O’Flynn (2007, p.363) notes, bargaining with the authorising environment may put ‘enormous challenge’ to existing managers’ capabilities. Moreover, this approach may pose another disadvantage because in most developing countries there is a tendency for the leaders to listen to ‘honeyed words more than criticism’ (Kim, 2009, p.93).

Proposal 2: Enhancing the reform by increasing internal capability, capacity and supports

Another way of promoting changes is by focusing on internal capabilities or the operational environment of the Bureau. Managing inward is one of the public managers’ challenge which focuses on the internal operational management (O’Toole et al. 2005; Moore, 2000, p.198). In doing so the Bureau should focus on the bottom-up aspirations and take in to consideration different needs and interests of its employees and the MOF employees in general. Thus different strategies should be tailored to the different employees’ needs because public sector reform also deals with human behaviours and organisational cultures that naturally adjust to the new system gradually. As Kettl (1997, p.459) argues, ‘careful management of these new governmental reforms requires the cultivation of new capacity, which is why governmental reform must go hand-in-hand with human resources reform’. Similarly, Dahl (1947, p.4) in his classic study observes that ‘most problems of public administration revolve around human beings’, thus, concern over their behaviours within particular circumstances is essential.

In budgeting for performance, Melkers and Willoughby (2001, p.62) argue that change in organizational cultures is important as it demands the adoption of ‘new organizational values, missions, and operating requirements’. Similarly, Forester and Adams (1997, cited in Melkers & Willoughby, 2001, p.56) note that ‘the success of budget reform directly on an organization’s ability to absorb and then institutionalized new formats, process, and system’. They add that budget reform should also aim at ‘learning’ process rather than to ‘budget correctly’ (p.56). In their recent study, Choi and Ruona (2011, p.64) find that learning culture environment brings significant ‘levels of readiness for change’.

Apart from bottom up participation and learning environment, the MOF should provide a fair incentive for the reformers as well as disincentives for lower performance. This competition is important to increase employee motivation for change. Jones (2005, Lecture Note) notes that the public managers should ‘focus on incentives and disincentives rather than rules and forms that prescribe’. Kerr (1975, p.769) strongly argues that ‘whether dealing with monkeys, rats, or human beings, it is hardly controversial to state that most organism seek information concerning what activities are rewarded’. Therefore, it is fundamental to renew incentive mechanism (such using Performance Related Pay) to stimulate well-performed officials and reduce irresponsible public officials (Kim, 2009, P.96).

Furthermore, focusing on internal capacity and capability will increase the understanding for reform direction as well as a sense of reform ownership. For instance, capacity building is important to improve ‘the range functions which an organization can carry out effectively on a sustained basis’ (Polidano & Hulme, 1999, p.124). Melkers and Willoughby (2001, p.56) note that ‘inadequate understanding by budget actors of the usefulness of reform’ can prevent effective reform. Additionally, Poladino and Hulme (1999, pp.128-129) note that the main failures of international aid in public sector reform are due to lack of ‘genuine commitment’, less ‘ownership’ and ‘over ambition’ goals which ended up in ‘overloading capacity’ of the public officers.

Focusing on internal operating capacity investment will bring lasting impact for the reform. Nevertheless, too much focus on the internal operating environment can be time and budget consuming because investing in human capital is both expensive and demands long term and continuos training on budget technicality such as the use of performance measurements and technical know-how of the new budget system. As Osborne and Brown (2005, p.97) argue, ‘without employee participation, there may be little ownership of the change initiative and poor outcomes, but involvement is a time intensive process’.

Proposal 3: Enhancing the reform by the external supports

Focusing on external supports is also an important strategy for the Bureau because nowadays central issues in public sector become more non-vertical and not only exclusively explored by the authorized bureaucrats. In this ‘horizontal’ sense, Ingstrup and Croockall (1998, p.9) find that ‘well performing organizations have moved out of their vertical hierarchical or vertical structure (silos), to network with an array of partners’.

In recent governance practise, managing outward is one of the public managers’ challenge which deals with managing the ‘networks of organizations and citizens’ (O’Toole et al. 2005; Moore, 2000, p.198). As Stoker (2006, cited in O’Flynn, 2007, p.361-362) argues, through networks public managers can learn different approaches from wide variety of available sources.  Moreover, through an external support will help the Bureau to cope with the culture that ‘hesitates to tell the real problems and reasonable alternatives to their superior’ (Kim, 2009, p.95). The ‘external supports’ will be more open to propose opinions or new solutions thus providing better feedbacks without directly compete with the authority of the top leaders.

In addition, Moore (1994, p.302) notes that public managers ‘must become agents of the collective rather than individually defined purpose’. Thus, to bring change the Bureau should establish a budget networks by involving more participants in reform process such as NGOs, budget interest groups, press or media, private practitioners and scholars that may involve in developing budget technicality. This external influence can be utilized effectively by the MOF to support their reform efforts by reducing barriers to network such as ‘restrict access and limits to the knowledge of the citizens’ (Rhodes, 1997, p.58). Therefore, the Bureau should create appropriate environment for ‘group discussion and collaboration’ between internal officials and external participants (Kim, 2009, P.99).

Furthermore, through this strategy will also cover the participation of international non-state actors such as donors, international agencies, and cross countries lesson-learn practises. Those institutions usually provide technical assistances for reform implementation based on international best practise and lesson learned. Through this set of activities MOF can critically observe and learn from practical implementation as well as changes in other developed societies. This is important because we can learn, adjust the success stories as well as avoid the failures. And most importantly in ‘lesson-drawing’ sense ‘their present (developed society) is meant to be become our future’ (Rose, 1991, p.93).

However, there is ‘a tendency to mechanically imitate foreign experiences that differ in many ways from those of developing countries’ (Kim, 2009, P.95). In this sense, ‘the prevailing assumption appears to be that if the developed countries are doing it, developing countries are following suit’ (Polidano & Hulme, 1999, p.122). In addition, Kim (2009, p.95) notes the important of ‘indigenising’ rather than ‘simply follows’ and ‘mechanically imitates’ developed countries’ models. Therefore, the Bureau should consider a wide range of aspects such as ‘different socio-political dynamic’, ‘different background’ and ‘different path’ (p.95).

Managing networks is even more challenging because they need ’mutual adjustment’ and ‘game-like’ strategies that may only fit with particular policy in particular time (Rhodes, 1997, p.57). Moreover, ‘in relation to governmental decision making, an authoritarian culture is still dominants that limits participatory and discussions’ (Kim, 2009, p.93). Therefore, involving external participants may create conflicting interest with the internal organisation and political dimension because different participant may have different motives and goals that may crowd the reform objectives.

Proposed solution

Each of the above presented proposals has its own merits as well as drawbacks and it is difficult to propose a single solution in managing complex reforms in Indonesia. It will be better to mix these three alternatives as they are not zero sum options, rather they reinforce one another. However, in the context of Indonesia, Proposal 2 is preferable for the following reasons:

First, it is important to have a strong top down support and external participation but in the context of recent budget reform in Indonesia, particularly MOF, the focus on internal capability and capacity deserves strategic managerial concerns. For the last decade, most of the reform agendas have put forward big goals and new burdens without effective focus on internal operational capability of the public servants. Thus, whatever the reform goals propose without take bottom-up aspects in to reform policy agenda will likely fail.

Second, the new budget system requires new skills and different paradigms not only for the internal budgeters but also to the central agencies and MOF leaders. It implies, MOF should utilize new approach rather than poses different form of centrality approach. Internal focus will allow employee to adjust their values with the new reform agenda which offers a fairer incentive to participate compared with the previous regime. In addition, internally-oriented strategy is essential for improving ownership because at the end the employees will be the main operators of the new system. Thus, their involvement and engagement is important to ensure implementation success.

Third, focus on the external support could be best utilized if the MOF has the capacity to absorb and learn international best practise. In addition, external support will be effective for implementation if their inputs and recommendation can be adjusted within the available capacity. However, from my practical experiences it is difficult to understand other countries’ experience and to interact effectively with the international consultants within a limited capacity such as: language barrier and lack of public management theories and practical experiences.

Finally, as one size will never fit all, I agree that the reform should be treated as ‘a journey not a destination’ (Wright, 2010). Public managers should be more engaged in ‘the journey’ rather than ‘the destination‘(Kim, 2009, P.99).

That being said, the announcement comes less than 24 hours after media reports surfaced that show that due to staffing cuts at Service Canada’s processing centres, applicants can wait for more than four weeks to know if their EI benefit claim has been accepted.  Other service standards, such as the length of time to return telephone calls, are being exceeded with regularity, and as of September were permanently changed to reflect deteriorating service standards.  The Conservative government has additional plans to cut another $ 247 million from Human Resources budget, which will include further staff reductions and the closing of call centres.

For the unemployed, this is an unacceptable wait, and will only serve to push those in precarious financial positions further into debt or onto provincial social assistance rolls. Furthermore, the delay in getting benefit payments to qualified applicants delays any counter cyclical stimulus effect on the economy, as benefits delayed are benefits not spent in the current period.

If the Finance  Minister is serious about aiding the jobless, he should do more than simply reduce a planned Employment Insurance premium increase by one half; he should ensure that those that have worked, paid their Employment Insurance premiums, and have a legitimate claim to their benefits can access those benefits in a reasonable amount of time.

As it stands right now, workers can expect to pay more for their Employment Insurance, and expect to get much, much less in terms of service should they require access to those benefits.

In pursuit of the goal of performance improvement, performance management advocates for the “empowerment” of managers, i.e. vesting the public manager with the power and authority she/he needs to serve the citizen, and strengthen the links between government and its diverse clientele in civil society (CAPAM,1994). Underlying the empowerment premise is the assumption that the power or authority that is “delegated” to the average manager would not only be shared with the subordinates, but would also be exercised for the public good (Hope, 2001).
This is assumed to increase efficiency, based on the notion that public sector managers are hampered by rules and regulations, and have few incentives to take risks and to be innovative and service-oriented. Performance management is also expected to increase accountability because clear and explicit managerial targets, combined with managerial autonomy and incentives to perform, make it easier to establish the basis for managerial accountability and to achieve outputs (Hills and Gillespie, 1996; Lane, 1995). Further, according to Therkildsen (2001), this in turn increases political accountability by making it easier for managers to match targets with political priorities. Politicians can, in turn, hold managers accountable for their performance, and also performance targets can make service provision more transparent to customers.

Yemen is only the third country in the MENA region to use the SWIFT system.

The Enhancing Government Effectiveness Project in Yemen project is a 1.5 year USAID-funded initiative that aims to assist the GoY increase the efficiency and effectiveness of its disbursement of development loans and grants, improve monitoring and evaluation of development projects, and build the technical capacity of key staff.

To read about local Arabic coverage of the event, click here. Local coverage in English is available here.

The USAID/Tatweer program works with key ministries, agencies and executive offices to improve overall institutional performance and introduce international best practices. USAID/Tatweer has trained more than 90,000 government officials in strategic planning, human resources, financial management, and project management. It has also helped Iraqi colleagues implement wide-ranging improvements in critical administrative functions like contracting, hiring and retaining staff and matching budgets to ministry plans and built long-term capacity in these areas.

Dr. Huntington emphasized that the success of USAID/Tatweer is primarily based on the dedication and competency of Iraqi government counterparts who have rapidly absorbed knowledge to implement greater efficiency and transparency in their government offices. USAID/Tatweer’s pioneering work with the overhaul of Iraq’s civil service has helped institutionalize a number of these advances as the government returns to its premiere position in the region.

As the program begins to wind down and be turned over fully to the Iraqi government, high-level government support for management systems based on international standards, coupled with a commitment to continually upgrade the skills of all civil servants, is helping to ensure long-term sustainability.

MSI has implemented the USAID/Tatweer program since July 2006.

In a series of recent editorials in the New York Times, columnist Thomas Friedman has discussed a variety of governance issues in Yemen, from where he has recently returned. MSI is currently implementing the Enhancing Government Effectivness Project in Yemen, which is helping to build the capacity of Ministry staff to implement development projects and improve overall development management.

MSI Technical Director Lahcen Haddad spoke with Friedman recently and is quoted in his column, It’s All About Schools, which appeared in the Times on February 9, 2010.

Read more about MSI projects in education and human development throughout the Middle East and worldwide here.

Together with the Tatweer program, the head of the Iraqi Central Organization of Standardization and Quality Control (COSQC), Mr. Saad Abd al Wahab, led Iraq’s first quality control conference last week. The conference, titled Quality in Production, Implementation and Importation: The Key to Building a New Iraq, was held on the International day of Standardization on October 14th.

Mr. al Wahab lead the development of a three-five year strategy that aims to establish five testing laboratories in Iraqi boarder provinces where goods are exported and imported. At the conference, COSQC agreed to a memorandum of understanding with Iran that calls for cooperation in testing the quality of traded goods, as well as activating previously signed memorandums with both Syria and Egypt. COSQC will also continue to seek out similar agreements with other countries in the future.

Leaders of the MSI-implemented USAID Tatweer program encouraged enhanced cooperation with neighboring countries and added that consumers’ in Iraq are suffering from a low quality of commodities and household devices. Tatweer leaders said it will continue to provide COSQC with quality control training and technical assistance.

The strong economic theme of contemporary management often comes to the fore in times of crisis, when senior managers concentrate on what is countable or quantifiable, evaluating whether things are ‘efficient and effective’ and cutting things that are deemed not to be. Focusing on countable things seem to invest decision-making with some kind of hard certainty in situations which are actually uncertain. The obvious is not always the most wise. Making cuts (as we can see in the way that the UK political parties are vying with each other to be the most brutal in their plans for cutting public services) looks like a courageous and decisive thing to do because we can ascribe a quantity to it, although it is more difficult to quantify what will happen as a result of making them. Framing the discussion about countable things and implying that to do so is somehow hard-headed glosses over all the other activities of practitioners and managers which can only ever be describable, and are therefore seen to be ‘soft’. One might make a contrary argument that since we can only describe them rather than reduce them to simple metrics, actually these are the hard things to take into account. There is often a strong whiff of testosterone and aggression when managers are trying to make ‘tough choices’.

Another thing that is likely to happen is that the working environment becomes even more politicised: senior managers begin to activate alliances with old friends they have known for a long time and whom they trust. It is possible that cliques will form. Questions relating to the broader interests of the service are likely to be sacrificed in the factionalism that can occur as people manoeuvre to protect their own patch, or the patches of their allies in reciprocal alliances. Although much will be made that what the senior managers are doing is making savings across the service as a whole for the benefit of all rationally according to the ‘data’, what actually transpires will be as a result of the political process that takes place around the table between people who know each other in shifting tides of alliances and deals. Obviously this is affected by the relationships of these individuals to other managers and processes outside the meeting, but in the end each meeting participant will constrain and enable the other in the decision-making meeting. There will be a struggle over what GH Mead called ‘the life process of the group’.

How might public sector managers operate in this kind of political and fast moving environment? The first thing to recognise is that there is no opting out of the game, although there are no guarantees that one will get what one wants by playing. Nonetheless, this is recognition that the daily process of working together is intensely political, by which I mean that it involves struggles over power. One way of becoming marginalised is not playing the game in meetings of managers, not lobbying, not influencing, not sufficiently affecting the way the service is being described and perceived. Not adequately joining in the discussions that are going on in departments allows others to have the licence of describing your service as they see fit which potentially gives them the advantage of disposing of it. The second thing is to act as others are acting, with confidence, but with the knowledge that you are always working with uncertainty. Things may or may not turn out as you want them to, but this is no-one’s ‘fault’ because what transpires does so as a result of the interweaving of many people’s actions and intentions.

The third thing is to continue to reflect with others in the process of struggle about the ethics of what is happening. In a complicated and fast moving situation where it is hard to make sense of what is best for all of the services being provided, one cannot unilaterally sacrifice one’s own service in an act of martyrdom, but neither can one just sit and hope that the axe falls elsewhere. Trying to work with and surface the ethical implications as they arise is a powerful form of intervention in a group struggling to make difficult decisions and could work against cabals tying things up to their advantage. This will mean being open to detaching oneself from one’s own position too.

In the attempt to act for the good in times of economic crisis there is no avoiding the politics.

The project partners with the Iraqi government to rebuild the administrative capacity of key ministries to deliver services to the Iraqi people. Tatweer‘s 80 expatriate staff continues to transition their training program, which has met its contract goal of 80,000 trainees, to complete Iraqi ownership. This new funding will cement the sustainability of that training capacity across the 10 Iraqi ministries with which MSI collaborates. It will also help to expand the project’s ability to develop and implement new business practices in those ministries.

Larry Cooley, President of MSI, noted, “Tatweer is the largest US-funded public administration project since the Vietnam War, and MSI’s work on it has propelled our professional expertise into the international spotlight, making it a model for similar projects in post-conflict regions globally.”

He describes the difficulty he has had of getting many of his ideas accepted because setting targets has become axiomatic – to suggest that setting targets is the cause of many of the problems rather than the solution to the problems is to present oneself as being eccentric. Seddon points to the ways in which other ungrounded  idelogical obsessions, that consumer ‘choice’ is the best way to develop services, that IT is always a cheaper option, that the private sector will always deliver a better deal for service users, have come to dominate decision-making and management in the public sector.

Seddon’s heroes are W Edwards Demning, who developed statistical techniques for better managing manufacturing processes, and the Toyota boss T Ohno. Ohno, for example, was deeply sceptical of ‘best practice’ regarding it as a kind of rigid thinking importing alien ideas from elsewhere. The key to developing work for Ohno was from within the work itself. What Seddon takes from these two management thinkers is their attention to work flow, rather than rules, and their prioritising of method. Developing a patient and detailed understanding of what it is you are dealing with, rather than coming up with answers in advance (‘how can we set up a one stop shop?’) is the only grounded and evidence-based way of improving services. Seddon would like to replace all the targets and measures with a simple question to all managers in the public sector; ‘What measures are you using to help you understand and improve the work?’ There are no other prescriptions than that.

There are many things that I would share with Seddon in his analysis of what goes wrong in organisations dominated by performance measures and targets. In general he is using the term ‘systems thinking’  in contexts where there is a factory-like process, such as processing benefits or matching people on the housing waiting list with vacant properties, where systematic approaches to mapping how the work flows through an organisation is extremely helpful to thinking about how to respond to that work. It is a kind of business process mapping. Where I part company with Seddon is with his idea that an organisation can be thought of as a system, rather than the patterning of the interactions of many, many people. When organsiations are thought of as systems it often leads to organsiational development initiatives where employees are treated as though they are parts of systems, which we have explored in previous posts. It would be possible to make the argument that the thinking that Seddon is criticising is also driven by systems thinking, although perhaps he would say that it is not systemic enough.

Seddon deals convincingly with better approaches to managing the work, but has little to say about managing people and why even the most rational of schemes may be taken up patchily and unevenly by employees. His question ‘how is the work working’ is a very valuable one, however.