Performance and accountability: Making government work

OECD Directorate for Public Governance and Territorial Development

Whether setting targets or timetables, governments want to become more efficient. Becoming more accountable helps too.

Governments have always been keen to achieve results, but calls to improve public sector performance in OECD countries have become particularly loud and insistent over the last couple of decades.

Reasons include increasing claims on public expenditure, particularly pensions, healthcare and education, expectations of higher quality public services in line with rising living standards and, in many cases, reluctance on the part of citizens to pay ever higher taxes. Government also has to be more competitive in the face of other potential suppliers in areas like transport, communications and energy. It must show it can do the job it sets out to do.

That is why governments across the OECD have responded by setting goals and shifting the emphasis of government management and budgeting away from how much money to spend towards what is actually being achieved. New Zealand was among the first to adopt this results-oriented budgeting and management approach in the late 1980s, and was followed in the 1990s by Canada, Denmark, Finland, the Netherlands, Sweden, the UK and the US. Later, Austria, Germany and Switzerland launched similar moves, and Turkey has recently begun a pilot phase of this process.

At the same time, these developments have pushed governments to modernise their accountability and control procedures. In particular, over the last 15 years or so, OECD governments have been engaged in reviewing and reforming the ways in which they keep control over large and complex operations in public services and how those responsible are held to account. Technological innovation and changes in the size and structure of government, in part reflecting privatisation and decentralisation, are also playing an important role in fostering these developments.

But these initiatives have by no means run their course, and their widespread implementation gives rise to some fundamental questions. What is meant by performance in the public service context, and how can it best be measured? Should a service be judged by, say, its accessibility or its financial cost, and who should do the judging? How can moves to increase the managerial responsibilities and decision-making powers of public servants be reconciled with democratic control and effective auditing procedures?

It is clearly not enough to argue that a reform works because it is based on sound research, or on an accepted procedure, or indeed that the government spent billions on its implementation. The main challenge is how to make reforms achieve their goal. This is the basic idea underlying performance-oriented budgeting and management: to shift the emphasis away from controlling inputs and towards achieving results. However, OECD countries are at different stages in this process and approaches to implementation vary.

In the US, for example, government ministries have developed strategic and performance plans that include performance targets. Other countries favour agreements between ministries and subordinate agencies or other public bodies. For instance, in the UK, ministries approve agencies’ annual business plans, and these establish performance goals and targets for the following year.

Methods of implementing these plans also differ considerably from one country to another. Ireland uses pilots schemes before considering wider implementation, whereas Australia, the Netherlands and the UK have opted for a top-down, total system approach from the start. Others, like Finland, give individual agencies considerable freedom to develop their own methods to reach agreed goals.

All these approaches are results-oriented, but how effective are they? Four main broad objectives can be identified: first, managing government efficiency and effectiveness; second, improving decision-making with regard to resource allocation and budgeting; third, improving external transparency and accountability; and fourth, achieving budgetary savings. Some countries target just one or two of these objectives, while others are aiming at all four.

What seems clear is that for now, greater progress has been made in implementing performance management reforms than in performance budgeting. Already, ministers or heads of department are formally responsible for setting targets for internal organisation, as well as reporting and delivery of services, and performance against them is systematically reported in around two thirds of OECD countries. Continuous performance monitoring within ministries is also now conducted in well over half of the countries concerned.

Nonetheless, the use of performance information in the budget process is still work in progress. Though three-quarters of OECD countries may routinely include non-financial performance data in their budget documentation, many do not always link expenditure to output and outcome targets. Countries are still grappling with measurement and in particular how to attribute specific policies to actual results on the ground. Nor have governments abandoned inputs. Indeed, basing decisions on several types of information is perhaps a necessary and realistic approach, and so output performance is considered as part of a package that includes information on fiscal policy and even political factors.

Despite many years of trying–some 40% of OECD countries have been working on outputs measures for more than 10 years–countries continue to struggle with a myriad of technical and behavioural issues. But there have been successes. Take transparency, for instance: in 24 out of the 30 OECD countries, performance information is available to the public and widely published. Inspired by positive outcomes like this, governments will likely push on with performance initiatives.

The drive towards holding ministries and agencies answerable for results has implications for the traditional accountability mechanisms. But action to change this is being taken, with interesting spin-offs. The main development has been a move away from procedures under which external supervisors have to approve payments and other decisions in advance–so-called ex ante control–towards systems under which internal management takes the decisions first, and these are audited afterwards–ex post control.

The principal motive for this change is to speed up the decision-making process and make it more efficient, and it places larger responsibility on public sector managers to ensure that the right decisions are taken and implemented correctly in the first place, not just in payment transactions, but in strategic management. In other words, better accountability can improve performance, too.

Little surprise therefore that all OECD governments are moving in this direction, though some have gone further and faster than others, particularly in Nordic countries and the UK. In France, Italy and Spain, where treasury controllers and quasi-judicial “courts” of arbitrators still approve and oversee spending, change has been more gradual.

But faster change seems inevitable, since one effect of the move towards ex post procedures has been more numerous and more varied controls. Indeed, performancerelated audits now account for up to half of the work carried out by external auditors in some instances.

There is cause for prudence though. All of these shifts are happening at a time when many governments are delegating more service delivery functions to bodies outside direct ministerial control. This means that responsibility for programmes is moved further from those who are held to account for the funds, and control procedures therefore become more problematic. In addition, although many countries are trying to give managers more flexibility to achieve performance goals, political systems still deal poorly with mismanagement of funds. Despite the diversity of approaches in OECD countries, some common threads can still be drawn, a vital one of which is the importance of backing up performance-driven procedures with appropriate accounting and control mechanisms, and ensuring that the two develop in concert with each other.

Proper ex post control might not guarantee government popularity, but it will bring stakeholders on board. More use should be made of it. According to one set of findings by the OECD and the World Bank, politicians in general do not commonly use performance measures in decision-making in well over 40% of OECD countries. Even more strikingly, members of the legislature use such measures in a mere 19% of those countries.

But while performance and efficiency are important, what matters is the end result. Put another way, poor policies carried out “efficiently”, according to budget and set procedures alone, may be counterproductive for the service, and will hardly inspire confidence in bureaucracy. Results-oriented management, on the other hand, requires judgement to make the right decisions, and that means an openness to collaboration, self-evaluation and a willingness to monitor and adapt along the way. As Edmund Burke once famously put it, a state without the means of change is without the means of its own conservation.


OECD (2005), Modernising Government: The Way Forward, Paris, chapters 2-3. Available at

©OECD Observer No 252/253, November 2005

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