12. Performance Management in Korea

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Performance Management Performance Management in Koreain Korea

June 2005June 2005

Heesuk YunHeesuk Yun

Korea Development InstituteKorea Development Institute

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ContentsContents

Performance Management FrameworkPerformance Management Framework

Current Performance Management Practices in KoreaCurrent Performance Management Practices in Korea

Developing an Integrated System of Performance Developing an Integrated System of Performance ManagementManagement

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Performance Management FrameworkPerformance Management Framework

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Steps of performance managementSteps of performance management

Setting performance targetsSetting performance targets

- Delineating the mission and strategic objectives of the organization- Delineating the mission and strategic objectives of the organization - Defining quantitative and/or non-quantitative performance indicators- Defining quantitative and/or non-quantitative performance indicators - Choosing targets for indicators- Choosing targets for indicators Designing the programDesigning the program

- Designating who is in charge of the program- Designating who is in charge of the program - Designing the service delivery system- Designing the service delivery system - Planning human and financial resources- Planning human and financial resources - Drawing up evaluation plans- Drawing up evaluation plans

Implementing the programImplementing the program

- Delivering service with inputs of human and financial resources- Delivering service with inputs of human and financial resources - Measuring performance indicators- Measuring performance indicators

Assessing the performanceAssessing the performance

- Performance monitoring- Performance monitoring - Program evaluation- Program evaluation

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Tools for performance assessmentTools for performance assessment

Performance monitoringPerformance monitoring

• Measures the program performance with a predetermined set of Measures the program performance with a predetermined set of indicators.indicators.

• Can produce information on outputs and outcomes in a frequent and Can produce information on outputs and outcomes in a frequent and timely manner at relatively low costs. timely manner at relatively low costs.

• By itself, can rarely explain the causality between inputs and outputs By itself, can rarely explain the causality between inputs and outputs or outcomes. or outcomes.

Program evaluationProgram evaluation

• Addresses the question of why and how the program produced Addresses the question of why and how the program produced certain outputs and outcomes. certain outputs and outcomes.

• Employs analytical tools with varying degrees of sophistication.Employs analytical tools with varying degrees of sophistication.

• Usually requires large amounts of money and time, and cannot be Usually requires large amounts of money and time, and cannot be performed on all programs.performed on all programs.

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Uses of performance informationUses of performance information

Use 1: Improving decision-makingUse 1: Improving decision-making• Performance information provides an opportunity to learn and Performance information provides an opportunity to learn and

improve.improve.• Performance management can only be effectivePerformance management can only be effective if people working if people working

within the system actually believe in the value of a results-orientation. within the system actually believe in the value of a results-orientation.

Use 2: Assisting in resource allocationUse 2: Assisting in resource allocation• Performance information serves as a reference in resource Performance information serves as a reference in resource

allocation.allocation.• The budget authorities take other social, economic, and political The budget authorities take other social, economic, and political

factors into account when deciding on budgeting. factors into account when deciding on budgeting. • Poorly performing programs are not necessarily cut back or Poorly performing programs are not necessarily cut back or

discontinued.discontinued.

Use 3: Enhancing accountabilityUse 3: Enhancing accountability• Performance information can be used to assure accountability.Performance information can be used to assure accountability.• But we should avoid fostering a “silo-view” in the public service.But we should avoid fostering a “silo-view” in the public service.• Performance contracts can also generate rancor and lower the Performance contracts can also generate rancor and lower the

morale if the employees find the performance assessment as unfair.morale if the employees find the performance assessment as unfair.

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Current Performance Management Current Performance Management Practices in KoreaPractices in Korea

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OverviewOverview

Performance Management SystemPerformance Management System (PMS) : MPB (PMS) : MPB

Government Operations Assessment SystemGovernment Operations Assessment System (GOAS) : OGPC (GOAS) : OGPC

Management by ObjectivesManagement by Objectives (MBO) : (MBO) :

Ministry of Government Affairs and Local AdministrationMinistry of Government Affairs and Local Administration

Performance AuditPerformance Audit : Board of Audit and Inspection : Board of Audit and Inspection

Self-Assessment of Spending ProgramsSelf-Assessment of Spending Programs : MPB : MPB

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Performance Management SystemPerformance Management System

• Led by the Led by the Ministry of Planning and BudgetMinistry of Planning and Budget (MPB). (MPB).

• Adopting the framework in the Adopting the framework in the Government Performance and Results AGovernment Performance and Results Actct of the U.S. federal government. of the U.S. federal government.

• Based on the Based on the pilot project on performance budgetingpilot project on performance budgeting carried out in 199 carried out in 1999-2002.9-2002.

• Requires line ministries toRequires line ministries to

- set up - set up performance goals and indicatorsperformance goals and indicators, ,

- prepare - prepare annual performance plans and reportsannual performance plans and reports, and , and

- submit them to MPB at the start of the annual budget cycle. - submit them to MPB at the start of the annual budget cycle.

Mission

Strategic goal Performance goal Performance indicator Programs




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Performance Management SystemPerformance Management System

• Covers onlyCovers only part of ministerial activitiespart of ministerial activities..

- Those activities not involving large sums of expenditure (such as Those activities not involving large sums of expenditure (such as pure policy-making) are excluded from performance monitoring. pure policy-making) are excluded from performance monitoring.

- Also, activities for which the benefits of performance monitoring Also, activities for which the benefits of performance monitoring are expected to be small (such as wages and salaries, “basic are expected to be small (such as wages and salaries, “basic program” expenditures, and general administrative expenses) are program” expenditures, and general administrative expenses) are excluded as well.excluded as well.

• Has not been very successfulHas not been very successful..

- Lukewarm support from the top management in the MPB.Lukewarm support from the top management in the MPB.

- Little enthusiasm from line ministries.Little enthusiasm from line ministries.

- Performance indicators not derived from ministerial missions in a Performance indicators not derived from ministerial missions in a systematic fashion.systematic fashion.

- Performance reports not open to the public.Performance reports not open to the public.

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Government Operations Assessment SystemGovernment Operations Assessment System

• Led by the Led by the Office for Government Policy CoordinationOffice for Government Policy Coordination (OGPC). (OGPC).

• AAssesses the ssesses the performance and organizational capacity of ministries performance and organizational capacity of ministries and citizen satisfactionand citizen satisfaction with them. with them.

• Composed of the assessments of (i) the central government Composed of the assessments of (i) the central government ministries, (ii) local governments, (iii) specific programs, etc.ministries, (ii) local governments, (iii) specific programs, etc.

• Assessment results are Assessment results are reported to the Presidentreported to the President in biannual cabinet in biannual cabinet meetings.meetings.

• Has not been very successfulHas not been very successful..

- Did not require line ministries to set out a clear framework of missiDid not require line ministries to set out a clear framework of mission and strategy.on and strategy.

- No systematic assessment of performance utilizing indicators, relyiNo systematic assessment of performance utilizing indicators, relying instead on subjective assessment by outside experts and in-hong instead on subjective assessment by outside experts and in-house staff.use staff.

- No serious cooperation and coordination with the MPB.No serious cooperation and coordination with the MPB.

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Government Operations Assessment SystemGovernment Operations Assessment System

• Changes in 2005Changes in 2005

- OGPC now requires line ministries to OGPC now requires line ministries to establishestablish performance performance indicators and announce target levelsindicators and announce target levels in annual business plans. in annual business plans.

- Each ministry reports its Each ministry reports its annual business planannual business plan to the President in to the President in an open meeting held at the beginning of each year.an open meeting held at the beginning of each year.

- Performance assessment by OGPC will be based on these Performance assessment by OGPC will be based on these indicators.indicators.

• After the introduction of new requirements,After the introduction of new requirements,

- We observe a We observe a drastic change in the attitude of line ministriesdrastic change in the attitude of line ministries..

- They are making serious efforts to think through their missions and They are making serious efforts to think through their missions and set out strategies and performance indicators.set out strategies and performance indicators.

- But But the coordination with the MPB is still weak.the coordination with the MPB is still weak.

- Ministerial business plans are generally poor in content, lacking, Ministerial business plans are generally poor in content, lacking, for example, a systematic linkage between planning and for example, a systematic linkage between planning and budgeting.budgeting.

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Self-Assessment of Spending ProgramsSelf-Assessment of Spending Programs

• Under preparation by the MPB.Under preparation by the MPB.

• Designed after Designed after PART (Program Assessment Rating Tool)PART (Program Assessment Rating Tool) of the U.S. of the U.S. federal government.federal government.

• Requires line ministries toRequires line ministries to assess their own programsassess their own programs with spending with spending levels above a certain threshold levels above a certain threshold every 3 yearsevery 3 years..

• The assessment is based on 16 questionsThe assessment is based on 16 questions common for all types of common for all types of programs and a few additional questions specific to different types of programs and a few additional questions specific to different types of programs.programs.

- Types of programsTypes of programs: infrastructure investment, procurement of : infrastructure investment, procurement of large-scale facilities and equipment, provision of direct services, large-scale facilities and equipment, provision of direct services, capital injection, subsidies to private entities, grants to local capital injection, subsidies to private entities, grants to local governments, and R&Dgovernments, and R&D

• The MPB reviews the assessment resultsThe MPB reviews the assessment results and takes them into account and takes them into account when preparing annual draft budgets and the National Fiscal when preparing annual draft budgets and the National Fiscal Management Plan.Management Plan.

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• Common questionsCommon questions - Program designProgram design

Does the program have clear purposes and legal or other bases?Does the program have clear purposes and legal or other bases? Can the government intervention be justified?Can the government intervention be justified? Is government spending necessary to achieve the objectives?Is government spending necessary to achieve the objectives? Is the program duplicative of other program?Is the program duplicative of other program? Has the program been subjected to an objective feasibility study?Has the program been subjected to an objective feasibility study? Is the proposed program design most cost-effective?Is the proposed program design most cost-effective? Are performance goals and indicators in place?Are performance goals and indicators in place? Do performance goals and indicators fully reflect program objectives?Do performance goals and indicators fully reflect program objectives? Are the targets set at reasonable levels?Are the targets set at reasonable levels?

- Program managementProgram management Is the implementation regularly being monitored?Is the implementation regularly being monitored? Is the program being implemented as planned?Is the program being implemented as planned? Are efforts being made to reduce costs or increase efficiency?Are efforts being made to reduce costs or increase efficiency?

- Performance assessment and feedbackPerformance assessment and feedback Has an objective and comprehensive program evaluation been conducted?Has an objective and comprehensive program evaluation been conducted? Did the program achieve the intended objectives?Did the program achieve the intended objectives? Are customers and stakeholders satisfied with the program performance?Are customers and stakeholders satisfied with the program performance? Is the agency utilizing the assessment results for program improvement and budget Is the agency utilizing the assessment results for program improvement and budget

planning?planning?

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• Answers to the questions take the form of Answers to the questions take the form of “yes (1)” or “no (0).”“yes (1)” or “no (0).”

- In case of the questions regarding the achievement of program In case of the questions regarding the achievement of program objectives and the customer satisfaction, 4-scale answers (1.00, objectives and the customer satisfaction, 4-scale answers (1.00, 0.67, 0.33, 0.00) will be given.0.67, 0.33, 0.00) will be given.

• A weight is assigned to each question and the overall assessment will A weight is assigned to each question and the overall assessment will be based on the be based on the weighted sum of the answersweighted sum of the answers..

- Programs are classified as “effective (85-100),” “moderately Programs are classified as “effective (85-100),” “moderately effective (70-84),” “adequate (50-69),” “not effective (0-50),” and effective (70-84),” “adequate (50-69),” “not effective (0-50),” and “results not demonstrated.”“results not demonstrated.”

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Establishing an Integrated System of Establishing an Integrated System of Performance ManagementPerformance Management

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Our goalOur goal

• For now, focus on accumulating experience in performance For now, focus on accumulating experience in performance measurement.measurement.

• Later, develop various systems into an integrated full-fledged Later, develop various systems into an integrated full-fledged performance management framework.performance management framework.

- Covering all major aspects of government activities, including the Covering all major aspects of government activities, including the financial and human resource management.financial and human resource management.

• Ultimately, instill a results-orientation in the public sector.Ultimately, instill a results-orientation in the public sector.

- Managers and staff constantly asking themselves what the benefits Managers and staff constantly asking themselves what the benefits of their activities are supposed to be, how they know, and what of their activities are supposed to be, how they know, and what they can do to be more effective.they can do to be more effective.

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StrategiesStrategies

Consolidating the diverse systems of performance managementConsolidating the diverse systems of performance management

• PMS and other systems should eventually be merged into a new PMS and other systems should eventually be merged into a new

framework for performance management.framework for performance management.

• A close cooperation between OGPC and MPB looks essential, A close cooperation between OGPC and MPB looks essential,

with OGPC taking the lead and MPB providing logistics.with OGPC taking the lead and MPB providing logistics.

Establishing a sound system of planning and reportingEstablishing a sound system of planning and reporting

• A system of planning and reporting is a precondition for good A system of planning and reporting is a precondition for good

performance management. performance management.

Emphasis on program evaluationEmphasis on program evaluation

• An effective performance management system requires both An effective performance management system requires both

monitoring and evaluation.monitoring and evaluation.

• In a country like Korea which has little experience in evaluation, a In a country like Korea which has little experience in evaluation, a

formal strategy to introduce the evaluation practice seems formal strategy to introduce the evaluation practice seems

desirable.desirable.

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StrategiesStrategies

Introducing a program structure in budget accountsIntroducing a program structure in budget accounts

• A program structure will facilitate performance management by A program structure will facilitate performance management by

aligning the budget accounts with the mission and strategies of aligning the budget accounts with the mission and strategies of

agencies and by helping them to identify the full cost of agencies and by helping them to identify the full cost of

programs.programs.

Greater use of performance contractsGreater use of performance contracts

• At a later day, a greater use of performance contracts can be At a later day, a greater use of performance contracts can be

encouraged. encouraged.

Business

12. Performance Management in Korea