Improving Government Performance-What Gets Measured, Gets Done

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Improving Government Performance

What Gets Measured, Gets Done

Prajapati Trivedi

In response to the then prime minister's concern for accountability of top government officials, the Economic

Administration Reforms Commission had produced an absolutely superb report on this subject in 1982. Sadly, 11 yearsafter there has been not an iota of increase in the accountability of government officials and departments. This paper

examines the reasons for this failure and suggests a practical plan to achieve the goal of increased accountability.

I

Introduction

"OUR purpose is not to criticise

government, as so many have, but to renew

it. We are as bullish on the future of the

government as we are bearish on the current

condition of government. We do not

minimise the depth of the problem, nor

the dif fic ult y of solv ing it . But because wehave seen so many public institutions

transform themselves from staid bureau

cracies into innovati ve, fle xibl e, responsive

organisations, we believe there are

solutions."

This paragraph by Osborne and Gaebler

(1992) captures the essence of this paper.

It is clear to all thinking people that civilised

societies cannot exist without effective

governments. The efficiency of the

government sets an upper bound on the

efficiency of the market system. Thus, to

compete in the world today, it is not enough

to reform the market system, one must

overhaul the working of the government as

well. In other words, markets work where

government works. This paper outlines a

strategy to reinvent the government.

Whether we like it or not, there is a

widespread perception that the performance

of the Indian government is poor, at best.

Even the staunchest defenders of the

government give arguments that smack of

defensiveness and helplessness. Some of

them point out that we should be, in fact,

thankful because the performance of the

government could be much worse. Otherswant us to derive some consolation from the

fact that the central government is doing a

much better job than most of the state

governments in India.

The reasons given for the poor

performance of the government are also on

predictable lines. Most people blame it on

the lack of will power among politicians

or on a singular and conspicuous lack of

efficiency, dedication and commitment on

the part of bureaucrats. Unfortunately,

people who advance these reasons aremixing up cause and effects. The reasons

mentioned above are mere symptoms ofthe underlying, fundamental cause of poor

performance of the governmentlack of

accounta bility of the top echelons of ci vi l

servants. Another way of saying the same

thing is to point out that the people who work

in the government are not the problem; rather,

the systems in which they work are the

problem.1

In making the above observation I am

neither breaking any new ground nor can

I claim much in terms of originality. Inresponse to the then prime minister ' sconcern

for accountability of top government

officials, the Economic Administration

Reforms Commission, known popularly as

the L K Jha Commission, produced an

absolutely superb report2

on this very

subject in 1982. Sadly, 11 years after this

report there has not been even an iota of

increase in the accountability of the

officials. The main purpose of this paper

is to examine the reasons for this failure

to increase accountability of seniormost

government functionaries and suggest a

feasible, practical and necessary game

plan to achieve this goal of increased

accountability.

II

Reasons for Poor Performanceof Government

( I ) Multiple Principals with Multiple

Goals; Secretaries to the government of

Ind ia have to answer to a number of agencies

and institutions of the state. For example,

in additi on to the parliamentary committees

such as the Public Accounts Committee,newly created Standing Committees and

parliamentary procedures such as question,

motions and debates, the senior government

officials have to deal wit h the Compt rolle r

and Auditor General, enquiry committees

and commissions, prime minister's office

and the Cabinet Secretariat. Each of the

above agencies considers it to be their

sacred duty to hold government offici als

responsible.

The multiplicity of principals would not

pose such a major problem if there was a

clear agreement or consensus as to what is

expected of the seniormost governmentofficials. Unfortunately, various concerned

agencies and institutions of the state have

diverse and, often, conflicting objectives.

As a consequence, the top officials get fuzzy

and conf lic tin g signal about results expected

from them. Since it is not humanly possible

to meet the expectations of all concerned,

the official s often end up being criticise d by

those principals whose mandate could not

be fulfilled. This leads to demoralisation,

preference for risk aversion and proclivityfor non-action.

In addition, the focus by multiple

princ ipal s on form and procedure, perceived

lapses or excesses of the executive has

lead to a narrow, negative and formal

concept of accountability. This, in turn,

has compounded the problem of risk

aversion and demoralisation among civil

servants. As the L K Jha Comm ission

concluded: "What we have in our system

is essentially accountability for error and

wron g doin g, and not for non-achievement

or inefficiency."

(2) The Not-Me Syndrome: Another

source of poor governmental performance

can be traced to the complexity of the

functions of the modern government and

the nature of its developmental tasks. These

tasks are invariably multidimensional and

involve a large number of agencies in the

process of examination as we ll as decision

making. This leads to blurring of the

organisational as well as individual

accountability. Each individua l department

is eager to pass the blame for delays and

inaction on to another sister department.

Each department claims that they are notresponsible for the final results as they

have no control over the decision-making

process.

III

Solution for Poor Performanceof Government

Common sense tells us that if we wish

to improve performance of the government,

we must at the very least know what

constitutes 'performance'. The L K Jha

Commission examined various instruments

used by the gove rnme nt to .measureperformance of the government and found

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them severely deficient. The commission

concluded, that A nnua l Plan, Performance

Budget and the Annual Reports did not

measure up to the task and recommended

that each "Mini stry /Depa rtme nt should ask

itself well in advance what it proposes to

do in the ensuing year and formulate as

specific and precise an answer to this

question as possible." The commission

described the document containing this

information as an Action Plan.Since the acceptance of the recom

mendation of the L K Jha Commission in

this regard, Action Plan has become an

integral part of the functioning of all

departments in the government of India.

It was expected that these Action Plans

wi l l eliminate the root causes of the poorperformance of the government. First,

listing of all the tasks various departments

were to perform during the year was

intended to provide a consistent and

unambiguous signal as to what was

expected from each department. Any

trade-offs among conflicting demands of

various principals were to be resolved at

the beginning of the year and were not to

be used as an excuse to pass the buck at

the end of the year.

Second, laying down of precise,

quant ifiable and measurable targets was

intended to provide an objective standard

for measuring performance. This, in turn,

was supposed to reduce subjec tivity in

rewarding or punishing officials and thus

improve their morale and credibility.

The above expectations were based on

sound principles of management and werea precursor to the current best selling book

on the subject of improving government

performance entitled Reinventing Govern-

menu How the Entrepreneurial Spirit Is

Transforming the Public Sector by David

Osborne and Ted Gaebler. Talking about the

power of performance measurement, these

authors outlined the following basic

principles:

(1) What gets measured .gets done.

(2) If you don 't measure results, you can't

tell success from failure.

(3) If you can' t see success, you can't reward

it.

(4) If you can't reward success, you're

probably rewarding failure.

(5) If you can 't see success, you can't learn

about it.

(6) If you can't recognise failure, you can't

correct it.

(7) If you can demonstrate results, you can

win public support.

IV

Problems with Action Plans

As has been the fate of many other publicpolicies, the Act ion Plans were never really

implemented effec tively. Hence, a good idea

remained just thatan idea waiting to be

implemented properly. In its current form,

Action Plans in most cases represent an

exercise in futility. That is, the manner in

which Action Plans are being implemented

currently, they have not added to the

improvement in the 'quality of account

ability'. As we shall see below, even if we

take up the exercise in all its seriousness,

the Action Plans as designed currently wi l l

not take us very far. The problem is notnecessarily with the "will" to implement.

The main reason for this problems lies in

the conceptually flawed design of the

current batch of Action Plans. Because

these Acti on Plans are congenitall y flawed,

even the best intentions in the past have

yielded no results. Let us, therefore,

examine the major flaws with the current

design of Action Plans.

Problem Number I: A glance at the 1993-94

Action Plans suggests that there is a

fundamental confusion among departments

regarding the very purpose of these Action

Plans. This is reflected most dramatically in

the fact that some departments have an Act ion

Plan document that is 10 pages long

(Department of Mines), whereas, others have

Action Plans that are close to 100 pages

(Department of Telecommunications and

Department of Power). The latter include

detailed performance parameters for all

organisations under them. Their own

department's performance parameters are a

minuscule part of these documents.

Either these departments are genuinely

oblivious of the rationale, purpose and

objectives of the Act ion Plan exercise or they

have included a humongous amount of details

to create an incorrect impression that they

are responsible for a lot of action.Problem Number 2: Even if we accept the

contents of a particular department's Acti on

Plan at its face value, it is impossible to

measure its performance at the end of the

year using the curren t documents. For

example, the 1993-94 Action Plan for

Ministry of Power lays down a list of 24

activities to be done during the period

Apri l-Ju ne 1993. Now if at the end of this

quarter, they inform the Cabinet Secretariat

that they have been able to perform only

20 activities out of a total of 24, how are

we to judge their performance? Since all

24 activities are not of equal importance,

we cannot really judge their performance

correctly or objectively. It is possible

that they may have completed the less

important activities and ignored the more

important ones.

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Thus, what is required is priori tis ing the

activities by attaching weights to them.

This is not a new idea as most departments

are used to doing this while negotiating

Memoranda of Understanding (MOUs)

with public enterprises under their

supervision.

Problem Number 3: Even if we take care

of the above two problems, one will have

to overcome yet another congenital fatal

flaw with Action Plans. The Action Plansin their present form ask the departments to

specify specific target dates for each act ivi ty.

However, they do not give any indication

regarding how to interpret any devia tion

from the target dates.

For example, one item in the 1993-94

Action Plan for the Ministry of Power is

'Submission of PIB Note on Agartala Gas

Based Power Project by June 1993'. Now

if the note is submitted in August 1993 as

opposed to June 1993, how are we to judge

the ministry's performance? Clearly, the

current system would give the Ministry of

Power no credit at all. This may not only

be 'un fai r' but its perverse effects on the

incentive structure may be also 'dangerous'.

If in the month of May 1993 the ministry

realises that it cannot meet the June 1993

deadline, it may decide to completely freeze

action on this front and move its focus to

other activities where it sti ll has the potential

to meet the June 1993 deadl ine. This is a

common problem with all-or-nothing

deadlines.

The solution to this lies in not having a

single target but a 5-point scale as shown

in Table 1.Problem Number 4: A related but equally

important problem w it h the current system

arises out of the confusion created as a

result of two parallel action plansone

relating to the implementa tion of 'election

manifesto' of the ruling party and the other

to the usual activities of the departments.

This situation is analogous to having two

'pr ofi t and loss' statement in a business.

The perverse consequences this duality of

action plans has on motivation and

behaviour are predictable and vindicated

by the available evidence.

For example, it is not clear which action

plan is more important from government's

point of v iew. Common sense would suggests

that elected officials are li kel y to care more

about the action with respect to the election

manifesto. This, in turn, implies that much

of the 'other' work wi l l suffer.

The sum total of the above-mentioned

four problems with the current system of

Action Plans is to make them absolutely

useless as instruments for measuring

'performance'and achieving accountability.

For a democratically elected government,

the absence of accountability of implementorsof electoral promises becomes a fatal flaw.

The elected officials are obviously held

accountable by the cycle of elections, thus

it is only 'fair" that they have a management

control system which provides them an

instrument to get 'results' and not excuses

for non-performance.

The answer does not lie in increasing the

'quantity' of controls. Rather, the focus

has to shift to increasing the 'quality' of

cont rol. Thi s can be achieved by reducing

the reports submitted by the government

departments and improving the design ofthe Action Pans.

V

Action Plans Reinvented

The heart of the action plan consists of

the performance evaluation system. Thus

any improvement has to focus maximum

possible attention in this area. We suggest

that the design of new Action Plans

referred to as Performance Contracts in

the futureshould involve the foll owi ng

four steps:

Step 1: Criterion Selection. The first step

is to choose a set of criteria to measure the

performance of the department. The crite ria

to choose these crite riathe mega cri ter ia

are simple. First, we must insure these criter ia

are 'f ai r' to the secretary or the head of the

depart ment. That is, they must onl y

encompass those areas over which the

secretary to the government has control.

Second, these criteria should also be 'fair'

to the country.

For example, inclusion of profits of the

public enterprises under a particulardepartment as a criterion may not be 'fair'

to the secretary because he or she is not a

super managing director and should not be

made to behave like one.

A sample of possible criteria for evaluating

the performance of the Department of Mines

is given in Table 2. This is only an illustra tive

list for stimulating discussion. Much more

intimate knowledge of the relevant

department is required than what the author

can legitimately claim.

Step 2: Criterion Weight Selection. Once

the relevant criteria have been identifi ed, we

must indicate the relative priorities by

attaching a series of weights to each criteria

as shown in the Performance Contract

(Appendix I ). This makes it easier for the

secretaries to decide what is more important

when the chips are down and they have to

ration their precious resources. These weights

have to be determined by a process of mutual

negotiations between the two parties entering

into a Performance Contract.3

Step 3: Criterion Value Selection. The

next step is to select a target value for each

performance criter ia. However, instead of

having a single value, one must choose afive-point scale for the reasons discussed

earlier in this paper.

Step 4: Performance Evaluation

Calculating the Composite Score. The real

revo lution in the new design proposed lies

in this step. Appendix II shows how the

Composite Score for the hypothetical

Performance Contract may be calculated.

This is a rather simple procedure of calculating

a weighted score for performance on various

fronts.

If the department does an excellent job on

all fronts, then they are like ly to get acompositescore of 'I' On the other hand, if the

department does a lousy job on all fronts,

then it wi l l end up with a composite score

of '5' . A combination of 'excellent' and 'poor '

performance is likely to yield a composite

score which lies between 5 and 1.

As can be seen from the Appen dix I I , one

has to first compare the achievement wi th

respect to criteria values and determine the

'Raw Score' on a scale of 1 to 5. Then, one

has to multiply this 'Raw Score' with the

respective weights and calculate the

'Weighted Raw Score'. The sum of weighted

Raw Scores gives us the Composite Score.

In the hypothetical case of the Ministry of

Mines, we find that the Composite Score

turns out to be 2.10, whic h is close to 'Ve ry

Good'.

V I

How to Interpret Composite Scores

If we had composite scores for all

departments, it wou ld provide us wi th a

unique measure of comparative performance.

However, it is important to note what is

being compared. We are not comparing theindividual tasks of various government

departments. Rather, we are compar ing the

ability of respective departments to meet

their commitments to wh ich they had agreed

to at the beginni ng of the year. Wh ile many

tasks undertaken by the Department of Power

are likely to be different from those of the

Department of Family Welfare or the

Mini stry of Mines, yet their abilit y to meet

their respective commitments can be certainly

compared.

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At the end of the year, the prime minis ter' s

office can announce results which may look

like as follows:4

The potential impact of this kind of list

is mind-boggling. It wi l l create a sense ofcompeti tion among government departments

to perform the basic tasks assigned and serve

the public interest, which is the very core

of the proposed reform. The above list is

a sort of an index of performance in a

hypothetical stock market for the governmentdepartments.

V I I

Policy Options

Anybody who has given serious thought

to the whole issue of accountability in the

government, w il l soon come to the conclusion

that the current system of Action Plans is

in a serious need of fine-tuning. There does

not seem to be much option in this regard.However, on individua l aspects of this overall

proposal, there are some options available

to us.

Name of New Instrument: In public policy

arena nomenclature is a substantive and not

merely a cosmetic issue. Essentially we have

three options:

(a) Continue to call it an Action Plan and

simply change the contents by asking

departments to select a more appropriate set

of criteria; attach weights to indicate inter

se priorities among them and device a 5-

point scale of criterion values rather than a

single target.

(b) Call it Performance Contract to

emphasise the contractual obligati on that thedepartment heads have in fulfilling their

respective targets.

(c) Call it Performance Agreement to

indicate that it is a professional agreement

and not a legal contract as may be inferredby some if we use the term Performance

Contract,

(d) Call it Performance Evaluation System

in order to send a clear signal regarding its

intended purpose. This term also de-

emphasises the corresponding obligationsof the government and lowers the

expectations in this regard that the evaluatees

may have. The lessons from the governmentof India's MOU policy should not be lost

sight of. There the public enterprises were

given an exaggerated impression that MOUs

will provide a vehicle to make their

performance conditional on all kinds of

unrealistic expectations and commitments

from the administrat ive departments. It took

several years of education to convince public

enterprises that MOUs want to measure

performance in the "real " wor ld not in some

imaginary Utopian world.

Institutional Arrangement: The literature

on performance evaluation c learly suggests

that "who" measures performance is as

important an issue as "how" performance

is measured. Here, again, we have some

choices:

(1) Cabinet Secretariat: The Performance

Contracts could be between the CabinetSecretariat and respective government

departments. This would be the most

natural and least disruptive optio n since

the Cabinet Secretariat is already the lead

agency in this regard. One will have to,

however, consider the issue relating to

how the differences in opinion betweenCabinet Secretariat and the departments

will be resolved. Will this require the

intervention of prime minister in order to

ensure fairness or wi l l the Cabinet Secretary

have the final say.

Also, one wil l have to consider issues

relating to the expertise and time availab ility

for this purpose at the Cabinet Secretariat.

In this connection, one will have to think

of creating a think tank of experts to assistthe Cabinet Secretariat in the initial stages.

(2) Standing Committees: Once the new

concept of Performance Contract is accepted,

it would be essential to synchronise other

performance evaluation exercises in orderto achieve the objectives of the proposed

reforms. This instrument could be used to

make the parliament-government interface

more focused and effective.

Scope of the Policy: The coverage of the

policy, i e, number of departments to be

covered under the proposed policy will

have to be decided wi th great care. Basically ,

we have two options in this regard. According

to one option, it may be desirable to start

with the infrastructure ministries and

departments. This option has two advantages.It wi l l be easy to manage the process of

designing and implementation of a handful

of Performance Contracts for thesedepartments. In addition, it is likely to be

relatively easier to prepare Performance

Contracts for departments dealing with

infrastructure.

According to the second option, it may

be more convincin g as well as necessary

to start with Performance Contracts for all

departments. This will reduce the possibility

of one weak link in the chain of government

departments becoming a constraint on the

performance of all others. Moreover, itmay suggest that the government only cares

about effic iency of a select few departments

and not others. If efficiency is important

then one must find resources to do the bestpossible job.

Complementary Policy Decisions: To make

this policy effective, it would be necessary

to take a few other supportive measures. For

example, one will have to consider the option

of giving a secure tenure to a secretary tothe government for the duration of the

Performance Contract. Therefore, if a

secretary is due to retire in September of a

particular year, he or she will have to be

allowed to continue t i l l the end of March

in the following year. This will prevent the

disruptive impact of frequent changes at

the top level during the year and would be

necessary for ensuring the sanctity of ayearly agreement. Similarly, many other

complementary decisions may also be

necessary for the eventual success of this

system.

V I I I

Why This Cannot be Done:Expected Sources of Resistance

As a French scholar once said, systems

are not required for the top 10 per cent or

the bottom 10 per cent. The top 10 per cent

will continue to do the right things with or

without a system. Simi lar ly, the bottom 10

per cent wil l always try to find ways to beat

the system. However, for the rest of the 80per cent, investment in designing systems

is likely to pay rich dividends.

As with any change, one must expect

resistance. In what follows, we have tried

to anticipate the most like ly lines of argument

against the current proposals.

Argument Number I: It is impossible to

evaluate our performance. This is exactly

the same argument given by public

enterprises when the system of Memorandum

of Understanding (MOU )5 was introduced.

However, it was found that, indeed, some

aspects of public enterprise operations are

difficult to quantify, but a little thought and

ingenuity is required to overcome this

barrier. It is our fi rm convic tion , that one

can fi nd good proxies for quali tative as

well as non-economic aspects ofgovernment operations. One has to only

ask some of the retired secretaries, and one

wi l l be flooded with ideas. These peoplehave no vested interests in the status quoand can be an invaluabl e source of most

innovative ideas.

This is not an academic issue. Thi s barrier

has been overcome in the past by many

ministries who have done a fine job of

selecting appropriate criter ia for measuring

their performance . Our research shows

that the best example is the 1985 Ac tion

Plan for the Department of Irrigation. It is

the only case whi ch tru ly captured thespirit of the recommendations of L K Jha

Commiss ion in this regard. The government

should have circulated this document and

held "information-cum-training" sessions

to effectively implement this policy.

Argument Number 2: There are too many

unpredictable variables in running a

government department and, hence, it is

not possible to measure performance

objectively. If every thing was predictable,

there would not be any need for the

leadership of senior government officials.

The junior officials could do every thingon a routi ne basis. The proposed system

of Performance Contract does not expect

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to reduce all measurements to only

predictable indicators. Rather, the goal is

to encourage top officials to do contingency

plann ing by ide nti fyi ng sources of

uncertainty.

Argument Number 3; Performance of

government departments is dependent onthe performance of others and, hence, it

is not possible to isolate their share in the

total performance. First, let us try to at

least delineate those areas that are withinthe control of the department and those

that are not. This in itself would be a

major achievement. Second, one can work

out the precise contributions made by

each department and design a system

accordingly. In particular, the idea of a

lead department' which has the primary

responsibility for delivering the final

service as suggested by the L K Jha

Commission may need to be seriously

considered.

CONCLUDING COMMENTS

The task outlined above is simple yet

profound. In one sense we are merely fine-

tuning the existing public po licy instrument

of Action Plans. Yet, the modifications

suggested are intended to bring a major

qualitative change in the functioning of the

Indian government. This is the first crucial

step to transform a process-oriented

government to a result-oriented government.

We have no choice in this matter. It must

be done. Other countries have started the

process and are already ahead of us in this

regard. We must therefore begin and wemust begin now.

Notes

[The views expressed in this paper are solelythose of the author.)

1 The present paper is in line with a wellestablished tradition in this field representedby important contributions to it by McKean(1958), Hendricks (1981), Miller (1984),Johnson and Lewin (1984), Wholey andNewcomer (1989) and Lane (1993).

2 Economic Adminis tra tion Reforms

Commission Report No 29 on'Accountabiliy ',June 30, 1982.

3 See Downs and Larkey (1986) for more on thisaspect.

4 This is purely for the sake of illustrating thepoint in a manner that brings it closer to homemore effectively. It should not be taken toreflect the reality, which is unknown at thetime of writing this paper.

5 Good principles of management are, indeed,transcendental. Thus, there is a great degreeof similarity between the principlesunderlying the government of India's policyon Memorandum of Understanding (MOU)for public enterprises and the proposed

Performance Contracts for the administraivedepartments. For further details on the MOUpolicy, see Trivedi (1990 and 1992).

References

Barzelay, Michael (1992): Breaking through Bureaucracy; A New Vision for Managing in Government, University of California Press, Los Angeles.

Downs, G and P Larkey (1986): The Search forGovernment Efficiency, Temple, Philadelphia.

Hendricks, M (1981): 'Qualitative Evaluation atthe Cabinet Level' in N L Smith (ed), Federal

Effort to Develop New Evaluative Methods,Jossey-Bass.

Johnson, R W and Arie Y Lewin (1984):'Management and Accountability Models ofPublic Sector Performance' in Miller, TrudiC (ed), Public Sector Performance: AConceptual Turning Point, The John HopkinsUniversity Press, Baltimore.

Lane, Jan-Erik (1993): The Public Sector:Concepts, Models and Approaches, SagePublications, New Delhi (specially Chapter9 entitled 'Efficiency, Effectiveness andEvaluation', pp 190-204).

McKean, Roland N (1958): Efficiency inGovernment through Systems Analysis, Wiley,New York.

Miller, Trudi C (ed) (1984): Public SectorPerformance: A Conceptual Turning Point,The John Hopkins University Press, Baltimore

Osborne, David and Ted Gaebler (1992):Reinventing Government: How the Entrepreneurial Spirit Is Transforming the PublicSector, Addison-Wesley Publishing Company.

Reich, Robert B (1990): The Power of PublicIdeas, Harvard University Press, Cambridge,Massachusetts.

Trivedi, Prajapati (1990): Memorandum of

Understanding: An Approach to ImprovingPublic Enterprise Performance, InternationalManagement Publishers, New Delhi.

(1992): A Critique of Public Enterprise Policy,International Management Publishers, NewDelhi.

Wholey, Joseph S and Kathryn E Newcomer(1989): Improving Government Performance:

Evaluation Strategies for StrengtheningPublic Agencies and Programs, Jossey-BassPublishers, London.

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M-114 Economic and Polit ical Weekly August 27, 1994

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Improving Government Performance-What Gets Measured, Gets Done