3.30 4.15pm Managing For Results In Pfm (Jean Baptiste Sawadogo)

ICGFM Winter Conference: Performance. Results. Outcomes. Understanding Impact in Managing Public Finance ‘ Managing for Results’ (MfR) in ‘ Public Financial Management’ (PFM) . December 2-4, 2009, Washington D.C. . Jean-Baptiste Sawadogo President Leader One Inc Tel. +1 613 721 8087; E-mail: [email_address] © 2009 Leader One Inc.

‘ Managing for Results’ in ‘Public Financial Management’ New ‘experiment’ in Public Sector Policy and Management Very limited studies, literature and evidence Provide a bird’s view perspective Improve understanding of MfR Share observation and reflections on the topic Stimulate debate on MfR and its potentials for PFM and good governance © 2009 Leader One Inc.

MfR and its Impact in PFM MfR: results first; then resources, then … PFM : money first; then processes; then results?? MfR: impact mostly on developed country agencies MfR can potentially impact developing country PFM MfR to likely suffer from the ‘pendulum effect’ The impact of PFM: the improved wellbeing and prosperity of citizens: girls, boys, women, men © 2009 Leader One Inc.

Managing for Results (MfR) is a Strategic Quest for Results MfR practiced for millenniums Strong military influence ‘ Managing for Results ’ - the precursor term for ‘ Strategic Management ’ MfR: envisioning results, aligning resources and taking action to achieve results The private sector uses MfR to create wealth ; The public sector can use MfR to deliver results to citizens © 2009 Leader One Inc.

Global MfR Drivers & Milestones Finance is finite AND “Do more with less!” - early 1990s recession Finance is not everything CIDA’s Strategic Review and Renewal Exercise (1990+) The ‘Government Performance and Results Act’ is enacted in the U.S. (1993) Results-Based Management (RBM) at CIDA (1993+) Office of the Auditor General of Canada Report (1993+1995) Aid Effectiveness Principles adopted by DAC-OECD (1996) Assessing Aid: a World Bank report (1998) Results for Canadians - a Government-wide RBM Policy (2000) Many OEDC countries have adopted a results-focus (+ - 2000) The Millennium Declaration on the MDGs at the UN (2000) ‘ Managing for Development Results’ – WB and OECD (2002) Paris Declaration on Aid Effectiveness DAC-OECD-led process (2005+) Global consensus on the need for a results focused approach © 2009 Leader One Inc.

A New Global Imperative: ‘Managing for Results’ Demands on governments and their agencies to deliver results and be accountable Demands on international organizations to “focus on results” Demands on private firms to perform: financially and socially Requirement for innovative results oriented management approaches Increasing demand for Results-Focused PFM © 2009 Leader One Inc.

Performance Review Led to MfR in the Public Sector Performance review : spotlight on “Spending” vs. “Results” ‘ Performance Audit’: ‘Value for Re$ources’ (VfR) in external audit ‘ Managing for Results’ is now fuelling ‘Performance Audit’ and ‘Performance Budgeting’ Leadership of ‘Public Finance’ functions is needed © 2009 Leader One Inc.

The Role of Monitoring and Evaluation (M&E) Towards MfR M&E: precursor practices towards MfR Monitoring during project and program implementation Evaluation during and after implementation M&E functions were first to promote MfR © 2009 Leader One Inc.

The Role of ‘Performance Audit’ Comprehensive Audit: an early form of Performance Audit Performance Audit is: “… a systematic, purposeful, organized and objective examination of government activities; … designed to promote accountable government; … includes the examination of economy, efficiency, cost effectiveness and environmental effects of government activities ...” “ A focus on performance covers both the benefits accomplished [for citizens] and due process and fairness in the delivery of services”(1) Performance Audit calls for performance (1) Excerpts adapted from the Performance Audit Manual, Office of the Auditor General of Canada - June 2004; pages 13 and 17) © 2009 Leader One Inc.

Growing Impact of Supreme Audit Institutions On PFM Performance Improving SAIs capacity in Performance Audit Improving profile and independence Increasing innovative audit standards & specialties Increasing interaction with parliaments, civil society, the media and citizens Increasing transparency, improved anti-corruption, and increasing accountability Ultimately, improving PFM performance - results for citizens © 2009 Leader One Inc.

Performance Budgeting - A First Step Towards MfR in PFM Performance budgeting = Results-Based Budgeting Emerged within a decade or so Conveys government commitment to performance A Public Expenditures Management flavor Consists in ‘ informing ’ the ‘ Budget ’ with ‘ Results ’ Falls short of being truly ‘ results-focused ’ First step towards MfR in PFM for greater Public Sector performance © 2009 Leader One Inc.

What is ‘Managing for Results’? A deliberate, systematic, rigorous pursuit of results A way of thinking; of doing business Linking of ‘ Re$ources ’ with ‘ Results ’ committed to Two “brands” of results-focused Management Original: ‘Results-Based Management’ (‘RBM’) 1 - Inputs vs . Results (outputs, outcomes, and impacts) Consensus: ‘Managing for Development Results’ (‘MfDR’) 2 1 Original “brand”: Canadian International Development Agency (CIDA); 1993+ 2 Subsequent consensus “brand”: DAC-OECD-led consultative process 2002+ © 2009 Leader One Inc.

‘ Managing for Results’: A Nine-Point Overview ‘ Misconceptions’ Principles Precise vocabulary Logical hierarchy of results Tools Crosscutting Issues Performance Management Functional Stakeholders ‘ Rewards’ © 2009 Leader One Inc.

1. Top ‘Misconceptions’ ‘ Managing for Results’ is ‘Monitoring & Evaluation’ Attribution of ‘Results’ is impossible; so, MfR does not work The ‘impact’? Don’t bother during project or program implementation. © 2009 Leader One Inc.

3. Precise Vocabulary ‘ Reach’ : the human element of MfR ‘ Result ’: an expected or actual achievement ‘ Indicator ’: ONLY a measure of progress or achievement ‘ Target’ : desired level for an indicator ‘ Activity ’: NOT a ‘Result’; IS the ‘ doing ’, the action to achieve a result © 2009 Leader One Inc.

5. Top Tools The Logical Framework Analysis (LFA) or Logic Model (LM) The Performance Measurement Framework (PMF) The Implementation Plan - the business plan integrates all the parts of MfR © 2009 Leader One Inc.

6. Top Crosscutting Issues Gender Equality Mainstreaming : responsiveness to specific issues of girls, boys, women and men Sustainable Environment Mainstreaming: regulatory compliance and proactive developmental sustainability Knowledge Management & Sharing; echoes a 4 th RBM principle: ‘Learning by Doing’ © 2009 Leader One Inc.

7. Performance Management Performance Management is a subset of MfR Expected results planned ahead Indicators selected and baseline data collected Performance management framework Implementation: activities; budgets; processes; reports; risk mgt., work plans; etc. Continuous monitoring and analysis of results, activities, risks, lessons learned Continuous improvement towards results © 2009 Leader One Inc.

8. Top Functional Stakeholders Managerial functions - corporate and line Performance management/review functions (Monitoring, Reporting and Evaluation, MfR) Financial functions (Budgeting, Accounting; Control; Procurement; Internal Audit) Necessity for functional coordinated contribution towards to results; while managing risk © 2009 Leader One Inc.

9. Top ‘Rewards’ of MfR Results for citizens - girls, boys, women and men Strong focus: elimination of wasteful ‘activities’ ‘ Guaranteed’ ‘Value for Re$ources’: right results at right efficiency Capacity to demonstrate relevance and communicate performance - ‘Results’ vs. ‘Re$ources’ ‘ Rewards’: recognition; more funding; winning competitive funding © 2009 Leader One Inc.

Application of MfR in PFM Public Expenditures Management mentality Supremacy of the budget process Performance/Results-Based Budgeting mostly Some ‘Results for citizens’ reform: deliberate whole-of-government approach; but… Strong agency/sector/functional orientation rather than true ‘Results for Citizens’ focus © 2009 Leader One Inc.

MfR in PFM: Developing Countries MfR is a by-product of development aid: Applied to aid projects; then programs Application in ‘Program-based approaches’; progressively in PRSPs Focus on Public Expenditures Management and anticorruption Emerging whole-of-government approaches © 2009 Leader One Inc.

MfR in PFM: Developed Countries MfR is a by-product of austerity and crisis management Agency/departmental performance management Whole-of-government approaches Improvement of regulatory and policy frameworks Implementation through the budget process The pendulum effect after every crisis hardening vs. easing of rules Dilemma of stimulus packages: quick results vs. fear of risks © 2009 Leader One Inc.

MfR in PFM: Key Challenges ‘ Expenditure’ mentality; supremacy of the ‘Budget’ Risk-averse culture: across-the-board measures Complexity in government/self preserving structures Divided governance: Political; Legislative; Public Service; Judiciary; Decentralized regimes… Short-to-medium term electoral cycle vision Increased discourse but still confusion and insufficient practice Difficulty in moving beyond activities and outputs © 2009 Leader One Inc.

MfR in PFM: Where Are We Going? MfR is increasing in awareness and appeal Performance budgeting is increasing in popularity Citizens will keep pushing for results Do we have a choice to practice MfR or not? Yes - BUT… We must master the art and the science for MfR in PFM © 2009 Leader One Inc.

MfR in PFM: How to Get There? Strong MfR leadership at the top Long term orderly MfR implementation (culture change takes time) Long-term results-focused country vision Comprehensive country results framework Results-focused country strategic documents Results-friendly risk-mitigation practices © 2009 Leader One Inc.

MfR in PFM: A Final Word ‘ Managing for Results’ is here to stay - citizens will keep pushing for results Private sector uses MfR; creates enormous wealth Private sector flexibility: the budget is a tool Public sector rigidity: the budget is the law! The Public Sector can and must master MfR to deliver sustainable wellbeing and prosperity - for citizens: girls, boys, women and men… If Public Finance professionals catch up with MfR and lead for performance; results; outcome; impact To your results-focused leadership! © 2009 Leader One Inc.

For Additional Information: OECD-World Bank: Managing for Development Results: www.mfdr.org Canadian International Development Agency: RBM info: http://www.acdi-cida.gc.ca/acdi-cida/ACDI-CIDA.nsf/eng/NAT-92213444-N2H#intro Office of the Auditor General of Canada; Performance Audit Methodology: http://www.oag-bvg.gc.ca/internet/English/oag-bvg_e_859.html Leader One Inc: e-mail to: [email_address] © 2009 Leader One Inc.

3.30 4.15pm Managing For Results In Pfm (Jean Baptiste Sawadogo)

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