In most countries: Key institutions are in ferment Public institutions must meet new expectations/needs or lose public trust Public sector reform is getting higher on the political agenda But many important changes happen invisibly and unintentionally And despite reforms, trust declines

Which role of the citizen needs most attention? As owner of government? (voter, taxpayer, member of society with rights enshrined in the constitution) As subject? (protected by – and from – coercive power of the state) As «customer »? – recipient of public services

Diagnosis: Most needed – Coherence or Adaptation? Government – like all institutions – face two fundamental (and conflicting) challenges Maintaining collectivity and stability Adapting to changing circumstances

Does a government need: Stronger Collectivity? (eg. Policy co- ordination, budget stability, legal compliance, impartiality, protections against vested interests, management control, uniform civil service system,...) or More Adaptivity? (eg. Performance, competition, differentiated structures, tailored services/incentives, risk-taking,...)

Levers of Change Civil service system Budget & financial management Accountability and control systems Openness and transparency Role of central control bodies Machinery of government (incl. distributed governance arrangements) Use of non-government service providers

And Modernisation can be a Charade Gap between rules and behaviour The difficulty of culture change The difficulty of measurement Attractions of rhetoric and initiatives The avoidance of hard choices

Successful Reform Strategies Are calibrated to specific risks and dynamics of the national system Focus on desired cultural change Mobilise all levers on behaviour – formal and informal Have persistent and committed leadership at all levels

Challenges for the Future

OECD TRENDS Affordability remains a key issue for any government Governments under pressure to be adaptive Focus on strategy, collaborative action, risk management, societal impact Attention to whole of government, governance and public trust

Diagnosis for Iceland? Small with vulnerable economy Mobile talent Relatively dependent on maintaining good international reputation Citizen as Owner is key concern Key :ADAPTIVITY AND OPTIONS

But Iceland Has strong social cohesion Capacity for strong collective action A memory of the importance of good economic and fiscal policy Big change needs active leadership at all levels-not technical matter

Index of Degree to which C.S. System is Closed

Context for Performance Measurement Different Kinds of Problem ãManagement ãControl ãInformed Policy ãTransparency/Accountability/ External Confidence

Main Influences on Organisational Behaviour Markets Low complexity Contracts Rules Clans High Complexity

Public Service Models Rules Compliance Professional Behaviour dominated by informal influences Int. and Ext. Resource Controls Rule Bound BureaucracyThe Clan

Ramanathans Model Costs Inputs Process Outputs Outcome Indicators B/C

Managing Government Performance 4 levers Leadership & Vision Strategic Adaptation Boundary Riding Diagnostic Information

Strengths and weaknesses of control regimes

Approaches to taking Account of Outcomes ãOutcome oriented culture ãProfessionalism ãInternal Evaluation Systems ãComprehensive Internal Auditing ãExternal VFM ãPerformance-Oriented Budgeting and Management Systems ãLegislated Disclosure

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