The Internationalisation of Performance Management and Budgeting: Towards an Explanatory Framework Dr. Richard Common Herbert Simon Institute Manchester Business School University of Manchester, UK

Introduction Assumption of international convergence around ‘best practice’ in area of performance management and budgeting What is ‘best practice’? The role of international policy learning The importance of context when shaping adoption of performance management The link with other managerial innovations (such as NPM)

No unified approach to performance management and measurement in NPM-reform countries Focus here is on organizational performance Relationship with strategic management and shift from ‘old’ public administration: ‘the development of strategic management can also be portrayed as a way of increasing the performance orientation of an organisation’ (Pollitt and Bouckeart 2004: 127) 2. Towards an International Model of Performance Management

UK Comprehensive Spending Review (1998) has considerable international appeal Attempts to: match resources to key budget priorities in an attempt to improve efficiency Get away from annualised budgeting process to a three year process Commit departments to fixed three-year Departmental Expenditure Limits (DELs) through Public Service Agreements (PSAs) 2. Towards an International Model of Performance Management

The framework for PSAs are based on the following principles of public service performance: Clear, outcome-focused national goals, set by the government Devolution of responsibility to public service providers themselves, with maximum local flexibility and discretion to innovate, and incentives to ensure that the needs of local communities are met Independent and effective arrangements for audit and inspection to improve accountability Transparency about what is being achieved, with better information about performance both locally and nationally (HM Treasury, 2002) 2. Towards an International Model of Performance Management

To what extent does the CSR represent an international trend? Curristine (2005) assesses government performance across OECD and found common objectives: Managing the efficiency and effectiveness of agencies and ministries and/or the internal control and accountability within individual ministries Improving decision-making in the budget process, and/or in the allocation of resources and accountability of ministries to the Ministry of Finance Improving external transparency and accountability to parliament and the public and clarifying the roles and responsibilities of politicians and civil servants Achieving savings 2. Towards an International Model of Performance Management

Policy transfer: the outcome of international policy learning Diffusion of international models or approaches Unifying features of performance management: Strategic planning and targets Use of performance agreements (e.g. PSAs) Emphasis on outcomes in budgetary process Performance results used to set programme priorities, resource allocation and to change management 3. The Internationalisation of Performance Management: The Role of Policy Learning

Transferability of performance management Importance of context e.g. implementation problems with PPBS in Bahrain Requires following conditions (Hilton and Joyce, 2007): Rule of law Budget adherence Transparency Publicly expressed preferences Avoidance of structural deficits Timely budget adoption Competence in forecasting/predictability Functioning accounting system Audit capacity 3. The Internationalisation of Performance Management: The Role of Policy Learning

Transferability affected by ‘performance regime’ (Talbot, 2008), or the institutional context Administrative/cultural context: hierarchical and centralised structures not conducive to implementation of OECD style performance management On balance, it appears that institutional rather than cultural factors determine cross-national adoption of performance management 3. The Internationalisation of Performance Management: The Role of Policy Learning

Rational assumptions underpin performance management – ‘international appeal’ – yet UK CSR unable to stick to 3-year plan Unpredictability of politics Demonstration effect of UK CSR and US National Performance Review Legitimation from OECD Concept and suggestions rather than a hard, workable model being diffused Performance regimes (managerial context) appear to determine transfer of performance management and budgeting Conclusions