1. Decision Making and Performance Management in Public Finance Kamu Maliyesinde Karar Alma ve Performans Yönetimi TR08IBFI03 1.2.6. Performance Management and Performance Based Budgeting Day 1 Introduction to Performance Management Mr Heikki Joustie 17 January 2011

2. Decision Making and Performance Management in Public Finance Kamu Maliyesinde Karar Alma ve Performans Yönetimi TR08IBFI03 Developments in Anglo-Saxon Countries - specially Thatcher government in UK early 1980’s: - privatisation of common utilities (water- and gas supply, energy sector) - listing new possible openings to privatise traditional public services (railways, telecom) - adopting market type mechanisms in public service delivery Background factors 1: Anglo-Saxon Countries

3. Decision Making and Performance Management in Public Finance Kamu Maliyesinde Karar Alma ve Performans Yönetimi TR08IBFI03 OECD – change of the paradigm in mid 80’s. - ”well functioning public sector is a competitive advantage” - creation of the new public management committee (new tasks for the secretariat of technical co-operation committee – remains of the Marshall Aid) - effective publisher of comparative studies of performance management formula used in member countries Background factors 2 : OECD

4. Decision Making and Performance Management in Public Finance Kamu Maliyesinde Karar Alma ve Performans Yönetimi TR08IBFI03 UK, Canada, Australia, New Zealand, US - strategy- and policy oriented, outcomes in focus - governance is based on ”programs”, not that much on creating new legislation - uniform multilevel pyramid type administrative structures, managerial responsibilities on the very top of the administrative machine - efforts for decentralization and privatisation Different Solutions of PM: 1) Anglo-Saxon approach

5. Decision Making and Performance Management in Public Finance Kamu Maliyesinde Karar Alma ve Performans Yönetimi TR08IBFI03 Finland, Sweden, Denmark, Norway - efficiency and service quality oriented, outputs in focus in the beginning rather than outcomes - governance is based on legislation - central administration is divided – small ministries and underpinning rather indepentend agencies - effective decentralization of decision making powers towards front line managers - restructuring the roles of Parliament, Cabinet of Ministers, line ministries and all levels of operative agencies. Different Solutions of PM: 2) Nordic approach

6. Decision Making and Performance Management in Public Finance Kamu Maliyesinde Karar Alma ve Performans Yönetimi TR08IBFI03 Budgetary decisions moved from ”input” focus towards ”outputs” Different types of result targets were increasingly used as background information for proposed appropriations Accountability reporting upon performance targets was taken into use The role of external auditing expanded from legality checks towards achievement of performance targets Common features

7. Decision Making and Performance Management in Public Finance Kamu Maliyesinde Karar Alma ve Performans Yönetimi TR08IBFI03 Broad movement among OECD member countries to improve both efficiency and service quality in public service delivery. ”Public Administration” was seen more often as a ”Public Service Production” comparable to private service sector Many ”semimarket” type arrangements were created in different countries alongwith privatizations of former government activities. The use of market mechanisms

8. Decision Making and Performance Management in Public Finance Kamu Maliyesinde Karar Alma ve Performans Yönetimi TR08IBFI03 Performance management looks like to be a continuing search for balance between - disiplined budget policies and - finding incentives for better efficiency and better quality of public service delivery. Well functioning performance management models have found balance between budgetary policies and efficient service delivery Sustainable Financial Policy