1. Tekst hier Belgian Social Security network : Mgt contracts Page 1 September 2006 Negotiating performance agreements in the Belgian social Security network Testing the principal-agent model and the network theory EGPA Conference 2006 Study Group VI Governance of Public Sector Organizations

2. Tekst hier Belgian Social Security network : Mgt contracts Page 2 September 2006 1. Social Security and performance agreements

3. Belgian Social Security network : Mgt contracts Page 3 September 2006 Social security : concept Belgian State System of public social insurance covering social risks Direct contributions Employers’ organisations Trade unions Governance of the public institutions Performance agreements

4. Belgian Social Security network : Mgt contracts Page 4 September 2006 Contract management Performance agreements in 15 Social Security Public Institutions (SSPI) (2002/2003) :  Between the Federal State and the SSPI  12.000 employees concerned  Budget 870 millions €/year  Three years period  Management autonomy (budget, HRM, facility) Two-way agreement  Output level : organizational performance levels  Financial framework for three years  Commitments from the State Performance agreements in 15 Social Security Public Institutions (SSPI) (2002/2003) :  Between the Federal State and the SSPI  12.000 employees concerned  Budget 870 millions €/year  Three years period  Management autonomy (budget, HRM, facility) Two-way agreement  Output level : organizational performance levels  Financial framework for three years  Commitments from the State Implying  Accountability  New relationship with the State Implying  Accountability  New relationship with the State

5. Tekst hier Belgian Social Security network : Mgt contracts Page 5 September 2006 2. Mapping the negotiation process

6. Belgian Social Security network : Mgt contracts Page 6 September 2006 Basic assumptions from the theories  15 specialized and thus individual negotiation processes  Divergent interests between State and SSPI  Information advantage for the SSPI  Behavior Belgian State determined by the results of the SSPI (quality of the information)  15 specialized and thus individual negotiation processes  Divergent interests between State and SSPI  Information advantage for the SSPI  Behavior Belgian State determined by the results of the SSPI (quality of the information)  Tripartite Negotiations  Decision making network based on gradual common agreement  Auto-coordination by SSPI and minister’s cabinets  Autonomy and performance agreement are accepted by all parties  Tripartite Negotiations  Decision making network based on gradual common agreement  Auto-coordination by SSPI and minister’s cabinets  Autonomy and performance agreement are accepted by all parties Principal-Agent Network coordination

7. Belgian Social Security network : Mgt contracts Page 7 September 2006 Process- and chain management as backbone  Basic assumptions led to chain management  Process mapping has been agreed by all parties  Basic assumptions led to chain management  Process mapping has been agreed by all parties Primary process Intermediary Output Step 1 Original input Step 2 Final Output Involved actors Secundary process

8. Tekst hier Belgian Social Security network : Mgt contracts Page 8 September 2006 3. Testing the theories Lessons learned

9. Belgian Social Security network : Mgt contracts Page 9 September 2006 Our observations and the theories Multipartite negotiations besides one to one Changing coalitions and oppositions Principal > Agent Autonomy in danger Successful central steering Multiple logics are active High transaction costs Observations Exclusively individual and one to one Conflict between principal and agent Principal < Agent Autonomy is accepted and is a pre-require No steering : contract relations Ex post results Low transaction costs Principal-Agent Multipartite and global Global cooperation Not needed Autonomy is accepted and is a pre-require No steering : auto- coordination Global targets Low transaction costs Network

10. Belgian Social Security network : Mgt contracts Page 10 September 2006 Lessons learned The contracting cycle must be structured as a compromise between both theories  One to one relationship remains the model  Multipartite processes are sometimes inevitable  Negotiation and evaluation processes increase the possibility of conflicts  Convergent interests and coalitions are the keys for successful processes  A central function facilitates the processes and limits the transaction costs  The contract cycle is not only structured by the contractual and rational logic The contracting cycle must be structured as a compromise between both theories  One to one relationship remains the model  Multipartite processes are sometimes inevitable  Negotiation and evaluation processes increase the possibility of conflicts  Convergent interests and coalitions are the keys for successful processes  A central function facilitates the processes and limits the transaction costs  The contract cycle is not only structured by the contractual and rational logic

11. Belgian Social Security network : Mgt contracts Page 11 September 2006 For more information Amaury Legrain FPS Social Security – DGSOC amaury.legrain@minsoc.fed.be Tom.auwers@minsoc.fed.be 5E20 Place Victor Horta 40, 20 1060 Bruxelles 0032 (0)2/528.63.12