Unlocking Public Value: A New Model for Achieving High Performance in Public Service Organizations - Hardcover

Marty Cole; Greg Parston

Hardcover

ISBN 10: 0471959456 ISBN 13: 9780471959458

Publisher: Wiley, 2006

Synopsis

A new approach to understanding and improving performance and public value

This book presents the Public Service Value Model-an innovative, rigorous approach to defining public outcomes and quantifying results-to help readers understand and improve public service delivery. Filled with in-depth insight and expert advice, this guide will arm public service managers-whether in government, nonprofit, or even for-profit organizations-with a practical framework that can be used to define outcomes and manage trade-offs in public service delivery.

Martin Cole (Hartford, CT) is Group Chief Executive of Accenture's Government Operating Group. Greg Parston (London, UK) is Executive Director of the Accenture Institute for Public Service Value.

About this title

About the Author

MARTIN COLE is Group Chief Executive of Accenture's Government operating group. He is also a member of Accenture's Executive Leadership Team. Mr. Cole was profiles in the April 2004 issue of Consulting Magazine as one of the IT industry's top six power brokers. He was also a recipient of the 2002 Computerworld Top 100 IT Leaders award.

GREG PARSTON is Director of the Accenture Institute for Public Service Value. He has extensive experience in the public, private and not-for-profit sectors as an entrepreneur, executive director and manager. Dr. Parston has consulted widely on governance, leadership, strategy and change in public services.

From the Back Cover

Praise for Unlocking Public Value

"Unlocking Public Value addresses one of the most challenging questions for governments: how to measure transformation in order to improve outcomes and deliver value to citizens."
―Steve Ballmer, Chief Executive Officer, Microsoft Corporation

"All public services, the Metropolitan Police Service included, are faced with the increasing need to achieve more with the same or less resources at a time of escalating demand and rising customer expectations. This book provides some fascinating insights into public value, how to measure it and, at the same time, may assist in making informed judgments about future spending decisions."
―Sir Ian Blair, QPM, Commissioner of Police of the Metropolis, UK

"Government performance excellence needs instruments that help public sector managers to focus on when and how to create and measure public value. The Public Service Value Model is a sound and outstanding step forward in the field of strategic management in the public sector."
―Julio Gomez-Pomar, Former Secretary of State for Public Administration, Spain

"Public value is the most exciting and widely discussed concept in contemporary public service policy. It offers a common language to connect public services. This book will help you to put clothes onto your particular emperor."
―Ed Mayo, Chief Executive of the National Consumer Council, UK

"While pressure on public budgets increases at the same time expectations of performance rise, this is an excellent and example-rich guide to tracking performance and measuring real outcomes rather than just activity or outputs. It shows how creative experimentation can show the best methods of satisfying taxpayers who want to experience the real effects of the investment of their dollars."
―Sir Mark Moody-Stuart, Chairman of Anglo American plc and former Chairman of Shell

"Three cheers for Cole and Parston! In this important work, they have moved well beyond the simple idea of 'customer-oriented government,' preoccupied only with the quality of services, to a 'citizen-focused government' focused on assisting citizens to define and achieve important social outcomes in cost-effective ways. The practical tools they have developed will help citizens, taxpayers, clients and public managers align and achieve a shared concept of public value."
―Professor Mark Moore, Kennedy School of Government, Harvard University, and author of Creating Public Value: Strategic Management in Government

"This model for measuring performance in public services demonstrates cutting-edge research. In addition, it provides public managers with a hands-on tool for measuring, evaluating and improving public performance. An excellent study!"
―Andrea Römmele, Professor of Communication Management, International University, Bruchsal, Germany

From the Inside Flap

Praise for Unlocking Public Value

"Unlocking Public Value addresses one of the most challenging questions for governments: how to measure transformation in order to improve outcomes and deliver value to citizens."
—Steve Ballmer, Chief Executive Officer, Microsoft Corporation

"All public services, the Metropolitan Police Service included, are faced with the increasing need to achieve more with the same or less resources at a time of escalating demand and rising customer expectations. This book provides some fascinating insights into public value, how to measure it and, at the same time, may assist in making informed judgments about future spending decisions."
—Sir Ian Blair, QPM, Commissioner of Police of the Metropolis, UK

"Government performance excellence needs instruments that help public sector managers to focus on when and how to create and measure public value. The Public Service Value Model is a sound and outstanding step forward in the field of strategic management in the public sector."
—Julio Gomez-Pomar, Former Secretary of State for Public Administration, Spain

"Public value is the most exciting and widely discussed concept in contemporary public service policy. It offers a common language to connect public services. This book will help you to put clothes onto your particular emperor."
—Ed Mayo, Chief Executive of the National Consumer Council, UK

"While pressure on public budgets increases at the same time expectations of performance rise, this is an excellent and example-rich guide to tracking performance and measuring real outcomes rather than just activity or outputs. It shows how creative experimentation can show the best methods of satisfying taxpayers who want to experience the real effects of the investment of their dollars."
—Sir Mark Moody-Stuart, Chairman of Anglo American plc and former Chairman of Shell

"Three cheers for Cole and Parston! In this important work, they have moved well beyond the simple idea of 'customer-oriented government,' preoccupied only with the quality of services, to a 'citizen-focused government' focused on assisting citizens to define and achieve important social outcomes in cost-effective ways. The practical tools they have developed will help citizens, taxpayers, clients and public managers align and achieve a shared concept of public value."
—Professor Mark Moore, Kennedy School of Government, Harvard University, and author of Creating Public Value: Strategic Management in Government

"This model for measuring performance in public services demonstrates cutting-edge research. In addition, it provides public managers with a hands-on tool for measuring, evaluating and improving public performance. An excellent study!"
—Andrea Römmele, Professor of Communication Management, International University, Bruchsal, Germany

Excerpt. © Reprinted by permission. All rights reserved.

Unlocking Public Value

A New Model For Achieving High Performance In Public Service OrganizationsBy Martin Cole Greg Parston

Jossey-Bass

Copyright © 2006 Martin Cole
All right reserved.
ISBN: 978-0-471-95945-8

Chapter One

The Public Sector Squeeze

As public managers around the world seek ways to do more with less, the need is growing for a practical approach to define, measure and drive high performance in the public sector. Although public managers' budgets remain tight, taxpayers demand more, and better, service from public service organizations. Particularly in times of crisis, taxpayers question the value their governments are delivering to them. The increasing use of the Internet has further raised the bar on the level of service expected by the public. Some governments employ selective contracting out and privatization to raise productivity.

Elliott Hibbs must have felt as if he were caught in the jaws of a giant vise. During the first few months of 2003, the State of Arizona's newly appointed Director of the Department of Revenue found his agency had taken severe budget cuts for several years due to a state-wide austerity plan, in spite of its role as the major revenue producer for the State. Meanwhile, stakeholders ranging from legislators to taxpayers were demanding continued high levels of processing, enforcement and taxpayer assistance services without adequate resources to deliver those services. In addition, the prior administration had taken resources from enforcement and moved them to the service delivery side of the agency to meet the demands for swift refund processing, adversely impacting the effectiveness of the department, particularly in collecting unpaid taxes. As part of the new administration and to combat what appeared to be a serious decline in agency function and capabilities, Hibbs presented a plan to the legislature to restore department resources to 2002 levels by improving processing while increasing aggressive collection of delinquent taxes.

Hibbs, an Arizona state government veteran of more than 20 years, was confident that the initial steps he took at the agency were improving the agency's performance and adding value for many stakeholders. He reassigned staff back to audit and enforcement activities and continued a major upgrade of the agency's computer systems, which had started prior to his arrival. Yet he was frustrated with the lack of good data and meaningful facts that could help sell his message to the legislature, that cutting the Revenue Department's budget was a short-sighted fiscal act. "We were accomplishing a lot in spite of getting budget reductions or not enough increases to even cover higher personnel and operations costs. We couldn't easily get the legislature to see the importance of the value we were adding for the people of Arizona," he said. Caught in this dilemma, Hibbs agreed to pilot the Public Service Value methodology as a way of allocating resources to areas that would create the most value for Arizona taxpayers. Along with other public managers around the world at that time, Hibbs was facing a public sector squeeze. He needed to find a way to create value with scarce resources.

Public Service Value Approach

Like Director Hibbs, readers wrestling with the challenges of delivering value in the public sector may find Figure 1.1 helpful. It can be used to frame discussions with public managers about choices and trade-offs available to increase outcomes, or end results of programs, as cost-effectively as possible. The Public Service Value Model is a framework that public managers can use to set priorities between several goals and objectives. By our definition, high-performance governments are those that increase public value-they are able to efficiently produce more or improved outcomes for the public monies spent.

The Public Service Value approach has been developed over the past few years with the help of dozens of government organizations and academic experts. Using the Public Service Value Model, a public manager can evaluate an organization's ability to achieve key social outcomes cost-effectively and aggregate these results to provide an indicative measure of relative public value creation.

Public service organizations can plot their performance on the Public Service Value Model diagram (see Figure 1.1). The direction that an organization moves from year to year reveals how performance is trending. For example, if an organization moves to the upper right-hand quadrant, it is succeeding in increasing outcomes and cost-effectiveness at the same time. On the other hand, if a public service organization increases outcomes but is not cost-effective, it will move toward the upper left-hand quadrant. An organization that manages its costs, but sees a reduction in outcomes, will move toward the lower right-hand quadrant. In these last two cases, when done deliberately, organizations are making explicit trade-offs between focusing on improved outcomes and increasing cost-efficiency in order to, in effect, maintain public value. Lastly, if an organization heads into the lower left-hand quadrant, it is experiencing a reduction of both outcomes and cost-effectiveness and is eroding public value and most likely taxpayers' confidence.

The Public Service Value approach to helping public managers define and increase value in the public sector was inspired by the principles of Shareholder Value Analysis, which is commonly used to understand the performance of companies. In the private sector, a company's shareholder generally sees the value of his or her investment increase with company earnings, which are ultimately reflected in the company's share price. For the Public Service Value Model, we substitute private sector shareholders with taxpayers, citizens, public service recipients and legislators.

Fiscal Crunch

The "value squeeze" experienced by Director Hibbs is an all-too-familiar challenge shared by public managers worldwide (see Figure 1.3). In the United Kingdom, for example, Ian Watmore, who in 2004 was appointed to the newly created position of Chief Information Officer and is now the head of the Prime Minister's Delivery Unit, said, "It is difficult to balance the objectives of delivering social outcomes and services that consume more resources in an era when governments have less to spend on this rising demand." Since public managers are continually asked to do more with less, the questions on everyone's mind are:

How does one determine if taxpayer money spent is actually improving government performance?

How does one tell if public service programs are adding value?

Politicians, like public managers, feel the squeeze when it comes to delivering value. Politicians feel pressure to deliver on voters' expectations for education, security, social services, pensions and health care. The pressure on budgets in most countries is unlikely to lessen significantly in the years ahead. One significant factor driving this fiscal crunch in most of Europe (particularly in France and Germany), Japan and the United States is the rapid aging of the population and the demands that population is putting on the social security and health care systems in these countries.

In the United States, for example, spending on Social Security, Medicare and Medicaid total roughly 8 percent of the gross domestic product (GDP). By 2030, according to the Congressional Budget Office, the cost of these programs is projected to consume about 15 percent of GDP, and by 2050 they could equal about 19 percent of GDP. Brian Riedl, a budget analyst with the Heritage Foundation, noted, "The coming entitlement crunch is looking increasingly dire."

The budget outlook at the state and municipal level in the United States is not more encouraging. States continue to shoulder heavy Medicaid-related health care costs. With few exceptions, many states also were unprepared for the fiscal downturn at the beginning of the new millennium. Some either borrowed heavily by issuing debt, engaged in budgetary maneuvering by under-funding pension or other long-term obligations to help cover short-term operating deficits, or both, to ride out the storm.

Great Expectations

It might seem logical for stakeholders to reduce their expectations of government when confronted with such obvious budget squeezes. However, quite the opposite reaction often seems to be the case. Interest in improving public sector performance comes from all angles, including taxpayers, public service recipients, the media, nongovernmental organizations and legislators. If anything, the prospect of a perennial budget crunch serves to increase calls from all stakeholders for a more efficient return on taxpayers' money. Public managers, already interested in finding new and improved ways to deliver public services, are reaffirmed in their efforts.

In 2004, twelve years after co-authoring the influential Reinventing Government, David Osborne published another important contribution to the debate on public value, The Price of Government, with co-author Peter Hutchinson. Osborne and Hutchinson have tracked spending at the federal level, as well as at state and local levels, in the United States for the past several decades. They demonstrated that since the early 1970s federal revenues (all taxes, fees and charges), as a percentage of aggregate personal income, trended within a fairly narrow range, averaging slightly more than 20 percent. At the state and local levels, the cost of government during this same period stayed within even narrower ranges of 7 to 8 percent for state, and 6 percent for local.

Osborne and Hutchinson's findings suggest that, at least intuitively, Americans in the post-World War II era have had a fairly consistent sense of an acceptable range of what they are prepared to pay for public services. If taxes trend too low, citizens complain about inadequate services and social inequities. If they trend too high, taxpayers and politicians start pounding the table for tax cuts.

The authors note that despite almost three decades of conservative politicians in the United States and elsewhere singing the praises of smaller government from the early 1970s to the late 1990s, "Citizens do not just want lower taxes and `cheap government.' In reality, they constantly demand more from government, but at a relatively fixed price. They are in effect pressing for more value each year for the money they pay. In this respect, government is challenged by the same forces that constrain any other provider of goods and services."

Acknowledging the projected spiraling health care and Social Security entitlement costs of the next few decades, Osborne and Hutchinson do not speculate as to whether, or to what extent, such pressures could force the "price" of government to ratchet sharply higher and become stable at an elevated plateau. They only point out that the sole precedent for such a dramatic repricing of government in the United States was triggered by a world war hard on the heels of a global depression. It occurred in the 1940s when federal taxes increased dramatically to pay for World War II. Once the U.S. economy had stabilized by the early 1950s, the price of government (which included significantly greater benefits and services than before the Depression) remained fairly constant, albeit significantly higher than prewar levels, for the next 50 years.

Generally, governments do not follow a budget process that takes into account the price of government as described by Osborne and Hutchinson. Deal making at the eleventh hour typically results in a compromise budget, although as Osborne and Hutchinson point out, such deals do not always share voters' priorities or recognize that taxpayers in effect put limits on what they are willing to pay.

The Right Questions

In the wake of a fiscal crisis or natural disaster, citizens tend to hold their governments more accountable for delivering value than when politics as usual and competing special interests alone frame such discussions. As Mark Catlett, a former chief financial officer for the Department of Veterans' Affairs, noted, "Whenever there is a major catastrophe, people ask the right questions." Of course, the challenge for public managers and stakeholders is to find a means of asking the "right questions" about public value absent a crisis.

Nonetheless, national crises, whether terrorist attacks, severe economic downturns or natural disasters, do tend, at least temporarily, to throw the "price of government" off-kilter as spending spikes to help offset the impact of the crisis. The aftermath of a crisis is one of the periods during which citizen and legislative stakeholders stand back and reappraise the value they are receiving from public service organizations. Under such circumstances, stakeholders are more likely to look at how public service organizations performed, or failed to perform, in response to the crisis. A case in point is Hurricane Katrina, which devastated portions of the Gulf Coast of the United States, including New Orleans, in August 2005.

A good deal of public debate following the hurricane centered on the federal funding of levee maintenance and improvements in New Orleans. Questions were raised. If more money had been spent on the levee construction to make them able to withstand a more severe hurricane like Katrina, rather than a lesser storm as constructed, there may have been a different outcome. The consequences of resource allocation decisions are brought home to stakeholders at such times.

Another good example of how public value concepts can guide government decision-making is well illustrated by the U.K. government response to two major national crises concerning cattle over the past 20 years.

First, in the late 1980s, British cattle started to develop a degenerative brain disease. Bovine spongiform encephalopathy (BSE) is a chronic disorder affecting the central nervous system of cattle, popularly known as mad cow disease. When it first appeared, the government's response, in light of the scientific knowledge available at the time, was one of public reassurance and playing down the magnitude of the problem. However, over several years, more cattle became infected and serious questions were asked about the possible transmission of BSE to humans. When in 1996 a potential link was made between a new variant of Creutzfeldt-Jakob disease in humans and BSE, the government had to take drastic action. A series of protective measures was introduced, including the purchase for destruction of cattle more than 30 months of age (which were believed to carry the greatest risk for BSE infection). The European Union imposed a ban on the export of beef from the United Kingdom, and the United Kingdom banned certain cuts of beef, such as T-bone steaks, from domestic consumption because they contained vertebral column, which was potentially infected.

The costs of the slaughter program and other measures ran into the hundreds of millions of pounds, and the effect on the British cattle industry was devastating. BSE eventually subsided and no epidemic of Creutzfeldt-Jakob disease has yet materialized. To date, there have been fewer than 200 cases. Many of the measures introduced by the United Kingdom have been included in the BSE eradication and prevention programs instituted by the European Union and other countries where BSE has occurred. The effectiveness of these controls can be seen in the rapid decline in the number of cases.

However, the BSE episode diminished public value. Public health outcomes declined as the public's confidence in food safety was eroded and the British beef industry was badly damaged. While the outcome of containing BSE was eventually achieved, with the benefit of hindsight, not all of the measures taken were either necessary or successful and some of the money spent had little or no effect on the outcome. However, beef consumption has been restored to previous levels and the beef industry is recovering.

Then in early 2001, the U.K. government had to deal with a second major livestock crisis. Foot and mouth disease (FMD) was discovered in a herd of pigs in the north of England. FMD is an infectious disease affecting cloven-hoofed animals, in particular cattle, sheep, pigs, goats and deer. The disease is serious for animal health and for the economics of the livestock industry. While FMD is not normally fatal to adult animals, it is debilitating and causes significant loss of productivity. For example, milk yields may drop or the animals may become lame. In young animals it can be fatal.

Given the recent experience of BSE, the U.K. government response focused on four key outcomes:

1. Rapid reassurance to the public that the problem was being addressed

2. Limiting the impact on the British farming industry

3. Containing the cost

4. Bringing the disease under control

(Continues...)

Excerpted from Unlocking Public Valueby Martin Cole Greg Parston Copyright © 2006 by Martin Cole. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Edition details

• Publisher: Wiley
• Publication date: 2006
• Language: English
• ISBN 10: 0471959456
• ISBN 13: 9780471959458
• Binding: Hardcover
• Edition number: 1
• Number of pages: 208