‘We need to move away from our focus on quantitative KPIs’

PGPA reforms require a big shift in the public service and it’s testing even the leaders of the agency running the show, admits Finance head Jane Halton. Measuring actual outcomes is a great aim but hard to do in practice.

Jane Halton

Jane Halton

The Enhanced Commonwealth Reporting Framework is forcing public servants to rebuild a culture of evaluation and develop the skills to measure the real impact of the policies and programs they implement, rather than just basic outputs.

The bureaucracy is not very good at acknowledging when something isn’t working, Finance secretary Jane Halton told a recent seminar organised by her department and the Australasian Evaluation Society. Neither is the government of the day, one might observe, in which case a more meaningful reporting framework is all the more important in the long run.

For those worried that greater transparency and more genuine accountability sounds risky, Halton pointed out the Public Governance, Performance and Accountability Act also demands “a more mature approach to risk”.

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  • Finance Secretary, Jane Halton is right to highlight the concern
    about key performance indicators (KPIs). They have tended to be the things we
    can count rather than the quality of the service, or the impact that service or
    programme has had on an individual, family or group within the community. And
    of course, outcomes might only start to be achieved after a number of years of
    service or programme delivery.

    But just because it is hard, doesn’t mean we shouldn’t try.
    And while a focus on performance and KPIs opens agencies up to greater scrutiny,
    this is what we expect of our accountability framework.

    The Department of Finance has developed very good guidance
    on the development of outcome and programme objective statements. When well
    developed, outcome and objective statements provide a solid platform for the
    identification of appropriate KPIs.

    As Jane Halton identifies, a mature approach to risk also
    needs to be taken in focusing on performance and KPIs. One reason why many managers
    are reluctant to take responsibility for achieving KPIs is that they do not ‘control’
    the performance. And this is the nature of outcomes, they are affected by our
    own actions as well as a range of externalities (or external uncertainties).

    Risk is defined as the effect of uncertainty on objectives. The
    starting point for mature service and programme risk management is the
    identification of the potential external uncertainties and the clarification
    with Ministers and Parliamentarians about the possible effects of changes in
    the external environment and how agency managers plan to respond to any of
    these uncertain events. The Department of Finance has done much to communicate
    the Commonwealth Risk Management Policy which became effective on 1 July 2014.

    And this is not just an issue within the public sector.
    Broad-based business reporting, or the ‘Six Capitals’ approach to reporting on
    outcomes in the for-profit sector has also broadened the reporting of KPIs which
    go beyond a simple measure of profit or return on equity – ‘financial capital’.
    Focusing on outcomes in relation to ‘human capital’, ‘manufactured capital’, ‘intellectual
    capital’, ‘social capital’ and ‘environmental capital’ with KPIs will stretch
    many private sector managers.

    Strong, meaningful KPIs come from considered, well-developed
    and clear programme objectives and outcomes.

    In 2001 the International Federation of Accountants Public Sector
    Committee published a definition of accountability. That says that “Accountability
    is the process whereby public sector entities, and the individuals within them,
    are responsible for their decisions and actions, including their stewardship of
    public funds and all aspects of performance, and submit themselves to
    appropriate external scrutiny.” And it is the all aspects of performance that
    appeals to me. This definition shows that accountability is more than good
    spending (stewardship). Accountability is for service delivery and achieving
    programme objectives and outcomes. And this means looking at the quality and safety
    standards of service and the impacts – short, medium and long term – that programmes
    are having on individuals, families, groups within the Australian community,
    and the nation as a whole.

    Until we see meaningful KPIs about aspects of performance,
    balanced with a mature assessment of risk to that performance, we will not have
    a framework that enhances accountability.