3  Key principles, the nature of outcomes, and managing for outcomes

Responding to the challenges posited in the preceding chapter could be as simple as making pragmatic decisions as the Managing for Outcomes process evolves. However, shifting the New Zealand public management model towards an outcomes focus could potentially lead to significant changes that may not be consistent with the principles upon which the system was originally designed.

Before considering whether the principles that support the New Zealand public management system are appropriate it is important to understand the “nature” of outcomes, and how managing for outcomes might be defined. These understandings are important because they help to identify some of the issues that need to be resolved in determining what values should be given precedence in setting a principle based framework.

3.1  The nature of outcomes

Structuring a system focused on the achievement of outcomes with performance assessment and accountability principles at its core can create some difficulties. These tend to arise because:

• outcomes can be specified at different levels of generality;
• the myriad of relationships that exist between outcomes and outputs can create difficulties in determining what intervention is responsible for the realisation of a specific outcome;
• the timeframes within which the achievement (or not) of specified outcomes can be assessed do not lend themselves easily to annual processes associated with the budgetary or performance management systems; and
• it is difficult to specify performance indicators that adequately capture the expectations of Ministers without also providing for perverse incentives.

All of these issues can be addressed at some level when we look towards a managing for outcomes environment. In combination, however, it would appear that there may be some constraints around moving all parts of the New Zealand public management system to a pure outcomes focus (i.e. a system focused on outcomes to the exclusion of outputs), particularly if accountability is to be retained as a core principle.

3.2  What is managing for outcomes?

The current guidance for departments (Steering Group for the Managing for Outcomes Roll-out 2004/05, 2003) states that Managing for Outcomes: will lead to a more responsive Public Service that is better able to identify and deliver the interventions that best contribute to the outcomes Government is seeking. This may mean doing things differently, having the confidence to better align resources to the most effective and efficient outputs (p. 3).

With this vision in mind, and looking to the core principles expounded by the Treasury in 1987 (see Figure 1), it is possible to suggest that within a managing for outcomes environment the New Zealand public management model should be underpinned by:

• clear specification of the results (outcomes) sought by the Government of the day;
• management systems that engender and reward an outcomes focus where appropriate, through strategic planning; financial management systems; the incorporation of good evaluation processes that ensure lessons are built into strategy and policy development; and a performance management system that provides for a balance between accountability and responsibility;
• appropriate management of present and future capability requirements; and
• a beliefs system that provides a focus on achieving results for citizens.

These points are largely consistent with those that have been identified by other jurisdictions seeking to provide for a greater focus on outcomes.

For example, at a detailed level the United Kingdom has implemented processes to support joined-up government. In reviewing the pilot processes the British Comptroller and Auditor-General (2001) identified the following criteria as prerequisites for successful results management: working towards clearly defined, mutually valued, shared goals; evaluating progress towards achieving the desired goal and taking remedial action when necessary; ensuring that sufficient and appropriate resources are available; directing the team and the initiative towards the goal; and working well together to achieve a shared responsibility (p. 9).

Work by the OECD in the same area – Governing for Results (2002) – suggests that there is a need to go beyond the rhetoric of reform to look at the practicalities of implementing a results focus (p. 3). The implementation issues identified by the OECD include: how to provide for cascading targets where establishing a “clear read” is challenging; aligning results and financial information; engaging Parliaments at an outcomes level; determining whether outcomes or outputs should be used as a proxy for results where increased attention to outcomes budgeting and management more explicitly move from the realm of management to the intersection between management and politics (p. 5); the role of audit, evaluation and results; and motivation of personnel (pp. 3 – 6).

The following section examines the key principles that provide a basis for the New Zealand public management system, and whether or how they may be amended to better support an outcomes framework. As noted in the introduction to this paper the constitutional convention of the public management system existing to support the government of the day in achieving its identified goals, and in the process of doing so being accountable to the people (through Parliament) for the efficient and effective use of resources generated through taxation has been taken as a given. This shapes some of the assumptions that follow.