Chapter 1. Embracing continuous change in government
Introduction
National governments in OECD countries face a political, economic and social environment that is increasingly unpredictable, complex, and that extends beyond national borders. Many are under pressure to address the impact of globalisation and to respond to a backlash among significant segments of the population. They are being called to lead national economies out of the current low-growth trap by increasing productivity, while ensuring that the fruits of growth – both in terms of jobs and income – are distributed more equally across society. And they are expected to respond to the disruptive effects of technological change. Coupled with an ageing population, high youth unemployment and persistently high levels of public debt, these policy challenges – and the lack of adequate responses – have led to the polarisation and fragmentation of public opinion on a number of societal issues such as economic integration and the control of migration flows.
Governments continuously reform to be more effective, efficient, open and responsive to policy challenges. But do these reforms always bring the expected results? Evidence on the impact of recent comprehensive reform packages introduced in a number of OECD countries in response to the 2008 crisis suggest that, despite austerity measures and cuts in spending and programmes, government indebtedness has not declined much. Furthermore, public employment and pay remain, on average, stable across OECD countries, notwithstanding the significant cuts carried out in the most affected countries. At the same time, economic recovery has only just started to pick up in a number of OECD countries, while unemployment, especially among the youth, remains high. Citizens’ trust in government is currently at a record low. While this can be partly attributed to the legacy of the crisis, it is exacerbated by the perception that government reforms are ineffective, not implemented properly, and do not consider who the winners and losers are likely to be.
This raises the question of whether reforms are being designed to deal with growing complexity, and are they properly joined-up and implemented? So-called “wicked problems” – that is, problems characterized by uncertainty, complexity, divergent values and interdependent processes, structures and actors – cannot be addressed by partial or transactional solutions, but require concerted, adaptive and carefully stewarded approaches (OECD, 2017c). Climate change, globalisation, changing demographics and technological developments have given rise to policy problems whose causes and effects are difficult to identify, and that cannot be addressed through the efforts of a single actor or policy sector.
This uncertain political, economic and social environment comes with a number of challenges for governments and the way they operate. The policy-making environment has become also more complex, with a growing number of non-traditional actors from civil society, and questions about the impact of money and other types of influence on policy directions. The polarization of public opinion is reflected in political fragmentation, for example through the establishment of minority or coalition governments in a number of OECD countries with less power to act. Furthermore, policy makers need to choose from among a myriad of options to address these and other policy challenges, frequently without the opportunity to gauge their full implications. In the face of these challenges, piecemeal approaches and reforms designed in silos are no longer sufficient.
This chapter argues that a traditional approach to reform may be less and less relevant as the global context and accompanying policy challenges become ever more fluid and complex. Furthermore, without open and participative processes, traditional reform approaches can become captured either by private interests or by those of the public administration itself that may be resistant to working in new ways. Instead, governments need to prepare their public administrations for continuous change by identifying clear, desired outcomes and measures of progress; putting in place systems that support innovation and collaboration to reach those objectives; and promoting transparency and co-production with business and society to ensure that the public sector continues to work for the public good. This fifth edition of Government at a Glance provides a number of key metrics to support systems change in government and outcome-oriented policymaking.
1. The challenges. . .and shortfalls. . .of public sector reform
1.1. Is a new approach needed to help governments adapt to change?
Governments are constantly reforming. Though the word is used very loosely and can mean any change that governments make in their public policies and management practices, there are nonetheless many reasons for reform. The most obvious one is the change in context in which governments operate, leading to changes in the policies and practices they pursue. Changes in context may derive from changes in the economic or social environment, or in technology. They often originate in political change, for example, when after an election a new political party comes to power receiving a mandate from the electorate to pursue new policy solutions to existing problems. Reforms might also be needed if current solutions do not work due to their faulty design. Often, reforms arise from mimicry or peer-learning: many of the public management practices related to New Public Management spread this way in the 1980s and 90s, with international organisations – including the OECD – playing an important role in their diffusion. Reforms could have their roots in the spread of a particular ideology, such as those reflected in the policies of Thatcher and Reagan, or in management fads. Finally, new problems may arise that might require new policy interventions.
But traditional public sector reform approaches may no longer be able to adapt to a complex, fast-changing and interdependent world. Firstly, because in a context characterized by shorter economic cycles driven by disruptive innovations, governments need the capacity to respond faster than ever before to new challenges and demands from citizens, businesses and civil society. This requires effective foresight and leadership to anticipate upcoming challenges, including for instance in regulating innovative technologies such as artificial intelligence, big data and the sharing economy, but also having the agility to integrate new ways of working and technologies into government. Failure to embrace continuous change and flexibility in government may reinforce people’s perception that governments are always lagging behind the evolutions that occur in societies. At the same time, governments need to balance expectations for faster and continuous adaptation with the call for more inclusive policymaking that offers information and access to a wide range of stakeholders at earlier stages of decision-making.
Secondly, as the global understanding of complex issues is growing, a consensus is emerging on the failure of piecemeal reforms developed in sectoral and national silos to deliver long-term results. Addressing some of the Sustainable Development Goals (SDGs) related to climate change or gender equality but also issues such as tax evasion require reforms designed and implemented across policy sectors and functions (for instance to embed gender equality in budgeting practices and procedures, regulatory impact analyses, public procurement decisions and human resource management) and in close synergy with the international community. Rather than moving from one steady state to the next, public administrations need to be guided by clear policy objectives to respond to constant and rapid change and emerging policy challenges.
As reforms invariably result in winners and losers, undue influence exercised on the policymaking process by interest groups can undermine the extent to which reforms are designed and implemented for the public interest. Reforms may also fail to be properly implemented due to vested interests and resistance to change, for example to protect organisational boundaries and responsibilities. These types of behaviour result in fragmented or biased reforms that further undermine public trust and reduce the ability to enact further reforms. The more the policymaking processes is limited to a few, the easier it becomes for the resulting reforms to reflect only the interests of a few. Opening up processes and aligning them with outcomes in a public and visible way provides a means to look beyond vested interests and helps to mitigate policy capture both from inside government and outside government. This serves to address barriers to serving the public interest such as failure to collaborate or overt conflicts of interest. In today’s environment of rising inequality and political discontent, capture by powerful interest groups can erode the fundamental democratic process of fair decision making based on openness, dialogue and consensus (OECD, 2017d).
1.2. Complex and interdependent problems require “systems-thinking” approaches to avoid capture by existing processes and constituencies
The need for a better way to anticipate and manage change is giving rise to “systems approaches”, which analyse the different elements of the system underlying a policy problem, as well as the dynamics and interactions of these elements that produce a particular outcome. The term “systems approaches” denotes a set of processes, methods and practices that aim to affect systems change (OECD, 2017c). This holistic analysis puts the focus on the impacts and outcomes of policies, going beyond the linear logic of “input-output-outcome” of traditional approaches to policy design. It emphasises the involvement of all affected actors inside and outside of government, as well as the importance of leaving room for iterative processes to account for the uncertainty associated with wicked problems.
Traditional approaches to public policymaking tend to break down complex problems into their constituent parts and subsequently address each part through separate policy interventions. These approaches may prove unable to capture the complex interrelationships and changing nature of policy problems that transcend administrative and territorial boundaries. Furthermore, decades of public sector reforms layered one on top of the other frequently have not achieved the desired effects and may lead to incoherent or even contradictory policies.
Systems approaches do not necessarily require all elements of a system to be changed. Rather, they demand the adoption of a broad “systemic” perspective of the problem at hand and the factors causing it, as well as a purpose-oriented assessment of possible solutions. The approaches are particularly helpful in cases where there is a mismatch between the structure of the public administration and the structure of the problem at hand. In this case, the problem can be solved only by breaking administrative silos, i.e. by involving actors and knowledge from different policy fields and parts of government. Overcoming silos does not only imply working across existing portfolios, but could also require changing those portfolios in their entirety by creating permanent horizontal, less-hierarchical structures. For example, Belgium created a new Federal Public Service in 2017 that groups IT, human resources, integrity, management, budget, accounting and public procurement functions into a single body serving all federal organisations.
Systems approaches put great emphasis on the needs, opinions and mind-sets of users, and enable an understanding of citizens as co-producers and co-designers of government policies and services. Systems approaches may, for example, prove particularly useful in improving public service delivery in areas such as elderly care, mobility or education, but may also improve the machinery of public administration as such, e.g. by facilitating a re-organisation of departments or agencies (OECD, 2017c). It could also be very useful in the successful implementation of the United Nations’ Sustainable Development Goals (SDGs).
Even when public organisations have a clear understanding of the objectives that they should support and the relevant measures of performance, they may still lack the “strategic agility” to change the way in which they work. First developed in the private sector, strategic agility has three main components: strategic sensitivity, leadership unity and resource fluidity. Applying these to the public sector means ensuring that governments can anticipate and plan for future needs and challenges; align policies across the public administration to shared strategic objectives and the public interest; and redeploy resources quickly as needs change. This will require changing internal structures, processes and organisational cultures, as well as the way government interacts with citizens and businesses. These changes, in turn, will require new skills as civil servants are expected to make more individual choices on how to achieve outcomes, in a less hierarchical, and more technologically rich environment.
Within organisations, the capacity to increase strategic agility depends on processes that are more open, evidence based, and iterative. The OECD Observatory for Public Sector Innovation (OPSI) has put forward a framework for system transformation in the public sector that outlines a number of interconnected elements to be taken into account by public administrations (OECD, 2017c; see Figure 1.1).
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People and Place: A key precondition for instigating systems change is an interdisciplinary team consisting of both government and external experts that is motivated to substantially improve the system working in a suitable environment,
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Dwelling, Connecting and Framing: Allowing time and resources for better understanding and exploring the policy problem from different angles allows for a better definition of the purpose and objectives of an envisaged systems change. Connecting with a diverse set of stakeholders and citizens is also essential for gaining valuable insights. It also creates legitimacy for the change process and stronger buy-in from stakeholders by letting them reflect upon the problem without presenting pre-conceived solutions.
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Designing and Prototyping: While the concrete method needs to be chosen according to the specific context, the design process should specify the principal elements of a proposed solution as well actions that need to be taken to produce the desired outcome. The design should also be tested to gain additional evidence on the problem to be solved and the solution’s effects to ultimately improve the suggested solution.
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Stewarding: Stewardship refers to “a form of agile leadership” or “transformative leadership” that steers and monitors the implementation of the proposed design and adapts and calibrates the solution in light of unexpected developments and new information during the implementation phase. This requires resources to be distributed more equally between the design and the implementation phase of the systems change project.
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Evaluating: Evaluating systems transformation efforts may prove to be difficult, as processes may be long and incremental. As in the early phases of a systems change project, varied sources of evidence should be taken into consideration. Evaluation is useful to gauge whether the project has the desired effect, but is also an essential part of the systems change process itself, as results guide the everyday activities of implementers towards the systems change to be achieved.
In the next parts of this chapter we describe the key building blocks to the successful implementation of the systems approach, starting with the need for vision and leadership from the Centre, through practices that help gather the relevant evidence and build the needed capacities of the workforce to act on this evidence and freeing up the system to achieve constant innovation. Rather than taking a technocratic approach to policymaking, a systems approach requires citizen and stakeholder engagement, underpinned by greater transparency, accountability and open data. Finally, just as policy challenges are increasingly global in scope, this chapter looks at some of the prospects for developing global solutions. Indicators from this edition of Government at a Glance will be used to highlight where countries stand on these practices.
The Netherlands’ Jeugdbescherming Regio Amsterdam (in English: Child and Youth Protection Services in the Amsterdam area (CYPSA)) looks after 10 000 at-risk children per year with the help of 600 staff. In 2008, the agency was put under heightened supervision because it was unable to fulfil its core mission of assessing risks posed to vulnerable children and providing timely help. In 2011, a broad redesign of the organization was initiated under the slogan of keeping ‘Every child safe’. A core group of ten caseworkers, two team managers, two psychologists and a consultant trained in the Vanguard method1 and were given authority to redesign internal processes.
In three months, the group went through the “check”, “plan” and “do” phases of the Vanguard method and delivered a new approach to working. The check showed that CYPSA was split organizationally across different roles: social workers working with parents on a voluntary basis, guardians who had legal responsibility over the children and parole officers working together with convicted juvenile offenders. Hence, there was no single contact point for the family and caseworkers were unsure who was supposed to act when there were indications a child was unsafe. Caseworkers dealt with established protocols and reporting systems that were not central to the mission at hand—keeping children safe. In the planning phase, new basic principles of action were discussed: a caseworker should deal with the whole family system, directly communicate with families (the “Functional Family Parole Services”), and phases of engagement were outlined. Previous silos were to be abolished and replaced with teams that were organized around any potential case. New focus was put on early intervention and holistic care of the entire family.
After the initial analysis was completed, three similar teams of volunteers were given three weeks to go through the process building on previous findings, while undergoing their own learning process. This was followed by a ‘rolling-in’ stage where 40 teams were taken through the process so that they could experience their own “check”, “plan”, and “do” phases. This took a full year and required additional changes to supporting services such as IT, facilities, etc.
The whole process exceeded initial expectations: it improved both the quality of the public service and reduced costs. For example, the number of cases where children had to be forcibly removed from families decreased by 50%. The changes reportedly resulted in cost savings of 30 million EUR annually. In 2015 CYPSA was elected the Best Public Sector Organization in the Netherlands.
Despite improvements to its work, CYPSA faced a number of challenges in the implementation and follow-up to the systems change process. It proved difficult to find appropriate staff to execute the purpose-driven approach. In total, about 40% of the workforce left CYPSA in the course of the change process, and annual turnover is high at 20%. To address this, new recruitment procedures and revised training methods have been put in place.
← 1. Vanguard method: The Vanguard approach starts with the situations that people find themselves in, where their current thinking and practices are exposed to a structured method for studying ‘the way the work works’ (Seddon 2003, p 14). This frequently shows their organisation to be producing sub-optimal results for the service user. The method then leads workers to proceed with a collaborative inquiry in order to articulate a new purpose from the service user’s perspective, before going on to co-design a system, which can achieve this newly articulated purpose (O’Donovan, 2012).
Source: OECD (2017c)
2. New approaches require vision, evidence and capacities at all levels of government
2.1. The role of the Centre of Government
Systems approaches shift the discussion from processes and organisational boundaries to finding common ground on how to achieve outcomes. Focusing change on desired outcomes requires governments to understand what really matters to citizens – i.e. the impact of reforms on citizen satisfaction, confidence in institutions and well-being – and to take the lead across traditional sectors of responsibility. The centre of government1 (CoG) is emerging as a major actor in articulating overall government priorities and supporting an outcome-oriented approach to achieve this vision.
The CoG plays a critical role in ensuring that policies support the programme of an elected government. Its role and importance has largely increased in recent years, in part due to a recognised need for whole-of-government approaches that overcome the compartmentalisation of reform processes (OECD, 2013a; 2015a). The CoG has a range of key functions. A recent OECD survey (OECD, 2013a) identifies four priority tasks: supporting decision-making by the Head of Government and/or Cabinet; policy co-ordination across government and leadership of cross-departmental priority strategies; monitoring progress with policy reform; and strategic planning, which is closely aligned with policy development and resource allocation (see Chapter 4: Institutions).
It is in a unique position to develop a long-term strategic vision and needs to communicate the resulting policy priorities to all parts of the public administration, so that they can be integrated into all government actions. In practice, the CoG may provide strategic guidelines to departments and agencies, and verifies that departmental work is in line with guidance provided.
As a result of the global crisis and tight budget constraints in a number of OECD countries, governments have strengthened co-ordination between budgeting and policy formulation to ensure that limited resources support policy priorities. In Austria, the federal public administration has been moving towards the principle of outcome-oriented policy making since 2013. The Federal Performance Management Office located in the Chancellery, in collaboration with key stakeholders (including the Parliament, the Court of Audit, the Federal Ministry of Finance, the Supreme State Organs, line ministries and other public administration bodies), aims to ensure that the focus on outcomes is implemented across the whole administration. It provides support and advice to ministries when setting up performance- and outcome–oriented management schemes, as well as quality assurance for the objectives and indicators identified by the ministries and agencies to measure their achievement. It also monitors the achievement of objectives and makes the results available to Parliament in standardised form.
Co-ordination across different parts of the public administration is essential to ensure policy coherence and avoid duplication, inefficiencies or even policy action with contradictory effects. Traditionally, the CoG supports co-ordination through inter-ministerial bodies. Given the growing number of interministerial policy projects to address complex problems, the CoG in many OECD countries has recently taken on greater responsibility for defining strategic priorities and developing cross-departmental action plans, but has also become more involved in the implementation of horizontal policies, e.g. through delivery units. This evolution does not necessarily imply greater centralisation, but rather a supporting and advisory role of the CoG to enable line ministries to contribute to horizontal projects without questioning their autonomy or expertise.
The CoG’s role in implementing the UN Sustainable Development Goals (SDGs) is a good example of its crucial role in helping the public administration deal with complex policy problems. The 17 goals cover a range of different but interlinked policy challenges, from the reduction of poverty and inequality to gender equality, environmental protection, and peace and justice. While these goals are relevant for all countries, including OECD countries, their implementation poses different challenges for each country, based on their starting position. All these policy issues are to be addressed universally within the next 15 years. Given the breadth and complexity as well as the long-term nature of the SDGs, achieving progress on their implementation requires governments to co-ordinate across policy areas and levels of government (OECD, 2016b). OECD countries recognise the role of the CoG in delivering on the SDGs (see Figure 1.2). In 16 OECD countries, the centre of government is helping to steer the implementation of the SDGs either on its own or together with line ministries (see Chapter 4: Institutions).
The CoG can be strengthened in several ways to allow it to play a proactive role in co-ordinating government responses to wicked policy problems (OECD, 2015a). First, a strategic cross-governmental vision and objectives, such as the implementation of the UN Sustainable Development Goals, need to be defined. High-level political support for these goals and a clear mandate for the CoG to implement the strategy help reinforce their acceptance and create the framework conditions for their execution. Second, challenges to achieving the goals and ways to overcome them should be identified early in the implementation process in close co-operation with departments. Implementation should be monitored continuously and, if necessary, adjusted. Third, the CoG plays a key role in clearing obstacles to implementation, e.g. by establishing dedicated delivery teams that manage implementation and help solve upcoming problems. The CoG also needs to emphasise the importance of the strategic goals to be achieved to all actors involved in their implementation, and could foster a culture of delivery across government structures by offering technical support, advice and expertise.
Finally, from the outset, the CoG should clearly communicate the division of labour among different parts of the public administration, rally support from key actors involved, engage with external stakeholders to better understand the problem to be tackled, and design the most suitable solutions. The effective management of limited resources within the CoG, as well as the ability to leverage intra-governmental co-operation requires that specific analytical, political and administrative skills be present in the CoG’s leadership and staff (OECD, 2013a).
2.2. Building evidence to support change
In order to steer the public administration, governments also need to be able to measure desired outcomes and monitor progress in achieving them. A focus on outcomes provides a useful measuring stick for assessing whether the current activities of government still support its strategic priorities. Previous waves of reform – as well as organisations’ own propensities to add new responsibilities – can lead to growth in non-core activities that absorb resources that could be used for more pressing areas of action. A growing number of OECD countries use spending reviews to periodically assess whether the allocation of resources in the public sector remains in line with the government’s objectives. As countries move away from the crisis period, spending reviews have the potential to support productivity not only in terms of deficit reduction but also in terms of targeted investments to achieve priority outcomes.
Evidence collected by the OECD shows that the number and frequency of spending reviews have considerably increased since 2007. Twenty-two OECD countries reported having conducted at least one spending review over 2008-2016, compared to only five OECD member countries over the period 2000-2007 (see Figure 1.3). So far, new adopters tend to favour comprehensive rather than narrow spending reviews (see Chapter 6: Budgeting practices and procedures).
However, despite their growing popularity, only a few countries have information on the implementation of recommendations included in past spending reviews or on their fiscal outcome. Better tracking of spending review implementation and effectiveness thus represents an area for potential improvement.
The use of impact assessment is also a widespread practice across OECD countries to help support evidence-based policy making and improve outcomes. This is best known in the area of regulatory reform. The 2012 OECD Recommendation on Regulatory Policy and Governance defines regulatory impact assessment (RIA) as “a tool and a decision process for informing political decision makers on whether and how to regulate to achieve public policy goals”. It recommends that countries adopt ex ante impact assessment practices that include cost and benefit analyses. These analyses should consider the welfare impacts of regulation, taking into account economic, social and environmental impacts including distributional effects over time (OECD, 2012). At the same time, the analytical approach used in RIA can help assess the impact of policy tools other than regulation, such as spending or tax measures. RIA facilitates the estimation of costs and benefits of different solutions to policy problems, assesses a range of different impacts of the proposed solution and identifies winners and losers. It underpins policy makers’ decisions on whether or not regulation or a different policy tool will likely be the best solution to address a policy problem, and describes the trade-offs and risks inherent in different options.
RIA can be applied to the analysis of policies’ broad societal impacts that go beyond the mere economic assessment of the costs of a regulation (Deighton-Smith et al., 2016). The focus of formal requirements and guidance for conducting RIA has broadened over the past 10 years. Requirements to assess social, environmental and distributional impacts besides economic effects and costs are now an integral part of RIA in many OECD countries (see Chapter 8: Regulatory Governance). At the same time, economic impacts, e.g. on the budget, competition or the public sector are still more widely assessed than a number of social and distributional impacts, such as on gender equality, specific social groups or regional areas, income inequality or poverty.
The practical implementation of this comprehensive assessment of different impacts seems to lag behind requirements. Social, distributional and environmental impacts are not always assessed systematically according to formal requirements. This points to a compliance issue to be addressed, but may also be due to a lack of methodological knowledge, guidance and suitable data to assess these impacts, which are usually only measurable with qualitative data and cannot be quantified or monetised. Training and capacity building within the public administration would help better harness the potential of RIA. Given limited resources and time available to conduct comprehensive RIAs for all policy proposals, a selective approach could help focus capacities on those policies that are likely to have the greatest impacts on the economy and society.
Finally, policy makers need to ensure that RIA is used to support evidence-based policy making rather than policy-based evidence making. The use of RIA needs to go beyond a procedural approach that views it as a “tick-the-box” exercise. The results of RIA should enable policy makers to make informed decisions about the policy options available to them rather than serve as a legitimisation tool that provides arguments for decisions that have already been taken (OECD, 2015b).
New sources of evidence are constantly being developed, including through big data, crowdsourcing, scientific research, and programme experimentation. The OECD is looking at how governments collect evidence and advice in order to transform it into forms that are timely, coherent, adapted, and usable to policymakers.
2.3. Strenghtening capacities of civil servants to act on evidence
A clear and strategic vision, combined with the collection and analyses of robust evidence may not be conducive to effective change if it is not complemented with additional efforts to support the capacity of civil servants to take concrete actions to deliver better outcomes. Public management oriented towards action and continuous change requires an evolution of the working culture in government to leave more space for risk taking and experimentation, as well as to promote employee engagement and well-being, which are more conducive to innovation.
The OECD has been working on identifying some of the key characteristics of professional, strategic and innovative civil service (see Figure 1.5). A common feature of innovative organisations is their acceptance of experimentation and learning through trial and error. The challenge, for public sector organisations in particular, is to find ways to enable experimentation while mitigating the risks that will be borne by society as a whole. An associated challenge is finding ways to reward public servants who undertake well-structured experimentation, even when it does not succeed.
Motivating professional public servants to be innovative requires careful consideration of the range of incentives and disincentives that operate simultaneously within an organisation. These can include extrinsic factors such as the way that pay is structured and the way promotions are granted. It can also include the quality of relationships among staff and management, the way teamwork is used and effort is recognised. Intrinsic motivation can be affected by making staff aware of the impact of their work – how close they are to the beneficiaries of the policies that they develop, how they see value created as a result of their ideas and their labour.
To be innovative, professional public services must also have the right skills to apply to the problems they are being asked to solve. Employees who feel less capable to complete tasks will be less motivated to undertake them, while those with new skills will be keen to put them to use. Some of these skills are likely related to specific technical abilities, such as the ability to understand and manipulate big data sets or the ability to manage prototyping or experimental approaches to service design. Other skills include the ability to make connections between ideas that are not apparent, to ask the right questions and network with the right people. Acquiring and reinforcing these skills in the public sector workforce likely entails thinking about employee and workforce development in new and creative ways.
Monitoring employee engagement, notably through regular employee surveys, can be useful for driving change and identifying actions that can best support innovation and performance at the organisation, division and unit levels. Evidence shows that employee engagement, beyond being an end unto itself, is linked to making public workplaces more diverse and attractive in a competitive labour market, and provide a critical input for evidence-based human resource management. 19 countries in the OECD conduct centralised employee surveys across the full central public administration at regular intervals. Conversely, only five countries report not using employee surveys at all (OECD, 2016e, see Government at a Glance 2017, Chapter 6: Human resource management).
Innovation and experimentation – the foundations for an adaptable public sector – also require room for public administrations to make mistakes and to quickly correct upon those mistakes. The key issue is to recognise that innovation requires risk taking and that entrepreneurship will invariably lead to some failures. In recent years, there has been a significant growth in the type and number of organisations and structures dedicated to supporting innovation in the public sector (OECD, 2017c). These are known variously as teams, units, labs or networks. In 11 OECD countries, these structures provide the space for experimentation, thus creating a safe environment for risk taking (see Government at a Glance 2017, Chapter 11: Innovative and digital government).
The senior civil service is best positioned to influence this change of culture and values in various public organisations and policy sectors to achieve shared outcomes. Under certain conditions, they can have a positive effect on the performance, motivation and satisfaction of their teams (Orazi et al., 2013). The development of a senior civil service, which is generally done through centralised programmes and managed as a whole across agencies, is a clear trend in OECD countries. These groups of women and men work in positions of great influence, and bridge the political and the administrative spheres to achieve results in an efficient, effective and legal manner. Employment frameworks and training programmes can support a more proactive role for the senior civil service in stimulating innovation in the public sector.
As new challenges arise in a context of increasing digitalisation and public sector innovation, leaders are asked to assume different roles in order to manage the growing complexity of the public policy process (Rosenbaum, 2002). For example, the greater involvement of citizens and civil society organisations in the co-production of public policies calls for the development of leadership skills at lower levels to manage teams or networks (Orazi et al., 2013) and highlights the importance of the ability of senior leaders to exercise horizontal and collaborative leadership (Wart, 2013).
Aligning performance management systems for the senior civil service with organisational objectives is crucial for delivering outcomes. Ideally, performance accountability regimes for the senior civil service should help translate the outcomes that are identified in strategic planning and budgeting into implementable objectives for senior leaders, and provide them with the guidance to set corresponding individual strategic planning and performance management objectives. Administrations face a dual challenge: to align senior civil service performance objectives and incentives to support complex organisational objectives, while creating the conditions for the senior civil service to be capable of adjusting to changes in context and political guidance that cannot always be anticipated. All of this while bringing new stakeholders into the public policy sphere.
2.4. Example of an innovative approach to policymaking: Behavioural insights
A useful example of incorporating innovation into working methods is through the use of behavioural insights (BI). While policies often assume behavioural responses based on theoretical explanations, a behavioural insights approach can test these hypotheses based on real life or laboratory experiments to ascertain what the responses to various policy solutions will actually be. As a result, the use of BI may provide innovative solutions that enhance the public administration’s capacity to address complex problems. This evidence-based approach to policy making takes an inductive approach that is based on different kinds of experiments, including randomised control trials, pilot tests, and laboratory, online or natural experiments. Based on the results, BI identify patterns of behaviour and thus replaces and challenges long-held assumptions on what is thought to be rational behaviour. BI use a mix of traditional economic strategies and insights from psychology, cognitive science and other social sciences. They tackle directly the behavioural biases that often prevent government interventions from achieving the expected results (OECD, 2017a, see Government at a Glance 2017, Chapter 8: Regulatory governance). .
BI are gaining popularity among governments as a useful tool to create new, relatively simple and particularly effective solutions (see Box 1.2 for an example from the United Kingdom). The OECD (2017a) has recently published a collection of case studies of the application of BI including cases from 23 countries and various policy areas such as consumer protection, education, energy, environment, finance, health and safety, labour market, public service delivery, taxes and telecommunications.
Public Health England, an executive agency of the Department of Health, and the UK Behavioural Insights Team (BIT) employed randomised control trials between September 2014 and March 2015 to test whether social norms messaging can help to reduce the over-prescription of antibiotics. The intervention aimed at lowering the risk of antimicrobial resistance caused by high antibiotics consumption, which leads to higher mortality and morbidity rates, as well as increased health sector costs. The main concept behind the approach is that the perception of the behaviour of others in a specific situation influences people’s own behaviour. For example, informing people that a beneficial behaviour is more widespread than they assume may motivate them to also engage in that behaviour. Similarly, knowledge that their own behaviour is uncommon may lead people to change their behaviour.
The method tested the effect of two different kind of treatments to examine the impact of social norms feedback on general practitioner practices’ prescription rates for antibiotics. Based on publicly available data, the practices with the top 20% of antibiotics prescription rates were identified. The approach randomly assigned these practices into a treatment and a control group. The treatment group received a letter from England’s Chief Medical Office in September 2014 stating that the practices’ prescription rates for antibiotics was above the rates of 80% of practices in its local area, whereas the control group did not receive any communication. Subsequently, the trial randomly re-assigned practices into new treatment and control groups. In December 2014, practices in the treatment group received patient-focused information promoting reduced use of antibiotics, while the control group did not receive any communication.
One of the treatments had a significant effect on antibiotics prescription rates. Over the trial period of six months, doctors who received the letter about their own high prescription rates significantly reduced their antibiotics prescriptions – by 3.3% – compared to the control group. If the method had been applied nationally to all practices with high prescription rates, the estimated reduction in prescribed antibiotic items lie at 0.85%. Moreover, the cost of the intervention was low at GBP 4,335, while estimated savings in direct prescription costs are close to 100,000 GBP. The distribution of patient-focused information had no significant effect.
Source: OECD (2017a)
On the basis of the case studies collected, the OECD recommends several steps countries can take to broaden and reinforce the use of BI for public policy making:
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Broaden the application of BI from a focus on individual behaviour to the processes governing the work of public organisations, as well as to the behaviour of regulated firms (e.g. capital markets/banks; energy consumption for large industrial firms; means of transportation used by big business, etc.). Governments may also consider behaviourally informed policy solutions that are tailored to the needs of only a part of the population.
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Use BI across the policy cycle. Behavioural insights are most frequently used late in the design of policy. There is great potential to also apply BI to evaluate the effectiveness of policies and in the early design stage of policies to better understand the problem to be addressed.
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Develop capacity, consistent methodologies and quality control processes for the application of BI. This includes the development of processes to determine when a policy problem can be addressed through BI (and when not), internal capacity building within the public administration through information and training programmes, investment in the collection of robust data and information to ground behavioural interventions in solid evidence, and encouraging efforts to validate experimental results through replication and the application of identified solutions in diverse contexts.
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Monitor the impact of BI approaches to identify short-term and long-term effects.
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Enhance the transparency and accountability of the use of BI by publishing both successful and unsuccessful applications and disclosing information about the actual costs and benefits of applying behavioural insights. This helps to address ethical concerns about the use of BI and enhances the credibility and public acceptance of the tool.
A more purposeful and innovative approach to change is built on transparency and participation
The best technical elements for public sector decision making and implementation will not lead to better policies if safeguards are not in place to ensure that decision making is independent and that checks against undue influence exist both inside and outside government. Even legitimate advocacy channels can be abused to capture policy-making and implementation processes if they are used in a non-transparent and exclusive manner, or if they are only accessible to well-connected groups or individuals (OECD, 2017d). In addition to specific integrity policies at the organisational level, the interplay of three broad, mutually reinforcing strategies can help prevent and address the risk of policy capture: (1) levelling the playing field (stakeholder engagement and participation), (2) enforcing the right to know (transparency), and (3) promoting accountability (notably through competition authorities, regulatory agencies and supreme audit institutions). This year’s edition of Government at a Glance contains a number of indicators that help inform these strategies.
Stakeholder engagement and participation
Stakeholder engagement and participation increase the likelihood that policy outcomes are delivered for the many and not just the few (OECD, 2017d). Actively engaging stakeholders in the policy-making process, budget execution and the monitoring of service delivery can help guide and ensure the effective implementation of reforms.
OECD countries are paying increasing attention to various ways to engage stakeholders in designing, implementing and reviewing policies and regulations. However, evidence collected by the OECD suggests that there are still important differences across countries in the extent to which stakeholder engagement is used to inform policy making (see Figure 1.7). In addition, stakeholders are usually consulted at a late stage, when a draft regulation or policy already exists, rather than in early stage discussions on the nature of a problem and possible solutions (OECD, 2015b, see Chapter 8: Regulatory governance).
There is increasing evidence that collaboration with citizens and service users can help tackle service failure and drive innovation. Likewise, accountability and evaluation can be strengthened through engagement and participatory mechanisms. However, often citizens and service users are not able or willing to gather together as an interest group. This considerably lowers the probability that their diffuse interests will be heard in policy making, and may lead to biased public decisions favouring those interests that managed to mobilise collective action. In this case, governments may want to explore innovative solutions that lower the cost of engagement and participation, such as promoting the use of social network applications to reach out to those individuals and help them voice their concerns and interests.
In addition, stakeholders need to be educated on how to engage with government to increase the likelihood that their voice is heard. This can be achieved by providing information on when and why they have a chance to influence governments’ decisions. Strengthening civic education at a young age can also help strengthen engagement and participation in the policy making process (Print and Lange, 2013).
Governments must also create the conditions for increased trust in the engagement process by providing sufficient feedback and preventing consultations from being captured by strong lobbying groups and special interests. Doubts about whether stakeholder engagement activities are actually meeting their goals continue to raise serious concerns and may limit their effectiveness. These concerns create a case for assessing and measuring the success of the engagement efforts. However, few countries have developed robust methodologies to evaluate the results from consultations conducted online and via social media, including in the area of risk prevention and communication (OECD, 2016d).
Transparency in policy making
Transparency in policy making is necessary to prevent and address risks of policy capture. Asset declarations for public officials are commonly used in OECD member countries to monitor potential conflicts of interest. Evidence presented in Government at a Glance 2015 (Chapter 7: Public sector integrity) shows that there are still variations across countries in the scope and breadth of asset declaration requirements and reviewing mechanisms. Within countries, there are also important differences across government branches, seniority levels and policy sectors, with public officials operating in “at-risk areas” such as public procurement, taxation or customs having more stringent requirements. As regulations and monitoring mechanisms continue to develop with regards to asset declarations, the need to maintain the right balance between public disclosure and the right to privacy of public officials will become more and more prominent.
In addition, a sound framework for transparency in lobbying is crucial to safeguarding the public interest and promoting a level playing field (OECD, 2017d). More countries have introduced lobbying regulations since 2008 than in the previous sixty years (OECD, 2014c). Codes of conduct and lobbying registers are two important tools used in a number of OECD countries to monitor more closely and increase the transparency of the policy advocacy process.
However, despite sustained efforts to more closely monitor lobbying practices, evidence suggests that there are still gaps in implementation and shortcomings in compliance and enforcement strategies. The latest OECD report on Lobbyists, Governments and Public Trust: Implementing the OECD Principles for Transparency and Integrity in Lobbying highlights that enforcement of integrity standards and codes of conduct remains relatively weak, and that most lobbyists surveyed by the OECD indicated that there were either no sanctions for breaching standards or codes of conduct or, if there were, and that they were not compelling enough to deter breaches.
Accountability and control
External and internal audit mechanisms are crucial for safeguarding integrity in public policy making and ensuring the effective allocation of resources. The 2017 OECD Recommendation on Public Integrity emphasises the crucial role of external oversight and control bodies in promoting accountable public decision making. It notes that the capture risks of laws and policies can be mitigated through effective oversight by supreme audit institutions (SAIs), which can monitor and hold accountable public sector actors.
Effective internal control systems and risk management activities are also critical, particularly in high-risk areas, such as financial management, information technology and public procurement. In a number of OECD countries, centralised internal audit functions with dedicated strategic integrity objectives have been created to oversee the fairness of public policy making across policy sectors and governmental organisations (see Chapter 7: Public sector integrity). Having a central internal audit function, particularly one that includes integrity among its strategic objectives, can strengthen the coherence of the government’s response to integrity risks.
Open government data
Technology is having a profound impact on government openness. Over the past twenty years, rapid technological progress has led to a significant increase in the amount of data collected and produced in societies, including by government organisations. This helps make more information available for the purpose of government accountability. It also provides a wide range of users, both outside and inside government, with the tools to participate in policy discussions and generate value from this wealth of data.
The proactive release of open government data (OGD) is transforming public services in health care, education, transport, security and the environment (pollution, waste management) at the national and subnational levels. It contributes to better policy making by making data and evidence available across government departments and ministries, thus helping to break down silos. It also empowers businesses and civil society to contribute more actively to policy making. The proliferation of mobile phone applications using geospatial data is just one example of how data empower citizens and businesses by improving access and generating new services.
The OECD’s OURdata Index 2016 measures government efforts in promoting data availability and accessibility and in stimulating data re-use outside and inside government. Based on the International Open Data Charter (IODC) and on the framework developed by the OECD, countries such as France, Great Britain and Korea are particularly advanced in their efforts to promote OGD to generate socio-economic impact. By contrast, Turkey has yet to introduce and implement some of the best practices identified at the international level with regards to OGD (see Chapter 10: Open government).
This year’s OURdata Index highlighted a number of key findings:
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Proactive support for the re-use of OGD could be strengthened: Governments have put a great deal of effort into setting up the formal requirements for disclosing a large quantity of datasets in open, unrestrictive and re-usable formats. However, few governments have a proactive approach to encouraging the re-use of data both outside the public sector (through data awareness initiatives, hackathons and co-creation events) and inside the public sector (via information sessions and regular trainings to civil servants).
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Implementation gaps in late adopters of OGD policies and practices: A number of recent reformers in the area of OGD have yet to implement some of the policies introduced, for example, the Czech Republic, Latvia, the Slovak Republic and Slovenia,. By contrast, early reformers, such as Canada, France, Korea, the United Kingdom and the United States, have implemented their policies to a larger extent, in particular with regard to data availability and accessibility on a central/federal data portal.
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Consultation with stakeholders is commonly used to inform OGD policies, but few countries have put in place platforms where users can play an active role in monitoring the quality and increasing the completeness of available data.
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Few countries closely monitor the economic and social impact of OGD as well as its impact on public sector performance and productivity. Monitoring impact is necessary to support continuous improvement and better understand the impact of OGD reforms.
The OECD is looking at how countries can promote productivity and policy effectiveness through further re-use of data, but as the technological frontier expands, new issues are arising as to whether it is sufficient to make public datasets open or whether how that data is used – including through computer algorithms operated by governments and by service delivery partners – should also be more transparent as well.
Looking beyond national borders: the case for international regulatory co-operation
The most complex problems that countries face today transcend national borders. The threats posed by climate change, health epidemics, terrorism, tax evasion, illicit financial flows, as well as social and economic crises all have global causes and effects. More than ever, countries need to co-ordinate their approaches to address common challenges, manage global goods and ensure shared prosperity and security. International regulatory co-operation (IRC) provides an approach to more effectively address wicked problems that extend beyond national borders. This is recognised in Principle 12 of the OECD Recommendation on Regulatory Policy and Governance (OECD, 2012).
There is a wide range of instruments for international regulatory co-operation. The OECD (2013c) identifies 11 different mechanisms ranging from the harmonisation of rules and laws across countries to treaties and agreements, joint standard setting and mutual recognition agreements, and more informal tools such as soft law instruments like principles or guidelines and informal dialogue and information exchange. Governments usually use a combination of different tools to engage in IRC.
Successful cases show that there are great benefits to be reaped from IRC (see Box 1.3). At the same time, there is room for a more systematic application of IRC as part of good regulatory practices and for mainstreaming IRC into policy making processes. Guidance could be developed to help countries better understand when IRC may provide promising solutions to policy problems, as well as the benefits, costs and challenges of different IRC mechanisms.
International organisations (IOs) play a crucial role in promoting IRC. There is great diversity in the governance of IOs and in the ways in which they set international norms and standards. Most organisations focus to a large extent on non-legally binding policy instruments and operate as a platform for developing guidance and exchange of information. IOs are most actively involved in the planning, design and development of international rules and standards, and collect inputs and feedback from stakeholders. Only a few IOs systematically track the implementation of their instruments or evaluate their policy outcomes. This is essentially due to methodological problems, a lack of resources and mandates, which generally accord this responsibility to members. Greater efforts in developing a culture of evaluation of IO instruments, and further co-ordination between IO secretariats and their constituency is crucial to increase the amount of evidence on the effectiveness of IO action for more effective international regulatory co-operation (OECD, 2016a).
OECD countries have comprehensive regulatory frameworks for preventing and/or minimising health and environmental risks posed by chemicals. These frameworks ensure that chemical products on the market are handled in a safe way, and that new chemicals are properly assessed before being placed on the market. However, different national chemical control policies can lead to duplication in testing. They may also create non-tariff or technical barriers to trade in chemicals; discourage research, innovation and growth; and increase the time it takes to introduce new products on the market.
The Mutual Acceptance of Data (MAD) system developed through the OECD’s Environment, Health and Safety (EHS) Programme helps to minimise unnecessary divergences across regulatory frameworks and facilitate work-sharing by governments. Established in 1981, the MAD system is comprised of three OECD Council Decisions that are binding for all OECD countries and non-OECD adherents. They require the mutual acceptance of data on chemical safety generated according to OECD standards in any member country. Furthermore, regular meetings of government representatives and experts from the private sector and civil society in the context of the EHS Programme facilitate the development of new instruments, guidance documents and databases that support the harmonization of chemical programmes and facilitate work sharing.
The MAD system facilitates the reduction and avoidance of non-tariff trade barriers due to varying regulatory requirements. It also enables burden sharing in the testing of chemicals across member countries, which creates economic efficiencies and allows for better risk management, as the effects of chemical use may transcend national borders. The EHS Programme provides a platform for international exchange on technical and policy information that feeds into the development of new policies on chemical safety and helps to further streamline regulatory frameworks.
A 2010 OECD study estimates the net annual savings generated through the EHS Programme at 153 million Euros. Savings are mainly due to the redundancy of repeated testing in different countries and the use of standard formats for documentation and assessments. Furthermore, this estimate does not take into account important non-quantifiable benefits of the Programme, including health and environmental gains from better evaluation of chemicals, the avoidance of delays in marketing new products, and the bundling of expertise to develop more effective methods for assessing chemicals.
Source: OECD (2013b)
Conclusion
Public sector reform – while an important tool – is increasingly subject to the fragmenting forces of the modern world. It remains to be seen whether traditional reform strategies can be replaced by new approaches built around outcomes, measures and evidence, and working methods that allow for constant experimentation, adjustment and innovation. Countries’ ability to adapt to an ever-changing world depends to a large extent on their ability to mobilise the machinery of government and the human capital within their public institutions. Strong leadership from policy makers and the CoG is crucial to ensure effective co-ordination and implementation across policy sectors, and to make sure that evidence-based reforms truly benefit all. Insights from a number of new working methods, such as systems approaches and behavioural sciences, can support new ways of working, drawing on the benefits of new technologies. An essential element of adaptability, however, is the capacity and willingness of governments to take risks, learn from the results, and adjust accordingly.
Laws and standards can support important enablers and drivers of change such as integrity, evidence-based policy making and openness, but experience also shows that, on their own, they might be insufficient for cultivating sustained adherence to values. The participation of citizens in policy making and co-delivery of services will need to be complemented and reinforced by resources such as open government data, as well as by awareness-raising initiatives such as those targeting youth in schools to embed values of civic participation and integrity. Strengthening the capacity of civil servants to act on the wealth of evidence produced through effective leadership from the top, culture change and regular training is also a key enabler of continuous change. Engaged civil servants are also more likely to embrace this culture of innovation, which means that greater consultation with staff is needed to support long-lasting change. Recent work carried out by the OECD on employee engagement addresses these issues.
Finally, evaluating the public sector results and communicating them to the general public is of crucial importance, particularly when a large portion of citizens no longer trust public authorities. Continuous change depends on the willingness of citizens and stakeholders to participate in public dialogues about the objectives of government, what is being done to achieve them, what are the results, and to reach a consensus on policy alternatives. Systematically publishing the results from policy evaluations and publicly announcing positive outcomes of government policies, including through social media platforms, can also support greater social cohesion, stimulate public policy debate and build tolerance for risk-taking, ultimately strengthening the ability to effect change.
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Note
← 1. The term centre of government refers to the administrative structure that serves the Executive (President or Prime Minister, and the Cabinet collectively). It has a great variety of names across countries, such as General Secretariat, Cabinet Office, Chancellery, Office/Ministry of the Presidency, Council of Ministers Office, etc. In many countries the CoG is made up of more than one unit, fulfilling different functions. A unit that is shared by virtually all centres of government is the unit that serves specifically the head of the government. This too has a variety of names, such as the Cabinet of the Prime Minister or the Private Office (OECD, 2013a).