Chapter 9: Building APS capability

Assessing organisational performance

The development and reporting of appropriate performance information, both financial and non-financial, are a key element of the APS accountability framework. While measures of broad organisational performance have always been important in the APS, they have evolved over recent years, shifting firstly from input measures to measuring results, and secondly improving the sophistication of the results focus through the outcomes/outputs budget framework. The Auditor-General noted in 2002¹ that ‘agencies have devoted considerable resources to developing outcome/output/performance information frameworks consistent with Department of Finance [and Administration] guidelines and associated with the implementation of accrual budgeting’.

The MAC report on performance management in 2001 promoted an integrated approach to applying such information, encouraging agencies to draw on both their outcomes/outputs framework and their corporate planning and governance framework for detailed business planning and performance review and feedback.²

Figure 9.1: A generalised performance management framework

		Government Portfolio Minister(s), Minister(s), Parliamentary Secretary Legislative and regulatory framework
Corporate Planning and Governance Vision, mission, aims Values, behaviours Major directions/priorities Management structures		Outcomes and Outputs Structure Outcomes Outputs Performance indicators
		Business Planning Priorities, resource allocation, risks Budget cycle links Organisational capabilities Corporate strategies (IT, people, financial) Individual performance agreements - Objectives - Values/behaviours
		Performance Review & Feedback Organisational performance reviews Individual and team performance reviews Performance linked remuneration policy Managing underperformance

Source: MAC, 2001, p.8

Responses to the agency survey indicate that all APS agencies had some form of organisational performance management framework in place. All agencies had reported on the basis of the outcomes/outputs framework but not all of them had used it as their main tool for regular monitoring. The main performance monitoring tools used on a regular basis by agencies were the outcomes/outputs framework (87%), corporate and business planning (84%), project planning and monitoring (75%) and the balanced scorecard (15%; a further 19% of agencies reported that they were developing a balanced scorecard).

In broad terms, these frameworks are consistent with the MAC model, with the outcomes/outputs framework providing the formal accountability framework to Ministers and the Parliament, and the corporate planning framework focusing on the strategies needed to deliver the desired results. The growing interest in ‘balanced scorecards’ reflects the need to build a means for monitoring corporate strategies as well as outputs and outcomes, and for measuring how the organisation’s basic capability is being enhanced for the future.

Agencies generally reported that they used a full range of indicators in their performance management frameworks, with business results being cited most often, followed by financial management, customer relations, human resources and various aspects of information technology. For example, PM&C noted that in assessing its performance on a monthly basis it used workforce planning indicators, reports on contract allocation and management, and feedback on client group satisfaction. DAFF noted that its performance management and monitoring are underpinned by both its output/supply chain approach to delivering outcomes to clients and its business excellence framework approach to internal management and performance improvement.

Performance audits undertaken by the ANAO also support the view that agencies have focused on performance frameworks. However, the ANAO has found³ that further improvements were necessary so that:

• agencies could demonstrate the links between outputs, outcomes and performance indicators
• effectiveness indicators actually measure outcome performance with particular emphasis on assessing the agency’s specific contribution to shared outcomes
• planned versus actual results can be assessed by the inclusion of targets or other bases for comparison.

In 2002 the Joint Committee of Public Accounts and Audit (JCPAA) also tabled the findings of its Review of Accrual Budget Documentation.⁴ In their report, the JCPAA concluded that the overall structure of the accrual budget documentation is sound. However, it noted the need for improvements in identifying and reporting on shared outcomes. It also indicated interest in accountability and transparency, which can be achieved by providing an analysis of performance in annual reports against targets, including where performance has not been satisfactory, rather than describing activities and processes. Following that report a further ANAO audit has been conducted to examine performance reporting in agency annual reports. The objective of the audit was to determine whether agencies had:

• established a sound annual reporting framework
• developed arrangements to ensure performance information is accurate and coherent
• appropriately analysed performance information in their annual reports.

The report of this audit is expected to be tabled in late November 2003.

 

1 ANAO, Performance Information in Portfolio Budget Statements, Report No. 18, 2001–02.

2 MAC, Performance Management in the Australian Public Service, Canberra, 2001, p.7. A revised edition of this report was published in 2003.

3 Report No. 18, op. cit.

4 JCPAA, Report No. 388, June 2002.