Performance Management in Finland Heikki Joustie

Introduction in early nineties Budgetary reform – emerged appropriations Devolution of executive powers towards the frontline managers Use of performance agreements to combine result targets and money available Abolishment of detailed regulations Focus on result targets rather than resource allocations

Evaluation in 2000-2002 The role of Ministries as political steerers – too vague Defining the result targets – too soft Use of indicators – unevenly developed Outcomes and outputs – messed together Heavy critisism from Parliament – unclear targeting and reporting

Reform 2004 Restructuring the performance presentation in the budget Separation of outcomes and outputs between different levels – clarifying the hierarchical responsibilities of ministries and agencies main title: outcomes of a ministry chapter: outcomes of policy sectors budget line: outputs of an agency or other type of an actor

Performance prism Societal impact targets (outcomes) Societal impacts: outcomes Societal effectiveness ACCOUNTABILITY Operational performance: outputs How operations and use of finances have influenced the societal impacts MANAGEMENT BY RESULTS Operational efficiency economy productivity profitability cost-recovery rate Outputs and quality management commodities and public goods service ability and quality Operational results (outputs) Human resources development

The role of Parliament Performance management pattern changed the essence of the budget authority of Parliament This happened without any explicite change in the Constitution Parliament has after hesitation accepted it’s new role as a strategic decisionmaker

Statesmanship dilemma Politicians want to figure out as statesmen in the nations history; this means concentrating on broad lines and strategies To become a statesman needs to be re-elected, which means ”promising” operative details in electoral campaigns

The Parliament and performance management When adopting a role as a strategic decision maker, the Parliament wants more clearly defined outcome targets and reports The Central Government has committed itself to fulfil these requirements This means extended use of measurement and evaluation practicies specifically on the outcome level Use of indicators remains a real challenge for ministries