02 December 2005

Rewarding outcomes, not effort

“But the public seems to be losing patience with airy-fairy ideological crusades—and growing ever hungrier for down-to-earth pragmatism.” So says Lexington in a column headed ‘The End of Ideology’ in the latest (3 December) issue of The Economist. And it’s true America’s 1993 Government Performance and Results Act ‘seeks to improve the management of federal programs by shifting the focus of decision-making from staffing and activity levels to the results of federal programs’.

What has been the result?

As I argue in my forthcoming book, existing institutional structures constrain a truly outcome-based policy. In the US, there has been an emphasis on rewarding effort whatever the result. But for efficiency it is not the quantity of effort that should be rewarded, but its quality, as measured by its effectiveness in achieving outcomes. It is crucial, in short, that outcomes be rewarded, however they are achieved. The risk and consequences of underachievement should be borne by the institutions themselves, not by ordinary members of the public. Outcome measures for bodies engaged in long-term activities, for example, research and development, should be subsumed into broader strategic goals. It should not be up to the government or a government agency to monitor how efficient agencies are in achieving sub-objectives. More crucially, the resource allocation should not be on an agency basis. Resources, ideally, would shift in and out of different activities depending on how efficient each activity is in contributing to the achievement of the strategic goals.

There is no question that the GPRA does represent a big step forward for outcome-orientated government. But, in my view, progress is being impeded on two fronts: existing government agencies have too much say in both the choice of long-term goals to be targeted, and in how resources aimed at achieving these outcomes are to be allocated.

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