PAR Orientations

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PAR: What are the Key Orientations? 1

PUBLIC ADMINISTRATION REFORM

VIETNAM PAR 2001-2010

E. CUVILLIER (Ministry of Finance) - May 2002 -

PUBLIC ADMINISTRATION REFORM:

WHAT ARE THE KEY ORIENTATIONS ?

1. GENERAL OBJECTIVES

Until the recent past, public administrations in most countries were not renownedfor their specifically dynamic or innovative management of human resources. In

this area, attention had been historically paid to three key topics :

- Recruitment, with a concern to avoid complaisant hiring and to assure

equality of access for citizens to public employment;- Professional qualifications, with a particular emphasis put on technical

competence suitable for different occupations (book-keeping, legal, etc.), but, on the other hand, with little concern for relational qualities;

- The standardization of careers and remunerations (promotion by seniority,

salary scale) in order to protect the independence of public servantsworking in areas connected with various types of power.

The era when these principles were fully dominant is now over. Things have

changed and, even in countries like Vietnam where old rules are still in use, these practices are no longer considered as adapted in the present context and the new

stakes of the Public Administration and the need to modernize them is fullyrecognized. The management of human resources, either in the PublicAdministration or in the rest of the national economy, is today based on three

main objectives.

1.1. CONTROLLING THE WAGE BILL

The wage bill - direct (salaries, allowances and miscellaneous contributions)

or defered (pension rights) - today represents a significant share of the

recurrent budget (sometimes up to 85 percent in Vietnam). A governmentanxious to control its deficits and to moderate fiscal pressure has the

obligation to contain the wage bill. This can be done by adjusting two

parameters :• The staff of the Public Administration, with a strategy of reduction

regarding the public area of intervention (equitization, privatization),

increases in productivity (computerization, organization and reviews in

procedures) or flexibility (polyvalency of staff, redeployment, temporaryfreedom from duty);




• The amount of remuneration paid to each employee, with strategies of wages’ deindexation, individualization of remunerations or reform of

pension schemes.

1.2. IMPROVING PUBLIC SERVICE DELIVERY

The quality of public infrastructure, in particular education infrastructure, therapidity of administrative and judicial procedures (the rapidity of an action,

e.g. in the formation / enactment / implementation of procedures), and the

security of the population and goods are today considered as key factors of economic competitivity. This helps to improve the performance of national

enterprises and to attract foreign direct investment, thus reinforcing economic

growth and employment. To ensure this quality of service, a government has

to pay more attention than before to:

• The professionalization of its staff (with an emphasis on continuingeducation, the development of a greater level of competence, and transfers

of know-how through contracting out);

•

Staff motivation (remuneration based on merit, differentiated promotions, participative management, decentralization of decisions);

• The orientation of all activities to the full benefit of users (reorganization by category of services or type of users, through the development of one-

stop counters, and the development of reception rooms, telephone

services, Internet websites, etc.).

1.3. TRANSPARENCY

Transparency has two meanings: deontology and the prevention of corruption

on the one hand, and, on the other hand, the production of clear and measuredinformation, accessible to all and allowing evaluation of the cost and the

efficiency of public services. In both cases, we should get importantguarantees of the impartial running of the Public Administration.

2. ORGANIZATION

In line with the above-mentioned objectives, some general tendencies related to

the organization of the Public Administration are now coming out :

2.1. SEPARATING THE MISSIONS

Gradually, through the effect of theoretical analyses and practical diagnoses

regarding the running of the services of the public agencies, the idea that iswidely accepted is to separate specific missions not long ago carried out by

the same authority. For example, when the State is a shareholder of a public

enterprise, one needs to differentiate between the management of public

participation in the capital and the exercising of regulatory State supervisionwith regard to this enterprise or, in the new context of open competition for

the old public monopolies (telecommunications, railways, energy, etc.), to

separate the remaining activities of a former monopolistic public enterprise




and the newly created regulatory public entity. Lastly, strategic functions

should be separated (conception of policies, preparation of the legal andregulatory framework) from management functions.

The dissociation of missions aims at avoiding conflicts of interests that are

detrimental to the efficiency and the deontology, without sacrifacing the longterm to the short term, and making managers responsible for performance

objectives.

2.2. THE NETWORK ORGANIZATION

The complexity of public policy issues that are raised today is such that there

is a need to mobilize various levels of competence to elaborate solutions.Facing this situation, any static organization chart will always be inadequate.

The emphasis should be put less on the logical hierarchy of obedience and

more on the capacity of public servants and agencies to cooperate effectivelyin the network, according to the tasks to be completed.

Two parameters take on a critical importance: 1/ the quality of information

systems (meaning network computerization, which allows staff to exchangedata and easily communicate) ; and 2/ the propensity of agents to adopt

cooperative behavior (relational competencies, system of incentives).

2.3. THE OPENING TOWARDS THE CITIZEN-USER

Taking into account the above considerations, it appears obvious that the

Public Administration should henceforward favor qualities considered in the past as secondary:

• The capacity to react rapidly (meaning the necessity to decentralize

powers to shorten the decision-making process);• The capacity to consider all issues raised by users, which requires the user

to multiply the contacts in various administrative agencies (meaning thenecessity to develop one-stop counters and to organize activities by type

of users);

• The capacity to involve citizens in the elaboration of decisions concerning

themselves (meaning more open consultative procedures and even theinvolvement of external personalities in the steering committees of the

Public Administration).

2.4. THE NECESSARY FLEXIBILITY

In order for the Public Administration to adapt to the evolving demand of users, changes in technology and, moreover, to the peaks of activity that canoccur now and again, public agencies should today be able to develop various

techniques of flexibility: polyvalency, mobility of staff, contracting out,

mission-oriented Public Administration in order to face new missions, etc.




3. QUALIFICATIONS

It appears necessary to essentially insist on two main aspects:

3.1. THE GROWING IMPORTANCE OF CONTINUING EDUCATION

Competence acquired through initial training is today rapidly becomingobsolete due to the accelerated speed of economic, social and technological

evolution. We can observe in many countries that, in achieving increased

flexibility, public agencies place more and more importance on the polyvalency and the mobility of staff. Consequently, it appears essential to

organize, through continuing education, the actualisation of basic knowledge

and the access to additional knowledge.

In addition, as human resource management and organization are becoming

the main factors in the performance of the Public Administration, it is

becoming essential for public servants functioning in key positions to be

trained on management, team animation, and leadership, whatever their initialtraining was when they were initially prepared and chosen according to a

technical expertise.

3.2. PRACTICES FOR CONTRACTING OUT AND PARTNERSHIP

Instead of training its own staff, the Public Administration can also look outside for any shortfalls in its qualifications. This strategy is particularly

appropriate when the requested competence is marginal compared to the usual

tasks of the concerned public agency.

In such a situation, two approaches can be used: either contracting out the

considered activity to an external provider od such services (e.g. contractingout hardware and software activities), or the hiring of staff, based on specific

activities, on a fixed-term contract without the possibility of becoming a

public servant.

To assure the success of contracting out and partnership activities, it is

necessary to put a particular emphasis on a few critical points:

• The capacity of the concerned public agency to keep the strategic control

of contracted-out activities. This requires the definition of preciseobjectives in the requirements and a strict monitoring procedure of

realizations.

•

The capacity of the concerned public agency to accumulate the know-howand the record of activities, even outside the execution of projects. This isimportant in order for the Public Administration to, a posteriori, justify its

own choices; it is also crucial for it to make significant progress based on

lessons from past experiences. In this respect, a major issue in currentmanagement problems is the knowledge management.

• The capacity of the concerned public agency to organize in a morerigorous manner the working responsibilities and procedures. When




activities are directly managed, a certain lack of rigour in task programing

or definition of objectives can be compensated by the proximity,sometimes even by placing under the same authority those who have

conceived a project and those who implement it. However, the situation is

totally different when the project’s implementation is contracted out.

4. PERFORMANCE MANAGEMENT

The challenge, here, is to motivate public servants so that they give the best of

themselves to implementing the strategy of the public agency they belong to.

4.1. MANAGEMENT BY OBJECTIVES

To this end, the first leverage is to provide to each member of staff a precise

definition of his/her responsibilities that he/she must handle and the expected

objectives of his/her position. More exactly, the objectives should not be

considered as an arbitrary decision imposed by the hierarchy, but rather explained, discussed, eventually negotiated, and at least accepted by all

concerned staff. They have to be quantified and measurable in order to verifywithout major difficulty, a posteriori, if they have been reached.

The evaluation of achieved results in comparison to announced objectives is asensitive subject. The objectives will never be evidently credible if no

sanction is ever imposed when they are not reached. On the other hand, if

sanctions are systematically imposed in case of failure, independently of thecircumstances that are the origin of this failure, there will be a strong

disincentive to take risks and pressure to devise more ambitious objectives.

The search for the middle ground between these two extremes is not that easy, but finding it takes on crucial importance in order that the device can really

become a rallying cause and not be disheartening.

The other sensitive point is the nature of the objectives to adopt. The results of

public actions cannot be easily quantified, like those of enterprises in terms of

sales’ volumes, in margin rates or in benefit amounts. They are oftenqualitative, and influenced by numerous variables unrelated to the action

(input1) of the Public Administration. Ensuing from this is a doctrinal debate

and numerous significant hesitations on this matter, in particular between

1/ An INPUT focus is easy and affordable but it does not, in itself, support efficiency and effectiveness.

Because of the focus on resources it can be seen as good in situations with low levels of confidence and

variable competence – for example in developing countries.




those responsible for measuring the activity (output2) and those measuring the

results (outcome3).

Management by Objectives 4

Outcomes

Outputs

Process

Inputs

Costs

Value for money

Effective-ness

Efficiency

Economy

4.2. DIFFERENTIATED R EMUNERATION

The idea here is to shift from uniform remuneration for all staff of the same

grade and same seniority to variable remuneration based on performance in

order to encourage all staff to work optimally. Two levels of mobilization areconceivable, for which the articulation is again sensitive: individual

differentiation, which takes into account separately the performance of each

individual agent, and collective differentiation, which takes into considerationthe performance of the administrative unit or of a team so as to avoid too

individualistic behavior.

The key question, once the principle of variable remuneration is accepted, is

the scope of variation to be implemented. The larger the variation, the more

significant the reward or, conversely, the sanction. On the other hand, the risksof rejection of the system by staff accustomed to uniform wages, takes onincreased importance as does the pressure on managers evaluating the staff.

4.3. R ECONSIDERING THE CIVIL SERVICE STATUTES?

Based on general tendencies, it seems impossible to avoid a discussion

concerning the perpetuity of employment statutes traditionally applied for the

2/ An OUTPUT focus facilitates efficiency and control of aggregate expenditure and lends itself to

enhanced accountability. On the other hand it can result in information overload, there are measurement problems and it can be costly. Because of these challenges some see it as a good approach when levels of

confidence are high and the basics of cost accounting can be taken for granted.3/ An OUTCOME focus facilitates reallocation and supports policy formulation and coordination and canenhance the long-term perspective of public sector activities. On the other hand it suffers the same

problems as the output approach in regard to measurement, costs and information overload and in addition

this approach has problems with regard to- accountability since outcomes are not always controllable or

even attributable to specific public sector actors. The outcome focus can thus generally be seen as good in

situations where an output focus is viable but where politicians in addition are dedicated to the managementregime.4/ Refer to the 2002 Medium Term Expenditure Framework (MTEF) in the development and pilot

implementation in the educational sector.




public sector. Until today, these statutes, in fact if not in law, had the meaning

in most countries as lifetime employment and stable remunerations. However,one can easily realize that these principles, even without being totally

contradictory, are rather removed from the exigences of flexibility that have

been decribed above. There are numerous countries, which have such civil

service statutes, that have tried, in their Public Administration Reformstrategies aiming at modernizing the State, to suppress these statutes and to

align the conditions of employment for public servants with the Common Law

for salaried employees.

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