Russian Canadian Conference on Public Administration Reform

October 2003 Russian Canadian Conference on Public Administration Reform Higher School of Economics, Moscow

Edited by Gord Evans and Neil Parison 2005

Š 2005 The International Bank for Reconstruction and Development / THE WORLD BANK 1818 H Street, NW Washington, D.C. 20433, U.S.A. All rights reserved Printed in the Russian Federation A copublication of the World Bank and Alex Publishers Alex Publishers 4, Tchukotski proezd 129327 Moscow Russian Federation www.alexpublishers.ru The findings, interpretations, and conclusions expressed here are those of the author(s) and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank cannot guarantee the accura cy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply on the part of the World Bank any judgment of the legal status of any territory or the endorsement or acceptance of such boundaries.

Rights and Permissions The material of this work is copyrighted. NĐž part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy ing, recording, or inclusion in any information storage and retrieval system, without the prior written permission of the World Bank. The World Bank encourages dissemination of its work and will normally grant permission promptly.

For permission to photocopy or reprint, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone 978 750 8400, fax 978 750 4470, www.copyright.com.

ISBN 5 9618 0014 8 All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, World Bank, 1818, H Street NW, Washington, DC 20433 fax 202 522 2422, www.worldbank.org.

Contents

Foreword by Yaroslav Kouzminov, Rector, Higher School of Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

CONFERENCE OBJECTIVES AND STRUCTURE . . . . . . . . . . . . . . . . . .

7

DAY 1: ROUNDTABLE ON INTERNATIONAL REFORM EXPERIENCES AND LEADERSHIP CHALLENGES . . . . . . . . . . . . . . .

9

CANADIAN EXPERIENCE WITH ADMINISTRATIVE REFORM . . . . . . . . . . . . . . . 9 PUBLIC ADMINISTRATION REFORM WITHIN THE EUROPEAN COMMISSION . . . 12 OBSERVATIONS AND ISSUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 DAY 1: BRIEFING BY SENIOR RUSSIAN OFFICIALS . . . . . . . . . . . . 17 SUMMARY OF BRIEFING BY A. SHAROV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SUMMARY OF BRIEFING BY S. PCHELINTSEV . . . . . . . . . . . . . . . . . . . . . . . . . . 19 OBSERVATIONS AND ISSUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 DAY 2: WORKSHOP PRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SUMMARY OF WORKSHOP PRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .

WORKSHOP 1 – FUNCTIONAL REVIEWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Neil Parison – Different Review Methods: Functional, Program, & Whole of Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pavel Kudyukin – Functional Analysis and Types of Functions – Russia’s experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

John McLure – Functional Review Case Study: Canada . . . . . . . . . . . . .

Peter Brooke – Functional Review Case Studies: International Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Talaibek Koichumanov – Functional Review Case Study: Kyrgyz Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Talaibek Koichumanov – Functional review in Uzbekistan . . . . . . . . . . .

Workshop 1 Discussion Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

WORKSHOP 2 – IMPROVING GOVERNMENT PERFORMANCE . . . . . . . . . . . . .

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tony Verheijen – Civil Service Management: Emerging Models and Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gail Kent – Human Resources Management in the European Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24 25 25 26 27 28 30 31 31 33 33 33 35

4

October 2003 Russian Canadian Conference on PAR

Tom Stewart – Performance Management for Senior Government Executives in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tom Stewart – Recruiting and Developing Senior Government Executives in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

David Elder – Improving Service Delivery in the Canadian Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Workshop 2 Discussion Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

WORKSHOP 3 – BUDGET REFORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Andrei Klimenko – Budget Reform in the Russian Federation . . . . . . . . .

Gord Evans – Linking Policy, Budgets and Performance: Canada, New Zealand, Lithuania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Andrew. Dobson – Best Practices in Russia’s Regional Budget Reforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Alistair Pirie – Russian’s Budget Reform – Lessons Learned . . . . . . . . .

Workshop 3 Discussion Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

38 39 41 44 45 45 47 51 52 55

ANNEXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 ANNEX A: LIST OF PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Day 1 high level session Russian participants . . . . . . . . . . . . . . . . . . . . . . .

Day 1 international participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Day 2 working sessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ANNEX B: PRESENTATION MATERIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

59 59 62 63 67

Foreword by Yaroslav Kouzminov, Rector, Higher School of Economics In his speech of 7 May 2004 at the ceremony for assuming the post of head of state, President Vladimir Putin defined the main goal of the upcoming four years as follows: “To convert the potential which we have built up into a new energy for development, to thereby achieve a better standard of living for our people, and to secure a real and noticeable increase in their well being�.

One of the most important measures to secure these goals is the suc cessful implementation in the country of administrative reform, in which the Ministry of Economic Development and Trade and the State University – Higher School of Economics (HSE) are playing an active role. One of the visible manifestations of these efforts was the interna tional conference which took place in HSE in October 2003 dedicated to the problems of resolving this most important task.

The aim of the conference, as developed by its organizers, was to share experience of public administration reform in a number of countries; to analyze international approaches and their applicability in the Russian Federation; to hold an open dialogue between the officials, academics and specialists responsible for public administration reform in the Russian Federation with their western counterparts; to give thereby an additional stimulus to these reforms; and to provide support in develop ing methodologies for perfecting financing mechanisms for public administration and for implementation of the Presidential Program for reforming the Civil Service System.

The conference had around 150 participants: from the Russian side, members of the Government Commission for Administrative Reform and its working groups, the Inter ministerial Working Group On Implementing the Civil Service Reform Program of the Russian Federation, responsible staff from the Administration of the President of the Russian Federation, the Apparat of the Government of the Russian Federation, the Accounting Chamber of the Russian Federation, the

6

October 2003 Russian Canadian Conference on PAR

State Duma, ministries and other government bodies, representatives of civil organizations and of research and academic institutes, and inde pendent experts.

Foreign participants included: representatives and experts from the World Bank, the Embassies of Canada, the United Kingdom and France, the Canadian Agency for International Development (CIDA) and the Canadian Center for Management Development (CCMD), representa tives and specialists of the European Commission, and independent experts.

I would like to express our deep thanks to all the participants for the constructive dialogue, the targeted presentation of international experi ence, and for the proposals to adapt such experience and approaches to the situation in the Russian Federation where possible and appropriate.

In particular I would wish to thank the Embassy of Canada, CIDA and the World Bank for financial and logistical support in the organization of this high level conference.

OCTOBER 2003 RUSSIAN CANADIAN CONFERENCE ON PUBLIC ADMINISRATION REFORM

Conference Objectives and Structure The two day Russian Canadian Conference on Public Administration Reform, sponsored by the Canadian International Development Agency (CIDA), with support also from the World Bank, was held October 21–22, 2003 in Moscow at the Higher School of Economics (HSE). The Ministry of Economic Trade and Development (MEDT), supported by HSE and the World Bank, chaired the conference. Organizational and administrative support to the conference was provided by HSE, the Canadian Centre for Management Development (CCMD), the Canadian Embassy in Moscow, and the World Bank. The European Commission and the United Kingdom’s Department For International Development (DFID) also participated.

The conference took place at an important juncture in Russia’s reform program: civil service reform was completing its design stage just as administrative reform was being initiated. The conference was attended by over 150 Russian and international officials and opened by the Canadian Ambassador, C. Westdal, and First Deputy Minister of MEDT, M. Dmitriev.

Conference objectives included: • To explore the challenges facing Russian senior executives in imple menting public administration reform and drawing on lessons learned from Canadian, United Kingdom and European experiences; and • To identify practical challenges that will face those responsible for implementing the Russian reform program and propose measures to address these problems.

8

October 2003 Russian Canadian Conference on PAR

The conference was divided into three components: • half day roundtable discussion between senior Russian executives and senior Canadian and European Commission public service exec utives; • half day briefing by the senior Russian officials from the Admini stration of the President and the key ministries leading the reforms to a broad range of Russian officials from implementing state institu tions; and • three concurrent workshops to review in depth international best practices and lessons learned and the Russian experience to date in the areas of: – streamlining government through functional reviews; – improving performance management and service quality; and – modernizing budget formulation.

This publication attempts to provide highlights from the conference through summarizing key issues raised during the presentations and ensuing discussions and by providing the actual presentations from the three workshops.

One lesson learned from the international discussions was that public administration reform represents a long term undertaking, requiring continuous improvement and reappraisal. As underscored by Canada’s experience, Years worth of progress can rapidly evaporate when adverse external circumstances combine with a lapse of internal vigilance. More positively, Canada further demonstrated that lost momentum can quick ly be regained if focused leadership is applied. It is hoped that the mate rial, observations and issues raised at the conference and summarized in this publication will contribute to creative and proactive deliberations on public administration reform in the Russian Federation in the years ahead.

Day 1: Roundtable on International Reform Experiences and Leadership Challenges The senior officials’ roundtable was moderated by M. Dmitriev (MEDT) and N. Parison (World Bank). Short presentations on Canadian and European experiences were provided by J. Bourgon (Canada’s Ambassador to the OECD), J. McLure (held several senior posts in Canada including Deputy Minister of Defence), and G. Kent (advisor on administrative reforms to European Commission Vice President N. Kinnock).

First Deputy Minister M. Dmitriev opened the conference by emphasiz ing that public administration reform in Russia was still at a stage where international experiences were being studied for potential adaptation.

Although the ultimate program would of course follow a made in Russia strategy, international lessons learned, both positive and negative, could and should be used to inform the domestic reform program. Canada’s experience was particularly of relevance because of its federal and regional nature and long experience with administrative reform.

CANADIAN EXPERIENCE WITH ADMINISTRATIVE REFORM The presentation by Mme. J. Bourgon focused on a 10 year period, between the mid 1980s and mid 1990s in which progress on reform was achieved, lost, and regained. Throughout the mid to late 1980s, federal government expenditure declined as a percentage of GDP from 8.6% to 4.2%. However, a severe recession in the early 1990s wiped out all of these gains. Deficits soared, adding to already high national debt levels.

In response, a decision was taken by the government to attack the prob lem once more by pursuing a different approach.

In crafting the reform strategy, lessons learned from the previous seven years were applied: • across the board cuts; i.e., similar expenditure reductions to all pro grams, are inherently non strategic and ineffective;

10

October 2003 Russian Canadian Conference on PAR

• efficiency should not be the driving objective; more important is to determine whether a program is required at all before asking how to deliver it in a more cost effective manner; • trust the knowledge inside, both at the political and professional level; external advisors will not have the insights needed to ensure the ownership of the reform agenda at all levels.

• focus on the future role of government; knowing what to preserve for the future is as important if not more important than deciding what to cut; and • timing is essential; reforms must be completed decisively and quickly, rather than through protracted cutting exercises.

These lessons were incorporated into the Program Review design that was implemented through 1994/97. Although the exercise was far reaching in scope, the design was quite simple: • one team: the minister and deputy minister (administrative head of a Canadian department) were tasked with overseeing departmental review; • six questions: a straightforward questionnaire was used to assess the ongoing relevance and, if still relevant, best delivery option for each program; • three months: the initial analysis and proposals were completed in a very short period; and • one process: the approval route included a Deputy Ministers’ Committee with experience covering every department (for their knowledge and expertise); a Ministerial Committee for political con sensus building to ensure balance across the country and full Cabinet at Ministerial solidarity.

The process, as long as it followed these basic design features, allowed flexibility to accommodate the different departmental cultures, leader

Day 1: Roundtable on International Reform Experiences and Leadership Challenges

11

ship styles and mandates. For instance, some departments used a wide ly participative approach, others a top down approach, while others engaged stakeholders.

In general, the fact that the process was internally led, transparent, and much more participative than previous efforts tempered resistance and produced more creative, but realistic proposals. The program review experience countered prior perceptions of central agencies that depart ments would never of their own accord identify meaningful reductions.

It also demonstrated the importance of creating a political and profes sional partnership as leaders of the exercise. Finally, program review underscored the importance, in the design phase, of getting the scale, scope and timing of the exercise right.

At the department level, success owed to daily, face to face contact between the Minister and Deputy Minister and good access to the Prime Minister and Privy Council Office respectively. The production of a vision document, “Getting Government Right�, provided a strong reference point both to the public and the public service for undertaking the reforms. Its pillars for the federal government included speaking with one voice among the community of nations furthering the econom ic union; promoting the social union being the custodian of public goods and pooling of resources with the provinces to improve service quality.

In the case of the Department of Defence, major changes were already underway with major reductions to forces in Europe and military infra structure. Program review goals were met by designing two reduction programs, for military and civilian officials, which aimed to achieve the significant staff reduction targets through incentive schemes to encour age voluntary departure. The process also involved extensive consulta tions with unions.

In the end, in addition to significant expenditure reductions, the Canadian federal public service was downsized by 23%, or 47,000 jobs.

A decade later, it appears that these reforms remain sustainable as Canada continues to run budget surpluses and is now in the position of being able to reinvest in priority public services from a much stronger financial position.

12

October 2003 Russian Canadian Conference on PAR

PUBLIC ADMINISTRATION REFORM WITHIN THE EUROPEAN COMMISSION Ms. G. Kent drew attention to the fact that the current reform process within the European Commission was initiated in 1999 by R. Prodi under Vice President N. Kinnock. The urgency of reform was highlight ed by the resignation of the Santer Commission four years ago. From a public administration reform perspective, this crisis was compounded by the Commission’s long standing approach of perpetually agreeing to assume new responsibilities without taking into account their resource implications. Not surprisingly, a chronic gap existed between tasks assigned and available resources. Given reforms elsewhere in the world, the Commission had fallen behind the times.

Against this backdrop, the Commission launched a reform with explicit objectives: that it be well managed, and able effectively both to initiate and apply policy. In many respects, the reforms are exceeding expecta tions. Lessons learned to date include: • political commitment must be secured at the highest levels; • the inevitable frustration that accompanies reforms must be managed and confronted, not ignored; • extensive staff communication of the rationale for and progress of the reforms will elicit “buy in”; • engaging rather than confronting staff associations is crucial; and • tying public administration reform to broader objectives (in this case EU enlargement) creates a stronger case for proceeding.

Although much work remains, the EU has just expanded its population by 20%, its number of languages by 82%, and its number of member countries by two thirds. That this is being done with a 13% increase in staff suggests that the better management goal of the reform is being delivered.

Day 1: Roundtable on International Reform Experiences and Leadership Challenges

13

OBSERVATIONS AND ISSUES regarding federal systems…

As a federation, Canada is influenced by and influences provincial reform programs. In fact, Canada is a highly decentralized country that profits from a friendly competition across provinces and between the provincial and federal governments. This permits all governments to benefit from best practices and lessons learned from those who go first.

With respect to public administration reform, provinces such as Alberta and Saskatchewan initiated the first reforms, followed by the federal government, followed by the larger provinces of Ontario and Quebec. regarding supranational bodies…

As a supranational body, the EC is driven by and has to reconcile differ ent national agendas; e.g., one country’s reform focus was on fiscal restraint, another on transparency. In the end, the Commission takes a binding collective decision. Like most nations, Canada’s reform program was strongly influenced by globalization, particularly in areas such as trade, technology and communications. regarding optimal size and model of government…

This question cannot be answered without first considering the model of government that one’s country should follow. For instance, the French model includes the social sector; others do not. This may be as much a policy as an efficiency decision. In the Russian context, the fact that many essential activities are currently under financed also must be part of the equation. The Canadian model is neither market or state driven. The country has always accorded a vital role to govern ment as a partner of the private sector and as guarantor of core social programs.

The European Commission faces the public perception that it should be as small as possible. Accordingly, the reform is trying to focus its activi ties on policy making and implementation.

14

October 2003 Russian Canadian Conference on PAR

regarding open vs. closed reform processes…

Canada has experienced both variants. In the early 1980s, a major and reasonably successful reform was undertaken by a small group. The 1990s exercise was much more open. However, the 1980s exercise was more a realignment and modernization than downsizing, so this should be taken into account. regarding parliamentary control over the reforms…

There are very different models in this regard. Parliamentary models where the government is selected from the dominant party exert mini mal control over the government. In Canada, Parliament does play an important oversight role and the reforms were accordingly included in the annual budget bill to ensure thorough scrutiny. Both officials and politicians spent significant amounts of time answering to parliamentary committees. regarding internal willingness to implement restructuring…

The European Commission’s experience differed from Canada’s in that there was little internal willingness within directorates general to iden tify non priority functions. Further internal resistance is anticipated if restructuring reduces career promotion opportunities. regarding fiscal constraint as a driver of reform…

Although fiscal concerns were foremost in motivating the Canadian experience, this is not the case in Russia. The country is running a surplus and state expenditure as a percentage of GDP is lower than OECD country levels. The main driver is the need to strengthen effectiveness and improve and modernize degraded services. Russian civil servants are also poorly paid. Budget reform, while necessary, will need to ensure that its increasing emphasis on results and per formance incentives does not bias or distort activities such as funda mental vs. applied research, or the way in which medical services are delivered.

Day 1: Roundtable on International Reform Experiences and Leadership Challenges

15

regarding limitations of administrative reform…

One of the drawbacks of simply identifying the relevance of functions is that it does not take into account how well they are being performed which may, in turn, affect perceptions of relevance. Moreover, the fact that different groups are working on civil service and administrative reform respectively creates the possibility that key functions will be retained that cannot be delivered as it lies outside the scope and skills of the new civil service. An alternative approach, more bottom up, is to work with civil servants in departments to improve their effectiveness as a prelude to reforming functions.

To obtain a full picture, one must look beyond the linkages between civil service and administrative reform, and include the work on federal regional local relations, judiciary reform, and budget reform.

A problem with purely studying functions is that it does not address defects in the underlying processes, which remain deadlocked. In addi tion, phenomena such as under financing and corruption distort the way functions are delivered. regarding the need for stronger strategic and operational planning…

The government has not sufficiently identified clear goals and, in turn, institutions do not have clear plans. Moreover, the lack of “reglaments” creates further confusion concerning which tasks should be carried out and how this should be accomplished. The civil servant receives differ ent, sometimes conflicting signals from the President down to his own superior, but there is no plan to translate the President’s priorities into concrete actions at an operational level.

The “reglaments” or operational regulations should be very directive.

Unlike developed countries, which do not tie their managers with detailed operational regulations, the transition from a command and control administrative culture requires at least ten years of detailed reg ulation before flexibility can appropriately begin to be introduced. The performance contract could build on the operational regulations and serve as a motivator, if pay were tied to it.

16

October 2003 Russian Canadian Conference on PAR

regarding the relevance of international examples‌ The challenge will be not to borrow, but to invent. Learning from others is essential, but it is impossible to directly transplant another system from another culture. In learning from others, do not look to their theo ries and models; look to the actual reforms that were implemented. In Canada’s case, there are lots of impressive theories on paper, but they remain on paper. Another lesson learned is that it is more important to try and risk failure than to be overly cautious. People will forgive a failed, but honest effort, but not inaction. However, once mistakes occur and are admitted, they must be corrected. It is essential in undertaking reform to get the strategic vision right and to communicate roles in it down through all levels of the organization.

Regarding the European Commission, the scale of reform cannot com pare to the Russian exercise. Nonetheless, one lesson may be transfer able: to involve employees as much as possible throughout the process.

Day 1: Briefing by Senior Russian Officials During the afternoon session on October 21, 2003, briefings were pro vided on the Commission on Administrative Reform headed by Deputy Prime Minster B. Alyoshin by Mr. A. Sharov, Director, Civil Service Department, Ministry of Economic Development and Trade; and on the InterMinisterial Working Group on Civil Service Reform headed by Mr, D. Medvedev, First Deputy Head of the Administration of the President, by Mr. S. Pchelintsev, Deputy Head of the State Legal Department of the Administration of the President. The session was chaired by Mr. Y. Kouzminov, Rector of the Higher School of Economics.

SUMMARY OF BRIEFING BY A. SHAROV The Administrative Reform Commission, headed by Deputy Prime Minister Alyoshin established seven working groups to examine how 57 broad objectives of government were being delivered. In addition, several horizontal objectives were also reviewed. At this time (October 2003), approximately 10 objectives have been completed, requiring the review of over 500 functions, over 100 of which were found to be redun dant, in approximately 10 percent of RF executive organizations. The goal is to complete the exercise by March 2004, which means examining approximately 2500 functions per month (900 official and 1600 unoffi cial) over the remaining period. This high workload arose as it became apparent that the actual functions delivered by institutions were far greater than their mandated or official functions. In general, these infor mal or unofficial functions were those most susceptible to corruption or to creating barriers to economic development.

Three criteria were used to identify redundant functions: • could it be delivered by the private sector? • could it be delivered by alternative means?

18

October 2003 Russian Canadian Conference on PAR

• were there any significant social or economic impacts if the function was terminated?

For example, the current system whereby police contract with over 1.5 million property owners to provide protection, and are liable if theft occurs (on average only 37 do occur annually), could in theory be replaced by a private sector service. However, until the private sector matures to the point where such services are available, there would be an undesirable social impact (rise in theft) if the function were discontinued at this time.

Three approaches were used with respect to eliminating functions: • eliminate (the function is obsolete); • commercialize (the function can be delivered by the private sector; and • devolve to a self regulating organization or another level of govern ment.

In this latter instance (e.g., self regulation of the auditing profession), the state retains a regulatory but not delivery role.

There are important related activities that support the functional review exercise: • a major project to update the legal framework to reflect the Commission’s decisions; • establish a regulatory impact process modeled on similar efforts in OECD countries to prevent ministries from simply creating new functions to replace the cancelled ones; and • setting service standards and improving access to information by the public.

Day 1: Briefing by Senior Russian Officials

19

SUMMARY OF BRIEFING BY S. PCHELINTSEV Close linkages exist between administrative and civil service reform and it will be a major challenge to coordinate the two. The current civil service reform derives from the concept approved by the President in August 2001 to modernize and produce a more effective and efficient civil service. The Kasyanov Commission has since consid ered proposals on the legal framework designed to create such a civil service. An initial product was the medium term Presidential Program for Modernization of eth Federal Civil Service (2003 2005), approved by the President in November 2002. Already, a law dividing the public administration into three broad categories – civil service, military, public service— the Law on the State Service System – has been passed by the State Duma.

The new civil service will be a professional cadre administering the exec utive authorities granted to federal bodies or subjects of the Federation.

The civil service is to be founded on principles of openness and trans parency. Contributing to transparency will be the documentation of clear operating procedures (administrative reglaments) for each institu tion and the production of clear job descriptions for each civil servant.

A conflict of interest regime, adapted in part from Canada’s experience, will be introduced.

While not unique to Russia, an objective must be to increase the attrac tiveness of a career in the civil service to young, educated, skilled Russians. The law foresees the contributions of outside experts (e.g., academics) to policy and legal formulation.

The law will institutionalize a competitive process for jobs and establish rights and obligations for civil servants. In addition, the rights of the public with respect to the civil service will be elaborated.

Experiments are being undertaken to seek out a means to remunerate civil servants based more on performance. In fact, the President signed a decree to permit such an experiment in the Ministry of Civil Defence and Emergency Situations.

20

October 2003 Russian Canadian Conference on PAR

Successful civil service reform will be highly relevant to effective admin istrative reform. Increased capacity will invariably influence the success of modernization. Media criticisms that the law primarily protects civil servants, who are revising it in their own interest at the expense of the public, are incorrect as the law addresses the interests of both, because both must be considered as part of the same process.

OBSERVATIONS AND ISSUES on linkages between the various reform processes…

The current approach is not connecting sufficiently administrative, civil service, judicial and other reforms. A key gap remains the inter relation ship with decentralization, although this raises the issues of delivery quality; i.e., is there any public benefit if a poor service continues to be delivered poorly at a lower level of government. If service deteriorates significantly following transfer, should it be reassumed by a higher level?

Of course, the issue of fiscal capacity must be addressed in tandem as it is unproductive to devolve a function if the sub national unit does not have sufficient revenue raising capacity (a finding of the Kozak Commission).

A related issue is the division of powers with and capacity of okrugs.

The planning system needs to be better integrated with the budget sys tem. Key state documents (the President’s Address to the Federal Assembly, the Government’s Medium Term Social and Economic Program, and the Budget) do not appear to be appropriately integrated.

Moreover, there are discrepancies between these documents in terms of goals. Ironically, planning often takes into account a long term perspec tive on an external issue such as globalization but not Russia’s role in this phenomenon. on defining functions within a broader framework defining executive authority…

Before programs are established, there needs to be a fundamental under standing of what the state should or should not do. This definition should apply in the longer term (15 20 years) and derive from a strong,

Day 1: Briefing by Senior Russian Officials

21

well articulated vision. Otherwise, today’s functions may be deemed redundant in just a few years.

Russia’s historical context is important here. Unlike the West, where administrators have had to fight to expand their field, the Russian chal lenge has been to limit it. Obviously, market mechanisms have not pro vided a historical counterweight and are at a very early stage currently.

It is essential to strengthen those forces that challenge dominance by the administration.

Another consideration is fiscal latitude. Even if a function fits the defi nition of a core state activity, the question of affordability enters the dis cussion. If a government cannot afford all of its core functions, then the fundamental question must be addressed: is it better to deliver all core services poorly, or to deliver the most important core services well? on the importance of clearly regulating institutional and individual func tions…

Administrative reform also affects service quality and anti corruption programs. The lack of definition concerning an institution’s functions and failure to assign a precise and reasonable set of functions to employ ees under a clear set of rules (reglaments and job descriptions) contin ues to affect these broader issues. For example, if an employee claims to have 50 functions to deliver, but can only deliver 20, the choice of which get delivered with what quality leaves too much to discretion. on performance measurement as a basis for remuneration…

Some argue that there are certain areas of the civil service where con crete performance measures cannot be established and that remunera tion should continue to take into account factor such as seniority and loyalty. Inevitably some balancing of this position will need to be con sidered. The experiments will provide further information, but there is no reason why these two approaches cannot co exist.

A critical decision will be the basis on which civil servants are remuner ated. An equivalent rate to the private sector may not be appropriate as

22

October 2003 Russian Canadian Conference on PAR

there are other motivators for a civil service career beyond salary. At the same time, a socially acceptable level must be provided and obvious inequities, for example between federal and Moscow municipal civil ser vants, addressed. Whatever level or scheme is chosen, incentives must play an important role.

Canadian experience underscores the complexity of this issue. Canada has roughly 72 job classifications, each with 4 7 levels plus five execu tive levels and five deputy minister levels. But the key thing is getting the monetary value of the job right, and that includes the package of pay and benefits. Something that may be a consideration in Russia is to move towards a less complex benefits system with more reliance on pay.

Benefits (e.g., cars, housing) can require elaborate administrative sup port that is a cost in itself. Moreover, a salary emphasis allows the indi vidual employee to choose what he does with his or her money. If this issue remains unresolved, it will adversely affect the other reforms. on reflecting the public’s interests in the reform process…

One of the limitations of functional reviews is that they do not address related issues of capacity and process. For instance, unnecessary or duplicative licensing functions might be withdrawn, but this does not by itself result in ministry officials providing an efficient service.

Somehow, the public’s perspective must be reflected in the design process.

Canadian experience underscores the importance of not just getting the structures and processes right, but ensuring that service quality actual ly improves. This can involve measures such as combining a variety of services delivered through several departments through a single loca tion or access point and paying attention to how effectively service is provided at key points of contact with the public (e.g., telephone response time, wait times at counters). Perhaps most important is the use of technology to improve service. 25 percent of Canadians now use internet provided services. Canada’s Customs and Revenue Agency (tax office) replied to over 100,000 questions in one day primarily through its website. The existence of these new approaches lends itself to setting service standards to better reflect public demands.

Day 1: Briefing by Senior Russian Officials

23

on the benefits and challenges of self regulation‌ From the Russian private sector perspective, a key initiative is deregu lation and the creation of self regulating organizations. There is more capacity to do this than is generally acknowledged. Civil servants who interact with the private sector should be better paid and fewer in num ber. On the other hand, self regulation in the education sector can cre ate problems and block reforms. This can occur when the self regula ting group perceives it in their own interest to create entry barriers to their profession.

Day 2: Workshop Presentations The second day of the conference divided participants into three work shops: 1. functional reviews; 2. improving performance; and 3. budget reform. The workshops were chaired respectively by: L. Yakobson (Higher School of Economics), A. Barabashev (Moscow State University), and A. Klimenko (Higher School of Economics). The following presentations were delivered.

SUMMARY OF WORKSHOP PRESENTATIONS Presenter

Organization

Topic

WORKSHOP 1 ñ FUNCTIONAL REVIEWS N. Parison

World Bank

Different Review Methods: Functional, Program, & Whole of Government

P. Kudyukin

Higher School of Economics

Functional Analysis Overview

P. Kudyukin

Higher School of Economics

Types of Functions of Executive Bodies

J. McLure

Canadian Government (retired)

Functional Review Case Study: Canada

P. Brooke

EC Consultant

Functional Review Case Studies: International Examples

T. Koichumanov

World Bank Consultant

Functional Review Case Study: Kyrgyzstan

WORKSHOP 2 ñ IMPROVING GOVERNMENT PERFORMANCE T. Verheijen

World Bank

G. Kent

European Commission

T. Stewart

Canadian Government

T. Stewart

Canadian Government

D. Elder Canadian Government WORKSHOP 3 ñ BUDGET REFORM

Civil Service Management: International Models and Approaches Human Resources Management in the European Commission Performance Management in Canada Executive Selection and Development in Canada Improving Service Delivery in Canada

A. Klimenko

Higher School of Economics

Russia’s Budget Reform Program

G. Evans

World Bank Consultant

Linking Policy, Budgets and Performance: Canada, New Zealand, Lithuania

A. Pirie

EC Consultant

Russia’s Budget Reform: Lessons Learned

A. Dobson

DFID Consultant

Best Practices in Russia’s Regional Budget Reforms

All presentations are appended. Below are capsule summaries and high lights from the ensuing discussions.

Day 2: Workshop Presentations

25

WORKSHOP 1 – FUNCTIONAL REVIEWS Neil Parison – Different Review Methods: Functional, Program, & Whole of Government Three different approaches have been used to assess the ongoing rele vance and effectiveness of government organizations: whole of govern ment reviews (focused at the totality of government activity), program reviews (focused at the program level), and functional reviews (focused at the ministry/agency level). Different criteria are used to group func tions: by type of function (e.g., policy formulation vs. service delivery), by client (e.g., general public vs. private sector), or by legislative origin (e.g., law vs. ministry decision).

It is important to establish objectives at the outset of the review and these may include: fiscal savings (not the case in RF); efficiency and effectiveness; increasing/decreasing public ownership or central govern ment control; or decentralization (subsidiarity).

The choice of operating environment may be driven by ideology or derive from the analysis. For analytic purposes, decisions concerning functions can be expressed in four broad categories and placed into a quadrant: gov ernment controlled and delivered; government controlled but delivered independently; devolved to another level of government; commercialized.

For retained government functions, a new typology of organizations is often created and may include ministries, services (e.g., tax administra tion), executing agencies, state owned enterprises and regulatory agencies.

Decision trees can be very helpful tools in organizing recommendations and developing more detailed designs. These lead through a sequence of analytic phases, including determining the type of function, identifying the client for that function, locating its optimum operating environ ment, and determining the type of body that should deliver it in that environment (e.g., subordinate vs. an independent agency).

The remainder of the presentation (appended) summarizes case exam ples for the three types of reviews and explores in more detail how to

26

October 2003 Russian Canadian Conference on PAR

apply the decision making sequence under each of the four quadrants to determine the optimum configuration of functions and organizational model for those functions.

Pavel Kudyukin – Functional Analysis and Types of Functions – Russia’s experience Functional reviews are required as an initial step in improving organiza tional effectiveness, the efficient use of budget funds, and providing incentives to employees. They also assist with anti corruption measures.

An assessment methodology will test whether the function is appropri ate for the state, has a statutory basis, or should be delivered by anoth er level of government or the private sector. However, the complexity of the process should not be underestimated.

In Russia, three phases of assessment included document review, socio logical investigation, and integration/synthesis of the analysis. It takes a significant effort to determine the true functions, their purpose and their outputs. The exercise revealed that many functions are enshrined in regulation, but are not expressed consistently across different organ izations. Aggregation is also a problem; i.e., one documented function may be expressed at too high a level and contain several functions.

Numerous functions had no statutory basis and had been created by the ministry for a variety of, often inappropriate, reasons. On the other hand, numerous mandated functions were not being delivered effective ly because of lack of funding.

This initial research must be tested against the reality of ministries through interviews. Eventually, a list of appropriate functions emerges, but a second phase will be required to validate the conclusions. From this work, a list of costed functions will result that can serve as the basis for establishing performance measures and performance incentives.

There is also a cross ministry dimension as duplication can be detected when results are compared.

Another phase of analysis is to link the types of functions to certain types of executive agencies. Nine types of functions include: political/policy,

Day 2: Workshop Presentations

27

international, rights establishing (e.g., legal drafting, standard setting), executive/managerial, control and supervision (e.g., licensing, compli ance), state services (e.g., distribution or resources, information provi sion), state property management (e.g., intellectual property, real estate), and supporting (e.g., accounting, human resources).

In general, ministries appropriately deliver political, international and rights establishing functions while agencies provide direct services and inspectorates deliver control and supervision functions. Rigid guidelines are not advisable as there are instances where even political functions (e.g., forecasting) are, in some governments, delivered by external organizations.

Future steps will flow from this analysis. Supervisory and control func tions have to be analysed closely as they are often applied excessively and can be sources of corruption. With clear functions, service standards can be considered. Revenue generating agencies bear close scrutiny as possible outsourcing candidates. Revenue raising activities also have to be assessed from a conflict of interest perspective.

John McLure – Functional Review Case Study: Canada Although Canada’s 1994–95 program review is the principle topic of the presentation, it is important to note that Canada had extensive prior experience with government restructuring. In the late 1970s, expendi ture cuts were proposed through an “X budgeting” process to offset growing expenditures. Comprehensive performance measurement was tried and abandoned because managers weren’t using the information.

In 1983, a major reorganization was completed, within a small circle of politicians and officials, to streamline government. Few cost savings were realized although the number of government departments was reduced from 32 to 23. By the mid nineties, Canada’s rapidly declining fiscal position necessitated another review.

The 1994–95 program review exercise was a more transparent exercise than its predecessors and was clearly driven by fiscal objectives. Lessons learned in the exercise included: ensure you have clear objectives, keep

28

October 2003 Russian Canadian Conference on PAR

the design simple (six questions were used), communicate to citizens so that they understand what they can expect from government, be cre ative in determining what could potentially be delivered by the private sector (e.g., air traffic control), look for amalgamation possibilities (e.g., food inspections), exploit technologies potential for cost savings, reduce downsizing friction through voluntary measures (e.g., early retirement incentives). The six questions that were used in this exercise were as fol lows: (i) Does this activity serve the public interest? (ii) Is this a legiti mate role for the public sector? (iii) Is this an appropriate role for the federal government? (iv) Is there potential for transfer to or partnership with the private or voluntary sector? (v) How can program efficiency be improved? (vi) Is the resulting package of reforms affordable?

Ultimately, the civil service was reduced by 60,000 over three years. In the Ministry of Defence, alone, the armed forces were reduced from 78,000 to 60,000 and civilian employees from 33,600 to 20,000. The achievements were not without costs. Provincial services were hard hit with reductions in transfer payments in areas such as health care, edu cation, and infrastructure. In fact, the cuts prompted similar reviews to be undertaken in Ontario and Quebec, which had to this point avoided major reforms.

Overall, the program review began a restoration of public confidence in government. In the late 1990s, emphasis shifted to human resources management and improved service delivery, in large part because of pub lic demands. Business planning was introduced to provide a strategic framework for budgeting and program delivery. Senior management per formance contracts now reflect organizational goals.

Peter Brooke – Functional Review Case Studies: International Examples The presentation drew on six functional reviews (Azerbaijan, Kazakhstan, Bulgaria, Latvia, Ukraine, Serbia), but referred primarily to Azerbaijan and Serbia. Although a common methodology was used for the six, the nature of the review was shaped by factors such as buy in by political leaders, prominence of fiscal objectives, and absorptive

Day 2: Workshop Presentations

29

capacity of the private sector. Typically, there are three main compo nents: definition of key concepts and analytic framework; information collection and analysis; and decision making and implementation.

The Serbian review of the health care function produced four categories of recommendations: merger/elimination of existing functions (e.g., com bining health insurance and health services sectors); identification of new functions (European integration); delegation/decentralization (licensing & accreditation agency, health standards agency); and strengthening min istry management. A critical success factor for this review was the pre sence of a new minister and the willingness to address the issue of decen tralization and its impact on the ministry in a substantive way.

The Azerbaijan functional review of the Apparat was less successful. The environment was one with a strong central planning tradition and rela tively weak ministries. The existing Apparat delivered 257 functions with 256 staff. The review suggested that 115 functions and roughly 150 staff were appropriate to a modern government secretariat. Although some measures were implemented, the changes were relatively minor.

A major reason for this was that the review was donor driven and the office itself did not perceive any need for change. Other lessons learned from this review include: taking the time to understand the role of the organization; being clear about the definition of a “function,� taking leadership and motivation into account, and linking recommendations to an overall performance management framework.

With respect to critical success factors, the issue of leadership is relevant to functional reviews at two levels. First, reviews work better when top leadership publicly commits to the process and provides the necessary mandates and resources. Second, internal leadership can be vital to ensure that the review is meaningful to the organization itself and is not simply driven by external consultants. It is also essential to develop a solid implementation plan as part of the review, not just submit an elab orate analysis. In terms of motivation, allowing the organization to retain any savings, be provided with more administrative flexibility, pro file their achievements, and/or invest in computers can be persuasive.

Organizations also welcomed the application of a related diagnostic tool, the Common Assessment Framework (designed by the European

30

October 2003 Russian Canadian Conference on PAR

Commission), which provides benchmarks with respect to overall orga nizational effectiveness. This helps organizations assess themselves. At the individual level, offering staff retraining opportunities and commit ting to assist in redeployment helps to allay fears.

Effectiveness will also depend on functions being reviewed vertically; i.e., from central ministries through line ministries and subordinate agencies at the national level and on through sub national levels such as provinces, regions, and districts.

Finally, experience indicates that functional reviews should not be con sidered as a one time exercise. In most instances, 2 to 3 stages will be required before the desired, well performing organization emerges.

Talaibek Koichumanov – Functional Review Case Study: Kyrgyz Republic The Kyrgyz Republic was considered, through the early 90s, to be a reform leader along with the Baltic States, but the pace slowed from the mid 90s. Organizational reforms resulted in a sharp deterioration of serv ice quality. Budget cuts and ministry amalgamations were not accompa nied by a reduction in the number or scope of functions. Given these problems, a more formal functional review was launched using a more rigorous methodology.

The process involved six ministries and agencies. Good involvement by ministry heads and internal working groups was achieved. Many recom mendations were implemented, including: ecological control was dele gated to regions; municipal property assessment and sale was decentral ized; determining curriculum content for higher education institutes was delegated to trustee boards with standards set by the state; legal licensing was devolved to a self regulatory agency; and duplicate priva tization functions were eliminated.

It was also determined that many organizations lacked a viable policy function, for instance in Education and Health. The Ministry of Justice was only peripherally involved in drafting legislation. Accordingly, pol

Day 2: Workshop Presentations

31

icy units were established in Education and Health and a national legal policy function in Justice.

Lessons learned emphasized the importance of commitment by leader ship and coordination at the government level. Training of participating employees is another critical success factor as is adequate resourcing.

Talaibek Koichumanov – Functional review in Uzbekistan A number of lessons learned arose from this functional review. Some functions are so obviously redundant that they can be fast tracked for elimination. A common finding in ministries was an absence of a strate gic planning function. Numerous service functions were identified for delivery by a service delivery agency. Care had to be taken with regula tory functions to avoid conflicts of interest. The approach of using inter national experts and task forces was not well received by ministries, as it became obvious that employees needed to be more involved in the process. Ultimately, training was required to address implementation; e.g., assessing legal/procedural changes required. The centre of govern ment was also assessed, with a view to weakening the traditional control role over ministries such as health.

Workshop 1 Discussion Points • It is difficult to strike the right balance between overloading the analy sis (e.g., the Russian exercise is looking at nearly 6,000 functions) with a whole of government assessment and missing duplication between ministries when the focus is simply on one organization or sector.

• The restructuring exercise will suffer from not having a clear, strate gic vision on which powers should be devolved to sub national levels.

This will inevitably lead to several waves of restructuring as these other considerations become clear at a later stage.

• Although variations exist, the OECD tendency, in terms of size of government, is 12–15 ministries and 3–5 cabinet sub committees,

32

October 2003 Russian Canadian Conference on PAR

with smaller, policy focused ministries separated from service deliv ery organizations. If the RF moves towards such a model, implica tions for the Apparat and sections of the Administration of the President will need to be considered to ensure that central and line ministry roles are coherent. If the ministry model is too radical for the RF, an intermediary step would be to group similar ministries under the direction of a Deputy Prime Minister. Care must be taken not too over consolidate, as organizations with extremely broad, diverse mandates become unmanageable.

• In the Russian context, functional reviews cannot overlook bureau cratic tradition where excessive central power is vested in the Executive. Increasing checks and balances will build public credibili ty in the reform. On the other hand, in young democracies, it is per haps inevitable that the bureaucracy over assumes its decision mak ing role as the legislative branch or other non executive organs gain capacity and assume their oversight role over time.

• Some cynicism results from perpetual restructuring. The Ministry of Transport (or transportation sector) offers one example where there have been successive integrations, disaggregations, and reaggrega tions of related sectors.

• Consideration should be given to approving by law the list of state functions. The focus would then shift to assigning work vertically or horizontally rather than restructuring.

• From a ministry perspective, there seems to be inherent conflicts between various reforms. Major gaps remain in Russia between the legal mandate and the functions actually delivered. It will be very difficult to identify many of these, which remain “under the carpet.” And there is difficulty distinguishing between functions and objectives and other similar terminology. For the government, this presents a serious chal lenge; i.e., translating the intent of the reforms and the reform laws into concrete actions and attitudes at the ministry level. Ministries may still seek to pursue their self interest or to interpret the laws from a wholly different perspective. In many ways, though, the conflicts are natural (e.g., numerous competing interests), rather than purely self interest.

Day 2: Workshop Presentations

33

WORKSHOP 2 – IMPROVING GOVERNMENT PERFORMANCE Introduction In approaching the presentations on Canadian, European Commission and international models, it is important to consider the Russian con text. Two Russian reforms are underway and are at very different stages: administrative reform just beginning and civil service reform well underway. The current focus on functional reviews and redundant func tions will need to extend to poorly performed, but essential functions.

This is at the crux of improving civil service performance. It must also be remembered that efficient performance does not necessarily translate into high performance. The international models being reviewed here will not be homogenous. The European and Canadian models may be quite different and the Eastern European models different still.

Tony Verheijen – Civil Service Management: Emerging Models and Approaches There are numerous choices to be made in designing a civil service man agement model. One of the most fundamental is the scope or coverage.

An integrated system covers both central and local government levels, although not usually the entire public sector (e.g., hospital workers and teachers). Benefits of such systems register most at local levels where pay might otherwise be less. They also foster mobility between levels and the wider dissemination of professional standards. On the other hand, this may be deemed to infringe on local autonomy, be too expensive for some local governments, and lead to a brain drain because of easy mobility.

Increasingly, the concept of a “core civil service” is evolving. The defi nition of “core” relates to the level of job and covers all institutions rather than differentiating between institutions. Because it is applied to a more limited group of employees, it controls costs and creates more job flexibility for this group. Typical criteria include the exercise of public authority (Germany), management responsibilities, or policy versus operational roles.

34

October 2003 Russian Canadian Conference on PAR

Another key distinction is the type of system. The most common types are career and position (or post) systems. Career systems usually employ broad competitions for recruitment and favour internal candidates for subsequent promotions. Such systems often fall under a civil service labour law that differs significantly from the general labour law. The Russian system is clearly a career rather than a position system.

Position systems (e.g., Sweden, Netherlands) focus on recruiting spe cialists and operate under similar labour laws to the private sector.

Promotion is not automatic as external and internal candidates may compete for most vacancies. Competencies will be rated more highly than inside knowledge, which would obviously favour internal candi dates. Position systems place significant pressure on human resources management because of the open recruitment.

Regarding the model of civil service management, there are three basic choices: centralized, network, and decentralized systems. In centralized systems, a central unit substantially controls the hiring, firing and pro motion of civil servants based on input from ministries. Such systems typically exist in a career system. Advantages include coherence and lack of favouritism. Disadvantages may include inflexibility and lower management autonomy.

The network system involves a central unit overseeing the selection and training of human resources professionals and ensuring that rules are followed. The actual hiring remains the responsibility of ministries.

These systems have matrix reporting relationships to the centre and to the ministry. They are difficult to manage in practice and require under standing by ministers and ministry senior management. If the system fails, the entire system can disintegrate. Network systems depend on a strong central unit able to conduct needs assessments and support local human resources offices.

Decentralized systems may have a central unit, but it is typically weak and does not intervene in human resources decisions. The Eastern European experience illustrates the problems of such sys tems, where Civil Service Laws are implemented unevenly. In several instances, these practices adversely affected the development of the

Day 2: Workshop Presentations

35

necessary administrative capacity for membership in the European Union.

Another challenge is creating incentives for staff development and train ing. Russia uses a quota approach (e.g., every employee is to be trained every five years) where training is contracted to a small group of insti tutions. Another approach (e.g., in Bulgaria) is to allocate a set percent age of each ministry’s operating budget for training. France has also adopted this “use it or lose it” approach with some success. A more strategic option is the use of training plans that are linked to ministry business plans.

Retention of young, educated employees in whom the public service has invested heavily in terms of training and development, is a challenge for all governments. Salary levels and increases are the most obvious incen tive. Some governments (Ukraine, France) require new employees to sign enforceable contracts that stipulate a minimum employment period with high penalties for prior departure. Fast tracking promotions (Slovakia) is another approach. Latvia used performance bonuses, but the scheme encountered transparency problems. Monetizing benefits can appeal, but is always controversial at the political level, which does like to appear to be increasing civil service wages.

Increasing attention is being paid to training delivery systems, which may be public sector or private sector based. The challenge of contract ing to the private sector is to obtain the necessary level of “tailoring.”

For public sector training institutions, the challenge is to remain effi cient and relevant.

Gail Kent – Human Resources Management in the European Commission Modernisation of personnel policy is one of the three core elements of the European Commission’s administrative reform program. As in any administration, the most essential asset of the Commission is the quali ty of its employees. In the absence of stock prices and bottom lines, which provide means of judgement and motivation in the private sector,

36

October 2003 Russian Canadian Conference on PAR

the quality of public employees is measured by public confidence, respect and trust.

The Commission has never invested enough in equipping its people to gain that public confidence, or performance dividend. Instead, there has been a heavy reliance on the historic presumption that institutions have self perpetuating qualities that rarely, if ever, require upgrading or rein forcement.

Although talent and initiative are certainly present in the Commission, these qualities are not by themselves sufficient. Illustrative of over reliance, in 1999 the Commission only dedicated 0.05% of its budget to staff training. Moreover, the Commission has never put a premium on management as a skill to be identified, trained and rewarded; instead, the Commission has had inconsistent and unprofessional disciplinary arrangements, and a career structure with systematic blockages and few incentives or rewards for additional effort, achievement or respon sibility.

To raise morale and motivation, increase job fulfilment, and improve productivity, the status quo had to be altered radically. It must be recog nized, however, that implementing reform and changing culture is nei ther easy nor quick. Organizational culture is a product of systems and structures. Accordingly, modernization requires moving from a hierar chical, compartmentalized culture that discourages initiative to one that maximises the creative capacities of staff. Increased quality in manage ment, confidence in exercising responsibility, and stronger service orien tation will not evolve until the architecture of the Commission is mod ernised. Although not unique in this, the Commission faces different complexities from national administrations, such as its multinational, multicultural, multilingual character. This requires different naviga tion – not alteration of purpose.

The main elements of the Commission’s strategy include: • A new appraisal and promotion system in which staff are assessed annu ally on the basis of pre defined and agreed objectives and with apprais al dialogues between every staff member and his or her manager, specif

Day 2: Workshop Presentations

37

ic training for managers, and an extensive system of checks and ba lances to guarantee the fairness and objectivity of the system.

• A new, more linear career structure to replace the 40 year old edifice which still has 4 rigidly separated categories – despite the fact, for instance, that 25% of the current technical or ‘B’ grade personnel are graduates with capacities and qualifications that should permit them to join the policy or ‘A’ grade. The proposed new career structure cre ates an Administrator function, covering policy and managerial tasks, and an Assistant function, replacing part of the current technical cat egory and the secretarial category. Career movement from Assistant to Administrator will be facilitated through a new certification mech anism that includes staff reports, satisfactory completion of a training programme, and passing an examination that is pertinent to the responsibilities of the higher function. The D category (chauffeurs and manual workers) will be gradually phased out and the functions undertaken by non permanent, contracted positions.

• A fourfold increase in the budget for training, and annual targeted training programme for each member of staff will facilitate the new framework for mobility that is more conducive to movement between activities and departments. More generally, mobility will now be regarded to be career enhancing instead of being an impediment to promotion.

• The new emphasis on training has significance for middle manage ment. In addition to making satisfactory completion of management training courses a precondition for managerial appointments, the new appraisal system and more structured career progression will put a premium on the trained and proven leadership and people manage ment abilities as indicators of management quality. This has never existed in the Commission before.

Future challenges include the Commission’s demographic profile; the average age for employees is late 40’s. Workforce composition will also be changed by the expansion of the EU, which adds 3,000 employees.

Given higher salaries, this may serve to drain skilled, experienced staff from the relatively lower paid countries.

38

October 2003 Russian Canadian Conference on PAR

Comment: in developing the Russian Civil Service Law, the issue of com patibility with the EU was considered.

Tom Stewart – Performance Management for Senior Government Executives in Canada Some 4200 of 160,000 employees are classed as executives in the Canadian federal public service. The executive category has five levels.

The Performance Management Program applies to the highest levels, Deputy Ministers and Associate Deputy Ministers as well as Executives.

Its objectives are to encourage and reward results achievement and to provide a fair, equitable framework for compensation in comparison to the private sector and other government jurisdictions.

The program has five main components: • achieving corporate priorities – these are aligned to the govern ment’s priorities and are issued by the Clerk of the Privy Council (Canada’s senior civil servant).

• individual performance agreements – concluded with the Clerk of the Privy Council and the Deputy Minister(not the Minister as in other systems) and covering policy (linked to government’s priori ties) and management (e.g., human resources planning, business plan ning) objectives; performance targets are identified.

• performance evaluation – completed by Clerk of Privy Council on Deputy Ministers based on a self evaluation and feedback from oth ers, including the Minister, as well as the concrete results achieved versus the performance targets.

• assignment of performance ranking – four possibilities: did not meet expected results; succeeded in meeting most expected results; suc ceeded in meeting all expected results; surpassed expected results.

• performance pay – two components: pay scale (up to 5% per year); and lump sum payment or bonus (between 15 and 25% of salary).

Day 2: Workshop Presentations

39

The performance approach for executives below the Associate Deputy Minister level is the responsibility of the Deputy Minister and similar but limited to a maximum bonus of 10% for EX1 3 and 15% for EX4 5.

Tom Stewart – Recruiting and Developing Senior Government Executives in Canada In the 1990s, Canada was facing serious problems with respect to recruiting and retaining senior government executives. Part of the prob lem was fiscal, with downsizing leading to very restricted promotion opportunities. New demands, such as strategic, horizontal and knowl edge management, were emerging. The demographics were problematic.

Whereas in 1984, 19% of executives were under 40, by 1995 this figure had declined to 4%. This is the primary recruitment pool for future Deputy Ministers who typically require 20+ years of experience.

Mobility had stagnated with only 10% of executives being appointed from other departments. Very few executive appointments, and this con tinues to be the trend, come from outside the public service.

In response, a program titled La Releve was launched. This program intended to complement long range human resources planning with some immediate actions to address a looming leadership crisis. It introduced a number of initiatives to fast track the identification and development of future executives. Correspondingly, a “competency based� system was introduced, which emphasized generic aptitudes, not job specific knowledge. A voluntary pre qualification program was introduced to identify those mid level executives with the right com petencies. Those qualified were then placed in a pool and were deemed ready to assume senior management (Assistant Deputy Minister) positions as they became available. A second program was launched for those who showed potential but who were not yet ready. They were given assignments in various departments and leadership training and coaching.

The La Releve program was initially criticized for focusing on senior management exclusively, but this was quickly extended to lower man agement levels. The program was also centrally driven, which was not

40

October 2003 Russian Canadian Conference on PAR

common in Canada’s relatively decentralized human resources manage ment system. Some of its success in addressing the leadership crisis must be attributed to the salary increases for senior executives, following many years of wage freezes that made senior positions more competitive with the private sector. Interestingly, these raises were affordable because of the downsizing.

Currently, emphasis is being placed on leadership, an amalgam of leader ship, management and expert knowledge skills. The proportions for a given executive position vary depending on location, but the leadership component increases for all of the most senior positions. The sustained health of any organization depends to a significant degree on getting this right; i.e., on long range planning for leadership needs; on bottom up development; on shared organizational values and vision; and on effectively identifying high potential candidates.

The current competencies include: visioning, creativity and innovation, action management, relationship management, people management, and knowledge. The mix of competencies changes as one progresses through the ranks. For example, a competency for sector specific knowledge shifts to strategic enterprise knowledge at higher levels. Visioning also increas es in importance, while action management is most important at the mid dle levels. These competencies have endured for seven years, but are being reassessed now for updating and streamlining. Notwithstanding the emphasis on generic skills, the element of expert knowledge remains important since there is considerable risk if this is ignored.

Successful leadership planning requires an alignment of business and workforce planning, including succession and knowledge retention plan ning. Performance compensation must be aligned to emerging policy pri orities and non monetary support systems (e.g., mentoring, recognition programs) must be set in place. Above all, leadership development must be recognized and valued by the centre of government and incorporated within the accountability frameworks that shape and reward actions and results.

The Canadian experience indicates continuing room for improvement in strategic human resource planning, as the quality varies greatly between

Day 2: Workshop Presentations

41

organizations. Nonetheless, through quick action in the late 1990s and continuing attention, the leadership crisis has been averted.

Notes: In the Russian context, the Canadian level of executive roughly correlates with level one and a few level two employees. The Russian challenge may be different from the Canadian context; i.e., focusing retention efforts and training on young, educated employees rather than senior executives.

The conclusions of a Treasury Board study of the private and public sec tors, identifying ten benchmarks for leadership development, is append ed to the presentation David Elder – Improving Service Delivery in the Canadian Government Service delivery is important because the delivery of services is the way a government connects to its citizens on a daily basis. The Government of Canada has given attention to the delivery of service and has made a spe cial investment in improving service quality ($880 million), in what was called the Service Canada initiative, which included one stop centres and, particularly, on line services. Underpinning this is the recognition by the Government, reflected in its management framework document “Results for Canadians�, that service design and provision must be citizen centred.

In the Canadian context, service delivery has not been structurally de linked from policy to the degree of other countries (e.g., New Zealand). It is more a hybrid model. Many departments continue to develop policy for services and even directly deliver services. Other agencies, such as Canada Customs and Revenue Agency (now the Canadian Revenue Agency), operating independently from policy departments, still have a role in the operational aspects of policy. Another important contextual factor is the split between federal and provincial services. In federal systems, the degree of inter governmental cooperation will be a critical service quality issue.

In the late 1990s, increasing attention began to be paid to service quali ty and citizen centred services. This corresponded with rapidly expand

42

October 2003 Russian Canadian Conference on PAR

ing demands for and use of technology. In 2000, the Government released “Results for Canadians”, a paper which set out four measures of a well performing public sector: focusing on citizens; embracing a clear set of public service values; managing for results; and ensuring responsi ble spending.

The focus on citizens required quantifiable improvements in govern ment service delivery and linked this to the government’s performance management system. Treasury Board required a 10% improvement in Canadians’ perception of quality in the delivery of key government serv ices over five years (by 2005). Surveys indicated the key to achieving this goal would be to provide better access (e.g., one stop shop; on line) and improved quality and performance.

A concrete measure of service quality was set out in a survey called Citizens First. This compared public perceptions towards a range of pri vate sector and public sector (federal, provincial and municipal) services.

Favourable perceptions of overall public service quality have increased from 47% in 1998 to 51% in 2000 to 56% in 2003.

Service Canada was established in 1999 to enable Canadians to navigate their way through the services offered by the many departments and agencies. The Service Canada initiative aimed at improved services for Canadians visiting government offices (Service Canada Access centres), for those phoning for government information (1 800 O Canada), for those using the internet (Canada.gc.ca).

Service Canada Access centres brought together a network of different departments’ offices. 229 in person centres have been established to provide information and deliver service on any federal program. In the centres are also public kiosks with computer facilities where on line access to the government website is available. Full access centres pro vide one on one client service to ensure the citizen gets the informa tion he or she needs on a particular program or service. Satellite and specialty (e.g., for youth, minority language) centres have also been established. In person service is being improved by the setting of stan dards of service.

Day 2: Workshop Presentations

43

The 1 800 O Canada telephone service provides 24 hour a day service in French and English at a free number dialled anywhere in Canada.

The officials who answer the calls can access a database storing infor mation on more than 3,000 programs and services from 180 government organizations. The quality of this service is measured annually, with results published for efficiency, accessibility, courtesy, responsiveness, accuracy and privacy. Only 8 years ago, the Auditor General had reported that only one in ten calls to some departments was answered.

The Government is committed to meeting the new target is 95% with 85% of calls answered within three rings. If the operator cannot provide an answer, a call back from someone who does know is to be placed within one business day.

The Government of Canada’s website, Canada.gc.ca, provides access to all Government on line services in English and French under three main categories: services to Canadians; services to non Canadians; and serv ices to business. The Government On Line program aims to have all key services accessible from a home computer 7 days a week, 24 hours a day.

The services offered on websites are clustered from the user’s perspec tive, rather than being structured along the lines of the individual organizations delivering services.

The Service Improvement Initiative links the goal of an overall 10% improvement (gauged by customer satisfaction ratings) to the govern ment’s accountability vehicles. Treasury Board has developed a Common Measurement Tool (available on line) to assist departments with such planning. The tool provides guidance on the types of ques tions and performance measures that have proved effective in gauging public perception of service quality. Departments are now developing annual service improvement plans as part of their broader business plan ning activities. The two primary results based documents prepared by departments, the Report on Plans and Priorities and the Departmental Performance Report, contain service improvement targets against deli very standards and customer satisfaction ratings. These documents are provided to Parliament. The targets in them are reflected in the per formance contracts of senior management, which are the means by which the performance and remuneration of officials at the executive level are determined.

44

October 2003 Russian Canadian Conference on PAR

Workshop 2 Discussion Points • The goal of codifying all activity through mandates, “reglaments” and job descriptions may be overoptimistic. Numerous demands, particu larly on managers, cannot be foreseen. For this reason, it is essential to incorporate ethical guidelines to provide general parameters for appropriate behaviour in such situations.

• A gap in the Civil Service Law is the absence of any reference to an organization and service wide leadership of the human resources function. This is crucial if issues such as attraction and retention are to be addressed in a systematic, strategic way. In the Canadian con text, in which human resources responsibilities are decentralized, there is still a central organization, the Public Service Commission, that articulates and ensures fairness of process.

• The issue of competition can be viewed in two ways. Open competi tion infers that each job is competed for. But the reserve system also is competitive; i.e., one must score high against competitors on a gen eral entrance exam. Hybrid systems are also possible.

• Problems arose when the draft Civil Service Law attempted to include the military, which had an altogether different command and subordination structure. Other problems derived from classification systems; in customs, for instance, two employees doing similar work could be paid significantly different salaries depending whether the job was slotted into a military or civil service category.

• Learning at senior levels is complex. In the Canadian case, senior executives tend to be resistant to structured learning, but very much enjoy the opportunity to get together and exchange ideas. Creating networking opportunities has therefore being adopted as an approach to senior executive learning.

• Equity issues in pay come in many forms. These range from unequal pay for equal work between men and women to donor paid versus government paid jobs. Another variant is fast tracking promotion programs for young people, although in this case the inequity derives

Day 2: Workshop Presentations

45

from a positive human resources objective (retention) rather than systemic discrimination.

• The creation of autonomous agencies has risks, as illustrated by Latvia. There, over 100 agencies operated effectively beyond govern ment control and inappropriately began charging fees for various services. Salaries were set much higher than civil servants. Russia will have to safeguard against this trend.

Russian agencies tend to have one person in charge of all the decisions.

Other countries have more distributed decision making and better checks. Recruitment, despite open competition rules, still revolves around personal referrals of the person in charge. However, the main problem remains low salaries.

• The reserve is rarely if ever accessed (based on observation of a civil servant with 36 years experience). It almost is a career in itself; train ing is provided. However, appointments continue to be from personal referrals. The merit based recruitment objectives of the Civil Service Act, while laudable in principle, will be very difficult to implement in practice (e.g., there is no central human resources authority; shortage of public administration experts versus volume of competitions; low salaries preclude sufficient applications).

• Transparency is of course important but the Russian public does not yet request or use the available information.

WORKSHOP 3 – BUDGET REFORM The following summarizes the four presentations made at the budget reform workshop. Unfortunately, the recording equipment did not cap ture the related discussion.

Andrei Klimenko – Budget Reform in the Russian Federation When discussing budget reform, it is of course very important to do so in the context of reforming the overall system of public administration.

46

October 2003 Russian Canadian Conference on PAR

In this context it was noted that civil service reform was already under way; and that administrative reform (the review of functions and struc tures and of government effectiveness and performance) was beginning with a number of pilots and experiments having been launched.

In this context, the main direction of budget reform was the move to performance based budgeting. This had already become an irreversible reform. The work of the Administrative Reform Commission would also focus attention on this reform area. The main problem being addressed was the imbalance between government responsibilities and the alloca tion and availability of financial resources. Accurate analysis of this sit uation is complicated further by the vague definition of many existing government functions and the informal nature of many others.

Functions are not defined in any way which makes it easy to perform quantitative analysis of any type on them (either workload or financial).

Even after completion of the present process of functional review, it is unlikely that functions will have been re designed in such a way to allow analysis of the costs associated with undertaking such functions. It is always difficult for example to quantify policy functions. This means that when moving to performance based budgeting it will likely be nec essary to combine a number of different approaches to gradually increas ing performance based measures in the budget process; while decreasing allocations made on the basis of inputs.

At the same time new approaches will need to be developed to the financ ing of programs such as the Presidential Program for Modernization of the Federal Civil Service. While some separate financing is made available from this program, this does not reach the subjects of the reform, the min istries, who are asked to carry an increasingly heavy burden in this respect. If one looks at the usage made of ministries’ research budgets, perhaps 70% is allocated to work relating to public administration which ministries do not themselves have the staff or the skills to undertake. But it is already clear that there is a need to inject a stronger medium term focus and emphasis on planning, which may lead to a difference in the way such research budgets need to be developed and managed.

Ministries pursue long term policy goals – for this they need clear medi um term perspectives. Predictable medium term financing needs to be made available to support ministries in achieving these long term priori

Day 2: Workshop Presentations

47

ty policy objectives. At the same time however, attention needs to be paid to the actual results being achieved by an individual ministry and to the quality of its financial management, with sanctions for comparatively poor performance. The next priority is significantly to improve expendi ture planning.

New and standard forms of reporting based on results will need to devel oped and elements of a management accounting system introduced.

Approaches need to be developed to benchmarking against internation al practice; and to developing capacity for effectiveness audits. Most important perhaps is putting in place internal incentives and stimuli, underpinned with monitoring, to secure a gradual move towards per formance based budgeting.

At the same time, there is a need to build up awareness of approaches to developing and setting performance indicators, including use of interna tional approaches and experience. The pilots on performance budgeting in 5 regions have shown that there is great demand for methodological support in this area.

Finally, it will be necessary to analyze the real costs of moving to a per formance based budgeting approach and ensuring that appropriate financial provision can be made for this, together of course with appro priate monitoring and control mechanisms, systems and processes. And of course the costs in the transition period and the load on ministries of running parallel systems of control on inputs while building up controls on outputs are also extremely high and need to be respected.

Gord Evans – Linking Policy, Budgets and Performance: Canada, New Zealand, Lithuania The importance of this often neglected subject was underscored at a recent London conference on MTEF (medium term expenditure frame works) programs. It concluded that one of the most common causes of failure occurs when the policy process is disconnected from the fiscal process. MTEFs cannot remain an isolated undertaking of the Ministry of Finance.

48

October 2003 Russian Canadian Conference on PAR

This presentation used four case studies (Canada, Ontario, New Zealand, Lithuania) to illustrate the importance of linking policy, budgets and per formance. This must occur throughout all four stages of the policy process: 1. government sets broad commitments (planning stage); 2. min istries develop detailed policies and budgets (policy development and approval); 3. government ensures the means to implement; and 4. min istry implementation. Note that the interaction between the centre and ministries changes at each stage (very high during stages 1 and 3; lower at stages 2 and 4).

There are numerous ways that governments express their policy priori ties or major commitments. Examples of such vehicles include “throne speeches” (Canada and New Zealand), budget speeches (Canada and New Zealand), and National Development Strategies or a Government Programs (Lithuania). Financial priorities are established in a macro economic strategy and fiscal plan, which includes aggregate targets for revenue, expenditures, and the deficit, and should reflect major new ini tiatives and tax policy changes. In all four case studies, a high level com mittee chaired by the Prime Minister (e.g., Lithuania’s Strategic Planning Committee) reviews and recommends these fundamental deci sions to full Cabinet, with the Ministry of Finance having primary influ ence over the fiscal plan.

Together these high level policy and fiscal statements provide direction to the ministry planning process. Referring to these policy directions and their budget ceilings, ministries develop strategic plans. In Ontario, this is termed a business plan and includes information such as vision, environmental scan, core programs, strategies, and performance meas ures. Additional information is often requested, such as an information technology or human resources plan. A cabinet committee reviews each ministry’s business plan along with its budget request.

A checklist of best practices at the planning stage would confirm active participation by decision makers at this stage, priorities being estab lished within the context of a fiscal plan, major new commitments or policy changes being reflected in the fiscal plan, referencing of policy objectives in budget negotiations, and the production of ministry strate gic plans that link proposed budgets to policy objectives and perform

Day 2: Workshop Presentations

49

ance targets. Perhaps one of the most important best practices is an effective working relationship between the Ministry of Finance and Cabinet Office (Apparat in the Russian system).

At stage 2 (policy development and approval), ministries prepare policy submissions and draft laws to implement their strategic plans. It is important to engage meaningfully decision makers at this stage. In Ontario, policy papers (termed Cabinet Submissions) precede legisla tive drafting and are reviewed in depth by ministerial sub committees (e.g., social or economic policy). If the issue is particularly important, it will be reviewed by the Priorities and Planning Committee, which is chaired by the Premier. In parallel, a fiscal review committee conducts an in depth assessment of the proposal. Following Cabinet approval of the policy and fiscal proposals, legislative drafting begins if required.

Different governments use different formats for policy papers, but the purpose of these documents is similar: to provide Cabinet with options and analytic information to support their decision making role. In New Zealand, these papers contain the urgency of and rationale for the issue, consultations undertaken in preparing the paper, policy implications (e.g., impacts on the economy or social groups), and the communica tions plan. Lithuania accompanies its policy proposals with a fiscal impact assessment that provides a multi year financial scenario, staffing impacts, and the financial impact on sub national levels of government.

In Canada, the creation of a new program must be accompanied by a “results based management and accountability framework,� which out lines performance measures, reporting requirements, and an evaluation strategy.

Best practices at stage 2 include the use of policy and fiscal impact assessments as decision making tools prior to Cabinet approval, suffi cient time and authority for the Ministry of Finance to approve or con test the budgetary impact of ministry proposals, in year controls on sub mitting unplanned or unbudgeted proposals, and expected results being established at the outset.

Stage 3 (government ensuring the means to implement) often encoun ters problems when poor planning exists at the centre. Symptoms

50

October 2003 Russian Canadian Conference on PAR

include severe legislative backlogs, approved budgets not provided, sig nificant delays at the committee review stage, and frequent court deci sions overturning government laws or regulations.

In well functioning systems, stage 4 (ministry implementation) will be characterized by robust results reporting mechanisms. In New Zealand, each ministry and agency is required by law to submit an annual report reporting the results achieved versus the targets set for all outputs identi fied under each budget program. These reports are provided to Parliament and the Auditor General and placed on the internet. In Canada, the Departmental Performance Report serves a similar function. Ontario uses annual results as the basis of their performance pay system, which has three tiers: assessment of overall civil service performance (if unsatisfacto ry, no performance pay is provided); relative assessment of ministry per formance (differential envelopes are provided based on ministry rank ings), and individual performance (distribution of the ministry envelope is based on individual rankings). Both the Canadian and Ontario govern ments have implemented evaluation cycles (3–5 years) for all government programs. Tests are applied to determine the ongoing relevance and opti mum mode of service delivery.

Best practices at stage 4 include an emphasis on performance rather than compliance in monitoring, results information being used to inform decision making, public reporting of actual versus expected results, linkage of individual performance to ministry performance (at manage ment levels), and a commitment to evaluation that, in turn, influences future policy and budget decisions.

The term “business plan” can be misleading as it has nothing to do with the private sector, other than the government wished to empha size the importance of efficiency and effectiveness. The plans them selves are intended to balance top down planning and budgeting (gov ernment’s priorities) with bottom up planning (ministry or sector strategies).

Notes: Ontario’s performance measurement methodology, with examples, is appended to the presentation in the annex.

Day 2: Workshop Presentations

51

Andrew. Dobson – Best Practices in Russia’s Regional Budget Reforms The presentation focused on a technique or tool being used as part of budget reform rather than of budget reform itself. This particular tool is a Code of Best Practice being implemented in Russia’s regions. A bene fit of the tool is that it provides both a roadmap and a toolkit for reform and can lessen the anxiety that often accompanies reform; i.e., uncertain ty about where reform is leading to? The regional perspective is impor tant to introduce at this juncture of the federal reform, since similar mis takes may be avoided with better communication.

The concept of best practice relates to actions that go beyond statutory requirements, which typically identify standards that, if not met, may result in penalties being imposed. Ideally, best practices identify stan dards that, if met, result in rewards or incentives being conferred. Best practices are not theoretical; they are drawn from actual practices and always have practical application. Best practices, unlike statutory requirements that are applied universally, are flexible and can provide a ladder to better performance for those with less resources or who are further behind.

This is a particularly relevant approach in Russia with its diversity of regions. For the poorer performing regions, they can focus on the imme diate next steps, rather than be intimidated by the huge performance gap. This also introduces incentives to improve practices since regions can compare themselves with others on how far they’ve progressed. In fact, a World Bank project in Russia, which linked incentives to progres sive attainment of various standards, set a precedent for this type of activity. It is interesting to note that this incentive system may be wor king more proficiently than a similar one in the United Kingdom intended to reward local governments that worked to certain standards.

Adherence to a best practices approach avoids the issue of setting end goals without the necessary steps to attainment. This is essential in the design phase of reform programs. Attainment of best practice levels also demonstrates a capacity to be delegated more responsibilities and to

52

October 2003 Russian Canadian Conference on PAR

undertake progressive activities in related areas, such as public adminis tration reform. This project has also countered the argument that best practices do not apply to the Russian context; these best practices are those being implemented in Russian regions. As a conscious part of the process, statements of best practice are generally accompanied by infor mation on the best available Russian precedent (the closest approach to date to the recommended practice), and other available materials (including “public domain” technical assistance materials) that can assist attainment of the standard. It is likely that the wide range of Russian regional experiences will produce different variants of successful best practices. This permits testing of different approaches for application elsewhere.

Another dimension is that best practices, once broadly implemented, may evolve into a future statutory standard (in England’s case, this has occurred with the local government code). They also push an internal debate forward. For example, the experience with level one (basic) stan dards may prompt further deliberations on level three (advanced or full) standards. However, while the steps may change, the principles underlying those steps should be constant.

The best practices approach could equally apply at the federal level and indeed often be uniform across the government sector. Ministries may compete for budget funds in a similar way to the way regions compete for grants.

The presentation was accompanied by a demonstration of the best prac tices website, including information on Russian precedents, used by Russian regions.

Alistair Pirie – Russian’s Budget Reform – Lessons Learned The European Commission is funding a project to create a transparent, efficient system of federal finance and to strengthen the Ministry of Finance’s capacity to reform and improve the budget process. Its cen tral focus is on “performance oriented budgeting” (POB). This phrase describes a process where budget allocations are increasingly related to

Day 2: Workshop Presentations

53

outputs and outcomes rather than inputs of manpower or other resources. Thus, the results to be achieved will increasingly influence budget decisions. Examples of a health outcome might be levels of life expectancy or improvements in it, while a related health output could be successful treatments of various ailments. It is important to empha size that inputs will remain very important and items such as salary or heating expenditures will continue to be carefully measured.

A second critical element is the medium term perspective. This increas es predictability (managers can make real plans), makes performance measurement more meaningful (it usually takes more than a year to pro duce an effect), and allows priorities to be set more effectively.

The advantages of such a budget system are widespread. For Parliament, deliberations on the state budget can be based on concrete information on what various levels of expenditure are expected to accomplish. The reporting of output results makes it easier to hold the government to account. The Government can similarly make decisions based on antici pated impacts, not just expenditure levels. The Ministry of Finance can shift from labour intensive line item control to a more strategic approach to priorities and effectiveness. Budget allocations can be informed by performance and effectiveness information. For ministries, the reliability of receiving their approved budgets will increase, more authority will be delegated to them (to use resources flexibly to achieve results, not to overspend), and the basis for performance pay will be established.

The process of introducing POB will unfold over a period of several years. However, the main thing is to make a start, which is what Russia did in 2003. The 2004 budget preparation process introduced POB prin ciples on an experimental basis. Ministries and agencies were asked to prepare reports defining their policy and expenditure objectives for 2004 06, linking these to goals, outputs and outcomes, assessing past outputs, and linking outputs to expenditures. To accomplish this, min istries worked on strategic goals and defining their main functions.

Attempts were made to link these to performance and financial data.

68 of the resulting reports were assessed on a 1–5 scale under six sepa rate headings . The average scores ranged from 3.47 for goal statements

54

October 2003 Russian Canadian Conference on PAR

to 1.18 for statements on expenditure efficiency. Interestingly, ministries were asked to complete a self assessment as well. Not surprisingly, their scores were higher than the Ministry of Finance assessment, but not sig nificantly different. The identification of outcomes certainly proved dif ficult, as did measuring effectiveness. The current budget classification structure did not mesh well with POB requirements.

Lessons learned emphasize the need to better align the budget structure (which focuses on economic classifications) to an output model, provide more training, and be more responsive to different types of budget users (termed main managers of budget funds). Greater time is required for budget preparation, as is better coordination with the Ministry of Finance.

A major aim for the 2005 budget preparation cycle (in 2004) will be to strengthen the multi year dimension and improve the methodology. The budget plans and requests should be based on hard ceilings derived from the aggregate expenditure ceiling and reflect sectoral priorities. Multi year planning will create an accompanying demand for multi year meas ures and targets. Accompanying rules will need to be established on how to change plans, revise priorities, and carry expenditures forward to the next budget year. The linkage between policy objectives, performance measures, and expenditures should become clearer. This will increase coherency across the whole planning process.

In exchange for adherence to this more demanding budget planning sys tem, ministries will need to be rewarded with greater autonomy to man age their budgets and determine how best to achieve their results. The Ministry of Finance is describing this process as a move from “manage ment of expenditures” to “management of results”.

This fundamental component of budget reform directly supports administrative reform. While prospects are promising, it needs to be recognized that progress will be iterative. The importance of the reform should not be understated. Ultimately, better budgeting pro duces more effective expenditures, public services and use of tax rev enues, which represent a fundamental obligation of government to its citizens.

Day 2: Workshop Presentations

55

Workshop 3 Discussion Points • In the Canadian context, non monetary incentives are also important with respect to best practice. When Ontario wins a Commonwealth award for innovation in service delivery, it sets a best practice for other provinces. Information sharing and comparison of best prac tices can occur internationally as well as nationally or regionally. • Both the United Kingdom and Canada have gone through the expe rience of over measuring and now use a more restricted set of indica tors (perhaps 130 in the UK for essential government activities).

However, within ministries, more in depth measurement occurs to aid with internal management and performance evaluation. A danger to be avoided is focusing on the official measures almost to the exclu sion of the service. A classic case in the UK involved achieving wait time targets in hospitals by turning people away, especially those with serious problems that could not be quickly treated. This just under scores the importance of thinking through what one is measuring and what the effect of applying that measure will be.

Annexes Annex A: List of participants Annex B: Presentation material

ANNEX A: LIST OF PARTICIPANTS Day 1 high level session Russian participants Afanasyev Mstislav Platonovich

Director, Executive Office, Audit Chamber of the Russian Federation.

Tel.: 914 14 40; Fax: 914 13 80

Anchishkina Olga Vladlenovna

First Deputy Director, Expert Appraisal Department attached to the President of the Russian Federation; Member, Governmental Commission for Adxministrative Reform. Tel.: 206 41 78; Fax: 206 47 94

Barabashev Alexei Georgievich

Professor, Deputy Dean, Public Administration Department, Moscow State University. Tel.: 939 53 38, 939 27 83; Fax: 939 53 38; E mail: barabash@spa.msu.ru

Barabashev Igor Alexeyevich

Deputy Director, Public Service Department, Ministry of Labor and Social Development of the Russian Federation. Tel.: 298 85 16

Belozorov Georgy Dmitrievich

State Duma, Head of Russian Canadian Parliamentary Program

Chichkanov Valery Petrovich

Deputy Rector for Research, Russian Public Service Academy attached to the President of the Russian Federation. Tel.: 436 90 24; Tel./Fax: 436 97 44 (assistant); Common fax: 434 57 00

Dmitriev Mikhail Egonovich

First Deputy Minister of the Russian Federation for Economic Development and Trade; Member, Inter Departmental Working Group for Russian Public Service Reform Support and Governmental Commission for Administrative Reform. Tel.: 200 52 82; Fax: 251 94 84

Drozdov Anton Viktorovich

Deputy Director, Executive Office of the Government of the Russian Federation; Leader, Working Group attached to the Governmental Commission for Administrative Reform. Tel.: 205 92 60; Fax: 205 43 06

Egorov President Rector, Russian Public Service Academy attached to the Vladimir Konstantinovich President of the Russian Federation. Tel.: 436 90 12; Fax: 434 57 00 Grishin Viktor Ivanovich

Chair of the Committee for Federal and Regional Policy of the State Duma of the Federation Council

Karlin Alexander Bogdanovich

First Deputy Minister of Justice of the Russian Federation; Member, Inter Departmental Working Group for Russian Public Service Reform Support. Tel.: 206 02 53

60

October 2003 Russian Canadian Conference on PAR

Khabriyeva Taliya Yarullovna

Director, Institute of Legislation and Comparative Law attached to the Government of the Russian Federation; Member, Inter Departmental Working Group for Russian Public Service Reform Support.

Tel.: 719 70 00, 719 74 31, 719 75 20; E mail: izak@imce.ru

Kopeikin Mikhail Yurievich

Deputy Chief, Executive Office of the Government of the Russian Federation – Director, Department of Economy and Property Management, Executive Office of the Government of the Russian Federation; Member, Governmental Commission for Administrative Reform. Tel.: 205 98 52, 205 40 92

Kozak Dmitry Nikolaevich

Deputy Chief of Administration of the President of the Russian Federation; Deputy Chairman, Governmental Commission for Administrative Reform. Tel.: 206 74 11, 206 73 88, 206 56 94

Kuzminov Yaroslav Ivanovich

Rector, State University – Higher School of Economics; Member, Inter Departmental Working Group for Russian Public Service Reform Support and Governmental Commission for Administrative Reform.

Tel.: 928 80 03(1); Fax: 928 86 06

Lamm Raisa Borisovna

Director, State Apparatus Financing Department, Ministry of Finance of the Russian Federation. Tel.: 924 00 89; Fax: 921 75 52

Laptev Alexander Petrovich

Deputy Division Director, Human Resources Department attached to the President of the Russian Federation. Tel.: 206 20 36; Fax: 206 35 33

Lobanov Viktor Vladimirovich

Deputy Director, Institute for the Professional Development of Public Servants and Workers Involved in the National Economy. Tel./Fax: 371 31 74, 174 60 05; Tel. (home): 704 68 61; E mail: igs@guu.ru

Lukyanchik Anatoly Yurevich

Deputy Director, Economic Department attached to the President of the Russian Federation; Tel.: 206 43 94; Fax: 206 32 45

Mau Vladimir Alexandrovich

Rector, Academy of National Economy attached to the Government of the Russian Federation; Member, Governmental Commission for Administrative Reform. Tel.: 434 83 89

Pchelinstsev Sergei Vladimirovich

Deputy Director, Main State Legal Department attached to the President of the Russian Federation (Executive Secretary of the Inter Departmental Working Group for Russian Public Service Reform Support)

Petrov Andrei Sergeevich

Director, Public Service Department, Ministry of the Russian Federation for Labor and Social Development. Tel.: 928 88 66; Fax: 928 08 76

Annex A: List of participants

61

Putilin Vladislav Nikolaevich

Deputy Minister of the Russian Federation for Economic Development and Trade; Leader, Working Group of the Governmental Commission for Administrative Reform. Tel.: 251 44 76, 972 72 63

Savchenko Sergei Dmitriyevich

Division Director, Human Resources Department attached to the President of the Russian Federation. Tel.: 206 47 38; Fax: 206 35 33

Sharov Andrei Vladimirovich

Director, Public Service Department, Ministry of the Russian Federation for Economic Development and Trade. Tel.: 209 87 76; Tel./Fax: 209 84 31

Sharonov Andrei Vladimirovich

First Deputy Minister of the Russian Federation for Economic Development and Trade; Leader, Working Group attached to the Governmental Commission for Administrative Reform

Shokhin Alexander Nikolaevich

Member, Bureau of the Board, Russian Union of Industrialists and Entrepreneurs (Employers); Member, Governmental Commission for Administrative Reform. Tel.: 258 77 47; Fax: 725 52 02

Sysuyev Oleg Nikolaevich

President, Congress of the Municipal Entities of the Russian Federation; Member, Governmental Commission for Administrative Reform.

Tel.: 248 83 45, 248 83 73

Van Nikolai Sergeyich

Director, Center for Strategy of Management of the Transport Complex of Ministry of Transport. Tel 200 43 14

Yakobson Lev Ilyich

First Deputy Rector, State University – Higher School of Economics; Member, Governmental Commission for Administrative Reform.

Tel.: 928 04 21; Fax: 921 29 48; E mail: roomjakobs@hse.ru

Yanvarev Valery Andreevich

First Deputy Minister of the Russian Federation for Labor and Social Development; Member, Inter Departmental Working Group for Russian Public Service Reform Support. Tel.: 925 76 38, 298 85 98, 298 88 57; Fax: 921 81 98

Yuzhakov Vladimir Nikolaevich

Deputy Chairman, Committee for Federation Affairs and Regional Policies; Chairman, Sub Committee for Public Service; Member, Inter Departmental Working Group for Russian Public Service Reform Support. Tel.: 292 19 31; Fax: 292 68 82; E mail: Yuzhakov@ duma.gov.ru

Zhukov Yuri Viktorovich

Deputy Department Director – Division Director, Department for Administrative Reform, Executive Office of the Government of the Russian Federation; Member, Working Group attached to the Governmental Commission for Administrative Reform.

Tel.: 205 46 05; Fax: 205 57 28

62

October 2003 Russian Canadian Conference on PAR

Day 1 international participants Name

Org.

Mr. Julian Schweitzer Mr. Neil Parison Mr. Tony Verheijen Mr. Gord Evans Ms. Yelena Dobrolyubova Mr. Talaibek Koichumanov Ms. Elena Nikulina Ms. Olha Lukashenko

World Bank World Bank World Bank World Bank World Bank World Bank World Bank World Bank Ukraine Government

Mr. Christopher Westdal Mme. Jocelyn Bourgon Mr. John McLure Mr. David Elder Mr. Thomas Stewart Mr. Alberto Palacios Hardy Mr. Matthew Levin Mr. Peter Teslenko Ms. Adrienne Danyluk Mr. Luc Rivard Mr. Vladmir Berzon Mr. Donald Lemieux Mr. Alan Millington

Can. Ambassador to RF Can. Ambassador to OECD former Deputy Minister in Canada Privy Council Office, Canada Treasury Board, Canada Canadian Embassy – Counsellor Canadian Embassy – Counsellor Canadian Embassy CIDA CCMD PAR Project Coordinator PAR Project PAR Project Director

Ms. Lucia Wilde Mr. Denis Yershov Ms. Yana Pavlovskaya Mr. Andrew Dobson Ms. Anastasya Naumenko

UK Embassy – DFID UK Embassy – DFID UK Embassy – DFID UK DFID Consultant works with A. Dobson

Ms. Gail Kent Mr. Magnus Ovilius Ms. Maria Van Ruiten Mr. Peter Brooke Mr. Alistair Pirie Ms. Flavia Galanti Mr. Raymond Piganiol

EC – Adviser on PAR Reform European Commission European Commission EC Project EC Project EC Project EC Project

Mr. Eric Schlosser

French Embassy

63

Annex A: List of participants

Day 2 working sessions 1. Agaptsov Sergey 2. Alexeeva Inga 3. Alexeeva L. 4. Antipieva Maria 5. Anchishkina O. 6. Afanasyev Mstislav 7. Barabashev Alexey 8. Barabashev Igor 9. Barashev I. 10. Belkin E. 11. Belozerov Georgy 12. Berzon Vladimir 13. Brooke Peter 14. Bourgon Jocelyn 15. Chichkanov Valery 16. Danyluk Adrienne 17. Dmitriev Mikhail 18. Dobrolyubova Yelena 19. Dobrynin O. 20. Dobson Andrew 21. Dron Alexander 22. Drozdov Anton 23. Egorov Vladimir 24. Elder David 25. Elian Marina 26. Emelyanov A. 27. Ermolovich Dmitry 28. Ermolovich Valentina 29. Ershov Denis 30. Galanti Flavia 31. Glukharev A. 32. Goncharova N. 33. Jakobson Lev 34. Izotova Anna 35. Karlin Alexander

interpreter

interpreter interpreter interpreter

64

36. Karpov Yury 37. Kent Gail 38. Kislov Victor 39. Klimenko Andrey 40. Kobushko Taras 41. Koichumanov, Talaibek 42. Kovalevskaya A. 43. Konovalov V. 44. Kopytkina Lidia 45. Korzenkov Igor 46. Korolev Vladimir 47. Korochkin V. 48. Kortava Robert 49. Kosterin Mikhail 50. Kostrov Anatoliy 51. Krapil Valery 52. Kudiukin Pavel 53. Kuznetsov I. 54. Kuzminov Yaroslav 55. Levin Mattew 56. Levin Oleg 57. Lemieux Donald 58. Lesheva N. 59. Lobanov Victor 60. Makarova Natalia 61. McLure John 62. Maltseva Irina 63. Marashlyan Vartan 64. Mau Vladimir 65. Migunova Irina 66. Millington Alan 67. Mishutkin N. 68. Morozov Nikolay 69. Naumenko Anastasya 70. Nekipelov A. 71. Nikulina E. 72. Novikova N. 73. Olivius Magnus

October 2003 Russian Canadian Conference on PAR

interpreter

interpreter

interpreter

65

Annex A: List of participants

74. Pavlovskaya Yana 75. Palacios Hardy Alberto 76. Panteleeva Valentina 77. Pautova Larissa 78. Petrov A. 79. Petrov A. 80. Piganiol Raymond 81. Pirie Alistair 82. Platugin D. 83. Popesku Natalia 84. Proletkin A. 85. Proshin V. 86. Punanova J. 87. Putilin Vladislav 88. Pchelintsev S. 89. Parison Neil 90. Rivard Luc 91. Rivtchun Tatiana 92. Rossinsky Boris 93. Rubinstein Boris 94. Van Ruiten Maria 95. Savchenko Sergey 96. Serduck T. 97. Sirotkin A. 98. Skorinov Jury 99. Stakhanova V. 100. Stewart Thomas 101. Suvorova Irina 102. Surinov A. 103. Sysuyev Oleg 104. Scharov Andrey 105. Schlosser Eric 106. Schweitzer Julian 107. Shokhin Alexander 108. Schmelev D. 109. Tscherbakova J. 110. Teslenko Peter 111. Tikhomirov Yury

interpreter

66

112. Trukhin Vladimir 113. Tugmanov 114. Vakaruk Olga 115. Valeryanov A. 116. Van Nikolay 117. Vanin I. 118. Vassilieva S 119. Vasiliev Denis 120. Verheijen Tony 121. Westdal Christopher 122. Wilde Lucia 123. Voronov S. 124. Yanvarev Valery 125. Yasin Evgeny 126. Zavyalov G. 127. Zaitseva T. 128. Zamotayeva E. 129. Zakharenkov N. 130. Zolotareva E. 131. Zharikova E. 132. Zhitenev Viatcheslav

October 2003 Russian Canadian Conference on PAR

ANNEX B: PRESENTATION MATERIAL

Annex B: Presentation Material

69

70

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

71

72

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

73

74

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

75

76

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

77

78

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

79

80

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

81

82

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

83

84

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

85

86

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

87

88

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

89

90

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

91

92

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

93

94

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

95

96

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

97

98

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

99

100

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

101

102

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

103

104

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

105

106

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

107

108

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

109

110

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

111

112

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

113

114

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

115

116

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

117

118

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

119

120

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

121

122

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

123

124

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

125

126

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

127

128

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

129

130

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

131

132

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

133

134

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

135

136

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

137

138

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

139

140

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

141

142

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

143

144

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

145

146

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

147

148

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

149

150

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

151

152

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

153

154

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

155

156

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

157

158

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

159

160

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

161

162

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

163

164

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

165

166

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

167

168

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

169

170

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

171

172

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

173

174

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

175

176

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

177

178

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

179

180

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

181

182

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

183

184

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

185

186

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

187

188

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

189

190

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

191

192

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

193

194

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

195

196

October 2003 Russian Canadian Conference on PAR

Annex B: Presentation Material

197

198

October 2003 Russian Canadian Conference on PAR