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Aid Effectiveness and Performance Management


July 14, 2011

Doug Hadden, VP Products

Charles Grodin remarks in the movie Dave, “If I ran my business like this…” It’s a standard view – if only governments ran like businesses. As many former businessmen have discovered (and not a few enterprise software vendors), it’s not as easy as it sounds. And, aid effectiveness is perhaps an order of magnitude more complex.

Corporate Performance Management

Corporate performance management uses techniques like key performance indicators (measure what is important) and balanced scorecards (show what is important) to improve performance. Government organizations use many of these same techniques.

Don’t let it fool you, it isn’t simple in government.

Private sector organizations have a bottom line: profit. There are established measurements like market share, and return on assets. Output measurements like the number of customer complaints handled, and outcome measurements like customer satisfaction survey ratings are factors that influence financials – profitability. If all the KPIs are green and the company is not making a profit, than the indicators are incorrect.

There is no bottom line in government. Outputs and outcomes are the results. Financial – in this case, budgets, is the input. This makes it very difficult to determine whether the KPIs are correct.

(On an aside, performance management links to accountability. Accountability has generally hurt government stakeholders more than the private sector, as CEO salaries show. The NewsCorp/News of the World hacking scandal is the exception that proves the rule.)

Aid Effectiveness and Performance Management

Does aid work? Some like Dambiso Moyo in Dead Aid, claim it doesn’t. Hans Rosling provides compelling visualization in that aid does work. Owen Barder of the Center for Global Development suggest that we need to consider what type of aid works.

Despite information overload, we don’t have enough data to overcome the narrative that aid is a waste of money. That’s because the aid environment is not a closed system. There’s foreign direct investment, climate and geography (droughts, floods) and many other factors that conspire to make aid appear more or less effective than it is. And, yet there is enough information for interpretation – to act as confirmation bias.

Need for Aid Transparency

Aid donors have performance criteria. Performance information is often not shared. There is often no consistency among donors. And, the contribution of governments to a shared goal with donors is rarely measured. That’s why aid transparency is so critical to determining how aid can be improved.

That’s why you need to sign up to making aid transparent. Over 5,000 people have done so. More is needed.

What could aid transparency accomplish?

  1. Better key performance indicators for aid effectiveness
  2. Alignment of many small initiatives at the micro level to more macro measurements
  3. More effective coordination of donors with governments
  4. More understanding of the sequence of aid initiatives based on the country context
  5. Value of foreign aid for international security
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Doug Hadden

Doug Hadden

Executive Vice President, Innovation at FreeBalance
Doug is responsible for identifying new global markets, new technologies and trends, and new and enhanced internal processes. Doug leads a cross-functional international team that is responsible for developing product prototypes and innovative go-to-market strategies.

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