May 19, 2013Doug Hadden
This series examines different scenarios and the impact of Government Resource Planning (GRP) to improve governance. [Framework described in more detail.]
Information and Communications Technology (ICT) initiatives such as Government Resource Planning (GRP), sometimes known as Financial Management Information Systems (FMIS) for government, are seen as an expression of PFM reform. Diamond and Khemani suggest that “the establishment of an FMIS has consequently become an important benchmark for the country’s budget reform agenda, often regarded as a precondition for achieving effective management of the budgetary resources. Although it is not a panacea, the benefits of an FMIS could be argued to be profound.”
IMPACT: General view that a skilled and efficient government workforceis required to enable public sector performance.
PROBLEM: The pace of PFM reforms often slows because of the inability for information systems to adapt to new needs
OTHER FACTORS: Many initiatives designed to improve government effectiveness in financial management, procurement, taxation, decentralization and anti-corruption require some changes in civil service management.
SCENARIO: There is limited agreement about the functions that cause bureaucratic institutions to operate more effectively.
According to Christian Schuster, “development practitioners are rightly concerned with depoliticising clientelist civil services. In other words that the recruitment of officials be based on merit rather than political loyalty for all but the top echelons of the bureaucracy. A number of statistical studies have linked depoliticised bureaucracies to positive development outcomes, including increased economic growth, lower levels of corruption and poverty reduction.” And, yet “civil service and administrative reform projects have the lowest success rate, below 45%, among the four subareas of public sector reform” in a recent World Bank study. This series demonstrates how GRP can be used to improve governance including enabling civil service reform.
Government Resource Planning Approach for Civil Service Management
Managing the civil service is enabled through GRP systems:
- Government Performanceincludes logic mapping that aligns government goals (budget inputs, outturns, outputs and outcomes) with capital, operating and salary spending where alignment and objectives change over time
- Where the special characteristics of salary planning can be modeled including union agreements, salary scales, vacancy rates, deductions, bonuses, expenses and leave accruals
- Core Civil Service Planning includes workforce management that includes the entire government “establishment”, public servant profiles and salary structures to help create standards
- With the automation of payroll to reduce errors and corrupt practices
- And training programs for capacity building to improve public servant capabilities
- The GRP leverages an enterprise-grade ICT Platform as foundation including a secure infrastructure
- User group controlshave been defined in the ICT Platform
- More advancedCivil Service Management functions can be implemented over time such as recruitment to attract candidates with desirable education, skills and experience
- When appropriate, talent management methods can be introduced to provide additional training, mentoring and advancement
- With the introduction of merit-based pay for performance to provide additional incentives for improving civil service performance
The civil service management scenario requires the ability for GRP systems to support the progressive activation of good practices in public service reform:
- Support for modeling complex salary structures for planning with re-forecasting the salary spend based on actual payroll
- Support for multiple civil service payment methods including secure cheque printing, voucher, pay masters, electronic funds transfer and debit card support based on the financial services situation in the country
- Focus of non-financial functions of civil service management on capacity building and talent management
There are GRP governance tools operating at every stage in the PFM reform lifecycle including:
- Segregation of Duties ensures proper human resource management discipline and reduces the opportunity for favouritism
- Approvals for all stages in the civil service lifecycle such as hiring, promotion, bonuses and dismissal
- Integrationensures that controls and functions operate consistently across multiple modules especially interfacing with core financial, budget and payment systems
Some governance tools augment specific parts of progressive activation lifecycle:
- Logic mappingincludes analytical tools that support program management, outputs and outcomes, and Key Performance Indicators (KPIs) to better align public servant performance with government objectives
- Salary panning includes analytical tools used for general budget planning that uses historical information and using complex salary structures used in government organizations
- Workforce management that usesanalytical tools to adjust and rationalize salary scales through benchmarking across government organizations
- Payroll controls through payment management aligned with workforce management that can eliminate phantom employees, improveattendance and reduce corruption opportunities endemic when payroll is provided through cash
- Capacity building through controls to ensure that training is used to ensure public servants have appropriate knowledge and courses are provided to only those who qualify
- Secure infrastructureis augmented by control tools such as data integrity that prevents manipulation in underlying databases, encryption that prevents people from accessing certain types of data, and general IT security such as virtual private networks to reduce ICT manipulation
- User group controls is augmented by user management such as password controls
- Recruitment functions to attract public servants with needed skills, education and experience when appropriate to do so that includes front-office transparency functions with e-recruitment and workflow controls to make hiring less subjective
- Talent management functions including workflow controls and analytics decision-making tools to advance public servants who are contributing to performance improvements through promotions and training as part of a process of professionalizing the public service
- Pay for Performance using workflow controls and analytics decision-making tools to provide more incentives for performance
Institutions and institutional characteristics such as capacity and political will are necessary to effectively leverage the governance capabilities of GRP.
Institutional governance enablers that are critical to progressive activation include:
- Public Service capabilities and incentives need to be adjusted to support professionalization
- Political Will by stakeholders such as the executive and senior public servants to champion change
- Independence of the civil service organization to pursue changes
- Standardsused in human resource management is required to develop proper pay grades, incentive scales and needed civil servant qualifications for positions
- Complianceprocesses that ensures dealing with phantom employees and workforce changes such as promotion
There are other institutional characteristics that are important during the lifecycle include:
- Capacity of public servants must improve over time in order to sequence more advanced functions such as recruitment and talent management
- Informal processesthat encourage patronage need to be examined and changed
It can be argued that appropriate institutional arrangements for civil service reform sequencing will have limited impact without an effective underlying technology system:
- Informal processes will dominate human resources without the imposition of automated controls
- Phantom employees will be difficult to identify without electronic identities, address tracking and electronic funds transfer
- Capacity gaps within the public service will be difficult to uncover without sufficient data
- Many public servants could be underpaid or overpaid
- Budget estimates will be inaccurate without a computerized model based on the government establishment
There are numerous signs that are used to measure the governance effectiveness of PFM in this scenario:
- Public Expenditure and Financial Accountability(PEFA) assessments are widely accepted as showing the PFM state-of-the-art in any country. PEFA provides detailed analysis of the comprehensiveness, efficiency and quality of PFM processes with some elements reflecting payroll
In this anti-corruption scenario:
- GRP systems support automated governance tools that enforce fiscal procedures
- Governance tools within the GRP help to improve efficiency and performance
- Features of the GRP optimize government capacity and methodologies ensure capacity building as part of the professionalization of the public service
- Governance tools are progressively activated to enable more advanced functions in sequence with improved capacity
- Improved efficiency and public service capacity can improve the World Governance Indicator, Government Effectiveness
- Professionalization of the public service with proper pay and incentives can also reduce corruption, the perception of corruption and the World Governance Indicator, Control of Corruption
Progressive action using GRP with tools and enablers will help to improve ratings for:
- PEFA C(i) Comprehensiveness and Transparency
- PI-11 orderliness in the annual budget process will be enhanced through salary planning and budget models that will provide more accurate estimates, particularly in government where salaries are often the largest expenditure category and governments are the largest employer
- PI-12 multi-year perspective will be enhanced through the salary models
- PEFA C(ii) Predictability and Control in Budget Execution
- PI-18 effectiveness of payroll controls will be enhanced through payroll and payment systems and human resources workflow
- PEFA C(iii) Accounting, Recording, Reporting
- PI-22 improved timeliness of accounts reconciliation via integration and automation including integration across GRP modules including payroll
- PI-24 improved quality and timeliness of in-year reports through integration between payroll and financial systems
- PI-25 improved quality and timeliness of in-year reports through integration between payroll and financial systems
Governance Indicators and Outcomes
The improvement of meta governance indicators such as Government Effectives and Control of Corruption improves trust and investment in countries. Improved effectiveness improves policies, laws and regulation of those laws. These indicators are used by credit agencies and private businesses. Foreign Direct Investment (FDI) can increase.
Case Studies: Canada and Uganda
Geoffrey Shepherd has pointed out that the merit model promotes competence and protects the civil service from political interference, but it largely fails in developing countries. Public service reform is enabled through GRP systems but requires significant and sustained change management to achieve objectives.
Canada and Uganda are two countries with similar sized public services and British heritage. These countries are at different levels in the professionalization of the public sector and face different challenges.
Information systems to handle human resources and financial management systems have been primarily decentralized in the Canadian federal government to departments, agencies and commissions. Payments are made centrally but planning has been highly decentralized. Canadian federal government organizations are faced with Commercial-Off-The-Shelf human capital and payroll systems that have no concept of budget. These systems are unable to predict salary budget deficits and can authorize payments that exceed the budget vote.
The decentralized nature of payroll in the Government of Canada can result in payments made to public servants who have changed departments or on secondment.
The most widely used tool to manage these problems in the Government of Canada is FreeBalance Performance Budgeting for Human Capital (PBHC) for organizations with more than a handful of employees. PBHC includes complex Government of Canada salary scales including modeling collective agreements with unions. Salary budgets developed by these organizations include all salary expenditures including training and travel.
PBHC acts as a hub for salary management. PBHC examines actual payroll figures to adjust forecasts. For example, higher vacancy rates and lower training costs in a pay period will show potential surpluses. On, the other hand, increased travel, training and certification will show potential deficits. Human resource professionals are able to use this information to make better decisions while ensuring meeting budgets.
PBHC also generates journal vouchers in financial systems, including ERP software where used, for accruals and intergovernmental transfers.
The Government of Uganda acquired Civil Service Management modules of the FreeBalance Accountability Suite as an Integrated Personnel and Payroll System (IPPS) to support the Public Service Reform Program (PSRP) after a competitive bid process in 2009. The introduction of IPPS required significant efforts in civil service change management that has included multiple stages. This has included training, updating human resource processes, auditing systems for phantom employees and potential areas of corruption and integration with a non-FreeBalance ERP system.
The Government of Uganda received a FreeBalance Public Financial Management Award of Excellence for Data and Process Migration. The IPPS team continues to sequence human resource functions based on capacity improvements and socializing changes. The final planned stage of IPPS will include salary planning and budgeting. At this time, the payroll and human resource integration across the Government of Uganda using the IPPS `shared service` could be equivalent in many ways to that in Canada.
The pace of PFM reform needs to be sustainable to have lasting governance improvements. The information systems must enable rather than prevent reform. There have been numerous failures when inappropriate software is used for government financial management. GRP software can enable public service reform through:
- Progressive activation of business rules and workflow to support modernization
- Elimination of multiple points of corruption including ghost employees and cash payments
- Improved decision-making through reporting and analytics
- Salary planning that ensures that payroll does not exceed budgets
- Standardization of human resource processes for recruitment, promotion, capacity building, performance appraisals, dispute management and pay for performance
These tools and techniques are best leveraged by governments with political will to sequence reforms with a focus on capacity and change management