• Reforming Government Agencies in Developing Countries


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Reforming Government Agencies Internationally: Is There a Role
for the Balanced Scorecard?
Jennifer S. Holmes, The University of Texas at Dallas*
Sheila Amin Gutiérrez de Piñeres, The University of Texas at Dallas
L. Douglas Kiel, The University of Texas at Dallas
University of Texas at Dallas
School of Social Sciences, GR 31
P.O. Box 830688
Richardson, TX 75083-0688
(972) 883-6843
[email protected]
Abstract
According to its proponents, the Balanced Scorecard has the ability to improve
performance and enhance accountability. After discussing domestic and foreign use of
the Balanced Scorecard in government agencies in developed countries, this paper
explores the applicability of the model to government organizations in developing
countries. Although an advanced method such as the BSC may be able to facilitate
improvement, implementation of the method by countries facing so many concurrent
challenges would be difficult due to a lack of resources, politicization of public
administration, and corruption.
Keywords: Balanced Scorecard, public agencies, development, organizational
development
1
Introduction
Some scholars see an evolutionary process in the development of public
administration. Part of this development is a transition from a clientelistic institution
characterized by patronage to an institution with new professional and organizational
ethics.[1] The challenge continues today as public administration struggles with issues of
accountability. Most recently, the interest in performance measurement and its
management via performance management models is evident in the increasing use of the
new public management paradigm.[2] The measurement element within the new public
management paradigm has led to further interest in the development of “organizational
report cards”. [3] Report cards can provide quantifiable measures of benefits from their
tax dollars and related government agency activities and expenditures. These report
cards have the potential to provide a mechanism for both building administrative capacity
and for focusing attention on issues of government accountability in developing
countries. The ultimate administrative goal in democratic societies is to create
transparent, professionalized, rationalized, decentralized, and participatory institutions
with administrative processes that are accountable, credible, and objectively measured. [4]
The traditional and still predominant approach to performance measurement is
based on productivity measures, including such measures as service inputs and outputs.
While these measures may provide means to determine how well an agency is performing
its “efficiency” related duties, such measures fail to provide a comprehensive picture of
how well management is preparing an agency to handle current and future challenges. In
short, performance measurement may describe how well an agency is meeting its defined
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measures, but fails to capture information concerning deeper issues of institutional
maintenance and resilience. These are pressing issues for developing countries.
Public agencies are under pressure to improve performance beyond mere
economic efficiency. According to its proponents, the Balanced Scorecard has a twofold
potential: first, to become a measurement instrument to guide performance in public
administration and second, to enhance democratic accountability and responsibility. This
paper explores the versatility of the Balanced Scorecard as a measurement system for
government organizations in developing countries. After discussing domestic and
foreign applications of the Balanced Scorecard to government agencies in developed
countries, the applicability of the model to developing countries is addressed. The paper
is organized in the following manner. Section one provides a basic overview of the BSC
and its applicability to public agencies in general. Section two examines the use of the
BSC in developed countries; while, section three discusses the challenges faced by
developing countries and whether or not the BSC is an appropriate tool for these
countries.
Overview of the BSC
In the past decade, some public administration scholars and practitioners have
attempted to implement a more comprehensive model of performance measurement.
This model, the Balanced Scorecard (BSC), developed by Robert Kaplan and David
Norton, provides a comprehensive method of measuring organizational performance that
is superior to traditional singular and efficiency based measures of agency performance.
(For more on conceptual and theoretical issues as compared/contrasted with OD, QWL,
Gallbraith or other approaches see Ironies In Organizational Development by Robert
3
Golembiewski, 2003.) The BSC promotes an alternative to singular measures of
organizational success and instead focuses on a family of measures intended to assess the
overall value created by an organization and incorporates the elements of financial
responsibility, service to citizens, work process improvement, and human capital
development as bases for measuring organizational success. As Kaplan and Norton note,
“exclusive reliance on financial indicators could promote behavior that sacrifices long-
term value creation for short-term performance”. [5] The BSC thus measures the
“capacity building” and “responsiveness” of organizational management. Capacity
building and responsiveness are essential elements of the new management paradigm that
are now measurable within the framework of the BSC.
The creators of the BSC, Robert Kaplan and David Norton[6] provide a
comprehensive system of measurement aimed at determining whether management is
building the infrastructure necessary to sustain organizational and institutional resilience
and accountability. The BSC measurement system includes four perspectives: financial
performance, customer service, work processes and the learning and growth of
employees. The measures ask the following four questions.
• “What is the organization’s financial performance?”
• “To what extent is the organization retaining its customer base and adding new
customers?”
• “To what extent have work process improvements led to increased efficiency and
improved customer service?”
• “To what extent has training been employed that enhances the skills and knowledge
of employees?”
4
Linkages between each of the four elements represent a critical component of the BSC.
These linkages show that each of the four elements serves to enhance the other elements,
while improving overall organizational performance. For example, improving work
processes allows the organization to provide better financial results but may also serve to
improve customer service. Enhanced training of employees can lead to better customer
service, increased efficiency, and an overall improvement in financial performance. The
components of the different perspectives “define the ‘how’ that is as fundamental to
strategy as the outcomes that the strategy is expected to achieve”(Ref. [5],p. 96). The
greatest value of the BSC is the understanding that organizational performance is based
on a variety of factors that contribute to organizational success. Moreover, these
different perspectives capture both lag and lead indicators of outcome, providing a key
improvement over a reliance on just financial measures.
The BSC also includes another major goal: linking the organization’s strategy to
the actions of organizational subunits. Instead of an ad hoc collection of indicators, the
BSC links measurement to strategy. By linking each of the four basic measurement
elements to the organization’s strategy, management has a clear means for determining if
organizational actions support the organization’s strategy (Ref. [5],p. 87). This innovation
is of particular value since in large complex organizations subunits often engage in
activities that do not support the overall organizational strategy. Thus, each subunit must
produce its own scorecard showing how its activities support the total organizational
strategy.
At the strategic level of the organization and at the functional unit level,
management, often with opportunity for feedback, develops particular actions that
5
support the organization’s goals. These particular actions are defined under the headings
of objectives, measures, targets, and initiatives. Objectives refer to the actual results the
organization hopes to achieve, while measures define how the unit measures its
performance. The concept of targets is used to identify the actual level of performance
the unit hopes to reach. Initiatives refer to the programs or policies the unit will employ
to reach its objectives and targets. According to Kaplan and Norton, “By clearly defining
the strategy, communicating it consistently, and linking it to the drivers of change, a
performance-based culture emerges to link everyone and every unit to the unique features
of the strategy. The simple act of describing strategy via strategy maps and scorecards
makes a major contribution to the success of the transformation program” (Ref. [5],p.102).
In this way, goals and actions of the organization, departments, and individuals can be
combined and coordinated to improve outcomes.
Adapting the Balanced Scorecard to Public Agencies
The BSC approach may provide an effective method to achieve the goals of
strengthening civil service and public management. The BSC approach is still relatively
new to the public sector, although it holds particular potential as a measurement system
for both developed and developing countries. A current challenge, common to both
developed and developing nations, is to improve performance, promote accountability,
and increase confidence in government. In order to facilitate these goals, the
Organization for Economic Cooperation and Development (OECD) surveyed and
evaluated performance management techniques in countries commonly regarded as those
in the forefront of “reinventing government,” such as Finland, the United Kingdom,
Sweden, New Zealand, France, Denmark, Canada, the United States, and Australia.[7] A
6
common response to budget cuts is to reduce services, making government reform
difficult. Michael Ross points out “that by reducing staff levels or budgets, the
government is reducing the level of service provided. In addition, only focusing on a
financial reform “will not fully capture performance” (Ref. [8], p. 232 see also Guthrie and
English 1997) [9]. Limiting service “does not remove the need for the service, nor the
expectation by the consumer”. [10] However, the push for greater financial efficiency
provides the opportunity for reform, creating an “emphasis on managing effectiveness of
outcomes, in terms of customer satisfaction, and in specifying outcome measures during
the planning process” (Ref. [8], p. 245).
While originally designed for business application, the BSC approach can help to
refocus scarce resources toward the desired outcomes. [11] Despite unique constraints, the
BSC has been implemented in government agencies. (For a comprehensive review of the
BSC and its implementation and applicability see Niven 2003 and Niven 2005). [11,12] For
example, within the federal agencies, there are two year federal budget cycles, political
pressures, data collection constraints on type and amount of data (i.e. the Paperwork
Burden Reduction Act), results beyond agency control, hiring and training constraints
(personnel system and size of discretionary budget), and difficulties in developing
performance measures. [13] Naturally, it is necessary to adjust the language of the BSC to
the unique requirements of public sector management.
A simple adaptation of the BSC to government would consist of the following.
Since government does not make a profit, the financial elements of the BSC for the
public sector are seen as measures of financial accountability. In short, did the public
agency spend its allocation as warranted by the large national, state, or local authority?
7
And, since citizens in a democracy are not just customers but citizens, then the language
of citizen replaces the business sector language of customer. The BSC for government
could ask the following questions, driving the four basic elements of the BSC.
1) Financial: Is the Agency maintaining it fiduciary responsibility to the citizenry by
spending its allocation in ways consistent with the organizational mission and
public law?
2) Citizen Service: Is the organization meeting the mandated needs of the citizenry
as defined by its mission?
3) Internal Work Processes: Are work processes constructed and continuously
improved in an effort to ensure efficiency and quality service to citizens?
4) Learning and Growth of Employees: Are employees receiving the training and
support requisite to develop the human capital, and thus the supportive
infrastructure, of the organization?
It is necessary to operationalize measures for each element of the BSC. Figure 1
illustrates that the goal is not to meet arbitrary budgetary goals but rather to develop clear
means for defining objectives and targets, using measures that result from programmatic
initiatives and organizational mission.
Insert Figure 1 here
Scholars have theorized about the potential advantages of a BSC approach in
government. It has the potential to be a powerful tool for developing and refining
strategy in complex political organizations, educating stakeholders in management
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control (Ref. [14], p.327), avoiding ‘information fatigue’ (Ref. [15], p. 877), minimizing
‘initiative overload’ (Ref. [15], p. 879), clarifying strategy, communicating and linking
goals, and enabling strategic feedback (Ref. [15], p. 879). Quinlivan [16] suggests
incorporating the Australian Business Excellence Framework categories to conceptualize
relevant perspectives.
The above discussion is a general translation from the business setting to a public
management context. However, uncritical implementation of the BSC to public
management can be problematic (Ref.[14],p. 32). Kaplan and Norton [5] state that public
organizations have diverse stakeholders, such as citizens, clients, and donors. Carmona
and Grönlund clarify that public agencies are more dependent upon the “support of
external constituents and to a lesser extent on actual performance” (Ref. [17], p.1489).
Adapting the BSC for government and non-profits entails identifying an overall strategy
for the agency and identifying appropriate perspectives. Typically, instead of a financial
perspective at the top, most governments or non-profits prioritize non-financial
community outcome measures, such as customer or constituent perspectives (Ref. [16], p.
37) or political mission goals (Ref. [17], p.1477). Other suggestions include the following
groupings of perspectives: cost incurred, value created, legitimizing support (Ref. [5], p.
99) or operational perspective, staff perspective, resources perspective, citizen
perspective. [18] Each organization needs to adapt the scorecard to its own organization,
according to its particular mission, culture, and strategic planning timeline (Ref. [18], p. 71
and (Ref. [19], p. 959). Even in an organization without a clear, pre-existing mission, the
BSC could function as an evaluation tool, a means of communication, and as an
9
opportunity to formulate strategy (Ref. [19], p. 960). As with any performance evaluation,
proper implementation and adaptation are necessary for success.
As promising as BSC is, there are recognized limitations for implementation.
McAdam and Walker recognize hard constraints of government regulations, budget
cycles, and rigid organizational charters, soft constraints of public sector culture, and the
risk of creating overly simplistic measures in the complex customer and citizen profiles
(Ref. [15], p.878-80). Johnsen warns against the temptation to use pre-existing data, which
may result in “low validity and hence low decision relevance” (Ref. [14], p.324) and an
uncritical application, which may result in “a rigid, dysfunctional, Soviet type, central
planning system, rather than a flexible, decentralized learning system” (Ref. [14], p.326).
Quinlivan warns that the development of bottom up scores with aggregation, “does not
provide the strategic aspects of the K&N approach” (Ref. [16], p.37). In addition, with any
performance management tool, managers need to guard against the “corruption of data or
developing a culture of concentrating on doing what gets measured to the exclusion of
what is not measured” (Ref. [16], p.37). Measurement should be strategically linked to
improvement in outcomes.
Applications to Government Agencies in Developed Countries
The BSC has been used in federal agencies, states, and localities in the United
States, in the context of the movement to revitalize government. The 1993 Government
Performance and Results Act of 1993 or GPRA, requires agencies to develop strategic
and performance plans, file performance reports to Congress, and develop improved
performance measures. [20, 21] Other countries have experimented with the use of the BSC
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in government. So far, experience has been limited to developed countries at the
forefront of reform, such as Sweden, Australia, the United Kingdom, and New Zealand.
Insert Table One here
The GAO promotes the use of BSC in federal agencies to improve performance and
strategic planning. [24-27] Charlotte, North Carolina and the State of Washington have
embraced the BSC approach. Local and state officials have found the approach helpful in
the context of the devolution of power and resources from the federal government to state
and local governments.
Federal Government. Despite the unique aspects of the federal sector in regard to
performance management, the BSC has been implemented in numerous federal
agencies.[13] The GAO uses the BSC to gauge performance and tie it to strategic
planning. [28] The executive branch has a management scorecard, with the following
perspectives: human capital, competitive sourcing, financial performance, e-gov,
budget/performance integration (Executive Branch Management Scorecard). The
Department of Energy currently uses procurement BSC scorecards, altering the financial
perspective to measure cost efficiency and maximum value. [29] The Department of
Transportation utilizes a BSC, with the following perspectives: efficiency, effectiveness,
and impact. [30] The Department of Commerce Acquisition Community has scorecards
with the following perspectives: customer, financial, learning and growth, and internal
business. [31] Beginning in 1998, the Department of Health and Human Services began
using the BSC, in areas such as information technology and office of grants and
acquisition management. [32] The Army developed three linked scorecards of different
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operational levels (command, regional, and local) in fall 2000. [33] In 1999, the Veterans
Administration implemented a BSC at three levels: national, network, and regional, using
five perspectives (performance measures: accuracy, timeliness, unit cost, customer
satisfaction, and employee satisfaction and development). [34] Schay et al. examine the
use of the BSC in federal human resources departments. [20] These departments use the
following perspectives: financial (direct application to agencies with ‘fee for service’
components), customer measures (use of a customer satisfaction survey), internal
processes (establishment of efficient information systems and databases), and learning
and growth (use of OPM’s Personnel Resources and Development Center survey, the
Organizational Assessment Survey). They conclude, “since most federal agencies do not
have an easily identifiable bottom line, use of balanced measures provide more realistic
information on agency effectiveness, especially when linked to the strategic plans
required by the Government Performance and Results Act” (Ref. [20], p. 364). Likewise,
Muldrow et al., [23] find in experiments with the US Mint and EPA Region VI, that the
use of customer and employee surveys, if properly linked to outcome measures, can
provide the basis for successful reform. They conclude, “A key goal for government
agencies is to move from hierarchical and non-participatory cultures to participatory
cultures that encourage creativity and innovation. This will lead to enhanced customer
service and lower costs” (Ref. [23], p.351).
Local Government: City of Charlotte, North Carolina. In the past, Charlotte,
North Carolina measured government efficiency and effectiveness through the typical
means of setting objectives and tracking performance of these objectives. (For an indepth
study of the Charlotte see Niven 2003.) [11] However, the city found this approach limited
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for strategic planning. In response, they incorporated the BSC to transform its mission
and strategy into concrete objectives and measures. The BSC provides a comprehensive
view of the City's five focus areas (Community Safety, City-Within-A-City, Economic
Development, Transportation, and Restructuring Government). These goals are balanced
with another four perspectives: customer satisfaction, financial efficiency, internal
processes, and learning and growth. [35] The scorecard monitors progress on the bottom
line, tracks progress on customer satisfaction, and evaluates organizational capacity
building. In 2000, the city of Charlotte implemented measures for each of the nineteen
objectives on the scorecard, creating a "dashboard" of the achievement across the five
focus areas and the four perspectives. Each business unit has a business plan and a
scorecard linked to and supported by each of the objectives of the corporate scorecard.
For example, community safety has the objectives of reducing crime and increasing the
perception of safety. Following the BSC has improved the clarity of strategic priorities
and provided concise measures. The city conducts surveys to measure customer
satisfaction, assesses its bottom line by comparing its costs to other cities, evaluates its
administrative processes by using activity-based-costing analyses, and directs attention to
the human capital of its employees by polling employees to see if they believed they had
the necessary skills and resources to do their jobs. The reforms were designed to connect
customer satisfaction with well-run departments and basic performance goals. [36]
Washington State. The state modified the classic BSC four-box model (costs,
customer, internal processing, and learning) to include the following aspects (public
benefit and value, customers, financial management, internal process management,
organizational learning and growth (Washington State). [37] Washington also
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implemented the BSC in specific, interagency projects, such as the salmon recovery
project in the Northwest. [38] This complex project involved numerous actors (five states,
Canada, twenty-seven Indian tribes, federal agencies such as the Environmental
Protection Agency, and local agencies) because of its mandate involving state forests,
hydropower plants, agriculture, transportation systems, and land use decisions. Instead of
creating a separate department in the state government, the state implemented the BSC
approach in November 1999. Previous attempts to create interagency policy failed due to
indecision and redtape. [3]
United Kingdom. McAdam and Walker[15] found that the incorporation of the
BSC in the United Kingdom, was, in general, positive. These reforms occurred in the
context of the Best Value initiative, as introduced in the Modernising Government agenda
in 1998. The BSC was specifically recommended by the Cabinet Office in 2001 as a
preferred management framework. The process of creating and implementing scorecards
was a flexible, strategic process that incorporated inputs from staff in a consensus
building process. This planning process helped to “minimize ‘information overload’,
revise service areas and functions, and to focus upon important services” (Ref. [15],
p.890). They also concluded that BSC implementation was hindered by poor data
collecting systems, poor measures, and overly simplified conceptualization of customer
needs. In general, they found that organizations with a pre-existing, systematic approach
were more effective in implementation. Storey[39] examines the implementation of the
BSC in the U.K. education system. The BSC included nine criteria: five ‘enablers’/
inputs to performance(leadership, people, processes, policy & strategy, partnerships &
resources) and four ‘results’/achievements (people results, customer results, society
14
results, key performance results) (Ref. [39],p. 327). She found the cultural climate in the
education sector more open to reform, despite difficulties of concerns about professional
autonomy. Moreover, the involvement of staff in measure design and objective setting
increased cooperation. She concludes, “If people’s energies and activities are to be
effective, then some thought needs to be given to an interlinked set of questions: clarity
of objectives; communication of them; evaluation of progress measured against
objectives chosen; and so on. The BSC, while not a panacea, at least seems to offer a
systematic framework for these key processes to occur” (Ref. [39],p. 336).
Sweden. The use of the BSC by the Swedish National Police Board has been
discussed by Elefalk [19] and Carmona and Grönlund[17]. Beginning with experiments in
six counties in 1998, this scorecard has four perspectives: success (of strategies and
processes), staff (personnel as stakeholders), citizen (reaction of public toward policing)
and resources (government as supplier of funding, material and human resources) (Ref.
[17]
,p.1484). It put a greater emphasis on staff involvement and feedback (Ref. [19], p.959)
in addition to extensive public opinion data about local problems and crime perceptions.
In this Swedish law enforcement context, the BSC helped focus on critical areas, while
avoiding a fixation on figures (Ref. [19], p.965) and developing performance metrics that
improved resource utilization (Ref. [17], p.1490). However, Carmona and Grönlund noted
difficulties in that there was a tendency for everything to become mediocre in the
aggregate and omissions in the measurement of stated priorities, such as community
policing and crime prevention (Ref. [17], p.1491). This case study is significant because
the Swedish National Police tend to prioritize principles of concealment and enforcement
instead of accountability. This case may be potentially instructive for “performance
15
measurement systems in other organizations characterized by a strict sense of secrecy,
discipline, and hierarchy” (Ref. [17], p. 1477).
New Zealand. In New Zealand, reforms utilizing the BSC were examined in one
government department and two Crown entities by Griffiths.[18] In these applications,
instead of financial and customer perspectives, shareholder, stakeholders and leadership
quadrants were included. Moreover, these different perspectives were not causally
linked, as in the original business BSC (Ref. [18], p. 77). Griffiths did find that BSC could
serve a valuable function in organizations at different levels of maturity. In less
developed agencies, the BSC could serve as a substitute for “a strategy development
process” (Ref. [18], p. 75). He also found that the BSC had “the potential to improve
transparency and accountability for these operations” (Ref. [18], p. 71). Despite the
successes and potential, this case illustrates some problems of demonstrating cause and
effect relationships, a limitation seen in some business applications. [40] Finally, Griffiths
noted the importance of increasing accountability and data disclosure (Ref. [18], p.77).
Australia. In the Australian state of Victoria, Kloot and Martin[8] researched local
reform efforts and evaluated attempts to institute performance measurement systems.
Through in-depth interviews with officials in seven councils, they found that process
measures and innovation strategies, in addition to good information, appropriate
indicators, community involvement, and an open organizational culture, were essential to
successful reform. In sum, when strategic planning and performance measurement are
linked, overall efficiency and effectiveness of local council operations improve.
Table Two presents an overview of the assessment of the BSC implementation in
public agencies in developed countries. As in any performance measurement system, it is
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important to craft appropriate measures, collect good data, and encourage cooperation
among the staff. The experience of BSC implementation in public agencies in developed
countries demonstrates the potential for improvements in strategic planning, better
analysis, and increased participation.
Insert Table Two here
The public agencies that have successfully implemented a balanced scorecard approach
are depoliticized, mature organizations with sophisticated bureaucracies. However,
applications in the developing world would face different starting points, constraints, and
contexts.
Application of the BSC to the Challenges and Goals of Developing Countries
The major public administration challenge to developing countries is to improve
institutional performance, enhance accountability, and increase efficiency. There is
pressure to adopt market driven economic reforms, privatization, and new performance
measurement systems. Yet,
…not much attention has been given to how to improve public
management in general to ensure that the substantial percentage
of GDP allotted to public expenditures is used effectively and
efficiently to provide timely and courteous service to society.
The emphasis has been in reducing public expenditures not in
improved management. [43]
Many developing country governments are undergoing both economic modernization and
democratic transition. “In the view of the major role played by the state in the economy,
the establishment of a high-quality civil service is a precondition for healthy and
17
sustainable development and economic growth” (Ref. [40], p.141). There are simultaneous
demands to improve administrative efficiency and improve responsiveness to the public.
Upholding public interest, establishing rule of law, providing equal
treatment to all, maintaining a balance between enforcement and
regulation, and providing service to the citizens continue to dominate the
work of public officials. However, the framework under which these
activities take place has been considerably altered in the face of increased
criticism of the public sector, continuing scrutiny of its performance, and
ever widening gap between the availability of resources and the demands
for services (Ref. [45], p.1293).
In developing countries, fiscal crises and undeveloped economies limit government
programs. Many developing countries have been functioning under severe fiscal
constraints imposed the International Monetary Fund through the conditionality of aid.
IMF conditions limit both fiscal and monetary policy, forcing government to constrain
their expenditures. At the same time, internal reforms of decentralization have created
new opportunities for innovation at the local and state level. Moreover, eligibility for
some international aid, such as in the Millennium Challenge Account, is tied to
administrative reforms These governments may find it advantageous to incorporate parts
of the BSC approach to successfully plan and implement reform at the sub national
level.[46,47]
Typically, central governments have preferred to implement reform proposals that
"come from the North," such as the recommendations from OECD, World Bank, or other
international agencies. Different reform policies enacted include reengineering models,
devoted to reducing costs and improving procedures, and result oriented reforms.
However, to function at the sub-national levels of government, success of reform policies
depends more on the ability to adapt a model developed in a different context to a new
situation. [48] The experience of developed countries has shown the importance adapting
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the BSC to each particular organization and context. This general lesson applies to LDCs
as well.
Insert Table Three here
What is the potential to apply a method such as the BSC to nations in Klingner’s
first or second stage of the development of public administration (political patronage or
transition)? Table Three presents an overview of the unique challenges to effective
reform and reform goals in developing countries. When examining issues faced by
public agencies in developing countries, there are common challenges they face as their
systems of public administration transition to maturity. A general observation about
civil servants in Sri Lanka can easily be applied to most LDCs: “officers came to see
themselves as mere cogs in machines, feeling no sense of responsibility or control. They
justified their actions by quoting rules and regulations rather than accounting for results
and outcomes” (Ref. [60], p.1359). Performance management is important to developing
a system of accountability. Jones points out that improvement to performance
management “could be made by more comprehensive and specific measurements of
attributable outcomes” (Ref. [63], p.131). However, reform attempts threaten political
discretion and, therefore, often face significant obstacles to implementation.
Additionally, the BSC component requiring citizen feedback would be difficult in many
developing countries. In a context of a history of non-responsive agencies, it is difficult
to garner feedback about particular services independent from a general view of the
agencies or government. A lack of confidence in the process, both from the citizens and
19
the officials, may complicate efforts at using them as reliable evaluation tools for the
efficiency and quality of the public services.
Although an advanced method such as the BSC may be able to help with many
of the obstacles faced by developing countries, implementation of the method by
countries facing so many concurrent challenges would be difficult. The BSC can
provide an integrated approach to reform, involving all major constituents —
bureaucrats, politicians, and citizens. The mini-case studies of implementation of the
BSC in developed countries suggest that the BSC has the potential to increase
accountability, efficiency, and transparency by developing a strategic plan and opening
lines of communication both within agencies and to the public. However, the
implementation of the BSC in developing countries would be complicated by a lack of
resources, politicization of public administration, and corruption. Nonetheless, parts of
the BSC may have the potential to be useful in planning and implementing reform and to
serve as an impetus to transition from a clientelistic institution characterized by
patronage to an institution with a professional and innovative culture.
Conclusion: The Applicability of the BSC
An application of the BSC to public agencies is particularly appropriate for
complex, transparent, and mature organizations with diverse stakeholders. To be
effective, the strategic planning process should be adapted to the particular needs and
goals of each organization to identify appropriate perspectives. In general, however, it
would include four: financial, citizen service, internal work processes, and learning and
growth of employees. Pressures for increased financial efficiency affect public agencies,
in both developed and developing countries. In fact, fiscal crisis may provide the public
20
and politicians with the political will to push for reform. An advantage of the BSC is that
reform does not end with increased efficiency, regardless of organizational mission and
public needs. The strategic process of creating the BSC would attempt to reform public
organizations so that they would better meet the needs of the citizens and the missions of
their agency. In terms of internal work processes and human capital, the BSC has the
potential to increase institutional capacity. By creating a more comprehensive overview
of the agency, the BSC has the potential to encourage more long range planning, create
more well-rounded objectives, and provide taxpayers with a clearer vision of where, how
and what their taxes are being spent. Despite the promise of reform, the BSC is not a
panacea. Successful implementation is likely to be limited to complex, mature and
transparent public agencies.
Acknowledgments
We would like to thank Dr. William Turk for his helpful comments and
constructive insights at the initial stages of the project.
Works Cited
1. Klingner, Donald. Public Personnel Management and Democratization: A View From
Three Central American Republics. Public Administration Review 1996, 56(4):
390-99.
2. Barzelay, Michael. The New Public Management: a Bibliographical Essay for Latin
American (and other) Scholars. International Public Management Journal 2000,
3: 229-265.
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3. Gormley, Jr., William, and David Weimer. Organizational Report Cards. Harvard
University Press: Cambridge, MA., 1999.
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