Ethos Issue 4, Apr 2008

Creating and Measuring Public Service Value
Ng Wee Wei

How can we measure the public sector’s bottomline? Accenture’s Ng Wee Wei advocates an outcome-oriented approach based on the concept of public value.

THE DILEMMA OF PUBLIC SERVICE
Governments around the world are putting pressure on their public managers to improve service quality and deliver efficiency at the same time: to do more, for less. After all, managers in the private sector face similar pressures and they are expected to deal with them as a matter of routine. Why should the same not be asked of their public sector counterparts? The reality, however, is that there are such significant differences between what private and public sector organisations produce that simplistic comparisons of this kind are very misleading. Private sector organisations exist to create value for their shareholders. For managers in the private sector, organisational performance is measured rather straightforwardly and objectively (but not exclusively) in terms of financial profit or loss.

Instead of profit or loss or shareholder value, however, public service organisations aim to generate public value: a direct and not always immediate benefit to service recipients and the wider community of citizens, businesses and taxpayers. That value—be it education, public safety, health and other aspects of the public good—can be difficult to identify and causally relate to service delivery.

Likewise, what constitutes value can be different and, at times, conflicting for different stakeholders. Public value measurement is not at all straightforward or objective. The question then becomes: For social security, health, education and many other government services that many of us depend on, how can we objectively measure performance, given that there are few objective metrics that everyone can agree on?

This is the heart of a dilemma that affects the work of a large community of politicians, policymakers and public managers.

THE SHIFT FROM OUTPUTS TO OUTCOMES
One can easily measure what goes into a system (inputs), what happens within the system (processes) and what comes out of the other end (outputs). For public service, however, the results that politicians, managers and citizens actually experience (such as changes in health or public safety for example) are more subjective and therefore less easy to measure by conventional methods.

In education, an output may be the number of children passing a particular examination. Yet most of us may be more inclined to focus on a broader set of outcomes, which could include the ability of children to go on to further education, their long-term employability and even some aspects of their well-being, expressed in terms of healthy behaviours and attitudes. Measuring these outcomes is a lot less simple than checking grades, but would give us a better sense of how successful children’s experience of education has been for them and, therefore, of the value that the education service is delivering to society and its taxpayers.

“Public value,” a concept invented by Harvard Professor Mark Moore in the 1990s, is the cost-effective application of public money to improve social outcomes.¹ A focus on the social outcomes (not to the extent that we lose sight or control of inputs, processes and outputs, but as the core of public service accountability) can have significant effects on public service delivery and on the creation of public value.

For example, a new management team in the Ontario Ministry of Health and Long Term Care, responsible for healthcare in Canada’s most populous province, recently found that they were measuring more than 2,000 performance indicators and still could not say whether the services for which they were responsible were sustainable and moving in the right direction. The mass of output measurements they routinely gathered, such as numbers of hospital admissions or numbers of surgical procedures for example, did not tell them what they needed to know concerning the health outcomes for individual patients and society as a whole.

As part of an innovative programme to focus on results, the team met with clinicians, managers, academics and health industry experts across the system to reduce what was being measured to less than 30 core indicators that were closely related to health outcomes. This enabled focused and accurate measurement, and provided the basis for a performance measurement system that is now organised under such key headings as health status, healthy behaviours and illness avoidance, patient-centeredness, ease of access and sustainability—all weighed against the effective use of resources. This approach has also enabled better decision-making, more effective planning and closer alignment between healthcare policy and the public value created for patients and citizens.

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