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The implementation of a performance management system (PMS) has always been a challenging endeavor for the public sector. In a studypublished by the International Journal of Project Management and Productivity Assessment (IJPMPA), Neeta Baporikar considers that most challenges and setbacks are due to various factors which can be summarized in the following manner: reluctance to change management, lack of strategy alignment, poor leadership and organizational culture, lack of training and advocating for a learning culture, lack of flexibility and simplicity in internal processes, and the absence of rewards for good performance.
In this regard, how did the PMS become part of the public sector and why is it so hard to implement in state-owned enterprises (SOEs)?
Norway’s PMS
Foundations
In Norway, the process of implementing a PMS in the public sector started with the ‘80s public reforms, which were oriented towards budgeting, decentralization, and performance management. It began with the implementation of the balanced scorecard (BSC) at the local and central administration apparatus, followed by the Management by Objectives and Results (MBOR) PMS and the introduction of the annual activity plan that made MBOR mandatory for each public unit. The objective was to strengthen political control by making goals less ambiguous, focusing on results, introducing a monitoring system, and making greater usage of incentives.
In the case of public hospitals (which became state-owned trusts after 2002), the challenge of balancing political control and enterprise autonomy has raised other concerns, such as: How do they develop specific and easily measurable performance indicators? How much discretion and qualitative judgment will be involved? Will the MBOR be a formal PMS or will it be a combination of a trust-based system of dialogue and a formal contract?
Reforms
In the beginning of the century, Norwegian authorities focused on structural changes and policies that empower patients. Afterwards, the attention shifted towards improving coordination between healthcare providers, addressing safety issues, and improving service quality. A the core of all of those changes was the MBOR PMS, whose implementation was facilitated by a reform package consisting of:
Budget reform, which reverted the budget system to productivity-oriented and granted regional financial autonomy, based on evaluation and systematic reporting of results
Activity plan, which aim for less ambiguous goals, focusing on results and setting a monitoring system;
Salary reform, which introduced annual assessment for executives and salaries based on individual contracts and pay-for-performance elements;
Hospital ownership reform/hospital enterprises reform, whereinhospitals were organized as independent health enterprises with control over capital and personnel.
According to Pettersen and Nyland, those reforms paved the way for the establishment of performance standards and the introduction of performance audit schemes, where performance measurement became a key component. The managers became responsible for measuring and comparing results using different economic and medical indicators, including both indirect and direct quality measures. Moreover, the monitoring of economic performance in hospitals was done based on a national benchmarking database.
Effects
Every year, Norway’s Ministry of Health sets out performance indicators at all levels, such as # Number of in-patients treated, # Number of outpatient consultations, and cost indices. The relationship between the minister and the agencies is subject to a quasi-contractual agreement or a steering model, which reflects the ministerial accountability—a feature that distinguishes Norway from the rest of the Nordic countries when it comes to setting metrics and evaluating performance in the public sector.
A perception-based survey deployed both in regional and local hospitals assessed the impact of those measures, revealing the following findings:
In spite of being a consolidated democracy, the adoption of a PMS in the Norwegian public sector was neither easy nor smooth, being characterized by reluctance at the beginning, changes during implementation, and uncertainties regarding its structure and coordination. Nonetheless, the endeavor seems to have yielded several benefits, such as increased efficiency. In the case of Norway, it is clear that adopting a PMS in the public sector certainly paid off.
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Trust in government is essential at all levels as it fuels citizens’ cooperation and compliance. In a rapidly evolving world, trust in government enhances the institution’s ability to make quick decisions, manage crises successfully, and adapt to changes while upholding accountability. Without trust, implementation in government could result in a lack of cohesion and unsatisfactory outcomes.
To explore the factors that drive trust in public institutions, the Organisation for Economic Co-operation and Development (OECD) developed a trust framework focused on two primary components: Competence and Values. This framework includes specific dimensions—Responsiveness, Reliability, Integrity, Openness, and Fairness—that governments can improve through targeted policy changes that aim to strengthen public trust (see Figure 1).
The framework underwent a consultative process with over 800 stakeholders through six webinars between 2020 and 2021. This effort resulted in measures aimed at restoring trust in government during and after the crisis, emphasizing inclusive rebuilding by considering socioeconomic, political, and cultural differences, and fostering support for addressing long-term, intergenerational challenges like climate change.
Figure 1. The OECD Trust Framework | Source: OECD, 2021
The OECD’s Trust Framework guided the development of the Trust Survey, an extensive cross-national survey that gathered over 50,000 responses from 22 member countries. This survey, designed to measure and understand what drives people’s trust in public institutions, directly reflects the dimensions outlined in the Trust Framework and provides insights for future policy reforms.
According to the findings, Norway emerged as a standout with exceptionally high levels of trust in public institutions and significant citizen satisfaction.
A majority of Norwegians reported high or moderately high trust in national (64%) and local governments (53%) and civil services (61%). The Norwegians had the highest level of trust in parliament, where 66% report high or moderately high trust, 27 % points above the average across the OECD countries (39%) (see Figure 2).
Figure 2. Trust in Norwegian public institutions | Source: OECD, 2021
Furthermore, an estimated 87% of Norwegians are satisfied with the judiciary and education systems compared to 56% and 67%, respectively, across OECD countries on average. Around 80% are satisfied with the healthcare system, 12 % points higher than the average across OECD countries (68%).
Reliability: Norwegian citizens generally perceive their institutions as capable of protecting personal data, maintaining stable rules and norms, and managing future crises effectively. This reflects a strong sense of institutional reliability that underpins public trust.
Openness: The survey indicates that Norwegians view their state as relatively open, particularly in terms of the accessibility of information about public services.
Fairness: The public perceives that the state treats citizens fairly and ensures equal treatment by public services.
Responsiveness: This area received fewer positive ratings, with fewer than half of the respondents believing that the government quickly addresses service problems or that citizens can significantly influence service changes.
Integrity: Perceptions here are mixed. While respondents generally do not believe that members of parliament can be bribed, concerns exist about potential conflicts of interest involving politicians accepting business positions in return for political favors.
Figure 3. Drivers of institutional trust in Norway | Source: OECD 2021
These findings highlight the complexity of trust in public institutions, showing that while some aspects are highly rated, others, particularly responsiveness and integrity, could be improved to enhance overall trust.
To improve responsiveness, Norway could enhance the user experience of its public services and encourage innovation within the public sector. This includes adopting emerging technologies, streamlining bureaucratic processes, and fostering continuous improvement. Additionally, implementing user satisfaction surveys, using data analytics to address public needs promptly, and increasing transparency in service delivery are critical steps to enhance government responsiveness.
In terms of integrity, centralizing efforts to prevent corruption and promoting transparent practices, including clear regulations and ethical training programs for public officials, are crucial steps, as recommended by the Council of Europe’s Group of States against Corruption (GRECO).
Trust serves as a cornerstone for effective governance, influencing citizen support, regulatory compliance, and societal cohesion. While Norway demonstrates commendable levels of trust in its public institutions, continuous efforts to enhance responsiveness and integrity are crucial. Addressing these areas not only fosters public confidence but also strengthens the overall fabric of governance, promoting transparency, fairness, and accountability.
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