Strategic Management for Improving Government Performance - Coursework Example

Strategic management and government performance Introduction Strategic management and strategic performance measurement (SPM) may be both functional and dysfunctional in nature depending on how they are implemented (Micheli & Manzoni 2010). Their effective implementation can enable organisations to define and attain their strategic objectives, align their behaviours and ensure effective organisational performance (Kloot & Martin 2000). Since the 1990s, organisations have invested huge amount of capital and resourcing in promoting effective strategic management and measuring of performance to ensure accountability (Micheli & Manzoni 2010). Indeed, recent studies have indicated that averagely, businesses with over $1 billion sales spend some 25, 0000 persons-day per-year managing and measuring performance (Micheli & Manzoni 2010). A similar trend has been noted in the public sector. After the OECD countries introduced the ‘New Public Management’ reforms, governments have massively introduced strategic management to improve their performance. In the UK government departments for instance, estimations have indicated some $150 million each year on monitoring progresses made on national targets (Micheli & Manzoni 2010). Hence, the idea that government can manage itself strategically in the same way that private sector organisations do features remarkably across national governments globally. This paper explores strategic management concept, Performance management of organisations and why improving the government performance really matters. The strategic management concept Strategic management consists of a set of managerial decisions and activities that determine an organisation’s long-term performance (Hofstrand 2007). It consists of external and internal environmental planning, formulation of strategies, implementation of strategies and evaluation and control (Hofstrand 2007). Essentially, it is a management process that integrates three key interrelation activities, namely strategic formulation, strategic implementation and strategic analysis (Kathwala n.d.; Nedelea & Paun 2009). The strategic management concept consists of four key elements, namely strategic formulation, environmental scanning, strategic implementation and evaluation (See Figure 1). Figure 1: Strategic management model (Hofstrand 2007). Performance management of organisations Strategic management facilitates performance management, which in turn enables government organisations to set up targets, monitor progress and to initiate corrective actions (Ambrosini et al. 2009). On the other hand, performance management strategies guide organisations through the process of setting up their strategic plans, expressing their objectives and goals and managing implementation (Kloot & Martin 2000). This enables organisations to be more accountable and calculated in improving operational effectiveness. Additionally, performance management promotes accountability at various organisational levels in addition to proactively resolving problems (Ronaldo F. Piccolo 2011). Usually, performance measurements can be used at this stage to ensure accountability of the organisations and that the targets are monitors. Public sector organisations should be accountable to the public. Hence, there is need for measuring to ensure that money has been spent as wanted and in compliance with the procedures. It also ensures that resources have been used effectively and that resources achieve their intended outcomes. Accountability requires measuring performance (Massay and Pyper 2005). According to Whittaker (n.d.), the strategic plan should detail out the critical issues that need to be addressed in the long-term as well as set the tangible milestones. It should allocate adequate funds to attain results and terminate the initiatives that are not generating results. Additionally, it should provide additional funds to the efficient and effective projects. Whittaker (n.d.) stated that such reasons are pertinent to situations where government agencies face broad mandates that are not easy to quantify, including provision of clean water, sustaining universal healthcare and eradication of poverty. This reflects the dimensions of the Balanced Scorecard model (Kloot & Martin 2000). Two scholars, David Norton and Robert Kaplan, developed the Balanced Scorecard model that states that in order for organisations to be successful, they should not focus strictly on the bottom line (Kloot & Martin 2000). Rather, they should focus on stakeholders, international operations and the organisation’s learning and growth aspects. The model aligns the work people do to with the organisation’s objectives and strategies. It communicates the intention of the strategy to the stakeholders (Whittaker n.d.). To this end, the Balanced Scorecard model has been applied in the government sector in the same way it has been applied to the commercial sector (Bourne et al. 2002). The model is essentially an effective communication medium that tells of the organisation’s strategy and the objectives selected. It offers a broad view of the performance against plan by balancing the short- and the long-term objectives (See Figure 2). Figure 2: government agency performance strategic management structure using balance scorecard framework (Whittaker n.d.) As indicated in Figure 2, the main themes of the Balanced Scorecard model to the government sector gives way to four key perspectives that the agencies need to focus on, namely Financial, Stakeholder, Learning and Growth and Internal Process. The stakeholder perspective is the most critical one for government agencies since attaining the mission does not necessarily compare to financial responsibility. To this end, the organisation has to establish whom it serves and ways in which the requirements have to be attained. This perspective integrates the organisation’s capacity for effective service delivery and satisfaction of the stakeholders (See Figure 2). The financial perspective for the government agencies is linked to budget management to achieve desirable results at minimum cost although with great efficiency. Calculation of returns may be in terms of the number of savings achieved and the funds reallocated to new projects (Rohm 2009). Internal process perspective is targeted at the key processes through which the organisation must surpass to sustain value addition to the stakeholders. Forming partnerships with the community is among the items that can be included within this perspective. Learning and growth perspective offers the foundation for facilitating achievement of the other three perspectives. Within this perspective, government organisations depend on skills, and aligning employees to attain the goals. Here, the government agencies motivate workers using the right combination of tools and skills to sustain improvement (Rohm 2009). Why improving the government performance really matters Effective service delivery Measuring effectiveness involves determining the services that generate the desired outcomes (Massay and Pyper 2005). Improving the government performance really matters since government agencies become more efficient and effective in service delivery . Over the past decade, government agencies have placed emphasis on improving efficiencies (Rohm 2009). In the United States for instance, improving efficiencies begun with the Government Performance and Results Act (GPRA) that was initiated in 1993 (Rohm 2009). The institution was mandated strategic planning and managing outcomes and impacts. The President’s Management Agenda (PMA) was started to place emphasis on GPRA. However, while the GPRA focused on making government organisations more mission-driven, the PMA stressed the need to link budget to performance (Rohm 2009). In this way, it is clear that government agencies learnt from the private sector. For instance, they realised the value of using the balanced scorecard model to gain competitive advantage and focus more on the bottom-line. According to Rohm (2009), in order to deliver PMA, the government agencies have to apply performance management effectively in order to understand where they should assign accountability. Efficiency: Meeting stakeholder expectations In measuring efficiency, whether or not the organisation is producing the intended services that reflect stakeholder interest is examined (Massay and Pyper 2005). Further, the need for transparency in and among government agencies is among the driving forces for use of strategic management to improve government performance. Government organisations have to place huge importance to performance specifically when it comes to meeting the stakeholder expectations (Huiru 2011). Despite the idea that promoting accountability is a significant motivation in this regards, it is not the sole driving force. This is since most government organisations worldwide are run as a network of many departments that are greatly interconnected. In this way, the decisions made in a section of the network unavoidably affect the functions and outcomes in other sections of the network. This shows the growing need for transparency in and among the government organisations. In the United States, the President’s Management Agenda details out the programs to dramatically improve performance. Essentially, the strategic management dimensions such as performance management enable government organisations to be more citizen-centred, market-focused and results-oriented . The PMA targets five main issues that the federal organisations need to address, namely improving financial performance, budget and agency performance integration, competitive outsourcing, strategic human capital and improving electronic governance (Rohm 2009). Meeting government targets The unique set of challenges that government organisations face in managing performance and achieving their strategic objectives and projects is a key rationale for strategic management of the government agencies (Wulf et al. 2010). In the United States for instance, the objectives and missions of government agencies are often decided by the Congress among other policy makers. Such a challenge augments the need for a greater teamwork in the agencies to ensure their effective performance. At the same time, the agencies face the mounting tasks of meeting their objectives without directly controlling the shrinking budgets and resources. Such trends show the need to manage performance at each step along the way (Ammons & Roenigk 2013). To this end, successful implementation of the mission and budget of government agencies have been effectively realised using a strategic plan where the strategies at organisational levels are later translated into the regional and departmental level objectives. Sequentially, this is transformed into operational tactics that eventually drive implementation (Whittaker n.d.). Making high quality decisions Running government is a complex business that needs high quality decisions which is achievable through strategic management. A key determinant of effective government management is the capacity to make effective decisions in order to manage their implementation (Armistead et al. 2012). The modern-day government make thousands of decisions that have to be executed each day. The overall impacts of these decisions are vast because of the size and the pervasiveness of the government (Armistead et al. 2012). In the case of New Zealand, the steady decline of fortunes in the early 1980s revealed the intrinsic defect in the countries traditional model of centralised government management and decision-making (Matheson et al. n.d). The model was far from being strategic and resulted to cumulative costs of poor decisions. It was evident that the centralised government failed to align the established attributes of public administration, including conflicts in value, uncertainty over cause and effect, all of which signalled poor performance in governance (Cavalluzzo & Ittner 2004). The traditional bureaucratic knowledge included one where it was not possible to make out the actions and responsibilities of the administrators and politicians and where information on cause and effect was both vague and elusive. In 1986, public reforms were carried out in New Zealand after realisation that the structure of the government decision-making required complete overhaul. The New Zealand government department started developing a strategic management system that would offer better and quality decision-making (Matheson et al. n.d). The shift to strategic management marked a defining moment for the country’s public sector reform agenda. For instance, deregulation of the country’s public service prompted the country’s administrators to shift from compliance mentality to management mentality. This enabled government organisations to focus on Government objectives and to become more responsive to the needs of the stakeholders. Finding long-term solutions to governance problems Despite the significance of autonomy in the government organisations, they still need effective governance that can be achieved through strategic management (Edwards 2012). In the case of the New Zealand government, what triggered the shift to execute strategic approach in government agencies was due to the realisation that effective governance needed the capability to design and to implement long-term solutions to a range of problems. Essentially, the government operates in both domestic and international markets that require policies and information (Matheson et al. n.d). Towards this end, information revolution, democratisation and globalisation have diminished the capability of the government to control conditions within the country in relation to the international community (Matheson et al. n.d). In this regards, the most relevant decision-making model capable of coping with these conditions was one that focused on guiding the government on its objectives and priorities. Accordingly, it was certain that good decision would only rely on flow of high quality information, a balanced combination of controls and the ability to learn and adapt. These were only achievable using strategic approach (Matheson et al. n.d). Identification and strengthening of core competences Government organisations need to identify and strengthen core competence that can be achieved using strategic management. According to Matheson et al. (n.d), like businesses, governments need strategic management. A key benefit of adopting strategic approach to making decisions is the amount of value it places on identification and strengthening of a organisation’s core competences. Indeed, it leads the government to realise what it is good for and what it is not for. According to Rohm (2009), the government’s core competence depends on its capacity for quality decision-making, creation and distribution of knowledge, implementation of decisions effectively and mediation among competing interests. Additionally, strategic management implies good government as the quality of governance is likely to determine its competitive advantage internationally. Underpinning key interest on government ownership Strategic management enables governments to underpin their interest on ownership of government agencies and departments. The strategic approach sets to clarify the government interests as the owner of its agencies and department (Nedelea & Paun 2009). This is different from the bureaucratic model that depicted the government as the purchaser of its departments and agencies’ interests. According to Rohm (2009), the efforts to clarify the ownership interest and creating an approach to management that is consisted with the devolved management system characterises strategic management. In a survey of the management of government organisations in New Zealand, Matheson et al. (n.d) found that the strategic management approach taken by the New Zealand government had several implications including portraying the government as the single owner with coordinated arrangement and common strategy. It depicted the government as having a strong interest in making sure that it had the proper set of institutions that could serve its priorities. The government gained the capacity to impose collective management standards for the departments so that the activities of one department would not adversely affect the next department (Hou et al. 2001). Coordination of tasks and strategies Strategic management ensures effective coordination of tasks and strategies by pulling together the necessary requirements for delivering significant elements of strategic value (Kiedrowski & Collins 2010). It ensures effective information flow, clarifies the tasks of teams within departments and the effectiveness of information systems. These facilitate sharing of strategic plans. A study by Matheson et al.( n.d) on New Zealand’s government organisations established that significant gains have been realised through the adoption of strategic approaches in operating governments. According to Matheson et al. (n.d), the success of the strategic approach enabled effective coordination of work among the key players such as chief executive, ministers and the central agencies. This influences the chief executives to effectively perform their duties in ensuring that the government priorities received significant attention. On the other hand, the more subtle influences were supplied through shared values and network of relationships in the public service. Conclusion Strategic management is critical for improving government performance. Indeed, their effective implementation enables organisations to define and attain their strategic objectives, align their attitudes and behaviours and to eventually achieve positive effects on the organisation’s performance. Overall, strategic management concept integrates a set of managerial decisions and activities that determine an organisation’s long-term performance. The concept consists of four key elements, namely strategic formulation, environmental scanning, strategic implementation and evaluation. The key benefit of strategic management is enabling government agencies, particularly in OECD countries, to create sound strategies through the use of more systematic, rational and logical approaches to strategic choice. Improving the government performance using strategic really matters since government agencies become more efficient and effective in service delivery. The government agencies get to meet stakeholder expectations, attaining strategic objectives and successful projects, making high quality decisions and finding long-term solutions to governance problems. Additionally, reasons why improvement of the government performance using strategic really matters is since government organisations are more able to identify and strengthen the core competences, underpin key interest in ownership of the agencies and ensuring effective coordination of tasks and strategies. 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