One of the key performance indicators (KPI) in the private sector is to determine the profitability of a business. This is because businesses exist to make profit. However in the Public Sector, the objective of governments is to provide public goods and as such, satisfy the needs of the citizens. Citizens are invariably dissatisfied with government performance at the end of its term of office. This is because most of the objectives of government is social in nature and as such it becomes very difficult to match government revenues and expenditure to determine profit or loss as a basis of measuring its performance.
Required:
Discuss the basis for measuring Public Sector performance and justify why governments can be assessed at the end of their tenure of office. (8 marks)
View Solution
- Economy. Economy measure the cost of inputs employed in achieving policy outcomes of government. It is concerned about the cost of public service delivery. Economy is about cost minimization of public services through effective cost control and accountability mechanisms. A tool used in measure economy of government performance is the budget.
- Efficiency. It measures the process of achieving a programme outcome and policy outcomes. It is concerned with judicious use of public resources in attainment of a given outcome. Efficiency focuses mainly of the conversion of the inputs to output and aims at optimization n of the conversion process. It calls for reduction of wastage and inefficient technologies in achieving policy outcomes.
- Effectiveness. This measures the impact of obtaining value for money. It can be quantitative (the amount of effectiveness) or qualitative (the value of effectiveness). It is about attainment of policy outcome. Once government achieves result, the government is said to be effective.
- Equity. It is concerned with performance in terms of balancing the needs of the current generation with that of future general. It focuses on sustainability, environment and the social justice. Therefore, a government must be seen to take the future generation into consideration when embarking on government programmes and policy,
(Note that all the four elements must the present to achieve value for money.)
Why government can be assessed at the end of the tenure?
- Governments are accountable to the people therefore the people must be able to assess the performance of the government.
- The plans and budgets of government is presented to the people at the beginning of each year and therefore the economy, efficiency and effectiveness and equity can be assessed from this information.
- Actual outcomes are reported as part of the accountability process and therefore information to assess value for money is always available.