39 – Applying the public value scorecard in local government services. Part 2.

Posted by Lancing Farrell                                                                                             780 words

This post continues discussion of the Public Value Scorecard by looking at the scorecards for legitimacy and support and the operational capacity.

Legitimacy and support scorecard

This scorecard links the external demands accountability in the authorising environment of the organisation, with ongoing public discourse on public value. The demands for accountability in the public sector are continuous and come from several sources. Individuals complain or join forces with others to form interest groups. The media amplifies the complaints of individuals and groups. Councillors represent their constituents and demand accountability. The Ombudsman, Auditor General and Local Government Inspector are powerful external sources of accountability. The real problem is that demands for accountability come from many different places and focus on different aspects of performance. Some are more disciplined and consistent than others.

Ideally, these four sources of accountability would integrate to form a compelling demand for performance focussed on an explicit public value account that would clarify expectations of public managers and create a context to record increased value creation. Instead, the auditing system focuses on cost controls and procedural compliance. The political system focuses on the issues of the day. The pluralist system focuses on whatever captures the interest of any individual or stakeholder. The complaint system focuses on the bad experiences of individual clients. Post 35 has further discussion of the sources of accountability.

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Standard form Legitimacy and Support Scorecard and worked example for waste management (click to enlarge)

The legitimacy and support scorecard includes measures of performance in relation mission alignment, inclusion of values known but with latent constituencies (the primary and fundamental sources of legitimacy and support), the four sources of accountability, and the key public policy and supportive role of citizens as co-producers (transformation of legitimacy and support into operational capacity).

Operational capacity scorecard

Mark H. Moore suggests thinking about operational capacity as a ‘value chain’ that links inputs of public resources (money and authority) into a production system consisting of public policies, programs, procedures, and activities that produce transactions with clients and, ultimately, create some socially desired outcomes. At any given moment the operational capacity of the public production system generates costs and produces results that register as social outcomes and/or transactions with clients.

The operational capacity functions to create public value in terms of both publicly desired outcomes and individual client satisfaction. The operational capacity to produce public value does not operate alone. It includes partners and co-producers who contribute to value creation as part of the value chain.

Operational capacity and operations can be reengineered to increase valued output per unit of cost or reduce cost per unit of valued results. To do this, public managers need information about the processes they are using and the results they are achieving.

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Standard form Operational Capacity Scorecard and worked example for waste management

The Operational Capacity Scorecard includes measures of performance in relation to flow of resources into the organisation (related to legitimacy and support) and outputs that lead to the ultimate creation of public value (related to public value account). The scorecard follows the flow of the public value chain.

The public value scorecard is not difficult to create. It needs to be linked to the annual business plan so that planned actions are measured and unplanned outcomes are captured in the reconciliation of the scorecard at year end.

The public value account is relatively straightforward and can be easily set up at the beginning of a performance measurement period (i.e. financial year). The organisational mission and budgets will be known. All other elements of the public value scorecard will only become known as services are delivered and managers will need to be vigilant to record them. A final public value account can then be prepared at the end of the performance period.

The legitimacy and support scorecard can also be established at the start of the performance period. Mission alignment and consideration of values with latent constituencies can be included in actions in the business plan. Similarly, actions related to authorisers and sources of accountability can be included in actions. A final reconciliation of the legitimacy and support can add other outputs or outcomes in relation to the authorising environment and identify the impact on operational capacity as a result.

The elements of the public value chain embodied in the operational capacity scorecard are commonly addressed in business plan actions. Unintended effects of pursuing the organisational mission through the business plan actions can be captured in the end of year review of the business plan. The impact on public value will then be apparent.

Whilst using the public value scorecard may initially require additional effort, it is one way to carefully consider public value creation and to integrate it into organisational operations and to measure performance in achieving it.

Moore, Mark H. 2013. Recognising Public Value.