Measuring public sector productivity: Fresh perspectives for a renewed imperative

The COVID-19 pandemic has forced countries to undertake necessary but expensive measures to protect lives and support economic recovery. Fiscal constraints have heightened the imperative for every government to improve its productivity and try to “do more with less”. The agenda to boost public sector productivity, however, is not a new one and has faced many challenges in the past. Complexities in determining the inputs and outputs of the public sector, for instance, make it difficult to reach consensus within governments on how to meaningfully assess public sector productivity. 

As the issue of public sector productivity regains the spotlight in the post-pandemic reality, two key questions arise: (a) How can governments best measure productivity and resolve longstanding challenges?; and (b) how can they incentivize government agencies to engage in the process of improving productivity? 

In addressing these questions, new approaches have emerged from the experiences of countries around the world. The World Bank’s East Asia Governance team and the Bureaucracy Lab explored some of these experiences in a recent roundtable with leading experts from the Bank, the OECD, the European Commission and representatives from Malaysia and the Philippines. The following recommendations from the roundtable provide a fresh perspective on measuring public sector productivity:

1. Avoid treading down the path of only pursuing a single, macro-level benchmark for the whole of government, as there is no one-size-fits-all methodology to measure public sector productivity. Given the different contexts in which public sector organizations operate, governments can complement macro-level measures that provide a system-wide view of performance with micro-level ones that can shed light on the drivers and variations of productivity across and within regions and organizations. More actionable, micro-level indicators such as task completion rates, client satisfaction surveys, and measures of staff capacity can assist in identifying drivers of good performance and guide policy makers and public sector managers on resolving specific challenges.
2. Combine multiple approaches to provide a more holistic view of government productivity and mitigate drawbacks from focusing on a single measure. Applying a single methodology across regions, sectors, or organizations is likely to run into problems. The Philippines government, for example, began to measure productivity in its health and education sectors but faced challenges in extending the methodology across non-social sectors where the actors, dynamics, and outputs differed significantly. In this direction, the World Bank is currently collaborating with the Government of Malaysia to apply a multidimensional approach to determine the efficiency levels of different public sector agencies, build the evidence base needed to identify drivers and bottlenecks of productivity, and design productivity-enhancing reforms. 
3. Create a clear conceptual framework for productivity that depicts the relationships between the multiple approaches and data sources used, and articulates how they come together to formulate an effective measurement system. This can reduce the potential for confusion of measurement concepts and encourage agencies to hop aboard the productivity train. 
4. Build a platform for regular surveys of public administration that can provide a rich and continuous source of micro-level data for analyzing productivity. Many of the determinants of public sector performance, such as staff motivation, management practices, and culture, are best captured by surveys. Having a platform to administer a core public administration survey on a regular basis ensures continuity of data, inspires efforts by government agencies, and allows for quick responses on topical issues (e.g. COVID-19 surveys). 
5. Consider investing in a specialized central unit to support micro-level analytics at the government and agency levels - collecting and analyzing data, piloting reform approaches, facilitating legal and regulatory processes, and informing the design of measures aimed at improving productivity. A dedicated unit can also relieve key agencies of the nitty-gritty work of measuring public sector productivity, and possibly expedite productivity-enhancing efforts under increasingly constrained or time-sensitive circumstances. 
6. Seek out allies in this endeavor. Given the difficulties in achieving consensus on measurement approaches, many countries have faced hurdles in gaining buy-in amongst government agencies, especially if the exercise is perceived as a way to penalize them (e.g. through budget cuts). The Netherlands’ Ministry of Finance has worked around this by first identifying agencies that see value in the exercise, collaborating with them to produce results and, in time, encouraging other agencies to follow suit. It is also vital that all stakeholders are engaged in a collaborative conversation at an early stage, allowing them to feel involved in the process and perceive the exercise as an opportunity to showcase their performance rather than a threat. 

While the measurement of public sector productivity remains an inexact science, the recommendations above can help guide countries embarking on the exercise to develop strong and useful measurement frameworks to continuously explore, collect and review data to inform productivity-enhancing reforms, as well as to build the support needed within government to sustain these efforts.