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Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–4
Introduction (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–5
The Concept of Performance
Measurement in the Public
Sector
The public sector needs to be evaluated because
performance management can bring about
transparency and the most important element,
accountability.
Performance measurement begins with determining the
organization’s mission, goals, objectives and activities.
Performance measurement is also an incentive for
output and it can be divided into two categories:
(a) the quantitative e.g. budgets and cost reductions
(b) the qualitative measures e.g. public satisfaction and
physical development
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–6
The Concept of Performance
Measurement in the Public
Sector (cont.)
In order to create an accurate, effective and efficient
performance measurement system in the public sector,
we need to have a good performance measurement
framework.
Some of the most commonly used performance
measures include:
(a) Inputs (e.g. funds, personnel, equipment, and
other resources)
(b) Workload or activity levels (e.g. applications
processed, inspections carried out, and services
rendered)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–7
The Concept of Performance
Measurement in the Public
Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–8
The Concept of Performance
Measurement in the Public
Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–9
The Concept of Performance
Measurement in the Public
Sector (cont.)
The performance
management cycle in
the public sector
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–10
The Concept of Performance
Measurement in the Public
Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–11
The Concept of Performance
Measurement in the Public
Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–12
The Concept of Performance
Measurement in the Public
Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–13
The Concept of Performance
Measurement in the Public
Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–14
The Concept of Performance
Measurement in the Public
Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–15
The Concept of Performance
Measurement in the Public
Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–16
The Concept of Performance
Measurement in the Public
Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–19
The Concept of Performance
Measurement in the Public
Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–20
The Concept of Performance
Measurement in the Public
Sector (cont.)
‒ the criteria of assessment include strategic planning
and evaluation of execution, human resource management, financial
management,
policy and programme formulation, execution and evaluation,
and complaints management
(11) Scorecard for ministry heads:
‒ combines the individual performance of the ministry
head and that of his or her organization to determine the ministry
head’s performance
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–21
The Concept of Performance
Measurement in the Public
Sector (cont.)
(12) Government Transformation Programme (GTP):
‒ ministers who are responsible for the seven
national key result areas and all cabinet ministers are
given a performance scorecard with performance targets
‒ the agency made responsible was PEMANDU
(13) Balanced scorecard:
‒ prompted users to identify an equal number of
measures in each of four perspectives: financial
perspective, customer perspective, internal, innovation
and learning perspective.
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–22
The Concept of Performance
Measurement in the Public
Sector (cont.)
KPIs
KPIs have been used as the key to organizational
success to achieve the vision, mission, business strategy,
objectives and targets.
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–23
The Concept of Performance
Measurement in the Public
Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–24
The Concept of Performance
Measurement in the Public
Sector (cont.)
Parmenter (2010) identifies the characteristics of KPIs that
cover most organization types, either public or private sector.
They are:
1 Non-financial measures
2 Measured frequently
3 Acted on by the CEO and senior management team
4 Clearly indicate what action is required by staff
5 Measures that tie responsibility down to a team
6 Have a significant impact
7 Encourage appropriate action
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–25
The Concept of Performance
Measurement in the Public
Sector (cont.)
Value-for-Money Indicators
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–26
The Concept of Performance
Measurement in the Public
Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–27
The Concept of Performance
Measurement in the Public
Sector (cont.)
The Requirements of Performance Evaluation
An evaluator and the human resource department are
responsible for ensuring that the performance indicators are
set according to the standards and that the process of
evaluating is as transparent as possible.
Few guidelines that they need to observe includes:
(1) Evaluation is done on a timely basis
(2) The officer-in-charge in the evaluation process
should remain unbiased
(3) There must be no external factors influencing the
evaluation process.
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–28
The Concept of Performance
Measurement in the Public
Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–29
The Concept of Performance
Measurement in the Public
Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–30
Implementation of KPIs in the
Public Sector
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–31
Implementation of KPIs in the
Public Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–32
Implementation of KPIs in the
Public Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–33
Implementation of KPIs in the
Public Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–34
Implementation of KPIs in the
Public Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–35
Implementation of KPIs in the
Public Sector (cont.)
KPIs
One of the most popular performance measurement
systems used by a large number of Malaysian public
sector organizations
Introduced to measure efficiency and effectiveness of
work processes to provide and deliver quantity services to
customers, and to assess customer satisfaction
Customer satisfaction will determine the rewards to the
employees and customer dissatisfaction provides the
employees with advice for improvement.
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–36
Implementation of KPIs in the
Public Sector (cont.)
Example of
KPI
template
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–37
Implementation of KPIs in the
Public Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–38
Implementation of KPIs in the
Public Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–39
Implementation of KPIs in the
Public Sector (cont.)
Performance Monitoring
Performance measurement can have many specific
applications:
(1) Problem identification:
It can identify undesirable conditions, such as
wasted resources, traffic accidents or vehicle failures,
and help determine their causes.
(2) Trend analysis:
It can help identify changes that are occurring.
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–40
Implementation of KPIs in the
Public Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–41
Implementation of KPIs in the
Public Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–42
Implementation of KPIs in the
Public Sector (cont.)
Performance Improvement
It is important for any government to have a good
foundation in planning to improve the public sector’s
performance.
In Malaysia, the five-year development plan (of different
series) has been designed to comprehensively outline the
government’s development policies and strategies in
developing the nation through strategic development
planning.
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–43
Implementation of KPIs in the
Public Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–44
Implementation of KPIs in the
Public Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–45
Implementation of KPIs in the
Public Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–46
Implementation of KPIs in the
Public Sector (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–47
Issues and Challenges
Common problems
The public sector’s provision of services is hugely
complicated by shared or sometimes conflicting objectives,
the demands of stakeholders and the influence of
politicians.
The public sector faces numerous challenges when it
comes to performance management regardless whether in
terms of the attitude of employees towards their job or the
implementation of proper performance management
system in the organization.
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–48
Issues and Challenges (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–49
Issues and Challenges (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–50
Issues and Challenges (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–51
Issues and Challenges (cont.)
Public Sector Accounting Governance and Accountability in the Malaysian All Rights Reserved
Context 8–52
Learning Outcomes