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1983 Report of the Auditor General of Canada

Overview

2.1 In our comprehensive audits, we have commented on management problems in the public service. We have also noted instances of improvement in management practices over the years. But one of our most troublesome findings has been that many management problems persist in spite of efforts to overcome them. There seem to be characteristics in the public service environment that make it difficult for managers to focus on productive management; that is to say, to concentrate on economy, efficiency and effectiveness and ensure that satisfactory results are achieved at reasonable cost. To understand better why the development and implementation of management improvements seem to be so difficult, slow and sometimes incomplete, we undertook this special study.

2.2 The growth of public expenditures and the size of the federal deficit have become public concerns. The federal government, as well as other governments, has been faced with pressures to improve services without increasing the size of the budget. More productive management has been suggested as one way to provide the same or an even better level of services with fewer public funds.

2.3 Despite the widespread interest in achieving greater value for money, governments have found it difficult to achieve this goal. Different approaches have been tried in various countries, with mixed results. There appear to be significant gaps in understanding management problems, their underlying causes and how to overcome them in public service organizations. The aim of this chapter is to contribute toward a better understanding of these difficulties by our own Office, and to assist Parliament, Government, Cabinet and managers in finding a way to achieve greater value for money in the public service of Canada.

2.4 During our study, we interviewed many public service executives. They indicated that undue constraints stand in the way of achieving greater value for money in the public service. They mean the impact of political priorities on the management process, the degree of administrative procedures with which managers have to cope, and the disincentives to productive management that are characteristic of the public service.

2.5 In some cases, these constraints seem to be more the perception of managers than the reality of the situation, and they can no doubt be used as excuses. Also, certain constraints are part of the nature of government and may be very difficult to change. Nevertheless, it was the consensus of the majority of the executives we interviewed that these three constraints shape the management environment of the public service and that they have a significant impact on attempts to improve productive management.

2.6 The effect of constraints on productive management in the public service is that achievement of value for money is generally accorded a low priority and that managers are frustrated and lack motivation when it comes to making productivity improvements. If some of these constraints were recognized and modified, and if a deliberate effort were made to establish an environment that encourages managers to achieve satisfactory results at reasonable cost, significant improvements could be made in achieving value for money.

The Study

2.7 For a number of years, our comprehensive audits of government departments and agencies have reported cases where managers have not demonstrated due regard for value for money. They also noted, however, that there have been conscientious efforts to overcome these weaknesses. Departments have installed control systems, measurement systems and reporting systems to assist good managers and to prevent poor ones from mismanaging. Still, our audits showed that satisfactory achievement of value for money was elusive. Our 1980 Report described the problem in the following words:

In essence, then, what our observations over the last few years suggest is that the best management systems and controls devised for government will not overcome the fundamental problems revealed by our findings, and confirmed by others, unless and until there is real desire and commitment on the part of decision makers at all levels - the will, both in Parliament and in the Government - to create an environment in which public service managers have the necessary means and incentives for achieving economic, efficient and effective management of public funds and resources.
2.8 Members of the Public Accounts Committee, too, have voiced concerns about the persistence of management problems in the public service. They have, at times, questioned whether the net effect of more control systems and administrative regulations is beneficial.

2.9 Prompted by these concerns, we undertook this study. Because of the necessarily broad scope of our first endeavour in this area, and because of the complex, ill-defined nature of the problem, we conducted an exploratory study rather than an audit, which would have relied more on documented or physical evidence as prescribed by generally accepted auditing standards.

2.10 There exists only a limited amount of research data that is specifically related to this area. Hence, we sought to build our own information base by probing the knowledge and understanding of individuals who are most familiar with the realities of managing government programs. The study, therefore, relies to a considerable extent on the perception and interpretation of managers and on the analysis of management situations described to us during interviews with a cross-section of senior executives.

2.11 During our study, we interviewed about 170 senior executives in the public service. These executives were carefully selected to include a number of deputy ministers, and a representative cross-section of assistant deputy ministers, directors general and directors. In addition, we interviewed about 30 senior professionals in our Office with experience in auditing public sector organizations. We also reviewed management reforms in the public service over the past 20 years and the academic literature on public sector management. Finally, we interviewed 25 presidents and chairmen of private sector corporations for purposes of comparison, and examined management environments in other government jurisdictions within and outside Canada.

2.12 The result of this research was a large amount of information about many aspects of public sector management. During our assessment of this information, a number of significant aspects emerged. Gradually, these crystallized into a consistent pattern which then formed the framework for this chapter. Our conclusions and suggestions are presented in the hope that they may serve as a basis for finding a way to achieve significant management improvements in the public service of Canada.

Three Significant Constraints to Productive Management

2.13 The principal realization arising out of our study is that there are significant constraints to productive management in the public service. By productive management, we mean management that achieves value for money. That is to say, management that ensures economic, efficient and effective use of public funds and resources - management that produces satisfactory results at reasonable cost.

2.14 There is, in our view, no single cause to which these constraints can be attributed. The nature of government everywhere seems to be such that constraints to productive management keep emerging almost inadvertently and steadily over time. We found this to be the case in all public services we examined. We observed that such constraints are being overcome only in organizations where a sustained and concentrated effort is being made to do so.

2.15 Constraints to productive management exist in any large, complex organization. However, public service executives we interviewed identified three constraints that in the public service particularly deflect attention from productive management. They are:

    - the impact of political priorities on the achievement of productive management;
    - the many administrative and procedural constraints with which management is burdened; and
    - the few incentives, but many disincentives, which influence productive management.
2.16 The first of these constraints is unlike the other two. Many public service managers pointed out that the purpose of the political process is to pursue political priorities and that, inevitably, efficiency considerations are not given the same priority in government as in the private sector. They also noted that it is the public servants' responsibility to implement public policies as defined by the political process. Therefore, such priorities cannot be viewed as constraints. They are part of the essential raison d'être of public service management. On the other hand, many executives argued that the political process can inadvertently help to establish significant constraints to productive management. They further argued that these constraints have to be recognized in any complete analysis of the problems and difficulties of pursuing economy, efficiency and effectiveness in the public service. Accordingly, the impact of political priorities on public service management is included in our discussion.

Political Priorities Have a Major Impact on Productive Management

2.17 The consensus of public service executives we interviewed is that political priorities have a significant impact on productive management. The political process has concerns that tend to overshadow and, to some extent, displace productive management. An important concern of the political process is to gain public support, and such support is principally achieved through the announcement of policy initiatives and new programs. Politicians rarely get elected for concentrating on productive management of departmental operations. "There are no votes in good management. Five ministers told me that", is how a senior official in a Canadian province expressed it to us.

2.18 This phenomenon is not limited to Canada. A United States Cabinet Secretary, responsible for administering a department of 120,000 people, said during an interview:

You learn very quickly that you do not go down in history as a good or bad Secretary in terms of how well you run the place - whether you're a good administrator or not. As a result, a Secretary often tends to ignore administrative things because it is not worth his time; it's not where he should put his emphasis.
2.19 The political process has political priorities. The political process is concerned with public policy issues far broader than operational efficiency. It sees national priorities as part of value for money. The federal decentralization program is an example. Measured strictly in terms of departmental operating costs, transferring an operation to a regional location might be more expensive than maintaining it centrally. Yet, in terms of regional development, national unity or employment creation, such a move may be highly effective.

2.20 At the same time, the political process seeks a public service that meets publicly demanded standards of prudence and probity, a service that is representative, responsive and equitable. To ensure that, and to prevent waste and extravagance, a body of regulations is set up. These regulations are, however, predominantly of a preventive nature. Their effect is more to check undesirable practices than to nurture desirable ones, more to inhibit than to encourage. Thus, their effect on the management process is to impose an unintended burden.

2.21 We do not of course question the political process. We are simply noting that the political process is by nature "political", and that its priorities have a significant impact on the public service management process. This impact is one of the basic differences between public and private sector management and has to be remembered when making comparisons between public and private sector organizations. Private sector firms are not required, to the same extent as the public sector, to reconcile questions of productive management with concerns such as national unity, regional development and national well-being. On the other hand, attempts to improve value for money in the public service should not be abandoned just because politics and public administration are not easily separated. To minimize the dilemma, constant and deliberate balancing efforts are required.

2.22 Good government is not necessarily good management. In the public service, good government is not necessarily seen by the majority of executives as the same as good management. The staffing process is often given as an example. As part of good government, more and more requirements are seen as being added to the staffing process to ensure the public service is accessible, equitable and representative. These, and other causes, make the staffing process such that it is now seen by managers as a considerable constraint to productive management.

2.23 Well performing private organizations focus on a few key objectives, maintain clear lines of accountability, give managers ample authority and emphasize management skills. Governments, on the other hand, must satisfy many conflicting interests. In attempting to do so, they inadvertently foster in the public service an environment of multiple objectives, unclear lines of accountability, excessive controls on managerial authority and significant emphasis on policy advice rather than management skills.

2.24 Many successful private organizations are led by chief executives who have been part of the organization for many years and know its business intimately. In most government departments, on the other hand, deputy ministers are rotated frequently, making it difficult for them to acquire first-hand knowledge of the issues about which they are expected to make major administrative decisions or give policy advice.

2.25 While good government and good management are not necessarily seen by public service executives to be synonymous, they are not necessarily incompatible. But they are difficult to reconcile. Based on our observations in Canada and elsewhere, it takes constant effort to balance the demands of the political process and the necessities of productive management. If such effort is not made, political concerns can unduly displace management concerns and become constraints to productive management.

2.26 Government operates in a fish bowl. Public service executives recognize that activities in government are much more a subject for public discussion than similar activities in business. Consequently, even small and isolated instances of abuse become the focus of public attention. For example, the misuse of travel funds or instances of seemingly unfair contract awards can become the subject of questions in Parliament with attempts to embarrass the Government. The need to minimize even the appearance of not observing prudence and probity can become more important than value-for-money considerations.

2.27 The political environment has a major impact on management. During our study, public service executives pointed out that departmental proposals to reduce operating costs are sometimes not compatible with political priorities. Such proposals typically suggest more economical arrangements with respect to passenger railway services, defence establishments, Customs ports, navigation aids and others. Affected parties tend to view such changes as a reduction in government services rather than an improvement in government productivity.

2.28 This situation appears to create perplexing dilemmas for public service managers. On one hand, they are urged to minimize costs. On the other, their initiatives to achieve that objective are not acceptable. Managers soon realize that there is more encouragement for program expansion than for program cut-backs and that productivity concerns tend to fade away when confronted by political priorities.

2.29 Public service managers find they are not likely to be judged by their efforts to use resources as productively as possible. Rather, they are likely to be judged by public charges of extravagance or inequitable treatment and the embarrassment this causes. They therefore focus more on how a result is achieved than on the result itself, more on the legitimacy of the means than on the end, more on process than on product. The resulting administration tends to prevent embarrassments more than it tends to encourage performance for productivity.

2.30 The majority of executives we interviewed both in Canada and elsewhere said the political process provides only limited encouragement for productive management (see Exhibit 2.1). In the instances where we did find managers generally concerned with value for money, there was invariably some corresponding encouragement from the political process. In the State of Bavaria, for example, a Commission for Simplifying Government Administration was set up in 1978, reporting direct to the Premier. Its task is to recommend measures for making government administration simpler, quicker and more cost-effective. The conclusion seems evident: for greater value for money in the public service, the political process should provide deliberate and sustained encouragement of productive management.

Exhibit not available

2.31 By encouragement of productive management, we mean deliberate and persistent efforts on the part of Parliament, Government and Cabinet to balance political priorities with value-for-money considerations. This includes a strong commitment to consider greater economies and efficiencies in government programs and in their deliveries. It also includes a willingness to review the constraining implications of administrative procedures that are set up to regulate the public service. It finally includes an expressed policy that managers at all levels are expected to come forward with proposals to achieve greater value for money, as well as public recognition of outstanding examples of productive management.

Management Feels Unduly Constrained by Administrative Procedures and Conflicting Accountability Requirements

2.32 The second significant constraint to achieving more productive management, according to the managers interviewed, is the body of administrative regulations and the conflicting accountability requirements that limit managerial authority and autonomy. The majority of public service executives we interviewed indicated they would be able to manage more productively if there were fewer and less detailed regulations. They insisted that many regulations entail extra staff, which adds to the cost of government. They also noted, however, that there are considerable differences in the ability and willingness of managers to deal effectively with constraints.

2.33 A smaller proportion of executives we interviewed believed that regulations are not excessive but inevitable, to prevent weak managers from acting irresponsibly. They argued that measuring results is difficult because managers often do not have clear-cut performance objectives and that, therefore, the management process itself must be tightly regulated.

2.34 Other surveys done in the public service tend to confirm the view that the present body of regulations is a serious burden on managers. The Burns Committee on Executive Compensation, a group of private sector executives who advise government on public executives' pay, stated the following in their 1982 Report:

The effective discharge of management responsibilities depends very much on the total climate within which managers must function. One wonders if managers can get on with their essential role, which is to manage the effective and efficient delivery of services to citizens through their employees, if their flexibility to manage is restricted and if the myriad of complex government procedures and regulations is not modified to reflect the practical aspects of delivery of services. The Advisory Group feels that some co-ordinated thought should be given to the environment within which managers direct programs and staff.
2.35 We are aware that there is always a certain level of complaining going on in any large organization. Yet, the extent and intensity of the frustration we encountered was striking. If a large proportion of executives in the public service perceives that they don't have sufficient authority and autonomy to manage as well as they might, then this perception itself is a significant constraint to productive management.

2.36 Managers' authority is constrained. Executives we interviewed pointed out that the burden of regulations is particularly constraining in the following areas: the authority to select and hire staff; the flexibility to develop practices uniquely suited to local conditions; and the discretion to choose an optimum mix of resources for maximum productivity.

2.37 Exhibit 2.2 lists the top ten constraints as executives say they experience them. Each of these constraints by itself is not seen as a major problem, with the possible exception of staffing. But when constraints become a spider's web of rules, regulations, directives, prohibitions and controls, managers lose sight of value-for-money concerns.

Exhibit not available

2.38 Of all the constraints mentioned by public service executives, staffing problems were viewed as the most persistent and frustrating. According to the majority of executives we interviewed, the number of months it takes to staff a position is seen as an unreasonable length of time, in view of pressing operational requirements.

2.39 Public service executives were of the opinion that the burden of detailed, government-wide regulations is one of the reasons why Crown corporations are increasingly chosen to perform government activities. Executives pointed out that Crown corporations have greater flexibility than departments when dealing with issues such as staffing, contracting, purchasing and capital projects. Crown corporations can therefore design their administrative procedures to meet the specific requirements of their operations. Public service executives argued that, if departments had the same type of flexibility, management in departments would be more productive.

2.40 Managers are faced with conflicting demands. Managers see themselves hampered in delivering satisfactory program results at reasonable cost by conflicting expectations of central agencies, departmental staff groups, service departments and review bodies.

2.41 Treasury Board determines how departments budget, classify positions and organize functions. The Public Service Commission prescribes how managers will hire and promote staff. The Comptroller General sets guidelines for internal audit and evaluation. The Department of Supply and Services establishes procedures for making purchases. Public Works has responsibility for the acquisition and maintenance of accommodation. Departmental staff groups tell the manager how to plan, deal with personnel, administer regulations, keep accounts, measure performance. Audit groups check for weaknesses and make recommendations for change. Each of these groups has some authority to prescribe how managers should act, yet assumes little or no responsibility for the results of managers' actions, should they turn out to be unsatisfactory because of conflicting demands.

2.42 The problem of unclear authority and accountability relationships was examined by the Royal Commission on Financial Management and Accountability in 1979. Its report suggested that "the authority of deputies with respect to administration be clearly prescribed and that they be held accountable for that administration."

2.43 Most executives we interviewed noted that only limited progress has been made since then. Considerable uncertainty remains as to what authority deputy ministers have and to whom and for what they are accountable. Exhibit 2.3 illustrates accountability relationships between departmental management and other organizations.

Exhibit not available

2.44 Case studies show that conflicting accountability requirements can create significant problems. The problem of conflicting demands was described to us during interviews with executives. To provide some illustration of actual occurrences, we conducted a number of case studies. Individual summaries of three cases are included as part of this chapter. These cases are not necessarily typical of management situations in the public service. They are nevertheless actual occurrences and illustrate that much time and efforts are sometimes necessary to overcome conflicting accountability requirements.

2.45 Case 1 in Exhibit 2.4 shows how four departments required nearly two years to agree which of them should assume the chairmanship of an interdepartmental committee. Each of the departments had demands it felt obliged to maintain. A common review mechanism to resolve the issue did not exist. It took a Cabinet-authorized withholding of already approved funds to get the departments to reach a consensus. The case is noteworthy because of the important task of the committee: controlling activities related to the use and disposal of highly toxic chemicals.

CASE 1 - Reconciling Conflicting Priorities: Controlling Toxic Chemicals
Toxic chemicals can benefit agriculture, but can also endanger human health. There are 58 Acts of Parliament governing the use of toxic chemicals, and 24 federal departments and agencies are engaged in toxic-chemical-related activities. Four departments account for the bulk of these activities: Agriculture, Environment, Fisheries and Oceans, and Health and Welfare.

In 1981, Treasury Board became concerned that the existing framework for controlling toxic chemicals had become unsatisfactory. Accordingly, it encouraged the four key departments to form a committee that would co-ordinate new resources for toxic chemicals programs.

Treasury Board was not convinced that the four departments placed a high priority on co-ordinating their activities. As a response, Treasury Board obtained permission from Cabinet to withhold already approved funds for toxic-chemical-related activities until the four departments submitted an action plan.

By October 1982, the four departments had developed terms of reference for the Committee, but could not agree on who would chair it. Each department was concerned about its own priorities if another department, as Chair, could direct planning and funding.

The issue was finally resolved in May 1983, when the Department of Environment was assigned the chairmanship for the first three years. It had taken nearly two years to resolve the issue of chairmanship for a committee that would guide the use and disposal of huge quantities of highly toxic substances.


2.46 Case 2 in Exhibit 2.5 describes how difficult it can be to change the classification of positions. A department felt it had to request such a reclassification to maintain effective services. The reviewing central agency, on the other hand, felt it had to reject the request because of concerns over the proliferation of special staff groups in government. It took six years to resolve the problem.

CASE 2 - Reconciling Conflicting Demands: Reclassifying Positions
In 1976, Labour Canada found it was no longer able to attract and retain labour conciliation officers because of an inadequate compensation plan. The Department saw this as a danger to the effectiveness of its mediation and conciliation service. It therefore proposed to Treasury Board to reclassifying conciliation and mediation officers from the Program Management into the Personnel category, which offered broader salary ranges and included performance pay.

Treasury Board was not convinced that the problem was one of inadequate pay. Elsewhere, a number of such difficulties in pay structure had, in the past, proved to be temporary. Also, approving the request would have set a precedent for other groups to make similar demands. Finally, establishment of the Senior Management group was pending, which would in any case affect several categories. In Treasury Board's view, Labour's problem was primarily one of organization. The request for reclassification was therefore denied.

This conflict between the conflicting demands of the Department and those of Treasury Board led to a long process of consultation, punctuated by frustrations and frayed tempers.

After four years of negotiations, the Deputy Minister of Labour and the Secretary of the Treasury Board became involved personally to break the impasse. Treasury Board officials now agreed that action was required. They authorized the establishment of a new classification subgroup within the Program Management group. Such subgroups are normally contrary to the Board's policy of trying to keep the number of groups and classifications in the public service to a minimum. An exception is considered only when the need is strong and the petitioner persistent.

Once agreement had been reached on the basic solution, it took another two years to establish the subgroup and the associated compensation plans. The actual effect on salary costs was, however, surprisingly small: only an additional $150 per year for each of 23 employees, or a total of $3,400. Yet, the elapsed time from the original proposal to implementation was six years.


2.47 Case 3 in Exhibit 2.6 is the summary of a dispute that focused on overlapping mandates of two departments. A department had printed maps for nearly 100 years, but was questioned by a central service department whose mandate included the provision of printing services. The dispute went on for seven years and, according to one study, resulted in unnecessary costs of over $900,000. The case illustrates how difficult it can be to achieve productivity improvements when departmental mandates conflict and the means to achieve objectives are disputed. The Department of Supply and Services has indicated that it has changed its approach so as to more clearly separate service and control functions. This according to DSS will help avoid the problems that emerged in this case.

CASE 3 - Reconciling Conflicting Mandates: Purchasing a Printing Press
The Surveys and Mapping Branch of the Department of Energy, Mines and Resources has produced maps of Canada for nearly 100 years. In 1975, the Branch noted escalating operating costs due to frequent breakdown of its obsolete printing presses. The Branch requisitioned a modern printing press through the Department of Supply and Services. DSS advised that three issues needed to be resolved prior to procurement: DSS's own mandate to provide printing services seemed to conflict with the printing activity at EMR; the EMR printing work might more economically be contracted out; it might be advisable to consolidate the DSS and EMR printing activities.

Agreement could not be reached, and both departments marshalled opinions in support of their respective views in a lengthy dispute that involved a succession of ministers and senior officials on both sides. The only point on which both parties agreed was that an additional printing capacity was required.

After nearly four years of dispute, EMR prepared a Treasury Board submission to seek approval for the acquisition. Treasury Board Secretariat concluded, however, that it was not the Treasury Board's role to arbitrate such disputes. It urged the two departments to reconcile their differences on their own.

The controversy was not resolved until January 1983, when the Minister for Mines insisted on making a submission to Treasury Board. The Board decided that EMR should get its new printing press.

The elapsed time from original requisition to final approval was seven years. During all this period, the dispute had focused mainly on the mandate question - on who had the right to print maps. According to one study, EMR could have saved over $900,000 in operating costs, had it been able to install a new press at the time of the original requisition.


2.48 In addition to these three cases, we studied the impact of government-wide regulations on the management of two high priority projects: the establishment of the National Energy Program in the Department of Energy, Mines and Resources, and the Telidon project in the Department of Communications. As Chapter 9 on Energy, Mines and Resources in this Report shows, significant problems were encountered in hiring the necessary people for a rapidly expanding program, despite flexibility and support on the part of central agencies. In the case of Telidon, some of the traditional administrative procedures did not match the need of the fast-moving, high-technology-oriented organization that had to cope with fierce international competition under intense time pressure.

2.49 Similar indications emerged from interviews with regional managers who operate programs that provide direct services to the public. These managers are expected to be responsible - satisfy public service-wide administrative processes. Yet, they are also expected to be responsive - satisfy the needs of diverse client groups. These requirements often conflict and are difficult to reconcile. As a result, the quality of service delivery can suffer.

2.50 The cases, and other examples, illustrate that conflicting accountability requirements can cause unproductive levels of frustration, dispute and inaction. They suggest that, to create favourable conditions for productive management, mandates and administrative procedures should, to the extent possible, be designed to fit specific requirements of programs. The examples also illustrate, however, that resolution of difficulties, as well as achievement of productive management generally, depend significantly on the competence and motivation of managers. Administrative mechanisms will virtually always be imperfect to some degree. Managers must therefore compensate for such deficiencies by ensuring appropriate interpretation and application. Indeed, to the extent that managers can be counted on to do this, administrative procedures could be fewer and more flexible.

2.51 Productive management depends on managers. Productive management is not likely to be brought about by control systems, regulations and standards. These can, at best, help to prevent outright "bad" management. Productive management results to a large degree from the initiative of competent managers. Exhibit 2.7 gives some views of executives on this point.

Exhibit not available

2.52 We noted during our study that there are some managers who achieve program objectives and, at the same time, give satisfactory attention to economy and efficiency. They typically have an understanding of central agency operations, a solid knowledge of the department and a willingness to negotiate with staff groups and central agencies about adjusting constraints to suit operational needs.

2.53 In contrast, we noted that some senior managers show little appreciation of operational and managerial issues. They are reluctant to negotiate with central agencies about adjusting constraints or to direct staff groups to develop practices for specific requirements. This aggravates the problem of constraints.

2.54 On the whole, we noted that few managers, despite a general readiness to express dismay over constraints, have made serious efforts to assess the true impact of constraints, to explore ways to overcome their adverse effects or to indicate effective alternatives. Examples of the more successful managers suggest that other managers - at all levels - should be able to develop knowledge and skills to deal with constraints more positively than they do now. This may be particularly true of personnel processes, to which managers have traditionally given less emphasis than is required.

2.55 One of the reasons why there appears to be so little effort to deal positively with regulations and other constraints seems to be the limited appreciation many managers have of each other's responsibilities and problems. During our interviews, we noted surprising gaps of understanding between departments and central agencies, headquarters and regions, senior and middle managers, and line managers and staff specialists. This situation promotes a "nobody will help me" syndrome that results in complaints rather than in positive action to deal with administrative constraints.

2.56 Our interviews revealed some instances where deputy ministers or other senior managers had made considerable efforts to overcome these problems of communications. They reviewed the impact of constraints on operations. They caused staff groups and service agencies to be sensitive to operational needs. They were successful in bringing about an appreciation between headquarters and field managers. As a result, the entire management team had an esprit de corps that allowed them to co-operate productively in the resolution of operational problems. These examples show that productive management depends to a large degree on concerted efforts by individual managers who receive strong corporate leadership and support.

There Are Few Incentives for Productive Management, but Many Disincentives

2.57 The third significant constraint, according to the public service managers interviewed, is the lack of incentives and the number of disincentives which influence productive management in the public service. In private sector organizations, the need to produce goods and services the public will buy but still be efficient enough to make a profit is the ultimate incentive to be cost-effective. In the public service, this "bottom line" does not exist, despite attempts to use program evaluation as a bottom-line substitute. Consequently, the basic attitudes that lead to continual attempts at improving productivity are scarce.

2.58 Incentives. Interviewees indicated that innovative and productive management in the public service is not generally due to effective incentives. Rather, it results from exceptionally motivated managers. Such individuals take pride in doing things to a standard of excellence and act on the personal conviction that achieving value for money is an important aspect of their managerial function. Incentives are usually seen in terms of direct extra compensation for outstanding achievements, including performance pay and bonuses. And research confirms that monetary incentives do have an important role to play. But incentives and rewards could also take the form of extra pension credits, sabbaticals, educational assignments, particularly interesting projects, greater job autonomy, especially attractive working environments, or recognition through some sort of public award for high achievers. At present, the public service provides few incentives to encourage its managers to strive for greater value for money.

2.59 Disincentives. During our study, interviewees noted a number of disincentives that tend to work against productive management: the lower level of prestige associated with managing operations compared with giving policy advice; the higher risk of causing public embarrassment - and being penalized - as a line manager compared with being a staff specialist; the expectation of having to reconcile conflicting demands that exceed the manager's authority; the requirement to reduce resources when funds seem to be wasted elsewhere; absence of recognition and reward for productive management. Exhibit 2.8 gives a representative sample of direct quotations from interviews.

Exhibit not available

2.60 Executives also mentioned a number of disincentives they thought could be changed to minimize negative consequences:

    - Person-year controls can be a disincentive to keeping down salary costs, since a person earning $45,000 counts no more than one earning $15,000. A total salary budget would be more satisfactory because it would encourage local managers to put together an optimum mix of resources for particular situations.
    - There is some stigma attached to "lapsing" funds at the end of a fiscal year, because this may be taken as an indication of a manager's inability to budget properly, and could reduce budget levels in future years. This is a disincentive to "return" non-essential funds and an incentive to spend them, whether value for money is obtained or not.
    - Across-the-board budget cuts are imposed equally on cost-conscious managers and those with "padding" in their budget. This discourages managers from running a lean operation.
    - Factors affecting managerial job grades comprise size of budget (including salary budget), impact of decisions and similar measures. This represents a disincentive for managers to economize and to keep operations small.
    - The difficulty of removing unsatisfactory staff is a disincentive to resolving performance problems. It is, on the other hand, an incentive for hiring additional staff to compensate for existing inadequacies.
    - Government-wide administrative regulations for such things as travel, contracting and acquisition of supplies can create inefficiencies for individual departments. The time and effort needed to request exceptions is a disincentive for managers to do something about the additional costs such regulations can cause.
2.61 Though there is criticism of disincentives to productive management, senior executives are aware that these arrangements were not designed to frustrate managers. They are simply part of the management process in large, complex organizations. Nevertheless, these disincentives have a significant impact on productive management.

2.62 The impact of disincentives. The virtual absence of incentives, combined with numerous disincentives, appears to discourage productive management. In the beginning, managers do not feel encouraged to improve value for money, even where they see the possibility to do so. In the end, they may lose sight of even the possibility and the need to improve value for money. When there is public criticism about inefficiencies in the public service, they tend to react cynically. Interviewees remarked that those who care deeply about value for money feel it an injustice to be criticized when disincentives virtually encourage them to manage less productivity than they feel they could and that, as a result, their motivation and morale decline.

2.63 Another impact of disincentives is felt to be their disposition to breed controls. To the extent that disincentives cause managers to give less attention to value for money than they should, controls are established to counteract that inclination. But such controls can, in themselves, counteract productive management. For example, person-year controls enable government to limit the number of employees in departments. Yet, as the managers interviewed pointed out, they do not prevent the resulting tendencies to use as highly-paid staff as possible or to use contract staff to supplement employees. To limit these tendencies, still more controls are necessary. Disincentives and more controls appear to feed on each other, and both detract from achieving value for money. In the view of public service executives, controls could be fewer, yet more effective, if disincentives were reduced or eliminated and appropriate incentives instituted.

How Organizations Have Attempted to Improve Productive Management

2.64 As part of our study, we reviewed efforts to improve management in the Canadian public service and in the public services of the Province of Ontario, the Federal Republic of Germany, the United States, the United Kingdom and Australia. We also reviewed management practices in a number of private sector corporations in Canada and the United States.

Improvements in the Public Service of Canada

2.65 Over the years, there have been many efforts to improve management in the public service in response to changed social objectives, more programs and greater expenditures. During the past five years, special efforts have been made to improve accountability and management practices. For example:

    - departments have established better internal audit and evaluation capabilities;
    - the Office of the Comptroller General was created, and it has launched IMPAC, a project to improve management practices and controls;
    - the Government has introduced the Policy and Expenditures Management System to better link policy and resource allocation decisions; and
    - Treasury Board has announced the publication of "Principles for the Management of the Public Service."
2.66 These initiatives have attempted to improve management systems and information as well as increase the capability to monitor and control departmental activities and expenditures.

2.67 Not surprisingly, such initiatives can also create problems. Public service managers reported experiencing more compliance demands, increased reporting requirements, additional accountability relationships and, of course, more paperwork. At the same time, many of the disincentives that detract from productive management remain in place.

2.68 Central agencies indicated that they are gradually attempting to reduce management constraints. Treasury Board reports that, through its deregulation project, it has eliminated a number of regulations and that, where feasible, it issues general guidelines instead of specific rules. It indicates it has introduced department-specific threshold limits in areas such as capital spending, requiring departments to seek formal approval only when they intend to exceed their threshold. In areas such as bilingualism and equal opportunities, Treasury Board states it has reduced reporting requirements by monitoring progress selectively through outputs generated by departmental information systems.

2.69 In the personnel area, the Public Service Commission reports it has made efforts to streamline the staffing process through deregulation and the continuous review of staffing procedures. The Commission states it is also experimenting with a new framework for delegation of staffing authority to take into account departmental circumstances. A pilot project for establishing custom-made arrangements to meet specific staffing needs is in progress in the Department of Public Works. The Commission noted that it has taken initiatives to increase the responsibility of line managers in the staffing process. The Commission explained that, together with Treasury Board, it has redesigned training programs for senior executives and managers to develop managerial skills and knowledge of the structure of government. Finally, with the establishment of the Senior Management category, departmental corporate management has been given more flexibility in allocating senior personnel.

2.70 Recent guidelines with respect to the Policy and Expenditure Management System established a review process in which the Treasury Board Secretariat and the Comptroller General's Office, together with individual departments, review operational plan frameworks. This may help ensure that operational plans are considered in the light of desired results and other known requirements. It may also improve central co-ordination and help departments define their requests for resources.

Other Public Services

2.71 During our review of improvement efforts in the United States, the United Kingdom and Australia, we noted that these countries have problems similar to Canada's with respect to public service management. Government Commissions set up by these countries have consistently commented on problems such as unclear objectives, inadequate performance measures, divided accountability, limited emphasis on management development and insufficient concern for economy and efficiency. Attempts to deal with these problems have met with mixed success.

2.72 The United States government passed a Civil Service Reform Act to establish incentives for managerial performance and improve management accountability. It also established an Office of Productivity and a Presidential Management Council to support efforts at improving management practices, identifying opportunities for productivity improvement and disseminating innovations throughout the government. In addition, the United States government has now established a project to review the impact of government regulations on management.

2.73 The United Kingdom set up the "Scrutiny Program" which is headed by the Prime Minister's Adviser on Efficiency in Government. This program requires departments to undertake thorough examinations of their activities to identify areas for potential savings and staff reductions.

2.74 In the Province of Ontario, senior officials explained to us how a concerted effort at simplification has resulted in fewer central controls and more departmental autonomy. The province published a statement of "Principles and Standards of Management" which outlines how public servants are expected to manage. A noteworthy innovation is "The Deputy Ministers' 100 Minutes". Under this mechanism, Ontario's Management Board of Cabinet - which comprises eight ministers - sets aside 100 minutes each year for each deputy minister to discuss departmental achievements, problems and priorities.

2.75 In the Federal Republic of Germany, individual states have set up Commissions for the Simplification of Administration. In the Ministry of Culture and Sports for Baden-Wurttemberg, the work of the local Commission focuses on deregulating the administration of schools, colleges and universities. The Ministry employs 120,000 teachers and other public servants and used to manage its affairs with the help of 3,500 administrative directives. As a result of an effort at deregulation, this number has been reduced to 365. The principal aim of the effort was to increase autonomy of managers, encourage delegation of authority to the lowest practical level and unify formerly divided lines of accountability.

2.76 We interviewed some of the managers and they stated that the purging of regulations has had the hoped-for effect. We also noted, however, that some managers are uncomfortable with their new-found freedom. They can no longer "hide" behind regulations, but must make decisions and take actions they sometimes find uncomfortable. When we discussed this with ministry officials, they showed themselves aware of the problem. They indicated that training and counselling assistance would be made available and that managers who are unable to perform their duties might be asked to change to non-managerial positions.

2.77 To obtain the perspective of a reviewer of this process, we interviewed senior officials in the Office of the State Auditor General. They generally supported the trend toward deregulation because it promises to reduce duplication, delays and unnecessary administration, thereby increasing productivity. We noted some uneasiness, though. Since only few regulations remain in force, auditors can no longer do the bulk of their audit work by verifying compliance with regulations. Instead, to give an opinion on management's performance, they must develop some methodology to evaluate performance based on the quality of judgement managers display in particular situations.

2.78 Our review indicates that, while problems in different public services are largely the same, approaches to solve them vary considerably. The common thread in all approaches is, however, the recognition that significant and sustained efforts are necessary to reduce constraints experienced by managers and to increase incentives and support for productive management.

Private Sector Organizations

2.79 Interviews with private sector executives indicated that successful corporations tend to have lean, performance-oriented administrative systems with clear accountability and responsibility assignments. Private sector executives kept emphasizing to us how crucial they consider it to be to focus on a few key objectives and results and to rely extensively on the judgement of experienced, committed managers rather than on detailed, prescriptive regulations. Following are some of the comments executives made to us:

We have a deliberately small corporate structure, so that we don't let the centre get so big that it overwhelms managers. The branches therefore have a lot of local discretion to make decisions. (Chief Executive of a manufacturing firm.)
My people feel they understand the mining industry and therefore are prepared to delegate authority downward because they can see if anything is going wrong. I think that this company prides itself on its lack of procedures. (Vice-president of a mining company.)
If you have a well-rounded group of people without too many rules but with a lot of experience and a lot of responsibility and a lot of authority, they can do a much better job of execution of the project at hand than a larger group with more structure. My number one job is to provide the environment for our managers to excel. (Chairman and Chief Executive Officer of a major Canadian resource company.)
2.80 Most private sector executives we interviewed insisted that excessive rules tend to hamper initiative, innovation and the exercising of management responsibility. This, in turn, detracts from productive management and its improvement. Executives also indicated to us that there is an enduring inclination - especially on the part of staff groups - to develop and disseminate rules for all sorts of situations. Successful firms, executives pointed out, constantly trim their bureaucracies, minimize detailed rules and reduce levels of hierarchy to maintain a productive management environment.

2.81 Many of the successful corporations are attempting to match the needs of the organization with the needs of employees. They conduct surveys to determine how employees perceive organizational climate and management practices, and they look for suggestions on how productive management can be improved. This information is then used in attempts to improve the quality of working life in the corporation. Improvement of productive management is seen to be highly dependant on the active support of people at all levels in the organization.

2.82 Finally, many of the private sector executives we interviewed emphasized that they, as chairmen or presidents of corporations, saw it as one of their main tasks to provide leadership, direction and encouragement for productivity improvement. Even in private sector firms with relatively clear goals and the bottom line as a natural incentive, a conscious and deliberate effort by organization leaders is required to improve management.

Conclusions and Suggestions

2.83 We are aware that we have no more than scratched the surface of a difficult and perplexing subject. Some of the difficulties we have discussed are closer to being dilemmas than problems, and management of the public service may never be able to solve them completely, but can only try to achieve the best possible balance between equally difficult alternatives. For example, in some cases an alleged constraint may arise out of the nature of government and can hardly be removed. In other cases, an alleged constraint may be used by some managers as an excuse. Still, the major constraints our interviewees identified do seem to have a significant impact on productive management in the public service. In this concluding section, we note trends in the growth of constraints, call attention to the perils of basing solutions on myths, and offer some suggestions for devising experimental approaches to achieving more productive management.

Conclusions

2.84 The aim of this study was to understand why problems with improving productive management persist in the public service. Our study results indicate that improvements to productive management are obstructed by significant constraints. These constraints tend to inhibit and ultimately sap the will of public service managers to emphasize economy, efficiency and effectiveness. Improvement of this situation will depend on the extent to which constraints are reduced and initiatives are taken to encourage and support productive management.

2.85 Constraints to productive management could increase in the next few years. There is a tendency in large, established organizations to follow a there-ought-to-be-a-rule approach when dealing with management problems. The public service is no exception. But in the public service the consequences of this approach are aggravated by the additional one-rule-fits-all effect. Managers of many diverse programs are expected to follow the same rules, regardless of need or fit. As the public service continues to become more complex through responding to new public needs, the number of regulations and their frequently non-fitting character can reach a point where productive management can be seriously jeopardized. At that point, the advantages of regulations can be outweighed by their disadvantages.

2.86 The public service may be close to reaching that point. It may have already reached it. A continuation of the trend to apply more rules to deal with greater complexity may make the situation worse.

2.87 Myths about the public service may lead to wrong solutions. During our study, we encountered various beliefs about public service management. Upon closer examination, quite a few of those beliefs turned out to be myths - either factually wrong or seriously misleading.

2.88 One example (see Exhibit 2.9) we encountered is the belief that the public service would be as efficient as successful business enterprises if only private sector management techniques were applied. There is consensus among scholars and practitioners of public administration alike that management techniques cannot be transplanted holus-bolus from one sector to the other and be expected to yield similar results. The Policy and Expenditure Management System (PEMS), for example, is a public sector development. It is not seen to be applicable in the private sector, and is therefore not used there. Another myth is that public sector management practices haven't been improved in many years. Our audit reports have noted that improvements have been made.

Exhibit not available

2.89 In addition to these myths, there are some misconceptions about the composition of the federal budget. It is often thought that the growth of the federal budget is due mainly to government operating costs, such as salaries for public servants, maintenance of facilities and purchases of equipment. In fact, operating costs represent about 25 per cent of the federal budget. This includes salaries and wages of all public servants, including National Defence. The other 75 per cent is made up of payments to provinces, individuals and Crown corporations, as well as payments to service the national debt. Over the past few years, the proportion of operating costs has been contained at the level of inflation. Although productivity improvements can reduce government operating costs, it must be recognized that even significant changes in operating costs have only a limited impact relative to total government expenditures. Nevertheless, in absolute terms, significant savings could be achieved through an improvement in productive management.

2.90 These myths and misconceptions tend to blur the understanding of management problems and can be misleading influences when devising approaches to improve value for money. In the past, there has at times been a tendency to focus primarily on controlling operating costs and on trying to apply private sector techniques as a way to improve management, without sufficient recognition that such measures may have considerable limitations in ensuring greater value for money in the public service environment.

2.91 The public service has made improvements in its management practices over the years. Yet, there is room for further progress. In trying to improve productive management in the public service, it must be recognized that myths sometimes lead to the wrong type of solutions. New approaches need to be devised that will establish a more positive and supportive environment for productive management.

2.92 In ending this section, we would like to summarize some of the salient points arising from our study. It was the consensus of the public service executives we interviewed that they would be able to manage more productively if the public service environment provided more active support for value-for-money concerns. The identified constraints make it difficult to improve productive management. They thereby contribute significantly to persistent management weaknesses in the public service.

2.93 It is apparent that parts of the identified constraints in the public service management environment arise out of the nature of government. Political priorities as well as a measure of administrative constraints will always be part of that environment. The types of disincentives that exist in the public sector are not unique to the federal government. They occur similarly in other public services and cannot easily be changed.

2.94 Public service executives will therefore to some extent always have to pursue productive management within the context of certain constraints. We believe there is considerable room for them to achieve such improvements through their own initiative. Unalterable constraints should not be used as excuses for avoiding responsibilities, nor for condoning poor management practices. We noted wide differences in the initiative of executives to manage productively. For example, some executives negotiate successfully with central agencies for special flexibility to fit their operational requirements. Other managers are more disposed to give way to their frustration by expressing dismay over constraints without trying actively to overcome them.

2.95 Public service managers could no doubt improve productive management within the context of present constraints. However, of those who have tried, some have given up in frustration because of disincentives. Our conclusion is that government could bring about substantial improvements through initiatives that recognize, review and modify disincentives and constraints to productive management in the public service. These initiatives should apply to all three: the ability of managers to deal with constraints, the willingness of the political process to provide greater encouragement for productive management, and the readiness of central agencies, service departments and staff groups to provide more flexibility and incentives to managers where the situation justifies it. The suggestions which follow have been developed based on that conclusion.

Suggestions

2.96 In concluding this chapter, we would like to offer some modest suggestions. They are designed to help overcome some of the problems identified and to find approaches that encourage more productive management in the public service. We are presenting suggestions rather than recommendations because this subject is so complex and ill-defined that definite recommendations would be presumptuous at this stage - if not misleading. Our suggestions have been distilled from the many ideas we received from public and private sector executives as well as from management researchers (see Exhibit 2.10).

Exhibit not available

2.97 There are several approaches we examined but rejected as not appropriate. For example, we do not believe the problems identified can be solved by "quick-fix" solutions, such as the introduction of new government-wide management techniques, or by major institutional reforms. The public service has had its share of both of these types of initiatives over the past years. We must look at other avenues for improvement.

2.98 We are not advocating a return to an unlimited "let the managers manage" philosophy or an indiscriminate reduction of regulations and controls. In the absence of incentives that exist in the private sector, central controls will continue to be necessary in the public service to achieve a satisfactory level of prudence, probity and equity. The challenge is to achieve a balance between the requirement for central control and the need for an adequate level of managerial authority so that managers can be responsible and accountable.

2.99 We recognize that the efforts of our Office to improve management practices may have contributed to the increase in regulations and controls in the public service. It will be necessary for our Office and for government to examine the costs as well as the benefits of additional regulations and controls and to consider their implications for productive management. Our Office will be reviewing the need for specific audits in some of the areas of administrative constraints that have been identified in this study. As well, we will be examining how the impact of disincentives to value-for-money concerns can be investigated more thoroughly in our future work.

2.100 Our suggestions are of a very general nature. They are designed to point out ways of thinking about the challenge of achieving economy, efficiency and effectiveness in the public service. We hope they will provide a focus for Parliament, Government, Cabinet and public servants to search for better ways of managing resources in the federal public service.

Make Productive Management a Key Priority

2.101 We suggest that the Government develop and initiate activities to make productive management a key priority. We further suggest that this should comprise four components:
    1. Encourage and support productive management.
    2. Reduce disincentives, increase managerial authority and clarify account-ability.
    3. Emphasize the development of managers.
    4. Support experiments to improve productive management.

2.102 Isolated, sporadic efforts that do not address the three major constraints in the public service management environment are unlikely to have much overall effect. It seems to us that a comprehensive, sustained initiative is required which has the active support of Parliament, Government, Cabinet, central agencies and departments. Such an initiative could open up new opportunities and approaches for improving productive management in the public service.

Encourage and Support Productive Management

2.103 Many of the factors that affect productive management are rooted in the nature of the political process and in the legislation governing financial administration and public service employment. Even though public service managers could make some progress on their own to improve productive management, it is unlikely that major changes could be made without the active support of Cabinet, the Government and Parliament.

2.104 We suggest that, if Government wants to improve value for money in the public service, it should make it a key priority by demonstrating a strong interest in productive management. It should reconcile political and managerial requirements to the extent possible. It should encourage public servants to pursue improvements to productive management. It should explain and set examples of what kind of management is expected in the public service. And it should help to enhance an esprit de corps among managers and a greater sense of responsibility for the stewardship of taxpayers' money. Such initiatives would do a great deal to reduce frustration in the public service and to establish an environment that is supportive of productive management.

2.105 In the legislative area, an important step for government would be to review legislation, such as the Public Service Employment Act and the Financial Administration Act, to determine whether there are any aspects of these or other Acts that could be modified to provide more support and better incentives for productive management.

Reduce Disincentives, Increase Managerial Authority and Clarify Accountability

2.106 As long as managers are faced with significant disincentives and excessive administrative constraints, have limited authority to carry out their responsibilities, and are unsure to whom and for what they are accountable, it is unlikely that major improvements in achieving value for money can be made.

2.107 We suggest that Government reduce disincentives to productive management. This would include selective deregulation, based on the ability of individual managers to follow principles of productive management in achieving the particular results for which they are responsible.

2.108 We further suggest that Government ensure that managers have the kinds of authority over resources and processes that better enable them to carry out their responsibilities more productively. This implies that responsibilities and results are clearly defined, to the extent practical. It also implies that the design of administrative procedures including staffing, budgeting, contracting and purchasing, is as much as practical, based on the operational requirements of the situation.

2.109 An effort might be made by Government to clarify accountability relationships. That is to say, ensure that managers clearly understand to whom and for what they are accountable, as far as that is possible in a given situation. A particular effort might be made to simplify the many accountability demands that deputy ministers now face. This is one problem raised by the Royal Commission on Financial Management and Accountability that has not yet been resolved.

2.110 In addition, Government might encourage better communication mechanisms between central agencies and departments, senior and middle management, headquarters and regions, as well as staff and line management. The aim should be for managers to understand the expectations their colleagues must satisfy, so that there is mutual appreciation rather than suspicion when conflicting demands arise.

2.111 The effect of implementing this set of suggestions would be a shift from reliance on regulations, controls and detailed procedures toward greater reliance on managers' competence and their achievement of results. A consequence would be that costly and burdensome administrative constraints which characterize the present system would, to some extent, become unnecessary.

Emphasize the Development of Managers

2.112 If increased reliance is to be placed on managers and their achievement of results, much more emphasis needs to be given to the kinds of experience and skills they need. Also, much more emphasis needs to be placed on assessing their performance.

2.113 The public service will always need people who can harmonize political and managerial objectives, balance the mix of resources required to deliver programs and cope with administrative constraints. Productive management ultimately depends on managers who are able to achieve objectives within the context of difficulties inherent in the public service environment.

2.114 The Government might therefore strengthen its management development programs. It might embark on a long-range program to develop the management talent it will require over the next decade or two. Government-wide and departmental programs might be devised that select prospective managers at an early age and develop them through a series of assignments involving all the critical aspects of management. In the course of their development, managers might be regularly assessed with respect to their abilities, judgement and their suitability for various types of positions. Managers are an important element in achieving productive management. Their skills are the key to achieving value for money. Hence, their development is crucial to a productive public service.

Support Experiments to Improve Productive Management

2.115 Our last suggestion is to support experiments to improve productive management. It is difficult to introduce changes in an organization as large, complex and diverse as the public service without creating additional problems. Experiments, on the other hand, provide a means to test new ideas with minimal risk and expense. In addition, they can provide opportunities for public servants to come forward with suggestions and alternatives for management improvement.

2.116 We suggest, therefore, that Government support experiments and pilot projects within the context of an overall initiative to improve productive management. This would provide opportunities for central agencies and departments to look for ways to reduce detailed controls, to modify disincentives, to test incentives, to increase authority and accountability of managers and to try new approaches in management development.

2.117 The experiments could deal with perceived government-wide constraints such as staffing, administrative procedures, common services, and information requirements by central agencies. They could also assist departments to identify and deal with constraints to productive management that originate within departments. The very existence of such experiments would provide encouragement for productive management, and they would be focal points for the removal of some of the obstructions to productive management.

2.118 Such experiments would have to be carefully designed, executed and monitored. They should clearly be part of an overall comprehensive initiative for the improvement of productive management. However, care must be taken to avoid the creation of the kind of central group that itself will eventually be seen as being a constraint of the sort it is supposed to help overcome. The major role of a small central group would be to identify or confirm potential experimental areas and ensure an appropriate mix of projects. The group should also provide the competence and continuity to analyse results of individual experiments and to develop recommendations for changes in policy with respect to management in the public service.

A Final Note

2.119 The Canadian public service is acknowledged by other countries for its management practices. Its management systems and approaches have evolved considerably over the years. Yet, there remain significant opportunities for improvement in terms of value for money. While our study indicated serious constraints to productive management in the public service, we noted that similar constraints exist in other countries. The challenge of achieving productive management in public service organizations, therefore, lies in the fundamental difficulty of reconciling political requirements with management requirements.

2.120 We believe there are no magical solutions, and no villains. There are simply many very difficult and complex problems that require a great deal of courage, tenacity, openness and good will to solve. We also believe that the majority of public service managers are capable, and committed to improvement. The task before us is to tap their potential for excellence by providing them with the support, encouragement and incentives they require to achieve the goal we all seek: more productive management in the public service.