Article by Michael J. Hatton and Kent Schroeder By the early 1990s, OECD (Organization for Economic Co-operation and Development) countries were characterized by growing demands on the part of society for the management of public sector organizations. General dissatisfaction with government performance, social service efficiency, and an apparent need for greater accountability by public sector enterprises led to governance reforms, also called New Public Management (NPM). The reforms have led to the penetration of market-based approaches to governance into the public sector, the transformation of social services into a client-oriented one and increased accountability of public sector enterprises for results and performance. This is how results-based management (RBM) appeared, which soon penetrated the management of most organizations in Asia Pacific, public, commercial and educational, single and multidisciplinary.
According to RBM, in the process of project implementation, factors of production (financial and human resources) are used, leading to the emergence of different results in the short, medium and long term. In accordance with RBM, expected results and potential risks are clearly established at the stage of project preparation, and an important characteristic of this process is the involvement of all stakeholders in it. Specific indicators are established that are used in the future to monitor the implementation of the project. The implementation of the project in Asia Pacific involves the formation of performance reporting, tied to the achievement of expected results, which becomes the basis of management.
However, more than a decade after the introduction of RBM, managers and leaders of the various projects that have used RBM tend to be rather cold about this approach. According to the authors’ experience, it is quite often the opinion that the use of RBM is a waste of time and does not give the expected effect. Representatives of organizations financing projects, executive bodies, beneficiaries are more interested in using RBM.
In order to understand the reasons for such ambiguous results of the application of RBM, which seemed promising ten years ago, the authors of the article considered a generalized model of RBM application from the point of view of assessing the project implementation process. As a result, the authors were able to identify the most common problems that make RBM ineffective.
RBM Manual: Principles for Effective Use
- Differences in understanding the essence of the approach by stakeholders can become an important obstacle to the adequate use of the approach. Effective use of RBM requires that all stakeholders achieve a mutual understanding in the perception of the approach, its practical application and commitment to RBM.
- There is a need for a full understanding by all stakeholders of the “results orientation” within RBM. Often stakeholders, especially those directly involved in project implementation, tend to replace RBM with resource and performance management.
- If one of the parties to the project is a partner from a developing country, its full involvement and full commitment to RBM is required. Unilateral application of RBM will obviously not give the expected results.
- At the stage of project development, it is necessary to determine the achievable results. In this sense, deep involvement of all stakeholders is especially necessary since managers often tend to view the project with overestimated optimism. Often the reason for the impossibility of an effective project implementation from the point of view of RBM is the mistakes made precisely at the stage of determining the achievable results. In addition, it is necessary to take into account the achieved but not expected results and use the information in the course of project management. According to the authors, side effects are often neglected.
- One of the most difficult tasks is to ensure the involvement of all stakeholders in the project management process. The expected results should be viewed as relevant by all stakeholders and the cost allocation and course of action should be considered adequate.
- Simplified indicators are often chosen to measure project performance. However, lack of resources and time should not be the reasons for the use of irrelevant indicators that do not allow a realistic assessment of the relationship between resource and energy costs and performance and, accordingly, do not provide the necessary information for project management.
- The project requires comprehensive risk management, which, however, should not be replaced by manipulation of expected results.
- Effective use of RBM requires the use of an external assessment of implementation progress, also based on expected results. This assessment should be carried out regularly from the very beginning of implementation. However, according to the authors’ testimony, it is often replaced by an ex post facto assessment, which obviously does not affect the course of implementation. If there are more than one review body, it is necessary to ensure consistency in the conduct of evaluations.
- The commitment of the RBM executing body in the implementation of the project is determined, in particular, by the presence of appropriate incentives and likely negative consequences.
- RBM assumes continuous learning: the monitoring information accumulated during the implementation of the project should be used for continuous learning. According to the authors, performers often do not have enough time for this.
To date, the above principles, according to the results of the research of the authors, do not find full application, which makes the use of RBM ineffective and leads to negative reviews of the approach.
Adhering to these principles can make RBM a truly productive management approach. The authors recommend that you be more assertive when applying RBM to ensure deep engagement and commitment from all stakeholders.