Regarding: Accountability in Public Administration
The primary goal of the public sector is to provide quality services that meet the demands of the citizens. Nonetheless, the realization of this objective mandates the prudent management of fiscal resources (Anwar, 2007). Accountability is one of the principal tenets that underpin public governance. The widespread corruption and mismanagement of resources inherent in the public sector necessitates the development of checks and balances (Miekatrien, 2007). Findings from a recent study have shown that the misappropriation of funds occurs during the budgeting and procurement processes in the majority of cases (Leruth & Paul, 2008). As such, it is imperative to replace the current principal-agent system with performance-based accountability.
Corruption has been an endemic problem in public administration. The media and civil society groups have exemplified the scope and effects of this problem (Anwar, 2007). Bureaucrats in the public sector have the ultimate discretion to make decisions that support the delivery of public services. Although bureaucratic systems are essential to enhance efficiency and effectiveness, officials often use their autonomy to perpetrate administrative corruption (Burns & Kedia, 2009). In addition, bureaucratic accountability ensures that agents are accountable to their principals. Conversely, Miekatrien (2007) has noted that subordinates cannot be responsible if their administrators engage in corrupt dealings. Thus, performance-based accountability becomes a viable strategy in the management of public resources.
Most public institutions use the principal-agent approach to prevent corruption. According to this theory, the prevention of fraud requires realistic reforms to achieve positive outcomes. In essence, the principal-agent model uses both incentives and disincentives to reward integrity and punish dishonesty respectively (Brown, Evans, & Moser, 2009). Namazi (2013) has argued that this strategy fails to achieve the intended goals if the principals themselves are fraudulent. By contrast, performance-based accountability focuses more on continuous improvements instead of punitive measures (Van Dooren, Bouckaert, & Halligan, 2015). The principal-agent model is a weak theory since it focuses more on punishing the people involved in corruption. The performance-based accountability addresses this challenge by reviewing the misconducts systematically to identify the root causes and their solutions. Conversely, it is difficult to design and implement performance-based accountability systems (Rabovsky, 2012).
The Rationale for Each Alternative
Performance-based accountability is increasingly gaining traction in the public sector because of its capacity to enhance the integrity of public operations. This system also improves the delivery of public services since it emphasizes the continuous improvement of performance (Van Dooren et al., 2015). Openness and transparency are integral components of fighting corruption and unethical behavior in the public service. However, government institutions maintain a secrecy code, which makes it impossible to hold public servants to account (Rabovsky, 2012). The performance-based accountability addresses this problem by providing data and information regarding the activities of public institutions. According to Kim, Kim, and Lee (2009), the dissemination of information openly and transparently enhances government operations.
The performance-based accountability rewards public institutions that achieve positive outcomes and sanctions those that fail to realize their goals. The essence of this model is to develop fiscal and management policies based on the capacity to achieve objectives (Rabovsky 2012). The elemental strength of performance-based accountability is that it institutionalizes a steering and learning approach in governance (Miekatrien, 2007). Performance assessment ascertains the level of success or failure while at the same time providing the basis for formulating future policies continuously and logically. Policy-making is a continuous process that should not start with problem identification and end at the evaluation stage (Meessen, Soucat, & Sekabaraga, 2011).
On the other hand, the principal-agent theory uses incentives and disincentives to control the behavior and actions of the agents. In practice, this model of management provides a natural framework that assesses the level of accountability in political or public institutions (Brown, Evans, & Moser, 2009). The principals develop policies, standards, and goals autonomously and require the agents to align their decisions and activities with these components. The principals then monitor the performance of the agents to determine the level of public accountability (Namazi, 2013). The administrators use incentives to induce their subordinates to undertake optimal actions. Also, the principal-agent theory recommends the application of punitive measures against corrupt or dishonest individuals (Leruth & Paul, 2008).
The fundamental pillar of government efficiency is a sound system that facilitates the effectual utilization and management of public resources (Anwar, 2007). Public institutions usually submit their budgetary allocations to the ministry of finance or parliamentary finance committees (depending on the jurisdiction) for approval. The oversight bodies serve as the principals whereas the heads of government institutions and ministries represent the agents (Leruth & Paul, 2008). Namazi (2013) has asserted that a committed administrator can reduce corruption significantly by combining incentives and civil penalties to influence the actions of the agents. However, the principal has the responsibility of uncovering factual evidence of corrupt and unethical behavior. The managers should not be dishonest or complicit in dealing with cases of corruption (Brown, Evans, & Moser, 2009).
The Limitations of Each Alternative
Although performance-based accountability is an appealing concept, its implementation poses a myriad of challenges related to political and technical issues. First, the introduction of this strategy challenges the status quo, which undermines the successful implementation of change (Burns & Kedia, 2009). Every government institution favors accountability but may not consider performance-based accountability as the appropriate means of fighting corruption. The central point of contestation is that the performance approach is excessively technocratic and it eliminates the political process that has been shaping accountability for years (Anwar, 2007). Miekatrien, (2007) has found out that the institutionalization of performance-based accountability may not be viable in institutions that lack sound governance systems.
Secondly, performance-based accountability uses indicators to implement change and improvements. This approach is problematic considering the challenges inherent in transforming a deep-rooted bureaucracy (Kim, Kim, & Lee, 2009). The majority of politicians and administrators prefer the rigid systems to planned change. As such, these entities often make progressive modifications to the current system when the need for change arises rather than creating new structures (Anwar, 2007). Performance-based accountability threatens an established order by proposing to overhaul it completely. Also, the implementation of a new system of governance requires massive financial commitments. Politicians and other stakeholders may question the basis for introducing performance indicators that will not generate short-term benefits (Meessen et al., 2011).
Part of the reason for shifting to performance-based accountability is that the principal-agent conceptualization is flawed. One limitation of the principal-agent leadership is that it focuses more on exceptional events instead of providing the basis for making continuous improvements (Namazi, 2013). The tendency to punish corrupt officials without reforming the system that reproduces such behavior does not ensure transparency in the long-term. Punitive measures restrain the capacity of the public institutions to identify the perennial and ingrained causes of corruption (Anwar, 2007). For instance, the action of firing or suspending a civil servant involved in the mismanagement of public resources does not provide sufficient information to rectify institutional failures. Thus, oversight alone does not prevent corruption without reforming the entire institution (Brown et al., 2009).
Government or public institutions have traditionally employed supervision as the best approach to enforcing public accountability. Conversely, this one-sided strategy does not reduce the cases of corruption considering the expanded roles of governance (Rabosky, 2012). On the contrary, the abuse of power, organizational deficiencies, and collusion have made it difficult to detect and rectify unethical behavior even with the most efficient supervision (Miekatrien, 2007). The function of the principals as supervisors and auditors diminishes when public institutions are weak and nonresponsive to the demands of the public. This limitation necessitates the combination of oversight with regulatory and political reforms to provide effectual checks and balances. The onset of these efforts mandates the elimination of secrecy and unnecessary bureaucracies (Meessen et al., 2011).
Recommendations and Conclusion
Performance-based accountability and management have become ubiquitous concepts in the public sector. Although these efforts are essential to combat the escalating cases of corruption in government institutions, they lack the political will to support implementation (Rabovsky, 2012). The attempts to institute organizational transformation often generate unintended consequences in both the private and public sectors. Performance accountability also produces inadvertent effects if the change agents take the proposed reforms to the logical extremes (Kim, Kim, & Lee, 2009). Managers must identify and manage these problems when designing the programs. Miekatrien (2007) has argued that the capacity to conceptualize the scope and influences of the unintended results influences the effectual management of any reform agenda.
First, it is essential to avoid the overreliance on indicators to make policy decisions. The public sector is complex because of the nature of the services it provides to the citizens. As such, a single aspect is not sufficient to identify the factors that support or hinder efficiency (Rabovsky, 2012). This unintended consequence relates to the second one, which entails appraising civil servants based on identifiable outcomes. The main problem is that people find an easy way to meet targets even if such actions do not reflect the actual objectives of the program (Kim, Kim, & Lee, 2009). Third, performance-based accountability should only use public resources to generate both short-term and sustainable benefits. The short-term success that becomes a long-term failure is inconsequential in fighting corruption and the mismanagement of resources in the public sector (Miekatrien, 2007).
Despite the unintended limitations outlined above, performance-based accountability is a crucial system that has the potential to enhance openness and transparency. The implementation of this strategy will require a departure from the culture of blame and punishment to the development of rational indicators of both success and failure. In addition, the proper implementation of this system should focus on building institutional capacity, as well as improving performance. Although supervision and oversight are vital in the fight against corruption, the imperative goal is to gather information that will facilitate continuous improvement. Most importantly, it is of the essence to formulate and utilize performance indicators in a systematic manner. Toward that end, performance-based accountability should complement the current practices. The organization should scale-up the process progressively to avoid the resistance to change.
References
Anwar, S. (2007). Performance accountability and combating corruption. Washington, DC: World Bank.
Brown, J. L., Evans, J. H., & Moser, D. V. (2009). Agency theory and participative budgeting experiments. Journal of Management Accounting Research, 21(1), 317-345.
Burns, N., & Kedia, S. (2009). The impact of performance-based compensation on misreporting. Journal of Financial Economics, 79(1), 35-67.
Kim, S., Kim, H. J., & Lee, H. (2009). An institutional analysis of an e-government system for anti-corruption: The case of OPEN. Government Information Quarterly, 26(1), 42–50.
Leruth, L., & Paul, E. (2008). A principal-agent theory approach to public expenditure management systems in developing countries. OECD Journal on Budgeting, 7(16), 1-29.
Meessen, B., Soucat, A., & Sekabaraga, C. (2011). Performance-based financing: Just a donor fad or a catalyst towards comprehensive health-care reform? Bulletin of the World Health Organization, 89(2), 153-156.
Miekatrien, S. (2007). The impact of performance budgeting on the role of the legislature: A four-country study. International Review of Administrative Sciences, 73(2), 189-203.
Namazi, M. (2013). Role of the agency theory in implementing management’s control. Journal of Accounting and Taxation, 5(2), 38-47.
Rabovsky, T. M. (2012). Accountability in higher education: Exploring impacts on state budgets and institutional spending patterns. Journal of Administration Research and Theory, 22, 675-700.
Van Dooren, W., Bouckaert, G., & Halligan, J. (2015). Performance management in the public sector. London, UK: Routledge.