Most Important Lessons

The 10 Most Important Lessons

Lesson 1. Formal institutions can and do play important roles in countries with strong as well as weak enabling environments.

Lesson 2. Leadership plays an important role in all countries, regardless of the enabling environment. In countries with weaker enabling environments, leadership works through specific systems, for example, helping to make meritocratic and performance management systems more effective. In countries with better enabling environments, leadership strengthens performance exogenously.

Lesson 3. A meritocratic system for personnel administration is the single- most important determinant of public-sector performance, in all types of enabling environments.

Lesson 4. The primary effect of well- functioning administrative procedures is to reinforce meritocratic practices. In weaker enabling environments, it may also strengthen performance directly. Simplicity and monitoring of administrative procedures are important to their effectiveness when the enabling environment is weak.

Lesson 5. Systems for strengthening performance through public outreach and oversight are only effective when they are actually used. We know little about how to make these institutions credible, in any enabling environment.

Lesson 6. Systems for strengthening performance through public outreach and oversight will make work procedures more complex in countries with more active civil societies.

Lesson 7. In each of the countries, collective action organizations, such as business associations and political parties, play particular roles that are not easily explained by enabling conditions. However, across countries, they do appear to try to alleviate the detrimental impact of some public sector entities – such as tax inspectorates – on their constituents.

Lesson 8. Courts contribute to better public sector performance, especially in countries with weaker enabling environments.

Lesson 9. Perceptions about the quality of the business environment – including unfair competition, political instability, and the Government’s commitment to anticorruption – matter to the firm’s decision to influence the state in all the countries, although in very different ways, possibly because of differences in the underlying reasons for these problems.

Lesson 10. Within all the countries, there is strong variation in the development of different institutions, both across organizations and geographic centers. There are also strong local spillovers in behavior, creating powerful geographic norms.

Implications for the Design of Public Sector Reforms

178. Our findings suggest at least three key implications regarding the sequencing and targeting of reforms.

179. The early stages of any institutional reform effort should probably focus heavily on establishing formal procedures required for meritocratic personnel management. Establishing such formal procedures should help to reduce the dependency of such reform efforts on unavoidable leadership uncertainties, such as loss of an effective leader.

180. Until effective administrative procedures operate, and until the formal rules and procedures governing human resource management are operative, institutional reform success hangs on the thin thread of leadership. Because of this, reform efforts in environments lacking these key ingredients need to make leadership the sine qua non for any intervention, and accept the fact that these initial reform efforts are unavoidably risky because they depend so heavily on the quality of the individual leading the reform, rather than on some sys tem. One implication of this conclusion: public sector reform programs might benefit from allocating more attention to the professional development of managers, through training programs and recognition of achievement, to reduce this risk and increase the quality of public sector management.

181. While it is undeniably important to emphasize managing for results, our findings suggest that performance management reforms would be more wisely viewed as second generation reforms, because there is little evidence that a performance management emphasis consistently contributes to better performance in public entities lacking meritocratic personnel management practices and effective administrative systems. While one of the elements of a meritocratic personnel management system is management of the performance of personnel (e.g., personnel performance evaluation 181. While it is undeniably important to emphasize managing for results, our findings suggest that performance management reforms would be more wisely viewed as second generation reforms, because there is little evidence that a performance management emphasis consistently contributes to better performance in public entities lacking meritocratic personnel management practices and effective administrative systems. While one of the elements of a meritocratic personnel management system is management of the performance of personnel (e.g., personnel performance evaluation

182. While efforts to strengthen “voice” mechanisms (e.g., strengthening civil society, establishing complaint mechanisms, publication of information on the activities and performance of public entities, creation of an ombudsman, strengthening the investigative reporting capacities of the press, etc.) are important, the impacts of such reforms appear to be almost non-existent until there exists a public sector capable and motivated to respond to the external voices. In short, “voice” strengthening should be viewed as a second- generation reform requirement, while creation of a meritocratic civil service, as well as creation of effective administrative procedures, should be viewed as first- generation institutional reform requirements. This does not mean that efforts to improve “voice” should be abandoned in countries such as these. Rather, it suggests that such reforms should be viewed as part of a longer term strategy, rather than as likely to yield any immediate performance impacts. In-country research needs to be conducted to determine how to make these types of systems credible.

183. Public sector reforms may benefit from better targeting in the early phases of reform. Successful pilots help to breed interest as well as create pressure on other public entities or geographic centers to participate in subsequent rounds of reform. The analysis presented in this report suggests many different ways that reforms could be targeted in order to increase their probability of success. For example, reforms could be piloted in organizations with more effective leaders or in regions with a lower concentration of corruption or better court systems. When planning a public sector reform, we would recommend that a systematic analysis be conducted to identify where pilots might be most successful.