Systems for guidance and direction
The Ministry of Finance is responsible for developing financial steering systems for central government. The Ministry of Finance and its administrative branch are responsible for a large part of corporate steering at state level. In its administrative branch, the Ministry also steers important corporate service providers that produce services for the entire central government.
In the steering of the administrative organisation and public service provision the key issue, in addition to economical and efficient organisation of the activities, is setting socially significant goals and steering that promotes their attainment.
A steering system refers to a set of procedures, systems and methods, and the documents associated with them, that support management. There is a close relationship between management and steering systems. Management refers to methods and procedures used by managers in order to achieve the set goals.
The development of steering systems aims to achieve a good balance in central government finances and activities as a whole.
Government Programme and its implementation plan
The state has various objectives related to public policy, the operation of the administrative organisation and public service provision. Political steering is a political choice of objectives made by the Government and Parliament. At the level of ministries, the Prime Minister’s Office is responsible for strategic steering as a whole.
The Government's central method of strategic steering is its Government Programme. The Government Programme is an action plan approved by the parties included in the Government, in which an agreement is reached on the most important domains of the Government. An implementation plan of the Government Programme is drawn up in order to realise its goals.
The implementation plan specifies the central goals of the Government Programme's focus areas, the key projects and the responsibilities for preparing cross-administrative core policies.
The goals of developing steering systems for central government finances and activities are to ensure that these systems are economical and effective, to simplify and clarify the steering processes, and to strengthen the corporate point of view. The methods used to achieve this include strengthening a corporate approach to management and the joint organisation of activities where financial benefits and quality improvements can be gained through centralisation.
Performance management is part of the state's corporate steering
Performance management is an agreement-based steering model aiming to find a balance between the available resources and the outcomes that can be achieved through them while improving service quality and ensuring cost-effective service provision. A key feature of the performance management model is that it is based on policy objectives set in the Government Programme, the administrative branches’ corporate targets and agency-specific targets. It plays a significant role in the extensive entity of resource allocation and budget-related steering.
Key policy instruments of performance management: the Budget and the performance agreement between a ministry and an agency
Appropriations for the budget year are allocated to each agency in the state budget. The available resources and the outcomes to be achieved through them are set out in detail in multi-annual performance agreements between the ministry and each agency in its administrative branch.
Based on initial performance targets set in the Budget, the ministries negotiate with the agencies and institutions and agree on performance targets for the budget year and the resources required to attain the targets.
The performance targets for the budget year and the resources required to attain them agreed between the ministries and agencies are set down in the performance agreements. The agencies report on the achievement of the agreed performance targets in the annual reports included in their final accounts. Additionally, the ministries report on the performance of their entire sectors in the Government Annual Report.
The spending limits procedure is a key part of performance budgeting and financial planning that spans several years. In this procedure, the Government makes a decision on the expenditure rules and ceiling of the Budget, or the spending limits for the entire four-year government term, as it takes office. Within the government term's spending limits, the allocations of appropriations to the administrative branches are reviewed in the decision on spending limits in March every year. This decision is based on the administrative branches’ spending limit proposals.
Content and timeline of the performance management process
The multiannual performance agreements must contain the most topical and essential themes in terms of the steering relationship between the agency and the ministry that require strategic steering. In addition, key targets for the agency's operative performance are set out in the performance agreements. The volume and quality of the available resources and an estimate of the following years’ development play an important part in the performance negotiations.
The negotiations are based on a dialogue between the ministry and an agency. While a draft agreement can be prepared by either party, discussing it together and arriving at an agreement is in key role.
In the autumn following the preparation of a new Government Programme, the ministries and the agencies in their administrative branches negotiate multiannual performance agreements for the entire government term.
In the first performance negotiations following the launch of a new Government Programme, the performance targets for the first year and initial targets for the second, third and fourth year are agreed upon. In the second year, performance targets for the second year and initial targets for years three and four are agreed. This procedure is followed for the third and fourth year. In the fourth year, or the final year of the government term, it makes sense to stress reporting on the attainment of the set of targets over the entire government term in the performance negotiations.
The performance targets for the following year are agreed upon by the end of each year. Target attainment is reported on in a mid-term performance report at the end of June and, for the entire year, in such documents as a final accounts report at the beginning of the following year. The required mid-term result negotiations are held and target achievement is monitored during the year and, if necessary, changes in the activities are agreed upon.
The process in a ministry
- The ministry's management issues guidelines for the relevant round of performance negotiations (ministerial management)
- The ministry's department coordinating performance management issues instructions for practices and schedules (coordinating department at the ministry)
- Performance negotiation documents are compiled in the ministry (coordinating department at the ministry and other departments)
- The ministry’ management approves the ministry's policies on performance negotiations
- The ministry’s management, the coordinating department and the departments participating in the performance negotiations conduct the negotiations
- The ministry’s management approves and signs the performance agreement
- The targets of the performance agreement are integrated in the ministries’, departments’ and units’ targets. The targets are linked to personal targets in performance appraisal discussions.
- Twice a year, the ministry's coordinating department produces a report together with the agency (for example, a mid-term report and final accounts) on the attainment of the performance agreement targets and monitors the situation concerning target attainment. The parties meet regularly to discuss changes in the operating environment and the required actions and to monitor target attainment. The necessary discussions on the mid-term results are held.
The process in the agency
- The agency's management issues guidelines for the relevant round of performance negotiations (the agency’s management)
- The agency's department coordinating performance management issues instructions for practices and schedules (the agency's coordinating department)
- Performance negotiation documents are compiled in the agency (the agency's coordinating department and other departments)
- The agency’s management approves the agency's policies on performance negotiations
- The agency’s management, the coordinating department and the departments participating in the performance negotiations conduct the negotiations
- The agency’s management approves and signs the performance agreement
- The targets of the performance agreement are integrated in the targets of the agency and its units. The targets are linked to personal targets in performance appraisal discussions.
- Twice a year, the agency's coordinating department produces a report together with the ministry's coordinating department (for example, a mid-term report and final accounts) on the attainment of performance agreement targets and monitors the situation concerning target attainment. The parties meet regularly to discuss changes in the operating environment and the required actions and to monitor target attainment. The necessary discussions on the mid-term results are held.
Performance management consists of regular discussions on the attainment of key strategic targets
Performance management is a management system ensuring that the set targets can be achieved with the planned resources. Preconditions for successful performance management are the management's ownership and commitment as well as clear processes and schedules. Practical-level preconditions for this are that the senior management directs and monitors the process and that the personnel can participate in it across a broad front.
Performance management is about dialogue and regular interaction between the agency and the ministry. Rather than a ‘spot check’ approach based on a few meetings a year, the performance management process consists of regular discussions on the attainment of key strategic targets, updates of the situational picture, and implementation of the required changes. This creates trust and a shared strive for success between the parties.
State Treasury’s services include analysis and reporting services and government performance information system
The government performance information system contains data on performance targets and their attainment, and serves as a preparation and planning tool. The system can be accessed by all government agencies and public bodies, and its use does not require any separate investment in hardware or software. The information handled in the system remains internal information of the ministry, agency or body until it is made public. Users log in to the government performance information system via the State Treasury’s e-services.
On the State Treasury’s exploreadministration.fi website, the section headed ‘Profitability information’ brings together data on the performance targets of ministries, government agencies and public bodies, and on the attainment of these targets. The targets and attainment figures are prepared and published in the government performance information system. The performance targets and their attainment can be viewed in ready-made reports. You can choose a year and view the situation at government level or for a particular ministry together with the agencies and bodies within its branch of government, or you can focus on a single performance-managed agency. Government planning and monitoring documents can also be viewed in the service, including performance agreements for specific agencies and bodies.
The State Treasury’s analysis and reporting services help government agencies and public bodies in problem solving by offering a consultation service focusing on evidence-based management. In practice, the analysis and reporting services produce comparative data and analyses, and identify areas that could be improved further. The aim is to help government agencies and public bodies solve information-intensive problems and protect the overall interests of central government in developing, guiding and managing operations. The analyses are produced in cooperation with group-level government organisations. The exploreadministration.fi website also provides a more standardised public reporting service on central government financial, personnel and profitability information, and increasingly also on other public information at group level in government and information on the local government sector.
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