Governance and performance

For over the past 10 years, I have participated in a project known as Performance Governance System (PGS). It was developed for the Philippines by the Institute for Solidarity in Asia (ISA), founded by former finance secretary Jesus Estanislao. ISA is dedicated to improving public governance of government agencies and institutions, including local government units (LGUs), government-owned and -controlled corporations, and government financial institutions. Its sister organization is the Institute of Corporate Directors, a foundation dedicated to improving corporate governance among listed corporations by, among other things, training independent directors of various boards of directors. (Disclosure: I sit on the board of trustees of ISA.)

I was introduced to PGS when I was appointed the private sector cochair of the National Competitiveness Council. After attending my first “reválida” session to review a government agency’s plans and programs developed during its engagement in PGS, I saw the potential such a system had for improving both performance and governance in an organization. In fact, I could see the strong relationship between good governance and strong performance; they went hand in hand or, better still, hand in glove.

The PGS was adapted from the old management tool “Balanced Scorecard” and adjusted to fit public institutions. The system involves a journey through four ladderized steps from the initiation to the compliance, proficiency, and institutionalization stages. The basic objective is to achieve breakthrough results by designing, executing, and sustaining a well-formulated strategy.

There are many steps which an agency has to go through to build a full-blown strategy map. Several of them are key to the success or failure of the plan.

First is the establishment of a core team. This is a small group from top management who will initiate the exercise and drive the process. Without this team, the process will never gain momentum.

Second is to develop a cascading process to bring discussion, engagement, decision, and commitment through the organization and down to the individual, personal commitment of every employee. This ensures buy-in and sustainability.

Third is the creation of the office of strategy management. This serves to institutionalize the process and place permanent managers and staff whose job is to focus on execution, sustainability, and, most importantly, do performance assessments. What gets measured gets managed.

Fourth is to set up a multisectoral governance council, an advisory body which now includes outsiders, including partners, customers, and citizens. This group should provide an independent, outside view of performance and the “reality check” which all agencies need.

Fifth is to create an organizational culture and system of sharing so that personal and institutional commitment is maintained and reinforced.

Finally, “breakthrough results” must be measured and validated to determine that they are indeed real breakthroughs and not hype.

The journey through all the stages is neither easy nor short. It can take at least a couple of years if an agency is diligent. However, I have also seen it take much longer with some agencies who have taken their foot off the pedal. I have participated in or chaired the reválida panels for many government institutions, including executive departments, LGUs, the different uniformed services of the Armed Forces, and public hospitals. I have also served terms as a member of the multisectoral governance councils for several agencies. I have always encouraged many in the private sector to accept invitations to serve on reválida panels or governance councils; it’s a quick way to scope out its leadership, provide advice, and learn about its major programs and targets.

My experience and observation has been that agencies and institutions which have most diligently applied themselves to the process and system of governance have, not coincidentally, been great performers. For instance, they have delivered breakthrough results and projects on time and on budget. More importantly, they have delivered the right projects and reduced corruption. Conversely, those government institutions which had a change of heart (sometimes coinciding with a change of leadership) or who quit the process were typically agencies which severely underperformed and failed to deliver the proper public service. In some cases, leadership changes in some agencies negated years of gain and progress, and we saw these agencies deteriorate and revert to their original states (or worse). And in some, we saw agencies, which made a lot of early progress fade over time, suggesting the need for a strategy refresh.

It is for these reasons I have strongly advocated that more agencies undergo the process. Leadership matters. Good governance matters. We have seen its impact on performance and public service.

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Guillermo M. Luz served as private sector cochair of the National Competitiveness Council from 2011 to 2018.

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