Public value

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Public value describes the value that an organization or activity contributes to society. The term was originally coined by Harvard professor Mark H. Moore who saw it as the equivalent of shareholder value in public management. Public value is supposed to provide managers with a notion of how entrepreneurial activity can contribute to the common good. Nowadays, public value is no longer limited to the public sector, but is used by all types of organization, including non-governmental organizations and private sector firms. Therefore, the public value researcher Timo Meynhardt from the University of St. Gallen and HHL Leipzig Graduate School of Management uses the term to generally raise the question about organizations' contribution to the common good. He believes that current management concepts, such as shareholder value, stakeholder value, customer value, sustainability or corporate social responsibility, should legitimize themselves in regard to their impact on the common good. [1] In his (social-)psychological-based concept, public value emerges for individuals from the experiences made in social structures and relationships. Hence, it can be seen as a prerequisite and a resource for successful living. [2]

Contents

Definitions

Public value is value for the public. It equates managerial success in the public sector with initiating and reshaping public sector enterprises in ways that increase their value to the public in both the short and the long run. Moore, 1995 [3] According to a recent systematic review of empirical public value research, public value has four key dimensions: outcome achievement (i.e. the extent to which a public body is improving publicly valued outcomes across a wide variety of areas), trust and legitimacy (i.e. the extent to which an organisation and its activities are trusted and perceived to be legitimate by the public and by key stakeholders), service delivery quality (i.e the extent to which services are experienced as being delivered in high‐quality manner that is considerate of users' needs), and efficiency (i.e. the extent to which an organisation is achieving maximal benefits with minimal resources). [4]

Public values are those providing normative consensus about (1) the rights, benefits, and prerogatives to which citizens should (and should not) be entitled; (2) the obligations of citizens to society, the state and one another; and (3) the principles on which governments and policies should be based. [5] Public Value is the combined view of the public about what they regard as valuable. Talbot, 2006. [6] Value for the public is therefore situated in relationships between the individual and society, founded in individuals, constituted by subjective evaluations against basic needs, activated by and realized in emotional-motivational states, and produced and reproduced in experience-intense practices. Meynhardt, 2009 [2]

In the public sector

The research program on public value was kicked off by Professor Mark H. Moore of Harvard's Kennedy School of Government, who published a book on the subject, Creating Public Value. Strategic Management in Government, in 1995. In this sense, public value can be instituted as an organising principle in a public sector organisation, providing a focus in the context of which individual employees are free to pursue and propose new ideas about how to improve the working of the organisation, in terms of efficiency or services. Public organisations seeking to use public value as a principle need to create a corporate culture in which the pursuit of public values by employees is rewarded just as pursuing shareholder value is rewarded in private corporations.

The concept has been taken up initially by academics, think tanks and NGOs, and later by a number of public sector organisations in the United Kingdom and other countries.

In 2004 it was used by the BBC as the cornerstone of its manifesto for the renewal of its charter. [7] [8]

In 2006 Accenture launched the Institute for Public Service Value (IPSV), to explore how public value is created in government organizations. [9] Greg Parston, co-founder and former Chief Executive of the Office for Public Management, and a collaborator with Professor Moore, was appointed Director. Among many other studies, IPSV conducted the Global Cities Forum in 2007-2009, which facilitated citizens' deliberations on their experiences and expectations of public value in 17 cities around the world.

In 2006, the Center for Technology in Government (CTG) in partnership with SAP AG, conducted research on the topic of public value in the context of governments' investments in information technology (IT). [10] The results of this research found that governments' ability to realize the full value of IT investments is not completely measurable in terms of financial results. More specifically, the five U.S. and international governments studied, looked for the full value of government IT investments in both the internal value to government operations and the broader political and social returns to the public at large. [11]

From this point of view, there are two sources of public value:

  1. value that results from improving the government itself as an asset to society and
  2. value that results from the delivery of specific benefits directly to persons or groups. [12]

In November 2006, UK-based The Work Foundation [13] published a report on their project, titled Deliberative democracy and the role of public managers [14] , followed in October 2008 by Public Value: The Next Steps in Public Service Reform [15]

The German Federal Employment Agency uses the public value concept to better understand its contribution to society that goes beyond simple task fulfillment and make it a yardstick for management decisions. An empirical study has shown that a particular value of this organization is seen in its contribution to social peace in Germany. [16]

In the private sector

Public value is also taken up by private sector companies that want to maintain a license to operate and understand what implications new strategies and projects might have in terms of public value creation/ destruction. Such analyses can be done using a Public Value Scorecard as proposed by Timo Meynhardt and Peter Gomez. [17] Public value acknowledges that established business paradigms such as customer value or stakeholder value risk overemphasizing certain aspects of business' value contribution to society at the expense of other important dimensions. It pledges for a redefinition of the entire notion of value creation as it takes utilitarian and hedonistic as well as political and moral aspects of value creation into account. [18]

A number of firms use public value to obtain management information helping to take strategic decisions. [19] Examples include:

The Strategic Triangle

When further developing his thinking on public value, Moore focused his book Recognizing Public Value (2013) on how to assist public managers to focus on creating public value within the environment they work within, rather than as a theoretical framework. [22] Moore created the strategic triangle as an analytical framework to help turn abstract possibilities into the concrete circumstances managers are facing. [23] The strategic triangle is used by many public managers across the world, to understand and measure the public value they create and what kind of capability and capacity is required to create it. [23]

The framework asks three critical questions about the outcome being sought:

  1. Does it create public value?
  2. Is there legitimacy and support for the conception of public value?
  3. Is there operational capacity to get it done?

These three questions create the points of the strategic triangle. [22] The challenge for public managers is to ensure that all three of these points are in alignment and mutually reinforcing. [23]

Public Value

Within the strategic triangle public value is also referred to as the ‘task environment’. [23] This is because when a public manager assesses what social conditions can be improved by the government, they must look at individuals needs and the valued social conditions they live within. [23] When government assets are used to change that task environment, public value is created. [23]

Legitimacy and Support

A key determining factor on whether a public manager is able to achieve public value is the amount of legitimacy and support they can generate within their authorising environment. [22] This authorising environment is made up of all the people who can call the organisation to account, to evaluate its performance and value, and has control over the resources it needs to deliver. [22] The authorising environment often includes individual citizens (i.e. voters and taxpayers), advocates (e.g. unions), the press, government agencies and non-governmental watchdog agencies. [23]

Operational Capacity

Operational capacity refers to whether the public manager has enough people and time to use government assets along a value chain to create the desired outcomes. [23] The value chain can be described as the ability to create the desired outcome through the flow of inputs to outputs. [23] The key characteristics of the value chain lie in how inputs flow through to outputs. These include the activities, processes, procedures, and programs of an organisation. [23] What nearly all public managers will face is low operational capacity to be able to deliver, so it is often only possible to achieve the outcome through partnership with other co-producers. [23]

The Strategic Triangle as an Analytical Framework

The strategic triangle can also be used as an analytical framework to assess empirical materials in research. [24] In a study by Höglund et al. (2021) of the Swedish public sector it was used to analyse the strategic management and management control practices at Region Stockholm and in particular, the Culture Unit. [25] It is challenging to find alignment among the three points of the strategic triangle when it comes to strategic management and public value creation. [25] Therefore, the study attempted to answer the question “How do management control practices enable and/or constrain strategic alignment”. [25]

The study was conducted through 34 interviews with 31 people between June 2017 and November 2019. [25] A range of documents were also collected as a part of the data collection. The researchers result findings were presented under three propositions. [25]

The first was that “strategic alignment is vulnerable to management control practices that have a strong focus on performance measurements”. [25] As the approach to creating public value was focused on using visionary objectives, performance measures and report systems, the results were that the focus on performance measurements created a misalignment among the three points in the strategic triangle. [25]

The second was that “strategic alignment is vulnerable to standardized management control practices”. [25] The study found that through standardising management control practices, there was a misalignment between the authorising environment and operational capacity, as it increased the administrative burden. [25]

The final was that “strategic alignment is vulnerable to politically driven management control practices”. [25] It was shown through the study that the interaction with politicians meant there was a greater focus on short-term goals and measurable outputs and that there were issues with political micromanagement. [25] This resulted in a lack of operational capacity and misalignment with the point of public value creation in the strategic triangle. [25]

The strength of the strategic triangle as an analytical framework is that it recognises the specifics and contextual issues of the public sector. [24] [26]

Measurement and Evaluation

Measuring public value has become increasingly important in efficient public administration. Although there has been a great deal of research dedicated to establishing public value, there has been relatively little focus on how to measure it. [27] Evaluating and measuring results is vital in influencing our comprehension and application of public value principles. [26]

Why Is Public Value Measured?

Public managers can utilise this information for ten various tasks to: (1) address accountability demands from elected officials and the public; (2) submit budget requests; (3) conduct internal budgeting; (4) initiate detailed analyses of performance issues and potential solutions; (5) inspire; (6) negotiate contracts; (7) assess; (8) assist in strategic planning; (9) enhance communication with the public to foster trust; and (10) improve. [28]

The primary purpose of performance measurement is to improve the efficiency and effectiveness of public service, thereby supplying information to public officials. [29]

Public managers can utilize performance measurement for: (1) evaluating; (2) controlling; (3) budgeting; (4) motivating; (5) promoting; (6) celebrating; (7) learning; and (8) improving. [30] Leaders of public agencies should first determine the managerial purposes for which performance measurement will be used, and then select a set of performance measures that can effectively support these purposes both directly and indirectly. [30]

What Should Be Measured?

Public value measurement focuses on outcomes and impacts rather than just inputs and outputs. [28] This includes: (1) achievement of desired societal outcomes; (2) citizen satisfaction; (3) trust in institutions; and (4) intangible elements contributing to public welfare. [27]

The value chain model proposes evaluating public value at various points: inputs, programs, procedures, processes, activities, outputs, and outcomes. [31] Some researchers suggest expanding assessment to consider the influence of policies and programs on various activities. This implies that every activity related to creating public value must be evaluated. [27]

How Is Public Value Measured?

Moore [31] suggests two distinct methods for evaluating public value: (1) The programme evaluation/cost-benefit approach and (2) the business management approach. The first approach using traditional program evaluation techniques focuses on economics and welfare economics to quantify the advantages and drawbacks of public programs or policies. [27]

Willingness-to-Pay (WTP), Willingness-to-Accept (WTA), and Travel Cost Methods are numerical models that aim to quantify the monetary worth that individuals assign to public goods and services. [27] Nonetheless, these strategies are known for being undependable due to their susceptibility to intangible factors like equity [32] and public confidence. [27] According to Moore [31] , the second business management approach is considered more practical compared to the initial approach. It utilises conventional performance measurement systems (PMS) that continue to be valid if they are interpreted to create a measurement that is more in tune with the public value concept.

Future Directions

There are two main directions of where public value research is heading. First, scholars are within the public domain, aiming to enhance the concept through improved definitions, deeper propositional theories, and efficient practical objectives. This involves separating public value into measurable parts, analysing its different aspects thoroughly, and investigating its interpretation and implementation in diverse settings. [26]

Secondly, it entails placing public value within the wider scope of public administration and beyond. This includes continued discussions on its strength as a concept, justifications for its role as a comprehensive idea, and attempts to broaden or modify the theory. Some researchers combine public value with other concepts or investigate its use in various sectors. [26]

Related Research Articles

<span class="mw-page-title-main">Strategic management</span> Planning for a companys responses to external issues

In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of resources and an assessment of the internal and external environments in which the organization operates. Strategic management provides overall direction to an enterprise and involves specifying the organization's objectives, developing policies and plans to achieve those objectives, and then allocating resources to implement the plans. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision-making in the context of complex environments and competitive dynamics. Strategic management is not static in nature; the models can include a feedback loop to monitor execution and to inform the next round of planning.

<span class="mw-page-title-main">Business performance management</span> Processes to bring output into alignment with goals

Business performance management (BPM) is a management approach which encompasses a set of processes and analytical tools to ensure that an organization's activities and output are aligned with its goals. BPM is associated with business process management, a larger framework managing organizational processes.

A balanced scorecard is a strategy performance management tool – a well-structured report used to keep track of the execution of activities by staff and to monitor the consequences arising from these actions.

Program evaluation is a systematic method for collecting, analyzing, and using information to answer questions about projects, policies and programs, particularly about their effectiveness and efficiency.

Information technology (IT)governance is a subset discipline of corporate governance, focused on information technology (IT) and its performance and risk management. The interest in IT governance is due to the ongoing need within organizations to focus value creation efforts on an organization's strategic objectives and to better manage the performance of those responsible for creating this value in the best interest of all stakeholders. It has evolved from The Principles of Scientific Management, Total Quality Management and ISO 9001 Quality Management System.

<span class="mw-page-title-main">Performance indicator</span> Measurement that evaluates the success of an organization

A performance indicator or key performance indicator (KPI) is a type of performance measurement. KPIs evaluate the success of an organization or of a particular activity in which it engages. KPIs provide a focus for strategic and operational improvement, create an analytical basis for decision making and help focus attention on what matters most.

A business case captures the reasoning for initiating a project or task. Many projects, but not all, are initiated by using a business case. It is often presented in a well-structured written document, but may also come in the form of a short verbal agreement or presentation. The logic of the business case is that, whenever resources such as money or effort are consumed, they should be in support of a specific business need. An example could be that a software upgrade might improve system performance, but the "business case" is that better performance would improve customer satisfaction, require less task processing time, or reduce system maintenance costs. A compelling business case adequately captures both the quantifiable and non-quantifiable characteristics of a proposed project. According to the Project Management Institute, a business case is a "value proposition for a proposed project that may include financial and nonfinancial benefit."

A federal enterprise architecture framework (FEAF) is the U.S. reference enterprise architecture of a federal government. It provides a common approach for the integration of strategic, business and technology management as part of organization design and performance improvement.

<span class="mw-page-title-main">Capacity building</span> Process within NGOs and non-profits

Capacity building is the improvement in an individual's or organization's facility "to produce, perform or deploy". The terms capacity building and capacity development have often been used interchangeably, although a publication by OECD-DAC stated in 2006 that capacity development was the preferable term. Since the 1950s, international organizations, governments, non-governmental organizations (NGOs) and communities use the concept of capacity building as part of "social and economic development" in national and subnational plans. The United Nations Development Programme defines itself by "capacity development" in the sense of "'how UNDP works" to fulfill its mission. The UN system applies it in almost every sector, including several of the Sustainable Development Goals to be achieved by 2030. For example, the Sustainable Development Goal 17 advocates for enhanced international support for capacity building in developing countries to support national plans to implement the 2030 Agenda. 

Organizational effectiveness is a concept organizations use to gauge how effective they are at reaching intended outcomes. Organizational effectiveness is both powerful and problematic term. The strength of it is that it may be used to critically evaluate and improve organisational activities. It's problematic since it means various things to different individuals. And there are other alternative methods for measuring organizational performance. Organizational effectiveness embodies the degree to which firms achieve the goals they have decided upon, a question that draws on several different factors. Among those are talent management, leadership development, organization design and structure, design of measurements and scorecards, implementation of change and transformation, deploying smart processes and smart technology to manage the firm's human capital and the formulation of the broader Human Resources agenda.

<span class="mw-page-title-main">Performance measurement</span> Process of collecting, analyzing and/or reporting information regarding performance

Performance measurement is the process of collecting, analyzing and/or reporting information regarding the performance of an individual, group, organization, system or component.

IT portfolio management is the application of systematic management to the investments, projects and activities of enterprise Information Technology (IT) departments. Examples of IT portfolios would be planned initiatives, projects, and ongoing IT services. The promise of IT portfolio management is the quantification of previously informal IT efforts, enabling measurement and objective evaluation of investment scenarios.

GQM+Strategies is a method that provides concepts and actionable steps for creating the link between goals and strategies across an organization and allows for measurement-based decision-making. It was developed by Victor Basili, Jens Heidrich, Mikael Lindvall, Jürgen Münch, Myrna Regardie, Carolyn B. Seaman, and Adam Trendowicz. The method was originally developed for organizations having a strong focus on IT and the development of software systems, but the method's popularity has grown to other domains and can be applied to any organization. The book Aligning Organizations through Measurement gives a comprehensive overview of the method, provides actionable guidance, case studies, and practical applications.

In organizational theory, organizational analysis or industrial analysis is the process of reviewing the development, work environment, personnel, and operation of a business or another type of association. This review is often performed in response to crisis, but may also be carried out as part of a demonstration project, in the process of taking a program to scale, or in the course of regular operations. Conducting a periodic detailed organizational analysis can be a useful way for management to identify problems or inefficiencies that have arisen in the organization but have yet to be addressed, and develop strategies for resolving them.

Traditionally, market orientation (MO) focuses on microenvironment and the functional management of an organisation. However, contemporary organisations have widened their focus to incorporate more roles, functions and emphasis on the macro environment. Firms have been concerned with short run success and often not taken into account the long-run ecological, social and economic effects from their activities. Despite growth in the MO concept, there is still a need to reconceptualise the concept with a greater emphasis on external factors that influence a firm.

Performance-based contracting (PBC) or results-based contracting, is a procurement strategy used to achieve measurable supplier performance. A PBC approach focuses on developing strategic performance metrics and directly relating contracting payment to performance against these metrics. Common metrics include availability, reliability, maintainability, supportability and total cost of ownership.

Process capital is the value to an enterprise which is derived from the techniques, procedures, and programs that implement and enhance the delivery of goods and services. Process capital is one of the three components of structural capital, itself a component of intellectual capital. Process capital can be seen as the value of processes to any entity, whether for profit or not-for profit, but is most commonly used in reference to for-profit entities.

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The Barcelona Principles refers to the Barcelona Declaration of Research Principles, a set of seven voluntary guidelines established by the public relations (PR) industry to measure the efficiency of PR campaigns. They were the first overreaching framework for effective public relations and communications measurement. The Principles serve as a guide for practitioners to incorporate the ever-expanding media landscape into a transparent, reliable, and consistent framework.

Information culture is closely linked with information technology, information systems, and the digital world. It is difficult to give one definition of information culture, and many approaches exist.

References

  1. ↑ Meynhardt, T. (2009). Public Value: Organisationen machen Gesellschaft. In: OrganisationsEntwicklung. Zeitschrift für Unternehmensentwicklung und Change Management 2013, Nr. 4, S. 4-7.
  2. 1 2 Meynhardt, T. (2009). Public Value Inside: What is Public Value Creation? International Journal of Public Administration, 32 (3-4), 192-219.
  3. ↑ Moore, M. (1995). Creating Public Value – Strategic Management in Government. Cambridge: Harvard University Press.
  4. ↑ Faulkner, N., & Kaufman, S. (2018). Avoiding theoretical stagnation: a systematic review and framework for measuring public value. Australian Journal of Public Administration, 77(1), 69-86.
  5. ↑ Bozeman, B. (2007). Public Values and Public Interest: Counterbalancing Economic Individualism. Washington, D.C.: Georgetown University Press.
  6. ↑ Talbot, C. (2006). Paradoxes and prospects of 'Public Value. Paper presented at Tenth International research Symposium on Public Management, Glasgow
  7. ↑ Building public value: Renewing the BBC for a digital world (PDF). BBC. 2004. Archived from the original (PDF) on 3 February 2016.
  8. ↑ Crabtree, James (27 September 2004). "The revolution that started in a library". New Statesman. Retrieved 2018-01-24.
  9. ↑ "Accenture Launches Institute for Public Service Value to Identify and Promote Leading Practices in Government Service Delivery | Accenture Newsroom". newsroom.accenture.com. Retrieved 2018-01-24.
  10. ↑ Chohan, U.W. (2021). Public Value and the Digital Economy. Routledge, UK.
  11. ↑ Advancing Return on Investment Analysis for Government IT: A Public Value Framework (PDF). Center for Technology in Government, The Research Foundation of State University of New York. 2006.
  12. ↑ Benington, J. (2009). Creating the public in order to create public value?. Intl Journal of Public Administration, 32(3-4), 232-249.
  13. ↑ "The Work Foundation". Work Foundation. Retrieved 2018-01-24.
  14. ↑ Horner, Louise; Lehki, Rohit; Blaug, Ricardo (November 2006). "Deliberative democracy and the role of public managers: Final report of The Work Foundation's public value consortium". CiteSeerX   10.1.1.501.7274 .
  15. ↑ Coats, David; Passmore, Eleanor (September 2008). "Public value: The next steps in public service reform". CiteSeerX   10.1.1.549.8241 .
  16. ↑ Meynhardt, T. und Bartholomes, S. (2011). (De)Composing Public Value: In Search of Basic Dimensions and Common Ground. International Public Management Journal, 14 (3), 284–308.
  17. ↑ Meynhardt, T. and Gomez, P. (2013). Organisationen schöpfen Wert für die Gesellschaft. In: Heuser, J. et al. DIE ZEIT erklärt die Wirtschaft (199–207). Hamburg: Murmann.
  18. ↑ Meynhardt, T., Gomez, P. and Schweizer, M. (2014). The Public Value Scorecard: what makes an organization valuable to society? Performance, 6 (1), 2–9.
  19. ↑ Public Value: Common Good and the Society. Movie by the University of St. Gallen.
  20. ↑ Armsen, W.; Lampe, R.; Moeller, S. and Gatti, E. (2013); Gesundheitsdienstleistungen in der öffentlichen Wahrnehmung: Die Messung des gesellschaftlichen Nutzens privatisierter Gesundheitsdienstleistungen. OrganisationsEntwicklung, 2013 (4), 20-26
  21. ↑ Beringer, L. and Bernard, S. (2013); Stern des Südens- Fußballverein oder weltweites Entertainment?: Der Public Value des FC Bayern München, OrganisationsEntwicklung, 2013 (4), 13-19
  22. 1 2 3 4 Moore, Mark (2013). Recognizing Public Value. Cambridge: Harvard University Press.
  23. 1 2 3 4 5 6 7 8 9 10 11 Moore, Mark (21 August 2017). "Public Value: Of, By, and For the People" (PDF).
  24. 1 2 Alford, John; Carsten, Greve (2017). "Strategy in the public and private sectors: similarities, differences and changes". Administrative sciences. 7 (4): 171–191.
  25. 1 2 3 4 5 6 7 8 9 10 11 12 Höglund, Linda; Mårtensson, Maria; Kerstin, Thomson (2021). "Strategic management, management control practices and public value creation: the strategic triangle in the Swedish public sector". Accounting, Auditing and Accountability Journal. 34 (7): 1608–1634.
  26. 1 2 3 4 Alford, John; O'Flynn, Janine (2009). "Making sense of public value: concepts, critiques and emergent meanings". International Journal of Public Administration. 32 (3–4): 171–191.
  27. 1 2 3 4 5 6 Spano, A. (2014). How Do We Measure Public Value? From Theory to Practice. In Public Value Management, Measurement and Reporting (Vol. 3, pp. 353–373). Emerald Group Publishing Limited. https://doi.org/10.1108/S2051-663020140000003015
  28. 1 2 Hatry, H. P. (1999). "Performance Measurement: Getting Results" – via Washington, DC: Urban Institute.{{cite journal}}: Cite journal requires |journal= (help)
  29. ↑ Hatry, Harry P. (March 2013). "Sorting the Relationships Among Performance Measurement, Program Evaluation, and Performance Management". New Directions for Evaluation. 2013 (137): 19–32. doi:10.1002/ev.20043. ISSN   1097-6736.
  30. 1 2 Behn, Robert D. (September 2003). "Why Measure Performance? Different Purposes Require Different Measures". Public Administration Review. 63 (5): 586–606. doi:10.1111/1540-6210.00322. ISSN   0033-3352.
  31. 1 2 3 Moore, Mark (2007-06-01), "Recognising Public Value: The Challenge of Measuring Performance In Government", A Passion for Policy: Essays in Public Sector Reform, ANU Press, retrieved 2024-09-21
  32. ↑ Cowling, M. (2006). Measuring public value: The economic theory. London: Work Foundation.


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