7. Accountability, performance management and contracting arrangements


Academic references to outcomes theory: Duignan (2009d)*

Unlike the other outcomes theory building-blocks, this is not a type of measurement. It is the arrangements by which individuals and organizations are held to account for what they do.

It's crucial to get such arrangements right because they create the incentives which determine how individuals and organizations act to get to the outcomes they are pursuing.

Below are the three possible arrangements.

2. Being accountable for controllable indicators PLUS for measuring higher-level outcomes and showing you are focused on key priorities leading to these (building-blocks two, three and one).

The best way of proving that you are focused on key priorities leading to high-level outcomes is to show you have line-of-sight between priorities and projects/activities within a visual outcomes model (building-block one).

1. Only accountable for controllable indicators (building-block two).

This is usually described as parties being accountable for outputs (concrete goods and services produced by an organization). However there may be some controllable indicators above the level of outputs depending on how outputs are defined in a particular case. For example, running a workshop might be an output. This is clearly controllable by an organization. However an increase in the knowledge of those attending the workshop would also be controllable by the organization but it might not normally be regarded as an output under a strict definition of an output.

3. Being accountable for not-necessarily controllable indicators (building-block three).

Being accountable for not-necessarily controllable indicators. This happens in the private sector where CEOs are often rewarded for increases in not-necesarily controllable indicators such as their company's share price.

The second approach moves beyond just outputs, taking into consideration outcomes but it does not demand accountability for outcomes.

This approach provides some assurance that the program or organization is focusing more broadly than just on outputs. However, it avoids the technical difficulties which arise in many instances if the contractor is held accountable for high-level outcomes.

The first approach is the simplest and tightest.

The contracting party can be assured that the contractor party did actually cause the controllable indicators to happen. It is therefore easy to hold them tightly to account. There is no room for debate as to whether they caused them to occur or, more importantly, whether they failed to make them happen to the target level. However the downside is that this approach is seen to be too low-level in a world which is focused on outcomes. That is, it's seen to be just focusing on outputs rather than outcomes.

The third approach appears to be focusing on outcomes, but there's a catch.

The problem with the third approach is that there's no assurance that the contractor actually made the outcomes occur for which they'are being held accountable. In sectors such as the private sector the benefits of outcomes (profits) are immediately and completely appropriable (i.e. can be totally captured by) by the contracting party. They can then use part of these to pay the contractor party and therefore this approach is feasible.

* This particular reference can be cited to refer to the material on this page.

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