Performance Evaluation and Management in
Korea: An Integrated System for Planning,
Management and Budgeting
O-Taeg Shim
Vice Minister for Policy Analysis and Evaluation,
Prime Minister's Office, The Republic of Korea
Abstract
The Korean government adopted a performance management and evaluation system
for the first time in 1961, marking 2011 its 50th anniversary.
Following the Korean War, Korea has gone through dynamic changes beginning with
the Economic Development Plan in 1960, the industrialization process in the 1970s, the
democratization movement of the 1980s, the IMF economic/financial crisis in 1997
through the global financial crisis of 2008. In the midst of the changes and growth periods,
the performance management and evaluation system has been taking a pivotal role in
presenting effective directions for the national affairs.
Currently, the performance management and evaluation of the Korean government
subjects major projects of all the administrative bodies to annual evaluation once every
year. The evaluation focuses on the performance of each evaluatee and its feedbacks are
used for policy improvement, budgeting, organizational and personnel management.
The lessons and experience that the Korean government has learned over the course of
establishing its performance management and evaluation system in place will likely
provide valuable lessons and case studies for those developing countries that are preparing
for economic development programs or have gone through national crises similar to those
of Korean in terms of policy management and national affairs.
The Korean government will share its experience of the performance management and
evaluation system as part of the Official Development Assistance for developing countries
and continue to strengthen its collaboration with the international community.
Introduction
Performance management has been at the
center of government reform in many countries
around the world in the past two decades.
Performance management as an integral mechanism
for planning, management and budgeting is indeed
an excellent framework for public management in
terms of improving strategic planning, managerial
efficiency and democratic accountability.
In
recent
years,
however,
performance
management in the public sector appears to be
losing its political support, surprisingly in advanced
countries. Performance management has not been
quite successful in dealing with ill-structured and
multi-collaborative macro problems, such as global
financial crisis, trade deficits, unemployment,
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national
disasters,
and
so
on.
Performance
management may not receive positive feedback
from the employees when the focus is on micromanagement as a control mechanism.
The benefit of performance management will
be realized only when the system is properly
devised and implemented for the people in the
system. I strongly believe that performance
management is still one of the most effective
governance tools for most developing countries.
The Early Challenges
South
Korea
implementing
the
has
a
long
so-called
history
of
results-based
performance management system. Sixty years ago,
South Korea was devastated during the Korean War.
But the country emerged from the ashes of the War.
3
There are many reasons for South Korea's economic
miracle. One reason, maybe the most convincing
one, is that the whole country poured all the
resources and efforts into economic rebuilding: that
is, I would name, a strong case of vision-driven and
results-based management. The then-policy makers,
bureaucrats and citizens all together could see what
changes would happen after five years and after
another five years.
Thanks to the country's vision-driven and
results-based management, South Korea moved
from the ranks of developing nations to one of the
newly developed nations in the late 1990s. But the
country had to face more sophisticated and
multilateral
democratization,
problems
associated
globalization
and
with
increased
uncertainty.
4
The rapidly changing information society and
more
competitive
knowledge-based
economy
pressured the Korean Government to redefine the
role of government, and reinvent its own way of
doing business to build a more competent and
effective government. At the same time, the twin
problem of dwindling tax revenues and pressing
needs
became
a
reality
undermining
the
government's ability to adequately address people's
needs and deliver services with quality and
efficiency.
But unfortunately policy makers had no clear
idea which programs were successful and which
were failing, resulting in waste and inefficiency
everywhere in government.
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The Early Responses
As a response to these problems, South Korea
joined the journey of "reinventing government" and
re-formulated its old "results-based performance
management"
systems
by
synthesizing
the
experience of others, such as the United States'
Government Performance and Results Act of 1993,
President's
Management
Agenda,
the
United
Kingdom's Public Service Agreements, Australian
Portfolio Budget Statements approach, and many.
The early version of performance management
system in Korea can be characterized as:
①First, mission-driven strategic governance,
②
Second,
anticipatory
planning
and
implementation,
③Third, results-based accountability, and
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④ Fourth,
integrated
management
and
implementation.
Here, I'd like to explain each one in brief.
(1) First, mission-driven strategic governance is a
process of making decisions and implementing
them in alignment with government-wide mission.
This approach provides an effective procedure to
establish priorities and clarifies agency standards
for accountability and expectations on overall
performance.
(2) Second,
anticipatory
planning
and
implementation helps agencies and programmanagers to predict the future accurately in the
process of planning, detect the problems timely in
the process of implementation, and refine the
programs regularly through evaluations and feedback.
Performance management systems should prepare
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agencies and program-managers to anticipate the
future, prevent problems, and correct mistakes as
timely as possible. This has been extremely difficult
in a short-sighted political and administrative
environment.
(3) Third, results-based accountability helps
agencies and/or program-managers to articulate
what results are expected, what data are regularly
collected and reported, and how agencies and
programs are evaluated. The process of establishing
a results-based performance management system is
closely aligned with the process of mission-driven
governance, strategic planning and performance
measurement. The basic unit of analysis for
performance evaluation is called "unit task." Here,
the unit task is the bridge to link the two different
types of management structures: the function
structure and the program structure.
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(4) Fourth,
various
performance
management
systems are linked to each other through a newly
invented business processing system, called "Onnara BPS." The On-nara BPS is the core e-Gov
system that aims to improve government capacity,
transparency and accountability in a systematic way
across
the
government.
The
On-nara
BPS
accommodates not only document processing but
also task & program management online. It works
as a backbone system that facilitates efficient
linkage to other management systems, such as
performance management, program evaluation,
knowledge management,
records
management,
auditing, human resources management, etc.
Most of all, the legal foundation to integrate
various performance management and evaluation
systems was provided by enacting the “Government
Performance Evaluation Act” in 2006. The Act
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intends to improve decision quality and transparency;
strengthen efficiency and effectiveness of doing
business; make the government accountable to the
people with its results; improve trust in government;
and reduce the administrative burden of preparing
numerous evaluations.
In 2007, the so-called electronic-Integrated
Public Service Evaluation System(e-IPSES) was
launched to administer performance evaluations
with efficiency and accuracy. e-IPSES facilitates
each agency in real time to integrate numerous
types
of
performance
evaluation
information
produced by various management & evaluation
systems, such as On-nara BPS, e-Human Resources
Management, Digital Budget and Accounting, eAuditing, etc.
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New Challenges and Problems
The Korea's performance management &
evaluation system equipped with various egovernment tools appears advanced and efficient.
However, many government officials were not fully
satisfied with the system and practices although
they agreed that performance-based management
was necessary in principle.
Many experts are also quite skeptical about the
efficacy of the early version of performance
management system that reduced performance
management to a score management system in
which employees are more driven into improving
their scores rather than improving the government
performance. The early designers forgot, if not
misunderstood, the very basic principle that
“[p]erformance management is a technology for
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creating a workplace that brings out the best in
people while generating the highest value for the
organization” (Daniels & Daniels: 2004, 7).
The newly emerged challenges and problems
are manifold. I'd like to point out some critical new
challenges and problems.
(1) First, in Korea, the impetus came from
administrative initiatives and legislative mandates,
rather than each agency's own needs for better
performance. This led early-designers to focus more
on technical aspects rather than fundamental issues
relating to ‘why we need a new management system
now?’ and ‘what values the new system will bring
about for the organization?’
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(2) Second, it appears that conceptual designers
haven’t paid much attention to ‘what the meaningful
meaning of performance is in the public sector.’ The
meaning of performance can be defined variously.
The values essential in the public sector include not
only economic values but more fundamental values,
such as due process and public interests. However,
by focusing on the economic performance, early
reformers oversimplified and downgraded the
public values of government.
(3) Third, the early designers in Korea perceived
performance management mainly as performance
evaluation, assuming that evaluating performance
would promote competition among workers and
eventually
bring
about
worker
efficiency.
Presumably, early designers aimed to institute an
incentive mechanism in the management process.
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As a result, the main focus of performance
management was on evaluating the performance of
government officials and agencies. This approach
has created unproductive competition in some areas,
and uncomfortable feelings about the evaluation
results. In this culture, as Niven points out, “it turns
out that most employees were convinced that in the
absence of a stated reason …, their boss was
planning to use it as a tool for generating layoffs …,
and as a result they were refusing to provide any
support for the implementation” (2005: 24).
(4) Fourth, despite Korea’s best efforts, the
implementation began to struggle, and employees
began to ask questions: What is the performance of
performance management? The management and
employees have been slowly but visibly losing
momentum. It is mainly because early designers
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focused more on performance measurement than
strategy management. New designers should note
that a performance management system is a "tool
that is designed to assist you in executing your
strategy, not crafting a new strategy” (Niven, 2005:
27).
(5)
Fifth,
we
encountered
some
frustrating
behavioral problems in the course of implementing
the performance management system, the so-called
gaming
by
performance
employees
scores,
to
resulting
receive
in
higher
undesirable
consequences. Examples include:
①Selecting performance indicators that are easy to
measure and/or quantify, particularly in the shortterm,
②Setting the performance targets that are lower
than they should be,
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③Doing
less
for
the
work
that
is
not
evaluated,
④Omitting the data that may lead to unfavorable
evaluation,
⑤ Selecting generous evaluators, and
⑥ Using rhetoric in the report.
Our experience indicates that:
(1) Performance measurement can work better when
tasks
are
related
to
implementation,
well-
representative of one's work, less repetitive, and
easily quantifiable;
(2) Performance measurement may not work when
tasks are related to planning and/or administrative
support; and
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(3) Performance-based pay may not work as a
motivation mechanism since gaming in performance
measurement occurs more often in an organization
where performance-based pay is higher.
Recent Responses
In order to respond to these new challenges
and
problems,
the
Lee
Administration
has
continuously engaged in dialogue with experts and
stakeholders
to
manage
contradictions
and
dilemmas involved in the system. As a result, the
current system is simpler focusing more on national
agenda and more useful with less gaming. At the
same time, the system is more cost-effective and
better
received
by
employees
and
citizens.
Particularly in 2011 the Prime Minister's Office
initiated a bold approach to make the system even better.
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The initiative includes more decentralization, less
redundancy, more focus on long-term vision and
mid-term strategic objectives, and more in-depth
analysis for government-wide programs.
Improving the system is a never-ending task.
Some lessons I'd like to share with you include:
(1) First, timely monitoring, rather than routine
periodic evaluations, should be emphasized so that
problems can be detected as early as possible and
fixed in the most effective way.
(2) Second, the management should convince its
employees that a performance management system
is not a threat to them, but a support to enhance
their capacity in the long-run. At the same time, top
managers convince themselves that performance
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information solely is not sufficient to make a sound
decision although it is an important source for better
decision-making.
(3) Third, the management should encourage
employees to re-assess the organization’s strategies
so that the organization strategic capacity can be
improved through performance management. At the
same time, top managers should recognize not only
those who performed well in the past but those who
ask the right questions for the future, and count it in
the individual performance scorecard.
(4) Fourth, performance management systems
should be re-designed to promote collaboration and
cooperation, rather than competition, within a
department and across departments and agencies. At
the same time, performance-based pay should be redesigned accordingly.
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(5)
Fifth, and most importantly, a new system
should pay more attention to 'doing the right things'
than 'doing the things right'. Yet, many performance
evaluation systems do hardly count the effort to ‘do
the right things’ although this requires more effort
and leadership than 'doing the given things right'.
Implications for Developing Countries
Assessing the effectiveness of a performance
management system and designing a new system
reflect someone’s ideology. In Korea, performance
management has evolved in a visible way although
the current system needs more refinements.
As
an
internal
control
mechanism,
performance management can evolve as a tool to
build a competent and accountable government. Yet,
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advocates of performance management should
prepare themselves for unresolved challenges and
new ones in the process of adopting and
implementing a performance management system.
I'd like to stress that performance management
system is more than a measurement tool. It is a
change initiative that must be carefully designed
and
implemented
so
that
everyone
in
an
organization comes on board and works toward
improved
results.
However,
the
lack
of
communication and ill-understanding of why a
change is necessary at this particular time would
lead everyone in the organization to passively
accept performance management.
South Korea is moving forward to build a more
competent
and
accountable
government
by
instituting an integrated performance management
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and evaluation system across the government. We
believe that the new system can change public
servants to enhance their capacity to serve the
public better.
I'd like to welcome you to a long journey of
building a good performance management system.
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