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An interview with Alex Matheson

Interview by: Alistair Craven

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Alex MathesonFrom 2000 to 2005, Alex Matheson has been the Head of the Budgeting and Management Division of the Public Governance and Territorial Development Directorate of the Organization for Economic Co-operation and Development (OECD) in Paris.

This Division supports two working parties of OECD Member Governments - the OECD Senior Budget Officials Working Party, and the OECD Human Resources Management Working Party - by providing research, analysis and policy guidance on public expenditure and public sector governance and management issues.

Before the OECD, Alex was, for three years, a Special Adviser on Public Management for the Commonwealth Secretariat based in London. In this role he undertook consultancies and ran seminars in Africa, the Caribbean, South Asia, South East Asia and the South Pacific. In the course of this he worked with Cabinet Ministers and Senior Officials in seven countries on the Support and Strengthening of Cabinet Decision-making.

The OECD groups 30 member countries sharing a commitment to democratic government and the market economy. With active relationships with some 70 other countries, NGOs and civil society, it has a global reach. Best known for its publications and its statistics, its work covers economic and social issues from macroeconomics, to trade, education, development and science and innovation.

As a public sector expert and manager of the OECD's Budgeting and Management Division, can you explain a little about your day-to-day role within the organization?

Alex Matheson:

Our work is under the direction of two committees comprising representatives of our thirty member governments - the Senior Budget Officials Working Party, and the Human Resources Management Working Party. In each area our team is involved in research and analysis on public management both nationally and internationally. High amongst our current concerns are the completion of publications on: 20 years of public sector modernization across OECD countries; performance related pay; budgetary reallocation; accrual accounting; Governance in China; and developments in public employment. We are also involved in establishing and supporting professional public budgeting and management networks in different regions of the world.

On a day-to-day basis this means we are involved in writing, reviewing draft publications, arranging international meetings, designing and executing surveys, networking with academics and professional peers, visiting or receiving visitors from member countries, or undertaking reviews of developments in a particular country.

Before your employment at the OECD you spent 25 years as a public servant in New Zealand working in senior positions in four government departments. Out of all of your experiences, what key challenges and achievements stand out in your memory from this period in your career?

Alex Matheson:

Actually, in addition to my career as a public servant, before joining the OECD, I also worked for three years for the Commonwealth Secretariat, where I worked a lot in Africa, Asia and the Caribbean. Key experiences for my professional development were involvement in delivery of New Zealand's development assistance in Asia and the South Pacific, the dramatic New Zealand public sector reforms of the late eighties early nineties - both from my perspective of a senior line department manager - and later as a contributor to reform policy; a consultancy assisting the building of a new public administration in South Africa, and working on the improvement of collective decision-making with the Cabinets of six Commonwealth countries.

It was out of these experiences that I learnt that simple best practice transfer does not work well in international public management. Effective change requires understanding both of the dynamics of government as a single system - e.g. how do strategy, policy, budgeting, management and accountability systems link up - and an understanding about how any system of government, relates to the history and culture of the country in which it is imbedded. My ambition in the OECD has been to provide information and analysis that helps deepen that understanding - and thereby assist member governments with creating effective and sustainable public management policies.

As well as the 30 member states, the OECD provides analytical and advisory services to transitional economies such as China. What have you learned about the structure of public services in the Far East in comparison to mainland Europe?

Alex Matheson:

China is a special case because a huge market economy is emerging in a society where, at least in formal terms, the economy had formerly been in public hands. The areas where OECD can be of most help are as a source of experience in the building the institutions essential for successful markets, as a peer partner in strengthening core public processes and professional disciplines ( e.g. economic analysis, budgeting, accounting ,statistics) and as a source of successful experience in setting and meeting international standards in international commerce. The OECD is an increasingly important partner for China too, as a source of ideas and expertise on how to deal with the problems of inequity, which inevitably accompany market growth.

More generally there is much that the Asian and European countries can learn from each other on public management. For instance, our two Asian member countries, Japan and Korea, each have a prestigious and capable public servant cadre with a strong sense of the collective interest, at a time when some other OECD countries are struggling to maintain quality and connectedness amongst their core civil servants. On the other hand, there are areas like transparency and accountability where the East has things to learn from the West. We will be opening an OECD public governance centre in Seoul next year, in which we and the Government of Korea, will undertake research and analysis to assist governments of the whole Asian region - and also the rest of the OECD.

In an era of globalization and decentralization, it has been argued that governments are being forced to reshape public sector leadership to cope with new challenges. Can you elaborate on what these challenges are?

Alex Matheson:

All countries are now in transition - and in these circumstances leadership is at a premium. The phenomenal growth of markets, and consequent increase in individual wealth and welfare in OECD countries, is forcing a rewrite of the social contract. Citizens now expect to be informed and involved in public decisions which affect them, and they are much less disposed to accept central authority unquestioningly. At the same time there are ever-more challenging problems that require strong central collective and representative decision-making- for example, for many countries the decision to reallocate current public resources to meet the growing costs of an ageing society is proving too hard.

"Without trust, and willing compliance by society at large, the modern government cannot operate. This is both what makes public management interesting and challenging, and what places constraints on the public sector manager compared with their private counterpart."

It is this tension between the need for strong collective decision-making, and the movement of power away from the centre that makes leadership so important today - both at the political and the managerial levels. The essence of the leader's role is to understand and to convey, how things must change in the interests of all - and then to create an environment in which the members of an organization will make the adjustments needed. It is not just about confronting the big problems - but making people feel secure enough to risk change. Across OECD countries at present, public sector leadership development is a top priority.

Taking a wider perspective for a moment, in your opinion, what are the biggest challenges facing public sector managers in the member states?

Alex Matheson:

There are three big challenges - how to fund future social security, how to help politicians take necessary but unpopular collective decisions, and to win acceptance of them in an atmosphere in which governments are increasingly sensitive to public opinion, and how to build a group of public servants with a shared sense of the public interest and a disposition to co-operate to achieve it.

A particular challenge is that while the jobs and incentives of senior managers, are becoming increasingly individualized, the most difficult problems governments now face require collective co-operation across different functions of government.

Some of the OECD's recent work has focused on performance-related pay in public services. Can you briefly summarize some of your findings in this respect?

Alex Matheson:

Over the past few years performance -related pay (PRP) has been introduced in many OECD governments. Our key finding is that PRP, while valuable, is not a silver bullet which will of itself stimulate better performance. Where it has worked well has been in management systems in which a number of other more fundamental management conditions are in place. The most important of these are clarity and transparency of organizational purpose and performance, and a senior management group who are truly accountability for the organization's performance. Absent these conditions, PRP may well make things worse.

Our study confirmed that there are many areas of public management where co-operation and teamwork are essential. In these areas we have noted, amongst those countries who have tried PRP, that their original preference for individualized incentives is now giving way to group or team-based incentive schemes. Notable too is a preference for bonus type PRP, rather than increases which permanently change the level of base pay.

You have spoken in the past about the concept of outcomes-based governance in public management. What is this concept? And why has it become an important topic?

Alex Matheson:

Public policies have become more ambitious. The challenge nowadays, for example, is less in rolling out a uniform national system of primary school education (although that remains important) and more in such areas as combating the creation of an enduring under-class. Issues like social exclusion cannot be addressed through a single public administrative process. What is required is a much more targeted, knowledge intensive and adaptive intervention which deals across the range of different policies which relate to the problem - and which is realistic about the fact that there are some influences in play which governments cannot control.

This is where outcome based management becomes important. It means setting up a system of public goal setting and impact measurement and evaluation that can be used to constantly review and adjust the relevant policies. The overall goal of outcome focused management is to align the actions of public officials as closely as possible to the ultimate purpose of the policy. There is no simple way of achieving this - outcome oriented management requires not only more formal information on policy intent and outcomes in the management process,( e.g. through outcome budgeting or outcome reporting) but also actions which influence how much public servants care about and are motivated to pursue the goals in question - transparency, values, leadership and incentives.

As an authority on the practice of international public management, are there any "universal truths" or words of wisdom you can offer to public sector managers reading this interview?

Alex Matheson:

I can't claim to be such an authority - but there are a couple of lessons which I have learnt over the years.

The first is that you shouldn't separate public management from a deeper understanding of government and governance. The public manager is not just a technician but part of a wider system through which societies take their collective decisions and undertake collective action. A bad public management decision can damage public confidence not just in the government - but in public institutions generally. Without trust, and willing compliance by society at large, the modern government cannot operate. This is both what makes public management interesting and challenging, and what places constraints on the public sector manager compared with their private counterpart.

My second lesson - which I think may ring true for most managers who have been around for a while - is that while to be successful we must be passionate about the public goals we are pursuing, it is prudent to be sceptical about the capacity of any single management intervention to produce important behavioural change.

In the public like the private sector, management advice has become a fashion industry with new solutions coming out every season. It is important to bear in mind that human beings are intelligent and discriminating, and perfectly capable of playing lip service only to change if they do not think it serves their interest. Deep change in both behaviour and organizational culture requires committed leadership and management, the use of the full range of incentives on staff - carrots and sticks, formal and cultural - and must be deliberately driven and reinforced over several years. While important management changes have occurred in some OECD governments, we are also conscious of so-called reforms which have been empty rhetoric, or which, after an enthusiastic launch, sink without trace within two or three years.

Finally, what is the next important business event/conference in your diary?

Alex Matheson:

The big event on our horizon is a High level international meeting in November 2005, which will bring together key Ministers from OECD countries and from some of the main transitional economies to review the way in which public management has changed and to address the key public management challenges which the world will face in the first quarter of the Millennium.

To find out more about the OECD, visit http://www.oecd.org/home/