Fundamentals Unpacked: outcomes and outputs in the public sector

Many private sector practices have made their way into government over the past couple of decades, and few have been more influential than the new metrics to determine success in public policy and administration.

This development reflects the views of many academics and practitioners, who have argued that policymakers can improve efficiency in the public sector by applying similar metrics to those used in the private sector.

One such metric is productivity, which can be defined as “the value of outputs produced, divided by the volume of inputs used in producing them”. It is a typical preoccupation in the private sector and has increasingly emerged as a core objective for policymakers, with many pages written in an attempt to make the public sector more efficient by reducing costs and increasing value per unit.

The pursuit of productivity

But does productivity really equate to effectiveness in public policy? The inherent focus of productivity is outputs rather than outcomes. Outputs are the immediate, easily measurable effects of a policy, whereas outcomes are the ultimate changes that a policy will yield.

Despite being related, the two are not always equivalent. Indeed, there are several policy situations in which increasing the outputs - or making them more efficient - does not lead to improved outcomes.

For example, the policy of increasing the number of police officers on the streets may prove successful in terms of outputs. However, this would not necessarily lead to the desired outcome - in this case, reducing crime. If the number of police officers were already sufficient, the new plan might make hardly any difference in terms of outcomes. Indeed, apparently counterproductive measures, such as improving street lighting, might actually prove far more effective in increasing safety.

Traditionally, policymakers focus on how to transform inputs - the resources that they are given - into the relevant outputs, and it is often assumed that high levels of productivity will inevitably result in good outcomes. Consequently, the metrics used to assess efficiency are often treated as predictive of outcomes, too.

However, these are not necessarily the most relevant ones for accurately assessing the ultimate impact of a policy on the lives of citizens.

Take healthcare, for example. Reducing the cost of treatment or encouraging shorter average stays in hospital might improve productivity, but it might also result in more relapses among released patients. This could adversely affect the ultimate outcome, which is to improve the health of individual citizens. Thus, it is quite possible to have good outputs without having equally good outcomes.

Starting with the outcomes

If this “consequential mindset” doesn't always work, what could work better? If policymakers start from inputs, they can often overlook other factors which are not productivity-related but may still have a major influence on outcomes.

A good solution might be to reverse the process. Rather than focusing on what inputs may lead to, policymakers should begin with the desired outcomes - and on what it would take to achieve them, both in terms of resources and contextual factors.

With this approach in mind, the Public Impact Fundamentals can provide an appropriate lens of analysis. The Fundamentals comprise factors which are consistently found in situations where public sector organisations have achieved positive impact.

And by focusing on impact, the Fundamentals go beyond mere efficiency to encompass outcomes. In fact, impact not only embeds the changes achieved by a policy but also the context in which these changes are made - and the way in which they are managed and implemented.

Productivity perfected?

Of course, this does not mean we should disregard productivity as a metric. On the contrary, by avoiding waste and allocating resources more efficiently, productivity can often make policies more effective citizens.

We believe that productivity as a metric should support and integrate the quest for impact. For example, a policymaker may rank a portfolio of solutions aimed at achieving positive impact according to their anticipated efficiency and choose accordingly.

We also believe, though, that productivity should not be the main or only metric that policymakers use to analyse a policy plan. Instead, they should reflect on the potential divergences between enhancing outputs and achieving outcomes, and look well beyond outputs to consider the rich variety of factors that may influence impact.

THE PUBLIC IMPACT FUNDAMENTALS UNPACKED

• Continuing the conversation: Public Impact Fundamentals in focus
• The Public Impact Fundamentals and paradigms of public administration
• The Public Impact Fundamentals and the role of the state
• Test learn, adapt: randomised controlled trials and the Public Impact Fundamentals