Governance and values

This page focuses on the Principles for Good Governance in the Public Sector ,  Public sector skills in the search for public value and how these relate to the wider social value agenda. As a basis for constructing supporting leadership approaches to compliment the digital ethics agenda.

Principles for Good Governance in the Public Sector

Good governance is seen as critical to ethical delivery of public services. Governance comprises the arrangements put in place to ensure that the intended outcomes for stakeholders are defined and achieved. The fundamental function of good governance in the public sector is to ensure that entities achieve their intended outcomes while acting in the public interest at all times. The International Framework: Good Governance in the Public Sector jointly developed by the Chartered Institute of Public Finance and Accountancy (CIPFA) and the International Federation of Accountants (IFAC) sets out a series of principles for good governance in the public sector. The framework defines acting in the public interest as requiring the following:

A. Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law.

B. Ensuring openness and comprehensive stakeholder engagement.

In addition to the overarching requirements for acting in the public interest in principles A and B, achieving good governance in the public sector also requires effective arrangements for:

C. Defining outcomes in terms of sustainable economic, social, and environmental benefits.

D. Determining the interventions necessary to optimize the achievement of the intended outcomes.

E. Developing the entity’s capacity, including the capability of its leadership and the individuals within it.

F. Managing risks and performance through robust internal control and strong public financial management.

G. Implementing good practices in transparency, reporting, and audit, to deliver effective accountability

The figure also illustrates that good governance is dynamic, and that an entity as a whole should be committed to improving governance on a continuing basis through a process of evaluation and review. The core, high-level principles characterizing good governance in the public sector set out above bring together a number of interrelated concepts. Principles C to G are linked to each other via the so called “plan-do-check-act” cycle^[1].

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[1] The “Plan-Do-Check-Act Cycle,” also called the Deming Cycle, is an iterative management process organization typically use for the control and continuous improvement of processes and products. For more information, see the International Organization for Standardization’s website www.iso.org/iso/home.html

Public sector skills in the search for public value

Public value describes the value that an organization 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.

To assess changes in the skills needed in today’s public services, the OECD has developed a framework which identifies four areas, each representing specific public value focussed tasks and skills required in the relationship between the public servants and the society they serve.

Public sector skills in the search for public value

1. Policy advice and analysis

Public servants work with elected officials to inform policy development. However, new technologies, a growing body of policy-relevant research, and a diversity of citizen perspectives, demand new skills for effective and timely policy advice.

Professional skills:

Traditional building blocks of policy making and advice include professionals with expertise in law and regulation, economics, political science, public administration, statistics, etc.

Strategic skills:

Designing new policies and refreshing old ones by bringing multiple perspectives to a problem, using foresight techniques to test different scenarios, and building resilience into policy design from potential shocks and unforeseen events.

Innovation skills:

Rethinking the tools of policy making, via for example, experimental policy design, (big) data-driven policy development, open policy making (including the use of ICT for crowdsourcing), design/systems thinking, and behavioural insights.

2. Service delivery and citizen engagement

Public servants work directly with citizens and users of central/local government services. New skills are required for public servants to effectively engage citizens, crowdsource ideas and co-create better services.

Professional skills:

Traditional building blocks of service and engagement skills include professionals with expertise in public relations, communications, marketing, consultation, facilitation, service delivery, conflict resolution, community development, outreach etc.

Strategic skills:

Using engagement skills to achieve specific outcomes to inform, for example, better targeted interventions, or nudging public behaviour towards desirable outcomes, such as healthier eating habits or smoking reduction.

Innovation skills:

Innovation skills applied to engagement to expand and redesign the tools themselves through, for example, co-creation, prototyping, social media, crowdsourcing, challenge prizes, ethnography, opinion research and data, branding, behavioural insights/nudging, digital service environments and user data analytics.

3. Commissioning and contracting:

Not all public services are delivered directly by public servants. Central and local governments are increasingly engaging third parties for the delivery of services. This requires skills in designing, overseeing and managing contractual arrangements with other organisations.

Professional skills:

Building blocks of commissioning skills include professionals with expertise in contract design and management, procurement, business management, commercial law and economics, finance and investment, audit and control, project and risk management etc.

Strategic skills:

Using commissioning skills and techniques to increase value for money; working with the market to develop innovations; using commissioning to achieve secondary policy objectives, such as building a greener economy; and supporting small and medium-sized enterprises (SMEs) and social enterprises, etc.

Innovation skills:

Rethinking the processes of commissioning through approaches and financial tools that support innovation in and outside government such as agile development, data-driven key performance indicators (KPIs), early market engagement and partnerships, instrument selection, social finance, impact investing, social impact bonds, vouchers, etc.

4. Managing networks:

Public servants and governments are required to work across organisational boundaries to address complex challenges. This demands skills to convene, collaborate and develop shared understanding through communication, trust and mutual commitment.

Professional skills:

Building blocks of network management skills include professionals with expertise in stakeholder relations, partnership development, knowledge management and sharing, project management and co-ordination.

Strategic skills:

Using partnerships and networks to establish common objectives, align responsibility and resources, and effect positive change.

Innovation skills:

Rethinking the processes of government through approaches and tools that support innovation in and outside government, incubating social innovation, leveraging government as a platform, building partnerships around open government data, systems thinking and analysis, framing issues around results, identifying and engaging new actors, change narrative, alternative regulation (e.g., behavioural insights), etc.

UK public value framework

From a strategic standpoint within a UK public sector context, it is seen as comprising four ‘pillars’:

Taken together these form the basis of a public value framework as a tool for maximising the value delivered from funding and strategic management input as follows:

Pillar one: pursuing goals (6 questions)

Understanding vision and goals

1. How well-defined is the overall vision for this area of spending?
2. What measurable and SMART objectives have been set to achieve the goals and vision?
3. What evidence does the public body use to link its chosen objectives to the vision/goals in this area of spend?

Degree of ambition

1. What evidence does the public body use to satisfy itself that its vision and objectives are as realistically ambitious as they possibly can be for this area? Implementing planning and monitoring progress
2. How does the public body monitor delivery of its goals and objectives?
3. What data is used to track progress against delivering the vision, objectives and indicators?

Pillar two: managing inputs (9 questions)

Managing financial resources

1. How does the public body plan to manage its financial resources?
2. What processes exist for the public body to review its use of resources?
3. What management information is regularly provided to key decision-makers to help inform decisions?

Quality of data and forecasts

1. How does the public body track how much has been spent (and on what) at each stage of the delivery chain, from central government to the front line?
2. What forecasts does the public body produce to understand and manage the impact of in-year spending on future years?
3. What evidence does the public body use to decide what it needs to purchase to meet its performance and financial objectives?

Benchmarking & cost control

1. How does the public body use cost benchmarking to improve efficiency and performance?

Cost shifting

1. How aware is the public body of cost shifting risks?
2. What strategy and contingency plans are in place to effectively manage risks?

Pillar three: user and citizen engagement (6 questions)

Public and taxpayer legitimacy

1. What understanding does the public body have of what citizens think about the area of spend?
2. What does the public body do with these insights?

User and client experience and participation

1. Does the public body understand the link between user and client experience and better outcomes?
2. How does the public body plan to improve the experience of users and clients?
3. What evidence does the public body hold of the link between user participation and improved outcomes?
4. How does the public body plan to improve participation and change user/client behaviour?

Pillar four: developing system capacity (14 questions)

Capacity to manage the delivery chain

1. How strong is the delivery chain (from commissioners to users)?
2. How does the public body systematically identify, manage and strengthen areas of weakness within the delivery chain (such as financial weak points)?
3. How responsive and resilient is the delivery chain to changing circumstances?
4. How effective and consistent is commercial delivery throughout the organisation?
5. How is new technology identified, developed or deployed to reduce costs and improve outcomes?

Workforce capacity

1. What processes and data does the public body use to monitor and plan for changes in its workforce?
2. How does the public body intend to build the skilled workforce it will need to continue to deliver and adapt to future changes?
3. How is the public body assessing and developing its leadership capability? Capacity to evaluate impact
4. How does the public body use performance data and trajectories to manage and improve performance?
5. How is space created to trial and identify ‘disruptive innovations’ throughout the system?
6. What strategic evaluations of policies and programmes are undertaken or commissioned to understand whether actions have had the intended effects?

Stakeholder management

1. How well does the public body understand the position of its key interest or stakeholder groups?
2. What is the public body doing to improve the support from key interest groups for the policy or programme?
3. How effectively do teams work across functional boundaries within public bodies, and across interorganisational boundaries, to achieve better outcomes?

More detailed guidance can be found in the revised version of the  Guide to the Public Value Framework – initially published as part of Sir Michael Barber’s 2017 report in to public value – alongside additional guidance for departments and other public bodies on how to use it most effectively.

Social value

Closely aligned to public value is the concept of Social Value which the UK government describes social value derived from procurement as “the positive legacy created through the performance of a contract”.  There are three categories of social value:

• social (e.g. activities that promote a united community)
• environmental (e.g. efforts to assist the community in reducing waste or pollution)
• economic (e.g. training, employment or apprenticeship opportunities for disadvantaged groups)

The principles of social value

The Principles of Social Value provide the basic building blocks for anyone who wants to make decisions that take this wider definition of value into account, in order to increase equality, improve wellbeing and increase environmental sustainability. They are generally accepted social accounting principles and are important for accountability and maximising social value.

An account of social value is a story about the changes experienced by people. It includes qualitative, quantitative and comparative information, and also includes environmental changes in relation to how they affect people’s lives.

By applying the Principles, it is possible to create a consistent and credible account for the value that is being created or destroyed. The outcomes, and the measures and values of outcomes, can remain specific to the context, activity, and the stakeholders involved.

The application of the Principles will require judgements. Therefore, the information produced using the Principles needs an appropriate level of independent verification or assurance. As a result, the requirement for verification is also a principle. More guidance on making judgements can be found in A Guide to Social Return on Investment.

Adopting the Principles will sometimes be challenging as they are designed to make invisible value visible. Value is often invisible because it relates to outcomes experienced by people who have little or no power in decision-making. Applying the Principles will help organisations become more accountable for what happens as a result of their work, and means being accountable for more than whether the organisation has achieved its objectives.

1. Involve stakeholders – Inform what gets measured and how this is measured and valued in an account of social value by involving stakeholders.
2. Understand what changes – Articulate how change is created and evaluate this through evidence gathered, recognising positive and negative changes as well as those that are intended and unintended.
3. Value the things that matter – Making decisions about allocating resources between different options needs to recognise the values of stakeholders. Value refers to the relative importance of different outcomes. It is informed by stakeholders’ preferences.
4. Only include what is material – Determine what information and evidence must be included in the accounts to give a true and fair picture, such that stakeholders can draw reasonable conclusions about impact.
5. Do not over-claim – Only claim the value that activities are responsible for creating.
6. Be transparent – Demonstrate the basis on which the analysis may be considered accurate and honest, and show that it will be reported to and discussed with stakeholders.
7. Verify the result – Ensure appropriate independent assurance.

The Social Value Act

The Social Value Act was introduced in 2012. Public bodies are now obliged to consider how the services they commission and procure might improve the economic, social and environmental well-being of the area they operate in. The idea behind social value is that we need to spend public money in a smarter way.

From 1st January 2021, central government has been required to go further than the Public Services (Social Value) Act 2012. All major central government procurements must explicitly evaluate social value, where appropriate, rather than just “consider” it. 

 In support of this the government has created a new Social Value Model (see below) which sets out government’s social value priorities for procurement. It includes a menu of social value options for commercial staff in in-scope organisations to review and select with their internal clients and any other stakeholders. There are 5 themes and 8 policy outcomes which flow from these themes, as follows:

COVID-19 recovery

• Help local communities to manage and recover from the impact of COVID-19

Tackling economic inequality

• Create new businesses, new jobs and new skills
• Increase supply chain resilience and capacity

Fighting climate change

• Effective stewardship of the environment

Equal opportunity

• Reduce the disability employment gap
• Tackle workforce inequality

Wellbeing

• Improve health and wellbeing
• Improve community cohesion

The model also connects social value to other relevant legislation, policies and initiatives. Examples include the Equalities Act, alignment with the Civil Society Strategy, references to ‘decent work’ initiatives and the mapping to the UN Sustainable Development Goals.

Measuring social value in local government

To enable Councils to outline key areas of focus, operational procedures, successes and resources available the Local Government Association (LGA) has sponsored National Social Value Taskforce to developed a Social Value Statement template which can be used to communicate key messages and secure support from staff, partners, suppliers and other locally based organisations to help create social value benefits for your community.

The LGA have partnered with the Social Value Portal to develop a set of Themes, Outcomes and Measures (TOMs) to help councils to measure the value they are achieving through implementing the Social Value Act. The National TOMs Framework has been designed around 5 principal issues, 20 Core Outcomes and 48 Core Measures:

• Themes – The overarching strategic themes that an organisation is looking to pursue
• Outcomes – The objectives or goals that an organisation is looking to achieve that will contribute to the Theme.
• Measures – The measures that can be used to assess whether these Outcomes have been achieved. For the National TOMs Framework, these re action based and represent activities that a supplier could complete to support a particular desired outcome.

To download TOM resources, access via the following links below

• Social value climate change emergency TOMs       
• Latest 2020 Social Value TOMs
• TOMs Guidance 2019
• The National TOMs – Engaging with stakeholders
• National TOMs Calculator

Social Value

National TOMs: Covid-19 Plug-in

During the Covid pandemic it has become clear that the need for Social Value is greater than ever, as public and private sectors continue to face unprecedented challenges in the wake on the Covid-19 pandemic.

In response to the ongoing crisis, the Social Value Portal team have developed a Covid-19 Plug-in for the National TOMs 2020. While the core values of the TOMs remain the same, this revised framework includes a series of new measures, as well as additional provisions for existing contracts, to provide clearer guidance to bidders and suppliers during this difficult time.

It is important to emphasise that these revisions are not intended to create an additional burden for businesses, but rather they are modifications with the goal of making the TOMs more flexible and responsive during the current crisis. You can Download the Covid-19 Plug-in here.