Government Efforts to Innovate
Public Organizations Begin to Pay Off

MPB Vice Minister discusses newly introduced institutional mechanisms to improve management performance and promote innovation activities of public organizations (non-departmental public entities).

The Ministry of Planning and Budget has been at the frontline of diffusing a wind of innovation in officialdom, particularly the operation of public organizations to live up to innovation, one of the policy goals being implemented since the inauguration of the current government of President Roh Moo-hyun.
Vice Minister of the Ministry of Planning and Budget Bahn Jahng-shick said in his interview with NewsWorld, "The enactment of the Framework Act on the Management of Public Organizations is aimed at establishing a legal and institutional foundation to ensure the autonomous and responsible management of public organizations."He specified a wide range of innovative steps to transform public organizations. The following are the excerpts of his interview.
Question: Would you explain major contents of the Framework Act on the Management of Public Organizations that went into effect on April 1 and future policy directions?
Answer: The key objectives of the Act are to establish a legal and institutional foundation for promoting autonomous and responsible management of public organizations, and to enhance their managerial efficiency.
With the enforcement of the Act, a unified management system has been put in place to define the scope of public organizations, and to classify them into public corporations, quasi-government entities, and other public organizations. Accordingly, the number of public organizations subject to the management system has increased to 298. The new unified management system also allows a systematic management scheme according to the classification categories of public organizations, whereas in the past, public organizations were placed under different management regimes despite the fact that they belonged to similar categories.
Another aspect of the Act is strengthened internal oversight systems for public organizations. The board of directors of each public organization is given the right to propose the dismissal of its CEO. In addition, a senior non-standing director system is introduced to strengthen the role of audit and checking by non-standing directors over management. At the same time, inspection by non-standing directors and auditors is reinforced, in contrast to the past when the operation of the board of directors was controlled primarily by standing directors, ending up ineffective checks over management.
Furthermore, outside evaluation and inspection systems are intensified. For example, disclosure of managerial information is encouraged, and committees for recommending candidate executives are introduced to ensure fairness and transparency.
In accordance with the enforcement of the Framework Act on the Management of Public Organizations, the Ministry of Planning and Budget will place highest priority on supporting autonomous and responsible management of public organizations, and raising public trust.
The Ministry plans to revise relevant regulations and institutions to eliminate government agencies'interference, thereby ensuring autonomous and responsible management of public organizations.
At the same time, it will provide assistance in operating in-house inspections, and revise management performance evaluation systems to help public organizations focus on management performance.
Another objective of the Ministry is to raise public trust by improving the management performance of public organizations, leading to innovative outcome that are highly evaluated by the citizens, who are the ultimate beneficiaries of public organizations'products and services.
Q: Will you describe expectations of the citizens on the operation of public organizations and their innovation efforts?
A: As a result of the management innovation efforts of public organizations, their efficiency, transparency, as well as customer satisfaction levels have continuously improved. Public organizations'customer satisfaction index has risen from 76.9 in 2003 to 80.4 in 2005 and 83.6 in 2006.
Performance-oriented systems such as the Balanced Score Card, annual salary and team systems have been in place to raise management efficiency.
At the same time, consolidated managerial information disclosure systems, chapters of ethics and contracts of job-related integrity have been introduced to step up ethical management.
Public organizations have built up customer-oriented management systems including the establishment of customer participation centers. In particular, Incheon International Airport Authority (IIAA) has gained a global reputation as it ranked first in service assessment surveys among international airports around the world in 2006 for the second straight year.
In the wake of changes in social circumstances, expectations of the citizens on public organizations are higher than ever. In this regard, public organizations need to continue their efforts to offer services that the citizens want, recognizing the fact that they are the ultimate owners of public organizations.
Q: Despite the continued innovation efforts made by public organizations, the reality is that the citizens do not fully sense the changes to a great extent. Do you any plans to improve public services?
A: The ultimate objective of innovating public organizations is public service innovation. Public organizations have so far focused on institutional innovations, but their efforts to improve public services are relatively insufficient.
In this regard, it is now time to also focus on innovation of actual services as well as systems and institutions. Public service innovation has become the top priority of public organizations, and they are evaluated on their achievement through innovation performance evaluation. The 2007 innovation performance evaluation survey has been designed to give more evaluation weight to public service innovation.
Moreover, the citizens, who are the beneficiaries of public services, are encouraged to participate in innovating services as public demands continue to be explored through public recommendations. Between April 20 and May 9, 327 public proposals were accepted, out of which 13 proposals were selected as excellent innovation tasks. One example is a proposal on providing agricultural information services reflecting regional characteristics such as soil and rainfall. To promote service innovation, each public organization is encouraged to develop its representative service innovation brand. An annual best practice competition is to be held in mid-October to share and diffuse innovative experiences that public organizations have accumulated.
Q: Please elaborate on the outcome of the Consolidated Managerial Information Disclosure System and future plans
A: A public website (www.alio.go.kr) has become operational since December 2005 to disclose and provide consolidated information on the management of public organizations classified into 27 categories, including average wage, CEO's job-related expenses and memos of board of directors meetings. The operation of this Consolidated Managerial Information Disclosure System is significant in that it provides an oversight mechanism for the citizens, the owners of public organizations. In fact, disclosure of managerial information has led to curbing lax management and promoting responsible management through greater transparency.
The website also serves as an information center offering useful information on the lives of people such as public notices on job information and biddings of all public organizations.
Furthermore, the website will be expanded and improved into an innovation portal for public organizations by the end of this year. The new portal will offer additional services, including a management improvement reporting center to serve as open dialogue channels between public organizations and the citizens, and to help public organizations conduct their innovative activities through the development of innovation self-analysis and treatment systems.
Q: Will you tell our readers about the public organizations'management performance evaluation system and the outcome of the 2006 public organization management evaluation survey?
A management performance evaluation system was introduced in 1984 to ensure public organizations'ex post accountability on their management performance. In addition, with the enactment of the Framework Act on the Management of Public Organizations in April 2007, 101 public corporations and quasi-government entities will be subject to the management performance evaluation system beginning next year.
A performance evaluation body comprised of outside experts, including professors and public accountants, makes an evaluation on three areas, 25 performance indicators and 100 items for the corresponding year, based on the manual determined at the end of the previous year.
According to performance evaluation results, incentives are given to executives and staff members in the form of differentiated bonuses. At the same time, organization warnings or personnel penalties are given for organizations with poor performance. Under this incentive system, annual salaries of CEOs is government-invested institutions can vary up to a maximum of a three-fold gap.
The management performance evaluation conducted in 2006 showed that 14 government-invested institutions saw their average performance evaluation grades rising to 77.8 points in 2006 up 0.8 points from 77 in 2005, while government-affiliated institutions witnessed their average assessment surging from 68.9 in 2005 to 72.3 points in 2006, a 3.4 point jump. By evaluation areas, performance in management innovation, customer satisfaction, and productivity have improved significantly. Korea Expressway Corp Korea Minting & Security Printing Corp., Korea Electrical Safety Corp. and Kibo Technology Fund were evaluated as public organizations with highest performance.
This year's management evaluation survey confirms that public organizations'management innovation efforts have yielded tangible results. Cases in focus are Korea Expressway Corp.' integrated traffic database, which has dramatically reduced traffic snarls during holidays and Korea Electrical Safety Corp.' introduction of Speed Call, an around-the-clock, free mobile service.
Q: Will you explain about the public organization innovation performance evaluation system and the outcome of the 2006 public organization innovation performance evaluation?
A: The public organization innovation performance evaluation system is in operation to promote the innovation of public organizations and foster a competitive environment by evaluating their innovative efforts and publicly announcing results. The government has been conducting innovation management and performance evaluation activities in four evaluation sectors: central government agencies, local governments, local education offices, and public organizations. The Ministry of Planning and Budget has been conducting innovation performance evaluations for public organizations since 2005.
In the year 2006 innovation evaluation, an evaluation body comprised of 60 private sector experts conducted evaluations of 219 public organizations in terms of their innovation implementation plans, CEOs and executives'support for innovative activities, staff members'participation in innovation, and the outcome of innovative activities.
MPB announced the results of the innovation performance evaluation by classifying them into six levels, and made efforts to make sure public organizations surpass level four a stage in which innovation activities begin to yield tangible results.
The percentage of public organizations assessed to enter Level 4 or above, rose from 16 percent in 2004 to 40 percent in 2005 and 68 percent in 2006.
In this regard, MPB plans to provide systematic support programs such as consulting services and innovation academies to diffuse innovation among public organizations. nw

Vice Minister of the Ministry of Planning and Budget Bahn Jahng-shick

Vice Minister of the Ministry of Planning and Budget Bahn, Chang Young-chul, dir.-gen. for public relations and Ryu Sung-kull, dir.-gen. for public entities policy,are all smiles with NewsWorld President-Publisher Elizabeth M. Oh following his interview with the magazine.