in Dutch municipalities
University of Groningen
Faculty of Economics and Business
MSc. Business Administration
Organizational & Management Control
Supervisor: H.J. ter Bogt
Co-assessor: Dr. M.P. van der Steen
January 15, 2017
Nicole Veenvliet
S2796325
n.veenvliet@student.rug.nl
Number of words: 16,239
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ABSTRACT
Due to New Public Management (NPM), municipalities are shifting their focus from an emphasis on input and process, towards an emphasis on accountability in terms of results. According to NPM, councilors should control the municipality with the aid of output and outcome performance information, in other words, councilors should use output control. Civil servants have to facilitate the councilors with this information by providing it in, amongst others, the planning and control documents. This qualitative study explores how members of the city council use the output and outcome performance information from the planning and control documents to control the municipal organization, and how civil servants within the municipality can help in providing the information councilors need to control the municipal organization. A case study in two municipalities was performed. The findings reveal that councilors mainly control the municipality by using input information (financial information) and by watching some elements of the process (qualitative information). Councilors ‘really’ start controlling the municipality when they receive an external signal. Trust, therefore, also plays an important role in the controlling task of the councilors. Councilors trust the civil servants and are in general satisfied with the information they receive, i.e. the way in which they are facilitated. Output control is only used to a limited extend. The ideas of NPM, thus, do not suit the context of this research.
Keywords: Municipalities, Councilors, New Public Management (NPM), Policy and Management
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1. INTRODUCTION
In the 80’s there was a move in a number of OECD (Organization for Economic Cooperation and Development) countries towards New Public Management (NPM) (ter Bogt, 2001: pp. 621–622; ter Bogt, 2004: p. 221; Hood, 1995: p. 93). NPM is a movement characterized by the adoption of businesslike techniques and styles in governmental organizations (van Helden & ter Bogt, 2001: p. 61). Due to this movement, municipalities are shifting their focus from an emphasis on input and process, towards an emphasis on accountability in terms of results. Within the Netherlands, municipalities were encouraged to introduce NPM elements through the Policy and Management Instruments Project for Municipalities (PMI) (ter Bogt, 2004: p. 221; van Helden & ter Bogt, 2001: p. 61). PMI is an initiative of the central government, aimed at making local authorities familiar with new ways of governance and management. The three main goals of the project were to 1) strengthen the position of elected politicians, 2) improve the planning and control processes, by introducing output budgeting and more cost-effective behavior, and 3) to increase the citizen orientation of municipalities (van Helden, 1998: p. 86; van Helden & ter Bogt, 2001: p. 62).
Due to PMI various new tools of governance and management had to be developed (van Helden, 1998: p. 86). One of the tools that was introduced in the planning and control cycle in municipalities is the product budget (in Dutch “productbegroting”). This budget attributes all receipts and expenditures to a particular budget (ter Bogt, 2001: p. 630). In 2003 the program budget (in Dutch “programmabegroting”) became mandatory for municipalities (ter Bogt, van Helden, & van der Kolk, 2015a: p. 290). Nowadays, municipalities all have to apply the instruments proposed by PMI and mandated by the central government in 2003. As a consequence the planning and control cycle at least include a program budget (budget estimate for the upcoming year), and a program report (i.e. annual account and report). In practice, it mostly also includes one or more interim reports.
4 task the planning and control documents play an important role for the councilors (Ministerie van Binnenlandse Zaken en Koninkrijksrelaties, 2003: p. 3; Vereniging van Nederlandse Gemeenten, 2014: p. 34). In principle the program budget, and the program report (which includes the annual account) which are always part of the in the planning and control cycle, should include structured and clear information on (intended or realized) outputs and outcomes. In this way, councilors have the information they need to guide and monitor the municipal organization. These documents are in general, however, not prepared by the councilors but by civil servants (van Helden & ter Bogt, 2001: p. 72). So although formally the council decides the content of these documents, this suggests, in practice civil servants might determine the content to a large extent, and thus play an important role in providing the information in such a way that councilors consider it as useful and will use the information to control the municipal organization.
Ter Bogt et al. (2015a) did research on how to improve the use of the planning and control documents to control the provincial organization. This research was performed by making some adjustments to the current program budget. The results show, that, redesigning the budget based on differentiated and proper performance information does not automatically lead to a more intensive use of this information in controlling the provincial organization (ter Bogt et al., 2015a: p. 310). However, since the study is only performed in one province it cannot be generalized to other provincial organizations, let alone to other governmental levels and organizations.
Pollit (2006: p. 51-52) emphasizes the need to perform further research on how and when politicians make use of performance information. He emphasizes this because he sees performance information as a product which is launched without any market research to find out what stakeholders think of the product. How and when stakeholders use performance information is a straightforward question which is rarely answered. Researching the uses of and attitudes towards performance information by politicians is important because they can determine the ‘fate’ of performance information (Askim, 2009: p. 40). Therefore, it would be interesting to expand on the study of ter Bogt et al. (2015a) by researching how councilors in Dutch municipal organizations make use of performance information to control the municipality. Furthermore, until now no research has been done on the role of the financial and other civil servants in providing the information councilors need to control the municipal organization. Therefore, the aim of this study is to explore how members of the city council use the output and outcome performance information from the planning and control documents to control the municipal organization, and how civil servants within the municipality can help in providing the information councilors need to control the municipal organization.
5 important. For governmental organizations this will give insights into what could be done to improve the quality of the information provided to councilors, so that it better meets their needs.
The research is performed by using a case study approach in which several councilors and stakeholders within two municipalities were interviewed.
The remainder of this research is structured as follows. The next section briefly explores the theory related to the research. Thereafter, an explanation is given of the research methodology. Subsequently, the empirical findings will be described. The paper will be concluded with a discussion of the findings, a conclusion, and suggestions for further research.
2. LITERATURE REVIEW
This section starts with an introduction of NPM and PMI, and the planning and control cycle to explain the context in which the research has taken place. Subsequently, performance information is examined. Finally, control and the relation of control with performance information is explored. This exploration of the literature provides points of attention which can give guidance to the empirical research conducted.
2.1 NPM and PMI
The movement towards New Public Management (NPM) started in the late 1970s, when the first initiatives by practitioners emerged in the United Kingdom and in municipal governments in the United States (Gruening, 2001: p. 2). In the 80’s other OECD (Organization for Economic Co-operation and Development) countries also started to move towards the NPM philosophy (Hood, 1995: p. 93).
NPM is a loose term, its usefulness lies in its convenience as a name for the set of similar items which dominate the political agenda of governmental organizations in many OECD countries (Hood, 1991: pp. 3-4). It refers to a movement characterized by the adoption of businesslike techniques and styles in governmental organizations (van Helden & ter Bogt, 2001: p. 61). Due to this trend, public sector organizations put more attention to production efficiency, management methods and management instruments (ter Bogt, 2001: p. 621). Consequently, municipalities are shifting their focus from an emphasis on inputs and process, towards an emphasis on accountability in terms of results.
6 (van Helden, 1998: p. 86; van Helden & ter Bogt, 2001: p. 62). PMI had a planning and control focus: from planning, via reporting and replanning, to evaluation. Due to this project, the product budget (in Dutch ‘productbegroting’) was introduced in Dutch municipalities. The product budget attributes all receipts and expenditures to a particular budget (ter Bogt, 2001: p. 630).
In 2002 the Dutch central government introduced the dual system, which means there is a distinction between the city council and the executive committee (Hengel, Budding, & Groot, 2014: p. 57). In 2003, related to the introduction of the dual system, the use of the program budget (in Dutch ‘programmabegroting’), which includes a budget estimate for the upcoming year, became mandatory (ter Bogt, van Helden, & van der Kolk, 2015a: p. 290). Nowadays, municipalities in the Netherlands all have to apply the instruments proposed by PMI and mandated by the central government in 2003.
2.2 The planning and control cycle
The planning and control documents are prepared in the planning and control cycle and play an important part for the city council in controlling the municipal organization. According to the government act (In Dutch ‘Besluit Begroting en Verantwoording’, abbreviated BBV), that includes the rules municipalities should follow in drawing up their planning and control documents, this cycle has to consist at least of a program budget (budget estimate for the coming year) and a program report (annual report), which have to be approved by the city council (Vereniging van Nederlandse Gemeenten, 2014: pp. 1-3). With the aid of the program budget the city council determines on which and in which way the alderman can spend money.
The government act (“BBV”) of 2003 sets the requirements for the program budget and report. One of these requirements is that the program budget has to be separated into different programs. Each program consists of a program objective and examines the social effects and the way in which these effects will be accomplished. For this purpose three questions have to be answered: “what do we want?”, “what are we going to do to reach this?”, and “what are the costs?” (Ministerie van Binnenlandse Zaken en Koninkrijksrelaties, 2003: p. 34). When the activities to reach the intended effects are translated in terms of products (outputs), this is called a product budget. Such output information can also be included in the program budget. For the sake of completeness, it should be mentioned that starting with the budget for 2017 the term products cannot be used anymore and will be replaced by the term ‘task field’ (in Dutch ‘taakveld’), according to a recent change in the government law (Ministerie van Binnenlandse Zaken en Koninkrijksrelaties, 2016: p. 11).
7 en Koninkrijksrelaties, 2003: p. 16). However, ‘social effects’ (outcomes) are often difficult to measure and to be related to government policy in a specific year. In practice this means that the program budget present information on activities and outputs rather than outcomes (ter Bogt et al., 2015a: p. 288-289).
The municipal council decides the number and content of the programs (Vereniging van Nederlandse Gemeenten, 2014: pp. 1-3). This implies the information in the program budget and program report differs across municipalities, which may have influence on the use of these documents by councilors. For example, when in one municipality the information councilors want is provided in these documents and in another municipality this information is not provided, the use of the documents could be higher in the former. This also suggests that, for example, the financial and other civil servants, who have to prepare the budgets and annual reports and who in practice determine the contents of these documents (ter Bogt et al., 2015a: p. 290), together with aldermen, i.e. member of the executive, although formally the council decides the content, can play an important role in providing such information that councilors consider it as useful and will use it to control the municipal organization.
Recently, there have been two changes in the governmental act (BBV). Firstly, since 2015 some key economic figures have to be included. With the aid of these figures an assessment has to be made of the mutual relationship between those figures and the financial position of the municipality (Ministerie van Binnenlandse Zaken en Koninkrijksrelaties, 2015: p. 1). Due to the second change each program has to consist not only of a program objective and an examination of the expected social effects of the program but also of policy indicators which are relevant for the objective of the program (Ministerie van Binnenlandse Zaken en Koninkrijksrelaties, 2016: p. 15). Besides this, municipalities have to apply some basic policy indicators in the budget and annual report. For those basic policy indicators the emphasis will be on outcome indicators which can be used to guide the social effects, such as number of FTE working at the municipal organization per 1,000 inhabitants and the housing costs in the municipality for a one person household. Furthermore, as indicated above, the municipality can add indicators. This change of the governmental act will apply from the budgetary year 2017 onwards (Ministerie van Binnenlandse Zaken en Koninkrijksrelaties, 2016: p. 27). Meaning that the indicators also have to be included in the program budget for 2017, which is drawn up in 2016.
8 across municipalities. This does not have to be a problem, because there is no one-size fits all for the documents and performance information provided in the planning and control cycle (ter Bogt, van Helden, & van der Kolk, 2015b: p. 8).
In principle, NPM and the PMI in the Netherlands insist on measurability of outputs and outcomes and on a uniform way of information provision for all types of tasks and outputs (ter Bogt, 2004: p. 221; van Helden & ter Bogt, 2001: p. 66). Basically, the idea about the provision of information in the program budget and program annual report is that ‘one size fits all’ (ter Bogt et al., 2015b: p. 5), more in particular clear output and outcome information with respect to the specific budget year should be provided for each policy field. These aspects are still considered to be important in NPM and also in the directives for the program budget presented by the Ministry of Home Affairs and Kingdom Relations (Ministerie van Binnenlandse Zaken en Koninkrijksrelaties, 2003). Measurability of outputs and outcomes is important, since control on only financial resources is too limited, and uniformity is important as it simplifies the comparison between policies (ter Bogt, et al., 2015b: p. 8). Nevertheless, some authors (ter Bogt & van Helden, 2011: p. 62; ter Bogt et al., 2015a: pp. 295-296; ter Bogt et al., 2015b: p. 8) suggest that the expectations of the information about the policy realizations have to be realistic and should be adapted to for example, the extent to which outputs and outcomes are really measurable, or the extent to which a municipality can influence the outputs and outcomes realized. The information in the program budget should be adjusted accordingly (ter Bogt et al., 2015b: p 8), as well as the type of control to be used. This means managers or civil servants and financial employees must know which information councilors and alderman need, but also what information reasonably speaking can be provided.
2.3 Performance information
To understand performance information the term management accounting information has to be explained first. Management accounting information is concerned with generating, communicating and using financial and non-financial information for decision making and control (Groot & Selto, 2013: p. 3). Management accounting thus concerns the input, process and output of financial and non-financial information. Performance information is defined by Pollitt (2006) as: “systematic information describing
the outputs and outcomes of public programs and organizations – whether intended or otherwise – generated by systems and processes intended to produce such information” (p. 39). This includes data
9 A book highly valued in the Dutch field of accountancy describes a set of characteristics, for the quality of information (van Leeuwen & Bergsma, 2014: p. 144), which can also be applied to performance information. These characteristics, shown in figure 1, must meet the need of the user so they will perceive the information as of high quality and will therefore use the information to a higher extend. Although perhaps somewhat speculative, it seems that figure 1 draws the attention to some aspects which could also be important in the context of the planning and control documents. For example, aspects like understandability (they understand the information, taken into account education and experience), timelines (the objective can still be reached), presentation (adapted to the imagination and interpretation power of the users), available, quantification (needed for a rational judgment), focused (no redundant information), critical content (an objective critical judgment can be made), consistent (everyone interprets it the same way), and sufficient (information that should be provided is provide) (van Leeuwen & Bergsma, 2014: pp. 144-151), could play an important role in the use of the performance information in the planning and control documents by councilors.
1. Understandable 2. Fits information policy 3. Target in a broad sense 4. Reliable 3.1 Content targeting 3.2 Timeliness 3.3 Presentation 3.1.1 Relevant 3.1.2 Sufficient 3.1.3 Available 3.1.4 Consistent 3.1.5 Quantification 3.1.1.1 Focused 3.1.1.2 Detailed 3.1.1.3 Precise 3.1.1.4 Critical content
Figure 1: Quality characteristics of information (van Leeuwen & Bergsma, 2014: p. 144)
10 available in the planning and control documents. They value informal, verbal consultations and formal meetings with top managers to a higher extend. This is confirmed by another study who found that when there is a crisis politicians obtain the information they need about internal processes and outputs from meetings with managers (Jansen, 2008: p. 189). Furthermore, the factual, quantitative performance information in the planning and control documents does not play an important part in the performance evaluation of professional managers by aldermen (ter Bogt, 2003: p. 325). Another study of ter Bogt (2008: p. 78), in which he interviewed several politicians, also showed politicians have low regard for the information in output and outcome budgets, and related documents.
In relation to this, Taylor (2009: p. 864) found in her research, on a small group of Australian public agencies and accountability authorities, that they only use performance information when they perceive that the performance information meets their information needs. Ter Bogt et al. (2015a) conducted research on how to increase the use of performance information by councilors to control the organization. For this research they performed a case study in a Dutch provincial organization, where they adjusted the program budget with the aid to increase the use of this document. The results of the study show, that due to these adjustments, councilors became more positive about the performance information in the planning and control documents. However, during the field research of the same study the actual visible use of the performance information was limited (ter Bogt et al., 2015a: p. 309). It, therefore, seems that redesigning the budget based on differentiated and proper performance information does not automatically lead to a more intensive use of this information in controlling the provincial organization. However, since this research is only performed in one province, it cannot be generalized to other provincial organizations, let alone to other governmental levels and organizations.
Finally, Pollit (2006) and Askim (2007) did research on the use of performance information in relation to the decision and policy making process. Pollit (2006: p. 49) describes that evaluation and performance reports have more impact in the beginning of the decision making process, because politicians then stand a better chance at influencing the basic parameters. The study of Askim (2007 pp. 458-463) shows performance information is mostly used in the beginning and on the end of the process to develop a policy.
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2.4 Control
There are a lot of definitions for the term control, but in general control can be defined as “the mechanism
through which an organization can be managed to move towards it objectives” (Ouchi, 1979, p. 833).
With regard to control Zimmerman (2000: pp. 3-4) makes a distinction between control and decision making. Control includes all the devices and systems managers use to align the behavior and decision making of employees with the organization objectives (Malmi & Brown, 2008: p. 290). It excludes support systems. Unless a support system is used to guide another’s behavior, it is a decision-support system. Therefore, the term control can be used to refer to the guiding and monitoring role of the municipal council.
Besides that there are different definitions for control there are also different types of control. Ouchi (1979: pp. 833-837), for example, describes three types of control: 1) output control (control based on market information, such as output and its prices), 2) behavioral control (control by bureaucratic mechanisms like rules, processes and procedures), and 3) clan control (control by ceremonies and rituals). Merchant (1982: pp. 45-46) came up with control types similar to those of Ouchi (1979). These types are: 1) results control (rewarding employees for good results), 2) action control (ensure employees perform certain actions that are beneficial to the organization), 3) personnel control (make it more likely employees perform the task satisfactorily on their own), and 4) cultural controls (shape organizational norms and encourage employees to monitor and influence each other) (Merchant, 1982: pp. 45-46; Merchant & van der Stede, 2012: pp. 29-90). Results control is comparable to what Ouchi (1979) describes as output control, action control can be compared to behavioral control, and personal and cultural control are comparable to clan control. The types of control can overlap each other in an organization, and they occur in combination, i.e. they form a ‘package’ (Malmi & Brown, 2008: p. 287). Ouchi (1979: pp. 843-845) indicates that different types of control have to be used, depending on the measurability of outputs and the knowledge of the transformation process.
12 judgmental control, and political control, which are summarized in table 1. These six types can be divided between cybernetic and political control (Hofstede, 1981: pp. 198-202). In a cybernetic control system objectives are set, output is measured, output and objectives can be compared, and corrective action can be taken (Kloot, 1997: p. 52). When this is not the case, and in particular when the objectives are unambiguous, Hofstede (1981: pp. 200-202) talks about political control, see table 1.
So, both Ouchi (1979) and Hofstede (1981) state an organization probably needs numerous types of control. Elaborating on this Malmi and Brown (2008: p. 287) describe management control systems do not operate in isolation, organizations probably use several controls to align employees actions with the objectives of the organization. They describe management control systems as a package, which is a collection or set of controls (Malmi & Brown, 2008: p. 287).
Control type Objectives Outputs Effects of intervention
Nature of activity
Cybernetic model fit
Routine Unambiguous Measurable Known Repetitive Fully
Expert Unambiguous Measurable Known Non-repetitive Largely
Trial and error Unambiguous Measurable Unknown Repetitive Marginally
Intuitive Unambiguous Measurable Unknown Non-repetitive No
Judgmental Unambiguous Non- measurable
Unknown – No
Political Ambiguous – Unknown – No
Table 1: Hofstede’s types of control (1981: pp. 197-202)
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2.5 Performance information and control
For each type of control described in the previous section different performance information is needed. For output control information on quantity and quality of outputs, costs and prices (i.e. market information) is in principle needed, and for behavioral control information about rules, processes and procedures (and how they contribute to the desired output) are needed. For clan control rarely any concrete information is needed, since it is more based on belief in certain norms and values, the sharing effects of education et cetera. Ouchi (1979: p. 838) therefore states that for output control more information is demanded than for clan control. Since the control types described by Merchant (1982), and Merchant and van der Stede (2012) are similar to the control types of Ouchi (1879) it can also be said that results control is more information demanding than personnel and cultural control, at least in so far as it concerns information from the accounting system.
Furthermore, Hofstede (1981: p. 198) describes that cybernetic models of control use feedback loops in which output information can be compared with an objective and when necessary adjustments can be made. This feedback loop can be extended with a feedforward loop (Hofstede, 1981: p. 198-199). The feedforward loop uses external information for a first anticipatory intervention, which is later on followed up by a feedback loop.
In a letter written by the Ministry of Home Affairs and Kingdom Relations (2016b: p. 3) is described that the executive committee needs to assure councilors perceive information on time and on the right moment, so that they can perform their control tasks in an ‘optimal’ way. This indicates the importance of the quality characteristics critical content and timelines described by van Leeuwen and Bergsma (2014: pp. 144-151), see section 2.3.
Until now, only little research is done on the relationship between performance information and control in governmental organization (e.g. Askim, 2007; ter Bogt et al., 2015a). Askim (2007: pp. 458-463), for example, found performance information is used for different purposes depending on the stage in the policy making cycle. When setting the political agenda performance information is used to bring attention to gaps between aspirations and actual performance. In taking a decision the information is used to support or reject political positions during debate. Finally, performance information is used to monitor municipal service provision at the end of the policy making process. Moreover, as described earlier, ter Bogt et al. (2015a) did research on how to increase the use of performance information by provincial councilors to control the organization.
14 important role in providing information in such a way that councilors perceive it as useful and will use it to control the municipal organization.
2.6 Research question and sub-questions
Based on the problems that in practice might exist in Dutch municipalities with respect to the use of performance information in planning and control documents by councilors and the provision of such information (by civil servants), as well as the previous exploration of literature, the research question of this study is: “How do councilors use the performance information in the planning and control cycle to
control the municipal organization and how can various parties involved in the municipality help to provide the information councilors need to control the municipal organization?”
The exploration of literature in the previous sections gives rise to the following sub-questions:
a) How autonomous are councilors in deciding on the contents of the municipal planning and control documents and do they – in their own perception and that of civil servants – have the time, knowledge and experience to steer and monitor the municipality and its policies on all main lines? b) How do councilors, in their own perception and that of civil servants, use the available performance information and other accounting information – i.e. what types of accounting and performance information do they use – and in what situations do they make use of performance information and other accounting information (e.g., for what type of discussions or decisions)? c) How prominent is the role of performance and other accounting information in the control of the
municipal organization and policies by councilors, i.e. to what extent do they use the available information and do they hold the opinion that the available information is sufficient?
d) How do councilors control the municipal organization and policies, i.e. what type(s) of control is/are used mostly by councilors when steering and monitoring – i.e. controlling – the municipal organization and municipal policies on main lines and why?
e) What kind of performance information do councilors – in their own perception and that of civil servants – need to perform their control tasks (i.e. steering and controlling on main lines) in the way they would like to do this?
f) How can civil servants and possible other parties involved (e.g. aldermen) help in providing the performance information the councilors would like to have available and need to perform their tasks?
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3. METHODOLOGY
This section describes the research method used to answer the research question, the case study background and the case description. Furthermore, it outlines the data collection method and the analysis used. Finally, an explanation is given of how the quality criteria controllability, reliability and validity are met.
3.1 Research method
The aim of this study is to get a deeper understanding of “how” councilors use the performance information in the planning and control documents to control the municipal organization and “how” civil servants within the municipality can help to provide the information councilors need to control the municipal organization. To research this issue a qualitative research method was adopted. According to Hennink, Hutter, & Bailey (2011):“Qualitative research is an approach that allows to examine
experiences in detail, by using a specific set of research methods, such as in depth interviews, focus group discussions, observation, content analysis, visual methods, and life histories or biographies” (p. 8). The
method allows to identify issues from the perspective of the participants of the study, and understand the meanings and interpretations that they give (Hennink et al., 2011: p. 8). So, with the aid of the qualitative research method an understanding of the view of the councilors and civil servants within the municipality on the issues can be obtained.
The qualitative method that was used for this research is the multiple-case-study approach. In a multiple-case-study more than one case is researched (Yin, 1989: p. 44), which increases generalizibility. The type of qualitative research used could be called descriptive and explorative (Scapens, 2004: pp. 259-260). A case-study typically answers a “how” or a “why” question (Yin, 1989: p. 6) and is appropriate in new topic areas and in the early stages of research on a topic (Eisenhardt, 1989: p. 532). Such as for this research area where not much research has been done.
3.2 Case study background
In the Netherlands there are three hierarchical governmental layers: the central government, provinces and municipalities, which all have its own responsibilities. The municipalities, which is the lowest layer, are engaged in several rather concrete tasks and services for the benefit of their citizens (ter Bogt et al., 2015a: p. 291). These tasks range from maintenance of the infrastructure and garbage collection to providing sports facilities and cultural activities.
16 elected by the citizens (ter Bogt, 2004: p. 243; Hengel et al., 2014: p. 56). The municipal council elects the aldermen. Since the municipal law of 2003 it is also possible to elect aldermen who are not a member of the municipal council. Each alderman is assigned to one or more disciplines (portfolio), and in particular focuses on the interest of this task field. The mayor is appointed by the crown. The mayor is the chairman of the municipal council and the executive committee (in Dutch ‘college van burgemeester en wethouders), which is the board that is practically responsible for the daily governance of the municipality and the execution of tasks (Hengel et al., 2014: p. 56). They carry out the decisions taken by the city council. The town clerk, who is formally the head of the civil servants, is appointed by the municipal council, on the recommendation of the executive committee. Although there is not a formal direct hierarchical relationship, in practice an alderman generally controls the professional managers, as he/she has direct contact with the professional managers who work in the policy area(s) for which the alderman is responsible (ter Bogt, 2004: p. 244).
3.3 Case description
The two cases researched were the municipality of Barneveld and Ede. Below a short explanation is given of each case.
Barneveld is a municipality located in the province of Gelderland. It has approximately 56.000 inhabitants and consists of nine centers: Barneveld, De Glind, Garderen, Kootwijk, Kootwijkerbroek, Stroe, Terschuur, Vorthuizen and Zwartebroek. The city council of Barneveld has 31 members which are divided over several political parties, i.e. SGP (which is the biggest party in the council), PRO’98, ChristenUnie, CDA, Burger Initiatief, VVD, and Fractie Van den Brink. Those parties, thus, decide over the planning and control documents in the planning and control cycle, which is made ‘Lean’, according to the municipality.
Ede is also located in the province of Gelderland. The centers in this municipality are: Ede, Bennekom, Lunteren, Ederveen, De Klomp, Harskamp, Wekerom and Otterlo. Ede has approximately 111.500 inhabitants. The city council of Ede has 39 members which are divided over BurgerBelangen, CDA, ChristenUnie, D66, GemeenteBelangen, GroenLinks, PVDA, SGP and VVD. In Ede the SGP is also the biggest party in the council. According to the municipality the program report of Ede is also made ‘Lean’.
17 municipality of Ede than in Barneveld, which can influence the way in which the councilors control the municipality. Finally, it should be noted that the composition of the municipal councils in both municipalities, which is not representative for that in most other Dutch municipalities, shows considerable similarities, i.e. a large share of councilors from Christian political parties.
3.4 Data collection
The data was gathered from different sources on both a primary level (semi-structured interviews) and a secondary level (the planning and control documents and the video(s) of the council meeting(s) about the program budget).
From each case two councilors were interviewed, one with a financial background and one councilor without a financial background. Besides the councilors, the council clerk, a financial employee, and a policy-focused civil servant were interviewed from each case. The council clerk advices the city council and therefore might be expected to have an impression of how councilors use the planning and control documents. The financial employee and the other civil servant can be expected to know which information councilors need (ter Bogt et al., 2015b: p. 8). For those reasons it was expected that the insights of these stakeholders help to get a more complete picture of how councilors use the performance information in the planning and control documents and to what extent these stakeholders take this into account when preparing the documents. In appendix 1 and 2 the questions asked to the interviewees can be found. Furthermore, from each case the planning and control documents of two years were collected. A list of the collected documents can be found in appendix 3. In addition the city council meetings of both municipalities in which the program budget was discussed were collected, see appendix 4.
3.5 Data analysis
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3.6 Controllability, validity and reliability
Of course, given the limited period of time available for this research, only a limited number of resources and other sources of data could be included, which is one of the major limitations of case research (Berry & Otley, 2004: 249). Nevertheless attention was paid to controllability, reliability and validity which provide the basis for inter-subjective agreement on research results (Aken, Berends, & van der Bij, 2012: p. 1). To increase the controllability a detailed description of the way in which the research was conducted is presented in the methodology section.
According to Scapens (2004: p. 268) reliability and validity of ‘evidence’, which is considered most important in quantitative research is a less appropriate criterion in case research. In case research the researcher cannot be ‘impersonal’ and reality is not necessary objective for that reason. Procedural reliability is more suited for this qualitative research method (Scapens, 2004: p. 268). To meet procedural reliability, clear research questions were addressed as shown in section 2.6, there was a research plan which is described above, interviews were recorded and the analysis was fully documented. With regard to external validity it is more appropriate to apply the logic of replication and extension rather than sampling logic to case research (Scapens, 2004: p. 269). This means that the findings and the theory from previous studies on the use of performance information by councilors to control a governmental organization are applied in another context, namely Dutch municipalities, to study if the theory has to be redefined and/or modified. Through this process the theory is generalized (Scapens, 2004: p. 269). Furthermore, due to the fact that there exist some differences between the two cases selected the implications from their comparison can extent the theory to a wider set of circumstances (Scapens, 2004: p. 263). In case research internal validity can be replaced by contextual validity. This criterion is met by using multiple research methods; due to this, evidence from one source could be compared with other kinds of evidence, and different types of information could be used to study each case.
4. EMPERICAL FINDINGS
In this section the empirical findings from both case studies are discussed. It starts with a general description of the planning and control cycle. Subsequently, the use of the documents is described. Thereafter, the way in which the councilors control the municipality is discussed. Finally, this section will discuss how other parties facilitate the council so that councilors can perform their controlling task, and to what extent they meet the quality characteristics of information when facilitating the councilors.
4.1 Planning and control cycle and the role of councilors
19 and policy framework document. The interim reports, however, differ between the two municipalities. In Barneveld the councilors are informed with the aid of a monthly report, in which an update is given of the current status of the content, finances, schedule and risks of the spearheads from each program. In Ede the councilors receive an update of the first few months, which is integrated in the framework document, and a half-year report, which is integrated in the program budget. In those reports the more significant deviations from the program budget are described. Figure 2 shows the planning and control cycle of both municipalities.
Figure 2: The planning and control cycle of Barneveld and Ede
Besides the differences in the documents, which are part of the planning and control cycle, there are differences in the content of the documents between the two municipalities and in the way the documents are formulated. In Barneveld the various interviews indicated that the whole planning and control cycle has been made Lean. Barneveld wants to draw up the planning and control documents as fast as possible so that the news value of the documents is high. One participant commented on the throughput time for the preparation of the planning and control documents:
“We try to keep this as short as possible because the news value should be high. This is possible because, due to the monthly reports you do not lag behind, in May you do not have to look to what budget did we agree on last year, but you only have to look to April.”1 (council clerk Barneveld)
Barneveld not only made the process Lean, but also the content of the planning and control documents is made Lean. As a consequence, the planning and control documents of Barneveld are very succinct. Despite of the succinct documents, the two councilors interviewed said they were satisfied with the information included in the planning and control documents, so also with the performance information included in these documents. However, although the councilors interviewed in Barneveld were satisfied
1
20 with the performance information in the planning and control documents, a closer examination of these documents for the year 2015, 2016, and the available documents for 2017, shows that in fact very little performance information was included. In addition, for most of the performance indicators that were included in the planning and control documents the target the municipality wants to reach is unknown. The comment below illustrates a possible reason for why the targets are unknown:
“…but [the alderman] do not want to burn their fingers on the indicators…”2
(financial civil servant
Barneveld)
Furthermore, the policy indicators which are mandatory in 2017 are not really included in the program budget of 2017; only a link to the website of ‘waarstaatjegemeente.nl’ is presented in the appendix. However, a lot of the indicators on this website are not known for the municipality of Barneveld.
A difference between Barneveld and Ede is that the interviewees in Ede indicated that they did not make the whole planning and control cycle Lean, but only the process and content of the budget report. The planning and control documents of Ede are also more comprehensive than the planning and control documents of Barneveld. The two councilors interviewed in Ede, however, both indicate that the documents are thick. One of the councilors said:
“There are some things that can be written down shorter, but on the other hand, if it is written down really compact, it is also more complicated [to understand].” 3 (councilor 2 Ede)
Another difference is that Ede included performance indicators for each program in the program budget and budget report. Most of these indicators are output or outcome performance indicators. However, not all sub-goals, and therefore also the ‘main’ goals, outlined for each program can be controlled with the output or outcome performance indicators shown in the program budget. Further, the policy indicators that became mandatory are all added in the appendix of the program budget 2017.
A common view among the interviewees of both municipalities was that it is difficult to measure the effect of a policy. The indicators that are shown in the planning and control documents of both municipalities are not only the outcome or output of the municipal policy, but also from external factors on which the municipality cannot exert any influence. Moreover, the interviewees indicated that the influence of the councilors on the content of the planning and control document is minimal. Councilors
2
…Maar willen niet hun handen branden aan wat harde kengetallen…
3 Er zitten wel dingen in dat ik denk, dat kan wel iets compacter, maar aan de andere kant als je dat heel compact doet wordt het
21 can influence the content by submitting motions and amendments. The majority of the councilors have to agree with a motion or amendment, otherwise the adjustment to the content of the document will not be made. This means councilors in principle only have an explicit influence after the document is set up. More implicitly the councilors in both municipalities give signals about what they want throughout the year; but the effect of much signals is often not so clear. Further, the focus in the planning and control documents is mainly financial; in Ede one interviewee said:
“The financial and policy framework, program budget and surely the program report, are more a party of the financial department while it actually should be a party from the policy departments.”4 (financial civil
servant Ede)
4.2 The use of the information in the planning and control documents by councilors
The results in the previous section indicate that the influence of councilors on the content of the planning and control documents is limited. This section moves on to the extent to which councilors use the documents. It also describes whether or not councilors need to gather information from other sources to understand the information in the planning and control documents and/or to conduct their control tasks.
In Barneveld, the various interviewees indicated the councilors make use of the planning and control documents around the moment the documents are discussed in the council meeting. Moreover, the civil servants have the idea councilors know where they talk about. Generally, the discussions focus on a limited number of issues, for example, a new policy initiative or a political ‘hot’ issue. Talking about the use of the planning and control documents, one of the interviewees said:
“Yes, they use it a lot but in my opinion they can use it even more. That is because we gave them so much instruments they cannot see the wood for the trees.” 5 (council clerk Barneveld)
Furthermore, talking about the use of the planning and control documents, interviewees reported that the various representatives of a political party divide the programs if possible. In that case each councilor has one subject or a few policy areas for which he/she is responsible, depending on the size of the political party. The financial specialist of the political party focuses on the financial part of the documents.
The information councilors use is mostly qualitative; i.e. related to processes to a large extent, and finances. During the interviews, the councilors said they also make use of the performance information in
4
Eigenlijk wordt de perspectiefnota, de begroting en de rekening zeker een beetje als feestje van de afdeling financiën gezien terwijl het veel meer een feestje moet zijn van beleidsafdelingen.
5 Ja, ze maken er veel gebruik van maar naar mijn mening kunnen ze er nog veel meer gebruik van maken. Dat komt omdat we
22 the monthly reports. However, it became clear that one of the councilors actually meant the current status of the content, risks, finances and planning reported in the monthly reports, which is not really a performance indicator that informs about output and outcome. The other councilor looks at the performance information in the monthly report, but barely uses it during discussions. The lack of use of performance information during discussions was confirmed by the council clerk, who told that only a few performance indicators were used during discussions. When asking about the key figures, one councilor said his political party uses this when discussing the program budget. When watching the council meeting about the program budget for 2017 this political party indeed made a short remark about this figure. However, it was not thoroughly discussed.
Besides the planning and control documents, the councilors gather other information from other sources. For example, they talk with a specialist and with external organizations such as a company, a sports club, or a special interest group. Most councilors undertake such forms of information gathering and both councilors in Barneveld indicated that they often need such information to make a decision. One of them added to this that external information is necessary because the succinct information given in the planning and control documents. He, however, did not see this as a problem. The information they gather depends on the situation; it can be qualitative or financial information, and sometimes also performance indicators are gathered. When watching the council meeting, the councilors also referred to such information they gathered themselves from external organizations.
Both councilors make use of the performance indicators on the website ‘waarstaatjegemeente.nl’. Which intends to include a standardized set of information for all municipalities in the Netherlands, although there are still various gaps. In addition, councilors have the possibility to discuss a topic with a civil servant and collect extra information that way. However, councilors made limited use of this possibility. This was also confirmed by the councilors interviewed; only one of them gathered information by incidentally talking to civil servants.
A common view amongst the interviewees in Ede was also that the planning and control documents were used around the time they are discussed in the council meeting. One councilor confirmed this by saying:
“The program budget is a hype at the moment it is discussed, but now I am also glad that it is over, subsequently I do not look much to it anymore.”6 (councilor 1 Ede)
6
23 The other councilor interviewed in Ede, however, looks back to the program budget occasionally to see if the elaboration of a plan is similar to what is agreed upon in the program budget. This councilor also makes use of the financial and economic figures around the time the planning and control documents are discussed.
Comparable with Barneveld is that the political parties in Ede also divide the different programs among the councilors, if possible, and that the financial specialists focus on the financial part. Between the councilors interviewed, there is some difference in the extent to which they say to make use of the information. One councilor first looks at the vision of the program and then whether the actions and performance indicators suit this vision. Regarding the indicators, the councilor looks to the indicators which are important for her political party and further to whether the performance indicator is useful, i.e. what does it ‘mean’?. The budget as such is less important for this councilor. The other councilor interviewed mostly looks at the financial information and performance information in the planning and control documents because the vision and the goals are already set out in the policy documents, in which the specific policy initiatives and implementation plans were presented. However, the interview showed this councilor also did not use all available indicators. The observations of the council meeting also showed only a few indicators were used.
Finally, the use of external information by councilors, gathered on their own initiative, is similar to Barneveld. So, in Ede they also gather a lot of information from several external organizations and is it possible to ask questions to civil servants. The civil servant, however, mentioned not much use is made if this possibility.
Overall, the findings suggest that the councilors in both municipalities made a rather limited use of output or outcome related performance information in the planning and control documents. However, the councilors interviewed in Ede made more use of the performance information in the planning and control documents than the councilors in Barneveld did. Probably this is also related to the fact that the documents in Barneveld include very little of such information. The use of input and process related information is rather high in both municipalities. Further, the councilors in both municipalities collect much information on their own initiative.
4.3 The way in which councilors control the municipality
This section describes how councilors use the information to control the municipality. Furthermore, this section discusses what information councilors need to control the municipality in an ‘ideal’ way.
24 According to several interviewees, the councilors ask a lot of questions about the process (i.e. activities and processes) and the finances. The council clerk, for example, said:
“The questions often focus on the process, such as when something is discussed, in what way and what is discussed … And also financial questions, such as who pays, how much will it cost and how are we going to cover it [are asked].”7 (council clerk Barneveld)
Concerning the use of performance information, the municipal employees at Barneveld felt the councilors make little use of the available performance information to control the municipality. The councilors, on the other hand, indicated they use performance information from among others ‘waarstaatjegemeente.nl’ to control the municipality, by comparing the figures of Barneveld with other municipalities. As one councilor put it:
“…The indicators are really used to check where Barneveld deviates relative to the rest of the Netherlands or where Barneveld has a problem.” 8
(councilor 2 Barneveld)
The councilor added to this that it is also important to understand the story behind the indicator, which is qualitative information. In practice this is probably not easy, since basically ‘waarstaatjegemeente.nl’ simply presents the figures as made available by the municipalities. Furthermore, trust plays a role in the task of the councilors to control the municipality. Councilors basically trust that things run smoothly and according to plan, and that they are informed timely if this is not the case. One interviewee for example said:
“Sometimes trust on a topic is damaged, then they be right on the ball of it.”9
(financial civil servant Barneveld)
Besides trusting the civil servants and alderman, one councilor also relies to a large extent on external parties in controlling the municipality. This councilor controls the municipality with the aid of the audit certificate of the external auditor and the assessment of the province. When these are satisfied and approve the annual report, the councilor focuses less on controlling the municipality. The focus of the external auditor and the province, however, is on financial issues and financial risks and not on outputs and
7
De vragen richten ze vaak op het proces, zoals wanneer iets aan de orde komt, op welke wijzen en wat hebben we afgesproken… En ook financiële vragen, zoals wie betaalt het, hoeveel gaat het kosten en hoe dekken we dat.
8 …de indicatoren gebruik je dus echt om te kijken waar Barneveld ten opzichte van de rest van Nederland afwijkt of een
probleem heeft.
9
25 outcomes. The same councilor also mentioned that he can estimate what decision about, for example, a policy will be taken before the actual decision is taken. This indicates the decision is in fact already taken before the council meeting starts.
The interviewees also show that councilors control the municipality only on an incidental basis. When they hear something in the news, from citizens, or external organizations, it can suddenly become a sensitive topic, and when there is an announcement of a policy note with a new policy initiative, the councilors are focused on that subject and not on the other ‘regular’ subjects. In many cases they are quite critical then, and really want to focus on controlling the municipality on the issue concerned. In this context, one of the councilors said for example:
“There should be some signals from the [external] association … that I think, now I have to dive into it, but often I do not dig in a regular policy.” 10
(councilor 1 Barneveld)
Both councilors in Barneveld did not say they miss important information in the planning and control documents which they need to control the municipality. One of the councilors, however, would like the monthly report to be more ‘dynamic’. In this respect, the civil servants said that it would be good if the going concern is clearer for the councilors and that the different documents/instruments available are better integrated, so that they are easier to use. Another interviewee would like the policies to be really measureable, but he also said that he understands this is not possible since there are too many other factors, apart from the municipal policy, that influence the indicators. Finally, one of the interviewees said he would like it if the councilors ask more questions to civil servants, so that the things that are difficult to explain on paper become clearer for the councilors.
In Ede, the councilors seem to control the municipality in a similar way as in Barneveld. A difference, however, is that the interviewees indicated the monitoring task in Ede is performed by the councilors using their right to ask questions, while in Barneveld councilors use the monthly report to monitor whether things are going according to plan. This also suggests that councilors in Ede need to be more active to inform themselves, for example via external contacts instead of ‘passively’ waiting for the civil servant new monthly report with its update. In addition, the councilors in Ede found it difficult to really steer the municipality, since in practice they largely agree with the proposal made by the alderman and the civil servants. A recent report of the audit commission in the municipality Ede also confirmed that the council plays often only a ‘fragmented’ role in the development of policy (Rekenkamercommissie Ede, 2015: p. 7). In addition, just as in Barneveld, one of the councilors mentioned he knows which
10
26 decision will be taken in the council meeting before the actual decision is taken. The councilors of Ede also use the available performance information on only an incidental basis. They are inclined to use it when they hear something in the news, from inhabitants, external organizations, when it is a politically sensitive topic, or when there is an announcement for a new policy. This means ‘regular’ policies are only controlled when there is an ‘real’ impulse, which is comparable with Barneveld. One of the councilors, for example, said:
“…, there will be a new sport policy, at that moment you search which key figures are compulsory from the BBV, how did we do last year, and in which way the new policy can contribute to the key figures in the future.”11 (councilor 2 Ede)
When discussing whether all information in the planning and control documents is sufficient or not, one councilor in Ede felt the information is generally sufficient, but would like the performance information presented in the planning and control documents to be better linked to the policies, so that you can easily see what the result is of a certain policy. In the ‘ideal’ situation this councilor would like a dashboard where you can look at a global level, but also can zoom in to a detailed product level. The other councilor interviewed in Ede, sometimes misses the perception of the citizens in the policy notes and other documents. This councilor would also prefer to have the possibility to zoom in to a more detailed product level. Other responses to what is seen as the ‘ideal’ situation were the desire for more clarity on what it means for the output if Ede will spend €1, - extra on that policy, and more support of civil servants for the councilors. This civil servant could help the councilors to dive into a subject and gather information for their political party, a role that seems to be related to that of the council clerk.
In summary, these results suggests councilors mainly control a municipality by using input information (financial information) and by watching some elements of the process. In both municipalities they only make limited use of performance information to control the municipal organization. Another similarity is that overall the councilors found the financial and policy framework document most important, because then they can steer and guide the municipality. The program report is mostly used by councilors for their monitoring task. Civil servants of both municipalities have the idea the councilors perceive this document as least important. This suggests the councilors use the planning and control documents more for their guiding task than their monitoring task when controlling the municipality.
11
27
4.4 Facilitating councilors
Below, the way in which councilors are facilitated by other parties, i.e. civil servants, in the municipality is sketched. In addition, an explanation is given of the extent to which the quality characteristics of information are met and in what way they are taken into account by the municipal organization when facilitating the councilors. Both of those aspects could help councilors to perform their controlling task.
In Barneveld there is one council clerk who legally has the task to coach, advice and support the city council. The council clerk performs these tasks by, amongst other things, answering the questions councilors have. In Barneveld the council clerk also advices the executive committee and civil servants on the way in which the city council can best be informed and when. This is illustrated by the comment below:
“It is not that I see everything that goes to the council, but for the things I see, consciously or unconsciously, passively or actively, I check if the council does not get too much information and at what point they can best be informed. … I try to sit on the chair of a councilor and then advice the civil servants and the executive committee.”12 (council clerk Barneveld)
To find out the needs of the councilors, civil servants sometimes go to a council meeting or watch the part of the video minutes which are relevant for the policy area they are responsible for. Moreover, civil servants discuss whether or not information for the city council will meet the councilors needs with the aldermen responsible for the topic. Finally, when a councilor has a suggestion to improve the planning and control documents this is taken into account.
Regarding the quality characteristics of information, this particularly means that the municipality tries not to overload the councilors with information. The councilors interviewed confirmed they indeed did not feel like getting too much information. As mentioned in paragraph 4.1, the planning and control documents are even very succinct; and several interviewees said this leads to, for example, a limited understanding of the issue or interpretation problems. As a civil servant put it:
”Sometimes there is a difference between what we, as civil servants, put down, the facts, and how the councilors interpret these facts.”13
(civil servant Barneveld)
12
Het is niet zo dat ik alles zie dat naar de raad gaat, maar bij de dingen die ik zie, bewust of onbewust, passief of actief, kijk ik of de raad niet te veel informatie krijgt en op welk moment ze het beste geïnformeerd kunnen worden. … Ik probeer op de stoel van een raadslid te gaan zitten en zo adviseer ik ambtenaren en college.
13
28 In addition, one of the interviewees mentioned that the councilors are not overloaded with information but are overloaded with instruments they can use to find information, which makes it difficult for them to find the information they need. This interviewee added to this that young councilors often have fewer problems with finding the information they want with the aid of all the instruments available. This is confirmed by the councilors interviewed who can be regarded as being young and who did not mention having difficulties with the various instruments.
Knowledge and experience of councilors is not seen as a problem by the interviewees in Barneveld. The council clerk tries to coach the councilors so that they can perform their controlling task in an ‘optimal’ way. There are also different workshops that councilors can follow. These workshops can help them to better perform their task to control the municipality. Furthermore, the councilors do not feel they lack experience. One of them, however, indicated that when the chairwomen of his political party, who is a member of the city council for almost 14 years, would leave they will lose experience. This suggests experience is important although the councilors do not feel they miss it. It could be noted, however, that a first workshop on the relatively new Lean accounting documents – which was not considered very helpful by many councilors – was followed by a second workshop.
Further, the councilors found they get sufficient information to take a decision and that they get the information on time. The two councilors interviewed in Barneveld also feel that overall they have sufficient time to perform their task to control the municipality in the way they do it now. One of them indicated, that the time he spends differs considerably; after an intensive period, he wants to do the council work in a more relaxed way. The other interviewees considered councilors do not have enough time to control the municipality; they can and perhaps should always do more.
When comparing Ede to Barneveld, one of the differences is that Ede has one council clerk with several council clerk employees who facilitate the city council. The council clerk employees, amongst others, ensure the questions from the city council are answered by answering the question or by asking a civil servant to answer the question. One of the councilors told that the role of the council clerk and council clerk employees is perceived as pleasant. Comparable to Barneveld, is that a civil servant first discusses the information which is presented to the city council with the aldermen responsible for the topic. The civil servant mentioned she tries to answer the questions of a council member as good as possible to help them understand the information. Furthermore, this civil servant said:
