A customised approach, proportional to the profile of each organisation, is taken to performance monitoring, data collection, assessing and managing risk, and resource management in order to enhance entity performance.
Authorise the monitoring department
The responsible Minister
- ensures a formal delegation is in place under s.27(4) or s.88(5) of the Crown Entities Act so it is clear that the monitoring department has the authority to request information
The Crown entity
- recognises that the Government expects effective monitoring of ‘arm’s-length’ agencies including of activities not directly funded by government
- understands the role of the Department under:
Monitoring department
- drafts the letter of delegation that confirms its status as monitoring department and any further Ministerial expectations
- ensures the entity understands the role of the Department under:
Ensure effective and customised performance monitoring
The responsible Minister
- provides timely advice to the entity and Department on the entity’s output priorities for the next financial year
- clarifies the Department’s monitoring priorities
- clarifies their reporting expectations to the entity and Department
- provides timely feedback to the entity and Department on performance reports
- ensures the entity and Department understand the consequences of under- or non-performance
The Crown entity
- actively involves the Department in developing the framework for reporting on its annual and longer term performance
Monitoring department
- ensures its monitoring practice:
- seeks information that supports progress towards policy results
- confirms that performance reporting data is aligned with the entity’s internal management data
- sets a reporting timetable with proportional compliance costs that ensures performance is clearly demonstrated
- supports the Minister’s relationship with the entity
- ensures the Minister’s information needs are met
- builds the Minister’s trust in its own performance as the monitoring department
Identify information critical to good performance assessment
The responsible Minister
- approves the critical data set that informs the achievement of policy and operational goals
The Crown entity
- before the beginning of each financial year, agrees with the Department on the critical data set[1] to ensure the entity is clear about data collection priorities and costs
Monitoring department
- seeks only performance information that it needs and that informs reports to the Minister and the central agencies
- before the beginning of the financial year, agrees with the entity on the critical data set to ensure the entity is clear about data collection priorities and costs
Manage cross-government information requests
The responsible Minister
- remains aware of cross-government information[2]
- ensures requests for information directed to the entity and Department about entity issues allow sufficient time for a quality response, subject to urgent requests such as oral parliamentary questions
The Crown entity
- provides timely and considered responses to cross-government information requests from the Minister and Department
Monitoring department
- provides timely and considered responses to cross-government information requests from the Minister
Manage additional information requests
The responsible Minister
- ensures (when practicable) that requests for additional information directed to the entity and Department about entity issues are reasonable and allow sufficient time for a quality response
The Crown entity
- recognises that additional requests for information may be made and complies with them in a timely manner
Monitoring department
- ensures its requests for additional information from the entity are reasonable[3]
- ensures processes linked to requests for additional information are managed well and in a timely manner
Assess performance-related information
The responsible Minister
- considers reports provided on the achievement of short- and longer-term objectives
- regularly seeks independent advice on the entity’s progress against strategic goals and performance expectations
The Crown entity
- ensures the board receives high quality information on progress against goals in the annual Statement of Performance Expectations (SPE) and outcomes in the SOI and Government goals for public services
- assesses the cost effectiveness and cost benefit of its own activities
- provides the Minister and Department with appropriate performance reports to an agreed timetable
- clearly informs the Minister about ongoing progress against strategic goals and performance expectations and reflects it in the annual report
Monitoring department
- works with the entity to ensure performance reports provide sufficient detail on progress against: goals in the SPE, outcomes in the SOI, Government goals for public services
- develops metrics to identify strengths and weaknesses in the entity’s performance
- provides the Minister with timely and practical advice on the entity’s progress against strategic goals and performance expectations
- gives feedback to the entity on how performance reporting data is used
Ensure information is sound
The responsible Minister
The Crown entity
- regularly reviews data quality to ensure that data is reliable and fit for purpose
Monitoring department
- provides the entity with timely signals when it has concerns about performance information
- works with the entity annually to review targeted aspects of data integrity
Inform the public about performance
The responsible Minister
The Crown entity
- provides the public with information about its own performance and what was achieved, by providing up-to-date performance data on its website[4]
- reports the chief executive’s expenses prominently on its website at least annually
Monitoring department
- ensures agreed performance data and the chief executive’s expenses are made publicly available on the entity’s website within an agreed timeframe
Assess and manage risks
The responsible Minister
- has a good understanding of the fiscal and reputational risks the entity faces
- informs the Minister of Finance and the chair of potential and material risks to the Crown’s interests
- when potential risks to the entity’s operations are identified, informs the entity as soon as is appropriate
The Crown entity
- develops a risk assessment and management system appropriate to its business and constituency
- shares its register of material risks with the Department
- focuses on continually assessing and managing the most significant risks in order to achieve maximum benefit[5]
- identifies, quantifies, analyses, mitigates and reports project and operational risks
- identifies potential risks to the entity’s and Crown’s interests and informs the Minister of them
Monitoring department
- advises the Minister of the contingent risks facing the entity and its sector, where applicable
- seeks information to identify risks to the entity, to facilitate risk monitoring and response
- scans for and acts on emerging risks that may require a response
Apply performance levers
The responsible Minister
- understands and makes use of levers[6] available to obtain desired performance, including but not restricted to:
- meetings with the board chair and/or chief executive
- letters of expectation to the board chair
- requests for information at any time
- directing the board chair to a particular action unless precluded by another Act
- lead a process to amend legislation tightening and/or reprioritising the monitoring regime
- commission a review of an entity’s performance
- obtaining a court order
- appointing new board members
- not reappointing board members
- initiating the removal of board members
The Crown entity
- chair understands the range of levers available to the Minister to obtain the performance the Minister wants
- practises risk assessment, including assessing the Minister’s likely response to particular actions or results
Monitoring department
- when appropriate, briefs the Minister on available levers to obtain desired performance
- under the ‘no surprises’ convention, ensures the entity is aware of its actions or aspect(s) of performance that may trigger the Minister’s use of particular levers
Manage operating resources responsibly
The responsible Minister
- approves priorities for the year and clarifies their expectations with regard to improving the entity’s efficiency and effectiveness
The Crown entity
- ensures it has data to show that its choices are based on assessment of:
- the evidence base and needs analysis
- cost effectiveness relationship of costs to benefits
- opportunity costs
Monitoring department
- tracks the entity’s finances over time and understands its cost drivers
- collects data that enables it to assess the entity’s operational choices with regard to:
- cost effectiveness
- relationship of costs to benefits
- opportunity costs
Maintain accountability for sector funding
The responsible Minister
- where relevant, ensures sector funders[7] understand the importance of effective accountability for such funding
The Crown entity
- where relevant, acts as a sector funder and implements effective good-practice accountability arrangements for its sector funding
Monitoring department
- seeks regular updates on the effectiveness of sector funding accountability arrangements, where relevant
Manage capital and reserves
The responsible Minister
- where applicable, clarifies their expectations regarding the use of capital
The Crown entity
- where applicable, manages its public equity as planned and informs the Minister as early as possible if equity levels are compromised
Monitoring department
- where applicable, tracks the entity’s use of capital and reserves over time
Focus on controlling costs and ensure maximum resources hit the ‘front line’
The responsible Minister
- makes their expectations clear to the entity
The Crown entity
- provides the Department with up-to-date data on operational costs[8]
- uses this data to ensure that resources are maintained for delivery of services
Monitoring department
- tracks the entity’s revenue and expenditure patterns over time
- assesses the entity’s service performance against expenditure over time
[1] This includes qualitative and quantitative data and the extent to which they interact.
[2] Cross-government information includes, but is not restricted to, information on responsiveness to iwi/Māori, Pacific peoples, ethnic communities and people with disabilities.
[3] The Department should set out its regular requirements for information from the entity. For example, the Ministry may seek information on collaboration with other agencies (typically twice yearly), activity to support te reo Māori (annually) and activity to support Pacific peoples (annually), and an annual review of business continuity plans (BCPs). Other ad hoc reports or feedback may be sought for, for example, the four-year budget plan, Briefings for Incoming Ministers, select committee questions for the Estimates examination, and draft versions of the Department’s SOI.
[5] Often referred to as the 80/20 rule or Pareto Principle: the organisation assesses and manages the largest 20 percent of all risks in order to achieve 80 percent of the total achievable benefit.
[6] Statutory-crown-entities-performance-levers-for-ministers-A3.pdf
[7] For example, the cultural sector funders are: Sport NZ, Creative New Zealand, Broadcasting Commission (NZOnAir) and the New Zealand Film Commission.
[8] Some Departments have developed tools for this purpose.