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Lessons from Norway: how to adopt a PMS in state-owned enterprises


Image source: Pawel Gaul from Getty Images Signature

The implementation of a performance management system (PMS) has always been a challenging endeavor for the public sectorIn a study published by the International Journal of Project Management and Productivity Assessment (IJPMPA), Neeta Baporikar considers that most challenges and setbacks are due to various factors which can be summarized in the following manner: reluctance to change management, lack of strategy alignment, poor leadership and organizational culture, lack of training and advocating for a learning culture, lack of flexibility and simplicity in internal processes, and the absence of rewards for good performance. 

In this regard, how did the PMS become part of the public sector and why is it so hard to implement in state-owned enterprises (SOEs)? 

Norway’s PMS


In Norway, the process of implementing a PMS in the public sector started with the ‘80s public reforms, which were oriented towards budgeting, decentralization, and performance management. It began with the implementation of the balanced scorecard (BSC) at the local and central administration apparatus, followed by the Management by Objectives and Results (MBOR) PMS and the introduction of the annual activity plan that made MBOR mandatory for each public unit. The objective was to strengthen political control by making goals less ambiguous, focusing on results, introducing a monitoring system, and making greater usage of incentives. 

Read more: This is how Norway is inspiring trust in government

In the case of public hospitals (which became state-owned trusts after 2002), the challenge of balancing political control and enterprise autonomy has raised other concerns, such as: How do they develop specific and easily measurable performance indicators? How much discretion and qualitative judgment will be involved? Will the MBOR be a formal PMS or will it be a combination of a trust-based system of dialogue and a formal contract? 


In the beginning of the century, Norwegian authorities focused on structural changes and policies that empower patients. Afterwards, the attention shifted towards improving coordination between healthcare providers, addressing safety issues, and improving service quality. A the core of all of those changes was the MBOR PMS, whose implementation was facilitated by a reform package consisting of:  

  • Budget reform, which reverted the budget system to productivity-oriented and granted regional financial autonomy, based on evaluation and systematic reporting of results
  • Activity plan, which aim for less ambiguous goals, focusing on results and setting a monitoring system;  
  • Salary reform, which introduced annual assessment for executives and salaries based on individual contracts and pay-for-performance elements;
  • Hospital ownership reform/hospital enterprises reform, wherein hospitals were organized as independent health enterprises with control over capital and personnel.

According to Pettersen and Nyland, those reforms paved the way for the establishment of performance standards and the introduction of performance audit schemes, where performance measurement became a key component. The managers became responsible for measuring and comparing results using different economic and medical indicators, including both indirect and direct quality measures. Moreover, the monitoring of economic performance in hospitals was done based on a national benchmarking database. 


Every year, Norway’s Ministry of Health sets out performance indicators at all levels, such as # Number of in-patients treated, # Number of outpatient consultations, and cost indices. The relationship between the minister and the agencies is subject to a quasi-contractual agreement or a steering model, which reflects the ministerial accountability—a feature that distinguishes Norway from the rest of the Nordic countries when it comes to setting metrics and evaluating performance in the public sector. 

A perception-based survey deployed both in regional and local hospitals assessed the impact of those measures, revealing the following findings:

Figure 1. Experience of Effects of the Hospital Reform Survey | Source: adapted from The Norwegian Hospital Reform, International Public Management Journal

Read more: Leveraging effective performance management systems for real estate success

The bottom line

In spite of being a consolidated democracy, the adoption of a PMS in the Norwegian public sector was neither easy nor smooth, being characterized by reluctance at the beginning, changes during implementation, and uncertainties regarding its structure and coordination. Nonetheless, the endeavor seems to have yielded several benefits, such as increased efficiency. In the case of Norway, it is clear that adopting a PMS in the public sector certainly paid off.

Interested in more articles about strategy and performance around the world? Click here.

This is how Norway is inspiring trust in government


Image Source: ©LumineImages via

Trust in government is essential at all levels as it fuels citizens’ cooperation and compliance. In a rapidly evolving world, trust in government enhances the institution’s ability to make quick decisions, manage crises successfully, and adapt to changes while upholding accountability. Without trust, implementation in government could result in a lack of cohesion and unsatisfactory outcomes. 

To explore the factors that drive trust in public institutions, the Organisation for Economic Co-operation and Development (OECD) developed a trust framework focused on two primary components: Competence and Values. This framework includes specific dimensions—Responsiveness, Reliability, Integrity, Openness, and Fairness—that governments can improve through targeted policy changes that aim to strengthen public trust (see Figure 1).

The framework underwent a consultative process with over 800 stakeholders through six webinars between 2020 and 2021. This effort resulted in measures aimed at restoring trust in government during and after the crisis, emphasizing inclusive rebuilding by considering socioeconomic, political, and cultural differences, and fostering support for addressing long-term, intergenerational challenges like climate change.

Figure 1. The OECD Trust Framework | Source: OECD, 2021

The OECD’s Trust Framework guided the development of the Trust Survey, an extensive cross-national survey that gathered over 50,000 responses from 22 member countries. This survey, designed to measure and understand what drives people’s trust in public institutions, directly reflects the dimensions outlined in the Trust Framework and provides insights for future policy reforms. 

Read more: MyDigital: Malaysia’s digital transformation goals by 2030

According to the findings, Norway emerged as a standout with exceptionally high levels of trust in public institutions and significant citizen satisfaction.

A majority of Norwegians reported high or moderately high trust in national (64%) and local governments (53%) and civil services (61%). The Norwegians had the highest level of trust in parliament, where 66% report high or moderately high trust, 27 % points above the average across the OECD countries (39%) (see Figure 2).

Figure 2. Trust in Norwegian public institutions | Source: OECD, 2021

Furthermore, an estimated 87% of Norwegians are satisfied with the judiciary and education systems compared to 56% and 67%, respectively, across OECD countries on average. Around 80% are satisfied with the healthcare system, 12 % points higher than the average across OECD countries (68%).

The main determinants contributing to public trust in Norwegian institutions (see Figure 3), as analyzed through the OECD Trust Survey and organized into defined dimensions, are:

  • Reliability: Norwegian citizens generally perceive their institutions as capable of protecting personal data, maintaining stable rules and norms, and managing future crises effectively. This reflects a strong sense of institutional reliability that underpins public trust.
  • Openness: The survey indicates that Norwegians view their state as relatively open, particularly in terms of the accessibility of information about public services.
  • Fairness: The public perceives that the state treats citizens fairly and ensures equal treatment by public services.
  • Responsiveness: This area received fewer positive ratings, with fewer than half of the respondents believing that the government quickly addresses service problems or that citizens can significantly influence service changes.
  • Integrity: Perceptions here are mixed. While respondents generally do not believe that members of parliament can be bribed, concerns exist about potential conflicts of interest involving politicians accepting business positions in return for political favors.

Figure 3. Drivers of institutional trust in Norway | Source: OECD 2021

These findings highlight the complexity of trust in public institutions, showing that while some aspects are highly rated, others, particularly responsiveness and integrity, could be improved to enhance overall trust.

Read more: How can a motivational culture impact the performance of public servants?

To improve responsiveness, Norway could enhance the user experience of its public services and encourage innovation within the public sector. This includes adopting emerging technologies, streamlining bureaucratic processes, and fostering continuous improvement. Additionally, implementing user satisfaction surveys, using data analytics to address public needs promptly, and increasing transparency in service delivery are critical steps to enhance government responsiveness.

In terms of integrity, centralizing efforts to prevent corruption and promoting transparent practices, including clear regulations and ethical training programs for public officials, are crucial steps, as recommended by the Council of Europe’s Group of States against Corruption (GRECO).

Trust serves as a cornerstone for effective governance, influencing citizen support, regulatory compliance, and societal cohesion. While Norway demonstrates commendable levels of trust in its public institutions, continuous efforts to enhance responsiveness and integrity are crucial. Addressing these areas not only fosters public confidence but also strengthens the overall fabric of governance, promoting transparency, fairness, and accountability.

Read more articles about government performance across the globe in Performance Magazine’s Around the World section.

MyDigital: Malaysia’s digital transformation goals by 2030


Image source: Mohd Jon Ramlan | Unsplash

Accelerating a digital economy is no longer just an option but a must. The United Nations reported that digital technologies have reached 50% of the developing world’s population and helped transform societies. Meanwhile, the paper “The Role of the Digital Economy in Rebuilding and Maintaining Social Governance Mechanisms” suggests that digitization improves society at all levels, from the automation of businesses to new opportunities to human behavior and social relationships, especially interactions between governments and citizens.

Malaysia is not an exception. The COVID-19 pandemic forced traditional brick-and-mortar businesses to pivot online, and millions of Malaysians followed. This is evident in their shopping, entertainment, and education needs. 

The digital economy has been identified as a key economic growth area (KEGA) in realizing the Shared Prosperity Vision 2030, a blueprint released in 2020 by the government. It reflects the aspiration of making Malaysia a country that develops sustainably while achieving equitable economic distribution and inclusive growth. According to the Shared Prosperity Vision 2030, Malaysia should have clear policies and raise awareness on enabling citizens to adapt to the future economy instead of leaving them as mere consumers. Hence, MyDIGITAL was launched.

MyDIGITAL is a national initiative that epitomizes the government’s aspirations to successfully transform Malaysia into a digitally-driven, high-income nation and a regional leader in the digital economy. MyDIGITAL’s three goals are to inspire decision-makers to become creators, users, and adopters of innovative business models; use human capital to flourish in the digital economy; and cultivate a consolidated ecosystem that empowers society to embrace the digital economy. To meet these objectives, six strategic thrusts have been identified:

  1. Drive digital transformation in the public sector. This can be accomplished by leveraging digital technologies, data, and digital intelligence, improving public servants’ digital skill sets, and enhancing the quality of online services. By the end of the year, the goal is for all ministries and agencies to provide cashless payment options and 80 percent cloud storage across the government. In the short term, transforming the Administrative Modernization and Management Planning Unit (MAMPU) will fuel digitalization and adapt to emerging digital technologies.
  2. Boost economic competitiveness by accelerating digital adoption, empowering digital management, and shaping emerging business models through digitalization. Businesses that embrace technology and build on the digital economy will generate value and thrive as the economy transforms. The goal is to have Malaysian industries be powered by innovative ideas and models. With economic growth led by local entrepreneurs, the focus will be on productivity and improving livelihoods. This will bring in new industry players, resulting in a more vibrant and innovative economy.
  3. Establish enabling digital infrastructure to help individuals participate in the digital economy. Through a conducive digital environment provided by seamless and extensive digital connectivity, the government and businesses will be able to operate with ease and continuously innovate. Malaysia has made significant progress in improving the state and coverage of such key infrastructure. Broadband, data centers, and submarine cable landing stations are among the digital infrastructures targeted by this thrust. These infrastructures enable data generation, flow, exchange, consumption, and storage.
  4. Build agile and competent digital talent to ensure that digitalization is successfully embedded across talent development, various levels of education, and the upskilling and reskilling of the existing workforce. The key challenge for Malaysians as job requirements change and new jobs surface is to acquire the necessary skills to remain relevant. To thrive in the evolving digital economy, current and future workforces should be well-equipped with digital skills.
  5. Create an inclusive digital society to bridge the digital divide and ensure that everyone benefits from the digital economy. There are numerous government initiatives and programs in place to improve the well-being of society. However, a digital divide persists across income, strata, age, gender, and skill sets. To create a digitally responsible society, ethical behavior in the use of digital technology will be prioritized. This will be expressed through the improvement of safety and ethics in digital activities and transactions and through cybersecurity. For instance, companies can leverage existing initiatives, such as the Information Security Governance, Risk & Compliance Health Check Assessment.
  6. Establish a trusted, secure, and ethical digital environment that allows businesses and society to fully reap the benefits of digital services without jeopardizing safety, data security, privacy, dependability, or ethical standards. The development of a holistic ecosystem is required, and this may involve a regulatory framework and cyber security capabilities to prevent threats or breaches that can disrupt the digital economy.

Twenty-two strategies, 48 national initiatives, and 28 sectoral initiatives support these strategic thrusts. Phase 1 began in 2021 and will last until 2022, when the foundation for digital adoption will be strengthened. In Phase 2 (2023-2025), inclusive digital transformation will be prioritized, and Phase 3 (from 2026 to 2030) will position Malaysia as a regional leader in digital content and cyber security.

MyDIGITAL’s mission is to ensure that all Malaysians benefit from the opportunities of the digital revolution. To realize this, active participation from strong partnerships and between all stakeholders are necessary. With MyDIGITAL’s implementation, the rakyat’s standard of living and well-being are expected to improve, businesses will be able to optimize resources and expand their operations and market, and the government will be able to provide more efficient and effective services.

To learn more about strategy planning, sign up for The KPI Institute’s Certified Strategy and Business Planning Professional course.

Editor’s Note: This article was written by Aikaterini Sachinoglou and originally appeared in the 22nd edition of Performance Magazine Printed Edition.


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