As public sector organisations are always expected to attain greaterresults and outputs with fewer resources, they are always seekingfor better ways to use these scarce resources with more economy, with greater efficiency of processes and people within their organizations, and with increased effectiveness of results in order to further their missions. Whether used alone or together with other tools such as benchmarking, activity-based management, and flexible budgeting, the operational review is the tool best used to perform an evaluation of these crucial three e’s-economy, efficiency, and effectiveness. a)The 3Es model Definition The 3Es model is a tool used by managers to assess performance visa vie the inputs injected in terms of the outputs obtained. According to Coombs and Jenkins (2002) due to pressure exerted on the managers of the public sector they are forced to deliver value for money which can be defined as the achievement of economy, efficiency and effectiveness. The 3Es model components which are economy, efficiency and effectiveness are complementary in financial management of most public sectors.
As postulated by Mandl U etal(2008), the value for money is only achieved when all the three elements are combined and can no longer be seen as a virtue but a necessity for public sector managers to achieve. It is therefore the prior purpose of this presentation to evaluate the 3Es model. Management Effectiveness Effectiveness can be explained in terms of what is achieved. It is about whether targets are met or not. Performing effectively means that the right work is being completed. Managers are responsible for making sure that this happens.
If a team is working really hard but not delivering what is needed, then they are not effective. Effectiveness is measured by setting out clear objectives before work starts and then evaluating whether the objectives have been met or not. it is valued and measured more in line with the specific goals versus the outputs (Reddy:1993). Local Authorities have goals which they aim to achieve and the plan of how they should achieve, if then they are to measure their effectiveness, then they would have to measure their output against the goals they would have set out in the first place as basis for carrying out that specific activity. Management Efficiency Efficiency can be measured in terms of the inputs required to generate the outputs. It is about the way in which work is completed. It is part of a manager’s job to help improve efficiency. For example, if the same work can be completed using less inputs or resources then efficiency has improved. The Urban Councils Act chapter 29. 15 section 136h (i-iii)provides some of the guidelines for effectiveness and efficiency to council management.
It states that some of the duties of the Town Clerk includes, “responsibility for effectiveness and efficiency of organisation of the council and the coordination of activities and where necessary, the integration of activities”, simply put this means that effectiveness and efficiency are essential components of a local authority manager to which they should strive to attain. Measuring efficiency means that the process needed to finish the work must be defined and specified. Each part of theprocessshould be studied to see the resources that are required.
This becomes the starting point or benchmark for measurement. Future work is then measured against the benchmark to see if it has taken more or less resource. Process changes are also measured to see if they are more or less efficient. It is also useful to measure one team’s efficiency against another and then adopts the most efficient methods as best practice always assuming that effectiveness is maintained. Measures of efficiency include its productivity, processing, time, operational costs and level of automation. Production of desired effects results with minimum waste of time, effort and scale.
Management Economy Economy is the third element of the three Es model, covering the financial aspects of work being done. It could be argued that economy or finance is just one of the factors to consider when improving efficiency, but because finance is so important in today’s organisations, economy has become the third element. Economy is measured by looking at the cost of the resources consumed and the value of the output delivered. Efficiency involves making choices for the allocation of scarce resources to satisfy their limited desire.
Need for capital and sound financial management in order to achieve effectiveness and efficiency. According to Combs and Jenkins (2002), the practice of management of sound housekeeping and the virtue of thrift, an economic operation acquires resources of appropriate resources of quality and quantity at the least cost. The term economy is frequently equated with the level of spending on a service but it is more accurately defined as the cost of procuring specific service inputs of given quality for example premises, staff and equipment.
While the notion of economy leads authorities to seek to minimize the price paid for inputs or production factors, there is no common perception in literature whether quizzing the wages for labours or civil servants is good or bad performance. Moreover, Boyne (2002), maintains the argument that high or low spending in it reveals nothing about service standards, or the success or failure of local authorities. In contrast to economy, economists define efficiency in terms of technical efficiency and locative efficiency, (Boyne 2002).
The first refers to the costs per unit of output while the latter refers to the responsiveness of services to public preferences. (b)How the Model can help improve business performance Prioritization It is important that the priorities of senior management are established as this will then drive the most appropriate measures to be used and lead to the best effectiveness, efficiency and economy mix. This mix will change over time depending on the focus of the organisation and external factors too. Every manager can be a better manager and understanding the 3Es Effectiveness, Efficiency and Economy can help improve business performance. t enables managers to know how to perform their functions with a specific focus on output that is producing more than what they have inputted. The 3Es model suggest that managers should plan to prioritise on the services that are needed most whilst planning on doing the other services, the priorities should however be conducted in an economic way and efficiency should be the out. Thus the public managers should set in place mechanisms for measuring the efficiency in the utilisation of resources set. Creating value for money
Value for Money is about providing services that are of the right quality, level and cost that reflect the needs and priority of customers, council taxpayers and the wider community. Public managers fail to achieve value for money in that they charge rates and tariffs that are not symmetrical to the services they offer and in the end they face resistance in the payment. Harare city council is in this dilemma as it usually charges exorbitant charges for water when at times it fails to deliver the water.
Using the 3Es model will enable the local authority repair the available pipes, correctly metering the water and making sure that only those who pay that reasonable charge get the water and services, it might also mean servicing its water pipes such that loss is not incurred with water gushing out unutilised, whilst charging residents who have not use the water high water charges According to Visser (2010), the 3Es model can ensure thatthe services the Council provides are good value for money and this can be done in a number of ways, primarily through transparent financial management, good procurement practices like in the awarding of tenders, business planning and periodic reviews of services (audits). Maximization on the resources available
Local authority managers are managers of public funds and resources. In this case the public gives them the resources and at the end of the day they expect better service delivery and efficiency. However in the current economic environment the resources are not sufficient, the people still expect better service delivery even in the absence of equitable resources and this puts public managers in a dilemma where they are expected to produce with little. The 3 Es model then suggests that managers should effectively utilise the resources they have and produce the best from that. Effective utilisation is then advised, local authorities are expected to find solution to that.
In the case of shortage of resources for waste management,the Harare city council resorted to put mass litter bins at shopping centres and other public places whereby the public would go and empty their rubbish there, the council would the come and collect the rubbish from the mass bins, the result is that it is able to collect waste with limited resources by picking it at central point when it is not able to do rounds at all the households, thus the practicality of the 3ES in improving performance of the organisation. Benchmarking Benchmarking is setting a standard that should be followed; management may set a certain amount of resources as permissible for a certain activity. The resources allocated therefore should be utilised fully so that the results can be attained. It may be that the focus is on maintaining a particular cost (economy) and producing the best output for that cost. In contrast to efficiency, effectiveness is determined without reference to costs and whereas efficiency means “doing the things right”, effectiveness means “doing the right thing”.
In the same context future work is measured against the benchmark to see if each has taken more or less resources. Process changes are also measured to see if they are more or less efficiently. It is also useful to measure one’s team efficiency against another and then adopt the most efficient method with the best practices always. Mixing the 3Es It can be very challenging in finding the best mix of the 3Es especially in public sector organisations like local authorities which have a specific mandate which they are set up to attain. Though relevance is still there, management usually seeks to attain effectiveness and efficiency at the expense of economy (World Bank: 2007).
The implementation of the Results Based Management system aims specifically on achieving efficiency and effectiveness and does little on economy; focus here is on the quality of services attained and the rate at which results were attained. This may be at the expense of economy It is also important to note that the focus maybe on maintaining a particular cost (economy) and producing the best output for that cost. In contrast to efficiency, effectiveness is determined without reference to costs and whereas efficiency means “doing the things right”, effectiveness means “doing the right thing”. It is important to note that the priorities of the senior management are established as this will then drive the most appropriate measure to be used and lead to the best effectiveness, efficiency and economic mix.
This mix will change over time depending on the focus of the origin and external tools. Performance management Using the three Es can help improve the performance of the organisation;an organisation should always strive to ensurethat its resources are fully utilised and benefit the community to which the service is offered. It is always a challenge in Zimbabwe in terms of accountability to economy that is efficient use of resources and being accountable on the use (Hlatswayo: 1992). However if local authority implement effective performance tools like the result based budgeting, the balanced scorecard or the activity based costing in relation to the 3Es then business performance can be attained.
The need to fully utilised the available resources available and making sure that each cent is accountable may the best method of using the 3Es. Conclusion The 3Es model is generally an important model that local authorities can use in order improve their performance as effectiveness, efficiency and economy are stipulated result areas that local authorities are supposed to deliver as prescribed by the respective legislation, used with other Performance Management tools like the Balanced Score Card, and the activity based costing, it is able to enhance the performance of an organisation, the major hindering factor as highlighted in the essay is that it is difficult to find the fix because of the challenge in attaining, effectiveness, efficiency and economy at the same time.
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