2.

Organisational
Effectiveness
McKinsey 7S Model
Value for Money
 Context of VFM
 Accountability - the need to demonstrate
achievement and provide account ( reliable and
meaningful) of how it came about
 Audit is a means of demonstrating
accountability
 VFM is a part of the audit framework in
the Public Sector
 Formalised in the the Comptroller & Auditor
General (Amendment) Act 1993.
 Concepts in VFM…….

Inputs Activities Outputs Outcomes

(resources) (processes) (provision) (impacts)

Economy Efficiency Effectiveness

 Economy
 Focus = input
 ‘acquiring resource of appropriate quality
and providing service to appropriate
standard at lowest cost’ CIPFA
 IP = only concern €, hours, materials,
 Relative measure - compare to…..
 Limited use on its own as ..no question of
whether objective achieved or how….
 Efficiency
 Focus = process
 ‘doing things well’ ‘doing it right’
 Relationship
between services/good
produced and resources used to produce
them
 Efficiency = Max OP for given IP
Min IP for given OP
 Effectiveness
 Focus = output / outcome
 ‘doing the right thing’
 Effectiveness = key
 On its own ltd as you can do most things if
you through enough time and money at it..
 ‘measures the extent to which OP from a
defined activity achieves the desired result or
policy objectives of the organisation’
 presupposes that policy objectives can be
defined with precision rather than in broad
conceptual terms
 …effectiveness...
 Raises the issue that there are two types of
objective
 output = service produced, result of activity
- intermediate, quantitative, measurable an
d appropriate to objectives.
 outcome = impact, effects OP have in terms
of achieving policy objectives, ultimate
objective is qualitative, subjective
Stakeholders
 Media

Pressure Groups

Analysts

Citizens Body

Staff
Local Legislature

Members