Policy Analysis and Bureaucratic Capacity Context, Competencies, and Strategies

Marcus Hollander and Michael Prince have shown that many kinds of analytic work are undertaken in different parts of public service bureaucracies in addition to the work of policy units:

Context, Competencies, and Strategies

Evert A Lindquist and James A Desveaux

December 22nd, 2004

Introduction

The policy literature has done a good job of delineating the full array of possibilities for where policy-related work can be undertaken inside and outside public sector bureaucracies Marcus Hollander and Michael Prince have shown that many kinds of analytic work are undertaken in different parts of public service bureaucracies in addition to the work of policy units: research, policy, planning, evaluation, auditing, operational reviews, quality assurance, financial analysis, management consulting, and information systems.1 John Halligan reviewed the many different sources of policy advice from inside and outside government, which includes internal expertise, other government departments, other governments, consultants, interest groups, think tanks, and universities.2 Jonathan Boston explored issues in “purchasing” policy advice, evaluating

whether internal and external markets could be created to compete for the policy work of departments.3 As Jon Pierre observed, there has emerged a “public market” for the provision of policy advice.4

In delineating these possibilities, however, too much emphasis has been placed on the options available to policy mangers and too little on evaluating the advantages, disadvantages, and fit

of strategies for mobilizing capacity needed to properly direct and staff policy units in

government agencies Casting the policy advice function as a spot market, where analysis is

“purchased” on demand, risks ignoring the critical issue of whether public service institutions adopt the best strategies for securing policy analysis to achieve the short-term objectives of advising governments and ensuring the longer-term advisory capabilities of the public service are robust

This chapter sets out a conceptual framework for evaluating different approaches to mobilizing policy expertise We begin by identifying the different locations where policy analysis is conducted in the public service institutions and where policy expertise is sought from inside and outside government We delineate the objectives that might inform the recruitment of expertise in policy units, making a broad distinction between the knowledge required to inform policy analysis and the qualities managers need to ensure that policy “teams” reach full

potential We identify three recruitment strategies available to departments and policy units:

• in-house systems that rely on attracting talent from outside the public service at the early

stage of careers or from other parts of a department, and then developing and promoting that talent over time;

• internal policy think tank systems that are premised on lateral movement for developing

the skills of policy analysts and rely on regular rotation of staff at all levels of the policy unit, drawing on expertise from other parts of the public service; and

• consulting strategies that rely heavily on a small core of staff to serve as brokers of the

work of external free agents, which includes analysts working for consulting firms, think tanks, universities, or as independent contractors

Each strategy has its own benefits, costs and risks No strategy is superior to the others in all circumstances; the effectiveness of a recruitment strategy is highly contingent on the workflow patterns of policy units and the required mix of generalist and specialist expertise, and on the political and policy challenges confronting a department or program area Each strategy has differing capabilities for responding to error or evolving political demands, and for promoting creativity and knowledge capture Managers and observers should carefully evaluate the costs

of adopting one strategy at the expense of others, but each strategy requires astute management and the retention of “rare talent” if it is to succeed

We conclude by identifying general lessons and probe the implications for improving the policy function at the system level First, leaders may want to establish a centre of excellence

dedicated to developing and deploying specialized and rare talent within the system Second, rare talent must be retained within the public service in order to build trust, deepen linkages, and make them sufficiently interesting to warrant the participation of the best experts at think tanks, universities and consulting firms Third, we warn that attempts by governments to shift responsibilities for the conduct of policy analysis outside the public service are not likely to succeed if the primary rationale is to lower costs Finally, we suggest a program of research that should yield useful results for practitioners and academic observers alike

The Institutional Setting for Policy Analysis

Policy-oriented units are distributed across public service institutions, which are complex bureaucratic systems serving duly elected governments Before considering what types and sources of expertise are sought out to undertake policy analysis and related activities (supply),

we need to understand the diverse locations and general rationale for acquiring it (demand)

The Demand for Policy Expertise

Policy analysis proceeds at several levels inside a public service, even if the ultimate consumers are deputy ministers seeking to best serve ministers as individuals and as a collectivity The immediate demand for policy expertise will emanate from the following locations:

• corporate policy units These units are usually headed by an assistant deputy minister,

and report directly to the deputy minister Their work typically spans not only the full range of department programs but also the range of issues encompassed by the

ministerial portfolio Due to their proximity to the minister’s office and the deputy minister’s office, these units are often involved with communications, consultation, and intergovernmental matters, but should not be confused with corporate services divisions

• sectoral policy units Attached to program sectors in operating departments, these units

are usually led by directors or director generals Their expertise is closely aligned with the programs encompassed by the sector They are more likely to conduct detailed policy analyses and program evaluations, and maintain pertinent data streams

Accordingly, they tend to have more technical knowledge than corporate policy units, although sectoral units do prepare strategic plans, Cabinet documents, and

communications materials

• central agency bureaus Cabinet offices, as well as finance departments and

management boards, have teams of analysts responsible for monitoring and liaising with operating departments on policy and other matters, and sometimes take on design responsibilities Ordinarily, they challenge, facilitate, and coordinate department proposals, in preparation for consideration by ministers and cabinet committees

• functional policy community The horizontal nature of many issues means that public

service leaders increasingly view policy analysts and their managers as a corporate resource and functional community.5 In other words, they are less inclined to see either new or established policy analysts as the “property” of a given policy unit and more disposed to see them as a system resource

The list of locations in which “policy work” gets conducted could be expanded, but for the purpose of exploring the costs and benefits of different recruitment strategies, it is sufficient to deal with those listed above Each location (see Chart 1) presents a different level of analysis and vantage point for considering what skills and knowledge need to be emphasized for

undertaking policy analysis in a public service, and each had different recruitment needs and opportunities

insert Chart 1 about here

The Supply of Policy Expertise

If corporate policy units, program policy units, central bureaus, and the functional policy community comprise the “demand side”, where do governments obtain policy expertise? Here,

we consider where policy managers in all of those locations might seek pertinent expertise, in addition to staff already in place, to deal with short term and longer term needs They include:

• operations divisions Many policy analysts begin their public service careers by

working in operational units delivering or supporting programs for departments They may have been scientists, engineers, IT specialists, or clerks – to name just a few possibilities Such individuals are valuable to policy units precisely because they are familiar with how programs are delivered and have an acute sense of how policies get translated into services They may upgrade key policy skills, either through government training opportunities or their own initiative, but this can also transpire “on the job.”

• sectoral policy units Many operating departments have several sectoral or

program-based policy units depending on its size and number of programs it administers While senior analysts are not responsible for developing a corporate view on policy matters, they often directly brief deputy ministers and ministers because they know the most about certain programs These analysts are strong candidates to become program or portfolio analysts in central agencies, and very promising analysts may move to a department’s corporate policy shop since such units should have expertise spanning the programs comprising the ministerial portfolio

• corporate policy units The responsibilities and depth of expertise housed in corporate

policy units will vary according to how the deputy minister structures a department Some corporate units are analytic powerhouses, containing the most talented policy experts in the department for all program areas At the other extreme, corporate units may oversee, liaise and coordinate the work of sectoral policy units; even if the

"experts" are in the latter locations In all instances, though, corporate policy units should have a department-wide and a portfolio-wide view of priorities and issues, and the capacity to respond to the immediate needs of the minister and the deputy minister, and to monitor and move forward issues throughout the system (which includes

working with other departments and central agencies, and supporting cabinet decision-making) Experienced analysts in these units are attractive to departments grappling with similar challenges, or to central agencies seeking talent to manage

interdepartmental issues across portfolios

• central agency bureaus Policy analysts in central agencies may not possess the detailed

knowledge of programs as analysts working in departments, but they should have a broad understanding of the operational and strategic challenges of departments They have a good sense of how the cabinet decision-making system works and a corporate view of how policy matters are handled across departments and central agencies Thus,

it is this system expertise as well as a central agency perspective on a department or particular programs that may be highly valued by corporate and sectoral policy shops in operating departments and by other central agencies

• outside experts Analytic expertise can be recruited from consulting firms (boutique or

integrated), independent consultants, or academics Individuals or teams can be hired

by the government for specific projects or they may work on retainer, a longer term contractual arrangement There are three reasons for hiring outsiders for policy work: 1) to handle tasks for the department or on overload basis; 2) to tap into expertise that is either not available inside the public service or not available on a full-time basis; and 3)

to undertake tasks the government believes should be fully contracted out

• specialist recruitment programs Some governments sponsor public-service-wide or

department-specific “fast-track” programs to attract talent for policy and management positions Assignments often involve policy analysis responsibilities, and many of the candidates aspire to policy as opposed to purely management careers The assignments are negotiated by the candidate, central agencies, and departments, and at the end of the program, they must compete for more permanent positions.6

A final source of expertise cuts across those previously mentioned: many public service

institutions support exchanges (e.g., Interchange Canada) Staff can take positions in the private sector or with other governments on a temporary basis Sometimes these arrangements involve a “swap”, with staff from participating organizations exchange positions In other cases it might involve only one person Furthermore, this approach can be used within the public service to move staff across departmental or functional divides to broaden horizons and develop skills

Competencies for Well-Performing Policy Units

Policy analysis is often thought of as a generic activity, but addressing complex issues in large public sector bureaucratic systems requires assembling a multitude of skills and expertise, and the right coordinating capabilities Moreover, although it is tempting to see the mobilization of expertise as tapping into a “spot market”, it is intimately connected to recruitment dedicated to building short-term and longer term capabilities In what follows we identify the kinds of skills and competencies that policy managers need to assemble in their units in varying degrees

Identifying the institutional bases for the supply and the demand of policy expertise is one matter, but it is equally important to understand the features of well-performing policy

organizations in a public service context.7 Several features have to do with the expertise, information, and norms that ought to be on tap in the policy unit They include:

• specialized policy knowledge Policy units should have on tap sufficient expertise on the

specific technical issues pertinent to its domain of responsibility The goal here would

be to ensure that the unit cannot be challenged on technical details This imperative will vary according to whether the policy shop is located in a departmental program sector,

at the departmental corporate level, or in a central agency

• access to data streams The quality of policy analysis is significantly affected by the

quality of data available to analysts Policy units need to either generate their own streams of data or access to needed data To the extent that a policy unit has a

monopoly over pertinent streams of data, it has a competitive advantage over other units

in the system

• generalized policy knowledge Specialized expertise and access to good data streams are

necessary but not sufficient conditions Capabilities must exist to develop broader views on policy issues, to identify horizontal linkages across issues, and sometimes to develop more comprehensive as opposed to selective policy initiatives This requires the capacity to coordinate the work of more specialized analysts and producers of data

• system knowledge Policy units may have specialized and generalist policy expertise

which is complemented by good data flows, but they must also have the capacity to work with other units and other departments, and to move ideas and conclusions

through the larger public service and cabinet decision-making system This requires employing officials who can be effective boundary-spanners, who can “work the

system” inside and outside departments

• process skills Policy units do not only design policy, they have to manage consultations

with citizens, handle communications and convey information to the public, and oversee negotiations with other departments, governments, and sectors The ability to anticipate and deal with process issues is increasingly important in modern policy environments.8

• public service norms Cutting across these desired competencies is a more fundamental

requirement, one that is often taken for granted inside central agencies and departments, and that is the need to protect and preserve public service norms such as probity, loyalty, cabinet confidences, discretion, anonymity, and the like

The balance struck among these different competencies will vary according to where a policy unit is located in the public service For example, as we move from a sector policy unit to a department’s corporate policy shop to a central agency unit, the balance between technical expertise/data flows and system knowledge should shift accordingly, and the need for

generalized policy knowledge is probably higher in the leadership of sector units, among all staff in corporate units, and certainly among central agency analysts

Some additional distinctions are in order In thinking about the kinds of skills and knowledge that is demanded by organizations and supplied by individuals, we find it useful to think in

terms of three kinds of expertise: generalist, specialist, and rare talent By generalist expertise,

we mean people with skills, competencies and learning capabilities who can take up new tasks with a reasonably short period of time By specialist expertise, we mean people who have reasonably deep understanding of a field or mastery of a set of technical skills, which requires a longer term investment in training By “rare talent” we mean people who are the acknowledged experts in the field, and at the top of their fields.9 All three kinds of expertise (see Chart 2) can

be found inside and outside the public service

Chart 2

Three Kinds of Policy Expertise

who can take up new tasks within a reasonably short period of time

mastery of a set of technical skills; requires a longer-term investment in training.

As the manager of any sports team will tell you, it is one matter to assemble the requisite talent

to field a competitive team, but it is quite another to ensure that the talent is sufficiently

motivated and coordinated so as to meet maximum potential (see Chart 3) The best teams or work units must also have a degree of resilience, and sufficient adaptability to recognize and to adjust in response to error or inadequate strategies adopted These additional competencies include:

• timeliness This is the imperative associated with policy work from the standpoint of

elected leaders and senior officials If not available when needed, even the best policy analysis or research is effectively irrelevant Obviously, some types of policy work necessarily have longer time horizons, but this suggests the need for ways to tap into the work-in-progress

• quality control The managers of the policy function must be attentive to quality, if the

policy unit and the larger department are to retain the confidence of the minister and deputy minister Policy managers need to monitor and assess the quality of work undertaken by subordinates and outsiders, and to ensure that resources are deployed in the most efficient and effective manner Oversight of quality also pertains to

communicating analysis since even the best work, if not put in digestible form for ministers and deputy ministers, could be ignored

• flexibility Even though specialized expertise can be an important asset, so too is

versatility and flexibility Hiring and then developing a team so that individuals and groups can respond to new demands, entertain new perspectives and approaches, or assist colleagues with overload situations is a critical capacity This capability also encompasses the need on specific projects to work with colleagues in other parts of a department, other departments, and outsiders

• sustainability More generally, all policy work is conducted in the context of limited

resources, and therefore an additional management consideration is whether the talent acquired inside or outside the unit will be available for the longer term, and whether those arrangements are cost-effective This, of course, relates to whether the challenges

confronting a policy unit are of the long-term variety, or if there are one or more

significant projects with time horizons of a few months or, say, two years

• loyalty This criterion goes beyond the manifold concept of public service norms From

a managerial perspective, it matters considerably whether members of a team owe loyalty to the unit itself, so its deliberations and strategies can be kept confidential as needed, and extra effort can be called upon as needed by managers

Chart 3

Recruitment Objectives for Policy Analysis Units

• specialized policy knowledge • timeliness

• access to data streams • quality control

• generalized policy knowledge • flexibility

• system knowledge • sustainability

• public service norms • loyalty

The balance between all of these competencies, whether related to specific policy capabilities

or the management of the function, are contingent on the challenges confronting a department and a policy shop, and on the broader strategies utilized for acquiring and mobilizing that expertise

Mobilizing Policy Expertise: Three Modal Strategies

Organizations can build capacity in different ways Before delving into examples of strategies for doing so, we need to introduce some concepts from the world of sports, since professional and amateur sports organizations exert considerable effort to develop the best teams, and then apply it the world of bureaucratic policy analysis

Sports organizations generally rely on two strategies to develop teams The first is a

combination of “draft systems” to attract or assign promising players to different teams, and

“farm systems” to develop, socialize, and monitor the progress of those players until they take

on “first string” positions; where public service bureaucracy is concerned, we refer to this strategy as “in-house recruitment”.10 A second strategy involves “free agents”, experienced players purchased from the open market, which corresponds in government to experts brought

in from outside a policy unit to take on certain tasks – such talent has not been groomed or socialized inside the unit There are two kinds of free agents that can be recruited to policy units:

• external free agents These consist of policy experts from consulting firms, think tanks,

other governments, or universities from outside the public service These experts provide a range of policy-related tasks, and may be former public servants

• internal free agents This category consists of experts from elsewhere in the public

service There are typically officials either sought by departments, or parachuted in by

central agencies, to trouble-shoot or offer skills and perspectives in short supply

Both kinds of free agents can perform very different tasks for policy units,11 and do so for very short or longer periods of time The tasks may range from conducting selective policy analyses

or think pieces, to undertaking policy research projects or managing significant policy projects, including managing the work of internal and external analysts

We could delineate many different strategies, but for the purposes of teasing out important analytic issues we think it best to identify three modal strategies They include:

• in-house recruitment This strategy relies heavily on identifying and grooming talent

from within the department, and presumes that analysts must have thorough grounding

in the work of the department The great majority of senior policy analysts begin their policy careers in entry-level positions These recruits are drafted either from university drafts, management trainee programs, or from operational divisions Depending on the critical challenges confronting the department, which may require manifestly different expertise or liaising capabilities, senior analysts may be hired on term contracts from other departments or central agencies External free agents may also be retained, but this is done more to cope with overload the work typically involves speech-writing, and narrow and selective analytic or research tasks In short, the full-time policy staff retains primarily responsibility for thinking and analysis

• internal think tank This strategy emphasizes the importance of bringing in fresh ideas

and alternative perspectives into the department or sector, though not at the expense of dealing with the transactional imperatives of the policy unit Many junior analysts are recruited from within the department, but they are encouraged to work elsewhere in the federal public service as part of their career development Likewise, senior analysts are regularly brought in from other departments, and sometimes from outside the public service The goal is to generate new ideas, to take advantage of the latest thinking and techniques, and to challenge program sectors in the department Under this recruitment strategy, generalists with experience outside the departments is balanced equally with technical, specialized expertise groomed from within the department Again, external free agents are used more to deal with overload

• contracting out This strategy presumes that the best way to gain access to best possible

expertise inside and outside the public service, and that the best way to acquire such expertise is through markets and contracts Significant chunks of analysis, research, and sometimes data generation, are contracted to consultants in the private and

nonprofit sector Sometimes the contracts include project management The

recruitment of consultants is driven by a strong view as to the specific products required

by the department A strong, experienced core of in-house staff sensitive to political and operational needs is groomed in order to manage, interpret and challenge the work conducted by the free agents In this strategy, draft choices are more likely to enter into the picture as junior consultants who, once they have proven their skills, may receive more substantial assignments On the other hand, critical in-house recruitment decisions must be made so as to ensure continuity as senior policy staff retire or leave for new positions inside or outside the public service

These “modal” recruitment strategies have been delineated for analytic purposes; with the real

world strategies employed by policy units may not be so stark Indeed, typically policy units use a mixture of recruiting devices, which together implicitly or explicitly constitute a strategy, and which may evolve over time Moreover, in big policy advisory units, different sections may

be characterized by different strategies Nevertheless, the work of policy units can be achieved

in very different ways, and are closely linked to recruitment patterns They provide a useful point of departure for exploring the effects and risks of different recruitment strategies and, as

we discuss in the conclusion, for conducting empirical research

Policy managers and the public service traditionally relied on in-house strategies: recruits start

in entry-level positions and, depending on capability and circumstance, rise in the hierarchy However, in recent years, this environment has changed in two ways First, the incentive system for employers and employees has grown more complex: the advent of more flexible budgetary regimes, new technologies and increasing competition from outside contractors means policy units are increasingly open to influences from the private sector Second, in the context of government restructuring and downsizing, public service leaders must consider what kinds of expertise the government should retain, and how such expertise should be supported Together, these developments have potential not only to affect the size and scope of bureaus, but also to affect the choice-sets of potential recruits and current employees alike

Evaluating Strategies for Mobilizing Policy Capacity

This section sets out a framework for comparing the advantages and disadvantages for the in-house, internal think tank, and contracting out strategies It begins by briefly introducing the many issues that should be considered under the following headings: workflow and

uncertainty; loyalty, security and norms; management capacity; adaptability; and gossip and knowledge capture Then we review each mobilization on its own terms, considering their benefits, risks, and the contexts for which they would be most appropriate

Workflow and Uncertainty Efforts to mobilize policy expertise is best understood against the

backdrop of multiple demands, uncertainty, and resource constraints Here we begin is with

workload patterns and the three critical dimensions are the flow, content, and the predictability

of policy work The aggregate flow of work can be even or it can be uneven, thus leading to peak and non-peak periods of work But the content of work may also change: while the aggregate flow of work remains even, the tasks may vary during peak and non-peak periods A final source of variation derives from the reality that policy managers often cannot anticipate what sort of demands they will have to contend with, nor how long they may have to contend with them

If the work or portfolio of work demanded in different periods varies significantly – the larger the difference, the more likely completely different skills will be required of staff or

contractors.12 On the other hand, how long such shifts will persist, how often the shifts might occur,13 and whether they are predictable are critical questions Predictability in tasks would permit senior managers to hire and contract for the right mix of talent with considerable

confidence If the work is uneven, predictable, workflow, and consists of relatively similar tasks, it can be handled by ensuring there is a sufficient number of generalists and rescheduling staff workload, and by contacting to external free agents as required However, if the tasks and skills required vary significantly, internal and external free agents can handle specialized work

that is not an ongoing core responsibility If the workflow is more or less even, but its content unpredictable, this suggests a somewhat larger core of generalists and a smaller budget for free agents If the workflow is uneven and unpredictable, this may point to a situation of overload and possibly turbulence.14 This suggests a “turn-around” situation for the government and the policy unit in question, requiring “fixers” from elsewhere in the system or from outside the public service

Decisions about how to mobilize expertise should be driven not only by a good sense of the matches between work demands and available skill sets but also by costs and the transaction costs of hiring staff and letting out contracts.15 On the other hand, there are overhead costs and risks associated with grooming internal expertise

Loyalty, Security and Norms Through socialization and monitoring, bureaucratic hierarchies

are often believed to encourage a higher degree of loyalty on the part of employees and offer a higher level of security when giving advice and implementing decisions.16 However, external free agents can provide considerable loyalty and security under contractual arrangements because they must also cultivate reputations for reliability and discretion

Norms inform and guide the work of policy analysts, encompassing perceptions about the critical tasks confronting public sector organizations, notions of the public interest and which groups are relevant stakeholders, planning horizons and the depth of information gathering to inform analysis, and the criteria for addressing alternatives Norms develop at several levels: specific programs; departments or agencies; the entire public service; and the private sector To

be sure, shared norms can ensure high organizational performance, but the question is whether they are congruent with critical tasks and future challenges The norms of a policy unit can be either as an asset or a liability depending on future needs and priorities Different mobilization strategies can challenge, supplement or reinforce critical values and skill-sets

Management Capacity Policy managers must be able to forecast short-term and long-term

priorities, determine what essential capacities are needed to meet those priorities, and ensure that policy work is timely and of high quality This implies leaders with considerable

experience in policy analysis, facility in handling both political and bureaucratic politics, and knowledge of the pertinent policy domains As policy units draw more heavily on advice from outside the public service, this should increase their internal and external coordination costs for

“purchasing”.17 Moreover, heavier reliance on internal free agents or outside contractors to manage or conduct critical policy work, suggests that in-house managerial capacity will be thinner, concentrated in the hands of fewer permanent public servants, and more vulnerable if

“rare talent” leaves

Public servants do “come and go”, but the question is whether policy units can offer sufficient inducements to attract replacements of similar caliber, since highly talented individuals are crucial to ensuring that internal think tank and consulting organization models work In-house strategies reduce, but do not eliminate, this exposure If a unit’s management is weak or if recent recruits are of lower caliber than in the past, this is a recipe for policy units of declining quality