Reforming the Bureaucracy in Indonesia: the Quest for Good Governance

1. Reforming the Bureaucracy in Indonesia: the Quest for Good Governance Dr WahyuSutiyono University of Canberra, Australia wahyu.sutiyono@canberra.edu.au International Institute of Administration Sciences Conference Bali, 14-16 July 2010

2. OVERVIEW • What are the impetus of the current reform in the Indonesian bureaucracy? • What approach is used? • What themes and perspectives that have shaped the reform? • What are the challenges of further reform? • This paper is a preliminary study (based on secondary sources) of a broader research project titled “Reforming Central Bureaucracy in Indonesia”. Data collection and its subsequent empirical findings will be undertaken.

3. Bureaucracy - old features Bureaucracy – expectation Legacy of authoritarian Suharto regime - 1998 crisis: • non-transparent processes, • underfunded institutions, • inadequately skilled public workforce and • institutionalised corruption (KKN) -- reflecting a self-serving and opaque administration. Today, Indonesian public institutions are expected to: • secure democracy • support a market economy and • provide good governance The need for reform

4. Public sector reform - Post 1998 Asian crisis • Democratisation program, ‘Reformasi’ agenda includes: • Constitutional reform, • Electoral reform • Strengthening of the legislature • Independence and reform of the judiciary, • Reform of the bureaucracy /public administration • Political and administrative decentralisation, • Reform of the security and armed forces • Counter corruption measures • Reform in the bureaucracy : • Decree by the Ministry of State Apparatus Empowerment (MenPAN) 2002, • Reform agenda - culture of bureaucracy : • Transparent, • Clean and accountable • Service to the public

5. Pilot: MoFinance & Audit Board /BPK

6. Reform in the Audit Board • Organisational level: • Addition of new regional representatives • Refocusing and standardisation of functions • Business process level: • Publications and communication to external stakeholders • Accountability – verified by external bodies and publicised • Performance evaluation by international audit offices. • Position analysis and evaluation, and analysis of jobs • Active involvement of stakeholders • Involvement of external law enforcer • Human resources level: • Employee competence • Clarity of jobs • Recruitment • Training and development • Career path • Integrity & Professionalism • Remuneration

7. Reform in the Ministry of Finance • Organisational level: • Separation, merger, and addition of director generals and other functions • Business process level: • Establishment of standard operating procedures (SOP) • Use of key performance indicator (KPI) • Electronic procurement • Human resources level: • Competency-based training and development • Establishment of assessment centres • Position analysis and evaluation, and job analysis • Open bidding for jobs • Management of employee transfer • HR information systems (SIMPEG) • Disciplinary measures: attendance

8. Analysis • Thematic approach • (World Bank 2008) • Governance perspective • (Edwards & Clough 2007; Farazmand 2009) • Strategic management perspective • (De Cieri & Kramar 2009)

9. 1. The thematic area of reform • Organisational reform : • creating delivery agencies, • process reengineering and organisational restructuring • HRM reform • Measure to track the existing staff • HR info system • Remuneration reform, deal with pay structure • Training and capability building. • Administration reform • To improve operational efficiency. • Demand side reform: • standard of service, focus on the users of services, towards e-government • Overall approach • No downsizing (which usually happens in HR reform) • Less controversial in nature • Direct linkage to other reform areas, esp. • Public financial management • Corruption eradication

10. 2. Governance perspective • Good governance initiatives: • Accountability • Transparency • Performance • Added elements: • efficiency, integrity, stewardship, leadership, • an emphasis on performance as well as compliance, • and stakeholder participation or inclusiveness.

11. Governance Framework of Bureaucratic Reform in Indonesia Transparency Good Governance Outcome Performance Accountability Service to public Performance management

12. Governance & Performance • Systems and structures ( “hard” governance) can provide an environment conducive to good governance practices • Organisational structure, business processes • But it is the acts or omissions of the people (“soft” governance) charged with relevant responsibilities that will determine whether governance objectives are in fact achieved. • HRM: clarity of roles & responsibility, employee performance management, codes of conduct • Culture

13. Pilot initiatives – lessons learned • At different times and in different organisations, different elements will be given emphasis and it is a matter of balancing these elements. • Tensions in attempting to practice good governance principles: • external and internal accountability • accountability and transparency • efficiency and inclusiveness • Factor contributing to achievements of reform • Strong and coherent technical and contextual analysis • Taking a pragmatic and opportunistic approach to reforming the bureaucracy where the institutional environment is challenging • Tangible indicators of success

14. 3. Strategic management perspective -- Further reform • Formulation & implementation of the strategy of reform • Strategic management perspective • Pilot ~ strategy implementation of reform • Strategic management framework • Strategy evaluation • Emergent strategy – post pilot • HR/people factor ( “soft governance” ) in revising the strategy

15. Strategic management process model Strategy formulation Strategy implementation Global environment HR practices Reform of bureaucracy HR needs Organisationperformance Democratic Indonesia Public sector reform HR capability HR actions Poor governance Strategy evaluation Emergent strategies

16. Strategy implementation(adaptation to public sector)

17. Evaluation of Reform Strategy : Soft governance - people factor • Issues with soft governance • HRM system - Overall HRM activities, integrated? • Recruitment - Annual intake answers the need of organisation? • Job evaluation - Integrated with other HR activities? • Remuneration - Linked to employee performance management? • Employee placement - ‘Formasi’ system still suitable? • Performance management – cascaded down to lower level employees? Related to career? Disciplinary action? Related to code of conduct? • Will the intended cultural change be well facilitated? • Will outcome performance be fully achieved? • To what extent people factors: • have given input to the revision of the strategy of reform • Contribute to the shaping of the emergent strategy of reform

18. Further reform • Change name of the ministry in the new cabinet in 2009, to include reformasibirokrasi: • Ministry of State Apparatus Empowerment & Bureaucratic Reform (MenPAN & RB) • Issued by MenPAN & RB in 2010: “Grand Design and Roadmap of the Bureaucratic Reform 2010–2025” • For all government agencies, central and sub-national levels • Linked to the national development plan: • Long-term National Development Plan 2005-2025 /RPJPN • Medium-term National Development Plan 2010-2014 /RPJMN

19. Challenges • Political commitment to continuity of reform • Political leadership • Champions of reform • Former Minister of Finance has left • Issues of multiple agencies of central public service: • MenPAN, BKN, LAN • Social-political issues: • Absorb employment • Cultural challenges • Vested interests

20. Conclusion • Reforming the bureaucracy after authoritarian regime and poor governance • Reform to support democracy and service delivery to public • Overall, positive results from pilot reform • Further reform needs integrated approach to dealing with governance issues • Research Project – next steps: • Data Collection - empirical findings