This chapter emphasises that effective capacity building may start with individual Managing Authorities, but must be supported by including a broader variety of actors as well, including other Managing Authorities, national coordinating bodies and beneficiaries. This is reflected in a series of concrete recommendations for European Structural and Investment Funds management stakeholders at all levels.
Strengthening Governance of EU Funds under Cohesion Policy
Administrative Capacity Building Roadmaps
Report
OECD Multi-level Governance Studies
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Chapter 6. Conclusions and Recommendations
Abstract
Although this project focussed principally on administrative capacity-building actions for Managing Authorities (MAs), the complexity of European Structural and Investment Funds (ESIF) administration is such that MAs have to be seen as one actor in a broader Management and Control ecosystem. Frequently, MAs do not have the legal or institutional authority necessary to make substantial changes to how things are done – from organisational re-structuring and adjusting recruitment procedures and contractual modalities, to investment strategy design and implementation processes, etc. As such, it is insufficient to focus only on MAs on the assumption that they are autonomous actors capable of designing and implementing wholesale changes. The OECD considers that effective capacity building for better ESIF outcomes needs to take into account a much broader variety of actors. In addition, despite legal or regulatory constraints – MAs do have margin for manoeuvre to make positive changes, and often more than they think.
This project highlighted that MAs are working hard, as best they can, often in challenging and unpredictable circumstances. The staff are dedicated and keenly interested in making improvements where necessary. MA leadership is aware of the strategic challenges facing the MAs, particularly ahead of the post-2020 period, even if coordination and communication could be stepped up to ‘surface’ issues sooner with decision-makers. Much of what has been written in this report focusses – necessarily – on the challenges. But the comments from intermediary bodies, beneficiaries and other related stakeholders demonstrated broad appreciation of the role of the MAs in working in difficult circumstances. The OECD wishes to record its thanks and appreciation to the members of the various MAs participating in this pilot, particularly the core project teams, who coordinated the logistics and interviews for the meetings on which this report, the recommendations below, and the individual country Roadmaps are based.
Recommendations for Managing Authorities
Many of the constraints MAs face relate to the regulatory and legislative framework in which they operate. Often, MAs have little say in the institutional structures in which they function. For example, with regards to people management, MAs must comply with broader public sector Human Resource Management (HRM) policies and rules that can limit their abilities to be more agile in meeting work demands. They also operate and implement their Operational Programmes (OPs) within the guidelines established through higher-level objectives and the Management and Control System (MCS), which can affect their ability to modify or adjust priorities and processes according to circumstances.
Yet, while MAs cannot reform legislation, change national priorities, or alter the MCS, they can generate positive change in their administrative capacity to support effective management of ESIF investment opportunities. Doing so, however, may require being more proactive in looking for opportunities to implement changes that are possible. This pilot revealed that, at least in some cases, the inability to implement change was only a matter of perception. For example, MAs should consider change beyond that embedded in legislative reform. It was observed that pilot MAs often propagated the legalistic culture of public sector organisations by only implementing changes mandated through legislation and regulations. In general, however, public sector legislation leaves some room for managerial discretion, the challenge is to find it and use it in ways that encourage innovative thinking. Often what is most needed is internal discussion, consensus and agreement to pilot a new approach, something that MAs may not always feel empowered to initiate. One key lesson is that MAs should not underestimate their “soft power”. They are pivotal actors in ensuring successful ESIF investment in their countries, and their capacity to do so and to push for change should be supported and promoted by actors and stakeholders throughout the system.
The individual country Roadmaps and accompanying diagnostic analysis provide MA-specific recommendations for distinct administrative capacity-building actions to be taken as from mid-2019. The Roadmaps cover operational aspects relating to people and organisational structure, as well as longer-term strategic planning and framework issues.
While the number of MAs participating in the pilot project (five) is limited, making it difficult for recommendations to be directly applicable to all MAs across the EU, these five MAs represent a diverse sample in terms of type of OP (thematic or sector), level of government (national or regional), and years of experience in managing ESIF. This, combined with the participatory nature of the pilot and co-designed approach to creating Roadmaps, means that the recommendations may speak to challenges faced by a wider group of MAs. The recommendations presented for MAs below focus on the first two challenge areas, as framework conditions, the third challenge area, are more difficult for them to directly affect. Overall, the recommendations presented were developed based on the information shared by the MAs and the diagnoses of challenges and practices in each pilot MA, the workshops conducted with each MA, as well as input from experts on ESIF, and desk research. Key inputs that framed the recommendations include:
OECD Recommendation on Public Service Leadership and Capability
OECD Recommendation on Effective Public Investment across Levels of Government and the forthcoming Monitoring Report of the implementation of the Recommendation
OECD Recommendation on Public Procurement
European Commission, Implementation of the Partnership Principle and Multi-Level Governance in 2014-2020 ESI Funds: Final Report
European Commission, Strategic Report 2017 on the Implementation of the European Structural and Investment Funds, COM(2017) 755 final
Recommendations for Challenge Area 1: People and organisational management
To develop a skilled, adaptable workforce with the right mix of competencies for effective ESIF administration, MAs could:
Identify the existing and desired competencies for effective ESIF administration through tools such as the European Commission’s Competency Framework and Self-Assessment Tool, engagement with employees and stakeholders, and benchmarking with other MAs.
Map existing skills and identify strengths and gaps.
Explore how existing tools, such as learning and development modules, focus groups, informal knowledge exchange networks, etc. could inform the development or revision of a competency framework and skills assessment.
To attract and recruit candidates with the right skills to thrive in ESIF administration, MAs could:
Employ additional tools to attract candidates beyond traditional candidate pools, such as through social media, increased engagement with universities and re-branded job descriptions and application portals.
Adjust recruitment processes where possible to test for a broader range of skills and competences during assessment.
Consider how on-boarding processes and induction programmes could be used more effectively to integrate new staff and equip them with the skills to get up-to-speed and operational as quickly as possible.
To improve the long-term and strategic orientation to learning and development, MAs could:
Build an evidence base on skills needs (e.g. for public procurement) through gap analysis (see above) and by gathering actionable feedback from staff at operational levels and management on their learning and development needs.
Place more responsibility on staff for their own career development by broadening the mix of learning options available to them, e.g. classroom-based training, online courses, interactive workshops. The European Commission’s tool to support peer exchange – the TAIEX-REGIO Peer2Peer instrument – could be used to support this.
Align learning and development initiatives with a competency framework and integrate it as part of ongoing performance management and career development processes.
To improve employee engagement and motivation, MAs could:
Build an evidence base through more systematic employee engagement surveys and exit surveys. This should be disseminated to as wide an audience as possible to improve comparability, taking sufficient care to communicate objectives beforehand and gain buy-in from senior management.
Improve communication around key business processes – such as performance management – to improve the availability of information and boost transparency around decisions affecting staff careers such as promotion, access to training, performance-related pay, etc.
Develop more systematic buy-in from senior management and leadership for employee engagement initiatives through periodic “town hall” meetings, discussion groups, as well as specialised training for managers.
To develop strategic workforce planning capabilities to meet the challenges of the post-2020 period, MAs could:
Position Human Resource units more strategically so that they can play a greater role in the achievement of organisational objectives, particularly through the identification, recruitment and development of high-potential talent.
Monitor the impact of HR policies and procedures, gather and review workforce data, and adjust policies where appropriate, including through budgetary and human capital resource re-allocation in line with organisational objectives.
Identify desired competencies and orientate business processes such as performance management and learning and development to improve and reward those competencies.
To ensure that their organisational structure is fit for purpose MAs could:
Determine whether the existing organisational structure and chart responds to the challenges of the post-2020 period and is sufficiently agile to capitalise on opportunities.
Determine the margin for manoeuvre in contexts where rigid legislation makes wholesale change impractical through engaging operational staff and management in a dialogue on resources and business processes.
Identify ways to match workflow with staffing resources by using the possibilities of temporary or short-term contracts more strategically.
To improve internal mobility and better match employees with workflows, MAs could:
Develop a pool of staff with appropriate qualifications, skills and competences able to undertake a short-term secondment or work exchange in a different part of the MA.
Integrate internal mobility to performance management and learning and development plans so it can be used as a tool for managers to develop their staff.
Clearly communicate opportunities, requirements and expectations to all staff and simplify the approval processes for internal mobility.
To improve knowledge management and communication flows, MAs could:
Develop and support communities of practice or discussion groups among staff at the operational level, with participation from the management level where appropriate, to improve knowledge flow where organisational or institutional rigidities are perceived to cause bottlenecks in programming.
Develop an intranet where staff can access information without the requirement to go through more formal channels (e.g. written response to written questions on interpretation of legislation).
Invest time in developing a common culture in how staff use document tracking or other such systems where they exist, as often differences of approach can mitigate the effectiveness of a system.
Recommendations for Challenge Area 2: Strategic implementation of Operational Programmes
To take a more strategic approach to OP planning, programming and priority setting, MAs could:
Examine the impact of each step of the OP implementation process to identify how to manage the OP so that it supports meeting OP and Partnership Agreement objectives, while also contributing to national sector or regional development ambitions.
Set OP investment priorities that reflect national and regional development needs by bringing OP stakeholders into the process of defining and validating investment priorities, to ensure robustness, add to evidence bases and increase potential for response to project calls (through greater “ownership”).
Identify common or complementary objectives between OPs across MAs or among Priority Axes (within an MA) at the start of a programming period and develop project criteria that could contribute to meeting cross-sector/cross-Priority Axes objectives.
Introduce incentives to capture synergies within and across OPs, for example by introducing bonus points for projects that help met objectives in more than one OP Priority Axes or for integrated projects contributing to more than one OP.
To optimise coordination for OP design and implementation, MAs could:
Take stock of existing dialogue mechanisms (thematic working groups, networks, committees, sub-committees etc.) and identify whether they need to be complemented by a multi-stakeholder dialogue body that focuses exclusively on the OP, or one that supports dialogue among the country’s different MAs. Or if current dialogue bodies need to be rationalised and adjusted. Ensure that dialogue mechanisms have clear objectives.
To address information gaps, improve knowledge sharing and expand communication MAs could:
Build a stronger bottom-up approach to information and knowledge sharing throughout the OP implementation system, including by introducing regular interaction opportunities for two-way communication with IBs and beneficiaries regarding changes in regulations, processes or programmes.
Ensure regular and well-structured communication with beneficiaries, including by actively communicating the benefits that the funds offer beneficiaries to realise their development or business goals.
Provide opportunity for citizens to express their opinions and understanding of local investment needs, proposed project results, or EU funds in general.
To effectively build the capacity of beneficiaries, MAs could:
Streamline the process of interacting with and supporting beneficiaries, for example by creating a single point of contact for beneficiaries throughout the project delivery cycle.
Improve the frequency and quality of the guidance and support provided to beneficiaries from either MAs or IBs by developing a comprehensive understanding of their OP’s beneficiaries and their actual capacity at the start of a programming period, and using the identified capacity gaps as a basis for identifying who should help build capacity in specific areas, and how.
Promote regular and constant information exchange with and among beneficiaries through interactive workshops, networks, online tutorials, etc.
Partner with beneficiary-support organisations, such as consultants, business chambers, and subnational government associations to identify capacity needs and deliver relevant workshops.
To actively engage with a broad-base of external stakeholders, MAs could:
Ensure stakeholder engagement is undertaken throughout the OP investment cycle, from the planning and implementation process to the monitoring and evaluation phase.
Build multi-stakeholder dialogue platforms for broader and more effective stakeholder input, such as establishing a cross-sector ESIF dialogue forum with a broad participant base from beneficiaries, other public sector, private sector and civil society bodies, etc.
To better render OP implementation processes more strategic, MAs could:
Expand the channels through which calls are made (e.g. via social media, specific apps, business chamber meetings, professional associations, universities, NGO networks, etc.).
Design a pilot to test new approaches to call processes and project selection.
Create a pipeline of ready projects so that the MA can get them underway as quickly as possible once the new period is launched, and minimise the impact of having to carry projects forward into a new programming period.
To expand performance measurement practices in support of evidence bases and outcome evaluations, MAs could:
Undertake training programmes or workshops dedicated to designing robust output and outcome indicators, data and action-evaluation techniques, and understanding how to apply what is learned to OP design, programming and adjustments. Such workshops can be designed and implemented at a national level for all MAs (e.g. by a national coordinating body in conjunction with a statistical agency) or at the EU level for national coordinating authorities and MAs.
Complement quantitative data gathering with qualitative data gathering, including in surveys, focus group research, and evaluation studies.
Recommendations for national authorities
ESIF investment is a multi-institutional, multi-level endeavour. National level authorities – be they Centres of Government, ministries of finance, of public administration, of regional development, or national coordinating bodies for EU funds – have a key role to play in effective ESIF investment and ensuring the solid administrative capacities of their MAs. It appears, however, that actors often place substantial emphasis on planning how funds should be spent and ensuring compliance with regulations and guidelines and relatively less time taking a more strategic focus on implementation and outcomes. The impact of administrative capacity-building or other support actions may be lost when designed and implemented individually by MAs rather than in broad concertation. In many cases, MAs sit in different ministries from where projects are actually implemented, and therefore their influence can be weakened unless the “implementing ministries” are aware of potential differences in policy and proactively support MAs in their work. In addition, addressing many of the challenges and implementing the potential solutions identified by the pilot MAs with respect to their ESIF administrative and investment management capacity requires support or action taken by national bodies beyond the MA’s organisational structure. Thus, without adequate support, it can be difficult to implement identified capacity building actions, especially in very siloed or hierarchical structures, unless higher-level actors actively promote a strategic partnership with and among their MAs, and between MAs and beneficiaries.
There are a number of issues explored in this pilot that require higher-level support and action in order to be addressed. Among these, the following stand out:
There is a need to support greater innovation in how MAs operate and in the practical implementation of their OPs. Structures and processes that facilitate ESIF administration are designed to minimise risk and mitigate the potential for fraud or error. This is sensible. However, a potential downside to such a risk-averse approach is that MA leadership and staff at operational levels have little incentive to test new approaches. Moving into a new programming period, it would be opportune for national bodies to work with MAs and consider how and where to encourage experimentation and innovation within the bounds of existing – and proposed – legislation and regulations. It would be useful to involve the European Commission in such deliberations, as well. Giving MAs more autonomy to innovate could be a first step to testing potential good practices. For example, if an MA wishes to trial a new way of recruiting staff, there should be scope to trial it under certain time-bound conditions, on a small scale and with appropriate care given to monitoring and evaluating. Successful approaches could be well documented and scaled to other MAs in the MCS and throughout the EU. Risk-aversion can characterise an MA’s approach to project selection and appraisals, as well, as there is often is a tendency to apply funds in ways that mirror past use rather than taking a longer-term more strategic approach. The support for greater innovation in MA operations can also trickle down to beneficiaries, for example by encouraging them to develop investment projects that may be (slightly) more innovative.
Building the administrative capacity of Managing Authorities should be undertaken at the appropriate scale. While much can be done by individual MAs to boost their administrative capacity, there is also a need to consider which actions and initiatives are more effective (i.e. have greater impact) when applied at a higher-level. For example, many of the actions contained in the Roadmaps developed through this pilot may be better leveraged at the MCS level than at the individual MA level, as the implementation could be easier and have greater impact. In this respect, it will be important for national coordination bodies and others to be active partners in the development of Roadmaps and plans given the limitations for individual MAs to build administrative capacity. In some cases, it may be beneficial to coordinate the future development of MA Roadmaps with higher-level bodies (e.g. national coordination bodies). This could help balance stakeholder roles and responsibilities, and encourage synergies and economies of scale for some initiatives that could be implemented and coordinated across multiple MAs. Care should be taken to ensure that such coordination occurs at an appropriate level based on the type of MA – national or regional for example.
Reconsidering the approach to national-level regulations and laws governing ESIF could boost timely investment implementation. Frequently changing regulations governing the use of ESIF can create an unstable investment environment and dissuade potential beneficiaries (particularly in the private sector) from tapping into the funds. The five pilots also showed how these changes were often not well managed in MAs, and therefore created heavy work burdens that slowed processes and reduced organisational productivity. In addition, rules or regulations for ESIF-use that go over and above what is established in EU regulations or national status add to administrative complexity and burden, and can compound the uncertainty associated with controls, verifications and audits. Such uncertainty may also discourage beneficiaries from responding to calls or designing innovative projects. While regulatory changes may be necessary during a programming period, minimising the need would be optimal, and consideration could be given to “grandfathering” rules or regulations for projects already in the OP implementation system, i.e. only applying changes to new projects calls.
There is room to re-evaluate and possibly recalibrate the institutional arrangements for MCS, and Monitoring Committees to make them more fit-for-purpose. The MCS provides the architecture for MA and OP operations. If it is too complex, too rigid, or inappropriate for implementing a particular OP, it can limit an MA’s capacity to do its job. It appears that a significant amount of the administrative burden associated with ESIF stems either from EU or national regulations, or from the MCS in its effort to avoid financial corrections. With respect to project implementation processes, for example, MAs highlight that often the same amount and type of documentation is required of projects regardless of size, value or scope. While the standardisation facilitates higher-level management, there is little room for MAs to tailor responses to specific challenges. Consideration could be given to introducing a greater degree of proportionality in checks and controls, and/or to permitting MAs to adjust procedures according to project size or beneficiary type. This could be developed with a cap or ceiling, permitting MAs to adjust procedures for projects up to a certain value. More generally, bringing MAs together with other key authorities in an MA/MCS dialogue forum or network to identify, discuss, adjust and solve matters inherent to the MCS could be beneficial for all actors, and support taking a more systemic approach to meeting OP and Partnership Agreement objectives. For such dialogue to be genuinely fruitful, however, it requires a shift in mentality about the role of MAs from simply an issuer of guidance or an implementing body to one that can genuinely push for change and take follow-up action. MAs can (and should) use their convening power to consult with stakeholders – within the MCS and beyond, including beneficiaries – to discuss their difficulties and the concrete tools that could support change, including Roadmaps for administrative capacity building.
The need for re-consideration and re-calibration also extends to the practical engagement of the Monitoring Committees. There is significant room for Monitoring Committees to be deployed in a more strategic fashion. Currently, they seem to be fulfilling a compliance function, established because of requirements but often without a clear mandate or distinct role. Their role as a multi-stakeholder forum could be boosted, as could their role in providing “practitioner” or “on the ground” insight into investment needs and priority setting. In addition, they could actively contribute to project selection and support qualitative (and even quantitative) monitoring and evaluation, and to provide input into reporting if they do not already, taking appropriate care to manage potential conflicts of interest. All of this, however, may require reconsidering the Committees, their objectives, structure, and size in order to more effectively deploy them in the ESIF strategic implementation process and support MAs in the management of their OPs.
Greater participation and input from MAs in strategic and operational considerations could be more actively sought or encouraged. Audit procedures, procurement processes, HR rules and processes, organisational structures, and strategic directions are set by higher-level bodies outside of the MCS or MA. These activities fundamentally frame an MA’s daily operations, and represent a significant degree of constraint and/or uncertainty for MAs and their beneficiaries. National authorities may need to work together with national coordinating bodies and MAs to better understand the challenges and identify solutions or common interpretations that facilitate operational improvements and problem solving. In all cases, it is important to ensure that MA perspectives are incorporated into decision-making, as they have strong insight into what is practical and what is not, and how certain changes impact operational delivery. Consideration should also be given to including the beneficiary perspective as well, even if on an ad hoc basis.
Recommendations for the European Commission
There is little doubt that the European Commission’s aims to recalibrate the rules, regulations and practices framing ESIF investment in the 2021-2027 period through greater simplification and flexibility will be welcome by EU Member States and the bodies responsible for implementing ESIF investment.
The information gathered through this pilot highlighted several additional areas where the European Commission could consider how it may best enhance the capacity of Managing and other Authorities to support EU Cohesion Policy objectives. Four in particular, stand out:
Building the administrative capacity of Managing Authorities should be undertaken at the appropriate scale. As discussed in the recommendations for national authorities, there is a need to consider which administrative capacity-building actions and initiatives are more effective (i.e. have greater impact) when applied at a higher-level. For example, many of the actions contained in the Roadmaps developed through this pilot may be better leveraged at the national/MCS level than at the individual MA level, as the implementation could be easier and impact greater. In this respect, it will be important for the European Commission to recognise the limitations for individual MAs, and consider how Roadmaps linked to technical assistance funding in the next programming period can promote an integrated view of administrative capacity building that includes national-level initiatives when necessary and appropriate. The European Commission could consider developing tools to help MAs self-assess their capacity gaps, as well as conduct a pan-EU survey to understand common needs among MAs and potential capacity-building actions.
Managing Authorities could benefit from more targeted support that takes into account the variety of institutional actors and constraints they face. During stakeholder interviews and the workshops conducted with each MA, the OECD observed that not all the MAs considered communication with the European Commission smooth and sufficient. On the one hand, MA staff broadly felt that the European Commission was not always fully aware of the day-to-day challenges they faced in administering ESIF. On the other, the European Commission felt that existing tools available to address some of these issues – such as peer exchange through the TAIEX Peer-to-Peer tool and the Competency Framework – were not yet being utilised to their full potential. Thought may need to be given as to how to narrow this gap. More targeted or more frequent formal and informal dialogue to help national and regional MAs address implementation challenges as they arise, could be valuable. To this point, and as noted in Chapter 4, MAs value informal dialogue in their relationship with the European Commission. A large majority of them find it very useful not only for understanding new requirements but also for the opportunity it affords to give feedback. There is scope, therefore, to complement the formal guidance provided by the European Commission, with increased interaction between its representatives responsible for programming, rules and regulations and the MAs in order to understand the practical challenges MAs face. It is important to ensure that exchange is reinforced at operational levels, i.e. with MA staff who are closest to day-to-day challenges, just as it should occur between senior DG REGIO staff and MA leadership.
National authorities could be further encouraged to consult Managing Authorities in designing the MCS and the processes required to implement OPs. There are a number of issues outside of an MA’s control that can cause delays in programme and project implementation. Changes to regulations or higher-level strategy documents, unclear rules or guidelines, strict or “one-size-fits-all” procedures in an MCS, all contribute to a degree of uncertainty surrounding the use of ESIF financing as well as to programme and project implementation delays. While the European Commission does not control these activities or impose strict rules on how national administrations regulate or structure ESIF management, including for MCS, it does establish the regulatory framework and guidelines for OP implementation bodies (MAs, CAs, and AAs). To make the most of the practical knowledge in MAs, such guidelines could further encourage that national authorities to consult MAs when transposing EU guidelines into national regulations or operational frameworks (e.g. the MCS). Incorporating the MA perspective could offer a practical dimension to how such frameworks may operate in practice and contribute to reducing unnecessary red tape. For example, it could help find ways to work through strict documentation requirements applied to all projects regardless of size, type, value, etc., arriving at more tailored, flexible solutions.
Establishing a forum for exchange among Managing Authorities would be welcome and useful. Given the enthusiasm among MAs to learn from each other, the European Commission should consider how it can structure opportunities to promote learning and cooperation among MAs (national and regional) on a more regular and permanent basis. Building on the Peer-to-Peer learning tool, DG REGIO could spearhead an international forum that provides a mix of exchange of good practice and training at regular intervals (e.g. every 12 or 24 months). This could be a valuable step toward building MAs capabilities to make improvements to their administrative capacity. Knowledge generated from these exchanges should be documented, accumulated and widely disseminated across Member States (including MAs but also relevant national bodies) by the European Commission, through a particular webpage, online brochure, etc. Also to consider is developing a practical toolkit(s) to support administrative capacity building and self-assessment tools for MAs to monitor their progress.