What Drives Government Performance? A Look at the Numbers

20/1/2025

If you’ve ever worked in or around government, you’ve probably heard the debate: what really makes agencies perform well? Is it strong leadership? A solid strategy? More funding? Or something else entirely?

A year ago I decided to dig into the data to find out. Using Spearman’s correlation (S test) and partial correlation (R test), I analysed six key dimensions of public sector performance to see which factors truly drive success, and which ones hold up even when other variables are in play.

My raw data was the 53 published Performance Improvement Framework reviews.

What I found was fascinating: some relationships are deeply ingrained in how government functions, while others depend more on specific conditions. Understanding these connections can help public administrators make smarter decisions, boost efficiency, and ultimately serve the public better.

Key Findings: The Six Dimensions Of Performance That Matter:

Leadership and Strategy Are Strongly Linked

S test: ρ = 0.578 (p = 0.000006) → Strong positive correlation.

R test (controlling for Business Effectiveness): ρ = 0.430 (p = 0.0013) → The relationship still holds.

What this means: Senior leaders don’t just manage day-to-day operations – they shape strategy with ministers. Even when we account for how well an agency is run, agency leadership still has a significant impact on strategic direction and performance. This confirms what many of us have long believed: strong leadership is about more than just keeping the lights on; it’s about setting a vision and aligning teams to achieve it. As I have said before, we don’t pay enough to keep the good ones, and we let them down by not protecting them from the nastier side of politics.

Financial Management Drives Efficiency

S test: ρ = 0.508 (p = 0.000103) → Strong positive correlation.

R test (controlling for Business Effectiveness): ρ = 0.447 (p = 0.0008) → The link remains strong.

What this means: Money matters. How agencies control their budgets has a huge impact on efficiency. It’s not just that well-run agencies tend to have more resources, it is that financial control helps agencies drive better outcomes. When funds are available and allocated wisely, operations run smoother, and services are delivered faster and more efficiently.

Efficiency and Effectiveness Go Hand in Hand

S test: ρ = 0.504 (p = 0.000121) → Strong positive correlation.

R test (controlling for Leadership): ρ = 0.446 (p = 0.0008) → The relationship holds.

What this means: A well-run agency is both efficient and effective. While good senior leadership is important, our analysis shows that efficiency and effectiveness are closely tied even when leadership is taken out of the equation. This suggests investing in tools, processes, and accountability structures over the delivery models can improve performance directly. It also means that as essential as good leadership is, an efficient operating model is likely also effective. The extension of this is that bad leadership will negatively impact operating models over time. Failure in leadership may not be evident immediately, but it will be – eventually.

Service Delivery and Efficiency Are Linked

S test: ρ = 0.475 (p = 0.000324) → Moderate positive correlation.

R test (controlling for Finance): ρ = 0.417 (p = 0.0019) → The link still exists.

What this means: Sure, financial resources help improve service delivery, but even when we control for investment, agencies that focus on service quality tend to operate more efficiently. This tells us that improvements – like community and citizen engagement and tech-driven solutions – can drive efficiency without relying solely on funding. This should be read alongside the significant underfunding in digital assets for several decades.

Leadership Influences Government Priorities

S test: ρ = 0.453 (p = 0.000651) → Moderate positive correlation.

R test (controlling for Strategy): ρ = 0.300 (p = 0.0288) → Still significant, but weaker.

What this means: Senior officials play a critical role in shaping ministerial priorities, even if strategy is the bigger driver. But leaders have the most impact when ministers ensure a clear and coherent strategic framework. Without it, even the best senior official will not be enough to keep agencies aligned with government goals. Strategic planning isn’t a one-time thing, it’s an ongoing process that ensures long-term alignment. Sidebar comment from me: this finding might also suggest that incoherent political strategy will eventually degrade outcomes.

Strategy Drives Business Effectiveness

S test: ρ = 0.449 (p = 0.000752) → Moderate positive correlation.

R test (controlling for Finance): ρ = 0.372 (p = 0.0062) → The relationship remains.

What this means: Even when budgets are tight, a clear and coherent government strategy leads to better performance. This is a big deal – it shows that strong planning and direction can help agencies make the most of limited resources. A well-defined mission and strategic approach ensure efficiency and adaptability, even in tough financial times.

Causality?

Let’s be clear: correlation doesn’t equal causation. But some relationships are stronger than others, and the data tells us a few key things:
✔ Leadership and strategy matter, independently of effectiveness.
✔ Financial resources drive efficiency, even after controlling for confounders.
✔ Efficiency and effectiveness are deeply connected: so it is not just leadership, even though leadership matters.
✔ Service quality improvements contribute to efficiency, not just financial inputs.
✔ Strategy and ministerial coherency is key to effectiveness, even when budgets are tight.

Takeaways

If you’re leading a public sector agency, here’s where I’d suggest focusing your efforts:

• Invest in leadership development. Strong leaders drive strategy and keep teams aligned. Keep a look out for succession. Ensure those who have just started their public service career know what good looks like.
• Make financial management a priority. Money matters, and how you allocate and control it impacts efficiency.
• Focus on internal efficiency. It’s not just about leadership: its about streamlined processes and tools and can lead to better outcomes.
• Improve service delivery through process reforms. It’s not all about funding; better systems and community as well as citizen engagement can boost efficiency. I’m afraid participatory democracy actually improves delivery and thus helps with financial management.
• Align leadership with clear strategy. Without a strategic political framework, priorities can drift, and impact can weaken.

Summary

These findings aren’t new, but they do confirm what many of us have suspected: performance is driven by multiple factors, but some have a stronger causal influence than others. While leadership and financial resources are important, strategy and efficiency are just as critical. Understanding these relationships can help governments make smarter decisions and ultimately serve the public better.