Hector Flores
3/5/2015
PPA 581
Governing By Network
Chapter 6

I. Introduction A. Governing By Network and the Accountability Dilemma
1. Accountability Dilemma –
Accountability dilemma is the difficult challenge of who will be accountable when a problem presents itself in a networked government.
2. Limitations of Traditional Hierarchical Audit and Control Mechanisms:
The key to unraveling the accountability conundrum understands the hierarchy of responsibility. This downfall in this is the time consuming and overreliance of box checking and rule compliance, rather than focusing on making the partnership work. 3. Descriptions and Differentiation of Models
a. Traditional: Finances: Standard, prescriptive, and record keeping. Equity/Quality: Compliance with program rules. Performance:
b. Hybrid/Transitional: Proof of dollars for contracted services only. Rules emphasizing fairness and equity. Performance: Activities. Trust: Medium. Incentives: Fixed Price. Equity/Quality: Rules emphasizing fairness and equity. Performance: Activities Trust: Medium Incentives: Fixed Price. Flexible Network: Proof of performance Equity/Quality:
c. Flexible Network: Finances: Proof of performance. Trust: High Incentives: Penalties and rewards tied to results. Equity/Quality: Service-level agreements. Performance: Outcomes.

II. The Seven Areas Crucial to Accountability

1. Setting Goals: The network must set useful targets to determine what the government initiated networks wants to accomplish. To do this, the network must define the good they want to produce, the service they want to provide, or the goals they want to accomplish.

A. Seeking Input: This is the first step networks must take to align goals and establish clear performance targets. Seeking input, or feedback, helps to avoid a situation in which government sets unrealistic outcome goals that in turn can cause a general lack of acceptance of the goals. B. Pushing Goals down the Network: This is the second networks must take, which is to push goals down the network. The further away a program is from the source of funding the more difficult it is to achieve goal clarity.

2. – 3. Aligning Values, Creating Trust:
Trust is an important factor to have in a network. If there is no trust, have lower costs of inter-organizational exchanges. These costs include procurement, search, and third party monitoring costs. When there is no trust in a network, oversight is high, reaching anywhere from 35 to 40% of economic activity costs in low-trust situations.

A. Contract Oversight vs. Value Equation. if a network is developed based solely on lowest-cost bids and gives little importance on whether the partners have a shared understanding of common values and goals, serious problems can arise.
4. Structuring Incentives: Incentive structuring is an important factor on whether the network fails or succeeds. A. Tie Incentives to Results:
B. Guidelines to keep in mind when structuring incentives:

1. Tie incentives to results, rather than activities.
2. Beware of creaming-the practice of skimming the easiest cases and leaving the difficult ones for other partners to handle.
3. Share the savings gained from operating more efficiently.
4. Seek reasonable performance guarantees to ensure that partners will be accountable for their actions.
B. Beware Creaming: Creaming is the tendency of some providers to compete with each other for the “easiest” cases.
C. Share in Savings: Network architects may opt to negotiate a guaranteed savings level from contractors and then share any additional savings, as an effort to alleviate incentive structure difficulties.
D. Seek Performance Guarantees: A guarantee a specific project or product will perform for a certain amount of years
E. Sharing Risk: Networked arrangements allow financial, performance, and even political risk to be transferred to the private and nonprofit sectors. (1). Unintended Consequences: Sometimes governments transfer