Doing Better With Less: Unlocking Efficiency in the UN

Enablers of success in improving efficiency emerge across four areas: leadership, funding, risk management and performance measures.

Strong and accountable leadership at all levels is a key driver of efficiency. A clear vision supported by a coherent efficiency agenda can foster both organisational and system-wide progress. Such agendas should be based on clear concepts. The UNSDG Efficiency Agenda illustrates how a well-defined agenda, backed by high-level commitment, can galvanise action within agencies and encourage inter-agency collaboration. At the country level, effective leadership and governance structures between UN Country Teams and agencies providing common services have proven essential for co-ordinated design, planning, and implementation.⁵⁶ 

Conceptual clarity can support organisational and system-wide efficiency agendas. Beyond positive examples such as those noted in Boxes 6 and 7 above, concepts such as efficiency, cost-efficiency, effectiveness, and cost-effectiveness are not consistently defined or systematically embedded within the strategies, policies and operations of UN entities. Common definitions and measures of success will be key to reducing fragmentation and accelerating progress.

HR-related risks are impacting agencies’ incentives to use shared services, relocate functions or streamline organisational structures. Risks related to job displacement are often mentioned as challenges for both the provision and the uptake of shared services. Clear communication, including on HR-related changes, helps manage transitions smoothly.⁵⁷ The financial impact of job displacement and significant relocation costs associated with building large UN service hubs, based on local labour costs, should also be considered. Restructuring exercises should be supported by clear strategies to mitigate the risk of losing expertise and institutional memory. The impact of significant reductions in junior positions on the average age of the UN workforce, and related implications for harnessing new technologies, should also be examined. 

Reduced control and oversight and related fiduciary risks are impacting agencies’ incentives to use shared services. For instance, OHCHR reported limited control over procurement decisions, discrepancies in rules with UNDP that create fiduciary risks, and a lack of real-time expenditure visibility. As a result, and thanks to its decentralisation process, OHCHR is seeking to internalise these functions, underscoring how current incentives can discourage shared service use.⁵⁸ On the other hand, some agencies cite the risk of adding new oversight and control requirements as a disincentive. Insufficient monetisation of savings to justify investment, agencies already having their own intra-agency shared service, as well as issues with interoperability of information management systems, also act as deterrents.⁵⁹

At the organisational level, there remains a widespread lack of effective systems for monitoring efficiency. In particular, economic efficiency and related concepts are not adequately measured. This shortfall is evident at the corporate level, where indicators and reporting mechanisms for enabling objectives and other efficiency-related initiatives are often lacking. While the UNSDG Efficiency Agenda does provide a methodology, the calculations involved are not always straightforward and certain sunk costs may be overlooked. The challenge also persists at the project level, where efficiency - especially economic efficiency - is frequently assessed inadequately, often only after project completion rather than throughout the project cycle, limiting opportunities to adjust and improve the course of action in real time.

At the system-wide level, inconsistencies in how administrative efficiency and cost management are measured and reported make it difficult to develop a coherent overview. This is particularly problematic when analysing support costs, as the lack of standardisation in cost categories and expenditure items across organisations hampers comparability. Without harmonised frameworks, cross-organisational comparisons risk being unreliable or misleading. There is notable variation in the way organisations handle and present administrative and support expenditures. Some agencies consolidate these costs to maintain consistent oversight, whereas others allocate them across different budget areas to reflect operational priorities. Approaches to cost recovery also differ, with many entities applying distinct rates.⁶⁰

Although guidance exists, the cost-efficiency and quality of shared services have not yet been assessed in a robust manner. Clear evidence on efficiency gains is limited. The challenge of systematic and comparable data to quantify these efficiency gains was also reported in the JIU mutual recognition study. Publicly available data mostly reports on cost savings, which have been positive, but the methodology for calculating both achieved and expected benefits is not explicit. 

Poor quality and sustainability of funding continue to pose significant barriers to efficiency across the system. The scarcity of flexible resources reduces the room for comprehensive structural reforms, strategic workforce planning and continuity of operations. On the other hand, transparent prioritisation has also been lacking. Resource allocation is largely shaped by individual donor priorities, limiting alignment with organisational goals and constraining efficient use of funds. Resource mobilisation strategies to address these challenges, including attempts to diversify the donor base, advocate for reduced earmarking or increase the transparency of core funding allocations⁶¹, have been unsuccessful in building sufficient trust to reverse the overall trend. The Funding Compact between the UN Development System and Member States has not yet delivered the expected changes.

Sufficient resources are needed to set up and maintain shared services. Establishing shared services requires substantial start-up investments that are only recovered in the medium term. Business cases and past experience estimate an average of 18 months to fully absorb the initial costs incurred.⁶² Success also depends on a clear governance model, with agreed cost-sharing and cost-recovery approaches. Service delivery models, whether vertically or horizontally integrated, require a sustainable funding mechanism. A critical requirement is the establishment of a clear and dynamic link between the volume of services delivered and the corresponding income generated.⁶³ For example, the 2021 MOPAN assessment underscored that UNDP’s largest challenge in service provision was its ability to recover the cost-of-service provision.