Performance Management in the Public Sector

Transcription

1 Performance Management in the Public Sector Past Experiences, Current Practices and Future Challenges Plenary adress: 2005 AFAANZ Conference, Melbourne Sven Modell Stockholm University School of Business Sweden Outline Background: : New Public Management reforms. Early implications for performance management. Emerging critiques and research traditions. Current trends and research opportunities. Policy implications. New Public Management Reforms since the 1980s Response to fiscal stress and the myth of public sector inefficiency. Emulation of private sector practices. From political intervention to managerialism. New Public Management: Key Control Features From centralized planning to devolved, bottom- line accountability. From input control to performance management. Deregulation and decentralization. Increasing reliance on market mechanisms: purchaser-provider provider splits, competitive tendering, contracting out, privatization.

2 Early Implications for Performance Management (1) Increasing emphasis on Management by Objectives/Managing for Results. Examples of reforms: - Next Steps Initiative (UK) NHS internal market (UK) The State Sector Act/the Public Finance Act (NZ) 1988/89. - Government Performance and Results Act (US) MBO in central government (Sweden) Early Implications for Performance Management (2) NPM reforms often couched in 3E rhetoric: - Economy (inputs) - Efficiency (outputs/inputs) - Effectiveness (outcomes) Survey evidence typically suggests an emphasis on the two former Es in organizational control practices. Early Implications for Performance Management (3) Reasons for this narrowing of the notion of performance: - Technical measurement problems and costs. - Lack of political and managerial interest. - Lack of user/citizen mobilization. - Market pressures for financial information (product costing). Can Value for Money Auditing Remedy this? VFM advocated as a holistic approach concomitantly considering all of the three Es. But comparison of VFM audit practices in five OECD countries (Pollitt et al., 1999) revealed: - limited attention to outcomes,, and - a predominant focus on good administration and management practices.

3 The Research Frontier in the mid-1990s Predominant focus on technical issues (definition and measurement of public sector performance). Managerialist/instrumental emphasis despite early calls for wider stakeholder approaches (e.g.,., Pollitt,, 1986, 1988). Is the public sector providing a leading edge on performance measurement issues (cf. Lapsley & Mitchell, 1996)? Emerging Critiques (mid- to late 1990s) Performance measurement and control practices overly accounting- and efficiency- centred. Performance reporting proliferates but is too fragmented and loosely coupled to strategies and objectives. Outcome and effectiveness concerns and the wider public interest are (still) neglected. Emerging Research Traditions Multidimensional stakeholder approaches (e.g.,., Ballantine et al., 1998; Kloot & Martin, 2000). Normative calls for a balanced scorecard approach (e.g( e.g.,., Chow et al., 1998; Forgione, 1997; Kaplan, 2001). Institutional approaches (e.g.,., McKevitt & Lawton, 1996; Brignall & Modell, 2000; Modell, 2001, 2003, 2005). The radical learning approach (e.g( e.g.,., Johnsen, 1999; Meyer, 2002). Is Performance Measurement Proliferation a Problem or Solution? Stakeholder approaches: proliferation reflects multiple stakeholder requests.. The managerial task is to arbitrate between such requests. The balanced scorecard approach: proliferation implies information overload. Selectively integrate indicators into unified strategic system to balance the organization.

4 Is Performance Measurement Proliferation a Problem or Solution? The institutional approach: proliferation reflects conflict between symbolic and instrumental logics. Proliferation and loose coupling a solution to avoid disruptive conflicts and stabilize the organization. The radical learning approach: proliferation reflects ongoing experimenting. Stability in performance measurement a potential sign of routinization and perverse learning. The Balanced Scorecard as Emerging Performance Management Myth The balanced scorecard promises to resolve the paradox of concomitant proliferation and narrow focus on financial control. This is potentially hampered by the ambiguity inherent in the technique. Framing of such ambiguity may require social re-construction of the balanced scorecard (Aidemark,, 2001; Modell,, 2004). Current Reform Trends From competition to collaboration. Citizen orientation customers without markets? Enhanced emphasis on relative performance evaluation: : league tables,, rankings, benchmarking. Growing attention to inter-organizational coordination needs. Towards a more centralized governance model to facilitate lateral performance management and outcome control? Illustrations from Swedish Central Government Long history of autonomous government agencies. MBO introduced in 1988, but only slowly replacing bureaucratic governance model. Reform of government offices in 1997 to improve policy coordination. Enhanced citizen/customer customer orientation since But still limited emphasis on outcomes.

5 Illustrations from Swedish Central Government Swedish Tax Authorities: : from efficiency of taxation to citizen satisfaction with tax services. Student Financial Support Board: : from short- term emphasis on student service to strategic long-range planning to meet outcome objectives. National Bureau of Statistics: long tradition of product costing and quality control, but considerable problems of rationing statistics. Current Research Opportunities Does the new reform climate imply a growing emphasis on managing outcomes? If so, how is this reflected in the evolution of performance management techniques? Do lateral performance management techniques stimulate or impede coordination and learning? How are technical and social factors interlinked in the continuous (re-)construction of performance management? Policy Implications Reconciling hierarchical control models with lateral performance management. Enhanced focus on outcomes may require closer interactions with academe! Treat performance measurement as ambiguity-framing and/or learning mechanisms rather than rational instrument for control!