Effective performance management in the public sector?

Impact case of the month: Performance measurement in the public sector

December 21 2021

Does measuring work performance within the Dutch public sector improve effectiveness and efficiency? According to Prof. Dr. Roland Speklé, Professor of Management Accounting & Control at Nyenrode Business University, performance measurement systems actually often have a negative effect on work performance. 'To  do  take advantage of it, managers in the public sector need to look more closely at how they use performance information, taking into account the circumstances.'

New Public Management (NPM) stems from management techniques from the private sector that are being applied to public organizations. The 1980s saw increasing dissatisfaction with the effectiveness and efficiency of the public sector. Bureaucracy and lack of result orientation were seen as impediments to effective government resulting in a decline in service provision satisfaction. Whereas in the 1980s it was thought that the public sector would perform better through NPM, the opposite turned out to be true when Speklé and his co-author Frank Verbeeten (University of Amsterdam) began their research in 2010.

Dysfunctional consequences

Speklé saw his Public Sector MBA students struggle with NPM thinking: "Most are employed as managers in the public sector, where NPM thinking is the dominating management philosophy. However, this clashes with their own ideas about effective management. In fact, the set targets and direction on measurable results forced them in a dysfunctional direction. They felt impeded from focusing on what, to them, were the most pressing policy priorities.

Speklé and Verbeeten's research shows that his students' concerns are widely shared within the public sector. This is not consistent with the benefits of NPM as painted by the proponents of the NPM approach. Speklé's research shows that incentive-oriented use à la NPM can even have dysfunctional consequences and lead to ‘goal displacement’, in which the set targets start to dominate the organization's real goals.

Steering for better results

Speklé and Verbeeten shed new light on NPM and show that there are alternative ways to use management information and to drive for better results. Consider, for example, the exploratory use of performance information. Here, performance information is not used as an assessment tool, but as part of a learning process and as input for an organizational dialogue. Critical questions can be asked about policy and implementation choices, their possible alternatives, and their relative effectiveness.

In short, politicians and policymakers must look beyond conventional NPM thinking to improve effectiveness in the public sector. With their research article, Speklé and Verbeeten were chosen as the winners of the David Solomons Prize (annual award for the best article in Management Accounting Research). They were asked to serve on several performance measurement committees in the Dutch public sector.   

January 4 2022

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