Performance Management

Conceptual Overview

Performance management includes activities to ensure that goals are being met in an effective and efficient manner; thus, it becomes a mechanism for [Page 1855]accountability. The managerial tradition of the past several decades has focused on performance as a part of management practice in the public sector of Western countries. Governments have supported administrative reforms from old public administration rules and procedures to modern managerial models, within the framework of the new public management doctrine.

As public values, efficiency, productivity, and service orientation have become more important. Bureaucrats have been forced to transform from their traditional roles into more managerial roles and to become more concerned with performance.

Generally speaking, many ideas concerning reform have been borrowed from the private sector. Evaluation has focused more on economic issues than on political ones. Egoistic interests, competition and contracting, cost-effectiveness, and the role of customers are discussed more and more in the core of public domain.

Performance management is important in both the private and the public sectors. By using performance management, governments are searching for better performance in their public sector organizations. The use of market mechanisms in public administration is one means of increasing competition with the private sector and improving the efficiency of public services. Service delivery is expected to be more transparent and accountable. In the redefined and new governance, administrative control is transformed from traditional action controls to modern output controls.

However, performance management is currently faced with many challenges. Sometimes it is difficult to implement in the public sector due to politically unstable and multiple goals, vague outputs, and complexity of services. These challenges raise the question of whether performance management is more a myth than a reality in modernizing public organizations. Another issue is how to reform performance measurement, which should be more than simply accounting exercises. As John Halligan and Geert Bouckaert (2009) ask, is there a gap between rhetoric and practice with respect to performance management?

In the performance management debate, warnings are given about the dysfunctions and unintended consequences of performance management practices that may result in a decline rather than an improvement in the performance of organizations. According to Frank Verbeeten (2008, p. 430), such effects may include the following:

• a.
  growth of internal bureaucracy,
• b.
  lack of innovation,
• c.
  reduction of system or process responsibility,
• d.
  tunnel vision,
• e.
  suboptimization,
• f.
  gaming of performance measures, and
• g.
  measure fixation.

How should we understand performance management? In performance management, targets are defined, expectations are set, processes are measured and evaluated, and, if all these are fulfilled, top management is rewarded. Performance management is both a management tool and an umbrella for a variety of different management techniques. Performance management is connected to several other management techniques, such as the stakeholder approach, a balanced scorecard, and even quality management. In national applications, performance management is called management for results or management by objectives and results. In some cases, the separate nature of steering and managing is being emphasized.

...