How to measure performance in public-sector organisations

By Tamyko Ysa & Vicenta Sierra

Measuring performance in public-sector organisations has many benefits. It allows managers to set up mechanisms to evaluate, control, budget, motivate, promote, celebrate and improve their strategic decision-making.

Our research in the International Journal of Public Sector Management identifies five core uses and benefits of setting up performance measurement systems in public-sector organisations:

1. Prognosis

One of the main benefits of measuring performance in public-sector organisations is the prognostic capacity of performance indicators. Prognostic measurement tools allow public organisations to improve their productivity and mission effectiveness. They also provide data that make it possible to specify what decisions need to be made to better align strategic activities.

Prognostic measurement tools allow public organisations to improve their productivity

2. Diagnosis

Diagnosis involves identifying problems and attributing blame. Performance measurement systems that target diagnosis can help managers identify best practices and provide rational evidence for selecting what process improvements would be most beneficial to make first.

3. Motivation

Managers in the public sector can use performance monitoring systems that track motivation as a call to arms for improving situations or taking corrective action. This type of monitoring can also facilitate the scorekeeping of service providers, thus enhancing competition among them. Performance indicators targeting motivation also improve judgment and decision-making.

Motivación trabajadores
Public-sector driven participants were mostly interested in improving productivity and mission effectiveness (Photo: Brooke Cagle/Unsplash)

4. Legitimation

Performance measurement systems that target legitimation are used for compliance purposes and to conform with the law. This type of performance monitoring in public-sector organisations can offer credibility with internal and external audiences and implementation as an industry norm.

5. Learning and improvement

Setting up performance indicators that measure learning and improvement levels can be a useful tool for both benchmarking and increasing learning capacity to implement better actions in the future.

Public-sector participants are less interested in measuring performance to enhance competition

Top-ranked performance choices

Which performance indicators are the preferred choice in public organisations? To measure their performance preferences, we divided participants into different groups with public and private-sector experience.

Our results show that participants with public-sector experience preferred performance indicators focused on prognosis. Public-sector-driven participants were mostly interested in improving productivity and mission effectiveness, as well as aligning strategic activities to strategic plans.

One would expect that participants with a market-managerial logic would also favour performance indicators that track productivity and mission effectiveness. However, our findings show an unexpected mixture.

Instead of choosing productivity and effectiveness as their preferred option, participants with private-sector experience preferred performance indicators focused on diagnosis. Their preferred choices were performance indicators that helped them identify best practices and provided rational evidence to help determine what process improvements to make first.

Competition and learning

Our findings reveal that public-sector participants were less interested than their private-sector peers in measuring performance to enhance competition. This difference makes intuitive sense, given the central role of competition in the private sector.

Learning was also rated differently among participants. Compared to their private-sector peers, public-sector participants expressed lower interest in implementing performance indicators to measure learning progress. This low score could be due to the public sector’s stronger attention to accountability, with priority given to other actions such as media attention on public-sector performance rather than learning for improvement.

Surprisingly, like their market-driven peers, participants with a public-sector logic rated legitimation at the bottom of the ranking.

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