Managing and Measuring Performance in Public and Nonprofit Organizations

An Integrated Approach

Theodore H. Poister, Maria P. Aristigueta, Jeremy L. Hall

• Publisher: Jossey-Bass
• Year: 2014
• ISBN:
  9781118958551
• Edition: 2
• Topic: Education
• Subtopic: Evaluation & Assessment in Education

New edition of a classic guide to ensuring effective organizational performance

Thoroughly revised and updated, the second edition of Managing and Measuring Performance in Public and Nonprofit Organizations is a comprehensive resource for designing and implementing effective performance management and measurement systems in public and nonprofit organizations. The ideas, tools, and processes in this vital resource are designed to help organizations develop measurement systems to support such effective management approaches as strategic management, results-based budgeting, performance management, process improvement, performance contracting, and much more.

The book will help readers identify outcomes and other performance criteria to be measured, tie measures to goals and objectives, define and evaluate the worth of desired performance measures, and analyze, process, report, and utilize data effectively.

• Includes significant updates that offer a more integrated approach to performance management and measurement
• Offers a detailed framework and instructions for developing and implementing performance management systems
• Shows how to apply the most effective performance management principles
• Reveals how to overcome the barriers to effective performance management

Managing and Measuring Performance in Public and Nonprofit Organizations identifies common methodological and managerial problems that often confront managers in developing performance measurement systems, and presents a number of targeted strategies for the successful implementation of such systems in public and nonprofit organizations. This must-have resource will help leaders reach their organizational goals and objectives.

PART ONE
Introduction to Performance Measurement

Performance management—the process of defining, monitoring, and using objective indicators of the performance of organizations and programs to inform management and decision making on a regular basis—is of vital concern to managers in government and the nonprofit sector. The chapters in part 1 discuss the scope and evolution of performance management in these fields and locate it in the context of results-oriented approaches to management. They also convey the variety of purposes that can be served by measurement systems and a sense of why performance management is so important. A crucial point made in part 1 is that performance measurement systems are usually not stand-alone systems. Rather, they are essential to support and strengthen other management and decision-making processes, such as planning, budgeting, the management of organizations and employees, program management, process improvement, grants and contract management, and comparative benchmarking. Thus, it is imperative for system designers to clarify a system's intended uses at the outset and to tailor the system to serve those needs. These chapters also discuss the limitations of performance management systems, as well as the challenges and difficulties inherent in developing them, and they present a holistic process for designing and implementing effective performance measurement systems.

CHAPTER ONE
Introduction to Performance Measurement and Management

Performance management focuses organizations on results through the use of performance information in various decision-making venues. The practice of performance management had its origin in the early twentieth century, and through sporadic and varied implementation efforts, it has appeared in numerous permutations in a variety of settings at the municipal, state, and national levels. In spite of this lengthy history, it has been only since the 1980s that performance management has evolved into a burgeoning field of practice that permeates public and nonprofit administration at all levels and locations around the globe. It has been said that performance is pervasive (Radin, 2006), and that is a fair assessment. This book sets out to provide a clear understanding of the concept and practice of performance management in modern governance, which incorporates the current reality that public goods and services are provided by public, nonprofit, and private organizations and various combinations of these.

The scope of performance management is wide. It has become a central part of governance and decision making at all levels of government—domestic and international—and has begun to permeate nonprofit practice as well. Carolyn Heinrich (2007) refers to the rise of perfor­­mance management as follows: “The rise of the development of performance management systems and practices has been nothing short of meteoric; both nationally and locally, performance management is now a goal or function of most governmental and nongovernmental organizations, and in many countries, legislation and cabinet-level entities have been created to support it” (256).

To extend our understanding, we first situate performance management within the broader field of public management, the implementation side of the public policy process. It is carried out by public servants in local, state, and federal governments in the United States and other governments around the globe. Public management encompasses the work of the bureaucracy, and as such it has increased in size and scope over time. The Progressive movement of the 1920s heralded an era of professional government based on rational principles. One manifestation of that shift was the development of the federal civil service system. The social, economic, and environmental policy programs of the 1960s expanded the scope of public management again. Now government has given way to the broader concept of governance, which takes into account the fact that public goods and services are increasingly delivered by third parties, including private sector firms, other levels of government, and nonprofit organizations (Frederickson & Frederickson, 2006).

Throughout these periods, there have been numerous reform efforts grounded in rationality—attempts to make government decisions and administration less political, and less subjective, through the use of objective decision strategies. Deborah Stone (1997) referred to this as the government rationality movement. But each rationality-based approach could also be viewed as reform oriented, intended to better hold bureaucrats accountable. Program evaluation, zero-based budgeting, strategic planning, and, of course, performance measurement all offer examples of such rationality-oriented reform strategies, though this is only a partial list. As Dubnick and Frederickson (2011) observed, there has been undue emphasis on implementing new reform strategies without sufficient attention to their potential problems. Romzek (2000) tells us that new reform strategies always introduce new accountability requirements that are added to, rather than replace, the old ones. Moynihan (2008) reflects on the relative ease associated with adopting performance measurement symbolically without the substantive commitment necessary to bring about the expected results. Adding a new layer of accountability expectations on top of existing systems without consideration for the integration of the new systems with the old creates myriad complex and confusing accountability expectations for those charged with implementing them. As one such reform strategy, performance measurement has at times fallen victim to the same pressures as other reform efforts.

In recent years, we have begun to develop a better understanding of what is necessary for performance measurement to generate the results it has promised. We distinguish between performance measurement and performance management in the literature and in practice. Performance measurement refers to the collection of data on key performance indicators; it is a relatively simple exercise, though practice has shown it to be difficult for governments with low technical capacity and stakeholder support (Berman & Wang, 2000) and difficult to implement under conditions of goal multiplicity or confusion (Koppell, 2005). Performance management refers to a strategic daily use of performance information by managers to correct problems before they manifest in performance deficiencies. Moynihan (2008), in a seminal investigation into performance measurement efforts at the state level, introduced the performance management doctrine, which offers three salient indicators of the sophistication of a performance measurement effort that characterize a shift from simple performance measurement to performance management: movement away from output measures toward outcome measures, the use of performance information in decision making, and the devolution of discretion to street level managers in exchange for responsibility for agency performance.

The challenge of performance management is thus to demonstrate outcomes resulting from the resources that the program, agency, or organization has consumed to appropriate managers, stakeholders, clients, and citizens. Performance management also strives to improve performance over time by using performance information to identify and correct deficiencies in the production process. The exact users of performance information vary from setting to setting, and so will their information needs, as we will see throughout the book. This implies that performance management systems need to be custom designed according to the purposes they serve. Over time, performance measurement has become further integrated into decision making, with data collected at various points suited to providing meaningful reports to support these purposes at the appropriate times. Poister (2010) advocates for three overlapping transitions: from strategic planning to strategic management, from performance measurement to performance management, and from using such tools independently toward better integration of strategic management and performance management.

As we explore the mechanics of performance management in detail, a number of questions from public management practice and research help to structure our understanding of performance management:

• How does performance management fit within understood accountability frameworks?
• How extensively has performance management been implemented at various levels of government?
• What factors explain when and where performance management is adopted?
• Under what conditions is performance management effective?
• What is the relationship between capacity and performance, and what forms of organizational capacity are necessary to implement performance management effectively?
• What special conditions affect the use of performance management in networked or intergovernmental settings where authority is shared and goal ambiguity exists?

And, of course, the most important question in this field of study is this:

• Does performance management actually improve performance?

Public Management, Performance Management, and Accountability

This chapter introduces the concept of performance management and situates it within the broader field of public management. In the balance of this chapter, we review the history of the development of performance management from its origins to the present. We discuss the current state of performance management in both government and nonprofit sectors and the characteristics that have come to be associated with effective performance management in those settings. We explore the limitations of performance management; present a brief assessment of the major questions that currently motivate research in the field; and conclude the chapter with a quick synopsis of the significant applications of performance management in practice, such as budgeting and grant and contract management.

Performance Measurement and Performance Management Defined

Performance measurement has been defined by several notable scholars. Hatry (2006) considers perform...