Performance Management and Public Service Improvement

This report has been prepared for the Commission on Public Service Governance and Delivery. It draws together research from around the world to address four questions that are directly relevant to the Commission’s work: what is performance management; does performance management lead to improvement in public services; what kinds of performance management are most effective; and in what circumstances do performance management systems work best?

The evidence points to four main conclusions:

1. Performance management can improve the effectiveness of public services. They also have a positive impact on outcomes for service users.
2. There is less hard evidence that performance management produces efficiency savings, so alternative means for promoting cost-cutting innovations may be required.
3. Performance measures imposed at the field level seem to be the most effective, so long as there are sufficient comparator organizations to allow competition and comparative learning between organizations.
4. Performance management seems particularly well-suited to delivering improvement in performance indicators which have a high degree of public acceptance, such as exam results and hospital waiting times. But its effectiveness is influenced by other factors including organizational culture and leadership.

These findings have four important implications for policy makers in Wales:

• Policy makers need to ensure that performance management systems enable Welsh councils’ performance to be compared over time, between authorities, and with similar organizations elsewhere.
• Wales should make more use of approaches such as benchmark competition.
• Policy makers need to consider alternative means for promoting cost-cutting innovations. This does not imply that large-scale restructuring is the answer. Rather, it suggests that techniques focused specifically on capturing efficiencies, such as business process re-engineering, may be needed.
• Performance management does not operate in a vacuum. It is important that policy makers encourage stakeholder involvement, system maturity, leadership support, management capacity, employee involvement, innovative cultures and goal clarity because these increase the effectiveness of performance management.