Performance Management and Why Is It Significant in the Public Sector - Literature review Example

Performance Management and why is It Significant in the Public Sector Name Professor Institution Course Date What is performance management and why is it significant in the public sector? Introduction While it is has been believed that performance management is a contemporary creation, but the records demonstrates that New York Council actually analyzing data and creating objectives to report past activities and project prospect performance in the 1900s, even though the word “performance management” was not utilized until in 1970s (Fryer, Antony & Ogden 2009, p.478). Currently, it is a recognized facet of the public sector management with several journals and books, creating special editions on its topic (Fryer, Antony & Ogden 2009, p.478). From then, the performance language has turned out to be an each day attribute of operations in numerous public sector firms. According to Flynn (2007), the performance language has been related to the setting of indicators or standards to be realized, and auditing of systems of the organization to guarantee conformance. Based on the information, this essay will define what performance management is and analyze why it is important in the public sector. The essay will also highlight its major drawbacks and pitfalls. Performance management definition and overview According to Latham, Borgogni & Petitta (2008, p.389), Performance management is defined as all activities which make sure that objectives are constantly being fulfilled in an efficient and effective way. This aspect first emerged in the UK in 1980s during a period described as Thatcherism. There existed a crisis in the National Health Service in the late 1970s (Boyne & Chen 2006. p.456). For instance, the operations at the hospitals could not take place owing to inadequate funding, there was extensive displeasure with the public services in totality, health practitioners needed more money and the government of the day was attempting to reduce more spending. Verbeeten (2008, p.430) postulates that in reaction to the situation, Conservative governments in the 1980s led by Margaret Thatcher started transforming the public sector permanently. These transformations have continued in the succeeding Labour governments. It should be noted that performance management encompass every aspect of a business. Literature reviews that this aspect is expected in operations management, finance, marketing, economics, accounting, human resource management and organizational behavior of an organization (Verbeeten 2008, p. 436). So as to change the views of the public, different governments came up with legislation and developed the language which was utilized to illustrate the public sector and initiated new concepts like “value for your money” and the “performance measurement” (Fryer, Antony & Ogden 2009, p.431). Therefore, “new public management” came into being (Fryer, Antony & Ogden 2009, p.431). For Performance management to work in the public sector efficiently, various basic premises must be set. They include hiring professional managers; setting standards for performance, focus on consistency of the services, decentralization of work, focusing on the private sector management style and increased prudence and accountability in the use of resources (Fryer, Antony & Ogden 2009, p.432). Hoque (2008, p.469) claims that performance management has been used in several public sector services including healthcare, military, police, public roads and education. Formulating and adopting an efficient performance management system has become a critical part of any current government. Performance management is important in effective overall operations of the public sector organization. Various research claims that after the election of 1997, Labour government of UK which took power, promoted the subject of controlling and managing public expenditure and enhancing public services (Folz, Abdelrazek, Chung 2009, p. 67). This reflected itself into policies, agendas and its practices which were intended to support the public service to create performance indicators to hold the officers accountable. This strategy was undertaken by the labor Government under the banner of “improvement and modernization” (Walker & Boyne 2006, p.372). This approach came with a lot of activities including creating to the development of Public Services Productivity Panel who were given the responsibility of producing a raft of White Paper of addressing health and social services, criminal and welfare justice. The aspiration of the panel was to “advice on methods of enhancing the efficiency and productivity in the public services” (Walker & Boyne 2006, p.377). The panel comprised of a group of public sector and business leaders who ha the responsibility of providing “a new viewpoint on the complex issues which public services faced in their endeavors to raise performance” (Walker & Boyne 2006, p.379). As a foundation for the panel, they concentrated on efficiency in the broader sense to address the economy, effectiveness and efficiency (the three Es) in order that productivity might be described as “the intensive correlation between inputs and the public service results” .The modernization practices was founded on supporting the administration and by decentralizing public services. Walker & Boyne (2006, p.381) argue that there exist four ideal forms which could be applied to explain the conditions of the performance management in nations these experts have studied, including Australia, Brazil, UK, USA Canada, Sweden, Netherlands and Ghana. Bouckaert and Halligan, postulate that there are three key dimensions of the performance management system. These dimensions consist of measurement, use and incorporation that will be designed to different levels of integration and sophistication across four ideal forms; management of performances, performance administration, performance governance and performance management. Because of the size of Brazilian administrative “system”, performance management has been scattered and diverse affair within and across government. With regards to the federal government, Office for Investment and Strategic Planning is the arm of governance in charge of formulating and incorporating white papers on the performance, management, but because of the independence amongst the dissimilar government branches– not to talk about privatization and decentralization initiatives –departments and agencies operating on isolation are capable of implementing performance management systems to fit themselves. Rhodes et al. (2012, p.235) claim that n Ghana, economic and political perspectives for the performance management started in 1992, when Lt. Jerry Rawlings was elected the President after 12 years of long military dictatorship after the 1981 coup, and the launch of National Institutional Renewal Program. During this moment, the economy of Ghana had been considerably stimulated with the rate of growth approximated to be nearly 4% annually (Rhodes et al. 2012, p.242). However, there was, an assumption that the country could perform well economically if it might improve the efficiency of the public sector companies. Similarly, with approval of “good governance” concept and country’s first democratic election carried out in 1992, political atmosphere created citizen involvement, dissimilar from what the country in the past two decades (Ohemeng & Owusu 2011, p.18). It was inside this political and economic platform which NIRP was formed to enable development of the results-based public service which concentrated on the citizen needs, as the clients of the public institutions, and to enhance public service delivery. A Performance management system created during this moment composed of two key components; the institutional and individual dimensions. Ohemeng and Owusu (2011, p.13) argues that the separation was because of the reality that the “final responsibility for efficient management and performance enhancement depended on the civil service organizations and the public servants at individual level but within the institutions”. Importance of performance management in the public sector Currently, most public company managers try to make performance management a top agenda in their operations. Managers are now ready to shift to a more determined program to exploit the recent advancement in the performance management methodologies and techniques which provides increased operational and financial efficiency, productivity and accountability (Fritzen 2007, p.24). As stated before, performance management is important in providing value for money. Folz, Abdelrazek & Chung (2009, p. 83) contend that every government has established various taxes, which they collect from the citizens to help run their operation for public service delivery. Folz, Abdelrazek & Chung (2009, p.77) argue that in return, the public expects quality service delivery, clean town environment, clean water, good roads, quality education and proper security among others. It prompts great value for money concentration management endeavors and resources on the social performances which really of great concern to the citizens. Performance management ensures that these taxes are used as required in the constitution and services are provided as budget without any deviation or mismanagement. Governments have established various bodies and agencies that carry out the watchdog role in ensuring the money can be accounted for (Hoque 2008, p. 474). The oversight institutions include Inspectors General, Ombudsmen, Public Accounts Committees in Parliament, Auditors General, etc. Such agencies assist in monitoring and controlling the ethical conducts of the public officers (Hoque 2008, p 476). Public institutions to be evaluated not simply on their competence to present precise financial records and accounts and to increase and use money compliant with the laws and regulations, but also to present proof for the accomplishment of particular objectives with great stress on the efficiency of utilizing public resources, i.e., to be responsible for the performance (Rhodes et al. 2012, p. 253). The Parliament has the authority to approve taxes and to sanction to expenditures. When a value is provided through services or products, the public feels contented with the work of the public servants and also ready to pay taxes. On the other hand, when the taxes are swindled and used for personal gains, the results are the poor roads, insecurity, unclean water and environment and poor education (Hoque 2008, p.488). Such factors cause discontentment among citizens and in some countries has led to uprising and revolutions. Performance management in the public sector has improved accountability in the operations. It offers comprehensible accountability to public officers and departments for creating changes helpful of the general strategy. Accountability in the public sector has in due course changed from an internally based accountability to parliaments and government supervision institution to an externally based accountability idea towards several external stakeholders like the public service users and the community in general (Fritzen 2007, p.27). Brignall (2008) posit that accountability has transformed from a slim emphasis on the financial accountability to a comprehensive concept of the management accountability via the application of performance management and the performance reporting practices. Performance management has ensured that companies have elaborate financial reporting channels in which the public is informed of how the company has spent their taxes or money (Brignall 2008). The accounting department is often set to manage the finance and the budget of the company and to ensure accountability. However, in most times this is not enough because some accountants also use fraudulent practices to swindle the public companies. As such, government recommends the establishment of the internal audit to uphold accountability and integrity. Performance management system normally ensures that officer of the internally auditor is set to detect and check fraud, appraise internal controls and monitor conformity with government regulation and organizational policy (Brignall 2008). Externally, there are also auditors who put check on public companies’ operation and hold the public servants accountable. The most outstanding office among the external auditors is the officer of auditor general. In Malaysian outlook, as reported in audit Act 1957, the Auditor General conducts an audit to ascertain public money have been employed to for the purposes for which it was appropriated and the services related to those functions were done or used in a resourceful manner with purpose for economy and the prevention of profligacy or waste (Fritzen 2007, p.28). This signifies that instead of simply being a “waste-watcher”, the Auditor General is needed to execute the role of “quality police” to validate the of public service performance. This means that if an audit is done properly, efficiency, cost effectiveness and accountability is achieved. Yang (2008, p.83) argues that in this case, the load of accountability role is charged on every public officer to operate in the interest of the public and compliance with their conscience, with accounts for each matter on the basis of professionalism and success in performance. Performance management creates goals and objectives of what the public officers are expected to do. When employees and supervisors in public service have a clear picture of their specific duties, any uncertainties in the place of work are eradicated. Every person is held answerable for their individual responsibilities and duties. Walker & Boyne (2006, p.384), postulate that Performance Management gives powers to the public servant to think concerning his or her responsibility in the company. Creating clear expectations and goals help in this situation. Employee performance programs must offer for a sense of balanced and credible measures. Balance is important in order that besides measuring anticipated outcomes, the performance structures include proper measures, like the quantity, quality, timeliness, and cost effectiveness. To be convincing, the performance expectations ought to be anchored in job evaluation, specific, specific, understandable, attainable and reasonable, and results oriented goals. Major drawbacks of Performance management With several scandals in the past, governments are currently advising the public servants to run public organizations just the private ones. In the recent past, performance, and accountability have invited public attention due to its obvious significance for the economic performance of public sector organizations (Folz, Abdelrazek & Chung, p.2009, p.69). The news in the recent past has portrayed worrying trend of poor performance and lack of business ethics in the public service. Some of the companies that have attracted the headlines include Enron, WorldCom, Anderson, Qwest Communications and Computer Associates, to name but just a few. Scandals that involved public officials such as corporate failures, Falling stock markets, dubious accounting practices and abuses of corporate power is what we have been treated to (Albrecht & Albrecht 2009, p.28). These scandals have made experts question the effectiveness of the performance management. In a nutshell, performance management faces a lot of challenges. The public sector is normally regarded as political ethics, hence judgment is political in nature (Albrecht & Albrecht 2009, p.41). Yang (2008, p.93) claims that performance management may not be effective because most public officers come to the officer on a political process, meaning they may work leaning on the side of people who elected or appointed them. Those who came with the past regime are normally retired or sacked to give room for new employees who are being politically rewarded. Such situation causes a lot of mistrust among employees and managers. Since a powerful performance management system depends on a trustworthy relationship, it can be very difficult to implement the set goals and objective of the organization (Yang 2008, p. 97). When the junior public officers doubt the integrity and credibility of their supervisors and managers they are likely to implement the goals of the performance management. Some of these managers who normally get political appointments may not have skills and experience. The lack of experience may cause poor communication skills and general incompetence. Performance management goes hand-in-hand with clear goals and objectives. Some public organizations and institutions have no defined goals because they are actually run by unprofessional employees (Rhodes et al. 2012, p.245). In public institutions where there are no established specific objectives and also, their employees are bound not to have any idea of their tasks. In established democracies, government employs professionals and insists on these companies to set clear goals and communicate them to their officers to make performance management effective (Yang 2008, p. 89). For example, an objective of "increase sales" is not just specific, but an objective of "20% rise in sales in three months" gives the public servant an objective they can attain. Under performance management system, staff sometimes competes with one another for a job position, pay and even status (Fritzen 2007, p.29). This could result to backstabbing, blackmailing, failure amongst members of the team to communicate effectively and strong staff rivalry. It may result to a department or team dysfunction, leading to failure to realize the set performance standards. Fritzen (2007) argues that in some cases, managers have the tendency of trusting one staff over the other. This creates distrust and dissension amongst the team members. In turn, some employees will think they are not valued and lose morale and motivation to the work. Another drawback that has affected performance management is lack of conformity on ethics. Several unethical issues that have been witnessed before in the public sector and are confirmation that performance management goals are not anchored on the ethical principles. Albrecht & Albrecht (2009, p.27) argue that the 21st century corporate failures like has been witnessed in Parmalat, Enron, WorldCom, Global Crossing, Adelphia Communications and Boeing has brought heated up debate on the issue with the role of the manager, auditor and any other public officers over the factors like integrity and independence. Since performance management is not anchored on the ethical principles, corporate failure, conflict of interest, incompetent directors and fraudulent accounting practices have made it difficult to achieve the performance management goals (Yang 2008, p.102). Conclusion In conclusion, performance management has been effective in major countries with strict rules and good will to the management. The UK, Ghana, Brazil, USA, Canada, Sweden, and Netherlands are some countries which have implemented ideals of the performance management today has very effective, efficient and accountable public sector. However, despite of the call for overhaul and restructure of the public institution in some developing and developed countries, performance management has faced numerous drawbacks. These drawbacks in the performance management have turned out to be a powerful threat to the new management and service delivery As such, governments must try to separate politics from public service to be able to match there counterparts who are already doing well. References Albrecht, C & Albrecht, C 2009, International ethics, fraud, and corruption: a cross- cultural perspective, Cross Cultural Management Journal, Vol. 16, vol. 3, pp. 25-46. Boyne, G.A & Chen, A 2006, Performance targets and public service improvement, Journal of Public Administration Research and Theory, Vol. 17, No.3, pp. 455-77. Brignall, S 2008, An accounting and finance perspective on performance measurement and management, in Thorpe, R., Holloway, J. (Eds), Performance Management: Multidisciplinary Perspectives, Palgrave Macmillan, New York, NY Flynn, N. 2007, Public Sector Management, Sage Publications, Los Angeles. Folz, D., Abdelrazek, R & Chung, Y 2009, The adoption, use and impacts of performance measures in medium-size cities: progress toward performance management, Public Performance & Management Review, Vol. 33, No.1, pp. 63-87. Fritzen, S.A 2007, Crafting performance measurement systems to combat corruption in complex, multi-stakeholder organizations: the case of the World Bank, Measuring Business Excellence, Vol. 11, No.4, pp. 23-32. Fryer, K, Antony, J & Ogden, S, 2009, Performance management in the public sector, International Journal of Public Sector Management, Vol. 22, No.6, pp.478 – 498 Hoque, Z. 2008, Measuring and reporting public sector outputs/outcomes: exploratory evidence from Australia, International Journal of Public Sector Management, Vol. 21, No.5, pp.468- 93. Latham, G, Borgogni, L & Petitta, L 2008, Goal setting and performance management in the public sector, International Public Management Journal, Vol. 11, No.4, pp.385-403. Ohemeng, F.L.K. & Owusu, F 2011, Developing and implementing an effective performance- based management system in Ghana: one step forward, two steps back? paper presented at the Fifteenth Annual Meeting of the International Research Society of Public Management, vol 13, No.3 , pp.11-45. Rhodes et al. 2012, Current state of public sector performance management in seven selected countries, International Journal of Productivity and Performance Management, Vol. 61 No. 3, pp.235 – 271. Verbeeten, F 2008, Performance management practices in public sector organizations: impact on performance, Accounting, Auditing & Accountability Journal, Vol. 21 No.3, pp.427-54. Yang, K 2008, Examining perceived honest performance reporting by public organizations: bureaucratic politics and organizational practice, Journal of Public Administration Research and Theory, Vol. 19, No.1, pp.81-105. Walker, R & Boyne, G 2006, Public management reform and organizational performance: an empirical assessment of the UK Labour Government’s public service improvement strategy, Journal of Policy Analysis and Management, Vol. 25, No. 2, pp. 371-93. Read More