Performance Measurement, Accountability, and Improved PerformanceAuthor(s): Arie HalachmiReviewed work(s):Source: Public Performance & Management Review, Vol. 25, No. 4 (Jun., 2002), pp. 370-374Published by: M.E. Sharpe, Inc.Stable URL: http://www.jstor.org/stable/3381131 .Accessed: 11/10/2012 16:40

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PERFORMANCE MEASUREMENT, ACCOUNTABILITY, AND

IMPROVED PERFORMANCE

ARIE HALACHMI Tennessee State University and Zhongshan University

Duing the past 20 years, performance measurement has become a salient item for governments all over the world. In the United States, the interest in performance mea- surement was demonstrated when President Clinton signed into law in 1993 the Gov- ernment Performance and Results Act (GPRA). Similar legislation can be found at the national and state (provincial) levels in Canada, Australia, New Zealand, and the coun- tries of Western Europe. Reasons for the recent interest in performance measurement include the following:

* a need to review more carefully the allocation of resources due to the inability of many governments to generate new and additional revenues to underwrite their various operations;

* demands by a better educated public for information about the use of taxes in the after- math of scandals concerning waste and corruption;

* the world's evolution into a global village where a report about an alleged practice in one place generates media reports, editorials, and eventually public opinion in favor of imitat- ing the practice;

* the desire of legislatures to reestablish their relevance and credibility after having failed to provide either oversight or solutions to serious social issues.

Examining the implications of these and other reasons for introducing performance measurement as a regular activity at the agency level suggests the existence of two major undercurrents: first, the push to establish greater or better accountability, and second, the drive to improve performance, or productivity. A review of performance measurement writings and GPRA-like legislation reveals an interchangeable and indiscriminate use of the two terms-accountability and performance improvement- for explaining the expected benefits and purposes of performance measurement. For example, Gormley and Weimer (1999) suggest that "the organizational report card is only one of several techniques that policy entrepreneurs may employ in the quest for accountability or quality" (p. 197). But can the same performance measures serve the following two goals: (a) better accountability and (b) improving productivity?

Public Performance & Management Review, Vol. 25 No. 4, June 2002 370-374 ? 2002 Sage Publications

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Halachmi / PERFORMANCE MEASUREMENT 371

Can Measures for Bringing About Greater Accountability of Government Employees

Be Used to Improve Performance?

Measurements for accountability and performance may not be compatible with each other for any of the following reasons:

* Accountability has to do with living up to performance standards that existed when the use of resources/authority was authorized.

* Accountability is first of all about relations: Who is superior to whom? Who is answer- able to whom? What must be reported and who decides it?

* Performance has to do with progress, innovation, and change. In assessing results, move- ment to a higher point on the same curve is acceptable only when a move to a higher curve is not feasible.

* Performance is about management, adaptation, creativity, and breaking away from the past or from the group.

* Whereas accountability is about staying within the four corners of the contract (the enve- lope), performance is about getting outside the box, thinking outside the envelope.

* Performance involves feeling good about alleged results and having a sense of achieve- ment, whereas accountability is about feeling right, safe, and capable of defending an official (formal) record.

* Performance has to do with self-examination and an internal search for insights and rele- vancy, whereas accountability involves external scrutiny and a relatively rigid use of pre- established legal or professional standards.

If this list of assertions is valid, then measurement of performance for accountabil- ity and measurement of performance for productivity may not be the same.

Can Performance Measurement for Accountability Undermine Efforts to Improve Performance?

Performance measurement for accountability may be inconsistent with perfor- mance measurement for enhancing productivity. I suggest the following:

* Performance measurement for accountability attempts to answer the question, "Was it done right?"

* Performance measurement for improved performance is an attempt to answer the ques- tion, "Was the right thing done?"

Performance measurement for accountability is about verification of the bookkeep- ing, whether resources have been used as intended and in the most economic way. For that reason, adherence to agreed accounting standards is a must. Best Value (BV) and Best Value for Money (BVM) are meaningful tools for establishing accountability only when the "books" are not "cooked." Performance data are the evidence to support the claim(s) of alleged achievements so that consumption of resources can be mean- ingfully be related to results. This is the logic of the so-called Service Effort and Accomplishments (SEA) reporting (Halachmi & Bouckaert, 1996).

372 PPMR / June 2002

Performance measurement for performance, however, is about exploration and learning from experience. Performance data are a subject for analysis, but constitute only a portion of the input that goes into the effort to derive the lessons and the ideas to be tested in the future. Benchmarking (comparisons with one's own past, with the best in the "industry," with the best-performing organizations in the sector) is a promising tool for carrying out this effort because it puts achievements in perspective and allows discussion of future actions.

Accountability/Better Performance, Strategic Planning/Strategic Thinking: A Parallel?

For insight into the relationship between efforts to improve accountability and efforts to improve productivity, consider Henry Mintzberg's (1994) description of the relationship between strategic management and strategic planning. In "The Fall and Rise of Strategic Planning," Mintzberg suggests that strategic thinking (the term he uses for strategic management) and strategic planning are inconsistent, although many use the term strategic planning for both concepts.

According to Mintzberg (1994), strategic thinking involves the use of tacit knowl- edge, soft data, and synthesis, which involve intuition and creativity (p. 108). Strategic thinking resembles key attributes of performance measurement. Strategic planning, on the other hand, involves rational and systematic analysis using hard data.

Mintzberg's (1994) notion of planning seems to be consistent with what auditors are looking for to establish accountability. Mintzberg says that planning is "about breaking down a goal or a set of intentions into steps, formalizing those steps so that they can be implemented almost automatically, and articulating the anticipated conse- quences or result of each step" (p. 108). Such an effort is conducive to and consistent with performance audit and thus with the notion of accountability. Thus, strategic planning is conducive to the way mechanistic (bureaucratic) organizations operate.

Strategic thinking is akin to the notion of an organic organization. Organic organi- zations generate random streams of communications. As members of the organization mobilize their collective insights and attempt to deal with an ever-changing environ- ment, multiple and simultaneous activities by members of the organization, interac- tions, reactions, and counteractions create an impression of chaos. To the order- and pattern-seeking auditor, establishing accountability in an organic organization is impossible. To establish accountability, auditors need a clear picture of who makes the decision, who implements the decision, what is the basis for the decision, or what are the functional relations between any achievement and specific organizational actions (i.e., consumption of resources). Without the formalization and the small steps that characterize strategic planning, auditors are at a loss. Auditors and accountants cannot deal with the fuzzy logic that is an essential condition for successful strategic thinking. Thus, the organizational structure and process most likely to facilitate strategic think- ing and enhanced performance may not be consistent with basic notions of account- ability such as transparency, complete disclosure, and minimizing deviations from the approved plan.

Halachmi / PERFORMANCE MEASUREMENT 373

Concluding Remarks

Performance measurement schemes for accountability cannot lead to performance outside the envelope because of its audit characteristics. When performance measure- ment is introduced to boost accountability, managers and their subordinates have dis- incentives to deviate from approved plans, even when such deviation is likely to be in the public interest. Spending much more, or much less, than what was planned opens the door to questions and requires additional work for documenting and justifying such deviation (as illustrated by the case of GPRA and the corresponding guidelines from OMB). Such negative rewards are likely to discourage public employees from taking initiative to make the necessary adaptations to rapidly changing situations or under unforeseen circumstances.

The prospect of additional paperwork discourages deviation and thus strategic thinking, although it may facilitate performance measurement. Valid measurement can become difficult or even impossible if there are midyear changes in agency opera- tions, for example, in administrative procedures or in the rank order of agency priori- ties. Conforming to the original blueprint for action serves accountability. However, the accountability that is obtained by delaying midcourse updates degrades perfor- mance. Allowing activities that are no longer needed to continue just because they were part of the approved blueprint or budget wastes resources. The pursuit of accountability, particularly in a rapidly changing environment, can be dysfunctional for productivity improvement. A GPRA-like performance measurement scheme that uses annual planning and year-end reporting to boost the short-term accountability of public employees can undermine the long-term productivity of the agency.

Nor will measurement for improved performance facilitate accountability. The nature of the measures that are likely to be used when preestablished goals are not pres- ent would not document the attainment of many results, including some undesired ones. From an accountability point of view, the absence of clear objectives prior to the beginning of operations amounts to giving permission to shoot the arrow first and paint the bull's-eye around it later.

In the private sector, improved performance may involve what was labeled by Tom Peters as "skunk-works"-unauthorized use of resources for promoting pet projects. According to Peters and Waterman (1982), tolerating such practices may explain cre- ativity, experimentation, and innovation at 3M. However, such a practice is not accept- able in the public sector because it runs contrary to accountability and the orderly han- dling of public resources. Unauthorized use of resources is not acceptable to auditors or to their master, the Legislature.

Therefore, GPRA-like schemes of performance measurement, where agencies develop plans of action and predetermined indicators of achieved results, may help accountability, but such a process may become an obstacle to innovation. A GPRA- like system can help auditors establish whether resources have been spent as promised and the progress that resulted from using them. However, GPRA-like systems discour- age mid-course corrections, innovation, experimentation, and proactive steps for anticipating and addressing imminent events or trends. The only sure thing about GPRA-like performance measurement schemes that seek to improve accountability

374 PPMR / June 2002

and performance is that they augment the overhead and thus the cost of managing an agency.

This article started by asking whether regular measurements can contribute to better accountability and better productivity. The answer that seems to emerge is that performance measurements can be valuable for both purposes. However, that does not mean that the same measurement schemes can serve both at the same time or just as well.

References

Gormley, W. T., & Weimer, D. L. (1999). Organizational report cards. Cambridge, MA: Harvard University Press.

Halachmi, A., & Bouckaert, G. (Eds.). (1996). Organizational performance and measurement in the public sector. Westport, CT: Quorum Books.

Mintzberg, H. (1994, January-February). The fall and rise of strategic planning. Harvard Business Reviewv, 84(1), 107-114.

Peters, T., & Waterman, R. (1982). In search of excellence: Lessonsfrom America's best-run companies. New York: Warner Brooks.

Arie Halachmi is the recipient of the 2001 Harold Lasswell Award of the Policy Studies Organization and chair of the International Working Group on Public Productivity. Con- tact: ariehalachmi@hotmail. com