Public sector organisations Show
There is a perception that performance in public sector organisations is poorer than in the private sector, both in terms of efficiency and quality of service. Greater
use of targets in public sector organisations
One of the key features of these reform programmes has been the increasing use of performance measures and targets to evaluate all aspects of the performance of an organisation’s activities. Typically, objectives are identified based on the mission statement. Targets are set for each objective. Managers must explain any variances between actual performance and the targets. The targets are normally based on some output of the organisation. Typical targets might be the number of patients treated by a doctor, or the number of passports issued by the passport issuing authority. Qualitative targets may also be used, such as the level of patient care, which could be measured using surveys of patients. This highly rational approach to performance management has its roots in the writings of Drucker and Argenti, who emphasised detailed planning and the use of quantified targets. They argued that this gives greater direction to the management and staff of an organisation. The use of and publication of targets also increases accountability. In the public sector, the managers are the agents, who act on behalf of the principal. The principal would be the general public, although the role of principal is often played by the government on their behalf. Much discussion of accountability focuses on whether or not managers have acted ethically – ie have not stolen the funds provided to them, and can account for their use. An equally important aspect of accountability, however, is how well the agent has performed in terms of efficiency. Linking reward schemes to targets Having such reward schemes is designed to improve the motivation of the management and staff, and it is argued that this improves the overall performance of t he organisation. Difficulties of using targets in the public sector
This final criticism does not appear to have been confirmed by the facts. In the UK National Health Service (NHS), for example, the period from 1999 to 2009 saw a large rise in the use of targets. During this period, the average increase in support staff was 3.6% per annum, while the average increase in total staff was 3% per annum, according to statistics released by the NHS information centre (www.ic.nhs.uk). There was clearly some increase in the portion of budgets spent on managers, but hardly a significant increase. Empirical evidence Another problem is that numerous changes have been made to the practices of setting and monitoring targets over the years, making the picture even less clear. Debate has largely focused on anecdotal evidence rather than on proper studies of the outcomes. Studies into the impact of performance-related reward schemes are fairly few and far between, but do appear to show a positive relationship between the use of performance-related pay and the performance of the staff of the organisation (5). While such studies have shown that individuals work harder, the impact on the provision of services overall is far from certain. Use of benchmarking in public sector
bodies Benchmarking is where one organisation compares its performance in a specific area with another organisation, the benchmark, to identify how much room there is for improvement. It then attempts to implement practices similar to the benchmark in an attempt to narrow the gap in performance. The specific area for benchmarking could be a particular business process – such as inventory control, or it could be a broader area such as 'quality of customer service'. The benchmark could be another organisation, or it could be another department within the same organisation. Seven-step approach to benchmarking
Identifying the performance indicators Regarding differentiation, many of the metrics used would be of a qualitative nature, such as client satisfaction or quality of service. It is difficult to measure these directly due to their subjectivity. One approach is to use customer surveys for these. In attempting to find relevant metrics, benchmarking exercise s carried out in the past by similar organisations can be a useful source. Much information about these is available in accounting and business journals, and online, or by contacting organisations that have already performed a benchmarking exercise. This is easier in the public sector, as the government – as overseer and beneficiary of the benchmarking – can often force other organisations to disclose information. This would not be the case in the private sector. Selecting the benchmark
When using external functional benchmarking, using a similar organisation in terms of objectives and size can make the process easier. It is not necessary then to take into account differences between the two organisations when comparing their performance, and it should be easier to adopt the practices of the benchmark if they are similar. For example, if a school uses a similar school in a different area as a comparator. External functional benchmarking can also be performed successfully using out of category organisations – ie organisations that may be have totally different objectives and even different primary activities. Using such benchmarks will make the process more complex, but may provide the opportunity for an organisation to overtake, rather than simply to catch up with comparable organisations. For example, a public sector logistics department could use one of the private sector international courier companies as a benchmark for its logistics. The most important factor when selecting the benchmark is to identify the ‘best in class’ for the activity or business process being benchmarked. Measuring the performance of the benchmark Much information is already in the public domain. Many organisations publish information about best practice benchmarks for particular industries. Financial reports may provide information about cost efficiency. There may be newspaper reports or analysts’ reports available for larger listed companies. Publicly available information is a good place to start, but it is unlikely to provide all the information required for a successful benchmarking exercise. Another source of information is ‘data sharing’ where other organisations are contacted, either directly and formally, or through professional conferences. This can be supplemented by interviewing of staff at the benchmark. Factors that influence the effectiveness of benchmarking Tillema claims that one reason for the lack of success of many public sector benchmarking exercises is that they focus only on measuring performance against the benchmark. They do not attempt to learn from, and adopt the practices of, the benchmark. Thus, the benchmarking is often a measuring exercise, not a learning exercise. A second factor is the influence of stakeholders. A benchmarking exercise will only lead to improvement s if pressure is put on the organisation from its stakeholders to narrow the gap identified between the organisation and the benchmark. This pressure can come from internal stakeholders, such as supervisory boards, or external stakeholders, such as users of the service. In the case of the Dutch water boards, no pressure had been exerted on the managements of the board, which is why no improvement was experienced. In some situations, benchmarking may lead to economic pressure on an organisation to improve. If poor benchmarking results are published, users of the service may switch to alternative providers. So benchmarking can lead to economic pressure on poorer organisations. In the case of state universities, for example, students have a choice which university to go to, and their choice may be influenced by published results of benchmarking. Such economic pressure only works in situations where users can switch service provider. This is not always the case, and monopoly providers of services will not feel this economic pressure. Another issue is that users may not always understand the results of benchmarking, and their decisions may be based on factors other than the benchmarking exercise – for example, the student that chooses a university based on the better nightlife in the city where it is located, rather than the publicly available results of benchmarking. Dysfunctional effects of benchmarking Benchmarking can also be used to defend rather than improve poor performance. In such cases, management focus on explaining why their organisation performed poorly, citing factors that make their organisation different from its peers. In such cases, the benchmarking leads to little or no improvement in performance. One factor that leads to greater levels of dysfunctional behaviour is where stakeholders misinterpret the results. For example, they do not take account of different operating environments, or different objectives of the organisation and benchmark, and this leads to unrealistic pressure to close the performance gaps. Misinterpretation is less common where the results are only made available to expert stakeholders. Because the expert stakeholders have a better understanding of the performance, and the factors that may differentiate the organisation from its peer s, they will be more realistic in their assessment of the results. This reduces the incentive for managers to manipulate the results. League tables The benefit of league tables is that many different areas of performance are summarised into one final score, showing how well the organisation has performed over all. League tables are also designed to improve competition among the organisations, giving an incentive to the poorer performers to improve so that they move up the table. Common criticisms of league tables are that they apply arbitrary weighting to the various factors that are used in the calculation of the final score. It is also argued that they do not take into account differences between the organisations being measured. In schools, for example, one factor that affects the performance of schools quite strongly is the demographics of the area where the schools are located, with schools in poorer areas typically appearing towards the bottom of the table. Conclusion Nick Ryan is lead tutor for performance management subjects. References
What is the most important downside to using customer surveys for performance measurement multiple choice question?What is the most important downside to using customer surveys for performance measurement? Customer surveys can be expensive to conduct.
What are the disadvantages of performance evaluation?Disadvantages of Performance Appraisal. Prone To Biasness. Some raters may rate one depending on the general impression one gives. ... . Contrast Error. ... . Generalization Tendency Error. ... . Severity Or Leniency. ... . Sampling Error. ... . Regency And Primary Errors.. What is the major downside of using the ranking method as part of a performance appraisal method quizlet?managers set the goals to be achieve. what is a major drawback of using a ranking system to evaluate employee performance? the ranking system is not to the organizations goals.
What are the disadvantages of performance standards?Disadvantages of Performance Management. Time Consuming. ... . Discouragement. ... . Inconsistent Message. ... . Biases. ... . Performance Based Conversations. ... . Targeted Staff Development. ... . Encouragement to Staff. ... . Rewards Staff for a Job Well Done.. |