Performance management practices in public sector organizations: Impact on performance

Abstract

Purpose: The aim of this study is to investigate whether performance management practices affect performance in public sector organizations. Design/methodology/approach: Theoretically, the research project is based on economic as well as behavioral theories. The study distinguishes amongst quantitative performance (efficiency, quantities produced) and qualitative performance (accuracy, quality, innovation and employee morale) and uses survey data from 93 public sector organizations in the Netherlands. Findings: The research shows that the definition of clear and measurable goals is positively associated with quantity performance as well as quality performance. In addition, the use of incentives is positively associated with quantity performance yet not related to quality performance. Finally, the effects of performance management practices in public sector organizations are affected by institutional factors. The results suggest that the behavioral effects of performance management practices are as important as the economic effects in public sector organizations. Research limitations/implications: All limitations of survey research apply. The survey is based on public sector organizations in The Netherlands; findings may not be transferable to other countries. Practical implications: The joint introduction of performance management practices may provide an opportunity to increase quantity performance yet may have no impact on quality performance. Originality/value: The paper responds to previous calls in the literature to use quantitative research methods to generalize findings from previous case studies. Also, the paper empirically tests the impact of performance management practices on performance, an area that has attracted scarce research attention.