Skip to Content


Home » Research Projects » Performance, Strategy and Accounting

A balanced view of performance

Could performance management in the public sector be more effective?

The drive to complement financial performance measures with broader measures of performance in the private sector has led to the widespread introduction of a ‘balanced scorecard’ approach. This approach takes the organisation’s strategic objectives as the starting point and creates a broad set of measures linked to achieving these objectives in the following four areas: finance, business processes, customers and innovation. Most performance measurement in the public sector already uses a range of indicators, not merely financial ones. But little research has yet been conducted into the links between strategy, performance measures and accounting in the public sector.

In this study, researchers aim to examine how strategy (in local government and Higher Education initially) is created and how performance measures (both financial and non-financial) are devised to support this strategy. Researchers will also explore whether ideas contained in the private sector, such as the ‘balanced scorecard’ approach can be transferred to the public sector. Also, whether existing approaches within the public sector (such as Best Value in local government) can be applied to other areas of the public sector such as health or education.

What the research means for policy makers and the wider community

Research methods

The project is in two parts. The first is based on four case studies (two from Higher Education and two from local government) exploring the process of developing strategy and performance and financial measures over a nine-month period. These pilot studies will be followed by further case studies in health and central government. Drawing on information from these case studies, researchers will develop a questionnaire for use across the public services to investigate the methods and measures used and their effectiveness.

Further Information: Project Posters

Updated Project Poster 2009

Below is a summary of this project’s provisional findings. It was originally presented as a dissemination poster, which is available here as a pdf document. All figures can be found at the bottom of this poster summary as thumbnails, which one should click to view full-size images. Alternatively, where figures are reffered to in the text, click the linked text for a full-size version.

 

A BALANCED VIEW OF PERFORMANCE?

Background

Performance measures (PMs) in public services have a long history, but have been developed and increasingly emphasised in the recent past, particularly in England (see Figures 1 and 2). Many PMs have been criticised for undermining the overall quality of service in pursuit of narrow targets, while private firms have increasingly adopted a ‘balanced scorecard’ approach, involving a range of measures that include finance, business processes, customers and innovation. But we have limited knowledge of how public service organisations develop and use PMs in practice, or of how far the public sector can learn from private sector PM systems.

Aims

We aimed to:

» investigate the practices of performance measurement, strategy and accounting in two public service domains: higher education and local government;

» improve our theoretical understanding of the way these practices work;

» suggest some practical improvements to performance management, strategy and accounting systems and identify what appeared to be best practice.

What We Did

» We conducted qualitative studies of the use of PMs in four organizations in the south of England (Figure 3), two unitary city local authorities and two universities (one ‘old’ and one ‘new’).

» Within these organizations we analysed documents, attended meetings and carried out about 80 interviews with senior managers.

» We used that information, along with earlier research data, to develop a theory of performance management and pilot a questionnaire that could be used to further this study and extend it to other public service domains.

Provisional Findings

» There were sharp differences between the local government and university case studies, with a more pervasive PM culture observable in local government (Figure 4).

» There were also common features, notably a disjunction between PM reporting cycles, budget and strategic planning.

» Where there was a prevalent PM culture, such as in local government, dysfunctions of PMs for service outcomes were also prevalent reflecting a lack of useful outcome measures for management to focus on.

Figures

Click on the figures to enlarge

goddardfig1.jpg goddardfig2.jpg goddardfig3.jpg goddardfig4.jpg

Other Project Outputs and Related Webpages

Project page on the ESRC Society Today website

April 2007: Performance, Strategy and Accounting in Local Government and Higher Education in the UK, Public Money and Management, Volume 27 Issue 2.

Research Team

Andrew Goddard

Andrew Goddard

Andrew Goddard is Professor of Accounting in the School of Management, University of Southampton, where he is also Director of the Centre for Research in Accounting, Accountability and Governance (CRAAG). His research interests lie in public sector accounting. He has recently undertaken research in the areas of accounting, accountability and governance in local government, development of the accounting profession and practices in the public sector (his paper was runner-up for the Mary Parker Follett Award) and accounting in Universities, NGOs and religious organisations.

Tel: 023 8059 3067
Email: arg2@soton.ac.uk

Martin Broad

Martin Broad

Martin Broad is a lecturer in Management Accounting within the School of Management at the University of Southampton. His work to date has concentrated on the development of accounting information systems within Higher Education Institutions and his PhD was gained in this area in 2001 from Bath University. He has also project managed the implementation of the Transparency Review in his former University and is a Chartered Management Accountant.

Email: M.J.Broad@soton.ac.uk