Does performance measurement improve public sector performance? A case of Australian government agencies

The paper investigates whether performance measurement drives performance improvement in Australian government agencies. Because the answer to such a question is rarely unconditional, contextual factors such as jurisdiction and type of organisation are considered. The paper uses documents such as budgets and annual reports of nine government agencies in three Australian jurisdictions to analyse how results against targets influence subsequent measured performance. It finds that performance measurement does not drive performance improvement for the agencies studied. The paper also explores two types of mechanism by which performance measurement might improve performance in Australian government agencies. One mechanism is that setting targets focuses effort leading to improved performance. A second mechanism assumes that policy intent plus resources leads to good performance measures, which produces better information and decisions and hence higher performance. No discernible impacts of these mechanisms on performance improvements in these agencies were observed. A systems-based approach to understanding the forces acting on managers and organisations showed that the mechanisms described above were less effective than countervailing influences that tended to derogate from the use of performance measurement.