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Tony Boland and Alan Fowler: School of Management, University of Newcastle upon Tyne, UK
Introduction
Although the measurement of performance in the public sector is relatively new, a substantial body of literature on performance management has developed since the late 1970s, encompassing terms such as performance measures, performance indicators, performance appraisal and review, value for money and, more recently, quality assurance. This literature has mirrored a parallel development in which the language of performance has become an almost everyday feature of work in public sector organisations, in some form or another. Similarly, a new "industry" has developed within the public sector which is concerned with collecting, reporting, and appraising organisational performance (Holloway, 1999; Rouse, 1993, 1999).
Public sector organisations are differentiated in comparison with their commercial counterparts in the private sector. There is no profit maximising focus, little potential for income generation and, generally speaking, no bottom line against which performance can ultimately be measured. The vast majority of public sector organisations still generate most of their income from the State, and have to account to several stakeholders. Consequently it was once, and not that recently, considered impossible to measure performance in the public sector.
The first attempts at performance evaluation and review were associated with the failed attempts at large scale strategic planning in the 1970s, and it was not until the appearance of organisational and managerial reforms introduced by the Conservative Governments of the 1980s and 1990s that public sector performance measurement became firmly established. Indeed, it is one of the underlying arguments of this paper that, in relative terms, performance measurement is still in its infancy (or at least, its adolescence). Consequently, the approaches used are still in need of further investigation and development, particularly in terms of understanding the resultant action arising from the measurement and evaluation process.
Initially, attempts at evaluating public sector organisational performance centred on the assessment of value for money. This was normally conducted by external auditors through scrutinisation of agencies' accounts. Gradually, a whole range of measures and indicators of performance arose throughout the whole public sector, in an attempt to identify examples of good and poor resource usage. More recently, the language of performance has been associated with the establishment of standards to be achieved,...