How to Avoid Four Fatal Flaws When Designing Your Government Performance Management System

Most “Government Performance Management Systems” suffer from serious conceptual flaws that have regularly proven to be fatal. For example, often there are no consequences for “good” or “bad” performance in government. Thus, even a good performance measurement system is a waste of time.  In addition, performance measurement systems in government lack: (a) upfront prioritization of goals and objectives; (b) upfront agreement on how to judge deviation from targets; and (c) focus on the whole of organization.

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Note:  This article first appeared in PATimes, published by the American Society for Public Administration, and is republished here with permission.

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Performance management in government is in vogue. All manner of governments have adopted some form of performance management system. However, in the name of performance management almost anything seems to go.

Alas, most government performance management systems are flawed and a truly robust system is an exception rather than the rule. The list such flaws is too long to summarize here and, therefore, I focus here only on four fatal flaws of such systems.

Fatal Flaw # 1: Lack of an incentive system

Almost all experts agree that a good performance measurement system in government is a necessary though not a sufficient condition for an effective performance management system. As the saying goes – “what gets measured get managed.” But this aphorism is not necessarily true. A performance measurement system with no (or random) consequences is not only a non-starter as a performance management system but also a waste of time and money.

Unfortunately, governments continue to believe that performance measurement is the same as performance management. Consequently, they treat performance measurement as an end in and of itself and they are repeatedly disappointed when performance measurement does not have the desired impact. Performance measurement is merely the starting point for performance management. We need to assign clear upfront accountability for results and design an incentive system that links to those results. By incentive system I do not mean a complicated monetary reward system. An incentive system means that there should be clearly defined consequences (positive and negative), upfront, that flow from the measurement exercise. Without clear assignment of responsibilities, most measurement systems remain an academic exercise. This, then, is the first fatal flaw of most government performance management systems.

Fatal Flaw # 2: Lack of prioritization of objectives and KPIs

Too often, measurement systems list a number of important objectives and corresponding KPIs (Key Performance Indicators) without prioritizing them. At the end of the year, how are we to then judge an organization that achieves 12 out of the 15 targets set at the beginning of the year? Reasonable people would agree that the answer would depend on the relative importance of the 15 targets. If the three targets that were not achieved constitute the core mission of the organization, then achieving other 12 targets may not be that impressive an achievement. Thus, the lack of upfront prioritization of objectives and targets constitutes the second fatal flaw. 

Fatal Flaw # 3: Lack of agreement on how to measure deviation from targets

Similarly, most government documents continue to use single point targets as measures of success. For example, a target for the amount of roads to be built in a year might be, say, 700 miles. What if at the end of the year the actual achievement is 685 miles? How are we to judge performance? In the absence of an agreement on judging deviations from the target, the final say lies with the evaluator. If the evaluator like the evaluatee, she could say it is close enough. Otherwise, she could make a big deal about missing the target. In the absence of an ex-ante agreement on measuring deviations from the target, evaluators have a huge subjective power over evaluatees.

This subjectivity is the bane of public sector management and explains why there is general skepticism about performance measurement exercises in government.  This lack of upfront agreement on how to evaluate deviations from targets is then the third fatal flaw of most government performance management systems.  

Fatal Flaw # 4: Lack of comprehensive evaluation of organizational performance

Finally, Most performance measurement efforts in government are partial and not comprehensive. Either they focus on a project, policy or a few select government departments. In my experience, this approach hardly ever succeeds. Partial approaches are akin to arranging chairs on the deck of Titanic. In a dysfunctional system, looking for pockets of excellence is a futile exercise. In many cases, you can get temporary results by focusing on some part of the organization or even some government departments, but you can be sure, just like a waterbed, that the inefficiency has traveled to another part that is currently not under scrutiny. Even temporary efficiency gains are often a result of the so called Hawthorne Effect – where individuals change their behaviour because they are aware that they are being observed. This temporary beneficial effect is also called the “audit effect.”

For sustainable change in behaviour, a comprehensive, whole-of-government approach is a necessary condition. It is also worth remembering that accountability trickles down and never trickles up. Holding the part responsible is unlikely to make the whole responsible. Whereas, holding the whole organization responsible, will ensure that all parts are also accountable. Thus, performance measurement of only a part of the whole organization is the fourth and final fatal flaw that stymies most performance management initiatives in governments.

For an example of a real-world performance management system that was designed to avoid these four flaws, look at how the Indian government’s system was modelled in recent years.  

Prajapati Trivedi, served as chief performance officer for Government of India from 2009-2014). Currently he is a Senior Fellow (Governance) and Adjunct Professor of Public Policy, Indian School of Business (ISB), Visiting Faculty, Harvard Kennedy School of Government, Harvard University and  Visiting Fellow, IBM Center for the Business of Government, Washington, DC. He can be reached at: prajapati-trvedi@isb.edu