Public sector performance measurement
Performance measurement in the public sector is different from that of the private sec-
tor. They include issues such as:
Democratic decision-making
Democratic decision-making means that many more people are involved in the decision
process and it is not the function of performance measurement to question policy. The
role is more related to highlighting areas where expenditure has not been effective in
achieving a policy aim.
Public accountability
The use of public funds obtained by compulsory levy places a greater responsibility on
policy implementers to demonstrate the effective use of such funds. This differs from a
private sector operation, which involves a much smaller group of stakeholders.
Policy making processes
Making decisions is a slower and more consultative process than in the private sector. It
may take much longer to change the focus of an activity in an attempt to improve per-
formance.
No clear measure of effectiveness
In the private sector, profit generation and levels of customer satisfaction are used as a
proxy or measures of effectiveness. The public sector does not have such an all-
embracing and clearly accepted measure of success. This often leads to the development
of much larger number of performance measures to judge performance in a number of
different ways.
Lack of competition
In public service, there are sometimes limits to the extent to which performance can be
proven, as there is limited competitive pressure for improvement. This situation is
changing in some countries with the introduction of competitive tendering for some
government services.
Difficulties in measuring effectiveness
The public sector deals with a great many social, human and economic issues, which
can be very hard to measure. For example, how do you judge the effectiveness of ex-
penditure of defence activities and equipment? Has the expenditure been effective if
there have been no invasions! This is just as problematic as for things such as healthcare
and education expenditure where it is almost impossible to determine the effectiveness
of different options for service provision, as there are so many non-controllable costs.
Unlimited demands on finite resources
In any country, the potential demand for public services will outweigh the resources
available to fund those demands. Therefore, even measuring performance may sound
futile.