In this article, we take a closer look at performance management in a public Leadership Pipeline framework. The article presents a definition of performance management and explores why performance management has flourished in the public sector in the years following the financial crisis. We also ask whether performance management is a good answer to the current efficiency challenges seen in the public sector.
What is performance management?
The basic aim of performance management is to increase the focus on value-creating behaviors that are aligned with the core mission. This is done through a variety of leadership and management initiatives such as setting organizational, departmental and individual performance goals, performance agreements, performance contracts, performance appraisal systems, systematic use of scorecards, performance pay and career paths - all with the common purpose of increasing organizational effectiveness (Biron et al., 2011).
We define performance management as the management discipline that deals with setting goals, monitoring and documenting results and behaviors. This definition highlights three key purposes of performance management: learning, managing and controlling in organizations (Van Dooren et al., 2010). Balancing these three purposes is central to organizations - but in practice, the three purposes often end up in conflict or imbalance. From this perspective, the Public Leadership Pipeline, with the ambition to create a coherent value chain of good leadership across the organization, can be understood as a leadership model that can embrace the discipline of performance management.
Why focus on performance management?
Performance management is not a new management discipline - it has been used in both public and private organizations for more than 25 years. However, the use of performance management has been greatly intensified in the public sector (Majgaard, 2013). In the years following the financial crisis, there has been an increasing tendency to focus on efficiency improvements through the management of goals and performance (Heeager & Olesen, 2014; Majgaard, 2013). Greve & Ejersbo (2013) write that the purpose of public sector management in Denmark has so far been to improve and renew the quality of the service provided to citizens. This has changed to some extent in recent years, and now "[...] it is now about simply maintaining the level of service and doing so with fewer resources in the future" (p. 3). The trend towards increased focus on performance management can be seen, for example, in the central government administration, where the Agency for Modernization published a policy document in January 2015 that sets out a "target picture" for good employer behavior in the state, and which "[...] is about formulating clear strategic goals for the daily work in a way that makes sense for the individual employee" (Moderniseringsstyrelsen, 2015, p. 2). Thus, there is an increased focus on making performance management meaningful for public employees - but can performance management actually solve the efficiency challenges in the public sector?
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Is performance management the answer to the efficiency challenges in the public sector?
Despite a number of problems and challenges with performance management and results-based management, there seems to be a consensus that performance management is at the core of public management (Talbot, 2010; Van Dooren & Van de Walle, 2008). Overall, Greve & Ejersbo (2013) state about the performance management efforts in the Danish public sector that "[...] there have been significant effects of the efforts on performance management, management and personnel, market-based management, digitalization and reforms" (Ibid., p. 3).
In isolation, the answer to the above question is positive. Yes, performance management is potentially a good answer to the efficiency challenges in the public sector, especially if performance management is implemented with a consideration for the specific culture and core mission of the organization. The effect of performance management is dependent on a number of specific organizational factors such as communication to employees, motivation and implementation of the strategy. Similarly, Pulakos and O'Leary (2011) conclude that performance management can potentially reap a number of efficiency gains and create positive energy and engagement as a consequence of improved performance. However, they emphasize that in the worst case scenario, performance management not only risks failing to deliver these results, but can also have decidedly negative consequences for the organization:
"Performance management done effectively clearly communicates what is important to the organization, motivates employees to achieve ambitious results, and implements the organization's strategy. Performance management done poorly not only fails to achieve these results, but can also undermine employee trust and destroy relationships" (Pulakos and O'Leary, 2011, p. 5).
There is good reason to rethink the way performance management is approached in the public sector to avoid falling into the same pitfalls that have characterized much of the private sector's performance management work. For example, Haines and St-Onge (2012, p. 1158) write that several studies find that as many as 80-90% of HR professionals believe that their performance management systems do not improve organizational performance. This points to a key paradox that must be kept in mind when choosing to implement performance management. It should be based on the recognition that organizations fundamentally create good performance by balancing a number of conflicting needs. On the one hand, the context in which public organizations navigate is complex and non-linear, calling for agility, learning, development, creativity and innovation. On the other hand, public organizations are governmental organizations that need to create order, overview, governance and control. This balancing act is crucial to be aware of if you want to create meaningful performance management.
