SPMS: UK Experience ,

One of the earliest attempts to integrate strategy with performance systems was the Programme Planning and Budgeting Systems (PPBS) in the USA in the early 1960s. The PPBS was pioneered by the US government to enable it to assert control over the use of resources especially by the military, but later

became a requirement of all civilian agencies of the federal government (Carter, Klein and Day, 1992). PPBS is a practice through which organisations would define the objectives of their policies, define the programmes for achieving these objectives and measure expenditure and the use of resources to achieve

these objectives. It also involved the measurement of the output of

programmes so as to assess their effectiveness. This measurement would engender a consideration of alternative ways of achieving objectives on the basis of least cost (Carter, et al., 1992). This programme was viewed as a technology for conducting government more rationally, efficiently and effectively thereby circumventing political uncertainty (Carter, et al., 1992). The PPBS generally ended in failure but it appears to have planted an ongoing interest in a rational approach to the conduct of public affairs.

The need to hold individuals and units responsible for their performance on the basis of clearly specified objectives was a recurring theme throughout the 1960s and part of the 1970s but re-emerged with renewed energy after the election of the Thatcher Government (Carter, et al., 1992). The election of the Thatcher government saw the enactment of the Financial Management Initiative (FM!)

that was associated with wide ranging reforms to the public sector in the UK.

The FM! emphasised the measurement and reporting of individual and unit performance on the basis of clearly articulated objectives (Pollit, 1986). These reforms were accompanied by the development and experimentation with numerous performance measures by public sector entities, leading some researchers to conclude that the public sector leads the private one in terms of the development of performance systems (Atkinson and McCkindell, 1997). The widespread adoption of performance measurement systems in the public sectors of many countries did not however, result in the expected improvements in performance (Atkinson and McCkindell, 1997). This lack of improvement has been attributed to the complexity of performance measurement, which means that only those easily measurable aspects get measured (Jackson, 1988). Palmer (1993) who undertook an empirical study of

performance indicators in a local authority in England found that the performance indicators emphasised efficiency and economy to the exclusion of effectiveness because the latter is not easily measurable (see also Atkinson and McCkindell, 1997; Ghobadian and Ashworth, 1994). Where outcome related performance measures had been developed, they had the potential to engender dysfunctional behaviour (Smith, 1993). The performance indicators focused on past performance because of central government pressure to cap costs and increase productivity (Kloot and Martin, 2000).

The concern with financial inputs and results meant that performance measures remained largely trapped within the traditional one-dimensional model. This therefore did not address the perceived shortcomings of the traditional performance systems for it could not show whether and to what extent the aims for which the money was spent had been achieved (Brignall and Modell, 2000; Ghobadian and Ashworth, 1994). This dissatisfaction with performance measurement coincided with similar dissatisfaction in the private sector where it was felt that financial control bore no relation to the needs of local clients or customers (Johnson and Kaplan, 1987; Eccles, 1991). Within the context of the public sector, this reliance on single measures may drive out other important dimensions of organisational performance besides ignoring the overlapping and sometimes divergent interests of various public sector stakeholders (BaIlantine, Brignall and Modell, 1998). Furthermore, the introduction of new forms of public management based on markets, contracts and consumerism represented in the I citizen's charter' and management necessitates new performance measurement systems (Sanderson, 2001).

The inadequacy of these performance measurement systems has been attributed to lack of a framework for defining objectives and even the resulting performance measurement system (Gray and Jenkins, 1986; Hoskyns, 1984). The performance indicators were not developed in response to any over arching strategy (Palmer, 1993). There is no agreement among stakeholders as to what

are the objectives, what constitutes performance and how it should be measured (Boyne, et al., 2002). The task of measuring performance indicators is also difficult because the outputs of public agencies are often intangible and ill defined (Ghobadian and Ashworth, 1994). The performance systems had failed to integrate with budgetary and management processes hence proved useless in the strategic management of the public sector (McKevitt and Lawton, 1996). Thus these pioneering efforts notwithstanding, questions have continued to be raised regarding the ability of this system to enable the performance of individuals and entities to be evaluated (see Jackson, 1993a).

Some researchers have therefore called for performance measurement systems to be guided by the strategy of the organisation (Brignall and Modell, 2000; Kloot and Martin, 2000; Jackson, 1993a). Strategy would define the performance measurement systems to be used in the public sector. The strategy would define the objectives and the way these would be achieved while the performance system would measure the achievement of these objectives on a host of measures, which are not only financial but non-financial as well (Atkinson, Waterhouse and Wells, 1997; Simons, 1999; 1995; Kaplan and Norton, 1996a; 1996b; 1993; 1992). Linking performance measurement to strategy would enhance the ability of the organisation to engage in planning and control of its activities and achieve organisational learning by enabling any plan or set of targets to be compared against its outcomes and explaining any resulting variances Gackson, 1993a) . The complexity of the public sector may suggest that planning and control would be better served by linking strategy with operations (Ballantine, Brignall and Modell, 1998). A strategic focus is recommended as a way through which the complexity of the public sector can be taken into account without sacrificing its values Gackson, 1993a).

The victory of the Labour Government in the UK in 1997 led to a new discourse of "modernising" local government management using 'best value' (BY) where performance measurement was seen as key to driving the improvement of

performance in local government management (Sanderson, 2001) . Local authorities would be required to prepare local performance plans outlining current performance and plans for improvement. BV installed regimes of audit and evaluation with the state reserving the right to intervene where local authorities were not achieving the required improvements in performance (Sanderson, 2001). Through the annual performance plan, local authorities would plan and publicise their performance as well as how they intend to improve their performance. BV requires that local authorities 11 undertake systematic performance review of all their services and demonstrate significant year-on improvements" (p. 299). The thrust of the Labour government's reforms were that: 11 policy making is more forward looking, joined up and strategic; secondly, making public services more responsive to the needs of users; and, thirdly, delivering high quality and efficient services" (p. 306). The requirements of BV are that local authorities seek to secure continuous improvement on efficiency, effectiveness and economy in its functions. The local authorities have to review the performance of their services every five years so as to challenge what they are doing and how they are doing it. This reflexivity would be conducted in the context of benchmarking, the needs of stakeholders and a national framework of performance measures and standards (Sanderson, 2001). The requirements of BV echo recent innovation in the private sector such as kaizen management that put a premium on continuous improvement.

It can be surmised that since the 1960s, governments have sought to direct the public sector using a range of technologies, one of which was performance measurement (Carter, Klein and Day, 1992; Pollit, 1986) . As already indicated above, performance measurement systems became problematised as mechanisms for the conduct of public government. Especially, this approach was criticised for lacking a strategy on the basis of which the objectives of government would be clarified and their achievement measured. The 1990s have seen concerted attempts to resurrect performance measurement systems

in the context of a linkage with strategy. These changes have elevated strategic performance measurement to a position of prominence in external and internal accountability. Its adoption has been associated with improved communications to external parties, who include the central government, voluntary agencies and local businesses, how well the organisation is doing (Boyne, et al., 2002). This communication multiplies the agencies involved in government. Performance measures also hold individuals and units within local authorities accountable for outputs and outcomes (Boyne, Gould­ Williams, Law and Walker, 2002; Sanderson, 2001). It has therefore culminated into a system that ties individual conduct with the unit, organisation and the state on the basis of objectives, targets and performance measures (Townley, 2002a). This again accords with liberal forms of government as discussed in the previous chapter.