Performance measurement in the public sector: the German experience

Purpose - In recent public sector reforms performance measurement has been a central element in many countries. This article aims to review the use of performance measurement within the German public sector, to evaluate the state‐of‐the‐art and to give recommendations for improvement. Design/methodology/approach - After a brief overview of the intended purposes of performance measurement within new public management, based on a literature review, this article examines the state‐of‐the‐art of performance measurement in the German public sector. An evaluation, based on the identified intended purposes, well‐known methodological problems and empirical findings, follows. Recommendations are given, identifying various areas for improvement. Findings - The German public sector can be described as a late starter with respect to performance measurement. The full potential performance measurement may offer in the opinion of its supporters is not realised. The front runners of performance measurement are local governments. Voluntary inter‐administrative comparison circles are the most frequently used instrument, followed – to a much lesser extent – by quality‐management initiatives and performance‐indicator‐based contracting. The experience with and the acceptance of comparison circles have been mixed. Research limitations/implications - Further research is needed into the transaction and opportunity costs of performance measurement and into the conditions under which the performance measurement can support an organisational learning process. Originality/value - This paper provides a structured overview of the state‐of‐the‐art of performance measurement in the German public sector, taking all federal levels into account and offers ideas for the improvement of performance measurement.