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Dynamics of Performance-Measurement Systems

Author

Listed:
  • Pascal Courty
  • Gerald Marschke

Abstract

We review the principal--agent multi-tasking literature and discuss the relevance of this literature to the implementation of performance measurement in public organizations. Arguably, the most important lesson from the literature is that performance measurement may elicit dysfunctional and unintended responses, also known as gaming responses. We propose an evolutionary model of how organizations manage performance measures when gaming is revealed over time. The model stresses the dynamic nature of the performance-measure selection process--a feature that has been overlooked in the literature. We present evidence from a job training programme that is consistent with the model and we discuss implications for the selection of performance measures. Copyright 2003, Oxford University Press.

Suggested Citation

  • Pascal Courty & Gerald Marschke, 2003. "Dynamics of Performance-Measurement Systems," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(2), pages 268-284, Summer.
    • Handle: RePEc:oup:oxford:v:19:y:2003:i:2:p:268-284
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    Citations

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    Cited by:

    1. Bruttel, Oliver, 2005. "Contracting-out and governance mechanisms in the public employment service," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2005-109, WZB Berlin Social Science Center.
    2. Carolyn J. Heinrich & Gerald Marschke, 2010. "Incentives and their dynamics in public sector performance management systems," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(1), pages 183-208.
    3. Finn Christensen & James Manley & Louise Laurence, 2011. "The Allocation of Merit Pay in Academia: A Case Study," Economics Bulletin, AccessEcon, vol. 31(2), pages 1548-1562.
    4. Finn Christensen & James Manley & Louise Laurence, 2010. "The Allocation of Merit Pay in Academia," Working Papers 2010-13, Towson University, Department of Economics, revised Jul 2010.
    5. Courty, Pascal & Marschke, Gerald, 2004. "A General Test of Gaming," CEPR Discussion Papers 4514, C.E.P.R. Discussion Papers.
    6. Kuhn, Michael & Siciliani, Luigi, 2013. "Manipulation and auditing of public sector contracts," European Journal of Political Economy, Elsevier, vol. 32(C), pages 251-267.
    7. Gibbs, Michael, 2021. "Job Design, Learning & Intrinsic Motivation," IZA Discussion Papers 14285, Institute of Labor Economics (IZA).
    8. Hubley, Teresa, 2008. "Lessons from a project to create performance measures for public health," Evaluation and Program Planning, Elsevier, vol. 31(4), pages 410-415, November.
    9. Kato, Takao & Kauhanen, Antti & Salmi, Julia, 2013. "Empirical Evidence on the Dynamics of Incentive Plans," ETLA Working Papers 20, The Research Institute of the Finnish Economy.
    10. Pascal Courty & Gerald Marschke, 2003. "Making Government Accountable: Lessons from a Federal Job Training Program," The Centre for Market and Public Organisation 03/083, The Centre for Market and Public Organisation, University of Bristol, UK.
    11. Schmid, Günther, 2004. "Gewährleistungsstaat und Arbeitsmarkt: Neue Formen von Governance in der Arbeitsmarktpolitik," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2004-107, WZB Berlin Social Science Center.
    12. Peter Friedrich & Joanna Gwiazda & Chang Woon Nam, 2003. "Development of Local Public Finance in Europe," CESifo Working Paper Series 1107, CESifo.
    13. Hasnain, Zahid & Manning, Nick & Pierskalla Henryk, 2012. "Performance-related pay in the public sector : a review of theory and evidence," Policy Research Working Paper Series 6043, The World Bank.
    14. Siebert, W. Stanley & Zubanov, Nick, 2008. "Management Economics in a Large Retail Organization," IZA Discussion Papers 3645, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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