Academic journal article Global Business and Management Research: An International Journal

The Utilization and Antecedents of Output-Based and Outcome-Oriented Performance Measures

Academic journal article Global Business and Management Research: An International Journal

The Utilization and Antecedents of Output-Based and Outcome-Oriented Performance Measures

Article excerpt

Introduction

Performance measurement is a key source of organizational information providing evidence on achievements as well as highlighting areas that need improvements. In the public sector, performance measurement is generally about regular measurement and reporting of performance for programs, organizations or individuals. An ideal performance measurement system would include both output-based and outcome-oriented indicators (Berman and Wang, 2000). Performance measurement may indicate various types of measures including inputs, outputs, outcomes, deviation from targets, and potentials and attainments of key success factors. Accordingly, information from these measures is then used by the organization via performance management where strategies and activities are implemented to improve performance and enhance goals and outcomes (Hawke, 2012). However, the nature of performance measurement in the public sector is problematic due to its complex structure involving large organizational layers, multiple stakeholders and various interests hence the design of performance indicators and measurement systems can be a struggle for public officials. Often, they are confronted with issues such as the amount and quality of performance indicators, its effectiveness in measuring the intended behavior, its usefulness in supporting short term and long-term management decision making and the effectiveness of the data in supporting improvisation in a timely manner (Fryer et al., 2009).

Requirements for outcomes performance measurement and management approaches are increasing worldwide despite the difficulties that come with its deployment especially in terms of the design and management systems (Heinrich, 2002). Similarly, in Malaysia, the pushed for usage of performance measurement was intensified with the introduction of Government Transformation Program (GTP) (1) in 2009 with its objective to transform the government to be more effective in its delivery of services to the citizens, where the government is accountable for outcomes that matter most to the citizens. The GTP aims to move Malaysia forward to become an advanced, united and just society with a high standard of living for all. At the heart of the Malaysian 2009 GTP is the seven governmental priorities known as National Key Results Areas (NKRAs) i.e. reducing crime, fighting corruption, improving student outcomes, raising living standards of low income households, improving rural basic infrastructure, improving urban public transport and addressing cost of living. Each of the abovementioned NKRA is headed by a ministry where its Minister is subjected to the progress of his/her respective Ministerial Key Result Areas (MKRAs). The performance of each ministry was supposed to be measured through the Ministerial Key Performance Indicators (MKPIs) which have been designed as a direct measurement of the targets to the outcome. In other words the MKPIs are measurements that would lead to the subsequent achievement of the targeted objectives reflected in the respective MKRAs and NKRAs (Jabatan Perdana Menteri, 2010).

Consequently, public officers in Malaysia need to have a better understanding on both their work output and its outcome. Work output refers to the direct results of the organization's activities while outcome is about the intermediate effects on the targeted population as a whole. The achievement of outcome would eventually lead to impact with regards to goal achievement for the society (Epstein and Yuthas, 2014). Hence, after the introduction of GTP, the measurement of performance achievement in the Malaysian public sector is not only on work output (i.e. targets and goals at the departmental and organizational level) but include its consequences on the society (i.e. MKRAs and NKRAs). Ideally, justification by public officers is imperative in highlighting as to how their KPIs achievement would impact the targeted NKRAs and MKRAs. In view of this development, some attention has now surfaced on the readiness of public officers in Malaysia in abiding to this significant change in performance measurement. …

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