Academic journal article Public Administration Quarterly

Summary Execution: The Impact of Alternative Summarization Strategies on Local Governments

Academic journal article Public Administration Quarterly

Summary Execution: The Impact of Alternative Summarization Strategies on Local Governments

Article excerpt

INTRODUCTION

Although performance management in the public sector, including local government, has a long history (Van Dooren et al. 2010; Moynihan 2008), over the past three decades it has become much more pervasive (see, for example, Pollitt and Bouckaert 2000). No doubt this is partly related to the rise of New Public Management (NPM) strategies over the same period. Indeed, it has been claimed that performance management systems are the 'engine room' of NPM (Diefenbach 2009). The ubiquitous embrace of performance measurement and assessment in the public sector has led to growing unease amongst public finance scholars. Moreover, the heavy emphasis on 'management by numbers' in public sector performance measurement and assessment in particular has attracted substantial critical attention (see Andrews et al. 2011 for a synoptic review of this literature).

Often performance indicators are summated into a single rating score to enhance understanding, ease dissemination (particularly by the media), and provide a handy aggregate measure of a local council's performance (Saltelli 2007). However, the process of combining performance indicators into a single rating score has attracted substantial criticism. Principal objections include a loss of information, such as the loss of relative standing within broad categorical bands (Saisana et al. 2005), forfeiture of measures of uncertainty (Bird et al. 2005), the illusion that categorization is free of value judgements (Saltelli 2007; Bird et al. 2005; Kloot and Martin 2000), and the distortion of information when independent dimensions are combined (Bird et al. 2005). This last concern is particularly important in the context of municipal indicators since it is clear that performance occurs along a number of dimensions (Drew and Dollery 2015). For instance, local government has a role in infrastructure management, particularly roads, but it also provides services to local residents, such as aged care and child care. Moreover, there are dimensions of municipal performance - such as the quality of customer service - which may defy quantification altogether (Kelly and Swindell 2002). Thus, when municipal performance data is reduced to a single number there is a substantial danger of one dimension being amplified at the expense of other dimensions of performance.

Despite the volume of scholarly attention directed at performance indicators, much work remains to be done, especially on composite performance indicators. For example, Jacobs and Goddard (2007, 108) have pointed out that 'there is a paucity of research on how these composite performance indicators are constructed, what the methodological challenges are in doing so, and whether they are in fact a good reflection of performance'. The present paper seeks to address this gap in the literature by applying a number of frequently used summarization algorithms (or indexes) to a sample of New South Wales (NSW) local authorities to compare the outcomes of the different techniques. In so doing, we seek to demonstrate that the compilation algorithm employed is in fact a major determinant of the performance rating assigned to a given municipality. The constitutive implications for individual entities are also important and a broader message arising from this paper is that the performance management systems which lie at the heart of NPM are not objective 'facts' but rather the outcomes of a myriad of subjective decisions relating to how accounting data is compiled.

By way of institutional background, NSW local government is in the throes of a vigorous debate over structural reform through compulsory council consolidation engendered by the establishment of an Independent Local Government Review Panel (ILGRP) in 2012 by the NSW Government. The Panel recommended the amalgamation of more than 40 percent of the 152 NSW councils citing the need to improve financial sustainability. A key document informing the municipal merger recommendations was a NSW Treasury Corporation (TCorp) (2013) report entitled Financial Sustainability of the New South Wales Local Government Sector. …

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