Academic journal article Public Administration Quarterly

Performance Management in the Third Sector: A Literature-Based Analysis of Terms and Definitions

Academic journal article Public Administration Quarterly

Performance Management in the Third Sector: A Literature-Based Analysis of Terms and Definitions

Article excerpt

INTRODUCTION

Performance management has recently gained importance in the steering bodies of nonprofit organizations (NPOs), largely due to changing contextual factors, including, for example, the emergence of the efficiency principle in the competition for subsidies (Greiling, 2009), more contracts being based on performance agreements than on general sponsorships, and increased demand for proof of efficiency and effectiveness rather than proof of proper assignment of funds (Greiling, 2009; Meyer & Simsa, 2013; Zimmer, Priller, & Anheier, 2013).1 NPOs are, more than ever, under pressure to allocate financial resources efficiently and to communicate their performance effectivity and their impact on the public (Greiling, 2009). Additionally, tracking performance is key to the entire performance management process because it results in positive effects on the quality of work (e.g. Gill, 2010; Phineo, 2013). At the same time, funders are particularly interested in results, keeping an eye on whether performance is assessed at all (Dawson, 2010; Gill, 2010; Grimes, 2010).

Likewise, performance management has taken on greater significance in both consulting and research. In various policy areas there is increasing demand for evaluation, such as in labor market policy, development policy, social services, and universities (Toepel & Tissen, 2000). Several handbooks and guidelines for practitioners have been published on how to conduct evaluations, induce performance measurement, or align management with outcomes (Asian Development Bank, 2013; Batliwala & Pittman, 2010; Deutsche Gesellschaft für Evaluation, 2010; Impact Plus, 2010; UK Cabinet Office, 2012; The Urban Institute, 2006; Wainwright, 2003). In academic literature, measuring performance and results are a focus of considerable attention. Some authors point out both the advantages and disadvantages of performance measurement (Bell-Rose, 2004; Berman, 2006; Campbell, 2002; de Waal & Kourtit, 2013; Ebrahim, 2003; Gill, 2010; McEwen, Shoesmith, & Allen, 2010; Osborne & Gaebler, 1992; Osborne, Bovaird, Martin, Tricker, & Waterston, 1995; Poister, Pasha, & Edwards, 2013), its methods of assessment (Greatbanks, Elkin, & Manville, 2010; Greiling, 2010), and its constraints (Bell-Rose, 2004; Kettiger & Schwander, 2011; Mutter, 1998; Osborne et al., 1995; Tuan, 2008). Other authors focus on impact-oriented reporting, especially in social businesses and social entrepreneurship (Achleitner, Lutz, Mayer, & Spiess-Knafl, 2013; Grimes, 2010; Jäger, 2010; Leppert, 2013; Roder, 2011). Additionally, several papers address the application of performance measurement or performance management with the use of a case-study (Barman, 2007; Dawson, 2010; Lehner, 2011; McEwen et al., 2010).

However, there is no academic article in the context of performance management that sets forth a holistic overview of current definitions of terms and demonstrates the ways in which important terms are currently used in contradictory ways. These differing definitions are troublesome, as a clear and commonly held understanding of central terms and definitions is critical. First, such understanding is important for general credibility and relevance of the topic (e.g. Berger & Luckmann, 1967; Reed & Luffman, 1986; Short, Moss, & Lumpkin, 2009; Short, Payne, & Ketchen, 2008). Second, conceptual clarity is important to practitioners for strategic development processes within their organizations (Gill, 2010), as this improves communication among team members and enables them to cooperate and assess the data they need to improve their performance. Furthermore, organizations need clear-cut definitions and commonly understood terms that can be used for external communication with funders. This aids organizations communicating the true value of their actions, thereby preventing the image of the third sector2 as purely an expense-factor (Bouri, 2011; Roder, 2011). …

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