INSTITUTIONALIZATION OF PERFORMANCE MANAGEMENT SYSTEM IN A MALAYSIAN LOCAL GOVERNMENT FROM THE PERSPECTIVE OF NEW INSTITUTIONAL SOCIOLOGY

Abstract The purpose of this paper is to examine the process of institutionalizing and implementing Key Performance Indicators (KPIs) in a Malaysian local government (LG). New Institutional Sociology (NIS) is used to understand the various institutional pressures faced by the organization during the development and implementation process of KPIs. An interpretive case-study strategy was applied. A total of 22 interviews have been conducted with the top management of the LG. The findings suggest that the evolution of the Performance Management System (PMS) in the LG was a result of the directions of government through the Government Transformation Programme (GTP) and is still in its infancy stage. Although the LG has adopted the contemporary PMS, the old PMS; Annual Work Target (AWT) is still the dominant PMS. The KPIs initiative was considered as secondary PMS; therefore, it became as a complementary tool to the existing system. The study also discovered that the KPIs had brought several changes to the staff, departments, and the organization itself. The outcome of the KPIs' implementation, however, could not be studied. The research outcome has contributed to the existing performance management literature especially in the development of PMS within the Malaysian context by exploring the development and implementation of KPIs in an LG as well as the organizational changes within the organization. Keywords: Annual Work Target, Institutional Theory, Key Performance Indicators, New Institutional Sociology, Performance Management System. Abstrak Tujuan penelitian ini adalah untuk menguji proses pelembagaan dan implementasi Indikator Kinerja Kunci ( Key Performance Indicators /KPI) di pemerintah daerah Malaysia. Sosiologi Institusional Baru ( New Institutional Sociology/ NIS) digunakan untuk memahami berbagai tekanan kelembagaan yang dihadapi oleh organisasi selama proses pengembangan dan implementasi KPI. Strategi studi kasus interpretif ( interpretive case-study strategy) diterapkan pada penelitian ini. Sebanyak 22 wawancara telah dilakukan dengan manajemen puncak pemerintah daerah. Hasil temuan menunjukkan bahwa evolusi Sistem Manajemen Kinerja ( Performance Management System /PMS) di pemerintah daerah adalah hasil dari arahan pemerintah melalui Program Transformasi Pemerintah ( Government Transformation Programme ) dan masih dalam tahap awal. Meskipun pemerintah daerah telah mengadopsi PMS kontemporer, PMS lama yaitu Target Kerja Tahunan masih merupakan PMS yang dominan. Inisiatif KPI dianggap sebagai PMS sekunder; oleh karena itu, Inisiatif KPI menjadi alat pelengkap sistem yang ada. Studi ini juga menemukan bahwa KPI telah membawa beberapa perubahan pada staf, departemen, dan organisasi itu sendiri. Namun, hasil implementasi KPI tidak dapat dipelajari. Hasil penelitian telah berkontribusi pada literatur manajemen kinerja yang ada terutama pengembangan PMS dalam konteks Malaysia dengan mengeksplorasi pengembangan dan implementasi KPI di pemerintah daerah serta perubahan organisasi dalam organisasi. Kata kunci : Target Kerja Tahunan, Teori Kelembagaan, Indikator Kinerja Utama, Sosiologi Institusi Baru, Sistem Manajemen Kinerja.