Designing effective performance-measurement systems under the Government Performance and Results Act of 1993

Performance measurement has been the object of increasing interest since the late 1980s. The need for systematic performance measurement in governmental organizations is well documented in the literature (Brown and Pyers, 1988; ASPA, 1992; Wholey and Hatry, 1992; Behn, 1992). Development of performance indicators has received emphasis within the reinventing government movement, especially in the application of total quality management to the public sector (Carr and Littman, 1990; Osborne and Gaebler, 1992; Gore, 1993). The federal government increasingly emphasizes measurement-of-performance data at the program level (GAO, 1992, 1993). The Governmental Accounting Standards Board has recently focused on the potential promulgation of formal standards for performance measurement and reporting for state and local governments (Hatry et al., 1990; Fountain, 1991; GASB, 1994). Performance measurement has even become something of an international movement (Cave, Kogan, and Smith, 1990; Bouckaert, 1993). Indeed, the literature on performance-measurement systems has become far too extensive to cite completely here. Obviously, this is an indication of great interest and activity. In the United States, performance measurement has been enshrined as the very essence of sound federal agency management and accountability in the Government Performance and Results Act of 1993 (Public Law 103-62; hereafter: GPRA). The 1993 act requires that every federal department and agency will, by September 30, 1997, develop five-year strategic plans linked to measurable outcomes via a series of annual performance plans, which will be required governmentwide beginning with fiscal year 1999. The performance plans must cover each program activity set forth in the agency budget, with specific performance indicators, and "objective, quantifiable, and measurable" goals. In the development of measures, the emphasis is to be placed on program outputs and outcomes. Beginning no later than March 31, 2000, and filed by March 31st of each succeeding year, annual program performance reports are required, setting forth clearly the performance indicators, goals, and actual performance for at least the three preceding years. The performance reports would: review successful performance, describe unsuccessful performance, detail any remedial action which may be required, and recommend any necessary changes to performance goals for subsequent fiscal years. The annual performance plans may include proposals for so-called managerial flexibility waivers, which, if granted, would effectively dispense with certain administrative procedures, requirements, and controls, in return for anticipated future performance improvements. Such waivers are to be justified on the basis of positive quantifiable changes in the performance indicators. Subject to the approval of the director of the Office of Management and Budget, waivers may become permanent once they have been in effect for three consecutive years. As such, substantial amounts of managerial flexibility, discretion, and authority may be extended on the basis of anticipated improvement in measured performance. Endorsed by Vice President Gore's National Performance Review, the 1993 act has assumed a central role in the reinventing government process. We would do well to ask, however, if the great faith that has been placed in performance measurement is entirely appropriate. Proponents of performance measurement acknowledge that it can be extraordinarily difficult to identify program goals and objectives, let alone develop meaningful measures of goal attainment (DiIulio, Garvey, & Kettl, 1993; Gore, 1993). What appears to require further elaboration, however, is the impact which the complexity of modern government operations has upon the task of measuring performance and managing improvement efforts. Recent attempts to develop management strategies that address the problems associated with the increasing complexity of modern government have focused on creating mechanisms which allow for organizational learning. …