Why measures matter

This is an era of performance management in the public sector. In the UK, public service reforms since 1997 have focused heavily on performance and delivery. A multitude of measures are now used to assess the performance of government departments and public services - from departmental efficiency measures to league tables and performance ratings for schools, hospitals, police forces and prisons. The US has experienced a similar performance movement, culminating with legislation at federal, state and local levels, whilst the Canadian government introduced performance accounting in 1997. Other governments around the world have followed.

Individual agencies and local administrators also use performance management. Well-known examples include Compstat, the system introduced to drive police reforms in New York City, and Citistat, a derivative model used in Baltimore in the US to address workforce issues. Both systems, use computer generated statistics to provide timely performance information, in order to drive improvements in operational performance. 

Performance contracting has been part of this broader movement and, over the past few years contractual performance measurement has also become more intensive and more complex. Both in the UK and overseas, governments are showing greater interest in using contracts to improve the qualitative performance of public services. A better understanding of how to measure and incentivise performance is essential to extract maximum value.