ArticlePerformanceManagementConfrontingtheChallengesforLocalGovernment.pdf

PERFORMANCE MANAGEMENT: CONFRONTING
THE CHALLENGES FOR LOCAL GOVERNMENT

JEREMY L. HALL
University of Central Florida

ABSTRACT

Performance management, the use of performance information in
strategic daily decision making, has not infiltrated local governments to
the same degree as state or federal agencies. This article uses the
capacity/performance paradigm as a framework to build a theoretical
synthesis of the obstacles to local government use of performance
management. It identifies and elucidates a series of challenges local
governments face in successfully implementing performance-based
management approaches. Among the obstacles identified are:
insufficient administrative capacity, limited fiscal resources,
insufficient economies of scale, absence of comparable entities for
benchmarking, inadequate use of strategic planning, complex
implementation environments (intergovernmental, intersectoral,
cooperative, and collaborative), strings attached to state or federal grant
awards, the illusion of control created by proximity to decision makers
and citizens, task simplicity, and the cacophony of reform expectations
(strategic planning, program evaluation, performance measurement and
management, evidence-based practice). Because of these challenges,
these small local governments are less likely to encounter demands for
performance information, or to develop an a priori appreciation for its
value to day-to-day administration. The essay concludes with a look at
what can be done to inspire increased attention to performance in local
government administration.

INTRODUCTION

Local government managers face considerable
accountability demands on a daily basis, as do their state and
federal counterparts. But local government administration offers
distinct challenges to accountability through responsiveness
(Koppell 2005), or what we might call performance-based
accountability. The tasks of local government are routine,
problems are often small in scale, and government organizations
are often small, facilitating communication and information

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sharing through traditional means. But routinization of tasks
should also facilitate the use of performance measurement to a
greater degree than an environment characterized by task
uncertainty. With respect to size, Zheng (2015) found, for
example, that the use of e-participation in local governments in
New Jersey increased among cities with greater populations.
This suggests that as cities become larger, the linkages with
citizens become more difficult to maintain, and as agencies
grow, the information burden is difficult to bear without
systematic approaches. This article uses the
capacity/performance paradigm as a framework to build a
theoretical synthesis of the obstacles to local government use of
performance management. That is, to elucidate the barriers and
impediments local government administrators—both municipal
and county—face for developing a culture of performance
management. In the way of definitions, it is helpful to begin by
distinguishing performance measurement, which is the
collection, analysis, and reporting of performance information,
from performance management, which is the use of such
information by managers with adequate discretion in daily
decision making (Moynihan 2008).

BACKGROUND: SYSTEMATIC USE OF
PERFORMANCE MEASUREMENT AND

MANAGEMENT

State governments, such as Virginia, led the way in
producing government-wide performance management systems,
and most states have such systems in place today (Moynihan
2008). The federal government entered the performance
measurement and management arena in a formal sense with the
passage of the Government Performance and Results Act of
1993, following a years-long National Performance Review.
With the adoption and implementation of CompStat by New
York Police Commissioner Bill Bratton and Mayor Giuliani in
1994, performance management began to enter the nomenclature
of local government management. The performance movement,
as a phenomenon, has emerged quite recently in practical terms,
and it has evolved and expanded with ardor. Citistat,

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implemented in Baltimore, characterizes a city-wide
performance management system based on the principles found
in CompStat.

The advent of these new approaches to management has
been accompanied by a series of trends that shape its application,
demand, and value. The rise of the IT sector has provided more
and more powerful technology to collect, process, analyze, and
report performance information directly to citizens and
stakeholders directly through the world wide web. The new
generation of consumers has grown up with technology and
social media as a central part of their lives, and the demands for
government accountability and citizen engagement have taken
on new forms as a result. The internet has also changed
information sharing not just in terms of availability, but it has
drastically reduced transmission times, making information
immediately available, and leading to expectations for reduced
time from production to reporting. The absence of information
now is seen as suspicious, and contrary to the foundational
expectation for transparency. Finally, the effects of globalization
in the new economy have been widespread. This means that
goods and services flow freely from place to place, but it also
means that people, as individuals, are more mobile than ever
before. They are not place-bound consumers of public services,
but mobile mavens with increased expectations who increasingly
exercise choice. We are now more aware of what is going on in
other places, and more readily able to observe differences in
public service quality from place to place. This encourages
governments to compete not only with proximate neighbors, but
with global ones. Managing expectations is considerably more
difficult when information flows freely.

Other societal trends have also influenced local
government dynamics. With the growth in government, rational
approaches offered considerable appeal to organize information,
process it, and report findings in an effort to enhance
accountability. The rationality movement, in general, spawned
increased use of various accountability-oriented efforts (Stone
2006), including strategic planning, program evaluation,
performance measurement, and more recently, evidence-based
practice. Objectivity has displaced subjective politics as a

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preference in decision making strategy, though the magnitude of
such shifts will no doubt be tempered by the nature of individual
positions. Of course, as Jennings and Hall (2012) have noted,
such objective approaches are valuable when questions are
instrumental—how to do something that is already agreed
upon—and not so valuable in addressing questions about what
should be done, as is often the case with values-laden questions
that are more common in state and federal government.

The performance literature started off primarily as a
descriptive and prescriptive one (Behn 2003; Newcomer 1997;
Wholey & Hatry 1992). Over time, a number of studies have
sought to describe the extent to which performance measurement
is being used as a management tool in various governments
(Moynihan 2008; Berman & Wang 2000). Others have sought
out the factors that explain the adoption and use of these
systems, or factors influencing their success (Moynihan &
Pandey 2010; Julnes & Holzer 2001). Ammons (1999) sought to
reveal the attributes that prepared cities for successful
comparison or benchmarking. Ammons & Rivenbark (2008), for
example, report on the experiences of North Carolina cities in
benchmarking, and offer insight into the factors that influence
successful use of benchmarking of municipal services.

Moynihan and Pandey (2010) examine a series of factors
associated with information use by managers, including
individual and organizational characteristics. More recent
attention has turned to figuring out whether or not performance
measurement makes a difference in actual results. Sanger (2013)
compared the performance measurement efforts of cities, finding
that only 27 out of 190 were using exemplary performance
measurement systems. Of those, only 7 were using data for
management purposes, and the results showed only a weak
correlation between demographics and city characteristics and
adoption of strong performance measurement systems. Yang and
Holzer (2006) considered the linkage between performance and
citizen trust in government—a non-mission oriented value of
considerable importance.

Thought and practice continue to evolve, with greater
emphasis now on strategic management and the central role of
performance measurement in that process. Poister (2010) has

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suggested that we ought to see greater transition toward strategic
management, performance management, and their joint use.
LeRoux and Wright (2010), studying nonprofit organizations,
sought to determine if performance measurement improved
strategic decision making. We are increasingly curious to know:
is the headache worth the hype? In spite of sound theory and
extensive practice, we still know very little about the
performance phenomenon’s prevalence, its contributions to
effectiveness, efficiency, or equity, and whether those
contributions justify continued use. The remainder of this essay
examines a number of factors that influence the expected use,
success, and support for performance management systems in
local government.

THE CAPACITY-PERFORMANCE PARADIGM

A body of recent research has examined the relationships
among various forms of capacity and performance outcomes.
Ignoring the details of efforts that take place within the black
box of specific policies and programs, such findings reveal that
the key to solid performance is a solid base of relevant capacity
in key areas. The precise definition of capacity depends on the
object it seeks to bring about (Gargan 1981), and it is not a
singular concept, but rather one comprised of multiple
dimensions (Bowman & Kearney 1988). It takes different types
of capacity to respond to a train derailment than to collect and
dispose of solid waste. But almost any outcome has two major
capacity categories—human and financial.

Meier and O’Toole (2002, 2003) have specifically
examined the effect of managerial quality and networking on
organizational performance. Hall has examined the relationship
of capacity to performance in state innovation outcomes (2007a,
2007b) as part of economic development in the new economy, as
well as local capacity to leverage federal grant awards (2008a,
2008b). In that research, human and financial factors played
prominently into the dimensions of capacity considered. In other
research, Hall (2008c, 2010) has shown that mitigating factors
can influence the role of capacity in explaining the flow of
grants. So it is not just capacity, but the way capacity interacts

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with other factors, that explains performance. Capacity is
necessary, but not sufficient, to produce performance results. All
of this research ignores the central role of what goes on within
the black box—how are local governments delivering programs?
What steps are they taking, or which strategies are they using?
Certainly these factors matter, particularly in the manner they are
integrated with performance measurement.

The capacity-performance paradigm explains
performance outcomes, but there is another related area where it
can influence performance. Local governments, if expected to
manage their performance outcomes, must possess the necessary
capacity to engage in the act of performance measurement and
management. What constitutes capacity for performance
measurement? It takes both time and money to successfully
implement performance measurement, and some have lamented
the tradeoff between administrative endeavors, such as
performance measurement and reporting, and direct program or
service delivery. Administrative requirements are seen as
detracting from time or money that could be applied directly to
the problem or the people in need.

Without detouring into a discussion of the proper
balance between these uses of resources, we can identify the
necessary components of capacity that will facilitate
performance measurement. First, management support and
commitment is key, for without it, no performance measurement
endeavor is likely to succeed, or to be taken seriously within the
organization. Second, a strategic plan with clear mission, goals,
and objectives is necessary to determine which outcomes are
important to the organization. Third, personnel or personnel time
are necessary to collect performance data in a routine manner,
compile it, analyze it, and report it to relevant consumers. While
staff time is important, expertise in data collection and analysis,
particularly statistical analysis, will be beneficial. Fourth,
capacity requires technology in the form of a performance
management system into which data is collected, organized, and
stored for future analysis, and from which reports can be
generated. At the simplest level, this might constitute a computer
with a spreadsheet or database program. But large, integrated
systems exist to match the size and sophistication of various

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performance efforts. Fifth, it is necessary for data users—
decision makers—at all levels to possess the ability to interpret
performance data. And, of course, none of this would be relevant
without the discretion to act in response to performance reports
in a double-loop learning approach.

Bartels and Hall (2012, 2014, 2015) have proposed an
administrative theory of performance to explain why some Tax
Increment Finance districts outperform others in the same
metropolitan area. They find evidence that the use of particular
management tools—performance measurement and risk
assessment—leads to improved performance in the primary
outcomes of interest—property tax revenue. In their most recent
study, they utilized quantitative analysis to isolate particular
tools and approaches associated with performance measurement,
reporting, and strategic planning, with promising findings
associating outcomes with performance management—the use of
performance information to make ongoing decisions. They also
find some evidence that suggests the number of TIF districts a
city operates increases performance. What does this mean for
local government performance management? There are two key
points to take away; first, evidence is mounting that performance
measurement, when used properly, can facilitate performance
improvements; second, the better the capacity on hand to engage
in appropriate performance measurement efforts, the greater the
likelihood of success.

Capacity is necessary, but not sufficient, to bring about
effective performance measurement, and therefore also not
sufficient to bring about performance improvements.
Performance measurement and management are not uniform in
their use across agencies or places; they exist on a spectrum from
symbolic efforts that adhere to minimum standards to substantive
efforts with a strong emphasis on learning and improving.
Capacity may permit more substantive efforts, but substantive
efforts may also stimulate the development of necessary capacity
to implement performance measurement.

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EXPLORING THE COMPONENTS OF CAPACITY, AND
POTENTIAL IMPEDIMENTS, FOR LOCAL

GOVERNMENT PERFORMANCE MEASUREMENT

Seeing that capacity provides the wherewithal for
success in both 1) substantive mission-central outcomes and 2)
process-oriented efforts such as performance measurement, we
can examine the various components of capacity individually to
provide insight into the expected limitations those deficiencies
could be expected to produce. Capacity for performance
measurement can be conceptualized in a number of key
dimensions; in some cases, the directional relationship is clear,
but in others, additional research is necessary to better determine
the influence each capacity dimension has on performance
measurement utilization and success.

Financial Capacity

Financial capacity drives all other forms of capacity. The
budget is the lever through which policy priorities are
implemented, including performance measurement. Without
budgetary resources it is not possible to provide employees,
technology, supplies, or any of the other things that are necessary
to implement and utilize performance measurement. Most
studies have explored the effects of performance information on
budgetary decision making rather than the reverse (Melkers &
Willoughby 2005, for example).

Administrative Capacity

Meier and O’Toole have examined the effect of
managerial quality (2002) and networking (2003) on
organizational performance. Hall’s (2007a, 2007b) research
concentrated on the role of particular types of human resources
for economic development success. When looking to capacity
that is necessary to achieve an outcome, human resources of one
type or another almost always enters the equation. What about
capacity to engage in performance measurement? Local
governments, cities and counties in particular, but also special
districts, vary considerably in size and scope. Many local
governments do not have more than one or two employees, and

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those that do have a number of employees rarely have a
substantial central administrative staff. Large cities and counties,
obviously, are the exception. Typically smaller governments will
face pressures to keep overhead costs low and service delivery
high. This challenge sets the stage for failure. There is, of course,
potential to offset such pressure through citizen education and
outreach; notably, Heikkila and Isett recommend three strategies:
“(1) garner citizen input on performance criteria, (2) improve
performance management processes to allow more citizen
involvement, and (3) communicate performance information
with citizens more effectively” (2007, 245).

Local government employees in the line departments—
police, fire, sanitation, parks, and so on—will likely be pressured
by the mission-oriented demands of their jobs. These employees
may find it to be challenging to allocate either the time or
motivation to substitute part of their busy schedules to measure
performance. Existing administrative staff may also have a full
plate dealing with citizen inquiries and problems, managing
finances, and so on. To ask these employees to take on the
responsibility of performance measurement may also be met
with resistance. This is all to say that performance measurement
is work, and it requires someone to perform it; it will not
complete itself. We expect that performance measurement will
be more effective when it is implemented with a staff that has
proper motivation, management support, and analytic skills.

Proper motivation implies that the staff believe that it is
in the best interest of the agency to collect data to monitor its
performance, that it supports accountability objectives, and that
it can influence decisions that will lead to improved service
delivery. Staff skepticism has notoriously been an obstacle to
performance measurement implementation (Berman & Wang
2000). To offset such skepticism, and encourage motivation,
changes may require amendments and adjustments to existing
systems such as annual reviews, or placement of incentives for
performance achievements. Long term changes to staff
motivation must stem from the resulting evolution of
organizational culture. In other words, they believe that the
information obtained from the data will lead to improvement.
Management support implies that managers share this belief, and

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that they encourage the performance measurement process,
support it with time and resources, and make employees aware
that it is an important part of their work. It has recently been
shown that leadership capacity is essential to bring about
positive performance results (Andrews & Boyne 2010). Finally,
analytic skills are an essential part of administrative capacity.
Individuals engaged in data collection, analysis, and reporting,
need to have good understanding of quantitative methods, as
well as the essentials of research design. In other words, they
need to understand the implications of threats to validity, the
importance of reliability, and how to conduct statistical analysis
in a way that maintains the integrity of the data, but that is also
interpretable to stakeholders, policymakers, and citizens.

Administrative capacity is more than just the number of
individuals working on a project. It is more than the hours they
spend per week or per year engaged in performance
measurement. Productivity is enhanced with training, skill, and
experience, and more qualified individuals will be able to
achieve much more in less time than their less qualified
counterparts. When we think about the challenges administrative
capacity poses to local government use of performance
measurement, there are a few. First, local governments—
especially small ones—are less professionalized. This means the
culture is less likely to encourage performance measurement. It
also means that it will be difficult to recruit individuals with the
kind of skills necessary to conduct such work because their skills
command higher wages that those governments may not be able
to pay. This challenge is present whether the application of such
expertise occurs in a centralized fashion or within line
departments. Technical skills necessary to deliver local services
do not often include quantitative analysis. This is why generalist
administrative professionals have become so important as
federal, state, and local governments have professionalized in
recent decades. The value of a graduate degree in public
administration, in particular, has continued to rise.

People constitute the core of a performance
measurement strategy, and the qualitative dimensions of capacity
identified here constitute a better measure of capacity than
simple quantity.

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Economy of Scale and Efficiency
“We don’t do a lot. We have a small budget and a small

staff. We really don’t have the resources to entertain a
substantive performance measurement effort…”—statements
like this are not uncommon. But there is a sound basis for the
argument. Local governments, because they are small, may find
it to be more expensive to implement a government-wide
performance measurement system. The argument is the same as
for serving a population with low population density in a rural
area. A road of equal length and width costs no more to build in
either place, but it costs more per resident in a town of 10,000
than in a town of 1,000. Technology required for performance
measurement may not be perfectly scalable, and the minimum
investment may result in higher costs per person, or per
budgetary dollar spent in smaller areas. The argument is simple:
the economy of scale that we find in federal, state, and large
metropolitan governments may not exist in smaller local
governments. Implementation of performance measurement may
result in greater overhead expenses in these smaller settings,
which could strongly discourage its use.

Is it possible to overcome scale economy challenges in
smaller governments? There are ways to do so without
disrupting either normal service delivery or agency budgets. One
key is to start small and simple, with an eye toward increasing
sophistication to better serve decision making needs as
experience and comfort with the effort grows. Another approach
would be to centralize administration of performance
measurement roles in local governments so that effort need not
be duplicated within each of the line agencies. And of course, it
is always possible to pilot test new administrative techniques on
a pilot basis for a sub-set of programs. One additional
mechanism that can help offset these scale-oriented challenges is
collaboration. Hall and Jennings (2012) dictate a series of factors
that influence collaboration on evidence-based practice in an
interstate collaborative. The basis of collaboration here is simple:
a benchmarking collaborative might be able to overcome some
of the challenges of scale by centralizing the organization of
performance measurement, analysis, and reporting activities to a
task force or third party with stronger expertise. And this also

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raises the possibility of outsourcing performance measurement to
a third party with considerable skill and experience, as has been
done with a wide variety of local government services in recent
years. Economy of scale provides greater capacity for
performance measurement because the marginal cost will be
lower, whereas the lack thereof can constitute an obstacle.

Inadequate Strategic Planning

It is difficult to know what to measure if there are not
clear goals and objectives in place. Without a good
understanding of performance measurement, a practitioner might
wrongly assume that it is something they can simply start doing.
A manager observes the things that they think are important, and
decides to begin collecting data. While this approach may not be
wrong, it lacks the guidance that can be obtained from a more
strategic analysis and plan. Local governments have been slower
to take on strategic planning than their larger state and federal
counterparts. The size of small local governments may provide
an illusion of control, and proximity to the problems may
provide good familiarity with needs and problems. However,
there are still areas of disagreement among local factions, and it
may not be the case that goals and missions in local agencies are
clear. They may be assumed without the justification that
strategic planning can provide.

There is a clear linkage between strategic planning and
performance measurement. Poister (2010) argued for better
alignment of the two practices in the future. Strategic planning
processes organizational and environmental information in a way
that helps to determine an organization’s mission and mandates,
its opportunities and challenges, and from those, its strategic
goals and objectives. Performance measurement begins with the
identification of key performance indicators, and the definition
of key is, essentially, strategic. So a good strategic plan will
provide the foundation for performance measurement. In
winnowing down lists of potential measures that might be
collected and reported, performance measurement efforts can
benefit by focusing on those that are defined in the strategic
plan—they are integral to achieving the organization’s mission.

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If we accept that a strategic plan provides capacity to
facilitate performance measurement, then conversely, the
absence of a plan implies a challenge to successful
implementation of performance measurement. While
performance measures can be determined independently, doing
so outside a strategic planning process offers two problems: first,
any performance measures selected run the risk of addressing
things that are not central to the organization’s mission—things
that do not matter; and second, engaging in an ad hoc effort to
select key performance indicators is duplicative of any effort that
would be performed in a de facto strategic planning process.
This redundancy would be inefficient if strategic planning were
conducted separately, and ineffective if not performed with the
same rigor as an earnest strategic planning effort.

Task Complexity and Simplicity

When thinking about performance measurement in any
environment, one of the challenges is often that we really can’t
measure the results of our effort. Take for example NASA; we
can track shuttle or rocket launches, or new satellites put into
commission on an annual basis, but these outputs do not reflect
the agency’s core mission. Outcomes for NASA are not
measurable on a monthly basis, and if they are, the change is too
negligible to be meaningful. For example, in mid-2015, we have
begun to receive photographs of Pluto that result from the New
Horizons mission launched January 19, 2006, the analysis of
which will continue for many years.

The following are NASA’s strategic goals, taken from
its 2014 strategic plan:

1. Expand the frontiers of knowledge, capability, and
opportunity in space.
2. Advance understanding of Earth and develop
technologies to improve the quality of life on our home
planet.
3. Serve the American public and accomplish our
Mission by effectively managing our people, technical
capabilities, and infrastructure. (NASA 2014, iv).

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Similarly complex outcomes and goals characterize
many agencies. The Environmental Protection Agency (EPA)
monitors environmental conditions that contribute to climate
change. Economic development agencies strive to reshape the
character of their communities. Some agencies face tasks that are
more challenging, complex, and ambiguous than others.
Sanitation departments, for …