The Iron Cage Recreated: The Performance Management of State Organisations in New Zealand

Umesh Sharma (Department of Accounting, Waikato Management School, University of Waikato, Hamilton, New Zealand)

Journal of Accounting & Organizational Change

ISSN: 1832-5912

Article publication date: 26 October 2012

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Citation

Sharma, U. (2012), "The Iron Cage Recreated: The Performance Management of State Organisations in New Zealand", Journal of Accounting & Organizational Change, Vol. 8 No. 4, pp. 548-550. https://doi.org/10.1108/18325911211273554

Publisher

:

Emerald Group Publishing Limited

Copyright © 2012, Emerald Group Publishing Limited


The book explains the results of a major three year research project by a team of academic researchers and public officials on the use of performance information in the New Zealand State sector. It examines the formal design of a performance management system and how this system has evolved. The book uses empirical evidence to illustrate how performance information has been used in State sector organisations. What emerged within public agencies was a Weberian‐like iron cage of bureaucratic control based on performance measurement. This was despite the reforms initiated in the mid to late 1980s. One possible reason for this was the role played by the authorising environment, such as the parliament, in driving a risk‐averse managerial culture.

The language used is simple and easy to understand by the intended readership. The book is rich in data and insight about performance information in State sector organisations. A variety of research methods were used including a literature review, seven case studies, and a survey sent to 60 percent of the managers employed in the public service.

The book is organized around four main parts. Part 1 reviews the international empirical evidence on how performance information is used; and themes that arose from the literature (Chapters 1 and 2). Part 2 discusses the espoused system that is formalized in documents such as legislation or administrative guidance (Chapters 3‐5). Part 3 begins by summarizing the themes from the case studies (Chapter 6). Chapters 7‐11 contain the results from the seven case studies within five organizations (Child, Youth and Family, the Department of Conservation, the Department of Corrections, Work and Income, and the Ministry of Women's Affairs). Chapters 12‐14 introduce and discuss two networks across organisational boundaries (in the transport and justice sectors). Finally, Chapter 15 presents the results of a survey sent to 3,000 managers in the State sector on the types and sources of performance management information used by them. Part 4 outlines research findings on the performance management system. Chapter 16 summarizes the conclusions from the research on the uses of performance information. Chapter 17 discusses why outcome‐oriented performance monitoring is underdeveloped in New Zealand while Chapter 18 sets out the options for the directions of reform.

Under Part 1 in Chapter 2, the literature on performance information is thoroughly covered. However, there were some omissions such as Pallot, Lapsley and Modell from the accounting literature. Further, the literature review currently appears to be more descriptive rather than taking a critical view of the literature.

Part 2 explores how performance measurement was used in the design of formal systems of organizational performance management in New Zealand. Chapter 3 focuses on State sector reforms that relate to the role of performance information. These reforms delegated significant authority to individual chief executives and considerable control to departments. The focus of control shifted from being one of inputs to the delivery of agreed outputs, within budget limits. Chapter 4 examines the changing ways in which Treasury, the State Services Commission and the Office of the Auditor General have interpreted their roles over time. However, the concept of “managing for outcomes” needs to be better defined as outcome and output are distinct from one another. This distinction is not so clear to the reader from the chapter. Chapter 5 is on the formal system themes and draws appropriate conclusions relating to the formal system.

Part 3 is based on the research results of the case studies and survey. Chapter 6 reports the findings and cross‐cutting themes from the case study research. The author articulates the three E's of economy, efficiency and effectiveness. However, the author could have expanded on the fourth E of “equity” which is ignored in the discussion. Chapter 7 is a case study on Child, Youth and Family which was conducted in 2008, and whose performance has high political significance. Chapter 8 is a case study on the Department of Conservation. The Department's approach to performance management is encapsulated in its Statement of Intent. The author advocates the Department's development of the National Heritage Management Systems in the early 2000s that helped achieve its national outcomes. However, the readers are not told what the outcomes are. Although the use of interview quotes brings the story to life, the outcomes remain patchy in the discussion, and needs to be more explicitly explained. It was somewhat clear from some interviewees who said that they were frustrated by what they could not achieve, but still the outcome needed to be more clearly defined and measured. Chapter 9 is a case study of the Department of Corrections. The case study analyses how performance was defined in the Department of Corrections and how the Department's main operations used departmental performance information in 2008.

Chapter 10 is a case study on Work and Income and Chapter 11 is a case study on the Ministry of Women's Affairs which made the transition from a poor performer to an award‐winning public sector organisation. The main focus of the latter Ministry is to help improve the lives of New Zealand women. Organisational learning is part of the Ministry's culture which is built on both formal and informal performance information and facilitates reflection and improvement. A learning culture characteristically involves a high level of employee empowerment and participation evident in the Ministry. The last few chapters in Part 3 explore/expand on networking across State sectors. Chapter 12 is on working across boundaries and on network policy‐making in the transport and justice sector. The author gives an example of reducing road accidents and crime rate as an outcome that requires collaboration of several state organisations. Chapter 13 is a case study of the transport sector and road safety to 2010 and the chapter is based on six interviews in 2008 with people closely connected with the development and implementation of the government's road safety strategy. Chapter 14 presents a case study on policy development and implementation in the Justice sector. It examines the development of the Effective Intervention programme which included the Ministry of Justice, Department of Corrections and New Zealand Police. Chapter 15 discusses the survey research to explain the types and sources of performance management information used by State sector managers. Overall, respondents agreed that most significant influence on the daily work of their work units was a reliance on applying their professional training or knowledge. Also 70 percent of the respondents agreed that their work unit's performance was primarily assessed in terms of specific targets.

The international significance of public sector performance management needs to be made more explicit in the case chapters. Although, the case study chapters give a sound account of performance management within the New Zealand context, what are some of the lessons for the international community? This needs to be made explicit to the reader. Further, the author seems to take an uncritical view of the cases. Were there any surprises or resistance in the organization? It would have been helpful if this had been better articulated in the book.

Part 4 outlines the research findings on the performance information in the New Zealand public sector. The theme that emerged from Part 3 was that the active use of performance measures by individual public organization tends to create an iron cage of control. The iron cage is the metaphor for Max Weber's concept of bureaucracy being the main mode of organisation in both public and private sectors. Little evidence was found in relation to organizations wanting to open the door of the iron cage. Chapter 16 presents information on how public organizations are controlled and governed. However, not much emphasis has been placed on private‐public partnership despite a growing trend toward that mode of outcome provision. The book had little to say on the important aspect of performance management represented by the contracts and agreements between the public sector and other organizations. Chapter 17 presents information on why outcome‐oriented performance monitoring is underdeveloped in New Zealand. The chapter highlights that Ministers and parliamentarians make relatively little use of the performance information presented to them. Chapter 18 sets out the options for the directions of reform. The chapter elaborates that changes in demand (demographic change due to ageing population) will result in continued pressure to do more with less.

In summary, I feel the book is well written and covers some excellent case studies and survey‐based research material on performance management in the New Zealand public sector. The book attempts to fill a gap in the literature, as little is known about how performance information, both financial and non‐financial as a result of reform is actually used by public sector managers, or by government policy makers and the wider public. I strongly recommend this book to undergraduate students of the public sector as well as to public sector managers and government policy makers.

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