Goverment Bsc

Management Accounting Research, 2000, 11, 231–251 doi: 10.1006/mare.2000.0130 Available online at http://www.idealibrary.com on

Strategic performance management: A balanced approach to performance management issues in local government
Louise Kloot*‡ and John Martin†

The drive for reform in the public sector worldwide has focussed attention on the measurement of performance in public sector organizations. This is particularly true in local government. Local government has traditionally been concerned with measuring the delivery of primary objectives, or results, at the expense of secondary objectives, or the determinants of organizational performance. Current strategic management literature suggests that there should be a strong linkage between strategic plans and performance measures. Kaplan and Norton’s (1992) balanced scorecard and Fitzgerald et al.’s (1991) results and determinants framework can provide this linkage. This paper reports on research into performance management systems in local government using the four dimensions of the balanced scorecard: financial, community, internal business processes and innovation and learning. It shows how the focus in this system of local government has been on the results of council work, ie. financial performance and to a lesser extent on how the community views performance. Local government performance measurement pays much less attention to the determinants, or means of achieving long-term, sustained organizational improvement in internal business processes, and innovation and learning. Whilst these issues are recognized as important, there are few measurement processes in place to manage performance in these areas. Strategic performance management demands an approach that recognizes the importance of a focus on both results and the means of achieving these results. This paper highlights a suggested framework for strategic and balanced local government performance measurement. c 2000 Academic Press Key words:

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Financial Performance Rating levels total rates and charges declared rates and charges per assessment rates and charges per capita rates and charges as a % of CIV (Capital Improved Value) rates and charges per median residential property value average residential assessment rates and charges as a % of CIV - farms rates and charges as % of CIV - commercial/industrial Strategic Performance Management in Local Government Dependence on rates and grants rates and charges as % of total recurrent value Financial Assistance Grants per capita Achieving financial plans recurrent surplus/deficit capital expenditure Financial health of the organization recurrent surplus/deficit as % of total recurrent revenue net assets total debt servicing costs as a percentage of rates and charges revenue working capital ratio - % of current assets to current liabilities Capital expenditure ratio of capital expenditure to total depreciation capital expenditure per assessment Funding capital expenditure recurrent surplus/deficit as % of capital expenditure ratio of total internal funding to capital expenditure Debtor management % of rates, fees and charges outstanding at 30 June 251 Comparative Indicators A further 47 comparative indicators are required in the areas of Town Planning (7), Waste management (5), Municipal cleaning and parks management (3), Public library and information services (8), Road construction and maintenance (6), Customer Service (1, based on state government community satisfaction index), Family, children’s and youth services (6), Environmental health/regulatory (4), Aged and disability services (4) and Administration (3). These indicators include costs (e.g. net cost of maternal and child health per consultation), workload (e.g. number of planning permits decided during the year) and quality/timeliness (e.g. average number of days to respond from referral to delivery). An annual performance statement is required to report on both sets of indicators. The report contains (for each indicator) actual result, target, variance against target, last year result, variance against last year, target compared to last year, three year moving average.