IS IT MEANINGFUL TO MEASURE PERFORMANCE IN GOVERNMENT SECTOR?

Abstract

During the last two decades, financial measures based on numbers generated by the traditional financial accounting system, have been found to be obsolete in measuring organizational performance. Accordingly, organizations, especially those in the private sector, have implemented a number of performance measurement and management tools including one of the so-called best tools, the Balanced Scorecard (BSC), based significantly on non-financial measures. Governments around the world are under pressure to control their costs and improve their services. In response, they have begun introducing changes and implementing modern management tools, including the BSC, in their organizations to deal with the financial constraints and increasing accountability to customers (taxpayers). However, some major underlying differences are obvious between the private sector and the government sector. But, there has been very little research as to how the BSC, in its current form, can be effectively applied in the government sector. Therefore, it is important to examine, if the BSC, in its current form, can be used as an effective performance measurement and management tool for the government sector. This examination should involve identifying the problems associated with the current version of the BSC, suggesting a generic BSC model and some generic measures suitable for the government sector and finally examine the cause-and-effect relations among the suggested generic BSC measures of performance for the government sector.