Performance Measures, Accounting and the Rationalisation of Organisations Professor David Cooper of the University of Alberta, Canada, is one of CIMA’s Visiting Professors. On Monday, 29th October he delivered the CIMA lecture at the Hong Kong Theatre, LSE, to an audience of over a hundred academics, practitioners and students. There is increasing pressure in numerous countries for accountability in the public sector. Emphasis is placed on both value for money and the need for a more business-like approach to operations. Performance measurement systems have therefore been employed to assess standards, but there is intense debate surrounding their use. In the UK, for example, criticism of government targets has centred on the spin that must be placed on any negative results and the abuse of the system which often occurs as a consequence. Professor Cooper’s research is therefore particularly topical. While he focussed on the provincial government of Alberta, it nonetheless resonates as a study of managerial responses to performance measurement systems. Since 1993 he and his colleagues have been investigating the introduction of such a system to the Alberta government, specifically the Cultural Facilities and Historical Resources Division (CFHR) of the Department of Community Development. Generally, it is expected that change in organisations is something people will resist. However, Professor Cooper found that in the CFHR Division the radical changes associated with the implementation of performance measures were enthusiastically embraced, and it was only later that serious dissatisfaction became apparent. To explain this response he referred to theories of rationalisation - the pursuit of reason. Performance measurement systems may be seen as an attempt to rationalise the operations that occur within organisations. He made a distinction, first suggested by the German philosopher, Habermas, between two types of rationalisation, and it is the interplay between the two forms which may explain the change of attitude among employees, and the effectiveness of the performance measurement system: 1. Instrumental Rationality Means-end rationality dominated by technique, calculation, organisation and administration. 2. Communicative Action Rationality involving people seeking to reach understanding about the situation and their plans of action in order to coordinate their efforts. The initial optimism among CFHR Division employees derived from the sense that they were attempting to achieve agreement as to their function, and that they could operate as decentralised, empowered units rather than being under strict bureaucratic control. So what went wrong? Professor Cooper identified certain imperatives that accompanied the introduction of the reforms but that undermined communicative action: • Political Imperatives Senior agencies of government sought to impose a particular model and to standardise procedures across departments. For example, each ministry was required to produce an annual report addressing a number of issues devised by the Auditor General’s office. There was also a tendency for departments to copy others and for senior agencies to request simplification. • Technological Imperatives The need for the performance measurement system to be administered and regulated led to various problems. Employees had difficulty adapting to a new specialised vocabulary and to the requirement for their performance to be measured in quantitative terms. Moreover, the measures at one level of government fed into those at higher levels, so that contents of reports and plans had to be structured in combination with those at adjacent levels. This gradual colonisation by instrumental rationalisation was largely responsible for the increasing discontent among government employees. However, Professor Cooper emphasised that both forms of rationality are necessary. In Alberta, the erosion of communicative action resulted in uninformed action, but had it dominated then practical engagement would have suffered. In response to some of the questions asked at the end of the lecture, Professor Cooper stressed that he was not criticising senior management for their actions, since operationalising performance measurement for their purposes unfortunately makes the system unhelpful for front line operating managers. Instead, he was arguing that performance measurement systems need to be clear about their purposes and focus, for one integrated system cannot simultaneously satisfy the two forms of rationalisation. Professor Cooper’s lecture was delivered in an animated and energetic style, and his communication of what are complex theoretical concepts was particularly impressive. His theoretical considerations, together with his focus on a division of provincial government, may be unusual in approaches to performance measurement. However, as a detailed study of the implementation of such measures it is valuable far beyond both Alberta and the setting of local government.
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