Performance assessment and benchmarking in the public sector: New Zealand example

¶ … Performance assessment and benchmarking in the public sector" by K.L.H. Wynn- Williams seeks to explore benchmarking as a tool for overcoming problems associated with accountability in public sector organizations. New Zealand pharmaceutical management agency (PHARMAC) is used as a template for possible solutions to benchmarking difficulties.

A key difference between public and private sector organizations is that private sector organizations often use profitability as their most significant measure of success, as well as report to a limited number of shareholders and boards. Public sector organizations' measure of success is successful maintenance within a budget and fulfillment of social objectives. They are accountable to funders, recipients of services, and others. In this case, accountability, by its nature, is more widespread. Moreover, social accountability, as its benefits are often abstract and unable to be financially measured, is often difficult.

To address these problems, Wynn-Williams suggests we first consider management control systems. There are a number of types. Results-based control systems measure outputs (often in monetary form) and compare them with desired pre-established criteria. Action-based control systems are those in which agreed upon processes are adopted for the purpose of leading to a desired outcome. Personnel control systems are based on hiring the "right" staff, creating the "right" personnel policies and training programs, and promoting a strong corporate culture. Wynn-Williams states that both results- and action-based control systems are often impossible for public organizations, as measurable outputs and established cause-effect relationships are often absent, which, the author says, "implies that benchmarking results or outputs of an organization may have limited usefulness."

Benchmarking as a performance assessment, in the private sector, is largely based on performance against external criteria, such as the "industry best." One of benchmarking's central principles is the continuous improvement of the organization. This style of benchmarking is difficult for the public sector; it is difficult to quantify accurately and completely societal outcomes, and there is sometimes no competition for a particular public entity (thus making impossible comparison to the "industry best"). Wynn-Williams holds that benchmarking should maintain a "central role" within the public sector; it should be modified toward increased attention on what actually needs to be benchmarked, comparing internal units within the organization, displaying best practice, and being of a generic nature. In a situation of no competition, a public organization can benchmark against its mission statement (which reflects the expectations of those to whom the organization is held accountable) and against its history (comparing performance from one quarter to the current quarter).