Search of a Benchmarking Theory

¶ … Search of a Benchmarking Theory for the Public Sector," Helden and Tillema (2005) argue that public benchmarking is becoming increasingly important in modern democracies and their institutions. Organizations in certain areas of the public sector, such as police districts, municipal social services and tax offices often look at each others' performances in the effort of identifying differences in performance, strategy and outcome as well as to identify methods of improving efficiency and performance. The concept of benchmarking, as the authors describe it, strives primarily to provide a mechanism by which an organization or institution can be managed and improved. Benchmarking strives to provide this mechanism by lending the ideas "organizations [should] copy 'best practices'" and "performance comparison results in performance improvement" (p. 337).

But, as far as the authors are aware, those two ideas, and similar others, have never been combined into a theoretical framework. Even the possiblity of combining these ideas into a comprehensive structure has never been examined, as was confirmed by Bowermann (2002) who stipulated that public sector benchmarking has not been on the recieving end of much focus at all in the scholarly research on management.

Helden and Tillema propose to fill this gap in the literature with their research. In other words, Helden and Tillema propose to create a theoretical structure whose purpose it is to explore public sector benchmarking. Helden and Tillema propose to begin thier theoretical framework at the combination of "economic and institutional reasoning" which will, together, "provide an explanation for the way in which benchmarking is used in the public sector" (p. 337).

"In Search of a Benchmarking Theory for the Public Sector" develops a theory and hypothesizes regarding the many patterns of interaction and response of public sector institutions to benchmarking and the accountability that comes with the concept. Helden and Tillema, in their theory, use facts and ideas from both economic theory and a theory by Oliver (1991)

that has its roots in a neo-institutional theory and a resource dependence theory. Helden and Tillema substantiate, qualify, and refine their theory and hypotheses on the response of public sector institutions to benchmarking with a case study of benchmarking initiative of waste-water treatment by Dutch water boards. This benchmarking initiative used an adaptive version of the Balanced Scorecard, and was composed of two benchmarking events which took place in 1999 and 2002, respectively. After each study, Helden and Tillema explored the water boards' response patterns to and interaction with the benchmarking initiative. Because these were two separate instances in which the authors were compelled to research, multiple research methods were employed, such as surveys and a good amount of case studies.

The focus of this research by Helden and Tillema is an analysis and discussion regarding the response patterns of the water boards to the two undertakings in benchmarkings. These analyses and discussions will be formulated through the lens of economic, neo-institutional and resource dependence theories.

"In Search of a Benchmarking Theory for the Public Sector" by Helden and Tellema is structured as such: first, a theoretical framework is explained, developed, and analyzed. Next, the Dutch waste-water treatment case studies are introduced and described. The authors go on to explain which research methods they used to investigate and explore the case studies. Finally, the response patterns of the water boards to the benchmarking initiatives will be investigated, analyzed and detailed through the lens of economic, neo-institutional and resource dependence theoretical constructs. Finally, a summary and discussion of the findings of the research is offered at the end of the piece.

Figure 1

Figure 1 in "In Search of a Benchmarking Theory for the Public Sector" is titled "Framework that Combines Economic and Institutional Theories." In general, Figure 1 summarizes the interactions and relationships between the two theories employed in the analysis of the patterns of response by public sector institutions to benchmarking -- economic benchmarking theory and institutional benchmarking theory.

We first view Figure 1 starting off at an institutional setting. This is, of course, part of the institutional benchmarking theory, as indicated by the dashed line surrounding the text "Institutional Setting." From the institutional setting and via the institutional benchmarking theory we arrive at our need to preserve support from the stakeholders involved with the organization, which moves us to the econmic benchmarking theory. The economic theory of public sector benchmarking looks at the question "Can benchmarking be viewed as a substitute for market forces?" (p. 338). Because, as the authors point out, the mere existence of market forces implies benchmarkers in and of themselves -- consumers determine quality and performance of organizations by either selecting or not selecting what these organizations offer. When consumers select an organization's product, the organization in question is given implicit positive feedback and is compelled to progress along the lines it already has set out for itself, as well as improve upon these practices to continue being the preferred organization. When consumers do not select an organization's product and instead prefer something else, the organization that is not preferred is compelled to modify its practices in order to be more in accordance with organizations in the same area that are preferred by consumers, otherwise the non-preferred organization risks dissolution. In short, "economic reasoning presupposes that all organizations that are subject to competition will improve performance" (p. 339).

But economic benchmarking theory seeks to provide an alternative to these benchmarking market forces, as often there is no competition in certain areas of the public sector.

So, returning to Figure 1.1, "need to preserve support from stakeholders" is handled by economic benchmarking theory because there is no competition available. Economic benchmarking theory bases its function on three ideas: 1) "benchmarking will improve the average performance of organization," 2) "benchmarking is a stronger incentive to improve performance for poorly performing organizations than for better performing organizations," and 3) "benchmarking will diminish performance differences between organizations" (p. 341).