Performance Evaluation and Reporting

  • Patrícia S. GomesEmail author
Living reference work entry
DOI: https://doi.org/10.1007/978-3-319-31816-5_2316-1

Synonyms

Definitions

Performance evaluation and reporting should be studied under the complex and multidimensional concept of performance. Performance evaluation is an important element in the management control of an organization through the incorporation of key performance indicators in performance measurement systems. After the new public management (NPM) era, greater attention has been put on the performance evaluation process as a way to lead to organizational improvements. There may be an interrelationship between the control focus of an organization and the aspects which are emphasized in the evaluation of performance (an internal perspective). Performance reporting is linked to the concept of accountability and to the need to improve the reputation of an entity (an external perspective). This linkage between performance reporting and accountability is based on the notion that reporting about performance contributes to monitor and evaluate the actions of public sector managers and politicians, helps to plan and to prepare the budget, to learn and improve, and to compare actual performance and expected results. Both concepts are interconnected and strongly associated with the need to measure, to report, and to manage public sector organizations’ performance.

Introduction

The new public management (NPM) was a global reform movement aiming the introduction of business-like tools in the public governance (Hood 1995), assuming that public sector organizations can be managed and evaluated in the same way as private organizations, namely through demands for accountability, transparency, and efficiency, and responsiveness. Central to these reforms is the need to monitor and evaluate performance, on the basis of results-oriented performance information (Boyne and Law 2005), and to make managers more accountable for their actions and decisions about the use of public resources (Budding 2004; Moynihan and Pandey 2010). A multidimensional system incorporating quantitative and qualitative indicators that measure, evaluate, and report the level of activity, inputs, outputs, and outcomes of the public governance is an important device in the implementation of these reforms (Jansen 2008; Hammerschmid et al. 2013). Based on Behn’s (2003) list of eight different managerial uses of performance information, Hammerschmid et al. (2013: 1) characterize these uses into two groups: (1) internal purposes, “when performance information is used for monitoring, evaluate, control and improve operations,” and (2) “external purposes, associated with showcase performance, give account, compare and benchmark.” Although internal and external uses are related, this chapter one assumes that performance evaluation has a purely internal function and performance reporting is more externally oriented.

Several scholars have been motivated by the philosophy of the NPM to study and research about public sector performance evaluation and reporting in the last 20 years. The works of Bogt (2001, 2003), Behn (2003), Budding (2004), Pollitt (2006), Jansen (2008), and van Helden et al. (2012) are just a few examples. Performance evaluation and reporting is seen as an important part of the accountability process and became central in the implementation of NPM reforms. For example, the introduction of performance-based contracts, target-setting and performance reporting are dimensions of NPM (Hood 1995; Jansen 2008). However, the use of performance information in the public sector, either for internal or external purposes, is quite limited (Bogt 2001, 2003; Budding 2004; Politt 2006; Jansen 2008; Hammerschmid et al. 2013) because “politicians do not often behave in the rationalist manner implied in the NPM model” (Lapsley and Pallott 2000: 227).

Government accounting literature identifies at least two different lines to understand the role of accounting in NPM reforms: a rationalist perspective, where accounting is seeing at the center of the reform (economics theory), and a symbolic perspective (legitimacy theory), where accounting practices only imply symbolic changes with no effects on internal operations (Lapsley and Pallott 2000). Given this twofold perspective, performance information is not only used as a measurement tool but also as a communication tool (Hammerschmid et al. 2013). Overall, performance evaluation and reporting in government organizations are considered complicated tasks given the multiplicity of actions and objectives to which they are subject, adding to the existing political pressures.

This entry intends to approach the themes related to public sector entities’ performance particularly concerning its evaluation and its report, highlighting the main challenges and difficulties in this process of change after NPM.

Performance Evaluation in the Public Sector: An Internal Perspective

Performance evaluation is usually not only or primarily based on concrete and factual aspects of the way how managers operate and “objective” information about this, but also on more general impressions and subjective opinions (Bogt 2001, 2003). Bogt (2003) explains that performance evaluation in government organizations, as evaluating the success of NPM reforms, is complicated. Several factors play a part here, such as different opinions on what to measure and how to do it, frequent changes on performance measures, imperfections in performance measurement, multiplicity of goals (perhaps sometimes concealed), a politician’s feeling that there will often be different and altering perspectives on what constitutes “success,” and problems in establishing causation (Bogt 2003; Budding 2004).

An important study about performance evaluation was developed by Bogt (2001), trying to determine whether politicians attach value to quantitative output information and whether they use this sort of information to control their organization and to evaluate managers’ performances (internal use). Based on the experience of Dutch municipalities, Bogt (2003) found that politicians expect managers to have feelings for the political wishes and needs, a cooperative attitude and an ability to encourage departments to work quickly and in a flexible way and to show initiative. This shows a hardly use by politicians, of quantitative output information available in budgets, management reports, and annual accounts.

Hopwood (cited by Bogt 2001) distinguishes three different styles of performance evaluation, which are based on research in the profit sector: the budget-constrained, the profit-conscious, and the nonaccounting style (implicit style for the public sector). Adapting these styles to the public sector, Bogt (2001, 2003) presents four styles of performance evaluation methods: (1) the implicit style, (2) the operations-conscious style, (3) the output-constrained style, and (4) the outcome-conscious style (see details in Fig. 1). A manager’s performance evaluation style is an important aspect of his management style and the features of a specific style depend upon both the extent and the way performance and budget information are used (Bogt 2001).
Fig. 1

Bogt’s performance evaluation styles (Source: Bogt (2003))

As Bogt (2001 and 2003) concluded, for the purpose of performance evaluation, professional managers are more focused on activities and information processes rather than on their outputs or outcomes measures. More recently, in three Portuguese large municipalities, Gomes et al. (2015) confirm these findings about the greater orientation by politicians to the implicit style and the operations-conscious style on the managers’ performance evaluation.

On a different perspective, Budding (2004) discusses the relationship between accountability and performance, deepening and extending the understanding of the behavioral and organizational effects of holding managers accountable in governmental organizations. The author starts his study by stating that “the identification and definition of the products of governmental organizations is a relatively subjective exercise, and therefore, output-indicators are also relatively subjective and easy to manipulate” (Budding 2004: 287). The author emphasizes this subjectivity highlighting that “the decision making in these organizations is a consequence of the multiple, conflicting political pressures, which result in relatively vague compromises that are also very unstable” (Budding 2004: 287). Due to these circumstances, identifying the relevant performance indicators and their targets is complicated for governmental organizations. Thus, holding managers accountable when targets are not clear could lead to negative effects.

Politt (2006: 38) argues that “evaluation is […] important to any democratic society. It benefits those who make decisions about policy, and it benefits the citizens who have to live with those decisions, once made.” Examining the use of performance information by ministers, parliamentarians and citizens, the “end users” of performance information, the author concludes that little research has been done on whether and how elected representatives use the performance information, which is contained in evaluation reports, performance audits, quality assessments, and inspections. It also alerts that if politicians and citizens seldom use performance information, then information cannot perform its supposed function in fostering transparency and trust in public programs and services. Thus, performance evaluation, performance measurement, and performance audit remain conversations between experts, technocrats, and managers, and not a significant feature of democratic governance (Pollitt 2006).

To summarize, the use of more sophisticated performance information to evaluate and monitor performance is not (yet) well developed among public sector organizations, as it was expected since the NPM reforms, mainly based on internal and managerial factors (Lapsley and Pallot 2000). Different aspects of the internal management structure, managerial styles, and the particularities of the political-administrative system justify differences on different contexts.

Performance Reporting in the Public Sector: An External Perspective

Performance reporting in the public sector is associated with improvements of accountability in public sector organizations as well as their reputation and legitimacy. These accountability and reputation concepts of public sector organizations may be linked to the need for transparency, effectiveness, and efficiency brought about by NPM reforms, such as the harmonization of public sector accounting through IPSAS (International Public Sector Accounting Standards). Creso et al. (2013) explore the policy’s pressures and responses of the research councils for the improvement of accountability, performance assessment, and evaluation. They argue that the “performance reporting are central to increased monitoring and evaluating, as they help to report, plan and budget; manage and evaluate; learn and improve; and compare performance and results” (Creso et al. 2013: 113). Their work concluded that performance metrics and increased emphasis on outcomes provide information necessary for organizational governance and address external pressures for transparency and accountability. Demands for accountability, transparency, efficiency, and responsiveness have encouraged the widespread and systematic monitoring and evaluating of public sector activities.

Lacey et al. (2012) study the interorganizational dependence and public sector performance reporting in the Australian federal police. They identify the importance of the independence between agencies for the performance reporting; independence refers to information represented in the performance reporting being derived from that the agency itself possesses and publishes. In addition to the issue of reporting and independence, there is also an issue of framing, legitimacy, and reputation (Lacey et al. 2012; Hammerschmid et al. 2013). Lacey et al. (2012) have concluded that within the public-sector context, practices of performance reporting have expanded during the last decade. Still, they need to pay more attention to the problems and issues of performance measurement across interorganizational networks, particularly where the performance of one agency within the network is heavily dependent on the performance of other agencies in the same network. These interdependencies are crucial to understand and compare performance.

Brusca and Montesinos (2016) have done an international comparison from an institutional and normative perspective comparing the frameworks of performance reporting in local governments. They argue that “a performance measurement system is a tool for producing information to quantify the efficiency and effectiveness of actions, and it can be used both to obtain information for decision making purposes (internal use) and to disseminate information to stakeholders on local government performance for accountability purposes” (external use) (Brusca and Montesinos 2016: 507). They additionally explain that many jurisdictions have begun to implement performance reporting systems as a step while adopting NPM reforms. Consequently, the development of performance reporting systems has been influenced by different contexts and by the successful introduction of NPM. Table 1 presents a summary of the main developments of performance reporting systems among different countries.
Table 1

Comparison of the performance reporting systems in different countries

Country

Development of performance reporting systems

Belgium, Australia, Canada, and the United States

Regions, states, and provinces have made the main efforts for obligatory reporting

Performance reporting is directed to stakeholders with an accountability vision, including the citizens’ perspective

Professional associations play an important role in the United States, but not in Australia and Canada. In the Flanders region of Belgium, indicators have been included by the regional government

The context and level of NPM reforms is only superficial, and performance reporting systems cannot be said to have an important impact

Nordic (European) countries, United Kingdom, and Netherlands

Highly developed centralized performance reporting systems with the central government as the main actor, to control local governments and especially stimulate them in performance measurement and efficiency improvements

The Nordic countries have a relatively strong need to legitimate the public use of resources, thus the stakeholder model takes precedence over the shareholder model, and organizational stakeholders have more of a say than shareholders or top managers in the adoption, implementation, and use of performance measurement

France, Italy, Portugal, and Spain

Central governments have enacted laws emphasizing the importance of and need for performance reporting, but have not made much effort in practice, so reporting systems are still at an initial stage

Italy, Portugal, and Spain are all facing major economic and financial problems, and thus have an urgent need to measure efficiency and effectiveness

Benchmarking is not usual in these countries. Moreover, centralist administration is favored, and the central governments exercise control over local governments

Countries have enacted laws in response to a demand for transparency in the use of public resources, accountability, and improved quality of services, but performance information is scant, despite regulations requiring the inclusion of performance indicators in the financial report to improve accountability and transparency

The administrative cultures do not favor the publication and use of performance indicators, the tools for performance measurement are undeveloped and public management reforms are not holistic, so that only isolated measures have been introduced, and the law is the instrument for reform

Source: Adapted from Brusca and Montesinos (2016: 521–522)

Veledar et al. (2014) underline that the practice of reporting performance information is very diverse across different jurisdictions, because in some jurisdictions public sector entities are required by law to report performance information annually, while in others the reporting of service performance information is voluntary and depends on the entities’ will to enhance accountability and inform decision makers. In a context where changes are introduced and compulsory by law, public sector accounting changes would be essentially symbolic, motivated by the need to obtain legitimacy from external stakeholders. The institutional theory based on the coercive and normative isomorphism can help to understand differences on the level of implementation of performance reporting systems.

Measurement and reporting of public sector performance is an integral part of the accountability process in public sector entities, due to its capacity to facilitate achievement of the objectives of an organization and the communication of relevant information to stakeholders. Performance information has therefore been recognized as playing a key role in public sector governance.

At this point, one can realize that performance reporting in public sector is essentially about the external demands for accountability. Reporting the performance is, however, a difficult task. Nevertheless, as Brusca and Montesinos (2016) explain, the financial information provided in the accounting and budgetary statements of many public entities is insufficient to achieve public sector accounting objectives and needs to be supplemented with performance information. Performance is measured and reported by means of performance indicators that account for the economy, efficiency, and effectiveness of public resources.

In the study of the performance reporting, it is important to refer the work developed by the IPSASB (International Public Sector Accounting Standards Board) on the measurement and reporting of public sector public performance. In particular, it is important to refer the publication of a recommended practice guideline (RPG 3), in March 2015, for reporting service performance information. The RPG is not authoritative like IPSAS and does not address the preparation of a financial statement; it aims to provide guidance and good practice on reporting service performance information in general purpose financial reports (GPFRs). In this way, compliance with this RPG is not required for an entity to assert that its financial statements comply with IPSAS.

For the IPSASB, an entity can present other types of information if this information is useful in meeting the objectives of financial reporting and meets the qualitative characteristics of financial reporting (relevance, faithful representation, understandability, timeliness, comparability, and verifiability). In RPG 3, there are multiple factors that the IPSASB considers relevant for the performance reporting, such as reporting boundary, period of reporting, selection of service performance information, location of service performance information, and organization of service performance information. Furthermore, RPG 3 addresses principles for reporting the service performance information that are important to understand the purposes of performance reporting (see Fig. 2).
Fig. 2

Principles for reporting service performance information (Source: IPSASB, RPG 3 (2013: §32–37))

Within the context of RPG 3, the IPSASB acknowledged that there are different approaches to reporting service performance information, including those more focused on outputs and those focusing on outcomes. In any case, the information reported explains how the entity is doing in terms of achieving the objectives.

Concerning the disclosure of performance information, RPG 3 (2013: §38–39) establishes that, for each relevant service should be reported information about: (a) service performance objectives, (b) performance indicators that show the entity’s achievements with respect to its service performance objectives, and (c) information on the cost of services. For performance indicators and service costs, the entities should yet display: (a) planned and actual information for the reporting period, and (b) actual information for the previous reporting period. It is also interesting to note that performance information reports should also include cross-references to the financial statements where appropriate, contributing to a more GPFRs.

To organize service performance information, RPG 3 suggests the elaboration of the “statement of service performance” which involves organizing information in to a tabular or statement form (RPG 3, 2013: §78). This statement will support understandability and comparability of performance indicators, which are the basis for the success of performance evaluation and reporting.

Summing up, the normative and coercive isomorphism seems to be very influential on the implementation of performance reporting systems, being determined by the approval of compulsory law and the need to obtain legitimacy from external stakeholders.

Performance Evaluation and Reporting in the Portuguese Context

Portugal is a centralized unitary state with central and local or municipal governments; it is considered a Napoleonic country with a Weberian legal and administrative influence. The country was under pressure to modernize its public administrative apparatus and reverse the tendency to centralize and nationalize public goods and service provision and delivery. In the last two decades, the successive Portuguese governments have implemented several administrative reforms, following NPM trends and therefore aiming “to introduce a new managerial rationality in public services, replacing the traditional approach to public management by the introduction of new managerial techniques” (Araújo and Branco 2009: 557) adopted from the private sector management.

The Portuguese government has been carrying out accrual-based accounting reforms since the approval of the public sector accounting basis law (Law no. 8/1990). However, the landmark of this reform was the publication of the Official Plan for Public Sector Accounting for the central government level (agencies and autonomous bodies), from 1997, followed by the publication of the Official Plan for Local Government Accounting in 1999. Afterwards, several Official Plans have been approved for the education sector, health, and social security. Since the 1990s decade reforms, the Portuguese government accounting framework “uses double entry combining cash-based budgetary accounting with accrual-based financial and cost accountings, providing information for both accountability and decision-making” (Jorge et al. 2008: 239). The introduction of the accrual basis accounting regime, the accounting standardization, the integration of budgetary, accrual and management accounting, and the need to facilitate data collection for the national accounts (government financial statistics) represented the main objectives of these public sector accounting systems.

Complementary to the budgeting and financial mechanisms, other planning and control initiatives became compulsory during the 1990s decade, such as the activity plan and the activity report (Decree-Law no. 183/96, September 27). These two management tools introduced the obligation for public sector entities to plan their activities to be carried out in the following year as well as the needed resources (activity plan) and to report the actions and activities accomplished in the last year (activity report). More recently, under the NPM agenda, the debate on methods to evaluate and control (individual and organizational) performance has therefore become more relevant in public administration, in politics, as well as in civil society (Rodrigues 2009). As a result of this debate, an Integrated Framework of Performance Evaluation in Public Administration (SIADAP) was introduced in the Portuguese public sector in 2004 by Ministers Council Resolution no. 53 and implemented in 2007 by Law no. 66-B/2007. This is a management by objectives model articulated with the management cycle, aiming to strengthen a culture of assessment and accountability in the public sector and to monitor the services performance in complying with the organizational mission. Table 2 presents the chronological evolution of the performance evaluation initiatives in the Portuguese public sector. As said by Rodrigues (2009: 9) about the new performance evaluation system “it introduced the paradigm of management by objectives in public administration” in this country.
Table 2

Evolution of performance evaluation initiatives in the Portuguese public sector

Period

System

Scope

Criteria

2004–2007

SIADAP (First version)

Intermediate managers

Employees

Objectives

Competencies

Personal attitude

2008

SIADAP (Second version)

Organizations

Top managers

Intermediate managers

Employees

Objectives

Competencies

Source: Adapted from Rodrigues (2009: 3)

Although the actual version of the SIADAP sets two evaluation levels – the individual and the organizational level, the former has been regulated and put into practice in first place (by the First version of the SIADAP). The most recent version of the SIADAP introduced a top-down approach because it enforced the involvement of the whole hierarchical structure of organizations. In this managerial context, top managers would be engaged in the goal setting process (both strategic and operational) and responsible for achievements. A deeper involvement of top managers in performance management processes took place in 2005 with the approval of the mission statement that represents a real management contract between the political leader and the top manager of each public sector organization. This initiative marked the beginning of top managers’ formal evaluation process. Top managers’ performance is determined by the performance obtained by the organization as a whole. The aim is leading organizations to engage in “real strategic thinking processes” (Rodrigues 2009). In this context, the Balanced Scorecard model and other performance measurement systems have been applied in some public sector organizations (Gomes et al. 2008; Gomes and Mendes 2013) to help managers in the goal setting process, as well as to identify performance indicators and the associated targets.

The articulation of SIADAP with the management cycle implies that it must include certain building blocks (article 8° of the Law 66-B/2007), as presented in Fig. 3.
Fig. 3

The management cycle and SIADAP – an integrated perspective (Source: SIADAP – Law 66-B/2007, article 8°)

This cycle relies on a management control framework. The monitoring and review of the objectives could enable to get feedback on what has already been accomplished and to introduce improvements throughout the whole system. In addition, performance reports could inform about performance, both in qualitative and quantitative terms, and to define and allocate rewards or sanctions, depending upon the situation. This report explains the achieved levels of effectiveness, efficiency, and quality.

Under the Law 66-B/2007 (article 28°), the Portuguese government created the Portuguese services evaluation council (CCA) with the following objectives: (1) assure the coordination and promote the cooperation between the various services with competences regarding planning, strategy, and evaluation, and promote the exchanges of experiences and disclosure of the good practices in the fields of evaluation. The year of 2008 was the pilot year in the first evaluation of public services based on SIADAP. Table 3 shows the matrix of the excellence degree attributed to public services by the Portuguese services evaluation council, based on 11 criteria, the first six criteria measuring the results of the service (outputs and cost-effectiveness). These criteria are the basis for managers and directors responsible by the planning, strategy, and evaluation areas of each ministry, to evaluate individually the performance of each service under its responsibility; the points obtained according to these criteria may or may not correspond to the self-evaluation obtained by SIADAP. To be distinguished with excellent performance mention, services and agencies should overcome most of the criteria defined in this matrix. These criteria represent a strong incentive to adopt new practices of control and management accounting on public services and public bodies voluntarily (motivated by management needs).
Table 3

Matrix of criteria of the services’ degree of excellence

 

Criteria of Evaluation

Short description

Results of services

1. Productivity

Comparison of the performance achieved with the human resources used (deviation between planned and accomplished)

2. Cost-effectiveness analysis

Comparison of the performance achieved with the financial resources used (deviation between planned and accomplished)

3. Results obtained by the service compared to previous years

Evolution of the results compared to previous years, based on the performance evaluation framework (comparison in time)

4. Results obtained in comparison with national or international standards, considering efficiency improvements

Excellence of the results obtained when compared with other standards, whether national or international, requiring benchmarking (comparison in space)

5. Overall improvement of evaluation parameters (effectiveness, efficiency, and quality)

Analysis of the exceedance of the evaluation parameters, compared to previous years, based on the performance, considering the weight assigned to each one

6. Analysis of deviations

Determination of the deviations between the degree of achievement and what was planned

 

7. Impact on society

Evaluation of the contribution of the service to the pursuit of public policies and degree of noncompliance (if applicable)

 

8. Users’ satisfaction

Evaluation of the type of measurement instrument used, the complaint handling policy, as well as the degree of users’ satisfaction

 

9. Employees’ satisfaction

Evaluation of the type of measurement instrument used, as well as the degree of employees’ satisfaction

 

10. Processes and system of performance indicators

Analysis of the reliability and integrity of the internal control system and performance indicators system

 

11. Planning and strategy

Availability on the electronic page of the service, or delivery to the competent oversight authorities, of the updated strategic plan, the activity plan, and SIADAP information

More recently, after a period of fiscal crisis and the strong external dependence from lenders requirements (Troika and IMF), Portugal embarks in an international harmonization process toward IPSASs adoption, after the adoption of IFRSs in the business sector (implemented since 2010). After a work of more than of 3 years to adapt the existent official plans of accounting to IPSASs, the government approved the System of Accounting Standards for Public Administrations – SNC-AP – by the Decree-law n° 192/2015, embracing a conceptual framework, 27 accounting standards (25 IPSAS-based addressing financial accounting and reporting, one for budgetary accounting and reporting and one concerning management accounting) and a multidimensional chart of accounts. This new IPSAS-based model will be implemented since January 2018 to all sectors of the Public Administration, including local government. The great impact on the performance evaluation and reporting can be synthetized on the following elements: (1) an accrual-based accounting system; (2) the production of a general purpose financial report including financial and nonfinancial information, forecasting information, and consolidated information from the State as a whole; and (3) the obligation to implement a management accounting system allowing to evaluate results and the accomplishment of objectives in terms of services delivered to citizens.

In addition, the Budget Framework Law (LEO) approved by the law n° 151/2015 introduces the adoption of programs budgets by all the central administration and the social security since 2019, accompanied by the development of a performance information system. It adds the need to disclosure online a general information about programs by subsectors, the objectives of the budgets policy, the budgets data, and the accounts of the state as a whole. In summary, being Portugal a European-continental country with a great influence of a civil law system, all the administrative and management reforms become compulsory by law. This is also true for the preparation and presentation of performance information, namely performance reporting. In this context, the opportunity for change internal operations practices will depend on the culture and the features of each organization, the involvement of organizational leaders, political pressures, and the capacity to put reforms in practice (enforcement). Both the managerial or instrumental perspective (NPM) and the institutional theory (in the isomorphism perspective) could help to understand public sector accounting changes in the Portuguese context. Table 4 presents the evolution of the legal background approved by the Portuguese government in order to make compulsory performance evaluation and reporting in the Portuguese public administration.
Table 4

Legal background for performance evaluation and reporting

Legal Diploma

Description

Law no. 8/1990, February 20

Approves the Law of Public Sector Accounting Bases

Decree-Law no. 155/92, July 28

Introduces RAFE (State Financial Administration Regime)

Decree-Law no. 183/96, September 27

Reinforces the obligation to use the Annual Plan and Annual Activity Report

Decree-Law no. 190/96, October 9

Introduces the obligation to draw up the Social Report for all departments and agencies of the central, regional and local government

Decree-Law no. 232/97, September 3

Approves the POCP (Official Plan for Public Sector Accounting)

Decree-Law no. 54-A / 99, February 22

Approves the POCAL (Official Plan for Local Government Accounting)

Ordinance no. 898/2000, September 28

Approves the POCMS (Official Plan for the Accounting of the Ministry of Health entities)

Decree-Law no. 12/2002, January 25

Approve the POCISSS (Official Plan for the Accounting of Institutions of the Solidarity and Social Security System)

Law no. 2/2004, January 15 (amended by Law no. 51/2005, August 30)

Approves the status of management staff in the departments and agencies of the central, regional, and local government. It requires the preparation of the Mission Charter and encourages management by results

Resolution no. 53/2004 and Law no. 66-B/2007, December 28

Approves the SIADAP (Integrated Framework of Performance Evaluation in Public Administration)

Decree-Law no. 192/2015, September 11

Approves the System of Accounting Standards for Public Sector (SNC-AP)

Law no. 151/2015, September 11

Approves the Budget Framework Law (LEO)

Conclusions

Every effective organization need to measure and monitor its performance to know how well it is performing and to identify opportunities for improvement. In this way, performance evaluation and reporting arises as a way to “reinvent” the government and to improve efficiency, effectiveness, and quality in public sector organizations and in public services at large (Hood 1995). This entry presented a short review about the processes of performance evaluation and reporting following a twofold perspective: internal and external use of performance information. Both concepts are interconnected and strongly associated with the need to measure, to report, and to manage public sector organizations’ performance.

Several scholars highlight difficulties and constrains in the use of performance information by different users, both for external (reporting) and internal (evaluation) purposes. The features of the politico-administrative system, the legal system, the heterogeneity of activities, the ambiguity of objectives, the managerial styles, the politics and managers’ characteristics, are important factors determining the process of change within public sector entities. On the other hand, prior studies show that accounting changes and the introduction of NPM initiatives became compulsory by law in several jurisdictions, in particular in European continental countries (Hammerschmid et al. 2013; Brusca and Montesinos 2016). This is also the case of Portugal, where each public sector managerial initiative and reform is introduced after an act approved by the Government and/or by the Parliament. As illustrated in this entry, the most important reforms that have been adopted in the Portuguese governmental financial system during the 1990s were the approval of the Public Sector Accounting Bases Law, the Administrative and Financial Regime of the State, and the Official Plan for Public Sector Accounting (and other sectorial official plans approved thereafter), having as main innovation the introduction of an accrual accounting regime and the basis to produce a more comprehensive government financial reporting. Since 2015, with the approval of the new Budget Framework Law and the SNC-AP (an IPSAS-based accounting system), new requirements have been introduced with impact on the performance evaluation and report of public entities. The changes have the goal to increase transparency for citizens and to improve the information available for to take management decisions and for external report. The new budgeting and accounting changes will produce effect only after 2018.

Although these accounting changes with impact on the evaluation and report system, a great skepticism was raised about their effects on the organizational performance because of the excessive bureaucracy and regulation that features Portuguese public administration (Araújo and Branco 2009; Gomes et al. 2008, 2015).

The institutional theory, in the isomorphism perspective (normative, coercive, and mimetic), can help to understand why performance information is not used at a satisfactory level by different users. Following the institutionalists perspective, scholars assume that when reforms and managerial practices are introduced with the goal to satisfy government mandates, they will be used to obtain legitimacy and external support and not for control and decision-making purposes. When the influence of isomorphism is significant, a great deal of decoupling is expected. In this context of great external and institutional pressures, the risk of spread between formal organizational structures and actual organizational practices increases leading to a little or no effect on internal corporate operations. Despite this institutional context existing across many countries, it is most certain that NPM reforms have been changing the way public sector organizations manage and improve performance as well as their internal culture concerning public service delivery and the use of public resources.

Cross-References

Notes

Acknowledgments

This work was financed by FEDER - Fundo Europeu de Desenvolvimento Regional funds through the COMPETE 2020 - Operacional Programme for Competitiveness and Internationalisation (POCI), and by Portuguese funds through FCT - Fundação para a Ciência e a Tecnologia in the framework of the project POCI-01-0145-FEDER-016908 (PTDC/IIM-GES/6923/2014).

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© Springer International Publishing AG 2017

Authors and Affiliations

  1. 1.Center for Research on Accounting and TaxationPolytechnic Institute of Cávado and Ave (IPCA)BarcelosPortugal