Does Performance Management Lead to Better Outcomes? Evidence from the U.S. Public Transit Industry

Abstract

Although performance management processes are widely assumed to be beneficial in improving organizational performance in the public sector, there is insufficient empirical evidence to back this claim. In this article, the authors examine the impact of performance management practices on organizational effectiveness in a particular segment of the public transit industry in the United States. The analysis utilizes original survey data on performance management practices comprising both strategy formulation and performance measurement in 88 small and medium‐sized local transit agencies in conjunction with comparative outcome data drawn from the National Transit Database maintained by the Federal Transit Administration. The results provide evidence that more extensive use of performance management practices does in fact contribute to increased effectiveness in this segment of the transit industry.

Strategic-Decision Quality in Public Organizations: An Information Processing Perspective

“…While some studies found a positive relationship (e.g. Poister, Pasha, & Edwards, 2013;Walker et al, 2010), others resulted in statistically non-significant direct effects (e.g. Andrews et al, 2009a;Andrews, Boyne, Law, & Walker, 2011).…”

“…strategy formulation) in a rational and analytical manner (Bryson, 2010;Poister et al, 2013;Ugboro et al, 2011). Drawing on information processing theory, we argue that the resulting formal strategic plan is an important source of information for decision-making because it typically offers insights into the strategic course and priorities of the organization as well as illustrating key organizational information such as the organizational strengths and weaknesses (Poister et al, 2013;Vaara, Sorsa, & Pälli, 2010). Hence, strategic decisions are taken based on the information gathered by the strategic planning process and presented in the strategic plan (Rogers et al, 1999;Ugboro et al, 2011).…”

“…Strategic planning is a systematic and stepwise process that focuses on formulating a strategic plan (i.e. strategy formulation) in a rational and analytical manner (Bryson, 2010;Poister et al, 2013;Ugboro et al, 2011). Drawing on information processing theory, we argue that the resulting formal strategic plan is an important source of information for decision-making because it typically offers insights into the strategic course and priorities of the organization as well as illustrating key organizational information such as the organizational strengths and weaknesses (Poister et al, 2013;Vaara, Sorsa, & Pälli, 2010).…”

“…The formulation phase typically includes strategic planning (Poister et al, 2013), while the implementation phase typically includes performance measurement (Poister et al, 2013) and performance management (Poister & Streib, 2005).…”

“…Performance measurement is a monitoring instrument that encompasses the identification of quantitative performance measures linked to the strategic plan and strategic goals, setting targets for these performance measures, monitoring the achievement of those targets and using performance information to benchmark the organization (Poister et al, 2013).…”