Performance indicators

Abstract

Performance indicators (PIs) are used in relation to concepts for which a direct measure is not always observable when monitoring development towards a desired goal. For this reason, they are devised as combined relevant quantifiable values that can be followed in time to give a partial metric of a given action. PIs may be used to report effectiveness by measuring profitability within the commercial sector, for example. In contrast, arts and cultural organisations, as well as other non-profit sectors, have a specific legal and financial structure to support the organisational goals related to delivering intangible services (such as a cultural experience, education, health, or sustainability) and to advance societal values (Forbes, 1998). In addition, services provided may have public good characteristics, may be a natural monopoly, may suffer from socially inefficient levels of consumption (or production) due to information asymmetries, and may receive public subsidy or be publicly provided, requiring a different approach than a simple investor-management accountability system. As a result, PIs to measure effectiveness are not easy to define, and if developed, may not indicate whether the organisation is operating on its production frontier, that is, efficiently (Peacock, 2003). PIs are intended to support decision making on the allocation of resources by evaluating opportunity costs and, in the cultural sector, have often responded to changes in cultural policy. Schuster (1997) notes three characteristic periods: in the 1960s, the concept of social indicators was developed to complement economic indicators; in the 1980s, attention moved towards making inventories of the size and activity of the sector; and in the 1990s, a focus on monitoring the management of the use of public funds for accountability drove the design and use of PIs. We can add two additional turning points in the development of PIs for the arts and culture sector. First, the recognition of