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Lanjutan Jurnal 1
Lanjutan Jurnal 1
Lanjutan Jurnal 1
The entity of SOEs owned by a single city represents a fruitful object through which to
study the effectiveness of particular performance measurement practices, as it
comprises a large number of discrete units operating under almost identical public
governance conditions (see Przeworski and Teune, 1970). This paper's case study was
located in a large German city in North Rhine-Westphalia hereafter referred to as
“Citee”. In 2014, Citee held more than 70 SOEs to a major, equal, or significant but
minor part. In particular, Citee had a majority ownership (more than 50 per cent) of
almost half of its enterprises, some equal ownership solutions (50 per cent ownership),
and minority ownerships (less than 50 per cent) of more than half of its enterprises.
Most of Citee's SOEs were private limited companies (in German, Gesellschaften mit
beschränkter Haftung), together with a few public limited companies
(Aktiengesellschaften), and some limited partnerships with limited liability companies
as general partners (Gesellschaften mit beschränkter Haftung & Compagnie
Kommanditgesellschaften). The enterprises operated in very diverse areas, ranging from
social activities (eg child and youth services) to more business-oriented activities (eg
public utilities, public transport). In order to govern its SOEs in line with its municipal
goals, Citee had established a central unit under its financial department that, at the time
of the study, comprised one ownership manager and five employees. This unit was
responsible for the facilitation of SOE governance; in particular, for financial
controlling, reporting, performance management, and overall SOE support. Also, social,
economic, cultural, and educational requirements needed to be balanced, harmonized,
and aligned to the city's overall strategic goals (see Schwarting, 2004).
The governance of SOEs in Citee was subject to high financial pressure (Döhrn et
al., 2013) that resulted from structural changes and high unemployment rates
(Bundesagentur für Arbeit Statistik, 2015). Historically, coal had been the main
economic driving force in North Rhine-Westphalia (Döhrn et al., 2013). Due to a
turnaround in energy policies, though, unemployment in North Rhine- Westphalia was
very high (circa 760,000; Bundesagentur für Arbeit Statistik, 2015), representing more
than a quarter of the total for the whole of Germany (approximately 2,900,000;
Bundesagentur für Arbeit Statistik, 2015). Overall, the cities of North Rhine-Westphalia
had found themselves to be under economic and financial pressure. The sum of cash
loans in North Rhine-Westphalia was equivalent to half the cash loans granted in the
whole of Germany (Burth et al., 2013). Indebtedness and over-indebtedness were
accelerating. Thus, the principal focus of Citee's ownership management lay in austerity
management.
Financial pressure had resulted in mainly output-based SOE governance in Citee,
with a strong focus on strict budgeting. Moreover, inconsistent approaches to
performance measurement and incentive schemes had led to a rethinking of the old
PMS. After an intense political decision-making process, in 2013, the city council
decided to restructure the performance measurement processes along with the
compensation schemes for their SOE managers. Alongside 60–80 per cent fixed pay,
one short-term and one long-term variable pay component (each 10–20 per cent) were
introduced. The short-term variable component was an annual bonus based on the
achievement of public service provision goals, whereas the long-term variable
component depended on predefined financial goals. The newly implemented adjusted
balanced scorecard (see Kaplan and Norton, 1992, 1996, 2001) reflected these two goal
sets: public service provision goals incorporated three perspectives – namely, (1)
customer/citizen, (2) cooperation within Citee, and (3) development – that together
constituted 50 per cent, while the fourth perspective, (4) finance, served as a
counterweight. (To guarantee its practicability, each perspective of a balanced scorecard
should entail at most three goals.)
All contracts completed since the council decision have been settled under this
scheme. This change process makes the case particularly interesting for the present
study. New performance measurement practices exist alongside old ones, revealing
functioning performance measurement practices, room for improvement, and potential
for conflict. For instance, the difficulty of balancing financial and service provision
goals became obvious within the case study. A strong focus on predefined and highly
ambitious financial goals questions the controllability of the set goals. In such
surroundings, high levels of pressure make the empowerment of COEs through
performance measurement unlikely. Taking this into account, the study scrutinized
which performance measurement mechanisms supported them in or restricted them
from actively contributing to public task fulfilment. Thus, the actual workings of the
underlying causal mechanisms were traced (Blatter and Blume, 2008a, 2008b; Blatter
and Haverland, 2012; George and Bennett, 2005; Haverland and Yanow, 2012). The
richness of the insights as well as the historical familiarity with the sequence of events
that were gained from the case study allowed for in-depth exploration of the causal
processes.
Data
collection
Initial contact was made with the ownership manager of Citee in April 2014 at a
conference during which he presented Citee's new performance measurement and
management system. In order that the study's authors could become more familiar with
the case and to confirm subsequent steps, a telephone conference was held. Next, the
case study was authorized by the municipal finance director, as well as by the mayor of
Citee. These steps were particularly important, as case accessibility is a primary
precondition for this kind of in-depth investigation. As this study sought to answer the
question of under which conditions PMSs can empower SOE managers, and as a
plurality of factors within the different empowerment dimensions is assumed to work
together to produce the desired outcome, the underlying case study approach
encompasses causal-process tracing (Blatter and Blume, 2008a, 2008b; Blatter and
Haverland, 2012; George and Bennett, 2005). Furthermore, causal-process tracing as a
within-case approach explains the study's single-case approach. The investigation
depended on gaining a comprehensive overview of the unfolding of all of the processes
that accompanied the introduction of the new PMS at Citee and the possibility of
gaining profound insights into the perceptions and motivations of important actors
(Blatter and Haverland, 2012).
Accordingly, during a preliminary meeting with the ownership manager at the
beginning of July 2014, key SOE managers were selected as interviewees. The main
selection criteria sought to strike a balance between SOEs from different sectors of
varying size and financial strength, and between SOEs in which CEOs were contracted
under the old as well as under the new performance measurement scheme. Theoretical
saturation defined the absolute number of the selected interviewees (Baker and
Edwards, 2012; Ullrich, 1999a, 1999b). Real-world occurrence established a natural
limit to this approach. For instance, no SOE manager of a small SOE existed who had
been contracted under the new PMS.
Table
I.
Overview of interviewed SOE
managers
<Insert Table I about here, including footnotes>
Table I summarizes the sample SOEs and the managers with whom interviews were
conducted, further to the initial interview with the ownership manager. As shown, a
balance was struck between SOEs with high, medium, and low impact, as measured by
number of employees (SOE size) and capital stock (financial impact). Also, a diversity
of sectors and a balance between loss- and profit- making SOEs were taken into
account. Moreover, approximately half of the SOE managers chosen were employed
under the new performance management scheme and half were still under the old PMS.
This maximum variation enabled a diversity of empirical observations within the case
study (Blatter and Haverland, 2012; Miles and Huberman, 1994).
Altogether, six in-depth, face-to-face interviews were conducted in the third quarter
of 2014. All the interviews were tape-recorded and later transcribed. The interviews
lasted approximately 50 minutes on average, with the shortest being 37 and the longest
100 minutes. The trustworthiness of the data was increased by tape-recording the
consent of all the interviewees. In addition, a transcript of their interview was sent to
every interviewee shortly afterwards unless explicitly rejected. The interviews were
open ended and geared towards ensuring a deeper understanding of all evolving
processes and the interviewees' cognitions in reaction to the differing measurement
practices. Primarily, the interviewees were asked about their role in their respective
SOE, about their own goals and those they pursue within their enterprises, about their
perception of the governance mechanisms in place, and, in particular, about their
experiences with the PMS and their interactions with the municipal ownership
management. They were also encouraged to freely describe the way in which the new
system was introduced, its components, and the targets that the city is pursuing with it.
Follow-up questions focused on increasing the richness of the collected data (Rubin and
Rubin, 2012), and the interviewers used Hermanns' (2004) stage directions for
interviewing to establish a positive atmosphere and concentrate on the real-life world
without losing sight of the research question. Additional case-relevant documents, such
as internal documentation, presentations, and council documents, were also collected
and expounded during the interviews.
This case study approach permitted a refinement of the explanatory framework of
how PMSs can empower SOE managers, as well as an understanding of a possible set
of causal mechanisms behind it as the collected data allowed for finely grained
empirical insights and the consideration of a broad and diverse set of explanatory
approaches (Blatter and Haverland, 2012).
Data analysis
The empirical data from the interviews were transcribed and analysed directly after the
interview phase (Miles and Huberman, 1994) using MAXQDA 11 software (Flick,
2014; Paulus et al., 2014). In order to ensure confidentiality, a numerical order was
assigned to the interviewees (Manager I, Manager II, etc.). The data analysis process
included re-listening to the recordings as well as reading and re-reading the transcript,
on the one hand (Windeck et al., 2013), and the coding and re-coding process on the
other. The entire analysis followed the “four eyes” principle. The very first step of the
coding process sought to discover the structural aspects to the data, and, to this end,
used open coding (Glaser and Strauss, 1967). During this stage, repeatedly reverting
back and forth between empirical data and the broad theoretical basis facilitated the
derivation of the theoretical framework described above. In particular, after grouping
the discovered codes, there were received as the main in vivo codes, on the one hand,
ones such as “procedural fairness”, “controllability”, “participation”, or “diverse
accountabilities” that could be grouped alongside the concept of psychological
empowerment, and, on the other, a prevalent “goal congruence” code that reflected the
research question. “Goal congruence” was identified as the main purpose of PMS and
defined as transforming individual goals into organizational or collective goals
(Anthony and Govindarajan, 2014; Cugueró- Escofet and Rosanas, 2013; Locke and
Latham, 2002; Locke, 1996). However, despite being the main purpose of PMS, the
introduction of these systems is evidently not always recognized by managers as being
empowering. Moreover, at this stage of the analysis, even dysfunctional effects were
detected, in that managers' existent orientation towards public service provision goals
had been distorted by a strong focus solely on financial goals. Indeed, this key aspect of
the first open-coding step led to the specification of the research question, which asks
how PMSs can be designed in order to empower managers towards public goal
fulfilment rather than diminishing their existing foci on public-service fulfilment.
Once the real world-driven research question had been specified, an understanding of
the entire landscape had been gained, and the theoretical basis in the described iterative
process built up, the three-step coding approach laid down by Miles and Huberman
(1994) (see Windeck et al., 2013) was followed. Then, the in vivo codes were further
grouped and developed according to the study's theoretical framework (“theoretical
coding”), and a “start list” was created around the four dimensions of psychological
empowerment. These served as the main coding families, which were then enriched
with subcodes. As a last step, this start list was revised during the data analysis, its
structure checked, and selective coding used to further elaborate the study's case (see
also Glaser, 1992).
Once again, the researchers were constantly moving back and forth from the
empirical to the theoretical dimensions of the analysis (Dubois and Gadde, 2002). This
single case study thus relies on abduction as a combination of inductive and deductive
research strategies (see Goretzki et al., 2013; Järvenpää, 2009). Given the complex
background of SOEs and the interplay of diverse mechanisms, abduction was identified
as an appropriate method for constantly refining the theoretical framework. Rather than
striving for generalization, the study aimed at a “possibilistic generalization” (Blatter
and Haverland, 2012, p. 31), in order to gather in-depth knowledge about a possible
combination of causal conditions that might lead to managers' empowerment through
PMS.
In fact, the balanced scorecard implementation process in Citee had not been
completed at the time of the present investigation. Furthermore, the implementation
plans had not been adequately communicated. Such consequences of a lack of
information show that the necessity for goal clarity and transparency starts long before
the use of a PMS. To drive forward the implementation process, trust in the system has
first to be established. In the case study, some managers adhered closely to official
internal documents when answering questions or follow-ups concerning the balanced
scorecard dimensions. They were unfamiliar with the system and showed discomfort in
using it. Accordingly, several scholars point to measurement system maturity as being a
key driver of purposeful performance information use (Kroll, 2015; Padovani et al.,
2010).
Citee also had in place a council information system that was used as an online
platform for communicating most of the decisions taken by the council to the public.
SOE managers were informed of the new performance measurement and incentive
system through this communication channel, too, once it had been approved by the
council, and they stressed unequivocally that all managers should actively seek out this
information and be “familiar with the system” (Manager III; 96). However, the
interviewees stated that transparency in political directives was not being actively
fostered in Citee, which reflects other research that sees a political reluctance to provide
clear goals (Behn, 2003; Van Dooren, 2005; Ho, 2006). Managers in Citee were
constantly in search of political developments and directives, resulting in insufficient
information flows. Although this task is largely considered a routine duty, the
importance of an additional, two-way, and more personal exchange with all involved
parties was stressed and proposed as a solution.
“Therefore I do think that the city has a legitimate interest to look at in this way,
especially the financial areas, and, I think, when it comes to the detail and content,
then, for example, the technical committees, too, are likely to be interested. That
something happens, for example [...], when we describe goals in child and youth
work that we want to increase the number of visitors. This could also be interesting
for the youth welfare committee.” (Manager VI; 48)
“So I'm primarily assuming, of course, that you want to have justice throughout the
companies.” (Manager V;84)
Enhancing managers' perceived competence through balanced goal difficulty
PMSs clarify managers' goals and provide necessary information on their attainment,
and thus have the potential to enhance managers' perceived competence – as long as
managers are able to accomplish these goals. In the study, goal difficulty was
omnipresent in Citee as it battled the twin pressures of indebtedness and over-
indebtedness. Accordingly, the pressure to constantly reduce staff numbers and costs
was weighing heavily on Citee and its SOEs. “The main objectives of the region” were
associated with “exorbitant targets” (Manager III; 84), a perspective that further
increased executive managers' perception of goal difficulty as a feeling of having “no
choice but to operate with these strict requirements, including with regard to the
subsidiaries” (Manager III; 84). Surprisingly then, in general, SOE managers perceived
the very high financial goals as reasonable, and stressed that they should be commonly
pursued.
Indeed, challenging financial goals were, in some cases, reported as being
motivating, as they demanded high levels of competence from the managers in order to
progressively come up with innovative solutions. Several managers reported at length
that they were actively searching for innovative solutions to halt the financial burden.
For instance, some had started to cooperate in new fields with other SOEs, or had found
new markets for their services outside of the city:
“So, one of the main reasons why we have been able to work so cost-effectively in
recent years has been collaborations with other institutes in the city.” (Manager I;
35)
“We also meet with [... let's call them 'third parties' [...] 'external third parties', and
also do business with them – Stadtwerke [X], for example. That's not [Citee]; I also
do business with them outside the city. And we want to increase this further.”
(Manager II; 63) Thus, supporting previous research (Walker et al., 2011; Wynen et
al., 2014), this study observed that clear performance targets may even induce
management innovation. However, these interrelations are complex and depend on
various contextual factors. Wynen et al. (2014) found that size and an organization's
budget restrict innovation. This is reflected in the present work's empirical data:
only managers of SOEs with higher capital stocks (independently of whether they
were loss- or profit-making SOEs) were actively reporting innovative behaviour.
Further, at some point, the motivating effect of high targets tilts into demotivation
and frustration, supporting a curvilinear effect of goal attainability on performance
(Bandura, 1986):
“[...] we could happily expand that, because we would then benefit ourselves from
the exploitation of this company [...] then I would have to cut down on what I stand
for.” (Manager I, 53)
The burden of increasingly unattainable goals at the peak of the curve was just
starting to become visible, as interviewees were forecasting their results for the
following periods. An “enormous need for maintenance” (Manager V; 79) was reported
throughout one interview, and was strongly perceived due to an obsolete infrastructure
having to be replaced in the coming years. In this respect, SOEs were judged to be
“operating at the edge” (Manager II: 81) and the budgetary outlook was generally
negative.
“So, for this year, the goals are certainly achievable. In perspective, the financial
targets in particular are no longer be achievable. Unless I bring together the issues of
quality and financial impact. We have a declining dividend, we have the city of
[Citee] facing tougher budgetary constraints.” (Manager V; 79)
“So we don't want it to fail because of that, but the problem [is] that public service
provision and financial goals should have bite, we'll need to work on this so that
there is also mutual acceptance.” (Manager III; 78)
“If I, during a population explosion, have growing numbers, then I can boast about
it, but I cannot help it. And in 15 years, we will all be dealing with declining
numbers, and if the utilization figures then decline, then you still can't do anything
about it. So they then also naturally need some kind of evaluation, but the utilization
figures are still essentially meaningful for measuring success.” (Manager IV; 43)
The disregard of the controllability principle in Citee is in line with that reported by
other researchers (Bhattacharyya, 2013; Burkert et al., 2011) and points to structural
problems requiring further investigation. A possible solution, proposed by one of the
interviewed managers, might be the transparent publication of the degrees of goal
achievement, which might also help with goal controllability throughout the year.
This is in line with research that shows a tendency to use bottom-up approaches for
the internal use of such systems (Torres et al., 2011). The possibility of influencing
goal-setting processes also mirrors the present study's underlying supposition that PMSs
that embrace participation and provide strategic information can foster self-
determination. However, public service provision goals, in particular, were reported as
being defined in a participative process that was limited for financial goals, as financial
goals were strictly predefined in view of Citee's poor financial situation:
“I have more room for action – naturally [...] in a narrow corridor [with respect to]
the financial targets.” (Manager V; 82)
With regard to financial goals, a top-down approach was used in Citee, although
interviewees perceived this as undesirable.
“There is a kind of a tendency to talk the system to death, which at some point leads
to it being out of control, including as far as discussion is concerned.” (Manager III;
76)
This strictness in financial goal setting limited the SOE managers' scope of action,
and sometimes rendered them incapable of acting. Managers were therefore calling for a
system that, in a top-down approach, defined the general dimensions of performance to
be measured, but, at the same time, offered room for participation in the setting of
concrete measures.
With respect to strategic information provision, no evidence was found of the use of
performance- measurement information for the communication of strategic goals. This
strategic perspective, which, from a theoretical perspective, is crucial in terms of
enabling managers to direct enterprises actively towards common public goals, was
lacking in Citee. Some managers believed that the lack of strategic information
provided by Citee and its administrative bodies was placing obstacles in their way:
“You know, whether I now have 10 or 12 thousand more or less, I can truly say to
you that that for me is no motivation. [...] Because they pay us well. We have
everything we want. Iya. So someone, who, what do I know, is motivated by one, or
maybe two or three months' salary, if that is their only motivation, then all I can say
is that such people are in the wrong place.” (Manager I; 53).
Also the research did not unequivocally confirm a shift in public managers'
behaviour towards a style more in line with the private sector for all countries (see Xu-
hong, 2004), which supports the view of prior research that involvement in meaningful
public service provision is an important incentive for public managers, compared to
private sector managers (Rainey, 1982). In general, managers in Citee did acknowledge
their multidimensional accountabilities and wished to have a dialog with all involved
parties. Correspondingly, Kroll (2015) identified stakeholder involvement as the second
most important factor for enhancing the use of performance-measurement information.
To encompass the broad impact that SOEs have on society in general, the present
study found that PMSs should sensitize managers to and enhance dialogue concerning
all accountability dimensions. Examples of diverse dimensions not yet included in
Citee's PMS but of crucial importance for the fulfilment of SOEs' tasks were reported in
many of the interviews. These examples were presented according to the introduced
administrative, political, professional, and social accountability dimensions. Enhancing
sensitivity to these accountability dimensions within goal setting should increase
managers' obligation to justify their actions towards all groups and not just
administrative bodies (Pollitt, 2003; Schlenker et al., 1994).
With respect to administrative accountability, Citee had laid down financial
requirements that managers must fulfil; thus “...to work economically as possible for the
city” (Manager II; 25) was at the core of SOEs administrative accountability.
“So that's the main thing; you know how bleak our budget is, I think soon we will
become over- indebted. I think the capital will soon be exhausted, I no longer
remember exactly, but I think by the end of the year at any rate.” (Manager II; 25)
“There's a market master who maintains order in the market, ie they check whether
the market regulations set for us by the board are being complied with.” (Manager II;
9)
But the ruling political parties, too, influenced the goals of the SOEs, with their
political ideas shaped by the expectations of their voters. This also encompassed, for
example, youth policy, with “talks [being] held with the youth welfare office” (Manager
VI; 21). Furthermore, every company specialized in a certain professional field
containing specific professional standards and benchmarks, and, consequently,
“prescribed rules and regulations” (Manager IV; 7) were important and formed part of
day-to-day work. The regulations were diverse, and ranged from broader, local area
transport plans to more detailed ones.
“We have a local area transport plan which prescribes certain quality standards for
the public transport network. At the same time, we have set as part of Green Capital
targets for the split model – a gradual increase by 2035 from the current 19% to
25%.” (Manager V; 5)
With regard to socially imposed goals, this study proposes that the public voice
should become visible within set goals and performance standards. Related suggestions
in the literature include user boards, town meetings, public hearings, and customer
surveys (Sørensen and Torfing, 2012) as ways of integrating the public voice into
PMSs. However, social goals have, up until now, been absent from the goal-setting
processes in Citee, although non-profit enterprises in particular were very much aware
of their social accountabilities. They also recognized the social aims involved; for
example, “[What] we pursue is the provision of cultural necessities for the region”
(Manager I; 20).
The case of Citee furthermore illustrates that a holistic approach to all accountability
dimensions is crucial, as interdependencies exist with other empowerment components.
However, ambiguities resulting from diverse accountabilities could lead to an
unmanageable system and dysfunctionality (Johnson, 2001; March and Olson, 1995). In
Citee, in cases in which social accountability or professional accountability was
strongly perceived but administrative accountability was not (due to a lack of strategic
information), the perception of goal clarity was diminished, as financial goals lost their
substantiality without the necessary strategic background, leading to dramatic financial
grievances, even in cases where past financial results had been universally outstanding:
“Everyone knows – and I am checking the actual numbers right now – that next year
we will have a deficit of 6.3; the following year, 7.2; the following year, 8.1; then
8.7, and then 9.9 million.” (Manager I; 75)
“In perspective, the financial targets in particular are no longer achievable [...], I
have an enormous need for maintenance, which has also not been displaced by the
city.” (Manager V; 79)
Discussion
In exploring the underlying case, this study has shown how PMSs that are designed in
accordance with the concept of psychological empowerment are able to foster
managers' active work role and thus support the effective governance of SOEs. An
empowerment-friendly performance measurement design was proposed in accordance
with the four dimensions in which psychological empowerment is manifested: meaning,
competence, self-determination, and impact (Thomas and Velthouse, 1990).
Considering each dimension in turn, first, the meaning of SOE managers' work can
be fostered through the provision of clear goals within a PMS. Goal clarity necessitates
that the goals imposed by administrative as well as political bodies be transparent. Only
in this way can a formal and institutional basis be established from which SOE
managers can form a clear view of the value that they place on their work in relation to
their own ideals or standards. However, a PMS needs to become established itself for it
to be perceived as clear and useful for assessing the meaning of one's work. As was
shown in the case of Citee, this process can be additionally supported through extensive
communication, and, within this communication performance, priorities can be
established. Goal transparency can be fostered through a two-way exchange with
politicians (who are commonly reluctant to formulate and set transparent goals), while
procedural fairness can be fostered through transparent goal allocation. All of these
aspects helped the managers of Citee's SOEs view their work as meaningful. In this
context, it is also helpful to use information systems as communication channels,
especially between SOE managers, administrative bodies, and politicians (Behn, 2003;
Van Dooren, 2005; Ho, 2006), and communication channels can thus support reliable
documentation. With regard to the multiple accountabilities that SOEs face, procedural
fairness in a PMS can further support the active work role of managers as it increases
their acceptance of goal-allocation processes. The case study showed that PMSs that
standardize performance measurement procedures for all SOE managers through higher
acceptance of goals also increase the perceived value of their work and thus the
meaning they attribute to their own work.
Secondly, high degrees of perceived competence are crucial for empowering
managers. However, public managers are largely confronted with difficult and
conflicting goals due to their manifold accountabilities, and goal difficulty has a
curvilinear effect on managers' perceived competence. In Citee, increased motivation
and – particularly in financially strong SOEs – increased managerial innovation
capacities were shown when goals were demanding, but, as soon as these veered
towards unattainability and unreasonableness, managers became frustrated and
demotivated. Thus, exploratory use of a PMS can help maintain goals at the difficult but
attainable level. From what was observed at Citee, such exploratory use is possible, as a
PMS integrates a multiplicity of goals, keeps track of goal achievement in a transparent
way, sets milestones, and enables the adaptation of measures to the specific needs of the
SOE. Such an exploratory approach can provide a basis for the managers' personal
development and thus can enhance managers' perception of their own competences.
Thirdly, participation in goal-setting processes fosters managers' perceived self-
determination. With respect to financial austerity, such participative processes were
limited for financial goals at Citee. Nevertheless, the case study revealed that the
detailed formulation of goals and measures is a way of enhancing managers' perceived
self-determination and thus empowering them. In addition, the provision of strategic
information through PMSs was found to have untapped potential.
Fourthly, a holistic view of goals can reveal the impact of a manager's work to an
SOE manager. In this respect, it was interesting to observe that managers at Citee
largely saw themselves as public servants and acknowledged their multiple
accountabilities. Thus, they wished to have a PMS that took into account all the
accountabilities that SOE managers face as well as the goals resulting therefrom,
thereby enhancing any dialogue. This broadened view on goals is a crucial element of a
reconsidered PMS, but is limited, as it entails potential dysfunctionality and
unmanageability (Johnson, 2001; March and Olson, 1995). Thus, rather than integrating
all accountability dimensions as particular measures into a PMS, SOE managers'
participation in administrative goal-setting processes, the occasional invitation of public
authorities to advisory board meetings, the use of other professionals' benchmarks, as
well as listening to the public voice can all help to broaden goals without making them
unmanageable.
Each of the presented performance measurement elements considers and supports
one empowerment dimension. In this way, empowerment becomes a means for
enhancing the active work role of SOE managers and the governance of SOEs in
general.
Conclusion
Previous studies have tried to determine whether PMSs lead to better outcomes in the
public context, with mixed results (Greiling, 2006). Some scholars have analysed the
factors that foster the use of the provided information (eg Ammons and Rivenbark,
2008; Kroll, 2015), while others have begun to examine how PMSs should be designed
– as opposed to whether or not they should be implemented – to produce the desired
effects (eg Padovani et al., 2010). However, to the present paper's authors' knowledge,
no study has been carried out within the specific context of SOEs. This study therefore
investigated how PMSs might be designed to increase the governance effectiveness of
SOEs.
It found that, for the complex settings of SOEs, effective governance solutions
require compatible governance mechanisms, as combined governance solutions can
adapt more flexibly to the changing needs of SOE governance and respond better to
historically developed, coexisting governance mechanisms (Bruton et al., 2015;
Christensen and Lægreid, 2007; Grandori, 1997, 2001b). Instead of outlining the
contradictory elements of coexisting governance mechanisms, this study searched for
possibilities for further developing existing ones. In particular, it was investigated how a
PMS, as the basis on which most NPM governance mechanisms are built, can be
combined with self-steering governance mechanisms. When it comes to public value, it
is important that SOE managers take an active role in achieving public goals rather than
merely pursuing their own interests. Empowerment at work supports this, as it leads to
increased task motivation (Hall, 2008; Spreitzer, 1995). Thus, we further developed a
model PMS according to the dimensions of psychological empowerment (Conger and
Kanungo, 1988; Hall, 2011; Seibert et al., 2004; Spreitzer, 1995; Thomas and
Velthouse, 1990), and proposed an empowerment-friendly performance measurement
design.
The study sought to discover under which conditions PMSs can empower SOE
managers, and hence, assuming a plurality of causal factors within the different
dimensions of empowerment, causal process tracing was chosen (Blatter and Blume,
2008a, 2008b; Blatter and Haverland, 2012; George and Bennett, 2005) for the “Citee”
single-case evaluation. The underlying causal mechanisms of the study's theoretically
deduced concept thus were traced. Based on in-depth interviews with the executive
managers and the CEOs of various German SOEs within the “Citee” case city, the study
found that a clear, transparent, and fairly designed PMS, along with a balanced
approach to goal difficulty and the provision of strategic information through
performance-measurement practices, positively influences all four cognitions in which
empowerment is rooted (meaning, competence, self- determination, and impact). It was
shown that these practices, together with a broad view and discussion of the manifold
SOE goals, could empower SOE managers. Consistent with these findings, an
“empowerment-friendly” performance measurement design was presented and the
implications for governance research in the post-NPM decade were outlined. This
facilitated the modelling of a theoretically derived, empowering PMS, enhancing the
framework with concrete propositions for its arrangement.
Limitations
This study focused on performance measurement practices. From a content-related
point of view, however, it is also important to assess the reasons why performance
information is being measured. For the public sector, strategic decision making,
learning, controlling, and budgeting as well as sanctioning and rewarding are revealed
as purposeful reasons for measuring performance information (Behn, 2003; Van Dooren
et al., 2010; Kroll, 2015; Moynihan, 2009). Accordingly, van Veen-Dirks (2010)
concluded that, depending on their use, PMSs could be adapted. In the present case, the
significant underlying performance information use concerned the effective governance
of SOEs. However, different recommendations might be derived for other purposes.
Also, the context of the study's findings was restricted to a German setting, which
provides opportunities for further research in other countries. Likewise, Citee was a
specific example, facing as it was the dilemma of extreme financial pressure (Döhrn et
al., 2013; Schwarting, 2004). However, the study's findings might lead to different
empowering goals and structural conclusions in other municipal settings.
Moreover, a qualitative methodology was used to trace the underlying causal
mechanisms that could lead to managers' empowerment through PMSs. In particular,
the relative meaning of empowerment with respect to governance effectiveness should
be tested, and the actual dearth of influence on self-governance elaborated. Through the
study's purposive sampling (Table I), insights were gained into a diverse spectrum of
public tasks and accountabilities. However, as with other qualitative studies,
generalizations cannot be derived from it. The objective of process tracing is to refine
theory rather than generalize it (Blatter and Blume, 2008a, 2008b; Blatter and
Haverland, 2012; George and Bennett, 2005). Examining the applicability of this study's
refined results within comparative case studies could be a possible next research step,
and would help to situate these results in a more general context. For instance, focusing
on and elucidating specific governance mechanisms vis-à-vis the specific business
activities of SOEs, executive managers' positions, and/or SOEs' legal forms could offer
additional criteria for further research on the design of empowering PMSs. Lastly,
further quantitative research is needed to support the current study's framework.
Nevertheless, this study and its findings mark a starting point for the exploration of how
PMSs as the foundation of output-based NPM governance can be designed to
simultaneously empower those whose performance is being measured.