Model 2: Siloed Performance Systems

(a continuation from the December 23, 2009 blog on “Managing Performance”)

Some organizations or countries operate a series of parallel performance systems, disconnected from each other. Oftentimes this happens when different leaders, at different levels of an organization, and at different points of time, launch measurement initiatives that are disconnected from each other. The two country case studies described by Bouckaert and Halligan that typify this model are Sweden and the Netherlands (note: these links are to an OECD study on performance budgeting, not to the Bouckaert-Halligan case studies, which are not available on-line. You have to get their book to read those!).

These separate performance systems are often overseen by specialists and are used for more than just compliance with legal requirements. For example, the chief financial officer may have one system, the quality officer may have another, and the strategic planning office may have yet another. Each uses performance information for his or her own purposes, but not necessarily for the overall enterprise.

The siloed approach focuses on managing structure and functions, and there is an internally interactive measurement process within each management function. Bouckaert and Halligan note that this approach: “focuses on several structural and functional mechanisms mostly within the market-based private sector, resulting in organising management functions.” Also, each operation decides which types of measures and controls work best for different kinds of jobs.

The authors observe that a developed measurement system can push individuals, teams, and organizations in a particular direction. In this case, “measurement then becomes a motivational and intentional process for the purpose of change.” They continue, noting: “Measures are not intended purely and simply to observe, but to cause reaction, sometimes to reward or to punish.” . . this moves the system “from a naïve belief in a thermometer type of neutrality to an awareness of the need for functional measurement.” Their analogy is that a disconnected traffic camera can still result in slower traffic simply because drivers think they are being watched.