Baltic Journal of Management

Using non-mandatory performance measures in local governments

Lourdes Torres Vicente Pina Caridad Mart
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Lourdes Torres Vicente Pina Caridad Mart, (2012),"Using non-mandatory performance measures in local
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BJM
7,4
416
Received 31 May 2011
Revised 18 January 2012,
17 May 2012
Accepted 20 July 2012
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Baltic Journal of Management
Vol. 7 No. 4, 2012
pp. 416-428
q Emerald Group Publishing Limited
1746-5265
DOI 10.1108/17465261211272166
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1746-5265.htm
Using non-mandatory
performance measures in local
governments
Lourdes Torres, Vicente Pina and Caridad Mart
Department of Accounting and Finance, University of Zaragoza,
Zaragoza, Spain
Abstract
Purpose The purpose of this paper is to analyse how local governments implement non-mandatory
performance measures (PM), the types of PM employed, the degree of their usefulness in decision
making and/or accountability, and their outcomes.
Design/methodology/approach The information was collected through a questionnaire
sent to the expert managers in charge of developing PM for Spanish local governments with more
than 50,000 inhabitants. In addition, data sources were triangulated through an analysis of the
performance indicators published in the notes to the local governments financial statements and in
their web sites.
Findings The implementation of PM in Spain follows a top-down approach in which each local
government can choose whether to implement PM, how to implement them, and what information to
disclose. Implementation features a high degree of involvement on the part of managers and little
involvement on the part of medium- and street-level staff. PM are used primarily for budgetary and
strategic management planning and long-term decision making.
Practical implications The paper will be useful to academics and practitioners to enable better
understanding of the problems associated with introducing and using non-financial, non-mandatory
PM. The Spanish case is similar to that of most continental European countries, in the leeway their
local governments have in implementing their own PM systems.
Originality/value The paper sheds light on the application of an interesting aspect of public sector
management accounting and contributes to the literature by analyzing the application of a
non-mandatory PM system in a non-Anglo-American context.
Keywords Spain, Public sector accounting, Local government, Performance measures, Decision making,
Non-mandatory system
Paper type Research paper
1. Introduction
Issues considered cornerstones of public sector reform in the 1980s, such as performance
measures (PM) and improved efficiency, are returning as proposed ways of reducing the
pressure on public budgets. Performance measurement is regaining its popularity in the
EUs public sectors, especially local ones (Lapsley and Wright, 2004; Ammons and
Rivenbark, 2008). Improving efficiency and effectiveness is driven not only by managerial
rationality but also by the political agendas of most countries (Halachmi, 2005).
Accordingly, the local governments of most EU countries are developing PM systems as a
public expression of their commitment to use taxes efficiently.
This study has been carried out with the financial support of the Spanish National R&D Plan
through research project ECON2010-17463 (ECON-FEDER).
 The disclosure of non-financial information and the introduction of performance Non-mandatory
indicators are rarely legally required in OECD countries. Such requirements as exist PM in local
do not refer to specific indicators and allow local government discretion in their
definition and introduction[1]. For Matland (1995) and Barrett (2004), this governmental governments
discretion and the lack of detailed legal requirements are meant to smooth local
governments PM implementation processes by making it easier for local government
staffs to arrive at a consensus and thus avoid conflicts while implementing PM. As the 417
decision to introduce performance indicators is usually made internally, heterogeneity in
their implementation and usage is common.
This study addresses the following research questions. First, how do local
governments implement performance indicators when they are non-mandatory? Second,
what types of PM are employed by local governments? Third, how useful are
performance indicators in local governments decision-making (internal/learning usage)
and/or accountability (external usage)? Fourth, what are the outcomes of their use? This
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empirical analysis is based on Spanish local governments of over 50,000 inhabitants.

This study of Spanish PM development will be useful for academics and
practitioners to better understand the problems associated with introducing and,
especially, using non-financial PM that are non-mandatory. The Spanish case is similar
to that of most continental European countries in the leeway local governments have in
implementing their own PM systems, while central governments provide ambiguous
implementation guidelines or none at all.
The paper is organized as follows. Section 2 contains the theories used and the literature
review. Section 3 analyses the Spanish case, divided into three components research
context, methodology, and results. Section 4 discusses the study results and the alternative
uses for PM. Finally, the studys main findings and lessons are outlined in the conclusion.

2. Theoretical context and previous research

The difficulties of establishing theoretical frameworks for explaining changes in public
management have been frequently described. According to Lee et al. (2006), finding
theories that provide satisfactory explanations is difficult when the phenomena under
study are multi-faceted and little known. It is therefore sometimes better to analyse the
rationality of public management changes using empirical evidence rather than
develop a priori hypotheses and test them (in what is known as grounded theory).
Nevertheless, the literature presents a range of theories (such as agency theory,
institutional theory, and the conflict/ambiguity approach) to explain the introduction
and use of PM in governments through the identification and analysis of the roles and
drivers of these reforms.
The agency theory has helped explain the determinants of non-mandatory PM in
public entities. Agents have an information advantage over the public; thus, PM
systems are used to monitor managerial action and link it to the principals. However,
the principal-agent relationship is more complex in the public than in the private sector
because the former has more layers between the principals citizens and/or central
government and the agents local managers and/or politicians (Letza et al., 2004).
Many studies on the implementation of public sector management reforms have used
the institutional theory (DiMaggio and Powell, 1983) to explain the features
oftheseimplementations. According to this theory, PM adoption can be viewed as
formal compliance with the wishes and expectations of the external environment and
 BJM stakeholders. Public sector entities must demonstrate accountability, and managerial
7,4 systems are seen as one way for public sector entities to legitimize their operations.
Matland (1995) explores how conflict and ambiguity in reforms implementation
policies affect the way reforms are adopted. He proposes four implementation perspectives
to explain the gap between rhetoric and results in public sector management reforms. One
is experimental implementation, which has a low level of conflict but a high level of
418 ambiguity and where key actors experiment with implementation; this is the Matland
approach that best explains the PM initiatives undertaken in this case.
The production of performance information has received considerable attention in the
public sector literature, but investigating the real use of this information has been
a negligible part of the research agenda (Van Dooren and Van de Walle, 2008; Moynihan
and Pandey, 2010). Poister and Streibs (1999) study highlights the primary users of PM
reports and the frequency with which they are elaborated as factors that could contribute
to assessing the nature of PM implementation in US municipalities. The study shows that
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this frequency varies according to the type of users. Studies have analysed the usefulness
of PM information in influencing political and management decision-making, with mixed
results. ter Bogt (2004) and Pollitt (2006) found that politicians generally either use
performance information in limited ways or not at all, other works (Ho, 2006; Askim, 2007)
have found that PM are used by councilors in their decision-making processes. Councilors
and managers both seem to use PM for budgeting purposes, but PM are used by managers
mostly to identify strategic priorities and by councilors to support program evaluation
decisions (Hildebrand and McDavid, 2011). PM are also used for reporting to elected
officials and management and in support of improved communication within local
governments (Melkers and Willoughby, 2005); they are used less frequently for
benchmarking when officials are unwilling to embrace comparison with other local
governments (Ammons and Rivenbark, 2008).
Stakeholder participation has been found to be a positive factor in PMs impact on
decision-making (Ho, 2006). The support of top managers has been consistently
associated with PM success (de Lancer Julnes and Holzer, 2001; Wang and Berman, 2001;
Cavalluzzo and Ittner, 2004). Political support, a goal-oriented culture, citizen
involvement in PM processes (Moynihan and Pandey, 2010), and the capacity of
performance indicators to meet the users information needs (Taylor, 2009) have been
positively associated with PM use. Meanwhile, the lack of technical infrastructure for
PM implementation and use including the technical ability to collect and process data
in a timely way and staff able to analyse PM data have been consistently cited
as problems (Berman and Wang, 2000; Hildebrand and McDavid, 2011).

3. The Spanish case

3.1 Research context
Spain has characteristics common to other EU countries, belonging to a public
administration culture grounded in public law and strongly influenced by the French
(Napoleonic) bureaucratic legal model. Most Spanish public sector employees are not
governed by private-sector labor legislation. Their special status increases the difficulties of
managerial reform. This governance model is called the sovereign state by Christensen
and Laegreid (2001) and is common to all Napoleonic and Germanic EU countries.
The services provided by Spanish local governments (Table III) are similar to those
delivered by most EU cities. Spain has 8,082 municipalities managing 13.5 percent
 of the countrys total public expenditure. The vast majority of municipalities are very Non-mandatory
small; 93 percent have fewer than 10,000 inhabitants. PM in local
The Spanish experience of public sector reform has been a succession of
readjustments rather than changes. The Act of 2004[2] states that local governments governments
governing more than 50,000 inhabitants should include information about the financial
performance, cost, and effectiveness of their services in their financial report but does
not provide guidelines on the specific PM to be included or how to calculate them. 419
Despite increasing interest in performance indicators, they are not yet compulsory at
the local government level in Spain to the extent they are in the UK. Performance
indicators will probably remain optional because of the potential high level of conflict
involved in public management reforms. The civil servant status of local government staff
and the power of the public sector trade unions are factors in the potential for conflict in
Spanish local governments. Another factor is the Spanish tradition of municipal
self-governance, in which directly elected politicians have full authority to make decisions
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about the organization of local service delivery, taxes, fees, and performance management
models, allowing them to implement their own strategies and avoid conflicts.

3.2 Methodology
The sample comprises the 144 Spanish local governments of over 50,000 inhabitants
in January 1, 2008; they were the ones legally required to disclose performance indicators
in their annual report. Below this threshold, PM are practically irrelevant. We phoned
these 144 cities o find out whether they had implemented PM before sending a
questionnaire[3] adapted from Poister and Streib (1999). A number of questionnaire
items were also relevant in analyses of PM use in other studies (Wang and Berman, 2001;
Cavalluzzo and Ittner, 2004; Hildebrand and McDavid, 2011). The questionnaire was
answered by 72 local governments, 30 of which (Appendix) had some kind of experience
in PM development; the other 42 did not use performance indicators. Therefore, the
response rate for the target population was 50 percent (72/144), an average response rate
for survey studies in management accounting (Nazari et al., 2006)[4]. The respondent
municipalities include all the big Spanish cities and represent 22.9 percent of the total
inhabitants of Spain and 25.86 percent of Spanish local government expenditure.
The questionnaire is divided into five blocks: block A collects background
information and is common across all the local governments analysed; blocks B to E
refer exclusively to the local governments with centralized citywide PM systems. The
questionnaire was addressed to the expert manager or technical staff in charge of PM
development in each local government, as identified in the exploratory phone contact.
The survey included questions about the background of the municipality and the
development, operation, and outcomes of PM. The municipalities also indicated the
services with performance information and the kind of performance indicator used. Data
sources were triangulated. We requested and obtained access to data on performance
indicators published in the notes to the financial statements of each local government in
order to assess their consistency with the answers to our survey. We also carried out an
analysis of the 144 local governments web sites[5] and found that only 6.2 percent of the
local governments (nine of them) had published their performance indicators there.
Univariate analysis and Cronbachs a were applied to analyse the data collected.
Cronbachs a is based on the average correlation among the items and tests the
reliability and/or consistency of multi-item variables or blocks of questions. It ranges
 BJM from 0 to 1, with 0.60 and 0.70 deemed the lowest levels of acceptability[6]. Cronbachs
7,4 a is often used as the primary method of assessing survey instrument reliability and
validity (Nazari et al., 2006). We have applied non-parametric tests (Mann-Whitney) to
examine whether municipality size and political orientation influence the use of PM[7].

3.3 Results
420 3.3.1 Use and context of PM. Table I shows the number of respondent municipalities
that agreed with the statements in the background section of the survey (block A of the
questionnaire). Respondents were asked to describe their motivations in implementing
PM. The most highly ranked was the desire to make better management decisions
(83.3 percent). This result conforms to the NPM doctrine highlighting the need to
implement PM to improve the efficiency of public service delivery. It is also consistent
with the answers to the question about PMs primary audience, in which department
and program heads (76.7 percent) took the highest ranking.
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The item that attained the second highest score on the question about motivation
(pressure from elected city officials [43.3 percent]) addresses politicians interest in PM.
This is also consistent with the answers about PMs primary audience, in which the
Mayor scores 70 percent and the council members 60 percent, suggesting that
politicians seem to play an important role in non-mandatory implementation processes.
These results do not confirm the findings of Pollitt (2006), who argues that elected
representatives have apparently taken little interest in PM even though they have
become almost universal.

Cities %

Motivations to implement PM
The desire to make better management decisions 25 83.3
Citizen demands for greater a ccountability 7 23.3
Pressure from elected city officials 13 43.3
Recommendations or best practices 6 20
Primary audience for PM reports
City manager, chief administrative officer or other executive staff 13 43.3
Mayor or professional staff in the mayors office 21 70
City council members 18 60
Department heads, program managers, other line managers 23 76.7
Budget officials, personnel officials, other professional staff 13 43.3
State and federal funding agencies 5 16.7
Citizen advisory boards or groups 6 20
Other: (citizenry, etc.) 5 16.7
Frequency of the distribution of performance information to the users
Monthly 8 26.7
Quarterly 12 40
Annually 23 76.7
Do you conduct a comprehensive citizen survey every year? 10 33% every year
6.7% every two
2 years
Have data from your PM system led to decisions to privatize or to
externalize some of your operations? 6 20
Table I.
Background information Note: n30 local governments
 The information is usually provided annually (76.7 percent) or quarterly (40 percent), too Non-mandatory
seldom for use in daily decision-making; thus, the most common use of PM in local PM in local
governments is in planning and strategic management, as is confirmed by the answers in
Table II. The frequency of PM provision and the primary audience scores show that PM are governments
more useful to top managers (e.g. department heads, city managers) than to medium- and
street-level managers (e.g. budget officials, personnel officials, and other professional staff).
The citizen demands for greater accountability item is cited as a motivation for PM 421
implementation by 23.3 percent of interviewees. Though greater accountability is not
usually directly required by citizens, it expresses a desire to address a formal and
democratic principle.
Municipalities were also asked whether they conducted a comprehensive citizen
survey every year. Ten of 30 municipalities answered positively, and another two
reported that they conducted a citizen survey every two years. In both cases, the
information obtained was taken into account in later PM developments.
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Some interviewees stated that a PM system could lead to decisions to privatize or

externalize municipal operations in order to improve efficiency. Six local governments

Mean SD

B. How important are PM to the following management processes in your city? (1 very important; 2
important; 3 somewhat important; 4 not at all important)
Personnel-oriented processes, such as management by objectives or appraisal by
objectives 2.44 1.031
Performance-oriented budgeting processes, such as program budgeting, target-based
budgeting or results-oriented budgeting systems 1.65 0.862
Strategic management processes, such as tracking the progress of strategic initiatives,
monitoring the achievement of strategic goals and objectives or measuring
performance in key results areas 1.73 0.961
Benchmarking of city departments and services against other, similar cities 2.20 1.014
Incentive systems such as pay-for-performance, shared savings or gain-sharing
programs 2.76 0.970
Cronbachs a for section B: 0.927
C1. The development of PM. To what extent do the following statements describe how PM are developed
in your city? (1 usually; 2 sometimes; 3 seldom; 4 never)
We involve managers in the development of performance measures 1.56 0.705
We involve citizens and/or citizens groups in the development of performance
measures 3.19 0.750
Data from citizen surveys help to determine criteria to include in our measurement
system 2.21 1.051
We involve lower-level employees in the development of performance measures 2.28 0.958
Cronbachs a for section C1: 0.599
C2. To what extent do the following statements describe how PM are developed in your city? (1 usually;
2 sometimes; 3 seldom; 4 never)
We have trouble getting the city council to support our performance measurement
system 2.71 0.89 Table II.
We have trouble getting lower-level employees to support our performance Background information
measurement system 2.33 1.113 and the development of
We have trouble getting citizens to support our performance measurement system 3.00 1.044 performance measures
Cronbachs a for section C2: 0.764 (for users with
centralized, city-wide
Note: n 18 local governments systems)
 BJM had used this information in privatization initiatives, especially for services without
7,4 social added value such as garbage collection and street cleaning. Garbage collection,
urban transport, water supply, and street cleaning are often outsourced by Spanish local
governments in any case, although the lack of comparable PM disclosures in almost all
Spanish local governments makes benchmarking difficult.
Blocks B, C, D, and E, designed for local governments with centralized, city-wide PM
422 systems, were filled in by the 18 local governments that reported having implemented
centralized systems. Block B deals with the importance of performance indicators to
the citys management processes, such as management by objectives, strategic
planning, benchmarking, and incentive systems. According to our respondents,
performance-oriented budgeting processes and strategic management processes are
the activities for which performance indicators are considered most important, followed
by benchmarking. Local governments prefer not to use PM for pay-for-performance
programs or personnel oriented processes. According to the OECD (2005), countries
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are not enthusiastic about introducing pay-for-performance, since payment is truly

linked to performance evaluation in only a few countries.
Block C analyses PM development. As can be seen in Table II, we have distinguished
between positive factors and the difficulties of PM implementation. The cities answers
reveal the important role played by managers in the development of PM. The
Mann-Whitney test (at the 0.05 level of significance) shows a higher level of manager
involvement in cities with right-wing Mayors. Employees experience the lowest degree of
collaboration in the implementation process. Lower-level employees are not usually
involved in PM development and might even resist it, which has been avoided or limited
by not linking payments to performance. Citizens are not directly involved in PM
development, although the opinion surveys conducted in almost all medium and large
Spanish cities constitute an indirect involvement. Cities of more than 100,000 inhabitants
have less trouble getting their city councils and citizens to support their PM system than
do cities of fewer than 1,00,000. A Mann-Whitney test indicated that this mean difference is
significant at the 0.05 level.
Table III presents the most common services provided by Spanish cities with more
than 50,000 inhabitants. Output indicators, representing the services workloads, were

Output Efficiency Effectiveness Service quality Satisfaction

(%) (%) (%) (%) (%)

Police 75.00 39.29 60.71 50.00 46.43

Fire prevention/suppression 35.71 14.29 25.00 25.00 21.43
Animal control 57.14 32.14 32.14 21.43 14.29
Community planning and zoning 53.57 17.86 28.57 25.00 17.86
Housing 46.43 14.29 25.00 14.29 10.71
Water supply/sewerage 60.71 21.43 32.14 28.57 25.00
Solid waste collection/disposal 78.57 39.29 39.29 25.00 39.29
Street maintenance/construction 57.14 28.57 39.29 25.00 32.14
Traffic 50.00 21.43 32.14 21.43 28.57
Public transport 57.14 17.86 28.57 28.57 35.71
Libraries 50.00 17.86 28.57 21.43 25.00
Parks and recreation 60.71 25.00 28.57 17.86 28.57
Table III.
PM applications Note: n 30 local governments
 indicated more often than other kinds of PM. For example, more than 70 percent of Non-mandatory
municipalities employ output measures for policing and waste collection and disposal. PM in local
Moreover, the local governments studied have more effectiveness indicators than
efficiency indicators for their programs. Efficiency indicators are applied only to some governments
services, one practical reason being that it is easier to collect output information, as it is
not sensitive to political or managerial criticism concerning benchmarking and/or
evaluation. These results are consistent with those of previous studies[8] (Poister and 423
Streib, 1999; Ho, 2006) on US local governments.
3.3.2 Problems with and impacts of PM. Block D deals with the operation of PM
systems and some of their potential problems. PM are most commonly used to track
performance over time (rather than comparing operating units) and to align PM with
the mission and objectives of the entity. The mean of the municipal staffs capacity to
analyse the PM data is 2.78, indicating that the staff has sufficient skill to manage PM
when local governments implement comprehensive PM systems. Municipalities also
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indicated that they experienced difficulties in measuring the quality of the programs
and services and in keeping PM updated.
Block E of the survey studies PM outcomes (Table IV). The local governments
studied had a positive overall opinion of the implementation experience, of the
improvements in the quality of decisions and services, and in the accountability of
individual managers. The lowest scores for PM outcomes concerned the measurement of
personnel. The results in this table reveal the problems associated with using PM

Mean SD

D1. The operation of PM (1 commonly; 2 sometimes; 3 rarely; 4 not at all)

We use similar measures to compare performance among operating units 2.33 1.237
We use measures to track performance over time 1.78 1.003
When developing performance measures, we focus on what is important, not on the
data available 1.89 0.900
Our measures are derived from the mission, goals, objectives and service standards 1.78 0.878
Data from our performance measurement are used in pay rises and promotions 2.11 0.758
Cronbachs a for section D1: 0.674
D2. To what extent do the following statements describe how PM operate in your city? (1 commonly;
2 sometimes; 3 rarely; 4 not at all)
We have trouble measuring the quality of our programs and services 2.11 0.758
We have trouble keeping our performance measures up-to-date 2.31 0.793
Our staff lacks the analytical skills needed to analyze the performance measurement
data 2.78 0.943
Cronbachs a for section D2: 0.727
E. PM outcomes. How would you characterize the impact of your PM system on the following areas? (1
substantial; 2 moderate; 3 slight; 4 none)
Improvements in the quality of decisions or in decision-making capacity 1.82 0.883
Improvements in the objectivity of personnel performance appraisals 2.94 0.998
Improvements in service quality 1.75 0.577
Reductions in the cost of city operations 2.38 0.957
Improvements in the relationship between administrators and elected officials 2.06 1.063
Improvements in the accountability of individual managers 1.81 0.834
Cronbachs a for section E: 0.877 Table IV.
Operation and
Note: n 18 local governments outcomes of PM
 BJM systems for human resources management issues such as personnel performance
7,4 appraisals. This may be related to the difficulties inherent in reducing costs, since the
cost of personnel is the main public administration cost.

4. Discussion
The questionnaire results show that the motivations for introducing PM seem to fall into
424 two categories. The intra-organizational determinants of PM focus on the improvement
of efficiency and effectiveness, basically from economic and rational decision-making
perspectives: many local governments agree that PM helps produce better decisions
and report observable improvements in their decision-making quality. The
extra-organizational determinants of PM are based on the idea that organizations adapt
their structures and processes to external demands and expectations (as institutional
theory posits), to pressure from elected officials, and for greater accountability.
From the information in Tables I to IV, it is possible to extract answers to the research
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questions about how PM are implemented and how Spanish local governments use it.
Analysis reveals the important involvement of managers and the low involvement of
medium- and street-level staff in PM implementation. Therefore, it seems that local
governments have followed a top-down approach in their PM implementation. This is
consistent with the use of PM in budgeting and strategic management and the
identification of Mayors and heads of departments and programs as the primary
audience for PM information, since planning and other long-term decisions are usually
the top managers responsibilities. The low involvement of medium- and street-level
staff makes introducing pay-for-performance more difficult and reduces the impact of
PM in daily decision-making, which could decouple PM systems from traditional work
routines and procedures, as institutional theory asserts. On the other hand, designing
PM through a top-down approach in each local government makes it easier to align PM
with the mission, objectives, and accountability policies of the whole entity and with its
long-term budgetary and strategic management decisions.
The agency theory does not fully explain PM implementation in non-mandatory
cases because the decision to implement PM is taken by local politicians (the agent) and
not by the central government (the principal). For institutional theory, non-mandatory
implementation results from a local governments wish to imitate the public
management reforms implemented by other local governments with good managerial
reputations in order to improve the performance and/or image of the city.
The Matland theory of conflict and ambiguity helps explain the choice of a
non-mandatory approach in Spain. Ambiguity has been the main method of limiting
conflicts in Spain. Instead of using clear guidelines and procedures in its PM design and
coercion in ensuring proper implementation, Spains central government has adopted a
policy that minimizes the potential for conflict arising from the political autonomy of
Spains Mayors, the special status of its civil servants, and its powerful public sector
unions. Spains approach can be considered experimental because its PM
implementation policy has been to avoid conflicts with and within local governments
by giving them the option of designing and disclosing such non-financial PM as they have.
The result is minimized conflict but also a low comparability with other local governments
and difficulties in assessing the real impact of PM initiatives. Since the non-mandatory
system and the special status of public sector employees are common among most EU
bureaucratic public administration styles (both Napoleonic and Germanic), the Spanish
 case could shed light on other PM implementation processes with similar administrative Non-mandatory
and contextual features. Meanwhile, local governments consider the results of their PM PM in local
implementations satisfactory, since block E reports moderate improvements in service
decision-making, and manager accountability quality, which could provide the starting governments
point for extending PM to lower organizational levels.
Alternative systems, such as in the UK and Australia, do not seem to offer the best PM
introduction methods. These mandatory PM systems are not used by managers because 425
they are not aligned with managerial objectives (Wilson, 2005). Managers complain
about the imposition of PM and are reluctant to disclose the measures they use in their
decision-making. Thus, it is unclear whether a mandatory or non-mandatory system is
more effective in PM implementation and disclosure in local governments.

5. Conclusions
The survey results allow us to conclude that the implementation of PM in Spain
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follows a top-down approach in which each local government can choose whether to
implement PM, how to conduct the implementation, and what information to disclose.
The primary use of PM by local Spanish governments is in planning and long-term
budgetary and strategic management decision-making rather than in daily work
routines and procedures or linking pay to performance.
Performance measurement information in non-mandatory systems could enhance top
managements awareness of organizational strengths and weaknesses and indicate
activity areas requiring improvement, since PM information is addressed to Mayors and
heads of departments and programs. By contrast, non-mandatory systems usually
disclose less PM information than do mandatory systems such as the UKs and Australias.
Choosing non-mandatory systems has given politicians and top managers the
freedom to design PM systems that fit the traditional organizational structure of each
local government. This prevents internal conflicts and facilitates the introduction of
PM but also makes benchmarking across cities difficult because the performance
indicators are not always disclosed and are not comparable when they are disclosed.
How to combine the external and internal uses of PM is a significant globally relevant
question. Systems using mandatory measures and standardized guidelines and
non-mandatory systems both fail to overcome the decoupling effect. When PM are
mandatory, managers claim it is not useful in managerial decision-making and are
reluctant to disclose the measures they use. When PM are non-mandatory, managers
disclose some of their measures, but these are not comparable across cities. The
mismatch between external and internal uses remains in both the Anglo-Saxon and
continental systems. Thus, academics and (especially) practitioners face the global
challenge of strengthening the link between the PM disclosed and the performance
information used in decision-making both at the strategic and budgetary level and
day-to-day decision-making levels.

Notes
1. This is the case in The Netherlands, with the Public Management Initiative (ter Bogt and
van Helden, 2000) and the new Governments Accounts Act, 2004, in Portugal, with the Local
Government Chart of Accounts (2002; Carvalho et al., 2006), in Spain, with the Local
Government Chart of Account (2004), and in Italy, with the Testo unico delle leggi
sullordinamento degli enti local (2000; Mussari, 2005).
 BJM 2. Orden EHA 4041/2004 of 23rd November.
7,4 3. During the phone calls, 42 municipalities stated that they were not familiar with PM, and no
further contact was made; seven answered by email, stating they did not have a performance
indicator system. Others preferred to read the survey to see if they were able to answer it.
4. If the 42 cases with no PM experience were eliminated, the response rate would be 30 percent
(30/(144 2 42)). Of the 72 local governments that did not respond to the questionnaire
426 (144 2 72), it is believed that many would not use PM, so the number of completed
questionnaires (30) could be considered near the average response rate indicated in the
literature.
5. The analysis of the local government web sites was carried out in May 2009 and November 2011.
6. The common threshold value is 0.70, but values below 0.70 are acceptable when the research
is exploratory in nature (Hair et al., 1995).
7. Some studies (Berman and Wang, 2000; Moynihan and Ingraham, 2004) have shown that
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larger municipalities have been associated with PM use because they generally have more
resources and staff with which to implement PM systems. Regarding political orientation,
Moynihan and Ingraham (2004) found that relatively liberal US governments were more
successful at incorporating performance information in executive branch decisions.
8. However, Pollanen (2005) found that Canadian municipalities developed and used more
efficiency measures than effectiveness measures for most services.

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428 Appendix

Municipality Population Position or department

Madrid 3,213.271 Chief of the Budgetary Office and the Head of the
Quality and Citizen Service Department
Barcelona 1,615.908 Chief of Management Control Services
Sevilla 699,759 An official of the Budgetary Office
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Zaragoza 666,129 General Coordinator of the Mayor and Social Action

and the Deputy Chief of the Modernization Department
Ma laga 566,447 Head of the Department of Quality and Modernization
Palma de Mallorca 396,570 Department of Quality
Bilbao 353,340 Deputy-Director of the Major Office and an official
from the Department of Human Resources, Quality and
Assessment
Gijo n 262,470 The CFO and the Head of the Studies Department
A Coruna 245,164 Director of Planning- Urban Observatory
Badalona 215,329 Department of Trade and Consumption
Sabadell 203,969 Director of Finance
Alcala de Henares 203,645 Director of Finance
Pamplona 197,275 Area of Local Finance
Santander 182,302 Department of Finance
Castello n de la Plana 177,924 Modernisation and Quality Department
Getafe 164,043 Department of Quality
Tarragona 137,536 Coordinator of Economy and Budget
Mataro 119,780 Services and Planning
Santa Coloma de Gramanet 117,336 Internal Services Area
Girona 92,186 Department of Finance
Cornella de Llobregat 85,180 Director of Finance
Pozuelo de Alarco n 81,365 Director of Finance
Sant Boi de Llobregat 81,335 Planning and Evaluation Unit
Getxo 81,260 Department of Quality
Roquetas de Mar 77,423 Director of Finance
San Cugat 76,274 Director of Economic Management and Strategic
Table AI. Planning
List of Spanish Manresa 75,053 Department of Finance
municipalities which Mijas 70,437 Director of Finance
answered the Viladecans 61,718 Department of Economic Promotion
questionnaire Mollet del Valle s 51,912 Director of Finance

Corresponding author
Vicente Pina can be contacted at: vpina@unizar.es

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