See

discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/254044505

The use of Performance Measurement System

(PMS) in transforming public sector
organization

Article · May 2012

DOI: 10.1109/ICIMTR.2012.6236460

CITATIONS READS

0 363

3 authors:

Nazirah Aziz Wee Shu Hui

Universiti Teknologi MARA Universiti Teknologi MARA
4 PUBLICATIONS 1 CITATION 14 PUBLICATIONS 48 CITATIONS

SEE PROFILE SEE PROFILE

Radiah Othman
Massey University
51 PUBLICATIONS 411 CITATIONS

SEE PROFILE

Some of the authors of this publication are also working on these related projects:

NGO projects View project

Social Reporting and Performance View project

All content following this page was uploaded by Radiah Othman on 01 February 2014.

The user has requested enhancement of the downloaded file.

 2012 International Conference on Innovation, Management and Technology Research (ICIMTR2012), Malacca, Malaysia :
21-22 May, 2012
The use of Performance Measurement System (PMS) in transforming public
sector organization
Nazirah Aziz; Wee Shu Hui
Faculty of Accountancy
Universiti Teknologi MARA
Shah Alam, Selangor, Malaysia
nazirah_00@yahoo.com
wee_shuhui@yahoo.com
Abstract — The purpose of this paper is to propose how
Performance Measurement System (PMS) can be used
in enhancing readiness among managers towards the
successful implementation of transformation in
Malaysian public sector organisations. The proposed
research agenda is based on the review of mainstream
literature of PMS and its use in public sector change.
Despite the paucity of literature on the role played by
PMS in transforming public sector entities, this paper
highlights the gap between the use of PMS and
readiness for transformation (RFT).
Keywords – Performance Measurement System (PMS);
Public Sector Change; Readiness for Transformation.
I. INTRODUCTION
Globalisation has placed strong pressure on government
to compete for trade flows, investment and resources [3]
[17] & [22]. Since the early 1980s, the Government of
Malaysia has taken a lot of initiatives to drive reform and
replace the traditional administration structures [25] [33] &
[34]. The New Public Management (NPM) has been
introduced to solve the problem of inefficiency with it
emphasis on managing outcomes and results as one of the
ways to improve performance in public sector [33] & [34].
[3] further points out that it is important to have a high
quality and excellent public sector delivery system as poor
delivery system can damage investors’ confidence to do
business and invest in Malaysia.
The Prime Minister of Malaysia, Datuk Seri Mohd
Najib in his Cabinet Appointment speech on 1 April 2009,
he emphasizes a new concept called “1 Malaysia: People
First, Performance Now” as the new administrations tag
line. This indicates that the government is seriously
focusing on improving performance towards achieving
Vision 2020. Performance management is the key agenda
in public sector organisations on the basis that it will help
them meet improvement targets. In 2009, Performance
Management and Delivery Unit (PEMANDU) was
established to “oversee the implementation and assess
978-1-4673-0654-6/12/$31.00 ©2012 IEEE
Radiah Othman
School of Accountancy, College of Business
Massey University
New Zealand
r.othman@massey.ac.nz
progress of the Government Transformation Programme
(GTP) and Economic Transformation Program (ETP),
facilitate as well as support delivery of both the National
Key Result Areas (NKRAs), and National Key Economic
Areas (NKEAs)”. In addition, the role of PEMANDU is
also to support the Unity and Performance Minister in
implementing the Key Performance Indicators (KPIs)
system. The aim of establishing GTP is to improve public
services and helping the government to achieve the ideals
of 1Malaysia, while the ETP is focusing more on
sustainable initiative that will transform Malaysia into a
high income nation by 2020.
Performance measurement is regarded by many authors
as one of the ways to improve public sector performance
[1] [4] [9] & [32]. For these authors, performance
measurement is essential for the success of public sector
organisations because it provides useful information to
improve public service delivery and overall performance.
Prior studies in management accounting research have
extensively discussed the role of performance measurement
towards enhancing performance in public sector
organisations [4] [21] & [35] and readiness of change in
public sector [11] [27] & [29], however they do not discuss
the relationships that may exist between them [5]. Parallel
to that, there is another recurring gap found in the
performance measurement and change management
literature. It refers to the lack of theoretical and empirical
research on the role of performance measurement to
support change management in public sector organisations.
Aiming at contributing to management accounting and
public sector accounting’s field, the current study will
examine how the use of PMS supports successful
transformation or change initiated by the Prime Minister of
Malaysia.
Resistance to change will lead to great losses in
government, and change is often resisted. It has been
reported that the government has spend almost 66 million
in setting up PEMANDU to lead the transformation. This
includes the cost of engaging external consultants and
establishing 1Malaysia lab to bring all parties from public
sector, private sector and academicians together to discuss
570
 2012 International Conference on Innovation, Management and Technology Research (ICIMTR2012), Malacca, Malaysia :
21-22 May, 2012
the best ways and alternatives of transforming Malaysian
public sector. The [3] stressed on the importance of
improving public sector delivery services to enhance
investor’s confidence. One of the key area in transforming
Malaysia is to improve public service delivery towards
enhancing overall performance. Thus, it is believed that
successful transformation will lead to improve in public
service delivery and enhancing investors’ confidence.
Moreover, reluctance to change will consequently affect the
public at large.
II. PREVIOUS RESEARCH
Performance measurement system (PMS)
PMS needs to be clearly articulated in order to define
the research scope [5]. [24] defined performance
measurement as the “process of quantifying the efficiency
and effectiveness of action” (p.1229), and is a “metric used
to quantify the efficiency and/or effectiveness of an action”
(p.1229), while PMS was defined as “the set of metrics
used to quantify both the efficiency and effectiveness of
actions” (p.1229).
There are four interconnected themes or lifecycle of
PMS as highlighted by [25] and [26], namely development,
implementation, use and update. The first theme
encompasses the development of efficient and effective
PMS from the perspective of strategic management, while
the second theme refers to the process of identifying the
problem or challenges arising during the implementation of
PMS [5]. The use of PMS refers to the use of performance
information to support the decision making process [24] &
[26]. The fourth theme is refers to the process of updating
the system [5].
Source: Adapted from Neely et al. (2000); Barbosa and
Musetti (2011)
The use of PMS in public sector organisation
Managers of public sector organisations have also been
facing a number of performance measurement-related
challenges. Public agencies are becoming more aware of
their necessity to develop and implement practices as have
been practicing in the private sector in order to make them
more business-like [13] & [32]. Governments around the
world are under pressure to cut their cost and improve
efficiency and effectiveness in delivering their services to
the public. [6] (p.20) indicated that measuring public sector
571
performance as “outcome indicators have a role not just in
focusing political debate, but in broadening the
involvement of the wider public in policy-making”.
Several initiatives have been introduced to improve
public sector performance as a means to improve its
efficiency and effectiveness in delivering the public
services. For example, the United States has established the
Government Performance and Result Act (GPRA) 1993 “to
clarify their strategic objectives and develop result-oriented
measures of progress towards these objectives” [9] (p.243).
Recent study done by [21] focused on measuring public
sector performance of government departments in
Australia. Based on a survey of 109, the authors conclude
that the performance measures have been utilised to a great
extent. In addition, the respondents argued that the use of
PMS in their department would enhance their programme
efficiency and effectiveness [21].
[4] extended the study of [21] by examining the
perception of senior civil servants of Malaysian public
sector on the PMS design and implementation as well as its
effectiveness to the management. His study employs survey
method and the respondents comprised of 70 senior
executive based in Putrajaya. Contrary to the findings by
[21], [4] found that performance measurement had been
utilized only to a moderate extent, with little emphasis on
social and environmental KPIs. Moreover, findings also
reveal that KPI are found to be less dynamic to reflect the
changes in strategy [4]. This might be due to the difficulties
in translating the strategy into operational and measurable
terms. Thus, the purpose of conducting this study is to
enhance the knowledge and bridge the gap in the PMS and
organisational change literature by examining the extent
use of PMS in federal government due to transformation
programme introduced by the Prime Minister in year 2010.
Readiness for transformation
Transformation can be defined as change in the form,
appearance or structure [12] (p.1). The authors suggested
that transformation occurs first at the individual level, and
then, at the organisational level. The readiness of
individuals working in an organisation reflects the
readiness of organisation towards transformation.
Individual readiness is an important driver for successful
change in an organisation [2] [7] [10] [12] [14] 23] [28] &
[30].
Transformation denotes not only members’ belief in
subscribing to change, but also members actively engaging
in practices that will lead to its successful implementation
[2] & [11]. [11] further added that the announcement of
transformation is not sufficient enough to persuade
employees that organisation is ready to implement the
change. If the organisation failed to persuade or ensure that
the change is needed, then the employees might feel that
the organisation might fail to change [11] & [25]. Thus, the
government has to take action in explaining and persuading
the public sector employees of the need for transformation.
The use of performance measurement in enhancing
readiness for successful transformation
 2012 International Conference on Innovation, Management and Technology Research (ICIMTR2012), Malacca, Malaysia :
21-22 May, 2012
Prior researchers claimed that there is a relationship
between performance measurement and change process [5]
[26]. However, there is a lack of prior literatures
performance measurement and change within the domain of
public sector change literature. [5] also claimed that
performance measurement facilitate the change process in
identifying performance gaps that occur, thereby providing
the necessary needed information to assess the change
process.
In addition, [5] also claimed that PMS has the “ability
to support the key elements of the organisational change
process” (p.344). PMS is a tool for control as it has been
used in analysing and monitoring the present situation in an
organisation [37]. Other than that, PMS also enabled
managers to monitor the progress of change and propose
corrective actions towards aligning with the organisational
strategies [26].
III. CONCLUSION
In enhancing efficiency and effectiveness in delivering
public services, the Government of Malaysia grapples with
issues concerning continual administrative reforms.
Acknowledging the importance of improving performance
measurement PEMANDU was set up to oversee the
successful implementation of GTP. The issues of effective
performance measurement in public sector organisations
have frequently been addressed by politicians, academicians
and the public at large via electronic and written media.
However the improvement is still unsatisfactory. There is a
need to address the underlying reason. Should ‘readiness to
change’ attitude be inculcated among public sector
employees?
REFERENCES
[1] R. Akbar, “Performance measurement in the
Indonesian local government: to perform or to
simply conform?” presented at the IIUM
International Accounting Conference V, Pan Pacific
KLIA Hotel, Malaysia, 2011.
[2] A. A. Armenakis and S. G.Harris, “Crafting a
change message to create transformational
readiness,”Journal of Organisational Change, vol.
15, no. 2, pp. 169-183, 2002.
[3] "Auditor General Report," 2007.
[4] R.Azhar, “Adoption of performance measurement in
Malaysian public sector organisations,”Masters’s
dissertation, University of Malaya, 2009.
[5] D.H.Barbosa and M.A.Musetti, “The use of
performance measurement system in logistics
change process: proposal of a guide,” International
Journal of Productivity and Performance
Management, vol. 60, no. 4, pp. 339-359, 2011.
572
[6] J.Bertok, J.Hall, D.J.Kraan, J.Malinska, N.Manning,
and E.Mathhews,“Issues in outcome measurement
for (Government at a glance),” OECD project on
Management in Government Technical Paper 3.
Paris, OECD, 2006.
[7] B. Burnes, “Kurt Lewin and complexity theories:
back to the future?” Journal of Change
Management, vol. 4, no. 4, pp. 309-325, 2004a.
[8] B. Burnes, “Kurt Lewin and Planned Approach to
Change: A Re-appraisal,”Journal of Management
Studies, vol. 41, no. 6, pp. 977-325, 2004b.
[9] K.S. Cavaluzzo and C.D. Ittner, “Implementing
performance measurement innovations: evidence
from government,”Accounting, Organisation and
Society, vol. 29, pp. 243-267, 2004.
[10] M. Choi and W. E. A. Ruona, “Individual readiness
for organisational change and its implications for
Human Resource and Organisational development,”
Human Resource Development Review, vol. 10, no.
46, pp. 45-73, 2011.
[11] I. Cinite, L. E. Duxbury and C. Higgins,
“Measurement of perceived organisational readiness
for change in the public sector,”British Journal of
Mangement, vol. 20, pp. 26- 277, 2009.
[12] M. Daszko, and S. Sheinberg, “Survival is optional:
only leaders with new knowledge can lead the
transformation,”Theory of transformation, pp. 1-12,
2005.
[13] J. Dixon, A. Kouzmin, N. Korac-Kakabadse,
“Managerialism - something old, something
borrowed, little new Economic prescription versus
effective organisational change in public agencies”.
The International Journal of Public Sector
Management, vol. 11, pp. 164, 1998.
[14] S. M.Elias, “Employee commitment in times of
change: Assessing the importance of attitudes
toward organisational change,” Journal of
Management, vol. 35, no. 37, pp. 37-54, 2009.
[15] “Roadmap to Economic Transformation
Program,”2010. [www.pemandu.gov.my]
[16] A.Goddard, “Contemporary public sector
accounting research: An international comparison of
journal papers,” The British Accounting Review, vol.
42, pp. 75-87, 2010.
[17] K. A.Goyal, “Impact of Globalization on
Developing Countries: With Special Reference to
India,”International Research Journal of Finance
and Economics, vol. 5, pp. 166 – 171, 2006.
[18] “Roadmap to Government Transformation Plan,”
2010. [www.pemandu.gov.my]
 2012 International Conference on Innovation, Management and Technology Research (ICIMTR2012), Malacca, Malaysia :
21-22 May, 2012
[19] M.Hall, “The effect of comprehensive performance
measurment systems on role clarity, psychological
empowerment and managerial performance,”
Accounting, organisation, and society, vol. 33, pp.
141-163, 2008.
[20] M.Hall, “Do comprehensive performance
measurement systems help or hinder managers’
mental model development?” Management
Accounting Research, doi:10.1016/j.mar.2010.10.
002, 2010.
[21] Z. Hoque, “Measuring and reporting public sector
outcomes: Exploratory evidence from Australia,
International Journal of Public Sector Management,
vol. 21, no. 5, pp. 468-493, 2008.
[22] Y. Jarrar and G. Schiuma, “Measuring performance
in the public sector: challenges and trends,”
Measuring business excellence, vol. 11, no. 4, pp.
4-8, 2007.
[23] W. E. K. Lehman, J. M. Greener, and D. D.
Simpson, “Assessing organisational readiness for
change,” Journal of Substance Abuse Treatment,
vol. 22, pp. 197-209, 2002.
[24] A. Neely, M. Gregory, and K. Platts, “Performance
measurement system design: A literature review and
research agenda,” International Journal of
Operations and production Management, vol. 25,
no. 12, pp. 1228- 1263, 2005.
[25] M. A. Norhayati and A. K. Siti-Nabiha, “A case
study of the performance management system in a
Malaysian government linked companies,” Journal
of Accounting and Organisational Change, vol. 5,
no. 2, pp. 243-276, 2009.
[26] S. S. Nudurupati, U. S. Bititci, V. Kumar and F. T.
S. Chan, “State of the art literature review on
performance measurement,” Computers and
Industrial Engineering, vol. 60, pp. 279-290, 2011.
[27] S. G.Ogden, and F. Anderson, “The role of
accounting in organisational change: promoting
performance improvement in the privatised UK
industry. Critical Perspective on Accounting, vol.
10, pp. 91- 124, 1999.
[28] A. E. Rafferty and R. H. Simons, “An examination
of the antecendents of readiness for fine-tuning and
corporate transformation changes,” Journal of
View publication stats
573
Business and Psychology, vol. 20, no. 3, pp. 325-
350, 2006.
[29] G. H. Seijts and M. Roberts, “The impact of
employee perceptions on change in amunicipal
government,” Leadership and Organisation
Development Journal, vol. 32, no. 2, pp. 190- 213,
2011.
[30] D. R. Self and M. Schraeder, “Enhancing the
success of organisational change: Matching
readiness strategies with sources of resistance,”
Leadership and Organisation Development Journal,
vol. 30, no. 2, pp. 167-182, 2009.
[31] S. Sezen, “The Impact Of Globalization On The
Organisation Of Public Administration: Turkish
Case,”Turkish Public Administration Annual, vol.
27-28, pp. 3-26, 2002.
[32] M.Sholihin, R.Pike and M. Mangena, “Reliance on
multiple performance measures and manager
performance,”Journal of Applied Accounting
Research, vol. 11, no. 1, pp. 24-42, 2010.
[33] N. A. Siddiquee,"Managing for results: lessons from
public management reform in Malaysia",
International Journal of Public Sector Management,
Vol. 23 Iss: 1, pp.38 – 53, 2010.
[34] N. A. Siddique, “Public management reform in
Malaysia. Recent initiatives and experiences,”
International Journal of Public Sector Management,
vol. 19, no. 4, pp.339-358, 2006.
[35] M. Tsamenyi, J. Onumahb and E. Tetteh-Kumah,
“Post-privatization performance and organisational
changes: Case studies from Ghana,” Critical
Perspectives of Accounting, vol. 21, pp. 428-442,
2010.
[36] F. H. M. Verbeeten, “Performance management
practices in public sector organisations: impact on
performance,” Accounting, Auditing, and
Accountability Journal, vol. 21, no. 3, pp. 427-454,
2008.
[37] M. Wouters and C. Wilderom, “Developing
performance measurement systems as enabling
formalization: A longitudinal field study of logistics
department,”Accounting, Organisations and Society,
vol. 33, pp. 488-516, 2008.