Performance Management in Government and Non-profit Organizations: a Goal Setting Theory Perspective

In this paper, I use goal setting theory (Locke & Latham, 1990) to empirically investigate whether the introduction of performance management practices in public sector organizations in the Netherlands results in higher performance. Goal setting theory suggests that specific and challenging goals result in a higher performance than moderate or easy attainable goals, vague goals or no goals at all. This relation is moderated by commitment to goals, use of rewards or incentives and the provision of feedback information (Locke & Latham, 1990, p. 252-261). Based on a survey of 106 Dutch government and non-profit organizations, I find that the definition of clear and measurable goals increases performance. In addition, there is an indirect effect of clear and measurable goals formal performance measurement systems and reward systems on performance. Finally, commitment to goals has an indirect effect on performance through the reward system. The results suggest that the joint introduction of performance management practices may provide an opportunity to increase performance at government and non-profit organizations; that is, these performance management practices appear to reinforce themselves amongst each other. However, the use of high-powered incentives appears to reduce performance. The question remains whether government and non-profit organizations do not want to, or cannot state clear and measurable goals.

Information: Peter Roosenboom, proosenboom@rsm.nl