Outcome-orientation in performance contracts
| Author | Isabella Proeller |
| Published date | 01 March 2007 |
| Date | 01 March 2007 |
| DOI | http://doi.org/10.1177/0020852307075692 |
Outcome-orientation in performance contracts:
empirical evidence from Swiss local governments
Isabella Proeller
Abstract
Setting targets for public service delivery combined with increased flexibility in
resource use has been a major topic of reforms internationally. Performance con-
tracts are a central instrument of implementation, defining the relevant contents of
control. The article will analyse performance contracts in Swiss local governments
as regards performance specifications and the combinations of performance and
financial control which they use. The analysis shows that only about a third of
performance contracts contain indicators for performance specification, and only
about 20 percent of performance contracts have defined indicators for outcomes.
In contrast, about 90 percent of performance contracts regulate the attribution of
financial resources by variable and globalized budgets. As a consequence, only a
minority of performance contracts fulfil the conceptual idea of combining output-
oriented financing and control of performance by targets and indicators.
Points for practitioners
The results of the analysis show that many performance contracts in use by Swiss
local governments to date do not fulfil the task that reform models have assigned
to them. Especially, the performance side of contracts often fails to meet the
theoretical requirements and does not specify performance in a way that allows
for effective performance control. The reasons might be manifold and include
deficits in the conceptual model or still being at the development stage of imple-
mentation, as well as deliberate strategies to implement only adapted and partial
versions of the reform model. It should be kept in mind that performance
management brings counterproductive and negative effects when used just as an
add-on and not relevantly integrated into the control system. The results point to
Isabella Proeller is vice-director of the Institute for Public Services and Tourism, University of St
Gallen, Switzerland.
Copyright © 2007 IIAS, SAGE Publications (Los Angeles, London, New Delhi and Singapore)
Vol 73(1):95–111 [DOI:10.1177/0020852307075692]
International
Review of
Administrative
Sciences
a danger that implementation gets stuck in an intermediate state. The challenge
for practitioners is to pursue and further develop the instruments in use, especial-
ly to strengthen the measurement of performance wanted and achieved.
Keywords: financial management, indicators, outcome-oriented public manage-
ment, performance management, Switzerland
Introduction
Setting targets for public service delivery and controlling agencies by the outcomes
and results they achieve has been a major topic in NPM reforms internationally. In
Switzerland, performance measurement and outcome-orientation combined with an
increased flexibility in resource use have been cornerstones of modernization since
the 1990s. Instruments and processes to implement these control mechanisms have
been at the core of conceptual reform models as well as of implementation efforts at
the national, cantonal and local level. Hereby, the key instrument in implementation is
performance contracts. Over recent years, performance contracts have been intro-
duced by many governments with the objective to enhance outcome-orientation.
Expectations regarding the improvement of organizational performance and
management as well as proclaimed benefits of this reform strategy and instruments
are manifold (Behn, 2003; Gianakis, 2002; Talbot, 2005).
Performance contracts are the central instrument within outcome-oriented
reforms in Switzerland containing the relevant control information. To gain an
impression of the sophistication and state of reforms, it is of interest in what respect
performance contracts actually reflect and incorporate this shift of control mode. The
international experience shows that outcome-oriented performance management
systems suffer from a range of difficulties and deficiencies (Boyne and Law, 2005).
So far, this question has only been party investigated in the Swiss context. For the
local level, performance contracts and available control information have not been
studied so far. The article will analyse the content of performance contracts in use
with regard to the control mode they reflect on the local government level in
Switzerland. It will investigate what kind of performance information is actually
available for control and how performance and resource control are combined. This
analysis will help to answer the question to what extent performance contracts truly
reflect increased outcome-orientation. The analysis is based on a content analysis of
performance contracts within Swiss local governments.
Outcome-oriented public management in Switzerland
Switzerland jumped onto the NPM bandwagon in the early and mid-1990s and
refers to its national NPM reform as Wirkungsorientierte Verwaltungsführung
(WoV) (outcome-oriented public management). Accordingly, orientation and focus
on outcomes has been a core objective from the beginning. Even though the same
conceptual reform model is used on different state levels, e.g. on federal, cantonal
and local level, federalism allows for tailoring actual processes and instruments to
each context and government (Pollitt and Bouckaert, 2004). In consequence, even if
96 International Review of Administrative Sciences 73(1)
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