PADM521:

Lesson Overview

Over the next two lessons, we will review the evolution of modern-style performance measurement as it relates to the public sector. This evolution can be described as having gone through four different time periods: Municipal Reform (1900 to 1930s), Critical Assessment (1940 to 1950s), Social Indicators (1960 to 1970s), and New Public Management (1970 to 1990s).

Over the next two lessons, you will read about each era. This content will provide a foundation for several of the topics that will be covered throughout this course. This background will also allow you to better understand the logic, motivations, and characteristics underlying modern-style performance measurement and management. It will also help you understand the challenges associated with the implementation of performance measurement systems.

In this particular lesson, we will study the earliest historical stage from within which performance measurement and management evolved. As indicated above, this period began around the turn of the 20th century and ended in the early 1930s and may be referred to as the municipal reform movement. As you will learn in this lesson, this movement was aimed at reducing waste by way of curbing corruption and inefficiency in government administration. For the purposes of this class, this movement is relevant because it serves as a starting point for the development of systematic approaches aimed at ensuring that public resources are prudently managed.

Lesson Objectives

Before beginning this session, think about the following lesson objectives. After completing this lesson, you should be able to

• identify the major players associated with the introduction of performance measurement in the public sector,
• describe the key factors that motivated the reforms,
• explain how performance measures were used during the municipal reform period, and
• describe the major assumptions upon which the introduction of performance measurement rested during these early stages.

Lesson Readings & Activities

By the end of this lesson, make sure you have completed the readings and activities found in the Lesson 2 Course Schedule.

Key Questions to Organize and Guide Your Study

Here are several key questions to guide your learning about the historical roots of performance measurement in the US. Think about these questions as you proceed through this lesson:

• What factors motivated the introduction of performance measurement in the public sector?
• What major players promoted the introduction of performance measurement reforms in the public sector?
• What were the assumptions upon which the adoption of performance measurement rested during the municipal reform period?
• How were performance measures used during this time period?

The Municipal Reform Period: Early 20th Century–1930s

 

As noted in the article by Lynch and Day (1996), modern-style performance measurement was introduced into the public sector by the New York Bureau of Municipal Research (hereafter referred to as the "New York Bureau"). The New York Bureau defined and promoted the use of performance measurement at the municipal level of government during this period. To understand the early stages of the modern performance movement, it is therefore important to understand the context within which the New York Bureau's decision to help develop and openly promote the adoption of performance measurement in government emerged. This portion of the lesson centers on three factors that facilitated the development of performance measurement in the public sector. These include

1. growing recognition of the scope and magnitude of government inefficiencies,
2. availability of techniques and methods for improving efficiency, and
3. belief in the transferability of practices across sectors.

This portion of the lesson will provide a brief introduction to these factors, beginning with the first factor.

Factor I: Growing Recognition of the Scope and Magnitude of Government Inefficiencies

The first factor that facilitated the development of performance measurement in the public sector was the growing recognition of the scope and magnitude of the inefficiencies that were present in the public sector—these inefficiencies had emerged during the industrial revolution (1820–1870). This recognition provided a fertile setting to gain support for the proliferation of reforms aimed at systematically identifying and revealing government waste. To get a sense of the magnitude of the inefficiencies that were present at this time, you may want to visit the Wikipedia page on William Tweed, also known as "Boss Tweed." In 1877, Tweed was convicted for stealing between $25 million and $45 million from New York City taxpayers.

The creation of the aforementioned New York Bureau of Municipal Research in 1907 was a direct response to the presence of the widespread corruption and inefficiencies that were present in the public sector. This bureau had one principal goal: to study and expose the political process that allowed for corruption and government inefficiency. Consistent with this goal, the Bureau’s 1907 certificate of incorporation specifies the following four important reasons it was created:

• to promote efficient and economical government;
• to promote the adoption of scientific methods of accounting and reporting the details of municipal business, with a view to facilitating the work of public officials;
• to publish facts as to the administration of municipal government; and
• to secure constructive publicity in matters pertaining to municipal problems.

It is important to note that the need for combatting government waste and corruption was not limited to New York. It was recognized in a number of other major cities across the United States, including but not limited to Philadelphia, Cincinnati, Memphis, Boston, Buffalo, Chicago, Hoboken, Indianapolis, Los Angeles, Milwaukee, Rochester, San Francisco, and Seattle. These cities established bureaus of municipal research similar to the one in New York.

Factor II: Availability of Techniques and Methods

The second factor that helped define the use of performance measurement in the public sector was the availability of techniques and methods for improving organizational efficiency. These techniques and methods had largely been developed for the purpose of improving efficiency in private sector organizations. They had been developed in an attempt to apply scientific principles as a means of improving efficiency in the production of goods and services. This approach, referred to as "scientific management," was a product of the Progressive movement. As such, it posited that society's ills could be resolved by using remedies identified through scientific research. (If you are unfamiliar with the Progressive movement, you are encouraged to visit the Wikipedia entry on the Progressive Era.)

The New York Bureau (and other bureaus that were established across the United States) was a part of the Progressive movement's emphasis on applying scientific knowledge to enhance societal and organizational outcomes. As such, they a direct interest in promoting scientific methods and practices as a means of improving the efficiency by which governments conducted their affairs. In particular, the Bureau took notice of and was influenced by the research and recommendations produced by one of the key figures in the scientific management movement: Frederick Taylor. In order to understand the early phases of performance measurement, it is therefore essential to understand Taylor's role in the municipal movements.

Frederick Taylor and Scientific Management

Many consider Taylor to be the father of scientific management. Consistent with the scientific management movement, Taylor believed that efficiency improvements were best realized through scientific research aimed at determining the best approach for conducting a particular organization task. Furthermore, similar to other notable proponents of the scientific approach to management (e.g., Frank Bunker Gilbreth, Sr.), Taylor believed in the notion that there is "one best way" of organizing and executing a particular organizational task. The key to efficiency improvements, thus, was to be found in science and research.

The use of performance measures was an important ingredient in Taylor's efforts to identify the one best way of conducting organizational tasks. In essence, they were viewed as a tool for finding ways to improve existing approaches to conducting various organizational tasks. Toward this end, he developed and applied a number of different performance measures. These measures tended to focus on measuring the time and motions associated with select tasks for the purpose of scientifically determining the best way of conducting the tasks. A good example that illustrates this approach is the many time and motion studies that Taylor conducted. For example, in his study named the "Science of Shoveling," he conducted time studies to determine the optimal weight that a worker should lift in a shovel (it was determined to be 21 pounds).

The emphasis that Taylor placed on using science to improve efficiency is described in his seminal book, The Principles of Scientific Management, which was published in 1911. This book provides important insights into the assumptions upon which the scientific management approach rested, as well as the scope within which performance measures were used. One such insight can be drawn from Taylor’s suggestion that the removal of inefficiency lay ultimately in adopting scientifically proven "best ways" to execute the tasks involved in the production process, rather than searching for "extraordinary people."

This view highlights a defining characteristic of the scientific management movement: the limited role that individual decision making played in the scientific management framework. In essence, Taylor regarded the scientific approach for improving efficiency as superior to an approach that relied on individuals' creativity and ability to make sound judgments. Toward this end, Taylor drew a strict line between "planning" and "doing." According to Taylor, the power of decision making should be removed from the "manual workers" to the extent it is possible. Rather, this power should be left to supervisors and managers.

Taylor's Four Principles

Taylor acknowledged that allowing workers to exercise judgment and take on their own initiatives could improve productivity when the right incentives were provided. However, he maintained that such a management model was still inferior to a model where it was determined via scientific research how the job would be performed in the best way (i.e., a scientific model). Consistent with this belief system, Taylor emphasized the adherence to the following four principles as a way to improve productivity:

1. Replace rule-of-thumb work methods with methods based on a scientific study of the tasks.
2. Scientifically select, train, and develop each worker rather than passively leaving them to train themselves.
3. Cooperate with the workers to ensure that the scientifically developed methods are being followed.
4. Divide work nearly equally between managers and workers, so that the managers apply scientific management principles to planning the work and the workers actually perform the tasks.

In practice, adherence to these principles and scientific findings often meant that people were charged with monotonous and repetitive tasks, such as standing on an assembly line. This type of effect was satirized in the Charlie Chaplin’s film Modern Times.

 

Questions to Consider

Taylor's view that the room for individual decision making among workers should be minimized to the extent possible presumes that their judgment and creativity plays a very limited role in the pursuit of improved efficiency. There is no need for you to submit anything, but please think about these questions before proceeding:

• To what extent do you agree with Taylor’s view that efficient production is best carried out by removing the human element (e.g., individual judgment and creativity) and splitting up the production process into a set of repetitive tasks?
• It is, of course, possible to draw attention to the fact that many private sector entities produce standardized products by way of assembly lines (a significant portion of this type of production occurs abroad), but how do these processes apply to government, if at all?
• What drawbacks do you think might result from dividing production into a set of repetitive tasks?  
• What might be some drawbacks of not using individuals’ judgment and creativity? (For example, do individual workers lose track of why they are producing or providing a particular good or service?)
• Do you believe that this is an appropriate model for carrying out public programs? Why? Why not?
• As noted above, another belief of the scientific approach is that there is one best way of organizing and conducting tasks (which is determined scientifically). Do you agree with this belief, or are there multiple possible best approaches available?

Again, please note that you are not required to submit anything in response to the above questions. They are here to help you assess your understanding of the content and guide you toward learning new knowledge about the content.

If you want additional information about Taylor’s work you may, at your discretion, review the following link. It provides additional information about the scientific management movement and Taylor’s contributions to this movement: Scientific Management.

Factor III: Transferability of Administrative Practices Across Sectors

A third important factor that facilitated the adoption of performance measurement in the public sector was that there was a general belief in the possibility of seamlessly transferring administrative practices across sectors. As noted earlier, scientific management practices had originally been developed for use in private sector contexts. However, the New York Bureau did not view this as a problem. It believed that the task of the public administrator ought to be no different than that of any other administrator. Hence, the belief was that the one best approach (scientifically determined) for carrying out a particular set of tasks would apply equally well in both sectors.

At the time, the belief in the transferability of techniques and methods across sectors was a generally accepted belief that had originated in Woodrow Wilson's classic article, titled The Study of Public Administration (1887). Wilson proposed that the task of any administrator, regardless of sector, involves the selection of appropriate means to accomplish given ends. This does not mean that Wilson and the New York Bureau ignored the role of politics. Rather, politics was recognized as a threat to efficient administration. In his article, Wilson therefore promoted the need to separate and draw a clear line between politics and administration. According to Wilson, legislatures should decide on what they want to get done (i.e., they make public policy), and administrative units should implement policy, using the most efficient administrative means. (This is referred to as the administration–politics dichotomy.) The proponents of scientific management and the municipal reform movement saw great potential in improving government efficiency as long as administrators could be protected from politicians. As noted by Kettl (2000), proponents of the adoption of scientific management principles in the public sector saw “virtually no barriers to the ability to improve government—if only government administrators could be protected from political meddling” (p. 9).

Questions to Consider

As noted above, an important factor that explains the Bureau’s willingness to promote scientific management principles is that it believed in the possibility of separating politics from administration. To what extent do you believe that this is possible (i.e., can a distinct line be drawn)?

Also, an implication of the focus placed on program execution is that the scope of the performance movement becomes limited to finding ways to improve the way government programs were implemented. That is, the sole focus is on efficiency. Furthermore, the previous section (the section on Taylor’s contributions) suggests that actual use of performance measurement was only for the purpose of determining whether a particular task could be performed more efficiently. In Lesson 1, we learned that there are several additional reasons for measuring performance, such as ensuring transparency and accountability and making allocation decisions across different programs. Why do you think that the use of performance measurement was so limited at the time?

Again, please note that you are not required to submit anything in response to the above questions. They are provided to help you assess your understanding of the content and guide you toward learning new knowledge about the content.

The Proliferation of Performance Measurement in Government

Prior to the introduction of scientific management practices, there were no practices or methods in place governments that systematically tracked how well public monies were spent. In essence, information about public spending was confined to budget information systems centered on specifying specific amounts that agencies could spend on specific resources (i.e., production inputs) during an upcoming budget year (i.e., line-item budgeting). This so-called input-orientation made it possible to hold agencies accountable based on whether they had spent the funds in accordance with the budget. But again, there was no systematic way of holding agencies accountable based on how well these resources were managed or whether they produced sought for outcomes or results. Furthermore, it is unclear whether considerations of efficiency were important to public administrators and managers, prior to the municipal reform movement. The efforts of the scientific management movement was pivotal in adding a focus on efficiency (i.e., the production of outputs using minimum possible amount of resources). It also represents the first time in modern U.S. history that attempts to adopt performance measurement were widespread. There are two important reasons for this:

1. There was general support for progressive ideas. In particular, the emphasis placed on science as a source for curing the ills of society was an important factor that explains why a number of mayors from U.S. cities expressed faith in these reforms. As noted earlier, many of these cities were able to gain political support for setting up their own Bureaus of Municipal Research including, but were not limited to, Philadelphia, Cincinnati, Memphis, Boston, Buffalo, Chicago, Hoboken, Indianapolis, Los Angeles, Milwaukee, Rochester, San Francisco, and Seattle.
2. The scope and magnitude of the inefficiencies that was present in the public sector. These inefficincies had emerged during the industrial revolution (1820–1870) and culminated in the early 20th century. As noted earlier, the recognition of the widepread corruption and the efficiencies that were present provided a fertile setting to gain support for the proliferation of reforms aimed at systematically identifying and revealing government waste.

Having said this, it is important to note that it is difficult to determine the impact that the efficiency orientation had in practice. Nevertheless, it is clear that it placed efficiency on the agenda of government reform efforts.

Characteristics of Performance Measurement in the Municipal Reform Period

Thus far, this lesson has outlined the most important factors that facilitated the promotion of performance measurement in the public sector during the municipal reform period. To gain a deeper understanding of the evolution of performance measurement, it is also important for you to be able to describe the main characteristics of performance measurement during this period. This understanding will make it possible for us to compare and contrast the distinguishing features of each of the four periods that are covered in this lesson and the next. A summary of the characteristics associated with the municipal reform period is provided in Table 2.1. As you can see, this table describes the various characteristics in three different columns, including the purpose of the reform, the underlying belief system, and the scope of use.

Purpose of the Reform

Column 1 outlines the purpose of the reform. As discussed earlier in this lesson, performance measurement was largely introduced for the purpose of combating government corruption and inefficiency. This purpose was described relatively thoroughly on page 4 of this lesson.

The Belief System

Column 2 summarizes the belief system held by the proponents of the reforms (i.e., the New York Bureau and other municipal bureaus). As you can see, the municipal reforms during this period rested on five core beliefs:

1. First, the reforms rested on a belief that there was one correct solution for solving administrative problems. As discussed earlier in this lesson, it was believed that this correct solution would be identified via scientific research.
2. A second and related belief was that this correct solution could be transferred seamlessly across sectors. Hence, it was assumed that managerial practices were independent of sector. According to the reformers, this assumption would hold true as long as administrators could be effectively shielded from politics.
3. A third belief was that politics could be effectively separated from administration. This would allow administrators to carry out their activities in an efficient manner. As noted earlier in this lesson, reformers believed that there were "virtually no barriers to the ability to improve government" (Ketti, 2000, p. 9) as long as these could be separated.
4. A fourth belief was that individual decision making ought to play a very limited role in the pursuit of effective government. In essence, it was believed that the solutions identified through scientific research ought to instruct individuals about how specific tasks should be carried out. The role of individual organizational members was therefore reduced to carrying out a set of instructions. An immediate implication of this, of course, was that no attention was placed on how one might use performance measures for the purpose of influencing people’s behavior. As indicated in Lesson 1, such use transcends performance measurement into performance management. Performance management, thus, was outside the scope of these early reforms.
5. The fifth belief was that agencies could be entrusted to implement policy in a value-free manner. This belief follows from the progressive movement's faith in expertise and professionalism. 

Scope of Use

Column 3 indicates the scope of use. As indicated throughout this lesson, performance measurement during this time period centered on realizing efficiency improvements. In essence, it was assumed that the solution to maximizing effectiveness (and thus minimizing waste in government) lay in improving the efficiency by which the tasks involved in program execution were carried out. Hence, the framework of analysis did not question policies or objectives. It was simply assumed that government spending would be effective.

Table 2.1. Characteristics of Performance Measurement in the Municipal Reform Period

Time frame	Purpose	Underlying assumptions/belief system	Scope of use
Early 20th Century–1930s	Combat fraud and inefficiency	Faith in science to find the one right way to conduct operations (i.e., one correct solution) Individual decision making plays limited role in the quest for efficiency Application of administrative practices is independent of sector Administration can and should be shielded from politics Administrative units are capable of implementing programs in a value-free manner	Efficiency

The above characteristics paint a picture of performance measurement that is relatively limited in scope and use. In essence, it is confined to a focus on efficiency, with no emphasis placed on effectiveness. Furthermore, there is no consideration of the use of performance measurement in influencing organizational members toward improving performance. Despite this limited scope of use, however, it is important to note that the adoption of performance measurement during the municipal reform periods still represented a great leap forward in terms of moving toward result-oriented governance. As noted earlier, accountability systems in government had been largely input-oriented prior to the municipal reform period, within which budget information systems centered on specifying amounts that agencies could spend on resources (i.e., production inputs) during an upcoming budget year (i.e., line-item budgeting).

As we continue our review of the evolution of performance measurement in the next lesson, you will learn about how the scope of use of performance measurement is further expanded for purposes of

• enhancing the transparency and accountability about how well public monies are spent;
• helping decision makers allocate scarce public resources across government programs (i.e., policy making); and
• helping managers within administrative units to make better decisions.

In addition, you will learn that the concept “performance management” is introduced in the more recent performance-oriented reforms. The above characteristics will serve as an important benchmark for comparing past and current characteristics of results-oriented governance.

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References

Kettl, D. F. (2000). Public administration at the millennium: The state of the field. Journal of Public Administration Research and Theory, 10(1), 7–34.