This study extends a recent strand of performance management research that examines the cultural aspects of performance management reform (e.g. Moynihan et al. 2011). Policymakers at all levels and in many domains have increasingly turned to such reform as a means to improve the quality and efficiency of public services. Despite its popularity, performance management has had mixed results, especially in loosely-coupled systems or in contexts where outcomes are complex and/or difficult to measure (Moynihan 2008; Radin 2006). One reason is that, as Moynihan and others have argued, performance reforms depend on more than changes in formal systems; they require organizational learning and changes in organizational culture—and changes in culture do not follow seamlessly from changes in formal structure (Sandfort 1999).

To examine how culture interacts with performance management reform, this paper disaggregates and operationalizes four informal institutions that represent discrete elements of organizational culture - organizational climate, survival anxiety (perceptions of risk), and both espousedorganizational values and organizational values-in-use (Argyris and Schon 1974,1977; Schein 2006) – to examine the relationship between performance management and cultural change. I address two questions: What impact do organizational climate and survival anxiety have on the adoption of performance values and the enactment of performance values by front-line staff? And what is the role of leadership in fostering an organizational culture conducive to performance-oriented reform? 

To answer these questions, this paper analyzes data from a mixed-method study of a large urban school district to identify and measure the impact of informal organizational institutions that facilitate and impede performance management reform. I draw from two sources: longitudinal (2007-2011) school-level data (teacher and parent surveys and district-mandated accountability documents) and a comparative case study of four schools undergoing reform selected for variation on survival anxiety and organizational climate.  The quantitative analysis measures correlation through OLS and structural equation modeling, capturing core constructs using factor analysis. Drawing from multiple sources and multiple kinds of data (including a third-party assessment of performance-oriented behavior), the paper goes beyond self-reports of managerial actions to actually assess performance behavior on the front lines,  mitigating against monomethod bias that can inflate results and allowing me to identify causal mechanisms and relationships (Khagram and Thomas 2010; Lieberman 2005; Meier et al 2011).

A key finding of this paper is that survival anxiety is not positively correlated with performance-oriented values or performance-oriented behavior. In other words, schools that theory suggests would have the greatest incentive to improve their performance (because they faced a loss of funds and/or complete closure) have not proved particular responsive to the reform.  By contrast, a safe and supportive organizational climate is highly predictive of schools’ adoption of performance values. These findings suggest that incentives alone are insufficient to prompt changes in organizational behavior—and that leaders must consider carefully how to foster a sense of trust and ultimately, organizational agency, to enable front-line actors to respond  to performance reform. The paper concludes with insights about how public managers can work through organizational culture to create necessary conditions for performance reform.