Association for Public Policy Analysis & Management

Research on the impacts of performance management has focused on organizational performance and unintended consequences such as goal displacement. An understudied area is its impact on employee attitudes and welfare. Similar to any major organizational reforms, performance management creates uncertainties and alters routines that employees are used to. Existing research in this area has mixed findings. Some research has found that performance management reforms were related to lower job satisfaction and employee commitment as more pressure is imposed on employees. On the other hand, some research found that certain forms of performance management strategies were positively related to trust in employers and employee cooperation. The reasons may be that goals are clarified in performance management reforms and employees can get performance-based rewards. The current public management literature on this topic is often limited by cross-sectional data and statistical techniques that are correlational rather than causal. Moreover, the measurement of performance management strategies is often self-reported, which may suffer from problems such as memory loss and inaccurate reporting.

We plan to further the research by exploiting a real-world performance management reform, the “Empowerment Zone” experiment in public schools in New York City, and using a differences-in-differences design that provides stronger support to validity. The “Empowerment Zone” was a reform that gave principals more autonomy in areas such as curriculum, budget, teacher hiring and training. At the same time, principals were held accountable for student performance. They would be removed if they could not improve student performance in ELA and math in the first two years into the reform. The pressure inevitably trickled down to teachers as they were the key to improve school performance. We compiled data from New York State School Report Card database and the annual teacher survey in New York City. We studied the following attitudinal outcomes: employees’ trust in colleagues, trust in principals, perceived leadership effectiveness, perceived performance information use, evaluation of teacher cooperation, and evaluation of teacher participation in management.

Our findings show that the Empowerment Zone experiment led to deterioration of employee morale and relationships. Compared with teachers from schools that did not enter the Empowerment Zone, teachers from experimental schools had lower evaluations of principal effectiveness, teacher cooperation to solve problems or participation in school management. Mutual trust and respect among teachers from experimental schools also deteriorated, probably because the reform created a more competitive culture and hurt interpersonal relationships. More interestingly, as a reform that emphasized using performance information to improve performance, fewer employees agreed that their school had clear measures of student progress or teachers were using performance information to improve instruction. However, teachers’ trust in principals did not decrease in experimental schools. This research contributes to a more comprehensive understanding of the impacts of performance management reforms. The policy implication is that policy makers and public managers should be aware of the negative impacts of performance management on employee attitudes and should mitigate these negative impacts when implementing the reform.