Testing the Dysfunctional Consequences of Performance Measurement: Analyzing the Determinants and Consequences of Performance Paradox in Public Organizations

Choi, Sungjoo; Choi, Sungjoo

Performance evaluations have frequently been used to provide incentives or rewards for higher performance, also being used for purpose of penalizing poorer performance (Heinrich 2007). Despite the usefulness of performance measures, quite a few scholars have expressed the concern that indiscriminate use of the performance measures without sufficient knowledge of the possible unintended consequences and side effects can ultimately lead to negative results (e.g., Ridgway 1956; Thiel and Leeuw 2002). The problem could be more serious in public organizations because they are inclined to pursue multidimensional organizational goals, often have unquantifiable outcomes, and require longer time to show the effects of policy implementation than in private businesses (Kelman and Friedman 2009).

The purpose of this study is to examine how the dysfunctional consequences of the increased pressure of performance evaluation will affect performance of public organizations. To do so, we analyzed team-level data—performance evaluation results and six types of distortions which could occur in performance assessment—collected from 47 central governmental agencies in Korea. To control for agency effects, we analyzed models through fixed-effect ordered logistic regression methods. The results showed that the threshold effect focusing on performance measures which are easy to accomplish was positively associated with team performance, while the output distortion, or the tendency that drops performance data which might negatively affect performance assessment, was also positively related to team performance. On the other hand, the tunnel vision, myopia, the ratchet effect, and measure fixation were not significantly associated with team performance.

Association for Public Policy Analysis & Management

Panel Paper: Testing the Dysfunctional Consequences of Performance Measurement: Analyzing the Determinants and Consequences of Performance Paradox in Public Organizations

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