DETERMINANTS OF STRATEGIC MANAGEMENT IMPLEMENTATION IN LOCAL ...
DETERMINANTS OF STRATEGIC MANAGEMENT IMPLEMENTATION IN LOCAL
GOVERNMENTS. AN INTERNATIONAL SETTING
Lourdes Torres*, Vicente Pina* and Ana Yetano** ltorres@ unizar.es; firstname.lastname@example.org
*University of Zaragoza Gran Vía, 2; 50005 Zaragoza (Spain) **Public University of Navarra
The past two decades have witnessed an influx of new ideas and initiatives in the field of public
management in OECD countries which have led governments to undertake major changes in the
way in which the public sector is managed in order to better meet citizen needs within expenditure
limits. Anglo-American, Nordic and European Continental countries have come under increasing
pressure to improve their efficiency and effectiveness and to reduce their demands on taxpayers
while maintaining the quality of services and the welfare state. This paper seeks to acquire a deeper
understanding of how some of these new ideas have worked in practice by examining the
implementation of strategic management in twenty-three pioneer local governments in Australia,
Canada, Spain, Sweden, the USA and the UK, countries which belong to different public
administration styles. The goal is to identify both the factors that affect the implementation of
strategic management and the advantages brought to the organization. For this purpose, experts'
views on the implementation of strategic management systems in local governments have been
analyzed, applying the Delphi method. The results will allow a deeper knowledge about the ideal
implementation process and the expected benefits which strategic management could entail.
The past two decades have witnessed an influx of new ideas and initiatives in the field of public
management in OECD countries which have led governments to undertake major changes in the
way in which the public sector is managed in order to better meet citizen needs within expenditure
limits. Anglo-American, Nordic and European Continental countries have come under increasing
pressure to improve their efficiency and effectiveness and to reduce their demands on taxpayers
while maintaining the quality of services and the welfare state. In this process, governments become
much more performance focused and performance measurement and management are now a main
component of the New Public Management (NPM) doctrine (OECD 1997). These reforms seek to
move the focus of budgeting, management and accountability away from inputs towards results.
Managers and organisations are given flexibility in order to improve performance and are then held
accountable for results measured in the form of outputs and outcomes. The provision of
performance information is not an end in itself; rather, its overall objective is to better support the
decision making of politicians and public servants, leading to improved performance and
accountability and, ultimately, enhanced outcomes for society. According to OECD information
available to managers and policy makers has both increased and improved given that 72% of OECD
countries include non-financial performance data in their budget documentation and two-thirds
provide reports on their performance to the public.
In recent years a substantial number of studies have explored performance measurement in the
public sector (Pollitt 2005, and Smith, 1995). At present, few governments would disagree about
the need to increase efficiency and to reduce deficits and debt, to improve service delivery, to
increase control over programmes, to enhance accountability and to focus core public servants on
policy development and performance management. However, for Torres (2004) not every country
has taken the same route. In some countries leading opinion formers regard the Anglo-American
NPM model with considerable suspicion, Anglo-American postulates not being universally
regarded as a desirable model to emulate. According to Christensen and Lægreid (2001),
performance management systems are embedded in a political-administrative context where
decisions taken and their practical implementation stem from a complex combination of
environmental factors, cultural traditions and diverse, organizationally based interests. For Pollitt
(2005a), in practice, differences in polity features, cultural factors and tasks seem to produce a lot of
variation in the use of performance management. Thus, public administrative arrangements are
conditioned by the features of governance and the public administration style in each country,
modernisation being dependent on context. The reform experiences of OECD countries have
highlighted that a country’s public administration system is part of its wider governance and
constitutional structures (OECD 2005). Practice within public administration styles both reflects
and influences the values of governance. So, while all governments are affected by global trends,
there are no overall public management recipes. History, culture and the stage of development give
governments different characteristics and priorities. Differences in public administration styles are
expressed in the public administration domain in areas such as strategic management. Not only are
there differences among countries in individual elements, but there are also systemic differences
among groups of countries with different historical heritages.
This paper seeks to acquire a deeper understanding of how some of these new ideas have worked in
practice by examining the implementation of strategic management in twenty-three pioneer local
governments in Australia, Canada, Spain, Sweden, the USA and the UK, countries which belong to
different public administration styles. For this purpose, experts'views on the implementation of
strategic management systems in local governments have been analyzed, applying the Delphi
method. In the first phase, academics and professionals are interviewed and, afterwards, from their
opinions, the questionnaire to be sent in the second phase to the other local governments is drawn
up. Thus, the questionnaire reflects the major areas of concern in the implementation of a strategic
management system. The study focuses on two aspects of the implementation of strategic
management: 1) what leads a local government to carry out the implementation, and 2) which
factors are expected to affect the implementation process. The results will allow a deeper
knowledge about the ideal implementation process and the expected benefits which strategic
management could entail.
2.- THE MEASUREMENT OF PERFORMANCE IN THE XXI CENTURY PUBLIC SECTOR REFORMS.
During the past 20 years, performance measurement has become an outstanding issue for
governments all over the world. The US General Accounting Office defines SHUIRUPDQFH
PHDVXUHPHQW as ‘the process of developing measurable indicators that can be systematically tracked
to assess progress made in achieving predetermined goals and using such indicators to assess
progress in achieving these goals’ (General Accounting Office, Apr 1998). For the Royal Statistical
Society Working Party on Performance Monitoring in the Public Services1 measurable indicators,
or performance indicators, for public services have been designed to assess the impact of
government policies on those services or to identify well-performing or under-performing
institutions and public servants. For them, the public accountability of Ministers for their
stewardship of public services deserves equal recognition. Hence, government is both monitoring
public services and being monitored by performance indicators.
In the USA, Canada, Australia, and the EU countries studied, interest in performance measurement
can be found in different initiatives carried out at national and sub-national levels. Halachmi (2002)
http://www.rss.org.uk/pdf/PerformanceMonitoringReport.pdf (Downloaded January 2006)
suggests two major reasons for introducing performance measurement as a regular activity in public
entities: first, to establish greater and better accountability, and second, to improve performance and
productivity. For him, the review of the performance measurement literature and legislation reveals
an interchangeable and indiscriminate use of the two terms -accountability and performance
improvement- for explaining the expected benefits and purposes of performance measurement.
Loughlin (1994) has argued that a change in the form of administrative accountability has taken
place and he sees the rise of performance management as providing the basis for new forms of
accountability in terms of performance and results. In relation to local governments, the increasing
requirement for accountability in terms of performance and results can be seen as a prime driver of
the development of evaluative systems. Research in South America suggests that an effective
planning oriented approach to performance evaluation can effectively enhance democratic
accountability, supporting the thesis that democratic accountability and public administration
modernisation can be achieved together if performance management is carried out effectively.
Public service organisations have been subjected to the introduction of various ‘private sector’
management techniques, whose implementation has not been exempt from criticism. Public Sector
workers, politicians and commentators doubt the value of using performance targets with broader
questions raised about the applicability of private sector approaches to public sector organisations.
Furthermore, there is some case study evidence that suggests that private sector approaches are not
bringing productivity improvements. For Jackson (???) value for money indicators tend to focus
narrowly on economy and efficiency rather than focusing on the satisfaction of the broad range of
Integrated Performance Management
Strategic management approaches seek a causal relationship that links the final results of the
organization to the processes and resources it manages. Even though, in relative terms, performance
management in the public sector is still in its infancy (Wisniewski and Stewart, 2001) in most
countries, pioneer initiatives have gradually been developing a global approach that seeks to
combine all the managerial aspects that contribute to organizational performance. This has led to
integrated performance management models produced from the experience of public entities and
often based on the well-known Balanced Scorecard (BSC) model of Kaplan and Norton. In strategic
management the integration occurs in two directions, vertically and horizontally. Vertical
integration means that performance measures are designed at different levels within the
organization in such a way that measures and objectives at a lower organizational level are deduced
from the upper level2. Signs of this alignment are present in the majority of strategic management
models which seek to emulate or reproduce, in the public sector, the BSC profile in which different
areas are integrated with each other from the top of the organization to its constituents (Niven,
2002). Horizontal alignment tries to make sure that the objectives defined by the organisation allow
work toflow across organizational boundaries. Performance measures are therefore customer-
focused and assess the organizational capability to provide value from the customer’ s perspective.
The horizontal alignment of the objectives becomes clear in the strategy map of the organization.
Horizontal and vertical integration of objectives leads to the alignment of all organizational
processes and resources towards the fulfilment of the strategy of the organization.
The idea of vertical integration is based on Kaplan and Norton’ s principle that strategic objectives must be aligned
throughout the constituents of the organisation (Kaplan Norton, 1996a).
Previous research includes case studies about the implementation process (see Appleby Clark,
1997; Hellein Bowman, 2002; McAdam HW DO, 2002), and surveys that analyzed the degree of
diffusion and implementation of certain management techniques (see Chan, 2002, 2004; Berman HW
DO, 1994; Berman Wang, 2000; Berman West, 1995; Jackson Lapsley, 2003; Lapsley
Wright, 2004; West Berman, 1993).
Based on comparative case studies Naschold and Daley (1999a) identified and discussed several
several trend –both positive and negative- observed in the experience of reform governments in
various countries. They also identify conditions for lasting success of local government reforms. In
a posterior article (Naschold Daley, 1999b) show that even strategic management capabilities
have not develop evenly across a broad international sample of cities, the are successful programs
such as Christchurch (New Zealand) that offer important suggestion for other cities. Through two
articles, Naschold and Daley (1999b, c) set out the central challenge that now face local government
making the transition to strategic management and redefining the interfaces between local
administration and its political, social and economic environment.
Poister and Streib (1999) carried out a survey to examine the extent to which performance
measurement has become integrated into contemporary local government management. Their
results show that many local governments in the United States share at that moment a strong
commitment to the effective use of performance measures, though they do identify some limits to
their current state of practice. In 2005 with a new survey these authors analyze the use of strategic
planning and management processes in municipal governments (Poister Streib, 2005). The results
show an expansion in the use of strategic planning, and some evidence of growing sophistication as
demonstrated by links to other management and decision-making activities.
Chan (2002, 2004) conducted a survey to municipal governments in the USA and Canada that show
a limited use of the balanced scorecard. However, most municipals governments have developed
measures to assess their organizations´ financial, customer satisfaction, operating efficiency,
innovation and change and employee performance. The respondent administrators also have a good
understanding of the balanced scorecard and the implementers are positive about their experience.
The need to monitor the change to avoid failures has been highlighted in different studies (see
Gabris, 1989; Gabris HW DO, 1999; Vinzant Vinzant, 1996a, b). Previous studies show that strategic
management and models such as the BSC are still exceptions in the local government environment.
Thus, the analysis of the implementation of these models will improve if it is carried out with the
opinion of experts.
The Delphi method is a systematic approach for gathering experts' opinions3. It was developed at
the Rand Corporation in the early 1950s and is the most frequently used forecasting technique.
Henessey and Hicks (2003) define the Delphi method as “a multiple interaction survey technique
that enables anonymous, systematic refinement of expert opinion, with the aim of arriving at a
combined or consensual position”. The value of the Delphi method lies in its ability to generate
ideas, both those that evoke consensus and those that do not. The method comprises of a series of
questionnaires sent to a pre-selected group of experts. These questionnaires are designed to elicit
and develop individual responses to the problems posed and to enable the experts to refine their
views as the group’ s work progresses in accordance with the assigned task. It is believed that the
group will converge toward the best response through this consensus process. In each succeeding
This is a highly recommended technique to reach consensus among experts where little is known about the topic
(Baruchson-Arib Bronstein, 2002; Delbecq HW DO, 1975; Hennessy Hicks, 2003; Murphy HW DO, 1998).
round, the range of responses of the panellists will presumably decrease and the median will move
toward what is deemed to be the correct answer. Because the number of respondents is usually
small, Delphi does not (and is not intended to) produce statistically significant results. So, the
results provided by any panel do not predict the response of a larger population or even a different
Delphi panel. They represent the synthesis of opinion of the particular group, no more, no less
(Torres, 2005). Authors such as Helmer (1983) underline the fact that the Delphi method is suitable
for dealing with forecasting problems for which there are no adequate models and for answering
one, specific, single-dimension question.
This methodology has been widely used in the private and public sectors in different areas with a
variety of modifications and interpretations (McBride HW DO, 2003; Powell, 2003). According to
McKenna (1994) and Keeney HW DO (2000), this technique has gained popularity in a great number of
disciplines. This broad spreading is due to the possibility of including experts from different
geographical and knowledge areas4. The common elements of the Delphi method are an expert
panel, a series of questionnaires, the search for consensus, anonymous participants5 and feedback
between phases (Beretta, 1996). Typically, three rounds are carried out (Powell, 2003). More
rounds can be done but it is necessary to analyze the improvement in the results, the costs and
participant tiredness to see if it is worth it (Jones HW DO, 1992; Hasson HW DO, 2000).
In this study, the application of the Delphi method has followed these steps: 1) selection of the
panel of experts –pioneer local governments- to be interviewed, 2) development of the first round of
Delphi interviews, 3) analysis of the first round responses, 4) preparation of the second round of
questions for interviewees, 5) analysis of the second round responses, 6) third round, and 7) the
synthesis of the final results.
The experts for the first round were selected from among successful implementers of management
systems. They were Barbara Emerson (Fairfax County, the United States), David Tyred (Prince
William County, the United States) and Carlos Vivas (Director de Área de Promoción Económica y
Hacienda, San Cugat del Valles, Spain). These professionals were interviewed in order to agree
about the main areas of concern related to the implementation and benefits of strategic management
systems. The results of the interviews allowed us to design the questionnaire for the next round.6.
In the second round, a sample of local governments, pioneers in the implementation of strategic
management systems, were invited to participate in the Delphi study. The questionnaires were sent
to 57 local governments identified as implementers of strategic management systems. The valid
response rate was 40%, a good level considering the length of the questionnaire. The answers came
from Brisbane, Holdfast Bay and Melbourne, in Australia, Kingston and North Bay, in Canada,
Mataró, Móstoles and San Cugat del Vallés, in Spain, Austin, Charlotte, Chula Vista, Fairfax
County, Maricopa, Milwaukee, Multnomah County, San Jose, Scottsdale and Tucson, in the USA,
Plymouth, in the UK and Gothenburg, Tierp, Norrtälje y Luleå, in Sweden.
In the third round, we sent a new questionnaire to the second round participants with the results and
comments from the previous one. We eliminated all the questions that were facts, such as the year
of implementation. The rest were included, in most cases, without being modified but with
Akkermarns HW DO (2003), Baruchson-Arib and Bronstein (2002), Hennessy and Hicks (2003), Keller (2001) and
Marsden HW DO (2003) are some of the authors that applied this technique with experts from different geographical and
The experts have allowed us to indicate their name and position, in the first phase, and the local government for which
they work in the second and third phases.
For preparing the design of the first round questionnaire we also had the cooperation of Blue Wooldridge and Carolyn
Funk at the Virginia Commonwealth University, the USA.
additional comment to seek improvements in the level of consensus. Five questions were modified,
either to better process the answers or to include options suggested by the participants. Thirteen
local government answers were obtained in this final round. The answers came from Holdfast Bay
and Melbourne in Australia; Mataró, Móstoles and San Cugat del Valles in Spain; Austin,
Charlotte, Maricopa, San Jose, Scottsdale and Tucson in the USA; and Luleå in Sweden.
These entities are small and medium sized local governments, in the context of the own countries,
which share quite common features throughout countries and may generally have a more
homogeneous culture than large local governments and central and regional governments.
Given that the methodological steps planned in the design of the Delphi study were not completed
in the second round by all local governments , only the answers of the twelve local governments
have been considered as results from the Delphi study. Brockhoff (1975) suggests that, under ideal
circumstances, groups as small as four can perform well. The answers to the second round
questionnaire have been statistically analyzed and the results presented in a separated column in the
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There is no consensus about the reason that leads local governments to implement a strategic
management system or about who drives the process. Managers and politicians were the starting
point in 58% and 42% of cases, respectively.
Because only twelve pioneer local governments completed the Delphi process, the results of the
interviews have been analyzed separately from those of the questionnaire sent to the other units.
Appendix A shows the results of the questionnaire for the full sample of 23 local governments in
the third column. As can be seen, the results in the first and third columns are similar.
The results of the Delphi study collect the opinion of interviewees both about their experience in
strategic management systems and what can be expected from them.
1) In the first round of interviews, the opinion of three pioneer local governments were required to
identify the most relevant features of strategic management systems related to the research
questions: the extent to which strategic management systems follow the BSC model, the objectives
of strategic management implementation, the implementation process, and the adaptation of local
government organization to the new management system.
2) A list of relevant key issues related to the implementation of strategic management systems was
obtained from the responses in the first interviews. Column A of Appendix A shows the items
grouped in thematic sections.
3) The preparation of the second round of interviews was carried out based on the list of Appendix
A. The interviewees were asked to score each issue according to its relevance in the successful
development of strategic management systems.
4) Column B of Appendix A shows the results of the second round of interviews in which pioneer
local government give a value to each issue in function of their importance for the successful
implementation of strategic management systems, expressing their opinion about ‘what should be’ .
In questions with 0 and 1 options, if the mean value of answers was between 0.34 and 0.65 the
pioneer local governments had reached a consensus about the importance or non-importance of
each issue. In questions with 0 to 5 options, if the mean value of answers was between 0 and 0.34 or
between 0.65 and 1, the pioneer local governments had reached a consensus about the importance
or non-importance of each issue. In questions with 1 to 5 options if the mean value of answers was
between 0 and 2.34 or between 3.65 and 5 the pioneer units had reached a consensus about the
importance or non-importance of each issue. The answers to the second round with a mean value
between 0.34 and 0.65 or between 2.34 and 3.65, in which a consensus had not been reached, were
sent to interviewees to be considered again.
5) Finally, consensus was achieved in some questions in the third round (column C of Appendix A).
The issues involved in the third round could be interpreted as those whose importance and
contribution to the successful implementation of strategic management systems is not clear for the
pioneer local governments interviewed. The absence of consensus in the items related to the impact
of implementation shows difficulties for perceiving clear management benefits.
6) The synthesis of the final results of the Delphi analysis carried out is as follows.
To what extent do strategic management systems follow the BSC model?
The Balanced Scorecard can be defined as a strategic management technique which allows the
organization to focus on its strategic goals. By first establishing a mission and vision statement, the
organization develops its strategy. Then the strategy is divided into different objectives, which are
divided into four perspectives, customer, financial, internal process and learning and growth. Each
objective will have measures, targets, and initiatives to reach it (See Kaplan and Norton, 1992,
The local government pioneers analyzed state that they have taken the BSC postulates, in the terms
defined by Kaplan and Norton, as a benchmark for the implementation of their own strategic
management systems, although adapted to their cultural and organizational characteristics and
traditions. There is also agreement about the main features of the strategic management system
structure. It should be based on the mission, which links strategy and the measurement system, on
the link between management systems and strategy and on the division into categories close to
those developed by Kaplan and Norton (1992). In most cases, these categories are adapted to local
government features, such as efficiency, effectiveness, quality and outcome indicators, budget or
programs-related indicators, or measures classified by strategic objectives The experts do not find it
crucial that strategic management systems should follow the BSC model.
The figures of the full sample questionnaire show that almost all, 82%, apply a strategic
management system based on the mission, 73% link the management system with strategy and 78%
divide the indicators into different categories, which shows the influence of the Kaplan and Norton
BSC model in the implementation of strategic management.
The objectives of strategic management implementation.
From the answers obtained in the first round, nine principal objectives were proposed to
interviewees. These objectives represent the main advantages that local governments seek from the
implementation of strategic management and summarize the main concerns of local governments
nowadays, such as efficiency and effectiveness (Ammons, 2002; Andrews Moyniham, 2002;
Behn, 2003; Bernstein, 2001, Chan, 2002, 2004; Worthington, 2000), citizen satisfaction (Ammons,
1995; Rainey, 1999), accountability, (Ittner Larcker, 1998; Poister Streib, 1999), and the need
for improving decision-making (Dusenbury HW DO, 2001; Liner HW DO, 2000, 2001). Cost reduction has
been the objective which does not arouse much interest, given that the human factor is the main cost
in the provision of local services and the implementation of strategic management techniques does
not seek redundancies in the public sector. Improvement in accountability is another doubtful
objective for experts in this survey
The implementation process
Strategic management systems are voluntary in all cases except in Melbourne which has to present
strategic plans. They are initiated by the politicians or managers of the area or department which is
delivering the service or, sometimes, by quality departments if they exist. The most common reason
for the implementation of strategic management was the experience of chief executives in other
public organisations (Sant Cugat del Valles, Mataro, Mostoles, Maricopa, Lulea) or research about
the model which leads the organization to adopt it (Austin, Charlotte, San Jose) Other reasons given
were it fits with the organisational culture (Holdfast Bay), external mandate or to better understand
the performance of the organisation (Scottsdale).
In the figures of Appendix B, 26% state they implemented strategic management because they did
some research about it and liked it and another 26% because of the Chief executive’ s experience in
another public entity. They are followed by ‘it was being quite useful in other local governments’
(17%) and ‘it fits well into the organization' culture’ (17%).
a) Prior situation
There is no consensus about what has been and what should be the recommended starting point for
the implementation of strategic management. As can be seen in Appendix A, there is an absence of
agreement about the contribution of previous experiences in organizational reform initiatives and
about the usefulness of contracting advisory services and initial studies before the implementation.
b) The personnel
The answers of experts show that the role played by staff could be different in each case and there is
no agreement about the role employees should play in the process. They do not consider the
involvement of personnel essential for the successful implementation of strategic management.
Notwithstanding, there is a strong consensus about the convenience of implementing key training
Looking at the results included in Appendix B, it can be seen that personnel has been taken into
account by a little more than half of the local governments studied. 60.87% of local governments let
the personnel participate to some extent, but there are also an important number of local
governments, 30.78%, that did not follow a participative process.
However, almost all local governments, 82.62%, have carried out training programs abput the
management system implemented in order to lower the resistance of staff and to make the
implementation process easier.
c) Leadership and compromise
Leadership and the compromise of managers reflect common features of pioneer local governments
in the implementation of strategic management rather than the involvement of politicians and the
empowerment of employees should also be taken into account
The managers` leadership seems to be crucial and the implementation of strategic management
systems needs leaders who drive the change. Pioneer local governments show a low degree of
rotation between managers given that the top management has changed two times or fewer during
the last ten years. It can be seen in Appendix B that 73.91% highlight strong leadership and 60.78%
managers' compromise as key factors for a successful implementation.
It seems the majority of local governments had some kind of external assistance, although the
usefulness of this external support is not clear. As can be seen in Appendix B, an external assistant
has taken part in the implementation in 60.87% of the cases. This help has come from consultants.
The percentage of the total local government budget used in the performance management system
project was less than 5% in 95.65% of local governments. These results show the affordability of
strategic management systems
The adaptation of local government organization to the new management system
a) Mission and vision agreement
The participation of the organization’ s members and its main stakeholders in the development of the
mission statement has been taken as a proxy for agreement on the mission. In the first round, five
groups were suggested as potential stakeholders in strategic management initiatives. As can be seen
in Appendix A, there was agreement on the involvement of elected officials and senior managers in
the setting of mission and vision statements as well as on the non-involvement of unions,
employees, governmental agencies and state auditors. Opinion is divided on the role of middle
managers and citizens.
b) Organizational culture
The Delphi experts do not reach an agreement about whether the implementation of strategic
management has brought about noticeable changes in the organization’ s culture (Appendix A).
52.17% of local governments report some changes in behaviour but 30% have not perceived any
change (Appendix B).
c) Barriers to the implementation
The opinion of expert pioneers in the implementation of strategic management does not allow the
identification of common strong barriers. From the most frequent sources of difficulties/barriers
listed in the first round are “the absence of an implementation schedule”, “inadequate support/
commitment from top management” and “the lack of agreement on the organization mission and
vision between different stakeholders”. The interviewees have agreed directly that they are not
relevant in the process. Along with these items, “incompatibility with other organization systems”
has not been considered relevant in the third round. The other items, even though they obtain higher
values, do not reach consensus between the experts. “Employee resistance”, “communication
between organizational levels” and “lack of resources” seems to be issues which could represent
barriers to the implementation, although there is no consensus on them. All scores have a value
below three, which shows that the obstacles listed have had a moderate or small effect on the
strategic management implementation and adaptation process. It is noticeable that no one barrier
listed has been considered a crucial threat to the process.
d) Dissemination of Local Government information.
As can be seen in Appendix C, the channels for the dissemination of information are similar in all
local governments independently of public administration styles. At internal level, the ways of
communication most frequently used are the Intranet, meetings and the annual report and, at
external level, the Web site and the email.
At external level, the majority of local government pioneers in strategic management initiatives
disclose performance information, such as strategic plans, performance reports, performance
indicators and annual reports, which means that local governments also consider stakeholders as
primary users of strategic management information. This behavior is quite different to that usually
found in the private sector in which management information is only available to managers and is
not disclosed to investors and other external users.
As can be seen in Appendix B, almost 70% of the local governments disclose their strategic plans
and performance indicator reports. Specific information on the management system and the annual
accounts are disclosed by 50% of the cases. Only Mostoles does not disclose any information. This
information was provided on the Internet (82.61%), by mail (73.01%) and by phone (69.57%). Only
30.43% make press releases.
The impact of the implementation
The impact of implementation refers to what can be expected from the implementation of strategic
management systems. There is agreement on the low impact of strategic management in the
reduction of cost in service delivery and on its positive contribution to the setting of meaningful
goals in the organization, which is a key issue for the improvement of management in public
entities. There is almost consensus on its positive influence on the alignment of the organization to
its mission, which is also a key goal of strategic management systems. The other elements of this
section deal with issues stated by NPM doctrine as the key objectives of governmental change, such
as improvements in efficiency, customer satisfaction, decision-making processes, accountability or
resource allocation. They have not been considered as specially reinforced by the implementation of
strategic management, although some of them have scored well. The achievement of these
objectives requires organizational changes that the mere implementation of strategic management
does not bring about..
One of the theories most frequently used to explain the implementation of strategic management
and performance measurement in public entities is the agency theory. According to the agency
theory (Bendor, Taylor and Gaalen, 1985), performance measurement is used in situations of
asymmetric information and uncertainty for monitoring managers and linking them with the
principal. Similarly, classical contingency theory (Thompson 1967, Johnsen 2005), states that
complex organizations use performance measurement to reduce uncertainty and for legitimacy. On
the other hand, institutional theory states that organizations exist in an institutional environment
which defines and delimits its social reality (Scott, 1987). Given that public sector organizations are
more dependent than others on legitimacy and on financial resources, the formal implementation of
structures such as strategic management may be used as a sign of efficiency and good governance to
respond to institutional or environmental pressure in order to secure legitimacy from constituents
and resources from the institutional environment. So, public entities would adopt strategic
management, BSC or other similar initiatives for different reasons including explaining
performance to the principal -in local governments, are the constituents- (agency theory), reducing
uncertainty and gaining legitimacy (contingency theory) and as symbol of efficiency in order to
secure legitimacy and resources from the environment (institutional theory). The three theories
suggest that the adoption of strategic management in local governments could take place for other
reasons than effectiveness. Agency theory, contingency theory and institutional theory agree that
the idea of the search for legitimacy is the driver of strategic management initiatives at local
According to the OECD (2005), the following broad objectives, for which countries have adopted
the formalisation of targets and performance measurement can be distinguished: managing
efficiency and effectiveness, improving decision-making; and improving external transparency and
accountability to parliament and the public. In our study, the highest scores have been obtained by
the improvement of the objectives of efficiency and effectiveness, consumer satisfaction, decision-
making and strategic planning, followed by the alignment of the organization to its mission, setting
meaningful goals, improving resource allocation and improving accountability. As can be seen,
there is a high degree of coincidence between the objectives stated by the OECD to encourage the
implementation of strategic management systems and the objectives pointed out by the local
governments. Conversely, there are not similarities between the perspectives (Appendix D) in
which the mentioned objectives are divided. This shows a certain degree of rhetoric in the setting of
objectives, stating those which are ‘politically correct'given that any local governments would
hardly overcome the efficiency and effectiveness or the customer satisfaction as key objectives of
public entity reforms. Likewise, the results of the impact of implementation show doubts between
experts about the ability of strategic management to achieving the objectives stated.
The Delphi answers show that local governments take the BSC model as a benchmark for the
development of their strategic management systems, but adapted to their different cultural and
organizational characteristics and traditions, which are clearly reflected in the different perspectives
proposed by each local government for the achievement of the objectives. Recently, variations of
the rational choice theory (Pierson, 2004, Pollitt 2005) state that earlier decisions or organizational
traditions may condition current choices so that the costs of departing from previous trajectories
were so high that they favour remaining on the same path (' dependency' set in some previous
period (Pollitt, 2005). So, the different features of strategic management systems implemented in
the local governments studied can be explained as an adaptation of the BSC to each legal and
organizational culture which determines the path of organizational reforms.
The reasons for the implementation of strategic management do not follow any institutional plan or
any kind of international tendency based on NPM doctrine. Instead they seem to be based on
individual initiatives such as the previous experience of chief executives, or on the intellectual
attraction of the managers or the elected officials for the BSC model and so the implementation
follows a top-down process encouraged by senior managers. The low degree of involvement of
middle managers, employees and citizens in setting the vision and mission of the system is coherent
with this approach, as is the secondary role played by politicians. The low interest of politicians in
the development of performance measurements had also been detected in OECD (2005). They
foundthat politicians use performance information ‘not much’ in decision making, and concluded
that, for countries that have introduced these reforms, a major challenge is to change the behaviour
Kaplan and Norton highlight the benefits of the BSC models, from the top of the organization to its
constituents and the horizontal alignment across organizational boundaries. A weak vertical
integration emerges from the experts’ answers given the low participation of middle managers and
employees and to some extent, politicians. Notwithstanding, what can be gathered from the
perspective answers shown in Appendix C is that they have set seeking the horizontal integration of
departments, programs and/or activities.
The results do not find evidence about any connection between previous experiences in
management initiatives or reforms and the implementation of strategic management systems. The
compatibility with entity organizational structure and the implementation in other local
governments are also stated as key factors of implementation. They are reasons which can explain
why strategic management can be implemented without strong involvement of politicians.
Specifically, some local governments state that the model fits well into their public administration
style, so it can be implemented without introducing reforms into their organization system.
The findings about organizational change show that strategic management is being overlapped to
previous organizational structures, without challenging traditions and views about the organization
of public entities. Furthermore, the results also support the idea of legitimacy rather than change as
the main driver, perhaps to give a view of modernization through the implementation of private
sector advanced management techniques.
From the background and literature review sections, better accountability or ‘new accountability’ in
terms of performance and results comes out as a primary driver of strategic management initiatives,
followed by improvements in performance. In fact, only accountability obtains marks over three in
Appendix A, perhaps due to it could be referred to as internal as external constituents. So, it seems
that accountability is a key driver in implementing performance measurement, and as such service
delivery must be a major part of the performance that is measured and managed – not just costs.
The majority of local governments studied have supplemented traditional evidence of financial
stewardship with strategic plans and performance information to demonstrate the scope and
magnitude of their offerings.
Governmental annual reports present less clear-cut between internal and external reporting than
annual reporting in firms and hence, which blurs the limits of the type of information to be included
in the financial report. Public sector financial and non-financial information is prepared not only for
representatives but for constituents and stakeholders as key document in the discharge of
accountability. Strategic management information is adequate to be disclosed in the financial report
of public entities in order to seek legitimacy and enhance citizen trust in government, and in terms
of performance improvements, it may give an image of efficiency, transparency and openness.
The search for legitimacy gives coherence and allows a rational explanation for the results. The
analysis of consistency between answers such as: relationship between objectives and impact
forecasted, reasons and drivers which lead the implementation, managers instead of politicians
leadership, low involvement of staff, absence of organizational change, low degree of agreement
about barriers in the implementation and absence of agreement about why strategic management
systems are implemented show that strategic management systems are implemented to some extent
as formal structures overlapped with traditional organization styles, seeking symbols of
transparency, openness and efficiency rather than efficiency itself in order to gain legitimacy.
This paper has attempted to provide an alternative perspective on strategic management
experiences. The relevance of doing so in the context of the ‘new public sector’ is justified by the
complex interrelationships between multiple stakeholders and the intensely political nature of
decision-making in public sector organizations. In such circumstances, shifting performance
management practices may seem to follow a more deterministic model of change, which
management may draw on to justify change initiatives (e.g. motivating new PM practices as a
‘necessary evil’ ). The results identify the trends, the strengths and the limitations of current
approaches and future challenges.
Modern theories of bureaucracies, agency theory, contingency theory, public choice theory and
institutionalism theory contribute to explain the determinants of non-mandatory performance
measurement in political institutions better than the search for efficiency or the development of
The introduction of strategic management in public organisations has often not resulted in expected
gains of efficiency. One reason is that strategic management systems are often not integrated with
the overall management of the organisation and therefore do not drive the decisions that really
matter. Vertical and horizontal integration of strategic management realises alignment of structures,
resources and processes and increases the probability of organisational success. However, to carry
out these integrations it is necessary to undertake organizational reforms which have not been
The quantity of performance information available to decision makers has substantially increased;
however, the use of this information in decision making as the OECD points out is a pending issue..
It takes time to develop performance measures and indicators, and even longer to change the
behaviour of key actors in the system (politicians and bureaucrats) so that they use this information
and develop a performance culture adapted to their particular country. The performance movement
is here to stay. The benefits of being clearer inside and outside government about purposes and
results are undeniable. But to gain these benefits, governments need a long-term approach, realistic
expectations and persistence. Modernisation strategies need to be tailored to an individual country’ s
context, needs and circumstances. These differences will be reflected in the starting point from
which the reforms are launched, the nature of the problems faced and the most appropriate solution
to apply. Other issues that depend on context include how countries deal with accountability and
control in public management,
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