Performance Management in Hong Kong 309

accountability to the customers. T he managerial bias or bureaucratic capture of performance pledges may well indicate that like many customer service techniques and strategies, the customer rhetoric of performance pledges has quickly become domesticated, to the extent that the production and content of pledges are now no more than just a public relations exercise, and a task to satisfy a top-down requirement. The culture of performance pledges has not permeated effectively into the public sector bureaucracy either because it remains something alien to the pre-exist- ing non-inclusive culture (hence as an administrative fad, it would rise quickly but also decline quickly), or it has been subject to agency and staff adaptation in the process of implementation just like any new policy innovation.

15.4.5 Overall Evaluation

If performance management represents a new regime that is a more transparent, open, objective, bottom-up, customer-driven, results-driven style of management, then certainly Hong Kong’s case so far has shown that despite the enthusiasm given to it in policy statements and management rhetoric, the reality remains that critical decisions in public sector management continue to be based on a broad-brush, across-the-board, political approach factoring in bureaucratic adaptation and negotiation. The discrepancy between claims and realities can be further explained in three aspects:

The measurability of performance

The ownership of, and responsibility for, performance

The politics of performance

15.5 Measurability of Performance

Government and the public sector at large exist to provide public services to citizens and perform core functions (such as maintaining law and order) in society. Viewing the activities and operations of government in much the same way as those of a private firm within the general notion of “management,” it seems logical to emphasize the continuous improvement of public services delivery through a good management of performance. The crucial question is how “performance” is to be defined and properly measured for the purpose of management. Performance measures and indicators (as “proxies” where direct measurement is not feasible) have thus occupied a key part in the ongoing performance discourse. In reality, public sector performance measurement is inherent with major conceptual ambiguities and methodological complexities and uncertainties. Notionally, performance measurement has the benefits of providing an incentive for production, innovation, and adequate accountability, and of reinforcing an organization’s external orientation. However, as de Bruijin (2002: Ch. 1) rightly pointed out, these benefits need to be qualified by the specific conditions pertaining to the nature of the organization and its products/services.

Performance measurement becomes problematic when: an organization has obligations and is highly value oriented; an organization is process oriented; products are multiple; products are generated together with others; products are interwoven; products are of wide variety; causalities are unknown; quality is not definable in PIs; and the environment is dynamic (de Bruijin, 2002: Table 1.1). These problematic conditions are often found in the context of public sector work that is less quantifiable, involves inter-departmental cooperation and teamwork, and is subject to more value-laden processes and a more politically charged environment. Furthermore, there are what de Bruijin (2002: Ch. 2) described as the “perverse effects” of performance measurement, which cast doubt on its reliability and effectiveness and hence lead to cynicism and staff resistance to its

© 2011 by Taylor and Francis Group, LLC

310 Public Administration in Southeast Asia

use. Performance measurement could become a stimulus to strategic behavior should participants engage in “gaming the numbers,” which might in the worst case bring about even negative performance. Performance measurement tends to reward the constant reproduction of the existing, which might block innovations. Though it can serve to induce an organization to account for its performance and objectify such account, performance measurement might also veil an organization’s performance, if performance information is so aggregated as part of managerial strategic behavior that it misses or blurs the causal connections existing at the level of the primary process of production.

A fundamental problem of performance measurement is that most public sector has both quantitative as opposed to qualitative aspects of performance—the so-called tangibles and intangibles. How far can measurement be comprehensive and “objective” is always a point of contention. If non-quantitative measures or indicators can be accepted, how far is it a matter of subjective/judgmental measurement (e.g., views of peers, customers, and the public at large), which may also lead to disagreement and controversies? There is also a danger that average performance will be equated with good performance (Carter, Klein and Day, 1992: 48). Some studies have found that PIs that are accessible to the public do not necessarily provide a comprehensive view of the performance of public bodies; neither has government a common or rigorous approach to performance auditing (Taylor, 2006a, 2006b).

15.6 Ownership of, and Responsibility for, Performance

Because of these problems of measurement, and the transaction costs involved in order to come up with more reliable and comprehensive indicators within the public sector because of the nature of its work, most departments and agencies are reluctant to embrace performance measurement wholeheartedly. Not only that, the negative or “perverse” effects of performance measurement have also led to bureaucratic skepticism and resistance toward the wider use of PIs and the like to bear upon major policy or management decisions. PIs are controversial and may become highly divisive. To the extent that the results of performance measurement are used to determine individual or agency reward, results that “get measured” may tend to be those that “get done,” so that those activities that can produce easily measurable outcomes would take precedence over those that can’t. Bureaucratic politics are then conducted in terms of determining the ways in which performance is measured and evaluated for the purpose of resource allocation and rewards.

The degree of performance ownership in the public sector is constrained by the level of interdependence of different units, services, or activities within the public organization or between different government departments/agencies (degree of complexity in production), and by the extent to which performance is affected by environmental factors beyond the control of the principal unit/organization concerned (degree of certainty). The degree of individual unit’s or department’s control over performance outcome also varies. Some organizational actors enjoy a high degree of autonomy, e.g., professional independence from other managers over performance and performance evaluation. Others may be at the mercy of the policy perimeters set by higher-level bodies, or by external constituencies and partner departments. In organizations where there is greater professional autonomy, this may weaken the capacity of managers to “control” the performance of the organization as professional standards and priorities often take precedence over managerial targets and criteria. As a result, there is no unified set of performance standards and motives that can drive such standards. The combined result is that key decisions in human resource management (such as pay determination) and financial resource management (such as annual budget

© 2011 by Taylor and Francis Group, LLC

Performance Management in Hong Kong 311

allocations) remain based on the well-tried conventional wisdom of “negotiative politics,” in order to secure the widest mutual accommodation and institutional consensus.

15.7 The Politics of Performance

Finally, there is the issue of the actual purposes that performance measures and indicators are put to serve. According to Carter, Klein and Day (1992: 49), three different categories of PIs can be conceptually distinguished that serve different purposes. Prescriptive PIs are used to monitor progress toward the achievement of objectives set by ministers or managers. Descriptive PIs simply record change (i.e., comparing relative performance over time rather than performance against normative standards or precise targets), while proscriptive or negative PIs specify not targets or ends, but things that should not happen in a well-run organization. Prescriptive PIs are more a top-down management tool to ensure compliance of prescribed targets by subordinate agencies and staff, hence lending themselves to a command style of management (Carter, Klein and Day, 1992: 50). Descriptive PIs, which can be produced at any level of the organization, may entail a more persuasive style of management.

In the context of performance management, as witnessed in Hong Kong’s experience, top-down PIs have been imposed by the government center and senior management of bureaus/departments as performance targets, both for political consumption (to satisfy the legislature and rising public expectations as a form of external accountability) and for the purpose of bureaucratic compliance control (as a form of internal accountability). However, these prescriptive PIs may not have secured sufficient bottom-up involvement and buy-in, but are mainly introduced as a new modus operandi within the new atmosphere of performance rhetoric. As such, it is easy for middle managers and frontline staff to engage in reverse “strategic behavior” so as to beat the game—adopting those PIs that will be favorable to them and presenting performance information in such a way as to hide or blur the actual performance. The findings of the Audit Commission, as well as the degeneration of performance pledges into glossy publicity pamphlets, have all pointed to such a “moral hazard” tendency of bureaucratic adaptation and capture. What performance measurement has actually achieved is a bundle of mainly descriptive PIs indicating inputs and unit costs rather than outputs and outcomes, very often a product of internal managerial negotiations. Wong’s (2007: 452) case study of the experience of SQS in Hong Kong’s subvented social services, for example, has also found that these service standards soon become treated as “bureaucratic chores and rituals. … [and the] compliance accountability and convenient ways to game the system will take hold,” so much so that “this is not accountability for the effectiveness of results, but rather accountability for documenting the processes by which the results are arrived at.” Frustrations and confusions set in, and service providers and professionals no longer take SQS seriously.

15.8 Conclusion

Performance measurement is both a science and an art. As science, measurement is subject to methodological, cognitive, and technical constraints and prejudice. As art, it has to be the “art of the possible”—accommodating bureaucratic negotiation and the limitations of management culture in the organization. The notion of performance is, in theory and practice, both contestable and complex. Therefore, great care has to be taken by policymakers and managers as to how to develop workable and reliable PIs and to interpret the findings generated by such indicators,

© 2011 by Taylor and Francis Group, LLC

312 Public Administration in Southeast Asia

and how to gauge the intangible and non-measurable aspects in order to cast a fuller and more meaningful picture of performance that, in turn, can really inform intelligent decision making. This explains why performance measurement is often pursued in government organizations in a somewhat indeterminate and flexible context.

The skepticism toward and the politics of performance-related pay are not unique to Hong Kong, but are found even in OECD countries that have pioneered performance management reforms since the 1990s (Cardona, 2007a, 2007b). No link has been found between performancerelated pay for public sector managers and improvements in organizational performance—“the technique has been useful only in overcoming labour market pressures drived from the competing private sector rather than actual outstanding achievements” (Cardona, 2007b). A 2002 survey of systems of productivity-linked remuneration in European Union member states concluded that:

Performance-related pay systems were costly and time consuming to implement

Measurement of performance, particularly in areas where there were no obvious quantifiable outputs, was very difficult

Almost none of the current schemes addressed the issue of underperformance

No evidence had been found that performance-related pay schemes had contributed to an improvement in performance, in human resource management, or in the quality of the service delivered

Different logics operate in political, policymaking, and managerial processes. The economic rational logic behind performance-based budgets, for example, is different from the political logic and these two logics do not necessarily converge (Cardona, 2007b: 5). In practice, as reported by a World Bank (2003: 38–39) research paper, performance management systems had demonstrated remarkably little influence on anything and in some cases produced negative effects. Such observations were echoed by a subsequent OECD (2005) study. If after 20 years of “disappointing experience” of OECD member countries with performance-related pay, with “the still unseen results” of performance management (in the words of Cardona, 2007b: 5), it is no surprise that Hong Kong has been so unenthusiastic about the implementation of performance management.

Judging from the rather ambiguous and even superficial way in which performance measurement is put to use in Hong Kong, the lesson seems to be that unless the various stakeholders in government genuinely believe that performance measurement represents a fairer, more reliable, and generally more effective process to drive resource allocation, performance evaluation, and reward decisions, it will continue to exist more on paper as a managerial rhetoric than as an effective tool to inculcate a fundamental shift in organizational thinking and behavior. Whether in political, bureaucratic, or managerial transactions, there are certainly genuine needs to define “performance” in order to assist decision making and to achieve accountability to stakeholders concerned, but the measurement of performance may be in totally different terms in different milieus, which cannot be easily reduced to a singular set of unproblematic denominators that can cross milieu borders.

References

Bouckaert, G. (1996) “Measurement of Public Sector Performance: Some European Perspectives,” in A. Halachmi and G. Bouckaert (eds) Organizational Performance and Measurement in the Public Sector, London: Quorum Books, pp. 223–37.

© 2011 by Taylor and Francis Group, LLC

Performance Management in Hong Kong 313

Brewer, B. and Huque, A.S. (2004) “Performance Measures and Security Risk Management: A Hong Kong Example,” International Review of Administrative Sciences, Vol. 70, No. 1, pp. 77–87.

Cardona, F. (2007a) “Tackling Civil Service Pay Reform,” paper presented at Conference on Civil Service Salary Systems in Europe, jointly organized by OECD, European Union, Romanian National Agency of Civil Servants, and SIGMA (Support for Improvement in Governance and Management), 25 April, Bucharest, Romania.

——— (2007b) “Performance Related Pay in the Public Service in OECD and EU Member States,” paper presented at Conference on Civil Service Salary Systems in Europe, jointly organized by OECD, European Union, Romanian National Agency of Civil Servants, and SIGMA (Support for Improvement in Governance and Management), 25 April, Bucharest, Romania.

Carter, N. (1998) “On the Performance of Performance Indicators,” in M.-C. Kesler, P. Lascoumbes,

M.Setbon, and J.-C. Thoenigh (eds) Évaluation des Politiques Publiques, Paris: L’Harmattan, pp. 177–94.

Carter, N., Klein, R. and Day, P. (1992) How Organizations Measure Success: The Use of Performance Indicators in Government, London and New York: Routledge.

Cheung, A.B.L. (1992) “Public Sector Reform in Hong Kong: Perspectives and Problems,” Asian Journal of Public Administration, Vol. 14, No. 2, pp. 115–48.

———(1996a) “Public Sector Reform and the Re-legitimation of Public Bureaucratic Power: The Case of Hong Kong,” International Journal of Public Sector Management, Vol. 9, No. 5/6, pp. 37–50.

———(1996b) “Performance Pledges – Power to the Consumer or A Quagmire in Public Service Legitimation?,” International Journal of Public Administration, Vol. 19, No. 2, pp. 233–59.

———(1999) “Moving into Performance Pay for Hong Kong Civil Servants: Conceptualization and Implementation Problems,” Public Administration and Policy, Vol. 8, No. 2, pp. 9–22.

———(2005a) “Civil Service Pay Reform in Hong Kong: Principles, Politics and Paradoxes,” in Anthony B.L. Cheung (ed) Public Service Reform in East Asia: Reform Issues and Challenges in Japan, Korea, Singapore and Hong Kong, Hong Kong: Chinese University Press, pp. 157–92.

———(2005b) “What’s in a Pamphlet? Shortfalls and Paradoxical Flaws in Hong Kong’s Performance Pledges,” Public Management Review, Vol. 7, No. 3, pp. 341–66.

Civil Service Bureau (1999a) Civil Service into the 21st Century: Civil Service Reform Consultation Document, March, Hong Kong: Printing Department.

———(1999b) Civil Service Reform Newsletter, Issue No. 3, June, Hong Kong.

———(2000a) Civil Service Reform Newsletter, Issue No. 11, May, Hong Kong.

———(2000b) Service Reform Newsletter, Issue No. 14, October, Hong Kong.

———(2000c) Civil Service Reform Newsletter, Issue No. 15, December, Hong Kong.

———(2005) “Summary of Progress of the Civil Service Reform,” Hong Kong [online] (Accessed January 10, 2006): http://www.csb.gov.hk/english/csr/files/panel051026e.pdf.

de Bruijin, H. (2002) Managing Performance in the Public Sector, London and New York: Routledge. Director of Audit (2005) Report No. 45 of the Director of Audit, Ch. 6 “Performance measurement and

reporting in the Government,” October, Hong Kong: Government Logistics Department. Efficiency Unit (1995) Serving the Community, Hong Kong: Government Printer.

——— (1998) Survey on Performance Pledge, August, Hong Kong [online]: http://www.info.gov.hk/eu/eng- lish/pm/pm_ref/files/ppflyer.pdf.

———. (2005) [online] (Accessed October 4, 2005): http://www.info.gov.hk/eu/english/pm/pm_pm/ pm_pm.html.

——— (2008) [online] (Accessed July 17, 2009): http://www.eu.gov.hk/english/psr/psr_past/issue16/cmaf. html, last revision: September 16, 2008.

Finance Branch (1989) Public Sector Reform, Hong Kong.

——— (1995) Practitioner’s Guide: Management of Public Finances, Hong Kong: Government Printer. Fitzpatrick, S. (2007) “Overview on Civil Service Salary Systems in EU Member States and some Reform

Trends,” paper presented at Conference on Civil Service Salary Systems in Europe, jointly organized by OECD, European Union, Romanian National Agency of Civil Servants, and SIGMA (Support for Improvement in Governance and Management), 25 April, Bucharest, Romania.

© 2011 by Taylor and Francis Group, LLC

314 Public Administration in Southeast Asia

Hayllar, M.R. (1995) “Reforms to Improve Performance in Hong Kong’s Public Sector,” Asian Review of Public Administration, Vol. 7, No. 2, pp. 32–61.

Kraan, D.-J. (2007) “Programme Budgeting in OECD Countries,” OECD Journal on Budgeting, Vol. 7, No. 4, pp.7–47.

Lane, J.-E. (2000) New Public Management, London and New York: Routledge.

OECD (1997) Performance Pay Schemes for Public Sector Managers: An Evaluation of the Impacts, Public Management Occasional Papers, No. 15, Paris: OECD.

——— (2005) Performance-related Pay Policies for Government Employees, Paris: OECD.

Patten, C. (1992) Our Next Five Years: The Agenda for Hong Kong, address by the Governor at the opening of the 1992–93 session of the Legislative Council, 7 October, Hong Kong: Government Printer.

Pollitt, C. and Bouckaert, G. (2000) Public Management Reform: A Comparative Analysis, Oxford: Oxford University Press.

Potter, J. (1988) “Consumerism and the Public Sector: How Well does the Coat fit?”, Public Administration, Vol. 66, No. 2, pp. 149–64.

Rabuska, A. (1976) Value For Money: The Hong Kong Budgetary Process, Stanford, CA: Hoover Institution Press.

Robinson, M. (ed) (2007) Public Sector Performance Budgeting: Linking Funding to Results, Washington, DC: International Monetary Fund.

Schick, A. (1986) “Macro-budgetary Adaptations to Fiscal Stress in Industrialized Democracies,” Public Administration Review, Vol. 46, No. 2, pp. 124–34.

——— (1990) “Budgeting for Results: Recent Developments in Five Industrialized Countries,” Public Administration Review, Vol. 50, No. 1, pp. 26–34.

Task Force on Review of Civil Service Pay Policy and System (2002) Phase One Final Report, September, Hong Kong: Printing Department.

Taylor, J. (2006a) “Performance Measurement in Australian and Hong Kong Government Departments,”

Public Performance and Management Review, Vol. 29, No. 3, pp. 338–61.

——— (2006b) “Statutory Bodies and Performance Reporting: Hong Kong and Singapore Experience,”

Public Organization Review, Vol. 6, No. 3, pp. 289–304.

Tung, C.-H. (1997) Building Hong Kong For a New Era, address by the Chief Executive at the Provisional Legislative Council meeting, 8 October, Hong Kong: Printing Department.

Wildavsky, A. (1964) The Politics of the Budgetary Process, Boston, MA: Little Brown.

Wong, H.K. (2007) “Consumerism and Quality Standards for Subvented Social Services: A Case Study of Hong Kong,” International Journal of Public Administration, Vol. 30, No. 4, pp. 441–58.

World Bank (2003) “Understanding Public Sector Performance in Transition Countries – An Empirical Contribution,” 30 June, Washington, DC: World Bank.

© 2011 by Taylor and Francis Group, LLC