Performance management in public administration: an Italian overview

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INTRODUCTION 
 
Nowadays, Public Administration are constantly under the pressure of public speculation. As 
a matter of fact, in order to offer social services to its population, public Organizations are 
connected with a consistent and various group of stakeholders. Governments, Citizens, 
Corporates, international Organizations are mutually demanding high standards of public 
services, forcing the organization’s management to enhance their accuracy and efficiency. 
Over the past few decades the solution has been identified as the adoption of an instrument 
usually implemented only in private companies: the Performance Management. 
Performance Management is an ongoing process developed to support the achievement of 
strategic objectives and organizational learning through managerial and human resources 
instruments. Despite its success over the years is still object of debating, Performance 
Management still constitute a challenge for Public administrations that are involved in it. 
As a result of an extended research and explanation of Performance Management content and 
diffusion in the Public Sector, the purpose of the Thesis is to offer some suggestions for future 
application focusing on the Italian setting. 
In order to achieve our goal, the Thesis will be structured into four chapters: 
1. Chapter 1 offers a whole panoramic of the performance management early diffusion, 
in particular suffering on the NPM paradigm. In fact, NPM has represented the first 
performance management’s application in the public sector. The chapter concludes stating the 
necessity of going beyond the NPM framework introducing alternative models.   
2. Chapter 2 describes the main components of the performance cycle. In particular, for 
each, it explains what are the peculiarities of the public sector to consider for its 
implementation. The chapter concludes offering an overview of its execution in the OECD 
countries. 
3. Chapter 3 analyzes the performance management related to the Italian public 
administration. Firstly, describing the Italian normative path towards its adoption and then, 
explaining the main innovations included in the law 150/2009 that has introduced, for the first 
time, the concept of “performance”. Lastly, it offers an overview of its application in the 
central and local administration. 
4. Chapter 4 is the critical analysis of the performance’s state of art in a regional health 
entity: the ASUR Marche. Examining the documents available on its website, the chapter 
highlights its implementation and build some conclusions.
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PART 1: INTERNATIONAL THEORY 
 
 
 
1.1 INTRODUCTION 
 
In the last thirty years public administrations, have been characterized by a continuous wave 
of reforms that have contributed to re-frame the old Weberian model based on self-reference 
and bureaucracy to a new way of processing and evaluating public activities. In the late 
seventies budgeting pressures, accountability demand, international competition and loss of 
trust towards public administration fostered the need for a more meanness and rational 
administration of public resources. The term NPM has been used as a “binder” to identify a 
series of different styles of management that have been implemented in public sector’s 
organizations in most of the countries that aimed to replicate successful private sector’s 
models and mechanisms. New importance was given to the results of the activities so that first 
performance measurement and management has been introduced under NPM era.  
Despite its relevance and diffusion, many criticism have been raised in terms of NPM real 
efficacy to the point that its positive impact on the performance of the public administration is 
still under investigation. Nowadays, many scholars declared the need to go beyond its rhetoric 
and new alternative paradigms have been proposed. 
The chapter has been structured to offer a comprehensive overview of the theme, starting 
from the explanation of the reasons of its diffusion and the main characteristics proposed and 
by listing the major lacks disputed and new post-NPM trends.
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1.2 NEW PUBLIC MANAGEMENT 
 
 
1.2.1 ORIGINS OF NEW PUBLIC MANAGEMENT 
 
The term New Public management (from now NPM) was introduced the first time by Hood 
(1991) in his famous paper. Hood was trying to define and explain the main characteristics of 
a set of changes and reforms in the public administration that took part in almost every OECD 
country from the late 1970s, which went on for over thirty years, developed subsequently 
even in the developing countries. 
In order to contain the inefficiency that was dominating the public administration, a 
revolutionary idea of NPM was to apply a set of successful ideas and models acquired from 
the private sector. 
The advent of the NPM developed through two phases (Groot,1999): 
Initially, the focus was on the introduction of the concept of accountability, where individuals 
and organizations are seen as responsible actors for their actions, aiming that it could lead to 
an improvement of the internal organization process. Accounting was the key element in this 
new proposition, it reflects high trust in the market and private business methods and low trust 
in public servants. The traditional professional and those activities now had to be closely 
evaluated through sophisticated accounting and management techniques.  
The second stage of NPM was pushing down delegation and autonomy of the organization in 
order to improve managerial decision and responsiveness.  
Along both phases, performance measurement system was introduced and took major role. 
Since the NPM has had a strong impact in the public administration across the world, the 
motivations behind its introduction and its development are significant (OECD, 1996):  
 The increasing role of public opinion obtained to take decisions about common policy 
and resource assignment. 
 The demand of a higher transparency from taxpayers that claim their money is being 
spent efficacy and efficiently. 
 The strong budgetary pressure dictated from the crisis of the welfare-state and the high 
level of debt. 
 The internationalization of the market and the need to be competitive;
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 The internationalization of many issues that previously were predominantly of 
domestic concerns. 
 
 
1.2.1 NPM DOCTRINE AND APPLICATION 
 
Since its first introduction, NPM has been widespread around, despite that, the impact and 
timing of implementation around the worlds vary significantly. Countries as New Zealand, 
Australia, United States and United Kingdom has been considered the pioneers of this 
innovation management while developing countries only recently are attempting to apply 
some aspects of the framework. 
The approach to the system also differs among countries: Anglo-Saxon countries such as   
New Zealand and United Kingdom gave preference to a logical top-down organization 
module. The highest level of hierarchy deliberates the strategy that will be implemented 
downward at all levels. In contrast, Scandinavian countries prefer a bottom-up approach, from 
the smaller and lower hierarchy organization unit upward to the highest conceptual level.  
As Hood (1991) stated, many authors gave their contribution with a particular focus on some 
features. The following characteristics of the model vary significantly in every state, but 
approximately these concepts have been the most recurring and debating: 
 
Doctrine Meaning Typical justification 
Hands-on professional 
management in public 
sector 
Active, visible, discretionary 
control of organizations from 
named persons at the top, 'free to 
manage' 
Accountability requires 
clear assignment of 
responsibility for action 
 
Explicit standards 
and measures of 
performance 
Definition of goals, targets, 
indicators of success, preferably 
expressed in quantitative terms, 
especially for professional services 
Accountability requires clear 
statement of goals efficiency 
requires 'hard  look' at objectives 
Greater emphasis 
on output controls 
Resource allocation and rewards 
linked to measured performance; 
breakup of centralized bureaucracy-
wide 
Need to stress results 
rather than procedures
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personnel management 
Shift to disaggregation 
of units in the public 
Sector 
Break up of formerly 'monolithic' 
units, unbundling of U-form 
management systems into 
corporatized units around products, 
operating on decentralized 'one-
line' 
budgets and dealing with one 
another on an 'arms-length' basis 
Need to create 'manageable' 
units, separate provision and 
production interests, gain 
efficiency advantages of use of 
contract or franchise 
arrangements inside as well as 
outside the public sector 
Shift to greater 
competition in 
public sector 
Move to term contracts and public 
tendering procedures 
Competitiveness as the key to 
lower costs and better standards 
Stress on private sector 
styles of management 
Practice 
Move away from military-style 
'public service ethic', greater 
flexibility in hiring and rewards; 
greater use of PR techniques 
Need to use 'proven' private 
sector management tools in the 
public sector 
Stress on greater 
discipline and 
parsimony in 
resource use 
Cutting direct costs, raising labor 
discipline, resisting union demands, 
limiting 'compliance costs' to 
business 
Obligation to check resource 
demands of public sector 
and do more with less 
Table 1 NPM framework. Source: C.Hood.1991, pp. 4-5 
 
Four main innovations could be identified from this strategy: 
In first instance, there is a shift from an administration model lacking autonomy of decision 
making and dominated by pre-set rules and regulations towards a managerial model. The 
managerial model gives managers a certain degree of freedom decision making and resource 
allocation, requiring them to be accountable effective a series of As a matter of fact, in order 
to make this model effective, some managerial tool must be implemented. Those tools are 
corporate planning, target setting, devolved resource management, performance monitoring 
and reporting and regular evaluation using benchmarked criteria.  
Secondly, turning down the bureaucratic model, where the state has a monopoly position, was 
the unique actor to offer the service in favor of market-type mechanism. Stressing the 
importance of getting results and increasing the performance, the market-type orientation 
aimed to adopt some contracts and procedure peculiar of the private sector. Competitive