Learning from Performance Feedback: Experimental Evidence on Problem Identification, Innovative Search, and Change

Despite the diffusion of performance management systems into multiple layers of government, we still know very little about how performance information affects managerial decisions in public organizations. Performance... [ view full abstract ]

Despite the diffusion of performance management systems into multiple layers of government, we still know very little about how performance information affects managerial decisions in public organizations. Performance information is supposed to assist decision makers by informing their strategic choices. How these strategic choices are informed by performance information in the public sector is seldom examined, since most research on performance management to this date has focused on reactions by citizens, users, or politicians.

We seek to provide knowledge on this question by focusing on how performance information affects problem identification, innovative search, and organizational change. Thereby, we test how performance information affects a broad range of strategic behaviors. This allows us to determine where performance information makes a difference for decision making in public organizations and where it does not. In two survey experiments we show how public managers react to factual performance information about their own organizations. We find that managers are more likely to identify a problem and make performance-oriented changes when performance feedback is negative. Positive performance feedback leads to a preference for surplus-oriented changes. The implications of the findings for performance management research are discussed.