Benchmarking in public sector organizations

Benchmarking in public sector organizations

Public sector organizations around the world face unprecedented pressure to improve service quality while lowering costs. At the same time, they are expected to become more accountable, customer focused and responsive to stakeholder needs (www.researchandmarkets.com/reportinfo.asp?report_id=42728). Federal and state agencies, public utilities, and others in the public sector face some serious challenges in measuring their performance. Benchmarking against best-in-class public sector enterprises could help public sector organizations meet the challenges they face in the twenty-first century. The benchmarking process seeks to identify best practice and use it as a basis for evaluating agency performance to identify areas for improvement. It is an ongoing process.

Benchmarking in public sector organizations has been the subject of numerous reports. Most of them highlight the importance of benchmarking in the public sector. Many public sector organizations are customer-focused. In the past it was assumed that resources would be available from the government, and that there would be accountability for the resources used in serving the public, but that may be changing in some countries. Service requirements vary from customer to customer, and this non-uniform demand for services places pressure on public sector organizations to streamline their service operations for the best use of available resources. Efficiency is becoming more important in public sector organizations, and the public is demanding greater accountability and better service. Considering the changing environment and prevailing culture in public sector organizations, there is a need to establish suitable performance measures and metrics, and to benchmark performance against best-in-class agencies to improve organizational performance. A critical first step in benchmarking is determining performance measures and corresponding metrics for different areas of public sector organizations.

Benchmarking can help to identify program areas in need of improvement and in setting reasonable targets for improvement. Benchmarking studies help organizations evaluate program or service effectiveness and assess efficiently. Public sector organizations have different characteristics and profiles than private sector enterprises. Private firms must typically adhere to bottom-line profit requirements, so performance measurement is relatively straightforward. Public sector organizations face different social and political pressures than private sector agencies. Public services typically operate with a fixed budget and consumer groups are in competition with each other for the services provided (Kouzmin et al., 1999). Swiss (1992) suggests that customer satisfaction should not dominate performance measurement in the public sector and notes that it must be handled with considerable caution. Dorsch and Yasin (1998) determined the extent to which benchmarking was utilized in the private sector vis-à-vis the public sector, drawing conclusions regarding the evolution and current practice of benchmarking. They presented a conceptual framework and examples that illustrate how benchmarking may be applied in public sector organizations. While Dorsch and Yasin (1998) did an excellent review of benchmarking in public sector organizations and provided a generic framework for benchmarking, there remains a great need for performance measures and metrics tailored to individual agency goals and objectives.

An important benchmarking area in public sector organizations is customer relationship management (CRM). Navaratnam and Harris (1994) explained the importance of customer service in the context of an Australian Quality Award winning, public sector service provider. The unit's mission was to excel in satisfying customer service requirements based on: respect for people, management by fact, customer satisfaction, and teamwork. Benchmarking is not very popular in developing countries; however, this method of performance assessment and promotion of best practice will help such countries productively utilize available resources to improve service quality for their citizens. Syed-Ikhsan and Rowland (2004) investigated the application of a knowledge management strategy in a Malaysian public sector organization. They examined perceptions of the benefits, problems, responsibilities and technological aspects involved in managing knowledge in an organization. While these studies address issues related to CRM, this remains a fruitful area for research and one where benchmarking is applicable. Likewise, the role of enterprise resource planning (ERP) in public sector organizations needs to be studied and evaluated with the goal of offering better quality service to citizens.

With the emergence of e-commerce, benchmarking in public sector organizations has received more attention than in the past. There are many reasons for this:

e-commerce facilitates an open exchange of information;

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  e-commerce facilitates fairly easy data collection;

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  e-commerce application in public sector organizations provides new perspectives on and technologies for online services; and

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  e-commerce frees up human resources for use in other activities involved in providing quality service.

Benchmarking in public sector organizations with e-commerce applications offers new opportunities and challenges. New performance measures and metrics reflective of the realities of public sector e-commerce are needed, and there is a need to determine appropriate strategies and techniques for benchmarking e-commerce practices embedded in public sector organizations. E-commerce technologies can act as a powerful interface between citizens, agencies and countries. While opportunities and challenges abound for improving the quality of public services using e-commerce and related technologies, these technologies also can be very helpful in the benchmarking process itself.

The internet is a powerful medium for collecting data and exchanging information on best practice in different agencies. Many sites are now devoted to public sector benchmarking and could be helpful to those interested in public service benchmarking. See for example the Public Sector Benchmarking Service at www.benchmarking.gov.uk. This UK based organization is dedicated to “learning through sharing in the public sector,” and uses the web to reach a very large audience.

Benchmarking public sector organizations should take into account the different community needs to be addressed by public agencies. Since public sector organizations are service oriented, identifying customer service requirements is a key task, and one that poses a significant challenge for practitioners. It is, nevertheless, a prerequisite for setting up standards or performance targets. In benchmarking public sector organizations, the search for best practice should span across agencies such as healthcare, internal revenue service, education, immigration, social security, emergency management, and more, and it need not be limited to the agencies of a single country. Best practices of the US Internal Revenue Service may be applicable to the US Social Security Administration, and vice versa, while the best practices of a tax authority in one country may be applicable to that of another country.

Benchmarking has become relatively popular and successful in private enterprises. It is now time to focus on benchmarking public sector agencies, with the goal of improving utilization of resources and overall service quality. It is time for the public sector to focus on best practice as determined by the benchmarking process. Reviewing the relevant literature and reported case experiences provides ideas for future research in public sector performance improvement. The following are areas of interest in public sector benchmarking, best practice, and related topics:

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  performance measures and metrics for public sector agencies;

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  using a balanced score card approach in the public sector;

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  implications of e-government for public services and the efficiency thereof;

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  IT outsourcing in the public sector – implications for performance;

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  assessing ethical conduct in the public sector;

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  CRM in the public sector;

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  evaluating institutional performance with key performance indicators;

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  assessing the implementation of public policy;

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  regional co-ordination – models, options and performance;

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  assessing IT contributions in the public sector;

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  strategic management of public sector goods and service acquisition;

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  motives and goals for public service;

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  assessing entity governance in the public sector; and

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  managing cultural diversity in public services.

The editors of BIJ welcome articles and special issue proposals covering performance measures, metrics, benchmarks, and best practice in the public sector. Topics need not be limited to the above-mentioned areas. Many other areas of public sector agency performance could be improved by benchmarking. Please feel free to contact us regarding your articles or special issue proposals.

A. Gunasekaran