Relevance of KPIs in Public Sector Organizations - A Primer

Performance management in Public Sector Organizations is a critical function as they are answerable to a large set of stakeholders which includes taxpayers. Often such organizations are large in size and they have to tackle intricate challenges in numerous functions which range from procuring resources, budgeting, creating checks and balances, achieving predetermined goals to name a few.

A BSC, along with relevant KPIs and realistic target values, can go a long way in measuring performance variables in complex procedures that public sector organizations engage

Financial Perspective can in a public sector undertaking can be obtained from areas like fund management, resource allocation, resource utilization and % increase in return on investment. This is to keep the financial motive from being undermined. Betterment of Internal Processes can be done by quantifying performance in the form of measures like number of streamlined processes, service delivery targets met and response accuracy etc. Citizen Focus can be achieved via critical error rate, product complaints, client satisfaction level and accessibility to people. H.R. and growth initiatives can be measured through % decrease in staff turnover, % increase in training expenses, % improvement in employment level and training days per agent.

The environment in which Public Sector Organizations operate is an extremely structured one, providing them less flexibility to work with. At times, they are required to abide by loads of rules and regulations. This leaves them with even less room to try something innovative and a risky. This in turn, takes a toll on the pace and efficiency they proceed with. To have maximum outputs from minimum inputs is required by these companies. Also, keeping the workforce updated of the changes in surroundings is not taken with much interest in these places. So, to overcome such hurdles KPIs are devised to keep the processes in line with broader goals..

The indicators on a BSC help in evaluating the current state of organization and carving a path to follow in future. These parameters are used in quantifying the otherwise 'difficult to measure' processes, offering a means to know whether the group is moving in the intended way or not. Another task KPIs do is that of communicating to the staff, in clear terms the 'countable acts that really count'. Removing confusions from the minds of employees is of utmost importance in making concerted and synchronized efforts. The concept becomes all the more important, when the talk is of Public Sector Organization, as the group makes significant contribution to a nation's growth and effective management of performance cannot be compromised.

KPIs assist in building and promoting an environment of continuous learning. This infuses in the employees a will to go out of their way, if need be, in improving the standing of the company. However, the indicators should be settled for, in the light of some factors like- challenges to be faced by the organization, the industrial trends (on external front) and strengths and weaknesses (on internal front). This will ensure the BSC will indeed take the organization to its goal.