ACCA Strategic Professional · Strategic Business Leader · Enabling success: performance excellence
A regional public hospital trust is judged by ministers mainly on whether it spends its budget without overspending, and the board therefore cuts preventive clinics late in each financial year. Patient outcomes are not measured. Which weakness of performance measurement in public sector organisations does this best illustrate?
The case shows an input and spending focus instead of outcome measurement. Because the trust is judged on staying within budget, managers cut preventive clinics, damaging outcomes. Public sector measurement should capture results for service users, not just financial compliance, otherwise behaviour is distorted.
- AFocus on inputs and spending rather than outcomes, which distorts behaviourCorrect
- BOver-reliance on profit as the single measure of success
- CExcessive use of benchmarking against private sector rivals
- DToo many stakeholders having identical objectives
Explanation
Performance is judged on budget compliance (an input measure) rather than outcomes such as patient health, so managers cut valuable services to hit the target. Profit is not a typical public sector measure, and stakeholders in such bodies usually have differing, not identical, objectives.
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