Performance mangement system in a Malaysian local government: a new institutional sociology perspective

Abstract

Key Performance Indicators, also known as KPIs, help an organization to define and measure progress towards organizational goals. It is one of the examples of private sector practices that have been developed and implemented in public sector organizations to improve the performance of public services. The system is supposed to assist the government in meeting its objectives as well as to make it become more accountable. This explanatory case study intends to investigate the implementation of KPIs in a Local Government (LG) in Malaysia. New Institutional Sociology (NIS) is used to understand the various institutional pressures faced by the organization during the process of developing and implementing KPIs. Supposedly, KPIs were introduced to inculcate a high performance culture. However, it has been found that KPIs are used as a complementary tool to the existing PMS; Annual Work Target (AWT) practiced within the organization. AWT has become shared values within the organization, and still suffers from several drawbacks. The study also discovered that the new PMS has brought several changes to the individual, departments, and the organization itself. In addition, the study was able to discover and point out the changes in organizational behaviour among the organizational members through the implementation of KPIs. This study gives a new insight to the Public Sector Accounting research by exploring the development and implementation of KPIs in a LG as well as the organizational changes within the organization.