Performance is a multidimensional concept

The term can include such concepts as efficiency (cost related to direct output), cost-effectiveness (cost related to benefit or impact), service delivery quality, service delivery equity, governmental fiscal stability, and conformance with governmental policies. A comprehensive performance measurement system might give information about how well a government, or single governmental agency, is operating in terms of all these performance dimensions.

The competitive edge of modern-day business emerges from creation or discovery of a performance management. A system that increases efficiency, decreases cost or enhances quality confers immediate competitive advantage on its creator and sets a standard for the rest of the industry to follow. But once disseminated across the field of competition, it becomes the standard. Now a new, yet more innovative, high performance system must be discovered that once more creates competitive advantage for its inventors.

As public-sector productivity gets increasing national attention, state and local governments seek more ways of improving their performance. Performance measurement systems may be helpful tools for improving both productivity and accountability. This paper identifies issues that governments should consider before implementing a performance measurement system.