Performance Assessment and Benchmarking in the Public Sector: An Example from New Zealand

Public sector organisations have to respond to calls for accountability from both funders and recipients of the services, as well as report on operations within constrained financial resources. Given the absence of profit motives and the difficulties of performance assessment in public sector organisations, the purpose of this paper is to consider the role of benchmarking as a tool to help overcome some of the problems of performance assessment in the public sector. The paper includes a brief review and discussion of current and recent trends and approaches in public sector benchmarking in New Zealand. The difficulties of establishing meaningful benchmarking exercises are discussed in relation to management accounting’s approach to management control systems. PHARMAC is used as a New Zealand example; it is responsible for obtaining the best health outcomes that are reasonably achievable through the use of pharmaceuticals for eligible people, within the funding provided. The paper proposes that a combination of internal benchmarking, process benchmarking and increased public documentation will enhance reporting systems in any public sector organisation.