Do external benchmarking mechanisms facilitate performance management in Malaysian local authorities?

Purpose - This paper investigates the extent to which externally led benchmarking may have facilitated performance management design and use in Malaysian local authorities. Design/methodology/approach - A longitudinal qualitative study of local authorities in Malaysia was undertaken, comprising interviews with key officers during the introduction of process-based key performance indicators (KPIs), and following the imposition of benchmarking (i.e. relative performance evaluation) on local authorities. Complexity theory was used in the analysing and theorising of data. Findings - External benchmarking mechanisms facilitated only operational performance management, with strategic performance management merely ceremonially adopted. As the focus was on mainly operational KPIs, strategic goals were not translated into detailed action plans and outputs at departmental level. In addition, operational and strategic performance management packages were decoupled. Thus, the efforts of external actors resulted in operational controls suppressing rather than facilitating strategic processes. Research limitations/implications - There is a need to transition from purely externally led benchmarking to internally driven benchmarking in local government, whereby benchmarking forms part of the interactive performance management mechanisms that lead to institutional learning and improvement. Practical implications - Benchmarking activities should be based on comprehensive analyses of performance management design and use. A reflective approach to continuously identify gaps or weaknesses in performance management systems will enable local government administrators to improve systems and processes in a timely manner to meet stakeholder needs. Originality/value - This paper explains the impact of central government policy and benchmarking initiatives on other levels of government. We have built on previous literature by examining the connection between external benchmarking and internal performance management design and use in local government. In relation to this, and following calls for research on holistic performance management, the integration between operational and strategic performance management packages was also examined.