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Performance measurement: the mismatch of manifest and latent functions

Performance measurement is still on the rise. According to Power (1994, 1997), modern welfare states are developing into “audit societies”. In the same vein, Strathern (2000) argued that audit regimes have become the moral fabric of modern society. Both scholars feel that new public management (NPM) has furthered a culture of accountability by promoting “styles of governance which commonly presuppose the necessity and benefits of auditing in its various forms” (Power 1994: 143). Indeed, empirical evidence for the rise of audit systems, including all sorts of performance measurement tools, is overwhelming. Simultaneously, many scholars have shown how performance measurement can give rise to serious complications, in the shape of technical problems and all kinds of “diseases” and unintended consequences (cf. Bouckaert, 1995; Van Thiel & Leeuw, 2002). In this type of analysis, problems and solutions generally focus on improving our understanding of the information asymmetries involved in performance measurement. Such reasoning draws on institutional economics, claiming that the risks involved in principal-agent relationships (such as opportunistic behaviour and moral hazard) can be kept in check through rational strategies on the part of the principal.