Performance assessment and benchmarking in the public sector : An example from New Zealand

Purpose – 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. Design/methodology/approach – A 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. Findings – In New Zealand, the pharmaceutical management agency (PHARMAC) 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 concepts discussed in the paper are applied to PHARMAC as an illustration. Proposes that a combination of internal benchmarking, process benchmarking and increased public documentation will enhance reporting systems in any public sector organisation. Practical implications – The methodology should facilitate organisations' responses to calls for accountability, from a diversity of interested parties. Originality/value – Highlights the role of benchmarking as a tool to help overcome some of the problems of performance assessment in the public sector.