Nico P. Mol

Performance Management in Dutch Central Government

This article investigates how and to what extent performance indicators in Dutch central government are actually embedded in performance management. In a case study encompassing 12 government organizations, the relevance of the indicators presented is analysed in three stages: (1) with respect to the responsibilities for results intended in performance measurement, (2) with respect to responsibilities actually implied in resource allocation and (3) with respect to responsibilities ultimately to be inferred from governance – planning and control – systems applied. In our research, management control systems appear to be only partially tuned to the performance indicators specified in advance. The familiar expression ‘What you measure is what you get’ is thereby invalidated by all kinds of restrictions imposed on a manager’s actual responsibility for measurement outcomes.

Performance management in a setting of deficient output controls

Purpose – Sets out to stress the need to adjust performance management to the deficiencies inherent in the output controls within The Netherlands defence forces.Design/methodology/approach – By analysing the management control reforms of the recent past, the paper assesses the scope for a “decision revelation” within the Defence organisation. It develops a framework for disclosure of decentralised decision making focusing on the allocation of labour time within the fixed labour force. Recent developments in the Defence organisation units for officer education and training are used to illustrate the framework.Findings – Management control systems fail because of weaknesses in the management accounting information underlying them. Management accounting information with respect to defence expense budgets does not grasp the relevant decentralised decision making to be controlled. This decision making is primarily concerned with the opportunity costs of the allocation of time within the labour force of the Dut...

Accounting for hybridity: accrual budgeting in the dutch central government

In the Dutch central government (following countries like New Zealand, Australia and the UK) a system of resource budgeting is being developed as a substitute for its present dual system of cash/commitment budgeting for core departments and accrual accounting for executive agencies. Advocates of this approach claim that resource budgeting will improve the allocation of government spending and increase efficiency in government production. A basic flaw of the reform proposals is the failure to acknowledge the hybridity of government activities and the need to accommodate these hybridities in the accounting system. We argue that the present dual system, with some minor revisions, will be superior to the proposed resource budgeting system.

Financial management initiatives at different governmental layers in the Netherlands

In the Netherlands, as in many other developed countries over the world, the reforms characterized as New Public (Financial) Management have found general acclaim in government organizations. These reforms have been summarized by Olson, Guthrie and Humphrey (1998, p.18) in the following five categories, which are all of them easily recognizable in the attempts at improvement of Dutch government governance.

Transfer Pricing in Government Organizations

Government organizations can usually be characterized as “multidivisional” entities, showing high levels of interdependence between their subunits. Often this interdependence is a consequence of a policy of vertical integration, which is deemed to be necessary in regard to the tasks to be performed. The integration of logistic support with the operational units of the armed forces may be taken as an obvious example.