Toward a Model of Performance Measurement of Output Based on the Theory of Constraints

Abstract

Purpose – The notion of output (Bouckaert, 2005; OECD, 2007) is more and more widespread in the performance measurement systems in the public sector. More generally, several reforms are promoting the implementation of key indicators such as management by objectives and quality management.

Our study introduces a first reflection about a performance measurement model of output based on the Theory of Constraints (TOC) in one public administration. The particularity of our model is the combination of theoretical design and practical implementation. Thus, an adjustment stage has been achieved in order to reach a realistic and sturdy model. It is also an opportunity to test the TOC indicators system, which is becoming prevalent in research activities (Davies & Mabin, 2009).

Methodology/approach – First of all, we present a literature review, which associates the concept of output, the TOC, and the notion of performance in a public administration. After that, we explain the design stage to define the key performance indicators.

During a two-month test phase, this measurement system was implemented in one public administration in Luxembourg; data were collected to draw up a dashboard. Subsequently, the model was adjusted in order to fit with the practice and observed cases.

Findings – We consider the limits of this measurement system, especially on certain aspects like the compliance with law. Furthermore, we show the major contribution of our model based on the TOC, which is to move from one local optimum to a global optimum.

Originality/value of paper – Thus, this publication highlights a model of performance measurement in a public administration, and the results of its implementation. It emphasizes the practical value of these indicators, the decision-making efficiency, and the appropriate level of use. The measurement model based on the TOC had a high interest for operational as well as for the managerial staff.

Citation

Hirtz, T. and Guernaccini, P. (2012), "Toward a Model of Performance Measurement of Output Based on the Theory of Constraints", Davila, A., Epstein, M.J. and Manzoni, J.-F. (Ed.) Performance Measurement and Management Control: Global Issues (Studies in Managerial and Financial Accounting, Vol. 25), Emerald Group Publishing Limited, Leeds, pp. 117-137. https://doi.org/10.1108/S1479-3512(2012)0000025008