The Impact of Performance Management Under Environmental Turbulence

• Author: Obed Pasha,Theodore H. Poister
• Published date: 01 May 2019
• Date: 01 May 2019
• DOI: http://doi.org/10.1177/0275074018814245
• Subject Matter: Articles

https://doi.org/10.1177/0275074018814245

American Review of Public Administration

2019, Vol. 49(4) 441 –453

© The Author(s) 2018

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DOI: 10.1177/0275074018814245

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Article

Performance management is now an established concept in

public administration, supported by more than three decades

of adoption and research. Earlier scholarly work on perfor-

mance management mostly dealt with defining the practice

and determining its various components (e.g., Halachmi,

2002), followed by research on factors leading to the use of

these systems in the public sector (e.g., Kroll, 2013;

Moynihan & Pandey, 2010). In recent years, scholars have

empirically tested the effectiveness of these systems, show-

ing positive as well as null and negative results (see Gerrish,

2016, for a meta-analysis). This discrepancy in impact high-

lights the differences in the application and context of perfor-

mance management systems, with research increasingly

incorporating a contingency-based approach in determining

the success of these systems in different contexts (Gerrish,

2016; Nielsen, 2013).

This study adds to this growing literature by examining

the impact of performance management systems in local

transit agencies under the Great Recession and its aftermath.

Past research on the transit industry has not only shown a

positive impact of these systems in periods of stability, but

also an increase in their use during turbulence (Pasha &

Poister, 2017; Poister, Pasha, & Edwards, 2013). This begs

the question whether an increase in the intensity of use of

performance management practices led to positive outcomes

for the transit industry under environmental turbulence. The

answer to this question will help determine (a) whether the

decision of transit managers to increase their reliance on per-

formance management during the recession was helpful, and

(b) to what extent performance management systems are

effective under turbulent conditions.

This study extends previous research by Poister et al.

(2013) by examining the impact of performance manage-

ment practices in the transit industry under the context of

environmental turbulence. We employ a survey of 162 local

transit agencies in the United States to determine whether

agencies using the various components of performance man-

agement during and following the Great Recession showed

superior performance than others. Findings show that an

independent use of formal strategic planning (FSP) and logi-

cal incrementalism (LI) is negatively associated with organi-

zational performance, whereas the impact of performance

measurement and a blend of FSP and LI are positive and

significant.

814245ARPXXX10.1177/0275074018814245The American Review of Public AdministrationPasha and Poister

research-article2018

1Cleveland State University, OH, USA

2Georgia State University, Atlanta, GA, USA

Corresponding Author:

Obed Pasha, Assistant Professor, Levin College of Urban Affairs, Cleveland

State University, 1717 Euclid Avenue, Cleveland, OH 44115.

Email: o.pasha@csuohio.edu.

The Impact of Performance

Management Under Environmental

Turbulence

Obed Pasha1 and Theodore H. Poister2

Abstract

Performance management is an established concept in the public sector, with several empirical studies supporting its beneficial

impact on organizational performance. Research on performance management, however, is still in initial stages and mostly

examines the impact of this practice under stable environmental conditions. This study adds to the literature by analyzing

the effect of this system on performance of local transit agencies in a turbulent environment characterized by the Great

Recession and its aftermath. Exploratory factor analysis (EFA) on survey responses from 162 local transit agencies in the

United States is used to extract the four components of performance management, namely, formal strategic planning, logical

incrementalism, performance measurement, and performance information use. Ordinary least squares (OLS) regression

analysis shows that an independent use of formal strategic planning and logical incrementalism has a negative impact on

organizational performance under turbulence. Performance measurement and a blend of formal strategic planning and logical

incrementalism, however, show a positive impact.

Keywords

strategy formulation, performance measurement, environmental turbulence