지방정부의 조직학습 촉매기제로서의

｢지방정부연구｣ 제11권 제2호(2007 여름) : 215～238

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성과측정에 관한 연구

A Study of Performance Measurement

as a Facilitator of Organizational Learning in Local Government

강 황 선*

*  제1저자

** 교신저자

이 용 모**

이 연구는 정부조직의 성과측정에 대한 국내외 학계와 실무분야에서의 관심이 고조되고 있는 가운데 다음과 같은 질문하에서 시작되었다: 성과측정제도들이 가치중립적인 도구의 일종인가? 그렇지 않으면 조직문화와 인간적 변수 등이 내재된 가치함축적 관리수단인가? 정부조직의 성과측정 혹은 성과평가제도들은 궁극적으로 조직학습을 유도하여 정부조직들이 자율적으로 상시적인 변화와 혁신을 통해 조직전체의 생산성을 제고한다는 지상목표를 지향하고 있다. 이러한 목표하에 그동안 우리나라에서 연구된 정부조직의 성과측정에 관한 연구들은 대부분 가치중립적인 관리기제로서의 성과측정제도들이 주류를 이루어왔다고 할 수 있다. 그런데 최근 우리나라 정부조직들이 채택하고 있는 성과측정에 관한 많은 제도들과 측정기법들이 외국에서, 특히 민간경영분야에서 활용되어온 것들이 많은 비중을 차지한다는데 문제의식이 있다. 이 연구는 성과측정제도가 조직학습의 촉매제로서 활용되기 위해서는 조직문화, 리더십, 의사소통, 과학기술과 같은 요인들이 활성화되어야 한다는 선행연구들을 광범위하게 검토하여 변수를 도출하였다. 무엇보다 통제변수로서 성과측정에 대한 조직내 구성원들간의 신념을 채택하였다. 통제변수를 효과를 확인하여 조직학습을 촉진하는 제도로서의 성과측정제도는 많은 객관적인 제도요소들 이전에 정부의 성과를 측정하고 이를 토대로 성과중심의 행정조직을 구현한다는 거시적인 공감대가 행정조직내에 형성되어 있어야 한다는 결론을 도출하고자 하였다. 미국 지방정부의 공무원들을 대상으로 설문조사를 실시하였으며, 주요 분석방법으로는 다중회귀분석을 실시하였다.

주제어 : 성과측정, 조직학습, 관료제 학습

Ⅰ. INTRODUCTION

1. Background and Purpose

Since the Government Performance and Result Act of 1993 was enacted, government performance measurement has been an increasingly important topic in the public administration and management arena. In fact, however, the effort to measure results of government activities dates back several decades. This long period of such efforts can be defined as "from exploitation to exploration," and "from intra-organizational struggle to inter-organizational and social/environmental struggle." As the fruits of the tug of war in the field of performance measurement, several groups of literature have been established: conceptual, theoretical, practical field (Kang, 2002).

Generally, organizational performance is equated with effectiveness, which is measured as goal attainment. This is a basic but fundamental idea of performance measurement. Under this model, effective organizations are those that organize around a set of objectives, determine the activities necessary to achieve those objectives, and allocate resources to those activities (Mason and Burton, 1977).

지방정부의 조직학습 촉매기제로서의 성과측정에 관한 연구

｢지방정부연구｣ 제11권 제2호(2007 여름)

In addition, another variable was newly considered, the human factor. It was recognized that organizational goals appropriately set by organizational leaders did not necessarily lead to increased effectiveness. From this recognition, human factors such as organizational behavior, psychology, motivation, and incentives began to be discussed in research on performance measurement (Johnson and Lewin, 1984). Of late, there is some research in which performance measurement is discussed as a significant channel for citizens to participate in government decision‐making process. For instance, Wray and Hauer (1997) say involving citizens more actively and appropriately can help build a broader constituency for the performance measurement process, clarify a community's vision and priorities, and strengthen accountability for program performance between citizen and public officials. They argue there are three primary groups in designing performance measurement: "elected officials," "public managers," and "citizens." The authors especially focus on the role of citizen. According to them, there are several roles for citizens in designing performance measurement: citizens as visionaries, citizens as customers, citizens as co‐producers of services, citizens as evaluators, and citizen as owners.

Callahan and Holzer (1998) argue that citizen involvement in performance measurement may help public managers stay focused on what really matters in their communities. Citizen involvement can increase the impact of performance measurement by encouraging managers to look beyond traditional output measures (that often have little meaning to citizens) and instead focus on quality of life issues and community goals. Another scholar with an interest in building a sustainable model of performance measurement is David Ammons (1999). In particular, he discusses the internal managerial aspect of performance management in public bureaucracy. More specifically, he considers public employee perceptions and their cooperation with performance measurement as the crucial condition for a successful performance management system. According to him, there are four kinds of measures: workload, efficiency, effectiveness and productivity. As a criteria for a good set of performance measures, the author points out several considerations, such as "valid," "reliable," "understandable," timely," “resistant to perverse behavior," "comprehensive," "nonredundant," "sensitive to data collection cost," and "focused on controllable facets of performance." He emphasizes that measurement initiatives typically are most successful when they secure the input and support of frontline employees and supervisors (Ammons, 1999a). In this regard, he also thinks employee attitudes toward benchmarking initiatives are the most important consideration for successful implementation. Xiaohu Wang (1998, 1999) is a new scholar who mainly deals with public employees' perception of performance indicators. He suggests that quantitative and objective oriented indicators should be reconsidered in the performance measurement system because public officials prefer, in particular, subjective measures such as citizen assessment of agency performance.

This study aims to contribute to building sustainable performance measurement systems. In particular, this study considers public employee perceptions of organizational learning capacity based on past results of their organizational performance measurement as an important barometer in establishing a sustainable performance measurement system.

2. Performance Measurement and Organizational Learning

This study attempts to examine the employees' subjective interpretations of organizational performance results within the theory of organizational learning. This link between performance results and organizational learning is very important. According to the theory of organization learning, evaluation results of both organizational and individual performance is a great stimulus to organizational learning (Argyris, 1977, 1978; Forss et al, 1994). As is well known, the theory of organizational learning discusses how we can construct a responsive (adaptive) organization in a fast changing environment. In particular, the individual members' contributions to creating knowledge in the organization is the crucial element of learning organizations. Furthermore, an exploitation‐oriented strategy and a model of resource‐based organizations are compared with an exploration‐oriented strategy and a model of knowledge‐based organizations in the theory of organizational learning (Senge, 1993). When public employees receive measurement results of their organizational performance, do they think that they can make any difference in the next performance result cycle? In other words, do public employees think their knowledge and experience can contribute to improving their organizational performance? If "yes," which factors make them think like that? In public organizations, which factors mainly facilitate organizational learning capacity? If the answer is "no," employees would not be willing to cooperate with the performance measurement system. When the results of past performance measurement make positive differences in employee attitudes and their behavior, those differences can lead to performance improvement of public organizations. That is why employee interpretation of the results of past performance measurement is a significant consideration in designing a sustainable performance measurement system.

Ⅱ. LITERATURE REVIEW and HYPOTHESES

1. Reconceptualization of organizational learning in public sector

An elusive conceptualization of social phenomenon incurs many ambiguous or too broad contentions and equivocal researches in which the elusive concepts are used. Organizational learning is one of the elusive conceptualizations of organizational phenomenon. In general, no doubt organizational learning is an essential strategy for organizations‐both private and public (non‐profit)‐to survive competitive and fast‐changing world. So many different researches of organizational learning in private management arena have been done. As the history of public administration/management shows, a lot of managerial knowledge/techniques initiated in private sector have been imported to public sector. And those knowledge/techniques were adopted and implemented at some public organizations. The knowledge of organizational learning is not exception. Yet interestingly the knowledge of organizational learning has not appeared as research results as much as other imported knowledge/techniques from private sector did. It seems natural that the elusive concept even at private sector remains just an interesting idea in public sector. In management arena, the concept of organizational learning is neither fully discussed nor implemented.

2. Bureaucracy learning

Research on similarity or difference between private and public sector becomes a popular research agenda. Since the conceptual argument on similarity or difference of those two sectors between Murray and Rainey & his colleagues, the research questions of the research have been mainly how is public sector different from private sector? or in what respect are those two sectors different based on empirical & quantitative study? Nonetheless, empirical and quantitative studies of the question have not showed any notable difference between the two sectors (Rainey, 1999). It seems that researchers implicitly agree that those two sectors are different even though the boundary between those sectors is quite blurred. We believe that it is inevitable that the two branches of management are different because they have intrinsically different goals; efficiency versus accountability. Allison mentioned this fundamental difference.

Underlying these lists' sharpest distinctions between public and private management is a fundamental constitutional difference. In business, the functions of general management are centralized in a single individual: the Chief Executive Officer. The goal is authority commensurate with responsibility. In contrast, in the U.S. government, the functions of general management are constitutionally spread among competing institutions: the executive, two house of Congress, and the courts. The constitutional goal was "not to promote efficiency but to preclude the exercise of arbitrary power," as Justice Brandeis observed. (pp.37‐38).

The concept of organizational learning developed in private sector should be re‐conceptualized and narrowed down to be used in public sector. Organizational learning in public sector is an organizational capacity with which public organizations steer its employees to be able to interpret their past performances, to explore the knowledge for their next performances, to form a shared belief, and to re‐align their behavior with the reference to organizational goal. In the public management arena, the free pursuit of creative knowledge in organizations cannot but be limited due to many reasons that are described above. While organizational learning theory emphasizes that organizational members should not be bounded to its goals, values, ideology and so on, the definition of learning in this study explores an environment in which employees can positively create knowledge within those goals. In this respect, organizational learning for public management in this study is close to the concept of adaptive learning. In the similar vein, learning organization in public management is an organization which internalizes the learning capacity in its organizational structure and culture. Organizational learning is a cognitive planning and a prerequisite of all kinds of reformative actions.

3. Leadership, Organizational Learning & Performance Measurement

It is widely accepted reality that the role of leadership is vital to all kinds of reformative change, as well as organizational learning (Grahtham and Nichols, 1993; Senge, 1990; Stata, 1989). Thus, it is important to explore a model of leadership that promotes organizational learning, especially from the perspective of public organization. The interpretation of performance evaluation (measurement) is the important starting point of organizational learning. It is clear that through performance evaluation we can recognize how much the performance of an organization this year is improved in comparison with that of the previous year. But it is matter of choice, among the members of any organization, whether they accept the performance results and use them for their performance improvement from year to year. In this sense, understanding the interpretation structure is a very important task for organizational leaders.

Basically, we have to know how leaders and their subordinates interact with the results of organizational performance measurement. And then we have to discuss what leaders should do to improve the learning capacity of their organizations. The interpersonal relationship between leaders and subordinates with regard to organizational and individual performance is a full‐fledged research agenda in the area of attribution theory. The attribution theory is known as the fruit of the social psychology arena. Using this theory, many organizational theorists have studied the interpersonal relationship between leaders and subordinates in organization. In particular, the interpersonal relationship regarding performance results in organizations is a very interesting research topic. The attributional process of organizational members varies with hierarchical position in organization and performance result. The attributional process of positive performance result is relatively straightforward. That is, organizational members are inclined to attribute a positive performance result to internal causes, such as effort, and ability. Most researchers into attribution interaction of organizational members have an interest in the interpretation of poor performance results. Also, the leaders' attribution process is different from that of subordinates (Konst et al., 1999). Most of those researchers chose leader's attribution as the independent variable and subordinate's response as the dependent variable. Because of this attributional tendency, leaders show punitive and authoritative behavior to their subordinates. And subsequently leaders are likely to impose more feedback and requirements upon their subordinates (Moss and Martinko, 1998). Based on the linkage between leadership and organizational learning, this study applies Goleman's research to ascertain how leadership styles affect for organizational members to respond to measurement results. According to Goleman et al., there are six key factors that determine organizational climate: the organization’s flexibility ― that is, how free employees feel to innovate unencumbered by red tape; their sense of responsibility to the organization; the level of standards that people set; the sense of accuracy about performance feedback and aptness of rewards; the clarity people have about mission and values; and finally, the level of commitment to a common purpose. And Goleman identified six styles of leadership based on the situational models. Utilizing the situational leadership theory, this study hypothesizes the six leadership styles vary with the degree of maturity of organizational members.

Overall Hypothesis 1-1 :

The more employees agree that their leaders are helpful for their job performance, the more they think their organizations have the learning capacity for the next cycle of performance improvement.

Hypothesis 1-2 :

The more employees agree that their leaders have a broad “listening mind,” the more likely they are to agree that their leaders are helpful in their job performance

Hypothesis 1-3 :

Mature employees under affiliative leadership will be more likely to agree that their leaders are helpful for their job performance.

Hypothesis 1-4 :

Mature employees under democratic leadership will be more likely to agree that their leaders are helpful for their job performance.

Hypothesis 1-5 :

Immature employees under authoritative leadership will be more likely to agree that their leaders are helpful for their job performance.

Hypothesis 1-6 :

Immature employees under coaching leadership will be more likely to agree that their leaders are helpful for their job performance.

4. Organizational Culture, Organizational Learning & Performance Measurement

The relationship between organizational learning and organizational culture assumes a very important position in research on organizational learning. Seeing the organizational culture in the micro perspective, it is an important factor that can facilitate or inhibit organizational learning. In contrast, when we see the relationship between organizational learning and culture at the macro perspective, organizational culture is not merely a factor in organizational learning. Organization culture is the ultimate outcome of organizational learning, and also a crucial element that differentiates the concept of organizational learning from that of individual learning.

Cook and Yanow's definition of organizational learning is the acquiring, sustaining, or changing of intersubjective meaning through the artifactual vehicles of their expression and transmission and the collective actions of the group. The definition emphasizes that organizational learning is a sort of collective phenomenon wherein shared belief and intersubjective meaning are the core of organization. This shared belief and intersubjective meaning should be embedded in organizational culture. In this respect, organizational culture is the final outcome of organization learning.

As a matter of fact, a stereotype has emerged regarding the relationship between organizational culture and learning. Those who discuss organizational learning of large bureaucratic organizations point to organizational culture of those organizations as an inhibitory factor. Diamond (1984, 1985) analyzes the psychological perspective of the change resistant nature of bureaucratic organizations as we described above. According to him, because the self‐defensive nature of bureaucratic organizations has been a long‐standing culture, that culture is a substantial barrier to organizational change and development. In this regard, risk-taking culture needs to be highlighted as a facilitator of organizational learning especially in the settings of public organization. When public employees are afraid of negative results in their performance, because of its consequences, or if they feel any policy agenda is risky to themselves, it would be very natural that they might reject the result and resist any change in their organizations. To the contrary, a risk‐taking culture would be a facilitative environment for organizational learning (Levinthal, 1997). The free flow of information and open discussion and evaluation are very crucial factors throughout the whole process of organizational learning (Argyris, 1977, 1978; Huber, 1991). However, when employees feel burdened by the consequences following their performance results, and are wary of performance improvement policies, they neither accept the result nor create knowledge for their next performance improvement (Bozeman and Kingsley, 1998). This study adopts the Fischhoff et al. (1981) theory of risk-taking culture for measuring the drivers of culture in public organization. In this study, the author adopts the seven criteria developed by Fischhoff et al. in order to measure risk‐taking culture in public organizations. Based on those criteria, we measure what employees feel about the performance measurement system in their organizations. Among those seven criteria, two criteria, "comprehensiveness" and "logically sound," are merged into a hypothesis because those criteria bolster each other according to Fischhoff et.al., (p.55). And also a criterion, "conducive learning," is removed because it is closely related with an organizational communication issue that will be discussed in another section of this study. Accordingly, hypotheses are :

Overall Hypothesis : 2-1

The more public employees agree that their organization has a risk‐taking culture, the more they will agree that it has a learning capability for the next cycle of performance improvement.

Hypothesis 2-2 : Comprehensive and Logically sound

The more public employees agree that their organizations tend to embrace various conflicting ideas, the more they will be likely to agree that their organization has a risk taking culture.

Hypothesis 2-3 : Practical

The more public employees agree that the measurement activities are managed by appropriate people, the more they will be likely to agree that their organization has a risk‐taking culture.

Hypothesis 2-4 : Open to Evaluation

The more public employees agree that the measurement process is transparent, the more they will be likely to agree that their organization has a risk‐taking culture.

Hypothesis 2-5 : Politically Acceptable

The more public employees believe that their political leaders accept employee involvement in the performance measurement activities, the more they will be likely to agree that their organization has a risk‐taking culture.

Hypothesis 2-6 : Compatible with institutions

The more public employees agree that there is a shared‐belief as to performance improvement thorough the performance measurement effort in their organization, the more they will be likely to agree that their organization has a risk‐taking culture.

5. Communication, Organizational Learning & Performance Measurement

It is very widely agreed that organization communication fosters learning by assisting the creation of new knowledge and by providing access to existing objective and tacit knowledge. Thus, organizations should sensitize employees and expose them to information and data within and outside the organization (Halachmi, 1997). West and Meyer explain how organizational communication can foster organizational learning. It might be true that hierarchy is the efficient form of large organization. In particular, through the control‐control system and clear boundaries as to roles in the organization, a large hierarchical organization could secure both efficiency and accountability. Hierarchical structure, however, could neither effectively respond to fast changing environments nor appropriately coordinate among functions and divisions at the sub‐unit level. West and Meyer point out these problems are central defects of the hierarchical organizations. Furthermore, as Mintzberg (1971) mentions, the hierarchical form is very inefficient and slow in terms of an active and free flow of information. The core of organizational form in this competitive world is how fast and effective the organization is in responding to the fast changing world. Thus, the organizational communication system is a crucial consideration in innovative redesign of organizational form. In particular, free flow of information between sub‐unit and divisions in large organizations is an essential part of organizational learning (Fiol, 1994, Duncan and Weiss, 1979). Through routine and direction of the organizational communication system, this organizational knowledge can be justified and diffused throughout the whole organization (Cohen and Levinthal, 1990). Indeed, organizational knowledge is created through free and open social interaction. By social interaction, the author means not only intra‐organizational interaction, but also inter‐organizational interaction and interaction between organization and society. In this study, the concept of communication refers only to intra‐organizational interaction, i.e. member‐member, and member‐leader. Without appropriate communication systems, organizational members will neither accept their performance results nor positively commit themselves to cope with the changing environment. Here, we can hypothesize an overall relationship between communication and organizational learning:

Overall Hypothesis 3-1 :

The more employees agree that they are satisfied with their communication system in their organizations, the more they are likely to agree that their organizations have the learning capacity for their next performance improvement.

Communication structure coincides with the organization's authority structure. As there are two kinds of organizational forms, formal and informal organization, there are also two kinds of organizational communication channels, formal and informal communication. In terms of the informal communication channels, Downs (1967) provides a very frequently cited argument. Based on Selznick's analysis, Downs inquires concerning whether the formal structure in organizations is really the only factor that affects members' performance and motivation. It should be noted that informal structures may be useful for organizational goals. According to Downs, first, informal structures provide the members of the organization with those personal rewards, such as friendly relationships and personal significance. And second, they provide extensions and adaptations of the formal rules when the latter are inadequate. Third, they provide the organization's members with personal motives for good performance unrelated to its formal goals or even to their own direct self‐interest. Downs highlights the informal structures in organizations as an important factor that affect member's behavior and their performance.

Hypothesis 3-2 :

The more employees agree that their organizations provide sufficient information through formal channels of communication, the more they will agree they are satisfied with their communication systems in organizations.

Hypothesis 3-3 :

The more employees agree that their organizations provide sufficient information through informal channels of communication, the more they will agree they are satisfied with their communication systems in organizations.

6. Technical Innovation, Organizational Learning & Performance Measurement

Many literatures on organizational learning acknowledge technology to be an important tool for knowledge acquisition (scanning), knowledge transfer or storage (Argote, 1999; Huber, 1991). However, rapid innovation of technology greatly strengthens the influence of it on not only several processes in organization learning, but also the whole process of organizational learning. The important nature of technology should be addressed in this section. Based on a linear perspective on the relationship between technological innovation and organizational performance, it can be said that the more governments adopt and implement technology, the more government can produce better policy outcomes. We need to examine whether this linear perspective might be applicable to public organizations.

Is technology value‐neutral in the public sector? Needless to say, public policy is the product of political activity wherein numerous shareholders are involved for the sake of their interests. But what is politics? Politics is the authoritative distribution of social values (Easton, 1953). The social values refer not only to economic interests, but also to prestige, security, and the like. In nature, any distribution of social values necessarily entails social and political ideology in a society (Rawls, 1993). Thus, political activity is a necessarily value‐laden activity. Public policy is initiated, implemented, and evaluated in the middle of numerous conflicting values (Kingdon, 1995; Schneider and Ingram, 1997). Consequently, the technology of the public sector cannot but be a value‐laden apparatus. Thus, when we discuss the issue of technological innovation in the public sector and its impact on organizational performance, it is necessary to take other intra personal, interpersonal factors into consideration. In a similar context as the above argument, Layton's analysis as to the nature of technology is noteworthy (Bijker et al., 1987).

Science and technology have become intermixed. Modern technology involves scientists who do technology and technologists who function as scientists… The old view that basic sciences generate all the knowledge which technologists then apply will simply not help in understanding contemporary technology. The divisions between science and technology are not between the abstract functions of knowing and doing. Rather, they are social. Thus, it is questionable if the overall relationship (linear relationship) between technology and organizational learning is really valid in the public organizations context. Innes and Simpson (1993) call the idea underlying the overall relationship the "linear perspective." The linear perspective assumes that there are two dimensions, organizational performance and technological innovation, which means improvement of technological innovation is positively related with organizational performance. In the context of organizational learning, we can accept the overall relationship between technological innovation and organizational learning capacity based on the linear perspective. However, there is another side to the linear relationship. Despite its great contribution to effectiveness and efficiency of organizational performance, technology may also lead to worker hostility and unrest (Mankin et al., 1982). In this respect, Bikson (1987) finds, in her research on adopting and implementing computer systems in a variety of private and public sector organizations, that organizational factors and individual cognitive factors are better predictors of success than are technical factors (Gattiker, 1988). Innes and Simpson (1993) state that "the most important principle is that the technology should be compatible with the culture, language, skills, practices, understanding, and organizational and social structures of the community that is to use it (p.233)."

Hypothesis

The more employees agree that technological innovation of their organizations improves their job performance, the more they are likely to agree that their organizations have a learning capacity for the next performance improvement cycle.

Figure 1 below illustrates the whole relationship between variables in the study.

<Figure 1> Whole Picture of Relationship between Variables

Affiliative

Democrtic

Authoritative

Coach

Comprehensive

Logically sound

Politically Acceptable

Open to Evaluation

Practical

Compatible

with Org.

Technology

Informal Channel

Formal Channel

Leadership

Risk-Taking

Culture

Satisfaction

with

Communication

Technical

Innovation

Judgement on

Organizational

Learning Capacity

Maturity

7. Control Variable: Employees' acceptance of measurement indicators

This study uses the indicator "acceptance"as a control variable. Thus, it is hypothesized that the control variable is a major premise of a strong relationship between the dependent variable and the independent variables.

Hypothesis

The relationship between the dependent variable and independent variables under high acceptance of measurement indicators will be more significant than that under low acceptance.

Ⅲ. RESEARCH METHODOLOGY

This study does not aim to explore a causal relationship between variables. Instead, it is focused on a descriptive explanation as to factors affecting employee perception of organizational learning capacity for performance improvement through performance measurement. Thus the survey method is a good way of collecting data in spite of its potential weaknesses. In particular, we are aware that there could be a systematic measurement error in this study due to some possibilities (Singleton and Straits, 1999). Respondents to the survey questionnaire should know of performance measurement activity in their organization. Organizational performance measurement is known as a managerial tool, which means many public employees do not necessarily know something about that performance measurement. In fact, measurement indicators are often developed by some experts in program evaluation or audit, and the entire process of performance measurement may be managed by a planning division. So our study should target only those who are familiar with performance measurement activity in their organization. Second, a systematic measurement error could be produced by respondents’ misunderstanding of questions. Knowing these problems in survey methods, we should carefully target the subjects of the survey analysis. Also, it is better to identify another channel to make sure whether respondents really understand the questions. Thus, in addition to the survey method, this study adopts a structured interview via email and phone with respondents.

1. Subject of survey

The sample of this study should be extensively involved in implementing a policy of organizational performance measurement. Also performance measurement activities should be widely known to public employees; thus, the subject of survey analysis in this study, the State Government of Florida was selected. Since the early 1990s, that State government has implemented a law which is equivalent to the GPRA(Government Performance and Results Act) of federal agencies. The Act requires agencies to justify their proposed performance measures to the Governor’s office and relates them to agency decision-making and strategic planning. Thus, each agency in that state has a few years of experience in implementing performance measurement activities. In this study, one agency (Agency X) was selected. The name of the agency is confidential because the survey asked several politically sensitive questions. Thus in this study, the agency is named "Agency X."

The Agency X provides a broad array of services. Since the middle 1990s, it has implemented very extensive performance measurement initiatives over the entire range of services that it provides. Most managerial level employees are aware that the agency’s performance has been measured by certain indicators because the agency has provided various performance reports both to employees and the public. And the legislature has often announced that if the agency did not achieve the strategic goals, services would be privatized one by one. Thus, performance measurement is a very important concern of the agency.

2. Distribution of questionnaires

The agency provided the author of this study with a managerial-level employee database contingent upon that the author’s sharing with it results of the survey, and that the name of the agency should be kept confidential. From the database, 1,080 high-level managers were randomly selected. A manager in the planning department informed us that those managerial level employees were aware of the performance measurement activities in the agency. To help respondents understand the definition of performance measurement and measurement indicators and past measurement results, results published by the agency were enclosed. This ensured that the possibility of a systematic measurement error, as mentioned above, could be reduced to a minimum degree in this study. A prepaid return envelope was enclosed, and the purpose of this study was emphasized so that respondents could know their participation was important. In addition, respondents were informed that they would not be at risk by the results of the survey, and all of their responses would be managed with extreme confidentiality.

3. Analytical tool

This study employed 5-point Likert-type scales ranging from "strongly disagree" to "strongly agree."Usually, survey research secures the validity of self-administered questionnaires through factor analysis (Singleton and Straits, 1999). In this study, as the first step is statistical analysis, we will use factor analysis to ascertain whether the questionnaire is a valid tool for the research question. If any invalid questions were found as the result of factor analysis, those questions would be deleted from further statistical analysis. And then, using the factor scores, multiple regression analysis is conducted to find the relationship between those variables. To test the control variable’s effect, several different multiple regression tests are conducted.

Ⅳ. ANALYSIS and RESULTS

1. Response rate

This survey was conducted over a period of two months. The pre-tested questionnaires were mailed to managerial-level employees. Of these, 394 available questionnaires were returned, yielding a response rate of 36.5%.

2. Test for the Questionnaire: unidimensionality & reliability

As is mentioned in the previous section, a factor analysis was conducted to see if each question measured the same idea. In this study, a factor analysis for each variable was employed. It should be noted that this study put each of those variables into a factor analysis separately because there could be a correlation between the variables. For instance, the variable "communication" could be correlated with the "open to evaluation" variable in "risk taking culture."

From the results of factor analysis, it was observed that questions measuring sixteen variables appropriately measure the variables that this study wants to measure. High factor loadings mean that each question is closely related with the underlying factor. In social science, those that have factor loadings higher than 0.5 are considered to measure the same underlying factor.

Based on the Eigenvalue index, researchers can determine how many factors can be chosen from the data. Usually, it is recommended to choose the number of factors with eigenvalues higher than 0.7 in the social sciences. However, it is observed that three questions have lower factor loadings than 0.5, which means those three questions do not measure the same underlying factor as other questions do. Those three questions are about the leadership factor. In leadership factor measurement, we used two ranking scales. Those ranking scales turned out to be useful in avoiding correlation between the variables. The three questions that are poorly loaded were not questions measured via the ranking scale. Thus, those questions are correlated with other questions. For example, those who think their managers’performance helps subordinates to use their knowledge and experience to get improvement results in the next measurement cycle answered with dual, even triple, leadership styles. In our opinion, the ranking scale is useful for measuring the delicate psychological tendency of research subjects.

In order to test reliability of the questionnaire, Cronbach’s coefficient alphas were calculated. Based on the rule of thumb, it has been said that Cronbach’s coefficient higher than 0.7 is desirable, but 0.6 is acceptable. The result of factor analysis suggests that those poorly loaded questions should be eliminated from further analysis. Thus, the author calculated the Cronbach’s coefficient after eliminating those three questions. As a result, it turns out that the Cronbach’s coefficients tell us that the questions used in the analysis are reliable measurements.

3. Results of the quantitative analysis

1) Overall relationship without control variable

This study uses a multiple regression test to ascertain the relationship between those variables. Before the multiple regression test, the author calculated factor scores of each variable. Usually, after factor analysis when researchers need further analysis, they use factor scores because the factor score is known as a useful standardized index to avoid a multicollinearity problem. There are two ways of calculating the factor score.

A simple way is just to use an optional command in some statistical computer packages. Another way is to calculate factor scores manually, using a formula: Standardized factor score coefficient z-score of each observation.

The results of regression analysis below show the overall relationship between employee perceived organizational learning capacity and those four primary variables. According to the results, it is observed that those four primary variables can explain just 16% of the variation of the dependent variables, which means those independent variables cannot be good indicators of the dependent variable. However, there are two statistically significant variables: cultural factor and communication factor. Those two variables are statistically significant at the .05 and .01 levels respectively.

Overall, two factors can positively influence the employees’ perceived learning capacity: risk-taking culture and communication. Using a variation inflation coefficient, we examine whether there is a multicollinearity problem or not. A prevalent method of detecting multicollinearity is to use a variation inflation coefficient of the whole regression model:1/(1-R-square). If the VIF score of the whole model is smaller than the VIF coefficient of each independent variable, researchers should suspect a multicollinearity problem. In the first result, the VIF coefficientof the whole model is 1.2. Thus, the communication factor has a small possibility of a multicollinearity problem. But the possibility is very small. As is mentioned, the risk-taking cultural factor could be correlated with the communication factor. However, it should be emphasized that the possibility would be very small because this study uses factor scores in this regression test.

Basically, it is very arbitrary to judge the multicollinearity. For example, it has been said that if the VIF is greater than 10, there are possible multicollinearity problems (Freund and Littell, 1991).

<Figure 2> Relationship between Variables without Control Variable

Affiliative

Democrtic

Authoritative

Coach

Comprehensive

Logically sound

Politically Acceptable

Open to Evaluation

Practical

Compatible

with Org.

Technology

Informal Channel

Formal Channel

Leadership

Risk-Taking

Culture

Satisfaction

with

Communication

Technical

Innovation

Perception of

Organizational

Learning Capacity

0.03435

0.00661

0.39784**

0.27672**

0.26811**

0.00875

0.23004**

0.06406

0.13349**

0.32393**

-0.03295

R2=0.4377

R2=0.2318

R2=0.0998

0.11771

0.12325*

0.20120**

0.10251

R2=0.1562

* p<.05, ** p<.01

2) Overall relationship under high indicator acceptance(with the control variable)

This study chooses employee measurement indicators acceptance as a control variable. Thus, the author conducted a multiple regression test under high indicator acceptance. The result is instructive. As the table shows, the R-square is improved to 0.3512. And also three independent variables — risk-taking culture, leadership, and communication —are significantly related with the dependent variable. This means those four primary independent variables are more significantly related with the dependent variable in those who highly accept measurement indicators of the agency. This result tells us that the effect of the control variable is very important in building a learning bureaucracy through performance measurement. In other words, when we encourage public employee contributions to performance improvement through performance measurement initiatives, we have to seriously consider the effect of employee indicator acceptance. Specifically, the importance of risk-taking culture is re-emphasized in the result. The results shows that the risk-taking culture more significantly affects the dependent variable than any other independent variables. And also the effect of communication is important. In terms of the multicollinearity problem, the VIF coefficient of the whole model is 1.54. Thus, we can conclude that there is no multicollinearity problem in this regression equation.

<Figure 3> Relationship between Variables with Control Variable

Affiliative

Democrtic

Authoritative

Coach

Comprehensive

Logically sound

Politically Acceptable

Open to Evaluation

Practical

Compatible

with Org.

Technology

Informal Channel

Formal Channel

Leadership

Risk-Taking

Culture

Satisfaction

with

Communication

Technical

Innovation

Perception of

Organizational

Learning Capacity

0.01418

0.00167

0.37602**

0.20712**

0.22655**

0.14640*

0.20551**

0.06027

0.30546**

0.19839**

0.00347

R2=0.3690

R2=0.2717

R2=0.0545

0.16034*

0.31621*

0.29271**

0.03871

R2=0.3357

* p<.05, ** p<.01

4. Interview

1) Interviewees

After the quantitative analysis, the author interviewed sixty‐nine respondents via email and phone.

<Table 1> Response rate of interview via Email and Phone

	Respondents	Interviewees	Rate
Email	79	62	78.5%
Phone	10	7	70%

As shown, sixty‐two respondents provided their email addresses and then respondents gave their phone numbers. The majority of those who gave their contact information responded to us two or three times.

2) Interview on risk taking culture

The first question was about the risk‐taking culture. We asked the respondents to evaluate risk‐taking culture in the agency. As the quantitative result showed, the risk taking culture was the most significant factor affecting employee perception of organizational learning capacity under high indicator acceptance. In particular, the author tried to ask what were the specific reasons for the risk‐taking culture. Over a period of three days, after the author sent the message to respondents, 58 respondents provided their opinion on the question.

<Table 2> Result of interview on risk‐taking culture

Degree of Risk-Taking Culture	0‐20	21‐40	41‐60	61‐80	81‐100
Respondents	10	17	25	6	0

Generally, the interviewees thought risk‐taking culture was not very high in the agency. In the next emails or phone calls, the author asked if there were any specific reasons why risk‐taking culture was hardly established in public sector. According to the interviewees, there were several reasons. First, the Governor announced a 25% reduction of employees in the near future. In fact, downsizing is a major reason threatening public employee security. Under severe pressure of downsizing, public employees are afraid of making mistakes. Thus, they do not want to suggest any creative ideas. Second, the public agency is constrained by many legal regulations and scrutinized by many commissions under the legislature. A big portion of the budget of the agency comes from the federal government. And most of the federal grants are given for specific purposes. Those grants are also under severe scrutiny by the federal government. Third, there is increasing threat of privatization from the legislature. A program supervisor said, “The legislature is just informed enough about this to decide to privatize, thinking private agencies will be more innovative, never realizing that the bureaucracy will still have to maintain an enormous staff to audit the private agencies, and the private agencies will have to somehow come up to speed with trained personnel and their own management systems.” Certainly, public employees are aware of those limitations of extensive privatization of public services.

In fact, the risk taking culture of this agency was relatively high (mean=3.1/5.0) even though there were a lot of arguments between respondents on risk‐taking culture in the agency. Two responses would be good middle grounds for the arguments. A manager who rated risk‐taking culture in the agency as “80” said, “we are governed by state and federal regulations to a high degree. This limits the amount of innovative actions we may take. We are constantly looking at better ways of reducing time and efforts, but still looking at optimum accuracy in our performance.” In contrast, a manager of service operation rated the culture as “30.” She said, “There are certain sections/divisions/levels of staff who are permitted to take risks once in a while, but in general I believe we are not risk takers.  I also feel when those individuals are allowed to take risks, there has to be such a detailed study of the consequences and measuring all angles of possible fallouts, that by the time the action is taken it does not even feel or look like a fresh, timely initiative or risk taking. It often is very difficult to expect a risk‐taking culture in a public agency due to those reasons as discussed above. Certainly, public employees are doing a good job in spite of so many stressful pressures. This interview highlights what the specific reasons for prohibiting risk‐taking culture may be and how public employees are responding to those pressures.

3) Interview on perception of political leaders

We did not ask any direct questions about political leaders of the agency. However, during the interview on measurement indicators, employee perception of political leaders became a major interest of the interview. A program manager said, “Because those in charge of measurement are legislators and have changed with various elections, the current legislators do not understand the system and have not worked to fix certain areas of concern.  They just currently want to change everything to make way for privatization.” Many interviewees said the measurement indicators were developed by the high level managers and political appointees in the headquarters of the agency. According to the result on the overall relationship between risk taking culture and its five elements, it was observed that the relationship between issues of political acceptability and risk taking culture were not related to each other. However, the relationship turned out to be significant under the high indicator acceptance. Here, it should be emphasized that the factor of political acceptability is closely related with the control variable, indicator acceptance. The Pearson Correlation Coefficients between two factors is 0.45695 (p<0.0001). The response of the second interview supports the correlation between those two factors, because public employees often believe that measurement indicators are developed under the influence of political leaders. Even though their high‐level managers are involved with activities developing the measurement indicators, those managers’ roles are believed to be small. Thus, the control variable is an important link between risk‐taking culture and the issue of political acceptability. In general, those who do not accept measurement indicators also think that political leaders in the agency do not want employee involvement in the measurement activities. A senior program evaluator in a local district of the agency said, “The local leadership encourages creativity: however, ideas are shot down from headquarters (political appointees).”

4) Interview on leadership

The third interview was about the leadership issue. Most research hypotheses on leadership above were not confirmed. As the quantitative analysis showed, the authoritative leadership style is heavily preferred regardless of maturity (self‐confidence). At the third interview, the author asked why the majority of employees preferred the authoritative leadership style. In general, there were two answers for this question. The first was that the authoritative and coaching leadership styles motivate subordinates to think that their knowledge and experience are respected and to share responsibility for organizational performance. For example, a respondent specified how his manager was the authoritative leader, saying that “he would give direct feedback and ask us to solve the problem to get an improved result in the next measurement cycle.” An operational program administrator who has worked in the current position for 23 years said that the “manager will give measurement results, identify deficiency, and require corrective action, but will allow subordinates to choose type and method of implementation.”

The other general answer was that the leadership style was preferred because subordinates must avoid final responsibility for measurement results. In a stressful environment, employees seek a kind of defensive reasoning with which they can rationalize any negative results of performance measurement. Thus, they want, respondents said, the authoritative leader to take the final responsibility. A respondent said that the timing of our survey influenced the results on leadership, i.e. a cutback environment. Thus, it is argumentative to conclude that authoritative leadership is the most facilitative for employee perception on organizational learning in the public sector. The organizational environment should also be considered regarding the conclusion.

Ⅴ. DISCUSSION

Organizational performance measurement (OPM) in the public sector has very wide utilities for performance improvement. This study’s focus is that OPM provides a clue for organizational learning in the public sector. Currently, much effort has been expended to create knowledge organizations or knowledge‐based bureaucracies in the public sector. Personal experience, all kinds of know‐how, and knowledge are valuable resources for performance improvement in modern organizations. In a broad sense, there are two kinds of approaches to creating knowledge‐based organizations: how to exploit human knowledge and how to create human knowledge.

So far, cutting edge endeavors toward knowledge‐based government are to create cooperation between organizations. Such interorganization‐based strategies are emerging as prominent approaches to knowledge‐based organization. For instance, intergovernmental cooperation and citizen groups‐government collaboration are interorganization‐based strategies. A particular term has been introduced emphasizing the cooperation of inter‐organizations: Governance. Governance refers to sustaining coordination and coherence among a wide variety of actors with different purposes and objectives, such as political actors and institutions, corporate interests, civil society, and even transnational organizations (Pierre, 2000).

In the OPM arena, performance measurement becomes a channel between organizations. In particular, OPM is emerging as a channel between citizen groups, other stakeholders, and government bureaucracy. Various stakeholders of government are cooperating with each other to exploit and create constructive knowledge for common goods in OPM systems in the public sector. For instance, GASB (Governmental Accounting Standards Board) is producing a collection of best practices of interorganizational efforts for performance improvement in the OPM arena (GASB, 2001).

This study approaches knowledge‐based government through OPM from the perspective of an “intraorganizational strategy.” Public employees are a valuable pool of professional experience and knowledge for performance improvement. How to encourage public employees to exploit and create their knowledge based on their experience for performance improvement is the theme of this study. Through analyzing employee perceptions of organizational learning capability, this study explores a facilitative environment for organizational learning in the public sector. To measure public employee perception of organizational learning capability, this study focuses on public employee perception of the OPM system in their organization. As is stressed in the interorganizational strategy discussed above, OPM is a good avenue to building learning capability in public organizations. Through managing OPM in a stable way, we can describe an organizational system that facilitates learning government or knowledge‐based bureaucracy. For this, a public employee commitment toward OPM systems is an important condition.

This study chooses four independent variables affecting employee perception of learning capability of their organization: risk‐taking culture, leadership, communication, and technological innovation. And each independent variable has its sub‐elements. We examine not only the whole relationship between dependent and independent variables, but also the sub‐relationship between each primary independent variable and its elements. Most importantly, this study chooses the indicator “acceptance” as a control variable within the relationship between those main variables. As it is discussed in the literature review chapter, indicator acceptance (goal acceptance) is a pre‐condition for enhancing organizational learning capability through OPM in the public sector.

Some meaningful results are observed through the quantitative analysis and the interview method in this study. First, the indicator acceptance played a significant role as a precondition of employee perception of organizational learning. Second, the risk‐taking cultural factor is observed to be the most important influencing employees’ perception of organizational learning. Third, as much published research supports, the comprehensiveness issue is a very significant factor of risk‐taking culture. Fourth, it was observed that the political acceptability issue was very significant in the risk taking culture under high indicator acceptance. Fifth, shared belief on performance improvement through performance measurement is also an important factor contributing to a risk‐taking culture. Sixth, transparency is an important environment for a risk taking culture. Seventh, this study emphasized that public employees think authoritative leadership style is the most helpful for employee contributions to performance measurement activities in a stressful environment. As is observed through the interviews with respondents, the agency in this study faces many pressures, especially from political leaders and the legislature. Eighth, a listening mind is an important character of any kind of leadership style. Respondents felt that their knowledge and experienced were respected when they thought they could make a difference in a leader’s decision making. In contrast, many of the respondents expressed their feeling that political leaders of the agency never listened to employee suggestions. It should be noted that the mean of those questions measuring political acceptability that is an element of risk taking culture was 2.54, which means the majority of respondents had negative images about political leaders’ perceptions of public employee involvement in performance measurement activities. Interviewees pointed out that political leaders of the agency did not want to listen to what civil servants suggested. Ninth, employees want to receive job‐related information through formal channels in the communication system. Interviewees said that when their organization provides much information through formal channels, they feel that their ideas are respected in the agency.

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강황선(姜煌先): 미국 뉴저지 주립대학(Rutgers Univ.)에서 행정학 박사학위를 취득하고, 현재 건국대학고 행정학과 교수로 재직 중이다. 전공분야는 공공관리 이론, 성과측정 및 성과관리이다. 최근 논문으로 Decentralization and Fiscal Disparities in Korea :With Special Reference to Seoul Metropolitan City (2007, 한국지방자치학회보), 정책학습조직을 위한 지방자치단체의 성과평가제도(2006, 한국정책분석평가학회보), 정부조직의 BSC 도입방안에 관한 연구(2005, 한국행정연구) 등이 있다.<E-Mail: profkang@konkuk.ac.kr>

이용모(李龍模): 뉴욕대학교 (New York University)에서 행정학 박사학위를 취득하고 현재 건국대학교 행정학과 교수로 재직 중이다. 주요 관심분야는 지방재정, 복지정책, 행정계량분석 등이다. 최근 논문으로는 Decentralization and Fiscal Disparities in Korea :With Special Reference to Seoul Metropolitan City (2007, 한국지방자치학회보), “Adequacy of Expenditure Assignment in Korea: A Fiscal Federalism Approach (International Review of Public Administration, 2005. 2) 등이 있다.

<E-Mail: ymlee@konkuk.ac.kr/논문접수일: 2007. 4. 18/심사게시일: 2007. 6. 20/심사완료일: 2007. 7. 13>