Performance Management in Public and Nonprofit Organizations

This chapter sheds light on performance management systems and their importance for the attainment of strategic objectives in public and nonprofit organizations, as well as in public–private arrangements. Besides discussing the differences between subjective and objective performance, the chapter highlights the potential of the theory of change in choosing performance indicators that effectively assess the value created. The chapter also maintains that appropriate indicators must reflect actions from agents that are associated with performance, are not subject to incentive distortions, and have reduced measurement costs.