This paper aims to identify the specific problems faced by the Finnish public sector organizations in designing and implementing performance measurement systems (PMS).
An understanding of the problems is obtained by examining three case organizations in practice. In order to support the analysis of the empirical findings, a review of prior literature on the private and public sector PMSs is carried out.
The design and implementation processes in the Finnish public sector organizations differ significantly from the way they are realized in industrial private sector companies. The four underlying reasons for problems in public sector organizations are the following: there are many stakeholders with conflicting needs; the end products and goals are undefined; there is a lack of property ownership and lacking management skills.
By utilizing the results of the study, PMS design and implementation in the public sector can be carried out by taking into account and avoiding the evident pitfalls introduced in the study.
A large portion of the prior research on public sector PMSs consists of surveys and conceptual studies. This paper describes three case studies and reveals new insights into the specific challenges faced by public sector organizations, especially in designing and implementing PMSs.
