Identifying a Suitable Approach for Measuring and Managing Public Service Productivity

Every public organization faces the challenge of improving productivity (ratio between output and input). In this effort, productivity measures are essential managerial tools. However, the issue of measuring service productivity has proven to be challenging. A key reason for the challenges seems to be related to the intangibility of services. It has been discussed a rather lot in the literature but there seems to be lack of understanding on how to capture this feature in practice. The objective of this paper is to find out how to measure the relevant elements of public service productivity in order to provide useful information for managerial purposes. The study is carried out by using qualitative research approach. Two tasks are carried out in order to push the topic further. First, the current knowledge is examined by reviewing literature on productivity and performance measurement. Second, an empirical examination is carried out in the context of four case services of the City of Helsinki, Finland. Several approaches of measuring productivity can be found in the literature. These approaches were evaluated in the context of the case services. In the case examination, several requirements for productivity measurement were identified. There is clearly a need for getting more detailed information on productivity affecting factors: measures should be designed for operative level units. Component-by-component approach was regarded as a suitable way for examining the complex measurement object of service productivity at the bottom level of an organization. In regards to the more technical measurement methods, the representatives of case services felt that matrix approach was the most suitable for their purposes. It was rationalized by the fact that matrix approach is easy to understand and it provides a powerful tool for operative management of productivity.