Stakeholder Involvement in Designing Strategic Management Systems in Public Administrations

AUTHOR
Bjorn Niehaves

ABSTRACT

Information and communication technologies fundamentally change political decision making in the public sector. Decision making in local public administrations, regarding the example of German public administrations, is often shaped by a significant informational asymmetry. According to the primacy of representative democracy, elected politicians are formally in charge of political decision making. However, often capacity problems occur as being a local council member is an avocational and honorary engagement for most of them. The resulting informational deficit heavily shifts emphasis of practical political power to public administration employees who are full-time engaged in the area of concern. Here, information and communication technology, especially management information systems, can help to improve information transparency and to reduce informational asymmetries in political decision making.

Balanced Scorecards (BSC) are an established conceptual basis for ‘balanced’ management systems (Kaplan & Norton 1996a; Kaplan et al. 1997; Gentia 1998; Olve et al. 1999; Kaplan & Norton 2000; Buytendijk 2001). An empirical study conducted in major US-enterprises (Kaplan & Norton 1996b) has shown, for instance, that there exist significant deficits in actually aligning the business strategy and business operations, that classical financial measures often run too short when it comes to strategic management decisions, or that controlling and reporting systems are often perceived as too complex but insufficient when it comes to ad hoc requests. These and other significant problems in management practice have lead to developing Balanced Scorecards (BSC) as a strategy management and controlling instrument (Horváth 2001). Hence, BSC aims at balancing performance measurement between strategy and operations, taking into account various types of measures, e.g. qualitative and quantitative, and including different stakeholder perspectives, e.g. citizen or employee perspectives (Kaplan & Norton 1996b).

Repeatedly, BSC implementations in public administrations fail in effectively including stakeholder perspectives. First, in many cases of BSC implementation in public administrations, the adaptation of industry-oriented approaches to our specific domain has not been developed to a sufficient extend. The primacy of politics and democracy is often not taken into account adequately. Second, essential prerequisite when “building a balanced scorecard [is to] achieve a consensus on the balanced scorecard that will be used by the organization” (Martinsons et al. 1999, p. 83). What is often seen as ‘just’ one of the things one has to assure when implementing BSC, is a major problem in BSC implementation practice. For instance, what are the stakeholders’ goals, what are effective measures that should be applied, and what would be the best resources to allocate to?

A policy research-based political perspective can support a structured approach to designing management systems in public administration which comply with the primacy of representative democracy. While significant strategic knowledge is needed for achieving a consensus and for an effective BSC implementation (Martinsons et al. 1999), this is often latent, spread over diverse entities and people, and regularly linked to conflictory beliefs and standpoints. A multitude of different goals and beliefs exists among different public administration stakeholders, such as citizens, businesses, or employees. However, at current state, little methodological support for systematically discovering this strategic knowledge within the BSC process is available, especially regarding participative approaches.

Therefore, the aim of this paper is to develop a BSC implementation approach which supports the effective inclusion of different public administration stakeholder views. Such an approach is intended to comply with the primacy of representative democracy as it applies stakeholder goal mapping on the basis of a participatory paradigm. Ethical dimensions become especially apparent when defining stakeholder perspectives, strategic stakeholder goals, and in selecting representatives for inclusion in this participatory process. The paper seeks to support these activities by suggesting an approach which increases transparency of stakeholder groups and their distinct goals.

Addressing this research objective, the method chosen is that of conceptual and argumentative research. Our arguments will (where applicable) also refer to empirical research results in terms of a BSC implementation case study from a public organisation. We consider the paper to contribute to and to be part of design science research in information systems (cf., for instance, Simon 1981; Boland 1989; Walls et al. 1992; March & Smith 1995; Rossi & Sein 2003; Hevner et al. 2004; Niehaves & Stahl 2006). We will therefore provide a brief summarising assessment of this research, complying with the guidelines for evaluating design science in IS research (cf. Hevner et al. 2004), within the concluding section.

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