Economy, Efficiency and Effectiveness as Performance Indicators in Government Agencies

Table of Contents

Executive summary 3 Introduction 4 Economy 4 Effectiveness 5 Efficiency 6 Conclusion 7
References…………………………………………………………………………………………………………………………………..8

Executive summary
Evaluation of performance is part of managing performance. Public agencies use economy, effectiveness and efficiency to determine performance. All these three parameters relate to inputs and outputs of the agency (Cutler, Cutler & Waine, 1997, p. 98). However, measurement of inputs and outputs presents some challenges. Thus, during measurement of performance of a public agency one has to make a choice of what to measure among the three …show more content…

71). Many managers have been found to spend disproportionately at the end of the financial years to consume all money, which they had for spending. Such moves undermine the use of economy as a measure of performance (Funnell & Cooper, 1998, p. 33).
Effectiveness
In order to use effectiveness as a measure of performance, policy objectives need to be stated in terms of outcomes to be attained. Effectiveness refers to the success or otherwise in achieving objectives, meaning that it is concerned only with outputs (Economic Policy Committee, p. 2). Effectiveness indicators focus on the impact of services on the community or client (Pollitt & Talbot, 2004, p. 78). The impacts are in terms of quality, accessibility and other impacts on the client. The quality of service delivered by a public agency can be measured in many ways. The first measure is the degree to which users of the service is satisfied. Another approach is the incidence of service failure. Quality can also be measured using accreditation and the quality of inputs. Since public agencies are concerned with provision of essential services such as education, health, housing and administration, the services ought to be accessible to its users (Cutler, Cutler & Waine, 1997, p. 88). The assessment of accessibility can be done with reference to waiting periods to enter the service, the affordability of the service or physical accessibility. In some areas, accessibility of