Performance assessment and benchmarking in the public sector: An example from New Zealand

Given the absence of profit motives and the difficulties of performance assessment in public sector organizations, the purpose of this paper is to consider the role of benchmarking as a tool to help overcome some of the problems of performance assessment in the public sector. The paper's approach is a review and discussion of current and recent trends and approaches in public sector benchmarking in New Zealand. The difficulties of establishing meaningful benchmarking exercises are discussed in relation to management accounting's approach to management control systems. In New Zealand, the pharmaceutical management agency (PHARMAC) is responsible for obtaining the best health outcomes that are reasonably achievable through the use of pharmaceuticals for eligible people, within the funding provided. The concepts discussed in the paper are applied to PHARMAC as an illustration. The paper proposes that a combination of internal benchmarking, process benchmarking and increased public documentation will enhance reporting systems in any public sector organization.