Adverse affects of a performance management indicator system: convergence towards the average rather than excellence

The British Audit Commission's system of indicators organises the quantification of about two hundred output and result indicators relating to the services offered by municipalities. The indicators are comparable from one town to the next and are published annually in the local press. This system creates a very strong impression of the town when one of the services performs badly. As a result, many municipalities increased the budgets of their services with the lowest performance, in the hope of raising the standard. In these cases, financial resources were sometimes drawn from the most effective services. Use of indicators thus caused a reduction in differences by convergence towards the average. It was an adverse effect because it was to be hoped that the indicators would cause performance to converge towards excellence.