Measuring Performance of Local Authorities Using Composite Performance Index and Perceived Performance Score

Local governments are public agencies that provide urban services to communities. Unlike the private sectors, the performances of local governments are difficult to measure. Furthermore, a good indicator for one local government may not apply to another within the same country and is more complex when examined across countries. In spite of all difficulties, performance of local governments must be measured and made known to various stakeholders. There must be attempts to identify indicators that apply for all local authorities and subsequently consolidated into one that explains the general performance of the local authority. This research intends to identify a set of output indicators to establish a composite performance index (CPI) and perceived performance score (PPS) for each local government in Peninsular Malaysia, and subsequently identify factors that influence CPI and PPS. This empirical study uses five sets of questionnaires to gather information from: (i) customers served at the local authority counters, (ii) employees, (iii) leaders (the management), (iv) residents and (v) the local authority output indicators from the local authorities. Data have been collected from 34 local authorities in the states of Kedah, Selangor, Pahang and Johor covering more than 4,400 respondents. The CPI is computed fiom: (i) a weighted combination of 14 output indicators, (ii) response fiom counter customers, and (iii) residents. Likewise, the PPS results from the evaluation on 12 aspects of urban services from the customers met at the counters and residents. The CPI and PPS form the major interest in this study. Apart from using bivariate correlation, the study uses multiple regressions to determine factors that influence CPI and PPS. Among the findings are that the CPI and PPS are not correlated to one another, and CPI is strongly influenced by the proportion of grants to total local authority revenue. In other words, the extent of financial autonomy of local authorities plays a key role in determining the performance of the local authority. City and municipal councils tend to perform better than district councils in CPI as the latter has the least autonomy in finance. Indirectly, the level of financial autonomy also relates to the population size and leadership of the local authority. The study finds that ~ PiSs not correlated to any of the organisational attributes, except for a weak correlation with leadership. This suggests that PPS is only influenced by personal characteristics of the customers and a more accurate evaluation of the performance of the local authority is only through CPI.

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