Organisational excellence in the public sector : with special reference to the Portuguese local government

The primary aim of this thesis is to analyse the key drivers of Organisational Excellence in the Public Sector and integrate them in a comprehensive, reliable and valid performance measurement system.

Within the movements for Public Sector reform and modernisation, Total Quality Management (TQM) has increasingly been regarded as a way to improve efficiency and effectiveness in the use of the resources available, deliver better public services, and bring Public Administration closer to its customers and citizens. However, too often the initiatives carried out are not integrated, nor they are part of a systematic and coherent strategy to guide public organisations towards Organisational Excellence (OE).

The literature suggests that adopting TQM can lead to superior performance, in spite of the difficulties of statistically demonstrating such link. There is also a prevalent view that TQM principles and core concepts are universally valid, but need to be adapted to each context in particular. In this sense, they are applicable to the Public Sector, although the existence of multiple stakeholders, the need to balance individual customer needs with wider collective purposes and the strong bureaucratic inheritance make their implementation particularly challenging.

The exploratory survey conducted in the Portuguese municipalities - which constitute the focus of our study - revealed that TQM is raising considerable interest and diagnosed the main barriers and motivations for TQM implementation. Moreover, it gave support to the Critical Success Factors (CSFs) identified in the literature.

Several organisational excellence models were reviewed. It is argued that Kanji's Business Excellence Model (KBEM) adequately covers the CSFs identified and, additionally, provides a sound methodology - based on the Structural Equation Modelling (SEM) approach and the Partial Least Squares (PLS) technique - to estimate the relationships between them and determine their impact on an aggregated measure of OE.

To measure OE from the internal stakeholders' perspective, a few adjustments were made on KBEM and new scales developed to assess the Local Government's performance in each CSF. The model was empirically tested and validated using data collected from 85 Portuguese municipalities and the internal OE index calculated.

Given the critical role of Leadership (the prime of KBEM), this construct was analysed in detail. The key leadership requirements in an organisation committed to TQM and OE were identified. A model was then developed and used to measure, according to leaders' and staff members' views, Leadership Excellence in the Portuguese municipalities.

With the purpose of evaluating OE from the external stakeholders' perspective, a Business Scorecard (KBS) was created. Feedback from citizens - the key external stakeholders of a municipality - was collected in each dimension of the scorecard. Using similar procedures, the model was validated and the scores for each latent variable computed. The OE index thus calculated drew attention to possible gaps between internal and external perceptions and called attention to the need of measuring OE from different angles.

The system of performance measurement proposed is grounded in the CSFs identified and assesses performance from a multiple perspective by integrating feedback from the various stakeholders of an organisation. Therefore, it provides a more realistic assessment of performance and is expected to support the Local Government in its quest for Organisational Excellence.