Defining and measuring productivity in the public sector: managerial perceptions

The paper aims to identify what productivity means in the public sector, how it is measured and how it should be measured and improved, according to municipal authorities in managerial positions.

The approach is both theoretical and empirical. The first part is a literature review of research concerning public sector productivity. The second part presents findings of empirical research that is based on interviews and workshops with municipal authorities representing: special healthcare services; basic healthcare and social services; and educational services. The research has been carried out in the Päijät‐Häme region, Finland.

According to the results, there is a certain mismatch between perceptions concerning productivity and the potential that lies in this concept as a functional tool in the public sector's development efforts. Public sector productivity cannot be developed and discussed without taking into consideration the issue of effectiveness.

Deeper common understanding concerning productivity and effectiveness and their measurement is likely to facilitate municipal decision making and service processes in individual workplaces as well as within and among different spheres of authority – and thus facilitate mutual learning.

The paper contributes to development and application of productivity and effectiveness thinking in the public sector. It is linked to service excellence, performance measurement and management systems, creativity in process delivery and deployment of improvement techniques in the public sector. It is of interest both to researchers and to practitioners.