Although performance management processes are widely assumed to be beneficial in improving organizational performance in the public sector, there is insufficient empirical evidence to back this claim. In this article, the authors examine the impact of performance management practices on organizational effectiveness in a particular segment of the public transit industry in the United States. The analysis utilizes original survey data on performance management practices comprising both strategy formulation and performance measurement in 88 small and medium‐sized local transit agencies in conjunction with comparative outcome data drawn from the National Transit Database maintained by the Federal Transit Administration. The results provide evidence that more extensive use of performance management practices does in fact contribute to increased effectiveness in this segment of the transit industry.

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As performance management systems gain popularity in police agencies, they are increasingly being criticized for their ineffectiveness at reducing crime and for encouraging abuse of authority. Scholars and practitioners, however, argue that these systems can be effective if they are implemented properly with the use of best practices. This article contributes to this debate by evaluating the impact of performance management systems and associated best practices on improving police performance. An analysis of primary survey data of 308 U.S. police agencies shows that performance management systems are effective tools in helping reduce crime across almost all crime categories. However, the best practices of performance reporting to citizens and providing discretion to officers have no significant impact on crime reduction, while consulting officers in the target‐setting process has a negative impact on police performance.

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This study is a continuation of previous work that emphasizes an alignment between the internal management (strategy formulation) of public organizations and their environment (strategic stance). As public organizations formulate strategy through strategic planning or logical incrementalism, they relate to their external environments through the strategy stances of prospector or defender. Current research asserts that organizations with a prospector stance perform better when they adopt logical incrementalism, whereas organizations with a defender stance perform better when they formulate their strategy through formal strategic planning (FSP). Our study on the transit industry, however, could not find support to these assertions.