Exploring the relationship between performance management and program impact: A case study of the job training partnership act

Programs that involve multiple levels of government may suffer from a principal‐agent problem: Lower levels of government may wish to pursue different objectives than the higher level of government that provides funding. One strategy for dealing with this problem is to establish a performance management system where units operating the program are accountable for meeting performance standards and are rewarded or sanctioned depending on how well they perform. Title II‐A of the Job Training Partnership Act provides training for economically disadvantaged adults and has operated under a performance management system since 1983 when the program was established. The federal government's goal for the program is to maximize impact on the employment and earnings of participants, but because control groups are not available for the 640 local programs, proxy measures of performance must be used. In this paper, data from an experiment in 16 sites are used to determine how closely measured performance corresponds to program impact. It is concluded that there is only a weak correspondence between the two measures and that the Department of Labor should avoid making significant rewards or sanctions based on the current performance management system. © 2000 by the Association for Public Policy Analysis and Management.