Performance-based accountability systems at the organizational level: effects of a school program

Abstract Public organizations have widely adopted performance measurement practices that carry significant consequences for both organizations and their employees. This article proposes that the design of these performance-based accountability systems plays a crucial role in shaping organizational performance. First, we develop a typology of performance-based accountability systems, proposing that strong incentives aimed at the organization, rather than the individual employee, may help mitigate the risk of dysfunctional behaviors. Second, we study an educational program that unlike prevalent systems offers substantial economic rewards exclusively at the school level, rather than individual teacher rewards or school-wide sanctions. Using nationwide data on all students and their parents, we employ both a difference-in-differences approach and a regression discontinuity design to identify the impact of the program. Despite the substantial economic incentives, our results indicate only modest effects on the targeted students and no evidence of unintended negative consequences. These findings contribute to the broader literature by offering insights into how the design of performance-based accountability systems influences organizational performance, both in terms of intended results and unintended effects.