The validity of subjective performance measures: school principals in Texas and Denmark

Public management studies are increasingly using survey data on managers' perceptions of performance to measure organizational performance. These perceptual measures are tempting to apply because archival performance data or surveys of target group outcomes and satisfaction are often lacking, costly to provide, and are highly policy specific rendering generalization difficult. But are perceptual performance measures valid, and do they generate unbiased findings? We examine these questions in a comparative study of middle managers in schools in Texas and Denmark. The findings are remarkably similar. Managers systematically overestimate the performance of their organization, perceptual performance is only weakly associated with archival performance, and managers do not provide sophisticated assessment of performance by giving their organization credit for the constraints it meets or discounting the resources it has. Even worse, the use of perceptual performance measures seems to provide biased estimates when examining how management affects performance. This is due to both random measurement error and common source bias.