A Performance Management Framework for Ensuring Organizational Sustainability of Water Utilities in Emerging Markets

Abstract

Purpose: The purpose of the paper is to develop a performance management framework (PMF) for water utility companies in developing countries to ensure their organizational sustainability.

Design/Methodology/Approach: This is a conceptual paper based on a critical literature review. There are 3 research questions: Why are water utilities in developing countries so often and pervasively nonperforming and unsustainable organizations? Would a more structured and rational approach to performance management by means of a performance management framework (PMF) be warranted in dealing with nonperforming water utilities in developing countries? If the PMF were warranted, what would it comprise of?

Findings: There is a need for an effectual PMF for water utility companies in developing countries, as water utilities are natural monopolies with limited exposure to market risks. In the absence of competition and an alternative for utilities’ services, the need arises for close oversight by the public to ensure performance adequacy and sustainability. In an environment of underdeveloped public accountability, common for developing countries, the efficacy of such an oversight would benefit from a structured PMF based on best international practices.

Such a PMF would need to be: (a) custom-tailored for the settings of developing countries; (b) user-friendly and intuitively coherent; (c) universally applicable in the conditions of developing countries; (d) sufficiently concrete and detailed to enable practical implementation.

Research limitations: The research is limited to urban drinking water utilities in developing countries.
Practical Implications: The proposed PMF could be embedded into the design of investment projects of international financial institutions (IFIs) with water utilities in developing countries.

Social Implication: The proposed PMF would contribute to mitigating significant social problems caused by deficiencies in drinking water supply, such as increased morbidity and mortality due to waterborne diseases.

Originality/value: Developed countries have established advanced practices and regulations for managing the performance of water utilities. However, for the circumstances of developing countries such regulations would be too diverse, complex and otherwise impractical. Most importantly, such regulations and practices are designed and conditioned for an environment with sound public accountability. Currently, there are no commonly accepted performance management guidelines for water utilities operating in environments with substandard public accountability.