ABSTRACT: This study examines through extensive review of relevant theoretical and empirical literature on public sector performance measurement, with a view to realign performance measurements across the public sector. Many public organizations have been under great pressure in recent years to increase the efficiency and transparency of outputs, to rationalize the use of public resources and to increase the quality of service delivery and the outcomes.
A number of theories have been discussed to give theoretical framework to the measurement system in the public sectors. Stakeholders’ theory for instance clearly explains why there is diversity in public sectors performance measurement. The major findings on public performance measurement, reveals that Public sector organizations have recently adopted multidimensional performance measurements in order to respond to the increasing dissatisfaction of the public stakeholders in the use of traditional measures. A solution to these problems has been presented in the form of goal-directed and multidimensional models for performance measurement, such as the Balanced Scorecard which shows a clear relationship between financial measures and non financial performance measures.The attempts to re- align public sector performance measurement has not been easy given the nature of the public sector as being a monopoly, however, there is good development in the sector towards embracing better indicators for measurements. The review has looked at different methodologies used for each study, factors influencing the choice of different performance indicators and finally explaining reasons for the diversity in performance measurement in the public sector.

KEY WORDS: Public sector, performance measurements, performance paradox, and stakeholder-theory.