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While results-based performance measurement has become a common practice in governing relationships with external stakeholders, many nonprofits are struggling with severe tensions when implementing results-based management practices inside the organization. This article draws on performance management research in accounting and management to analyze why results-based management poses particular challenges for nonprofits. As its first contribution, the article conceptualizes dedication to values as a particular characteristic of nonprofit organizations that involves high role ambiguity among nonprofit staff. Second, it specifies a particular tension associated with results-based management practices in values-focused work: Results-based management helps to reduce role ambiguity, but by doing so it creates role conflict. Third, the article proposes the interactive use of results-based information as an approach to how organizations with a high dedication to values can increase role clarity for nonprofit staff, while avoiding role conflict. [ABSTRACT FROM AUTHOR]

This article combines research on incentives with nonprofit organization theories to derive three “nonprofit characteristics” that influence the use and effectiveness of incentive mechanisms in nonprofit organizations: the lack of undistorted contractible measures for the organization’s overall performance, the relevance of identified employee motivation and the social relationships between the organization and its stakeholders. Building on research from social psychology, the article argues for a more deliberate use of implicit (i.e., not contractually defined) incentives rather than a shift toward the increased use of performance contracts. Because implicit incentives are often subtle (without the need of formal justification to others) and emergent rather than planned, managers are frequently not aware of these mechanisms, and their deliberate use creates a major challenge. [ABSTRACT FROM PUBLISHER]