Management by objectives (known also as performance management) has been perceived as a promising steering method in the public sector since the beginning of the 1990s (Smith 1993, 1995; Kravchuk and Schack 1996; Ballantine et al. 1998; Ferreira and Otley 2009Verbeeten 2008). However, working out operative goals of public organizations seem to be a challenge because major objectives formulated by politicians are oft en unclear and difficult to measure (Rombach 1991; Lundquist 1992; Gray and Jenkins 1995; Lapsley 1999). It is known that public organizations’ services like school, health care, welfare care, collective transportation, infrastructure and cultural services are usually unprofitable. The Transportation Service for the Disabled in the Municipality of Gothenburg is an exception. It fulfilled most objectives and achieved a profit of 7,890,000 SEK for 2013, while the planned one was scheduled at 5,000,000 SEK. Maybe performance management used as the steering model caused that result but the criticism targeting management by objectives suggests that this method hardly can explain such a positive result. Brorström et al. (2005) and Grönlund and Modell (2006) argue that in Sweden management by objectives is usually used in combination with other control models. The purpose of this study is to describe and explain why the Transportation Service for the Disabled succeeded in 2013 and to provide practitioners nationally and internationally with some pragmatic ideas how to improve the efficiency and effectiveness of public services. We ask three sub-questions: How were the operative goals created within the Transportation Service for the Disabled? How were the operative goals followed up? What can be learned from this case study? The research is based on the analysis of state regulations, internal policy documents, reports and interviews with key respondents. The study shows that the performance management systems (PMS) in combination with a new organizational culture based on SMART solutions, mutual cooperation among staff, with local politicians and other stakeholders resulted in the increase of efficiency and even partly effectiveness. However, these findings deserve further research if there are other public administrations that succeeded because of using PMS and friendly organizational culture.
