The authority of local government to establish and manage the local government-owned enterprises have been regulated in Government Regulation No. 25 the Year 2000 . Almost all local government in Indonesia have more than one local government-owned enterprises. One of the local government-owned enterprises by almost all regions in Indonesia is PDAM (Perusahaan Daerah Air Minum).
PDAM is one of the local government-owned enterprises that exist in some Indonesia areas. As one of the local government-owned enterprises, PDAM has the objective of organizing its strategic service function in the water sector independently to the community and to help local governments spur regional economic growth as one of the tools to increase local revenue source. In order to achieve the vision, mission, and goals, PDAM is required to always improve performance because the benchmark of the success of local government-owned enterprises is reflected in the performance.
Several studies on the financial performance of local government-owned enterprises have been done which resulted from assessment of financial performance and its contribution to PAD [1–4]. Research on the financial and non-financial performance of several local government-owned enterprises in Indonesia has been done by several researchers [5–7]
Local government-owned enterprises performance management has been still conventional, performance measurement based on DP3 (Daftar Penilaian Pelaksanaan Pekerjaan) that tends subjective. As a public service corporation, local government-owned enterprises needs to have effective strategy formulas that move all the elements in achieving the vision and mission that ultimately impact on the achievement of performance.
Local government-owned enterprises performance measurement has been done by BPKP based on financial statements, so that performance measurement like this cannot give a comprehensive performance. Improving the local government-owned enterprises performance needs to involve all elements by implementing performance-based management to improve local government accountability [8,9].
The performance measurement system that can help management comprehensively is a Balance Scorecard that has four perspectives: financial, customers, internal business processes and learning and growth perspectives . But the indicators in this concept cannot describe the comprehensive performance of local government-owned enterprises. Therefore, this study aims to reconstruct some indicators in four balance scorecard perspectives and implement the concept in PDAM.
2. Theoretical Framework
There are several theories that can be used as a reference in research on performance among others:
Resource-based theory (RBT)
Resources based theory suggests that firms have resources that enable companies to have the competitive advantage in order to have good long-term performance using enterprise resources to improve efficiency and effectiveness [11,12]. Therefore Resources based theory is highly appropriate to explain the research on comprehensive performance measurement.
All stakeholders have the right to obtain information on organizational activities . Stakeholder theories emphasize organizational accountability beyond financial performance, therefore the sustainability of the company requires the support of stakeholders because they are able to control the company's resources [14,15]. Therefore, this theory is very appropriate to be used as a foundation in research on performance, because customers and regulators are stakeholders.
The agency relationship is a relationship between the company owner (principle) and the manager of the company (agent) . The relationship between local government and local government-owned enterprises is the agency relationship. Local government gives authority to local government-owned enterprises to manage local companies. Therefore this theory is very appropriate as a foundation in research on performance, because local government as a principal and local government-owned enterprises as an agent has a tendency to maximize utility, because of a conflict of interest.
Balance scorecard is a model which provides a comprehensive framework that can translate corporate vision and strategy coherently consisting of four perspectives, namely financial, customers, internal business process and learning and growth . The advantages of Balance Scorecard in strategic planning system are able to produce the strategic planning which has comprehensive, coherent, measurable, balance characteristics through lagging indicator and lead indicator, so it has some advantages in clarifying the vision and strategy [17–19]. Balance Scorecard-based performance management requires companies to provide a significant contribution to achieving the vision and mission based on the company's basic values .
Local government-owned enterprises
According to the East Java Provincial Regulation No. 14 of 2012, the establishment of local government-owned enterprises aims to provide benefits to the community and increase the source of local revenues outside of taxes and levies . In order for increasing local revenues, so the local government-owned enterprises must be managed in proportion and professional in order to have a good performance. Determined 19 factors in formulating performance that led strategies to achieve the company's vision, mission, and goals . Performance measurement results from local government-owned enterprises used as a basis for assessing the success or failure of local government-owned enterprises in achieving the vision, mission, and goals of the corporation. In order for more comprehensive performance measurement, so the performance measurement should include financial and non-financial dimensions so can describe the quality of performance comprehensively .
3. Research Methods
The purpose of this research at measuring the performance of PDAM by implementing several new indicators of performance measurement comprehensively, therefore qualitative research methods more appropriate used in this research. Sources of data in this research are primary and secondary data. Primary data is obtained directly from the leaders and employees of PDAM, local government, and customers. Secondary data sources are obtained from the web, Badan Pusat Statistik or other sources related to the research object. Data collection techniques in this research through participatory observation, interviews with open questions and document review .
4. Results and Discussion
PDAM Madiun Performance measurement has been done by Badan Pengawas Keuangan dan Pembangunan (BPKP) so that the performance measurement is only from a financial perspective, and does not reflect performance measurement comprehensively. In this study, researchers have formulated some performance measurement indicators by developing the concept of the balance scorecard and adjusted to the local government-owned enterprises criteria, thereby reflecting performance comprehensive and measurable. The indicators are as follows:
Internal business process perspective
Learning and growth perspective
Training costs to employees costs
In the learning and growth perspective, the researcher formulated the indicator amount of employees ratio, the employees training and training costs as an indicator that better reflected the learning and growth process of the PDAM.
PDAM performance assessment results are presented in the table below:
Based on the result of research can be concluded that:
• PDAM need to build sustainability performance management by using indicators which reflect corporate's performance comprehensively, so according to with criteria desired by the corporate and stakeholders, especially local government as owner and communities as customers.
• The addition of several new indicators in the financial perspective, customers perspective, internal business process perspective, learning, and growth perspective proved to more reflect PDAM's performance comprehensively, so the concept can be used as a performance measurement tool sustainability.
• The result of analyzed by using some new indicators in balance scorecard concept shows that PDAM performance has included the good category with total score 466.25, thus the performance of PDAM has an expectation of the management, local government, and society.