Performance indicators (PIS) are central to the Thatcher Administration's strategy for reforming the management of government. This paper reports on research into the development and use of PIS in government departments, public agencies and private businesses in the 1980s. This comparative approach shows that the problems of performance assessment and the methods adopted for the design of PI systems, cut across the public/private divide but are related to the specific characteristics of organizations and their environment. The paper further analyses various dimensions of PI systems ‐ notably, the measurement of quality and consumer satisfaction ‐ and examines their implementation and evolution. The lifecycle of PIS suggests a possible prescriptive theory: the ‘mature’ PI model seems to be characterized by being designer‐built, parsimonious and timely. The drive towards the development of PI systems, it is concluded, is likely to intensify in the 1990s, in response to the Next Steps initiative and as instruments for the regulation of privatized m