For the past two decades, interest in the performance of local governments has become high in public management. The wave of performance consciousness has thus far diffused from developed countries to developing countries where decreasing public confidence and trust in government has made the implementation of performance management policies a way of improving public perception of government performance. Meanwhile, the implementation of such policies is often based on untested assumptions some of which constitute gaps in the literature. For instance, it is understood that performance management systems enable public organisations that provide services to satisfy citizens' demand for services. It is also assumed that mechanisms for managing organisational performance recognise and address the interests of multiple stakeholders in an organisational environment and that once performance management systems generate performance information, decision makers are likely to use that information to advance the goals of their organisations. This study explores these assertions by investigating performance management practices of local government authorities in Ghana. It sets out to understand how local governments manage organisational performance and what shapes their performance. It also examines the scope of a performance enhancing policy to determine whether it addresses multiple perspectives of organisational performance and the extent to which local government managers use performance information to improve service delivery. The study adopts a qualitative research approach by using data from interviews, focus group discussions, observations and documents to construct and interpret research findings. This research identified internal and external mechanisms for managing local government performance and found that central-local government relations allows the former to influence the latter's priorities by imposing on them, the national development policy, in ways that define development planning, performance reporting and local government controls. Following Kaplan and Norton (1992), a Balanced Score Card framework was used to examine the scope of performance indicators used to assess the performance of local governments under the District Development Facility. The findings reveal that performance indicators tend to be skewed towards financial and internal organisational aspects of performance rather than incorporating citizens' views about local government performance or promoting organisational learning, innovation and accountability. The findings offer insights for re-examining multiple principal-agent relationships at the local government level where the assessment of local government performance excludes the opinions of local residents and affects local governments' accountability to citizens. Although developing a culture of performance emerged as a key factor for improving local government performance, the findings revealed that the use of performance information by local government managers to make decisions on service delivery depends on the importance of performance information, their commitment to central government's priorities, reporting requirements of externally funded projects and public service motivation. This study concludes that the utilisation of performance information to improve service delivery is necessary but not sufficient without adopting an all-inclusive, citizen-centred approach woven into the formulation, implementation and evaluation of performance management systems in a developing country context.