Since 1980s the traditional rule-driven Public Administration has been gradually changed by New Public Management (NPM) for well established organizational paradigms, standardization and professionalism. Public organisations are an integral part of the political-administrative system and NPM’s market-based approach provide a successful guide to the government for managing better performance. NPM emerged from new organizational phenomenon to enhance moral standards in public services. Horton and Farnham (1999:26) emphasised, ‘the new public management was merging traditional public administration with the instrumental orientation of business management’. Therefore public management reform helps government to restore public faith on the political-normative debate about the development of the public service. In general the government need to provide satisfactory, efficient and quality services at a low price to the people as a consumer. NPM is able to change the style of governance and administration in the public sector and therefore Pollitt and Bouckaert(2004:8) defined, ‘Public management reform consists of deliberate changes to the structures and processes of public sector organizations with the objective of getting them to run better’. There are many debates about NPM, among them privatisation policy is one of the highlighted topic in UK.
PUBLIC ADMINISTRATION VS NEW PUBLIC MANAGEMENT(NPM):
NPM is the modified version of Public administration. The highlighted change is that, instead of focusing solely on administration side, government is now implementing management based neo-liberal state and economy. Pollitt and Bouckaert(2004:8) defined, ‘Public management is a merger of the normative orientation of traditional public administration and the instrumental orientation of general management’. According to Horton and Farnham(1999:37–38) the key contrasts between public administration and public management systems are:
· The success criteria for administrative systems are expressed in general terms with one of arbitration and rule interpretation role. In contrast, manager is a protagonist, opportunities for the economical and efficient uses of resources. He takes initiatives with clear goals and objectives, to achieve quantitative targets.
· The key features of administrative systems were mechanistic structure, limited delegation, long chains of command, narrow spans of control, extensive bureaucratisation, and defensive and passive behaviour. On other hand, managerial systems tend to have more flexible structures that are task-oriented with less hierarchy, maximised individual discretion, and have high levels of decentralisation and wider spans of control.
NPM is aiming to decline the dominance of public sector by the civil servant and politician; therefore it will increase freedom of an individual managerial accountability. Christensen and Laegreid(2001:13) advocated, ‘the external organisation is no longer dominated by the administration’s legal subordination to the political leadership and the internal organisation is no longer dominated by a strict hierarchy and rules’. In NPM, the most influential change is to break the bureaucratic structure in human resources. For example, in administrative system people used to promote based on their length of service, rather than performance. Now, hands-on professional management is getting opportunity to lead the public sector. Therefore they are introducing discretionary control of an organisation, explicit standards of performance, and private sector management techniques to increase competition and decentralization. However, human behaviour is always motivated with self-interest; therefore there is risk that over flexibility could hamper managerial ethic such as management in American Energy Company ‘ENRON’ involved with corporate scandal. Moreover professional management is still demandable for social progress. Economic productivity could not achieve without skilled and effective management due to lack of discipline in workforce and application of technology. Therefore NPM often describe as the marriage between managerialism and agency theory.
Government plays the role of agent in public administration, where principal are public/stakeholders. In this situation, it is difficult to negotiate between principal and agent. But in Public Management system it is possible, since here manager plays the role of an agent. The problem for agency theory is that agents take advantage because principal have lack of knowledge and are dependent on agent.
Under NPM the public/stakeholders can observe the agent’s behaviour; therefore they could offer incentive to received best output. Here agents are working by their own interest, so productivity decision is always favourable. However, if publics/stakeholders have no information about the agent’s behaviour, then agents are able to pursue their own aims until to satisfy the principal. Therefore, due to fixed wage contract the agent bears a certain amount of risk. This result is true if the principal is risk-neutral and the agent is risk-averse. Here, due to agent’s minimum effort, productivity decisions are not competitive.
IMPROVEMENT DRIVE OF NPM:
The public sector improvement due to implementation of NPM is noticeable in all around the world. Moreover as a sample, we could demonstrate the development of British Public Sector.
Financial control by introducing programme budgeting system has been one of the most successful parts of the NPM reform. Two particular changes have been driven, one is to restrain the growth of public expenditure, and the other is the performance improvement within public sector. For example, government in Britain often use performance report for crime control and financial report for reducing the growth of public expenditure.
Increasing managerial control is another successful part of NPM which includes decentralization and downsizing, contracted-out services, outsourcing of back-office and some management functions. In Britain, health care and housing service improvement is the witness of managerial control. Managerial control also helps to reduce transactional cost.
Information and Communication Technologies(ICT) advance is the best component of NPM. Rose and Lawton(1999:45) emphasised, ‘ICTs are vital to our appreciation and understanding of contemporary public management with a strong emphasis on the massive intensification that is occurring in the uses and flows of information in and around organisation of governance’. ICT is the new way of exploiting dramatic improvements in customer service. Therefore Eliassen and Sitter(2008:113) stated, ‘the digital revolution has led to new options for designing public sector and service delivery, and eGovernment has become the label for the set of developments’. In Britain, ICT is very popular for NHS patient booking and data record, Tax claim etc. It reduces burden of internal scrutiny and associated paperwork. There are also risk-factors for data loss and security breach such as HMRC data loss scandal 2007 and MoD data loss scandal 2008 were two major incidents. Still ICT make the public sector more efficient, and gives citizens easy access to transparent information.
In summary, the contribution of NPM is greater than any of its shortfalls. Pollitt and Bouckaert(2004:128) expressed, ‘The achievement of system improvements may be counted as a kind of ‘result’, in so far as a systems improvement leaves the entire governmental system more flexible, more quickly responding, with a higher capacity to learn and adapt, and so on’.
GLOBAL PHENOMENON & CONVERGENCE:
In many countries, improved performance and emphasis on economic norms and values has been a central feature of public management reform. The Organization for Economic Cooperation and Development(OECD) reported in 1995 that ‘a new paradigm for public management has emerged, aimed at fostering a performance-oriented culture in a less centralized public sector’. NPM trend spread among the Anglo-Saxon countries and then followed other countries. Every country has their own culture and value therefore they do not have an equal capacity to implement NPM; however they use their own desired reform for development. Eliassen and Sitter(2008:63) defined, ‘the UK alongside the USA in the category of ‘liberal’ states, France and Germany closer to a more ‘corporatist’ type, while the Netherland and the Scandinavian states represent a type of ‘social democratic’’.
According to Pollitt’s(2002) four stages of convergence, discursive and decisional convergence are manipulated in maximum NPM countries. Here government inviting public to contribute their opinion for part of government’s plan and legislation. This also helps politicians to maximise their chance of re-elected.
Government cannot relinquish control of huge public enterprises as this can lead to reduced ability to steer the economy. As part of Anglo-Saxon country, UK had taken massive privatisation initiative. Pollitt and Bouckaert(2004:170) stated, ‘the UK Conservative governments of 1979-97 ‘returned’ roughly half the public sector-and approximately 650,000 employees-to private ownership. The nationalized industries shrunk from 9% to less than 5% of GDP’.
Although in UK, privatizations for British Telecom seem to have been popular but water and British Railway run against public opinion. Here, government gained maximum price for selling those assets but public suffered for higher charges and poor service till now. As monopoly business, those services often increase their charges without any performance improvement.
UK has some success at restraining government expenditure, but still public sector continues to finance and deliver core goods and services such as health, education, R&D, criminal justice, social security etc. As part of Social policy reform, government removed unemployment benefit and introduce the ‘jobseekers’ allowance’ where entitlement was dependent on applicant’s diligence in seeking work. Other example, Point based working class housing subsidy was replaced by social housing benefit for unemployed homeless people. Moreover social policies and management such as school, Pension, Housing benefit, Health service, community care etc. are also modernizing over time.
New Zealand is a rapid mover for NPM approach, where government has commercialized many public organizations, transferred trading activities to public corporations, and decentralised resources. Australia used to have complicated structure between a federal government and states, but after reform both governments were responding in similar economic and intellectual context. However in America NPM initiative is weaker due to extreme pluralism political characteristic and weak presidential commitment to securing institutional reform.
In Continental European contexts Belgium, France, Finland, Germany, and Italy-are structurally and culturally less hospitable to NPM ideas, but expected to respond by developing a different reform mix of their own; such as France’s health care reform and Swedish public sector reorganisation. Pollitt and Bouckaert(2004:145) described about OECD countries, ‘there have been significant changes in the nature of politics in many OECD countries, quite apart from the impact of management reforms. Specifically, there has been an erosion of the perceived legitimacy of government and an increase in the volatility of most electorates’.
Among the Asian countries, Malaysia and Singapore are ahead for NPM reform. They have enjoying international standards competent civil service and strong political leadership. On the other hand, Bangladesh, Sri-lanka, Pakistan etc. countries less practicing NPM due to pluralist political system. Therefore, their economic growth is less than expectation. Samaratunge, Alam and Teicher(2008:28) stated, ‘Developing countries have been implementing NPM reform in order to improve efficiency and facilitate private sector involvement in the economy and to attract FDI, rather than merely embracing the concept of ‘small government’’.
NPM DEBATE AND ITS FUTURE:
In NPM structural countries, public should have access to read performance reports about teachers, police, social workers, social security, and specialist agencies, however most of the countries’ government deliberately hide report containing measuring the performance of members of Parliament or ministers. For example, MP’s expenses scandal in UK was never published by government.
The key feature of NPM is to decentralize power for public management. It is assumed that power is fixed quantum and therefore gain must be balanced by loss. According to Pollitt and Bouckaert(2004:165), ‘since not everyone can be “empowered” at the same time, who exactly is to be empowered against whom, and how, is a key test of cultural bias in visions of modernization’. Moreover Dent, Chandler and Barry(2004:48) also argued, ‘A barrier to developing effective strategic partnerships was identified as a lack of real delegated power to managers’. This contradiction could be minimised by distributing greater control between politicians, managers and public service users, each in their own side.
Economic foundation relies on Economic theory, which assumes that people will behave rationally but we cannot always predict it in NPM. Also economic theory cannot resolve all policy problems.
NPM focuses on private sector management technique but some of those techniques are not applicable to public service due to nature of business. As an example, supply of product depends on market demand but it is not predictable what the demand would be? In such case, we can only plan against forecasted demand based on historical data. Private management always rely on policy and policy could change any time, therefore it can have a negative impact to public services and de-motivate the sector in achieving results.
CONCLUSION:
NPM offers a collection of management tools which have been adapted and modified over time. NPM is therefore as one element in the quest for improved state capacity, alongside regional integration, privatisation and liberalisation with new management tools. To make NPM more successful, government’s need to stop interfering into the management’s role. The objectives and targets for management must be both clear and reasonably congruent with the demands and expectations of consumers. And politician should scrutinize ‘results’ and taking action if the results are below performance. Different organizations must work within the same, shared set of objectives and targets. At the end, the success of NPM reforms may be judged on the basis of how far they have moved the system in the direction of this vision.
REFERANCES:
· Christensen, T. and Laegreid, P. (2001) “New Public Management, The transformation of ideas and practice”, Aldershot: Ashgate Publishing Limited.
· Dent, M., Chandler, J. and Barry, J. (2004) “Questioning the New Public Management”, Aldershot: Ashgate Publishing Limited.
· Douma, S. And Schreuder, H. (2002) ‘Economic approaches to organizations’, 3rd edition, Essex: Pearson Education Limited.
· Eliassen, K.A. and Sitter, N. (2008) “Understanding Public Management”, London: SAGE Publications Ltd.
· Flynn, N. (2007) “Public Sector Management”, Fifth edition, London: SAGE Publication Ltd.
· Horton, S. and Farnham, D. (1999) “Public Management in Britain”, London: Macmillan Press LTD.
· Organization for Economic Co-operation and Development (1995), Governance in Transition: Public Management Reforms in OECD Countries (Paris: OECD).
· Pollitt, C. and Bouckaert, G. (2004) “Public Management Reform – A comparative analysis”, Second Edition, Oxford: Oxford University Press.
· Rose, A. and Lawton, A. (1999) “Public Service Management”, Harlow: Pearson Education Limited.
· Samaratunge, R.; Alam, Q. and Teicher, J. (2008) “The New Public Management reforms in Asia: a comparison of South and Southeast Asian countries”, International Review of Administrative Sciences 2008-74-1-25; Sage Publication.
· Pollitt, C. (2002) “Clarifying convergence: Striking similarities and durable differences in public management reform”, Public Management Review (Vol. 4 Issue 1); Routledge Publication.
PUBLIC ADMINISTRATION VS NEW PUBLIC MANAGEMENT(NPM):
NPM is the modified version of Public administration. The highlighted change is that, instead of focusing solely on administration side, government is now implementing management based neo-liberal state and economy. Pollitt and Bouckaert(2004:8) defined, ‘Public management is a merger of the normative orientation of traditional public administration and the instrumental orientation of general management’. According to Horton and Farnham(1999:37–38) the key contrasts between public administration and public management systems are:
· The success criteria for administrative systems are expressed in general terms with one of arbitration and rule interpretation role. In contrast, manager is a protagonist, opportunities for the economical and efficient uses of resources. He takes initiatives with clear goals and objectives, to achieve quantitative targets.
· The key features of administrative systems were mechanistic structure, limited delegation, long chains of command, narrow spans of control, extensive bureaucratisation, and defensive and passive behaviour. On other hand, managerial systems tend to have more flexible structures that are task-oriented with less hierarchy, maximised individual discretion, and have high levels of decentralisation and wider spans of control.
NPM is aiming to decline the dominance of public sector by the civil servant and politician; therefore it will increase freedom of an individual managerial accountability. Christensen and Laegreid(2001:13) advocated, ‘the external organisation is no longer dominated by the administration’s legal subordination to the political leadership and the internal organisation is no longer dominated by a strict hierarchy and rules’. In NPM, the most influential change is to break the bureaucratic structure in human resources. For example, in administrative system people used to promote based on their length of service, rather than performance. Now, hands-on professional management is getting opportunity to lead the public sector. Therefore they are introducing discretionary control of an organisation, explicit standards of performance, and private sector management techniques to increase competition and decentralization. However, human behaviour is always motivated with self-interest; therefore there is risk that over flexibility could hamper managerial ethic such as management in American Energy Company ‘ENRON’ involved with corporate scandal. Moreover professional management is still demandable for social progress. Economic productivity could not achieve without skilled and effective management due to lack of discipline in workforce and application of technology. Therefore NPM often describe as the marriage between managerialism and agency theory.
Government plays the role of agent in public administration, where principal are public/stakeholders. In this situation, it is difficult to negotiate between principal and agent. But in Public Management system it is possible, since here manager plays the role of an agent. The problem for agency theory is that agents take advantage because principal have lack of knowledge and are dependent on agent.
Under NPM the public/stakeholders can observe the agent’s behaviour; therefore they could offer incentive to received best output. Here agents are working by their own interest, so productivity decision is always favourable. However, if publics/stakeholders have no information about the agent’s behaviour, then agents are able to pursue their own aims until to satisfy the principal. Therefore, due to fixed wage contract the agent bears a certain amount of risk. This result is true if the principal is risk-neutral and the agent is risk-averse. Here, due to agent’s minimum effort, productivity decisions are not competitive.
IMPROVEMENT DRIVE OF NPM:
The public sector improvement due to implementation of NPM is noticeable in all around the world. Moreover as a sample, we could demonstrate the development of British Public Sector.
Financial control by introducing programme budgeting system has been one of the most successful parts of the NPM reform. Two particular changes have been driven, one is to restrain the growth of public expenditure, and the other is the performance improvement within public sector. For example, government in Britain often use performance report for crime control and financial report for reducing the growth of public expenditure.
Increasing managerial control is another successful part of NPM which includes decentralization and downsizing, contracted-out services, outsourcing of back-office and some management functions. In Britain, health care and housing service improvement is the witness of managerial control. Managerial control also helps to reduce transactional cost.
Information and Communication Technologies(ICT) advance is the best component of NPM. Rose and Lawton(1999:45) emphasised, ‘ICTs are vital to our appreciation and understanding of contemporary public management with a strong emphasis on the massive intensification that is occurring in the uses and flows of information in and around organisation of governance’. ICT is the new way of exploiting dramatic improvements in customer service. Therefore Eliassen and Sitter(2008:113) stated, ‘the digital revolution has led to new options for designing public sector and service delivery, and eGovernment has become the label for the set of developments’. In Britain, ICT is very popular for NHS patient booking and data record, Tax claim etc. It reduces burden of internal scrutiny and associated paperwork. There are also risk-factors for data loss and security breach such as HMRC data loss scandal 2007 and MoD data loss scandal 2008 were two major incidents. Still ICT make the public sector more efficient, and gives citizens easy access to transparent information.
In summary, the contribution of NPM is greater than any of its shortfalls. Pollitt and Bouckaert(2004:128) expressed, ‘The achievement of system improvements may be counted as a kind of ‘result’, in so far as a systems improvement leaves the entire governmental system more flexible, more quickly responding, with a higher capacity to learn and adapt, and so on’.
GLOBAL PHENOMENON & CONVERGENCE:
In many countries, improved performance and emphasis on economic norms and values has been a central feature of public management reform. The Organization for Economic Cooperation and Development(OECD) reported in 1995 that ‘a new paradigm for public management has emerged, aimed at fostering a performance-oriented culture in a less centralized public sector’. NPM trend spread among the Anglo-Saxon countries and then followed other countries. Every country has their own culture and value therefore they do not have an equal capacity to implement NPM; however they use their own desired reform for development. Eliassen and Sitter(2008:63) defined, ‘the UK alongside the USA in the category of ‘liberal’ states, France and Germany closer to a more ‘corporatist’ type, while the Netherland and the Scandinavian states represent a type of ‘social democratic’’.
According to Pollitt’s(2002) four stages of convergence, discursive and decisional convergence are manipulated in maximum NPM countries. Here government inviting public to contribute their opinion for part of government’s plan and legislation. This also helps politicians to maximise their chance of re-elected.
Government cannot relinquish control of huge public enterprises as this can lead to reduced ability to steer the economy. As part of Anglo-Saxon country, UK had taken massive privatisation initiative. Pollitt and Bouckaert(2004:170) stated, ‘the UK Conservative governments of 1979-97 ‘returned’ roughly half the public sector-and approximately 650,000 employees-to private ownership. The nationalized industries shrunk from 9% to less than 5% of GDP’.
Although in UK, privatizations for British Telecom seem to have been popular but water and British Railway run against public opinion. Here, government gained maximum price for selling those assets but public suffered for higher charges and poor service till now. As monopoly business, those services often increase their charges without any performance improvement.
UK has some success at restraining government expenditure, but still public sector continues to finance and deliver core goods and services such as health, education, R&D, criminal justice, social security etc. As part of Social policy reform, government removed unemployment benefit and introduce the ‘jobseekers’ allowance’ where entitlement was dependent on applicant’s diligence in seeking work. Other example, Point based working class housing subsidy was replaced by social housing benefit for unemployed homeless people. Moreover social policies and management such as school, Pension, Housing benefit, Health service, community care etc. are also modernizing over time.
New Zealand is a rapid mover for NPM approach, where government has commercialized many public organizations, transferred trading activities to public corporations, and decentralised resources. Australia used to have complicated structure between a federal government and states, but after reform both governments were responding in similar economic and intellectual context. However in America NPM initiative is weaker due to extreme pluralism political characteristic and weak presidential commitment to securing institutional reform.
In Continental European contexts Belgium, France, Finland, Germany, and Italy-are structurally and culturally less hospitable to NPM ideas, but expected to respond by developing a different reform mix of their own; such as France’s health care reform and Swedish public sector reorganisation. Pollitt and Bouckaert(2004:145) described about OECD countries, ‘there have been significant changes in the nature of politics in many OECD countries, quite apart from the impact of management reforms. Specifically, there has been an erosion of the perceived legitimacy of government and an increase in the volatility of most electorates’.
Among the Asian countries, Malaysia and Singapore are ahead for NPM reform. They have enjoying international standards competent civil service and strong political leadership. On the other hand, Bangladesh, Sri-lanka, Pakistan etc. countries less practicing NPM due to pluralist political system. Therefore, their economic growth is less than expectation. Samaratunge, Alam and Teicher(2008:28) stated, ‘Developing countries have been implementing NPM reform in order to improve efficiency and facilitate private sector involvement in the economy and to attract FDI, rather than merely embracing the concept of ‘small government’’.
NPM DEBATE AND ITS FUTURE:
In NPM structural countries, public should have access to read performance reports about teachers, police, social workers, social security, and specialist agencies, however most of the countries’ government deliberately hide report containing measuring the performance of members of Parliament or ministers. For example, MP’s expenses scandal in UK was never published by government.
The key feature of NPM is to decentralize power for public management. It is assumed that power is fixed quantum and therefore gain must be balanced by loss. According to Pollitt and Bouckaert(2004:165), ‘since not everyone can be “empowered” at the same time, who exactly is to be empowered against whom, and how, is a key test of cultural bias in visions of modernization’. Moreover Dent, Chandler and Barry(2004:48) also argued, ‘A barrier to developing effective strategic partnerships was identified as a lack of real delegated power to managers’. This contradiction could be minimised by distributing greater control between politicians, managers and public service users, each in their own side.
Economic foundation relies on Economic theory, which assumes that people will behave rationally but we cannot always predict it in NPM. Also economic theory cannot resolve all policy problems.
NPM focuses on private sector management technique but some of those techniques are not applicable to public service due to nature of business. As an example, supply of product depends on market demand but it is not predictable what the demand would be? In such case, we can only plan against forecasted demand based on historical data. Private management always rely on policy and policy could change any time, therefore it can have a negative impact to public services and de-motivate the sector in achieving results.
CONCLUSION:
NPM offers a collection of management tools which have been adapted and modified over time. NPM is therefore as one element in the quest for improved state capacity, alongside regional integration, privatisation and liberalisation with new management tools. To make NPM more successful, government’s need to stop interfering into the management’s role. The objectives and targets for management must be both clear and reasonably congruent with the demands and expectations of consumers. And politician should scrutinize ‘results’ and taking action if the results are below performance. Different organizations must work within the same, shared set of objectives and targets. At the end, the success of NPM reforms may be judged on the basis of how far they have moved the system in the direction of this vision.
REFERANCES:
· Christensen, T. and Laegreid, P. (2001) “New Public Management, The transformation of ideas and practice”, Aldershot: Ashgate Publishing Limited.
· Dent, M., Chandler, J. and Barry, J. (2004) “Questioning the New Public Management”, Aldershot: Ashgate Publishing Limited.
· Douma, S. And Schreuder, H. (2002) ‘Economic approaches to organizations’, 3rd edition, Essex: Pearson Education Limited.
· Eliassen, K.A. and Sitter, N. (2008) “Understanding Public Management”, London: SAGE Publications Ltd.
· Flynn, N. (2007) “Public Sector Management”, Fifth edition, London: SAGE Publication Ltd.
· Horton, S. and Farnham, D. (1999) “Public Management in Britain”, London: Macmillan Press LTD.
· Organization for Economic Co-operation and Development (1995), Governance in Transition: Public Management Reforms in OECD Countries (Paris: OECD).
· Pollitt, C. and Bouckaert, G. (2004) “Public Management Reform – A comparative analysis”, Second Edition, Oxford: Oxford University Press.
· Rose, A. and Lawton, A. (1999) “Public Service Management”, Harlow: Pearson Education Limited.
· Samaratunge, R.; Alam, Q. and Teicher, J. (2008) “The New Public Management reforms in Asia: a comparison of South and Southeast Asian countries”, International Review of Administrative Sciences 2008-74-1-25; Sage Publication.
· Pollitt, C. (2002) “Clarifying convergence: Striking similarities and durable differences in public management reform”, Public Management Review (Vol. 4 Issue 1); Routledge Publication.
