|
isbn 0415243637, pages 57 - 76]
Chapter 4
Explaining the New Public Management
The importance of context
Norman Flynn
Ferlie et al. al. (1996) made
a four-part classification of NPM approaches, based on four diagnoses
of the problem by government. Their models were the efficiency drive;
downsizing and decentralization; 'in search of excellence;' and 'public
service orientation'. Peters (1996) also proposed a four‑part
taxonomy of models of governing, market, participative, flexible and
deregulated, which was also related to different diagnoses of the
problems seen by governments. Our work (Flynn and Strehl 1996) of
the same year shied away from trying to classify the management changes
in seven European countries because we were still trying to identify
the changes, their causes and consequences. We did, however, find
some big differences among apparently similar countries and sought
some tentative explanations for those differences. Ferlie et al. acknowledged
different ,national type' contexts as well as sectoral differences
while Peters's analysis, although geographically wide‑ranging,
emphasizes the differences between sectors as the main determinant
of the applicability of each model.
Much of the debate about convergence and difference
has been concerned with sub-groups of the OECD countries, the English‑speaking
countries sometimes referred to as Anglo-Saxon or Anglo-American (Kickert
etc.) and Japan used as the only non‑Western example. A parallel
debate has been carried on in the literature on public sector management
and economic development. Kiggundu (1998) for example examines the
context in which civil service reform in Africa has rarely been successful.
Discussing the institutional capacity for good government in six poor
countries, Hilderbrand and Grindle (1997) produced a typology of the
economic, political and social conditions, which they call the (action
environment', and the 'public sector institutional context' or the
existing arrangements within the state.
McCourt and Minogue (2001)
take an explicitly contingency approach to the explanation of differences
between approaches to management. He posits a four‑part classification
of approaches to public management, one of which is emerging and labelled
'strategic management'. The other three are 'Public Administration',
the 'Washington Model' named after the 'Washington consensus' and
NPM.
This
chapter examines the proposition that different contexts generate
different discourses, including different diagnoses of the problems
thatgovernments are seeking solutions to. The diagnoses do not arise
automatically from the 'objective' problems but are constructed within
economic, political, institutional and cultural contexts. It also
asks how the contexts shape the decisions that are made about what
to do about the problems as defined. As with the diagnoses, it asks
whether contexts have an influence on decisions which are not likely
to be made on objective or 'technical' criteria. Some writers have
argued that there has been a small set of decisions or solutions to
the problems of managing the public sector and that these decisions
are converging around a common set. Governments facing similar problems
may arrive at similar solutions: after all, communication about what
governments do is now easily available to policy makers and managers
and there seems to be a convergence around a set of market‑oriented
ideas about what governments do and how they behave and should behave.
There has also been a counter‑argument that there persist differences
among governments and what they do and how they do it. These differences
are the result of contexts and are not simply the result of different
stages of development towards a single, convergent ideal type, national
conditions differ and therefore so do national practices. The arguments
are not necessarily completely contradictory. At a very high level
of generality, then all governments are similar: all (or almost all)
are concerned with the efficiency with which their public servants
work, the standards of public services, the deleterious effects of
corruption on economic development. At a fine level of detail, differences
will always persist. Researchers will always be able to find differences
in budgeting processes or personnel practices or the degree to which
competition is applied in service provision.
Both are correct and this chapter
is not designed to contribute to either side of this perpetual dichotomy.
It looks for explanations for the significant differences in how governments
discuss their public sectors and behave towards them. It also asks
whether there are elements of the context that make implementing change
easier or harder. Its third ambition is to raise questions that might
be useful in making international comparisons of public management
and public management reform. There is a growing interest in comparisons
and a growing number of territories used in the comparisons: Pollitt
and Bouckaert (2000) include ten states in their study of public management
reform. The purpose of comparative work varies. Our study tried to
map the changes that were happening in management in seven European
countries and tried to find patterns of difference and similarity.
We tentatively offered some explanations for the differences in the
constitutional and legal frameworks and in cultural attitudes to the
state as constraints on management changes. Pollitt and Bouckaert
link national politics to management arrangements and changes. Usually
'reforms' or significant changes in management arrangements are the
'dependent variable'. In this case what is to be explained is the
diagnosis of the problems as expressed by governments and other agencies,
the decisions made about what to do about them and the degree of difficulty
experienced in implementation of the changes.
At a macro-level, the actions
with which we are concerned include changing the portfolio of activities
carried out by government and therefore the size of the public sector,
measured either by the money spent or the numbers of people employed.
The most evident of these is the privatization of state industries
in manufacturing, public utilities, transport and telecommunications.
These changes have been most apparent in Europe, although experience
has been patchy: telecommunications has largely been privatized; railways
are sometimes state owned, sometimes privately owned and sometimes
in mixed ownership; many countries still have state-owned industries.
Other states have privatized the railways, e.g. Japan, and many states
have divested themselves of state-owned enterprises, especially if
they have been through 'structural adjustment programmes' imposed
by lenders. There has been little sign of privatization or a shift
in the activities undertaken by the state in the United States or
Canada.
At a micro-level, the changes with which we are concerned
are the ways in which the remaining activities in the public sector
are managed, including restructuring to create more accountable and
manageable entities, the use of outsourcing, financial management
and accounting, performance management, including customer service,
and personnel management. In these areas there is a wide range of
experience that has caused academics to doubt the notion of a single
label of 'new'. The argument is that within general categories of
'reforming' or even 'NPM' there are differences between countries,
in the three areas of discourse about problems and their solutions,
decisions about what to do and in implementation. Differences in discourse
may be less pronounced than differences in the other two areas, because
there seems to be a fairly common 'meta-language' (Lynn 1998) that
is used to describe, diagnose and prescribe management problems and
solutions. The differences include:
§
the degree
to which sectors or services are in practice transferred from the
public to the private sector;
§
the degree
to which markets are actually established, whether structures are
decentralized in practice and the degree to which control is maintained
in a small number of central institutions;
§
whether financial
planning and control really switches from control over inputs to control
through outputs or outcomes;
§
whether tiers of management are removed or merely
re‑labelled;
§
whether the recruitment and promotion of staff
is organized through a labour market or not;
§
whether customer orientation is based on empowerment
of service users, on the development of direct democracy, on market‑research
type consultation processes;
§
whether performance
management is carried out through devolved decision-making and an
emphasis on results or through centralized controls;
§
a variety
of structural changes;
§
different degrees of reliance on NG0s in service
delivery.
This chapter tries to spread the net fairly wide in
its attempt to catch or at least identify the independent variables
in the contexts in which governments operate. Contexts are divided
into external and internal. The definition of the external context
extends slightly that of Hilderbrand and Grindle. It includes the
macro‑ and micro‑economic environment; political conditions;
political positions adopted by parties; the immediate problems facing
governments and the institutional context in which changes are proposed,
including the prevailing managerial climate, national culture, the
socio‑technical systems in the sectors affected and the institutional
capacity for change.
The purpose is not to define
some formula for 'best practice'. The argument is that practice can
be explained, to some extent, by reference to the context in which
practices operate. It is also that the success of changes at the level
of proposals and implementation is to an extent contingent. Certain
practices are more likely to be successful than others, but that success
is as likely to be contingent on the context as on the skill with
which the practices are done. If these propositions are correct, then
the choice of approaches to management should be informed by analysis
of the contexts.
The argument is not that governments and others involved
in the process currently follow the processes identified in the contextual
model. The context affects the process but not necessarily at the
level of a systematic analysis. Indeed. the process may well start
with the choice of proposals, rather than an analysis of the problems
to be solved. It has often been argued that proposals such as those
implied in the 'Washington consensus' are a one-size-fits-all approach
that pays little attention to the local context. The same can be true
of locally developed solutions that may derive more
from the demonstration effect of other governments' presentation of
their successes in management reforms than from locally existing problems.
Macro‑economic conditions
Hood
(1996), using four indicators of economic performance and a 'high,
medium and low' classification of management changes, concluded that
the level of economic performance was not a sufficient predictor of
the level of implementation of NPM in the 1980s. Given the degree
of variation in the adoption of the 'new' management methods, many
other variables need to be included in the explanation, such as the
size of government, the degree of integration of government, and so
on. Hood finds that no single variable provides a good explanation
for all cases and calls for research that includes a contingency and
a diffusion approach. This has two implications for explanation. First,
that there is a set of practices that can diffuse through different
governments. Second, that as long as the contingent factors can be
identified and measured, including how they change, they will explain
changes in management practices. It could,on the other hand, be that
sufficient explanation requires an understanding of the interaction
of the variables, rather than treating each as an independent cause.
Macro-economic conditions do not automatically generate
policy responses from governments. If there is an inflation target,
price increases may trigger an interest rate rise, but the decision
to control inflation through interest rates is the result of a political
choice about the priority given to inflation over other economic indicators
as a goal of government economic policy. For more complex political
decisions as a result of macro-economic change, the political choices
are more complex. For example, if there is an unpredicted fiscal deficit
arising from reduced tax revenues in a recession there are various
possible political responses. At one extreme, such as in Denmark in
the late 1990s, the government can decide to meet all its previous
spending commitments and fund them through a combination of tax rate
increases and borrowing. At the other it can introduce austerity measures,
reduce entitlements to state support and try to reduce the size of
the public sector. Both are feasible political choices. In either
case, there could simultaneously be a decision to introduce public
sector reforms. In the first extreme case, it might be politically
expedient to try to increase efficiency and reduce running cost expenditure
as a gesture to those businesses and taxpayers who are asked to pay
higher tax in a time of reduced incomes. In the latter case, saving
on running costs might be part of the package of trying to reduce
expenditure. There are many variants between the two extreme cases.
Take the
opposite case: a government, such as Japan's between 1998 and 2001,
that tries to take counter-cyclical macro-economic measures to reflate
the economy. Since measures to encourage private spending failed,
the government decided to increase public spending, especially on
capital projects as a stimulus to the economy. Clearly, a period of
fiscal loosening was required, despite the very large accumulated
deficit. What effect might this have on the strength of efforts to
reform the public sector? Little effort because of the fiscal loosening?
Large effort because of the continuing recession and poor economic
performance? In the event, the mediation of the political process,
the loss of the hegemony of the LDP (Liberal Democratic Party) and
the unpopularity of elements of the civil service all proved to be
more important than the simple economic facts in explaining the calls
for drastic cuts in civil service numbers and improvements in efficiency.
The continued growth of employee numbers at local authority level
since the start of the recession in 1989 also needs to be explained
by local political factors rather than macro-economic management by
central government. The deficit itself is of political origin as the
LDP kept promises made at central and local level on spending and
projects while unable to face the political consequences of raising
taxes.
Our first category, shifting the boundary between the
private and public sectors and changing the size of the state, is
not a solution to short-term cyclical problems. It might be seen as
a long‑term solution if it reduces governments' commitments
to spend. Serious structural changes have never been achieved during
the period of a cyclical downturn. If governments do decide to shift
the boundary of the state for macro‑economic reasons it is because
they have a view about what is appropriate for governments to do and
how much resource they should control.
The appeal to the inevitability of 'globalization'
and its impact on national economics and governments is such a case.
New Zealand, a leader in both structural and management changes, made
its public sector reforms as part of a general liberalization of the
economy. The government claimed that an increase in productivity in
the public sector would make a direct contribution to national competitiveness
through its impact on the tax level. Corporatization of state activities
and privatization of those for which there was no overwhelming case
for them to be in the public sector were a major plank of the self‑imposed
structural adjustment programme (see Kelsey 1995). The management
changes within the public sector, including structural changes, introduction
of markets, separating policy‑making from service provision,
and so on, were also part of the package (see Boston et al. 1996).
However, not all governments faced with problems of national competitiveness
have taken this course of action. For example the French government
used the need to improve national competitiveness as the reason for
a series of 'modernization' efforts in the late 1980s and early 1990s,
contemporaneous with the New Zealand changes but different from them.
Management changes can have
little effect on budget deficits, especially in the short run. Reducing
the running costs of public services, as opposed to transferring responsibilities
to the private sector or to individuals, makes little difference to
overall public spending except in those states where the level of
spending is small in the first place and where most of the budget
is spent on the salary bill. The major expenditures of European states,
on welfare and education programmes, are unaffected by running‑cost‑productivity
improvement.
In summary, when we consider the effects of the macro‑economic
circumstances on public sector reforms, we have to distinguish between
the short‑term efforts to reduce deficits and the long-term
efforts to change the scale of state activities. We also need to consider
the political processes that translate a budget deficit into government
actions to cure it, or to wait until economic circumstances reduce
the deficit by increasing tax revenues and reducing welfare expenditures.
Different governments make different political choices. Governments
faced with different macro‑economic environments may also reach
similar conclusions, although for different reasons. The drive to
reduce costs and increase efficiency was not confined to governments
with budget deficits.
Micro-economic conditions
The
micro-economic context also has an impact of what sort of changes
are proposed and can be implemented. First, there is the question
of the state of the supply side. If governments wish to increase outsourcing
they have to have companies or third sector service providers to which
to outsource. Efforts to generate competition for supply of goods
and services where there is an established market, for example in
building or engineering work, will be more successful than in those
sectors where there is little supply, such as medical services in
states where the government has an existing near monopoly control
of hospitals, clinics and staff as is the case in most of Scandinavia.
Examples of problems in generating suppliers include the attempts
to generate private management of water supply services and fee collection
where companies do not yet exist in this sector (see, for example,
Batley and Larbi 1999).
The structure of the market also has an impact on the
success of competition policy. Oligopolies in sectors such as large
computer systems supply and weapons procurement reduce the cost advantages
of outsourcing.
Second,
there is the question of the labour market conditions facing governments
that want to introduce more flexibility in their public sector labour
markets. On the one hand, if there are few or no alternative job opportunities
for displaced civil servants and other pubic sector workers, a programme
of downsizing will meet with strong resistance. On the other hand,
if there are labour shortages of skilled staff, a programme of liberalization
of employment conditions will not improve the skill levels in the
public sector. More generally, Hilderbrand and Grindle cite the overall
level of development of labour skills as a constraint on the development
of capacity for economic development.
The micro-economic environment is also dynamic. A market
may be created if there is commitment to purchasing and if contracts
are written and managed in such a way as to generate the supplying
of materials to companies. On the other hand, mergers and acquisitions
among supplying companies can turn competitive markets into oligopolies
and cartels over time.
Political conditions
The
organization of power relationships through political institutions
also has an important impact on decisions and actions about the public
sector. A commonly invoked condition for successful change in the
public sector is the willingness of political leaderships to drive
through radical changes. Governments with large parliamentary majorities,
clarity about what they want to do and individual champions of change
are said to be an important element in breaking down resistance and
overcoming inertia. Governments that rely on coalition politics are
more likely to compromise when making changes that affect the interests
of coalition partners. Parties that rely on the support of people
such as civil servants or professionals for their survival in government
are also likely to be more timid about change. Examples include the
Lubbers government in the Netherlands in the 1980s, which had a radical
programme of reform but not a wide base of support in a system that
requires the development of consensus before changes are made. Various
attempts at decentralization of financial control in France have been
countered by the powerful Ministry of Finance, whose power and influence
was threatened by such developments. President Clinton's efforts to
make radical reforms of the US health insurance system were defeated
by an alliance of political opposition and the powerful insurance
industry.
Attempts
at civil service reform have also floundered on the rocks of political
patronage and the capture of institutions by party factions. Reduction
in the number of ministries and privatization of some functions in
Japan was stopped because of the potential loss of power bases by
important factions of the LDP. If political parties and their constituent
factions are closely allied to specific institutions and their powers,
it is more difficult to reform those institutions or to abolish or
slim them. The Italian parliament has sufficient members of the academic
profession to curtail managerial inroads into the universities.
Institutions or the professions
that staff them may also have support from their own constituencies,
other than through the political parties. If the medical professions
are held in high esteem they can call upon public support in their
resistance to unwanted managerial changes. The opposite may also be
true. When teachers are held in low esteem, for example, education
reforms are easier to implement than when they are cherished by other
teachers and parents. The status of civil servants varies from country
to country, from one extreme where they are poorly (and sometimes
rarely) paid, to the other, such as in France or Singapore, where
they are well paid and generally held in high esteem. Governments
may manipulate public opinion by praising or vilifying public employees,
but the process takes time. In some cases, popular support wanes because
of the perceived performance of the institutions. The Ministry of
Finance in Japan lost its high status gained from its perceived role
in helping bring about fast growth when growth slowed and corruption
scandals occurred.
Another protection against civil service reform is
the constitutional position of the civil service in relation to the
government. We found (Flynn and StrehI 1996) that where there were
strong and detailed administrative and constitutional laws, governmental
desires to bring about management changes were slower and had less
chance of success than in states where ministerial actions could be
implemented without legal and constitutional change.
The particular form that managerial change takes is
also influenced by the relative power of particular ministries or
commissions. When the Treasury is dominant (as in New Zealand in the
early 1980s) reforms will have an accounting flavour. When personnel
departments are important, emphasis is more likely to be on human
resource policies and practices. It is interesting that it took over
a decade of reforms in New Zealand before the personnel implications
of the changes were confronted, regarding recruitment, retention and
development of staff under the redesigned regime.
In
some states trade unions are powerful and can have an influence on
the form and implementation path of changes. Jamaica is one example.
These
issues are about the nature and structure of national politics. They
relate to some extent to what is called 'regime type', where types
are defined as dictatorships, autocratic, democratic, and so on. However,
it is not possible to read off the types of reforms directly from
regime type. Even dictatorships rely on coalitions of forces to stay
in power, and democracies have a variety of political processes. The
general point is that the political structures and processes have
an influence on the way that issues are raised and put on the reform
agenda. They also mediate the processes by which solutions are found
and policies are formulated and implemented. All change generates
winners and losers, whether they are changes to the functions carried
out by government, the size of the public sector, the way in which
services are delivered or the management arrangements of individual
departments and institutions. It would be unusual for there to be
a complete separation between the people making the choices and implementing
the changes and those affected by them. In some cases the people are
indistinguishable, since they belong to the same families and went
to the same schools. The upper reaches of the British, Japanese and
French civil service all have close connections with the upper reaches
of the legislatures and other branches of the state. This does not
mean that change is impossible, but the nature and speed of the change
will be affected by that political fact. Mutual obligations formed
by the connections' will inform the diagnosis and influence the actions
taken.
Where the connections are less close and there is clear
demarcation between the parts of the state and between the state and
the outside world, the political processes of change will be different
but they will still take place.
Another important political
condition is the degree to which people outside the country influence
decision‑making. In the extreme, a debtor country has to submit
to structural adjustment, privatization, management measures as well
as macro‑economic policies in exchange for loans. There are
also slightly more subtle pressures as small states operate to some
degree as clients of the USA or ex-colonial powers, following policies
that were formed outside the country in which they are being implemented.
The mechanisms for this are technical assistance missions, the World
Bank (and Inter-American Bank and Asian Development Bank), which import
ready‑made solutions such as down‑sizing, outsourcing,
privatisation, and so on, prior to diagnosis of the specific problems.
Political positions on the
public sector
As well as the political structures and positions being
important, the positions adopted by the parties about the public sector
are also a crucial influence on the analysis, diagnosis and actions
taken towards reforming the state. Obviously influential positions
were those of what became known as the 'New Right', despite the fact
that many of them were far from new. In brief these are:
§
that markets were more efficient than any other
method of allocation and what could be left to the market should be;
§
that all motivations are selfish, so managers should
not be allowed to make big decisions on budgets or services because
they will only serve their own interests and not those of the people
who they should serve;
§
that workers' motivations are the same and they
should therefore be tightly controlled;
§
that self‑reliance
is better than other‑reliance and therefore the state should
do as little as possible.
The consequences of these positions
for policy towards the public sector include privatization, cutting
back state functions, dictatorial management and the search for mechanisms
to bring managers under political control. For all the publicity that
these basic positions received, they were adopted by very few countries
and even in those where they were espoused or adopted, implementation
programmes were limited to a few states.
Linked but not identical is
the view that it is morally right for the public sector and its workers
and managers to suffer hardship just as other sectors have suffered.
Since industries are subject to intensified competition and are laying
off staff, closing plants, restructuring, de-layering and asking everyone
to work harder and smarter, then public sector workers should do the
same. If politicians have close connections with business, they will
be subjected to this moral argument and many will agree with it. The
result of the position is that the public institutions should be subject
to periods of staff cutting, restructuring, business process re‑engineering
whatever the impact on productivity or quality.
There is also the doctrine of 'modernization', in which
all the institutions, including businesses, democratic processes and
the public sector, should contribute to some sort of national renewal
and lead to greater national competitiveness in world markets. This
position was taken by the ruling parties in New Zealand and France
in the early 1980s, in Malaysia in the mid-1 990s and in Britain at
the end of the 1990s. The consequence of this position is that there
should be technical change and improvements at the customer interface
level of the organization.
A variant is the view that the civil service and public
sector in general are blocks to national and economic development.
They probably cannot be turned into 'engines of change' (or some other
mechanical metaphor) and should therefore be reformed sufficiently
to stop them putting a brake on development. Corruption and/or unnecessary
controls and 'red tape', which are part of the process of generating
bribes, slow down economic development and building and should be
rooted out. A variant is the US 'big government' line in which anything
that government does is detrimental to entrepreneurship and should
therefore be stopped. If this is not possible, then the public sector
should become more entrepreneurial. The 'reinventing' campaign in
the US was essentially legitimizing discretion at low levels of the
organization in opposition to the rule‑based culture of 'big
government'. It was about empowering the individual manager against
the system, rather than trying to change the system.
An alternative is consensual politics and a corporatist
approach. States with evenly balanced coalitions of a group of parties
have to have consensus building processes or frequent changes of leadership
and policy. The coalition building sometimes goes beyond parties and
includes representatives of workers, business, churches and other
sectors. The epitome of this approach is the Netherlands' consociational
democracy' (Lijphart), which has also been identified in Malaysia
(Jesudason (1996) coins 'syncretic state'), for example. In these
conditions,radical change is unlikely, as no party is likely to produce
a set of proposals outside the consensus. This is the case of reforms
in both the Netherlands and Malaysia, which have consisted of changes
in working practices, quality improvements, enhancement of the relationships
between government and citizens, rather than radical programmes of
privatization, restructuring or redefining the role of the state.'
Consensus and corporatism concern political process but also have
an influence on the positions likely to be adopted by the parties
involved in the processes.
So far we have discussed the
public positions of parties with regard to the public sector. Covert
positions include individual, faction or party enhancement. When politics
is organized mainly for personal gain, policies towards state institutions
may also be designed to gain power and reward. For example, a privatization
might be organized to benefit a faction, or it might be avoided if
a faction gains more from the institution's position in the public
sector.' Or a party may propose the creation of new institutions in
opposition to those in which the party's position is weak. The distribution
of powers and responsibilities among central and sub‑national
governments is often organized to maximise ruling party control. When
this form of power and reward‑seeking dominates politics, it
is difficult to predict the implications for public sector structure
and process reform which will depend on the relative positions of
the players.
Immediate problems
Politics
concentrates the mind on the short term. In democracies, elections
are the time horizon within which decisions are made. In autocracies,
public support is nurtured by visible events and displays. Policy
is often made in response to immediate events, especially negative
ones. Spectacular failures of the civil service or public authorities
generate demands for change. The response of the authorities to the
victims of the earthquake that struck Kobe, Japan, caused a huge drop
in confidence in the government and the ruling party and set off a
search for reforms. The economic crisis in Asia produced calls for
structural reforms in the relationship between government and the
private sector in many countries. The original reforms in New Zealand
were triggered by a balance of payments crisis.
Other events can be less spectacular and of longer
duration. Failures to produce adequate urban water supply, long delays
in registration of births, prolonged theft of public funds, visible
bribery beyond the norm, all put pressure on politicians to do something
to improve the situation. Sometimes the pressure comes from citizens
as individuals, sometimes as pressure groups and sometimes from businesses,
either within or outside the government's networks. Very poor performance,
or absolute failure, generates the necessity for some action. At a
lower level failure may be less spectacular but still apparent. It
becomes obvious when an education or health system is not working
to the satisfaction of the service users. Consistent failure leads
to legitimation problems for the government and/or the ruling party
or parties.
Among
immediate events we can also count fiscal crises: periods in whichthe
revenues collected are insufficient to pay the bills. Although the
causes may be cyclical, predictable and temporary or structural and
permanent, the occasion of a deficit and consequent borrowings (or,
in extreme, failure to pay salaries of state workers) triggers a policy
response. If the fiscal crisis results in borrowing, then the urge
for reform is reinforced.
Diagnoses
All the above conditions vary
from country to country. When governments decide what to do about
the public sector, they are influenced, at least, by all of these
factors. The diagnosis of the problem to be solved emerges as a response
to the interpretation of the short- and long-term problems and is
mediated by the political process.
Various ideal-type diagnoses
have emerged. Peters (1996) identifies four: the monopoly position
of government agencies in some services; the impenetrability of hierarchy;
the inflexibility of permanence; the rigidity of excessive internal
regulation. We could add to these: the state sector is too big because
it is doing things that it should not be doing; public services are
so unresponsive and ineffective as to generate public dissatisfaction
with government; the public institutions, although performing the
right functions, are inefficient and could do more with less; the
public sector is hindering economic development and growth.
Not all these diagnoses are mutually exclusive and
may appear in various combinations.
The
diagnoses do not arise automatically from some 'objective' conditions.
They are interpretations both of what is wrong and of what might be
done about it. Take Peters's first: the diagnosis that governments
should not have monopolies. In some states the question of a state
monopoly of prisons, for example, does not arise, whereas in others
private sector companies run most of the prisons. In those countries
where the state runs all the prisons, monopoly as a diagnosis of the
problem with prisons would only arise if there were the political
possibility of alternative forms of provision. Or take the second:
the fact that hierarchy prevents participation of workers and citizens
in the decisions made by the organization. If hierarchy is a cultural
norm and has been established for acceptable reasons, the existence
of the hierarchy would not arise as the diagnosis of a problem. Similarly with reform proposals
and implementation. Successful implementation of reforms requires
either that the change goes with the flow of the context, or that
the relevant element of context can itself be changed to allow the
reform to occur. Sometimes the proposals and implementation plans
are so far out of line with the context that it may be questioned
whether they were ever serious in the first place and were not simply
a rhetorical device to satisfy some important stakeholder.
There are three elements of
context that also influence the managerial solutions chosen and the
success of their implementation. The first is what might be called
the management climate or ideology. This means the approaches to management
that are current, known to politicians and others designing reforms
and likely to be acceptable to workers. The second, which has an impact
on the first, is certain aspects of national culture that have an
influence on the organizational cultures of the public sector. If
management arrangements contradict the prevailing culture they are
less likely to succeed. Third, there is a socio‑technical system
that operates in the sector(s) concerned. As in business organizations,
where management solutions that are appropriate in a nuclear power
plant might not work in a hotel, so solutions that are appropriate
in prisons might not work in tax collection departments.
The institutional context
The management climate or ideology
Management climate varies with geography, time and
sector. It consists of what companies and other organizations do,
what academics and consultants teach, advise and write about and how
management is represented in the media through stories of success
and failure and the creations of heroes and heroines and villains.
Politicians concerned about their approach to management are faced
with libraries full of books, consultants keen to be hired and a general
climate about what is currently in favour. They have to make some
choices.
The
centralization-decentralization debate has gone in cycles in management
thought. What companies do about how much autonomy divisions or units
they should have vis-a-vis head office depends both on the preferences
of managers and on the context in which companies find themselves.
Public sector changes have periods of centralization and decentralization.
A famous example is that of the self‑managing schools experiment
in Victoria State, Australia, which spread to many other places. The
experimental arrangements have now been reversed by the government
in Victoria because of its impact on equality of opportunity for pupils.
A third continuing debate is
about the choice between vertical integration and specialization.
The advantages of developing a high level of skill in a particular
activity are weighed against the advantage of being able to control
the whole of the production process. At any time, examples of both
solutions can be found in the private sector. Outsourcing is an example
of specialization in what is sometimes called 'the core business',
and private sector experience of this is evinced in support. Examples
of vertical integration, such as the European holiday industry with
its vertically integrating bookings, airlines and hotels, are ignored.
Approaches to quality also
vary. There are two opposed positions: that quality is best achieved
through detailed design and control; and that quality is achieved
through empowerment and participation. Both are used in approaches
to quality in the public sector, sometimes simultaneously.
A related issue is whether
products and services should be standardized (Fordism) or individually
designed for each customer, or at least having the appearance of being
such (post-Fordism). Manufacturing technology offers certain choices
of design and finish that allows customization: should services also
be customized?'
Apart from these five fundamental
choices, there are fashions that arise and are promoted from time
to time. Business process re-engineering is one example of a management
practice marketed and promoted by two authors, Hammer and Champney,
as if it was a new, discrete management process. More recent is the
fashion for 'strategic alliances', 5 which emphasizes cooperation
over competition, as a source of success. The 'new economy' has also
become fashionable, emphasizing use of the internet in service delivery,
call centres and efficient anonymity as a source of customer satisfaction.
Governments are busy smartening up their web pages and installing
or contracting for call centres.
Politicians are exposed to
these ideas and trends and filter them through their decision‑making
processes. The language of the fashionable ideas quickly appear in
documents, frequently with genuflection to 'private sector practice'
as if there was a single set of good practices in business.
National cultures
Hofstede
(1980, 1991) and Hampden-Turner and Trompenaars (1993) analysed large
samples of managers to see if there was a pattern of national cultural
characteristics that had an impact on the way organizations are managed.
Hofstede's sample showed four consistent dimensions: attitudes to
authority; the relationship between the individual and the group;
'masculinity' and 'femininity' attitudes to uncertainty. Hampden‑Turner
and Trompenaars identified seven dilemmas: universalism versus particularism;
analysis versus integration; individualism versus communitarianism;
inner‑directed versus outer‑directed orientation; time
as sequence versus time as synchronization; achieved status versus
ascribed status; equality versus hierarchy. The two lists overlap
somewhat.
In both cases, clusters of
characteristics were assigned to countries. If management processes
or management changes go against the flow of these clusters of characteristics
they are less likely to be successful than if they go with the cultural
flow. Although no detailed studies have been made of the impact of national cultures on public sector management, it is possible
to surmise the likely impact of culture on specific management reforms.
Authority and power distance
and achieved status and acquired Status
Some
reforms have involved reducing hierarchies and making individuals
responsible. Recruitment practices that open up labour markets replace
promotion through seniority with appointment on merit and performance.
The cultural limits on these changes are that the prevailing beliefs may be challenged.
If staff are unwilling to accept authority from those for whom they
have no respect or who do not have sufficient seniority then the old
hierarchies will reestablish themselves. A related cultural feature
is the willingness to accept responsibility for decisions. A hierarchy
which passes memoranda up and down to spread responsibility is fundamentally
challenged when authority and responsibility are forced on individuals.
The individual and the group and individualism and Collectivism
One aspect of personal responsibility is linking pay
and promotion to individual performance. Where the individuals subsume
their individuality within a group identity, individual appraisals
and individual performance pay schemes will become an empty ritual.'
Masculinity
and femininity These terms are shorthand
for styles of working and managing. They cover dichotomies between
competition and collaboration, caring values versus material success,
and so on (Hofstede 1991: 79‑108). They do not imply that all
women have feminine characteristics or that all men have the opposite.
Management changes in
the public sector have involved both changes from 'feminine' to 'masculine'
and vice versa. Regimenting the caring professions is an example of
the former. Promoting collaboration rather than competition might
represent the latter. Crudely, one would expect changes of the former
sort to be effective in places that have high 'masculinity index scores'
and the latter to be more successful in those that have low masculinity
scores.
Universalism and particularism This index relates to the preference
for applying rules universally to all cases and making individual
choices for particular cases. Clearly changes that increase individual
discretion will have problems in cultures wedded to the universal
application of rules.
Analysis versus integration This dimension concerns the
tendency to break problems into their component parts or to see them
as a whole and find a whole solution in the broad context. A tendency
to move towards management through effectiveness and management of
outcomes clearly requires integration rather than analysis. A tendency
towards analysis will favour management by outputs and individual
units and activities.
Inner-directed versus outer‑directed
orientation Inner-directedness is defined as a preference for looking
inwards in decisionmaking as opposed to taking signals from the environment.
Obviously it will be easier to create and manage outward‑looking
organizations in cultures that are conducive to that way of working.
Equality versus hierarchy
It
is not the intention to produce national culture stereotypes: Hampden-Turner
and Trompenaars take the trouble to avoid such a charge and even distinguish
cultures in different states in the USA. What such a set of categories
does, however, is highlight dimensions of underlying beliefs that
management changes might encounter. The reforms can either be designed
to comply with the prevailing culture or engage in a culture change
programme to alter it. Such programmes are not trivial since they
have to deal with deep-seated beliefs.
The socio‑technical system
Ferlie et al. said that the sector in which management
changes are implemented makes a difference to the success of the changes.
As in the business sector, the variety of products, services, technologies
and skills generate a variety of management approaches. Since the
industrial revolution it has been obvious that production lines require/are
based on the division of labour. Armies require hierarchy and obedience.
Policing requires a degree of autonomy for the officer at the scene
of a crime. Courts have to comply with laws and exercise their defined
discretion. Tax collection requires equal treatment of taxpayers.
Often management changes are
expected to be generalized across all public services and all sectors.
The anomalies soon become apparent. A pathology laboratory worker
famously responded to a 'customer care' initiative that she never
saw more than a few dozen cells of any patient. Any changes need to
take account of the nature of the service delivery system that is
involved.
The main variables are: Is
the service routine and rule-bound or does it require the operation
of discretion in everyday decision-making? Does the task have work
processes that come from the profession rather than the organization
(medical, engineering etc.)? Does the technology determine the working
arrangements? Are alternative technical delivery systems available?
Is the work to uncontroversial performance measurement?
The answers to these questions will form a strong context
in which decisions about increased decentralization, devolved decision-making
and managerial discretion are made. They will also provide strong
clues about how management control and accountability can best be
organized. General principles of management, whether derived from
the private or public sectors, do not provide specific answers about
how services should be managed. In addition to the above contextual
conditions, the content of the work is crucial.
Institutional capacity
A major constraint on management changes is the ability
of the people to carry them out. Reforms that rely on new costing
and accounting arrangements need accountants and book‑keepers
to carry them out. Performance management requires skills from middle
managers. Skills can be developed by training or acquired by hiring
people, but both processes take time and may lag behind the reforms,
making implementation slow and unsuccessful in the early years.
Crucially, a decision to provide
services by outsourcing needs not only a range of suppliers but also
the ability to write and monitor contracts with those suppliers. Batley
and Larbi (1999) identified the lack of skill in this area as a constraint
on the development of private urban water supply management in their
sample of poor countries. The difficulty of being a 'smart' purchaser
has been identified as a constraint on the development of contracting‑out
and market solutions (see, for example, Walsh), especially when the
services to be outsourced are complex and specialized.
Desired outcomes
The
real purposes of management changes is perhaps the hardest item to
disentangle from the language in use in official documents. The litany
of 'flexible, customer‑centred, responsive' and so on is always
a publicly stated aim. The politics of management change varies according
to the political configuration: reorganizations can be used to benefit
different factions; some reforms are designed to change the balance
of power between politicians and professionals.
The
ultimate outcomes are to gain or regain political support, whether
from the electorate or business, or other interests. The support may
be gained by cutting costs (and possibly taxes, although this has
rarely happened) or improving services. More radical changes, such
as moving the state‑private sector boundary, might well also
be an ultimate objective, introducing more opportunities for business
to operate in the areas previously occupied by the state.
In the real world of politics,
the connections between desired outcomes, diagnosis and proposals
maybe stretched or tenuous. Proposals may arise directly from the
political process and the objectives may remain covert.
Reform proposals normally arise
from some specific event or problem. A scandal exposes weakness; a
deterioration in service reaches the point of intolerance by the public;
an economic crisis exposes a country to outside influences; a party
sees electoral advantage in improving in public services Whatever
the event, the politicians and senior public servants, often advised
or informed by colleagues in other countries, and other outside agents
such as consultants, look for solutions to the problems. The desired
solutions are at different levels, from changing the role and functions
of the state to increasing efficiency and improving customer service.
The outcomes from those solutions may also vary: they may be to gain
electoral advantage for the ruling parts, to wrest control over public
services from professionals to politicians; to cut taxes: to improve
economic growth.
Conclusions
The argument has been, first,
that there are differences among countries and sectors in the way
management change is approached. Although at a highly abstract level,
governments use similar language to describe their reforms, in practice
there are different priorities and different objectives.
The context in which management
changes take place account in part for the differences in the proposals
and the success of their implementation. The elements of the context
are summarized in Figure 4. 1. The
importance of the elements varies among countries, and each country
will have its own particular set of contextual elements. Explanation
of a particular reform process and its implementation requires the
identification of the relevant context.
Implementation
of the solutions also takes place in a specific institutional context,
defined here as having four parts: the management climate, the national
culture as it impacts on organizational culture, the socio-technical
systems in the sectors to be reformed and the institutional capacity
for change.
The
positive and negative elements of the context need to be identified
if this analysis is to be used to improve the chance of successful
management changes. Some negative elements will be easier to change
than others. For example, if there is a strong national culture that
reinforces hierarchy and is comfortable with large power differences
and reluctant to individualize responsibility, then a reorganization
that removes tiers of management and devolves responsibility will
be difficult. Other approaches to performance improvement, such as
a hierarchical system of measurement and a collective responsibility,
would be easier to implement. Devolved management is much more likely
to be successful in a cultural climate that emphasizes individualism,
competition and the acceptance of individual responsibility.
The
context is not only important for the likely success of implementation
but also for the sorts of solutions that are proposed. Basic political
positions about the role of the state and the market strongly colour
the attitude to the big questions about state-private boundaries.
Positions about motivation and attitudes to the workforce also colour
the types of management arrangements that are put in place.
In addition to political positions
or attitudes, there are underlying structural attributes of the political
conditions, such as the degree of patronage, the relative strength
of ministries and professions, that affect the process of managing
and of managing changes.
All this might seem a heavy
burden on people trying to bring about change. Inertia would seem
to have the best chance of success. 'Path dependency' taken to extremes
allows no options. That is not the purpose of the argument, rather
that if we want to understand the processes involved in changing management
in the public sector we need to take account of all the contexts.
Practising politicians and managers know this, for their efforts are
aided or thwarted by the contexts in which they work. The contexts
help to explain not only the different management arrangements in
place but also the different goals and problems in achieving them. Notes 2 Counter to the global trend, the Netherlands government has consolidated third sector pension schemes into a state sector, while other places are seeking non-state alternatives. 3 Japan's Postal Savings Bank is a case in point.
5 See, for example, Doz and Hamel (1998) and Child and Faulkner (1998). 6 There is evidence of this, e.g. among Chinese workers in Hong Kong.
Batley, R. and Larbi, G. (1999) The Role of Government in Adjusting Economics, Paper 41, University of Birmingham. Boston, J., Martin, J., Pallot, J. and Walsh, R (1996) Public Management, The New Zealand Model, Oxford, Oxford University Press. Burrows, R. and Loader, B. (eds) (1994) Towards a Post-Fordist Wellare State? London, Routledge. Child,J. and Faulkner, D. (1998) Strategies of Co-operation: managing alliances, networks and joint ventures, Oxford, Oxford University Press. Doz, Y.L. and Hamel, G. (1998) Alliance Advantage: the art of creating value through partnering, Boston, Harvard Business School Press. Ferlie, E., Pettigrew, A., Ashburner, L. and Fitzgerald, L. (1996) The New Public Management in Action Oxford, Oxford University Press. Flynn, N. (1999) Miracle to Meltdown in Asia: business, government and society, Oxford, Oxford University Press. Flynn, N. and StrehI, E (1996) Public Sector Management in Europe, London, Prentice-Hall. Hampden-Turner, C. and Trompenaars, F. (1993) The Seven Cultures of Capitalism, New York, Doubleday. Hilderbrand, M.E. and Grindle, M.S. (1997) Building Sustainable Capacity in the Public Sector. In Grindle, M.S. (ed.) Getting Good Government, Boston, Harvard Institute for International Development. Hofstede, G. (1980) Culture's Consequences, Beverly Hills, Sage. Hofstede, G. (199 1) Cultures and Organizations, Maidenhead, McGraw Hill. Hood, C. (1996) Exploring Variations in Public Management Reforms in the 1980s. In Bekke, H.A.G.M., Perry, J.L. and Toonen, T.A.J. (eds) Civil Service Systems in Comparative Perspective, Bloomington, University of Indiana Press. Jesudason, J.V. (1996) Malaysia: the Syncretic State. In Rodan, G. (ed.) Political Oppositions in Industrialising Asia, London, Routledge. Kelsey, J. (1995) Economic Fundamentalism, London, Pluto. Kickert, W (1995) Public governance in the Netherlands: an alternative to Anglo-American Managerialism, Administration and Society, 28 (1). Kiggundu, M. (1998) Civil Service Reforms: limping into the twenty-first century. In Minogue, M., Polidano, C., Hulme, D. (eds) Beyond the New Public Management, London, Edward Elgar. Lijphart (1985) Consociational Democracy, mimeo. Lynn, L. (1998) The New Public Management: how to transform a theme into a legacy, Public Administration Review, 58 (3): 231-237. McCourt, W and Minogue, M. (eds) (200 1) The Internationalisation of Public Management: reinventing the Third World State, Cheltenham, Edward Elgar. Peters, B.G. (1996) The Future of Governing: four emerging models, Lawrence, KS, Kansas University Press. Pollitt, C. and Bouckaert, G. (2000) Public Management Reform, Oxford, Oxford University Press. Walsh, K. (1995) Public Services and Market Mechanisms: competition,
contracting, and the New Public Management, Basingstoke, Macmillan.
|
||