Public Management Reforms

The advent of public management marks a shift from earlier reforms. It is clearer both in theory and in programme details than earlier reforms which aimed at tinkering to cut costs. Instead of being a technical specialization within public administration, as was ‘old’ public management, public management now aims at the replacement of the traditional model altogether. Instead of their being reforms to the public sector, new public management represents a transformation of the public sector and its relationship with government and society. There are various ideas of what is involved in the public management reforms.

A strategic approach

Governments have aimed to develop better methods for long-term planning and strategic management. This means deciding the organization’s mission, looking ahead to achievement of goals and objectives, including how the organization fits its environment, and the strengths, weaknesses, opportunities and threats in that environment. These techniques offer better utilization of resources, by tying outcomes to resources, especially when combined with programme budgeting. Only by knowing what government organizations do, what they aim to do in the future and how they have progressed to declared objectives, can the political leadership decide which programmes or even agencies or departments are worth retaining.

Management not administration

It was argued earlier that management is different from administration. Public management now requires professional management where administration did not. Public organizations do things: governments now want to know what they do; who is in charge and taking responsibility for results. Managers are now involved in matters of policy: they are also involved in matters of strict politics; they are more often personally responsible for matters and will pay by losing their jobs if something goes wrong. They are, in other words, responsible for achieving results.

Political leaders increasingly choose managers with good records who are sympathetic to their goals. High-profile managers are often appointed to head departments or agencies. These are often appointed on short-term contracts, have management backgrounds and are employed to get results. They are also public figures in a way not previously considered normal for a public servant. Frequently they seem to prefer working for one political party. Another change in senior management is the move away from specialist heads, such as engineers or scientists in technical areas, or doctors in health departments, to managerial heads of agencies. Management is seen more as a function requiring its own skills rather than something which specialists can simply ‘pick up’.

A focus on results

The organization must focus on outcomes or outputs, instead of inputs. Managerial reforms have stressed performance by individuals and by agencies. Agencies are expected to develop performance indicators as a way of measuring the progress made towards achieving declared objectives. The performance appraisal system aims to measure the performance of individual staff, even to the extent of defining the key contributions expected over the year, which are then compared with actual achievement at the end of the year. This can extend to rewarding or sanctioning staff according to progress towards objectives. Informal methods of appraisal are considered to be ineffective and lead to inferior organizational outcomes. There is a general aim to monitor and improve the progress of staff and agencies towards achieving objectives.

Improved financial management

Financial management has been one of the more successful of the public management reforms. The most important change in this area has been performance and programme budgeting systems to replace the old line-item budgetand accounting systems. The focus was formerly on inputs rather than outputs, or on what the agency actually does. A programme budget allocates money according to specific programmes of the agency with all costs listed at programme, sub-programme and even lower levels. Instead of staffing being determined by a separate, independent central agency for personnel, it becomes part of the programme budget. The line-item system of budgeting was precise in a control sense but, in practice, governments had little information on actual programme delivery. Governments have been able to control spending far more by having better information.

Flexibility in staffing

At the next level of senior management, there has been a consistent trend away from position classification towards flexibility in arrangements for filling senior positions. The device of a Senior Executive Service (SES) has become a commonplace since the late 1970s in the US. The SES concept aimed at developing a pool of senior managers who can be transferred readily between positions and departments, who are trained for senior management, and who can develop a SES identity rather than a departmental one. Greater emphasis is now placed on policy advising, general management and professional skills rather than experience gained from specific duties. The aim is to improve overall efficiency by improving the service’s management capability. At all levels personnel changes have improved flexibility. It is now easier to re-deploy or even sack staff. Inefficient staff can now be dismissed quite quickly, with protection against arbitrary or politically motivated dismissal.

Flexibility in organization

One aspect of organizational flexibility is disaggregation, which means splitting large departments into different parts by setting up agencies to deliver services for a small policy department. This really starts in the UK, with the Next Steps initiative of the Thatchergovernment in 1988. The basic model specified in the report was to set up a separate agency responsible for the delivery of services which it does on a quasi-contractual basis with the relevant policy department. Once such delivery agencies are operating under explicit contracts there is no particular reason why they should be in the public sector at all or for its staff to be public servants.

A shift to greater competition

Introducing competition is a feature of public management. It is argued by proponents that if services are ‘contestable’ they should be put out to tender. The OECD refers to ‘provision for client choice through the creation of competitive environments within and between public sector organizations and non-government competitors’. Widespread privatization is part of this, but is not the only means of reducing governmental scope. Competition for provision through contracting, sometimes within government, is seen as reducing costs compared to bureaucratic provision.

The new contractualism

Under what has been called ‘contractualism’, any conceivable government service can be provided by contract, either externally through private or voluntary sector providers or internally with other parts of government. This follows from competition and is related to it, but competition could occur without a contract. Compulsory competitive tendering was adopted in local government in the UK in the early 1980s and in other parts of the government later.

As part of this move to contracting there can be individual performance contracts for staff, contracts with the minister and the government as a whole and contracts in the form of ‘charters’ with clients and the public.

A public service operating under explicit contracts with the private sector, or explicit contracts between policy departments and service delivery agencies, would be a very different public service. There can be no thought of service to the public or even service to the government. If everyone is a contractor, no one has a longer time horizon than the end of their contract; if everyone is a contractor, there can be no such thing as the public interest, only what appears in the terms of the contract.

A stress on private sector styles of management practice

This includes staffing changes designed to better fit staff for their positions, to appraise their performance and to reward them accordingly with merit pay. The emphasis on performance also leads to short-term appointments by contract and being able to terminate staff who are not performing. These changes derive from the private sector where staffing and budgeting flexibility has long been a source of some envy.

Relationships with politicians

If one of the main characteristics of the managerial model is that managers take responsibility for the achievement of results, the relationship between managers and politicians and managers and the public must alter. In the traditional model the relationship with the traditional leadership was narrow and technical, of master and servant, of those giving the orders and those carrying them out. Under the public management model the relationship between politician and manager is more fluid and is closer than before. Public management has become a form of political management and the relationship with political leaders has changed.

The major skill needed of a public manager is how to be a bureaucratic politician, to be able to interact with politicians and with the outside in a way that is beneficial both to oneself and the organization. This may be open to criticism as being politicization, but to achieve political goals is the main function of any public service worthy of the name. The traditional model tried to depoliticize what was essentially political. Public management recognizes the essential political character of government; public servants work with politicians in an interactive process called management. Of course, politicians have the final say, but the unrealistic separation of policy-making from administration has been finally discarded.

Relationships with the public

There is recognition of the need for direct accountability between mangers and the public, as the result of demands for a ‘client focus’ and for greater responsiveness to outside groups and individuals. This is another big difference from the traditional model.

Separation of purchaser and provider

Even if government is involved in an activity it does not need to be the final provider. It is possible to separate the purchaser from the provider; the purchaser being the party who decides what will be produced and the provider the party who delivers the agreed outputs and outcomes.

Re-examining what government does

A key aspect of the reform process has been to look in great detail at what government does, its role in the economy and society, and what is left to the private sector to do. An aspect of this is contracting-out or privatization, but it is broader than that. Advocates of the new public management, armed with theoretical insights from economics, have argued that there are some things governments should not do.

One important part of the public management reform process has been to examine and reexamine government programmes to ascertain if they are meeting their goals. Many countries have adopted quite rigorous processes for review of functions. Constant review and constant justification of the worth of everything that government does has been one of the results of financial stringency.