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Chapter 1 An era of change The traditional model of public administration (which dominated most of the 20th century changed since the mid-1980s to a flexible, market based form of public management. (not only a change in management style, but also in role of government in society and the relationship between government and citizenry). Traditional public administration has been discredited theoretically and practically -adoption of new forms of public management means the emergence of a new paradigm in the public sector. New paradigm poses a direct challenge to the fundamental principles of traditional public administration: 1. Bureaucracy (govts should organize themselves according to the hierarchical, bureaucratic principles enunciated by Weber) 2. One best way (of working and procedures were set out in manuals for admins to follow. strict adherence to these scientific mgmt principles would provide one best way of operating an org) 3. Bureaucratic delivery (once govt involved itself in a policy area, it would become direct provider of goods/services) 4.
Politics/administration dichotomy (admin is instrument used to carry out instruction and matters of policy or strategy belong to political leadership) 5. Public interest (service to the public was provided selflessly) 6. Professional bureaucracy (neutral, anonymous employed for life with ability serve political master equally) 7. Administrative (following instructions provided by others without personal resp) -Challenges: 1. Bureaucracy is powerful but doesn’t work well in all circumstances and has some negative consequences. . Trying to find the one best way is elusive and can lead to rigidity in operation 3. Delivery by bureaucracy is not the only way: subsidies, regulation, contracts. 4. Politics and administration are entwined -public demands better mechanisms of accountability where once bureaucracy operated separately from society. 5. There may be public servants motivated by public interest, but they may also be assumed to work for their own advancement and that of their agency instead of being pure and selfless. 6.
Case of unusual employment conditions in the public services is much weaker (especially given changes in private sector where jobs for life are rare). 7. The tasks involved in public sector are now considered more managerial requiring someone to take responsibility. -Economic problems in the 1980s means governments reassessed their bureaucracies and demanded changes, -Traditional model of administration is based on bureaucracy, public management is based on markets.
The emergence of a new approach -By 1990s a new model of public sector mgmt- ‘managerialism’ ‘new public mgmt’ ‘mkt based public admin’ ‘entrepreneurial govt’ -settled on New public mgmt NPM -Hood. -UK: 3E’s economy, efficiency effectiveness in all level of British govt -US: Gore report: i. shift from system where people are accountable for following rules to accountable for getting results. ii. putting customers first. iii. empowering employees to get results. iv. cutting back to basics and producing better govt for less. Striking similarities in the reforms carried out in a number of countries, it is argued that greatest shift is one of theory rather is one of theory than practice. NPM paradigm is a direct response to the inadequacies of traditional public administration in particular inadequacies of public bureaucracies. -Public mgmt reforms driven by different theories: economic motivations can be assumed for all players in govt; private mgmt provides lessons for govt ; no separation of politics from admin + change from admin to mgmt. Administration and management Administration essentially involves following instructions and services; mgmt involves first the achievement of results, secondly personal responsibility by manager for results achieved. -Public admin is an activity serving the public and public servants carry out policies derived from others and is concerned with procedures, with translating policies into action and focuses on process, procedures and propriety with office mgmt. management includes admin, but also involves organization to achieve objectives with max efficiency. Imperatives of Change Changes in public sector have occurred as a response to several interrelated imperatives: first, attack on the public sector; secondly, changes in economic theory; thirdly the impact of changes in the private sector (globalization as an economic force); fourthly, changes in technology. -Attack on public sector: early 1980s there were wide ranging attacks on the size and capability of public sector. Govt was source of unease. Three main aspects to the attack: 1. Argued that the scale of govt was too large, consuming too many scarce resources. cuts to govt spending followed. . Arguments about the scope of govt, it was involved in too many activities. in response, many ex govt activities were handed over to the private sector. 3. Attack on methods of govt, with bureaucracy becoming highly unpopular. -Changes in economic theory: in 1970s conservative economists argued that govt was the economic problem restricting economic growth and freedom. Instead of govts forcing people to do things through bureaucracy markets were superior in every respect. A harder- edged form of economics became prominent (neo-classical economics).
As times became harder, govt became more concerned with economic issues – policy advisers, politicians and the bureaucracy embraced neo-classical economics and its advocacy in making more use of mkts inside and outside govt for policy making and delivery of services. Economist and economic thinking are replacing adherents to the old public admin at higher levels of bureaucracy while economic theories permeate the NPM, in particular public choice theory, principal/agent theory and transaction cost theory. 1.
Public Choice theory: sub-branch of economic thought concerned with the application of microeconomics to political and social areas. From standard economic assumptions, predictions can be made. Key assumption: comprehensive view of rationality. Public choice theorists conclude that ‘best outcome’ will involve maximum role of markets and minimal role of govt. Mkts are also argued to have better mechanisms for accountability as opposed to bureaucracy. It can be argued that the assumption of individual rationality is too sweeping and ignores any selfless or public-spirited behavior by public servants.
Most important effect of public choice theory is implicit questioning of the motives of public servants in some situations. 2. Principal/Agent theory: developed for the private sector to explain the divergence often found between the goals of managers(agents) and shareholders (principals) P/A theory attempts to find incentive schemes for agents to act in the interest of principals. The application of P/A theory to the public sector leads to distributing comparisons in accountability when compared to the private sector.
The principals of the public service are the entire public, but its interest are so diffused that effective control of agents (public managers) is unlikely to be effective. The agency problem could be reduced. The theory gives some backing to those arguing for contracting-out much of the public sectors as possible, this way agency relationships would become those of the private sector-which are assumed to work better. Contracts could be used for employees and organizations and those arrangements would have incentives (positive and negative)). . Transaction cost theory: set out by Williamson this challenges the notion that transactions are without costs and specifies the circumstances where a firm may prefer market-testing or contracting to in-house provision -this also applies to public sector where some transactions would be less costly if contracted out to reduce administrative costs and provide some competition. There are some public sector transactions for which market testing has become mandatory, where in-house provision would actually be better. Private sector change: rapid change in the private sector and the realization of mgmt and efficiency of public sector affects the private economy and national competitiveness. a concern with national competiveness leads to a need for reform of public sector. Increased competition (nat and int), changes in mgmt, changes in personnel have all occurred in private firms no less than in govt. The move to privatization in its various forms could be considered as shedding aspects of govt.
Globalization adds an extra imperative to the reform of admin structures within govt- it is important for govt to tailor its policies to enhance national competitiveness. -Technological change: affects mgmt of govt. One of the driving forces both towards new forms of public mgmt and away from traditional bureaucracy . Adoption of e-govt and use of information and communication technologies could lead to a reconceptualization of the very way that bureaucracies work. Chapter 2 The Traditional Model of Public Administration – The traditional model can be characterized as an administration under the ormal control of the political leadership, based on strictly hierarchical model of bureaucracy, staffed by permanent, neutral and anonymous officials, motivated only by the public interest, serving any governing party equally, and not contributing to policy but merely administering those policies decided by the politicians. – Its theoretical foundations mainly derive from Woodrow Wilson and Frederick Taylor in the US, Max Weber in Germany and the Northcote-Trevelyan Report of 1854 in the UK. Early administration -Some form of admin has always existed ever since there were governments.
Earlier systems had one important characteristic: they were ‘personal’, based on loyalty to a particular individual (king or minister) instead of being ‘impersonal’ based on legality and loyalty to the organization and the state – resulted in corruption and misuse of office for personal gain. The reforms of the nineteenth century -Beginning of traditional model in mid-nineteenth century Britain with Northcote-Trevelyan Report: recommended the abolition of patronage and substitution of recruitment by open competitive exam.
It signals the start of merit-based appointments to public service and gradual decline of patronage to anon-partisan, neutral administration. – US: (evils of spoils system were too evident) 1983, The Civil Service Act/Pendleton Act: established Civil Service Commission and contained four key points: 1. the holding of competitive exams for all applicants 2. the making of appointments based on grade in exams 3. the interposisiton of an effective probationary period before absolute appointment 4. he apportionment of appointments in Washington according to state population size Influenced by Woodrow Wilson, but inspired by British civil service reforms. Weber’s theory of bureaucracy -Six principles for modern systems of bureaucracy, deriving form the idea of rational-legal authority. 1. authority derived from law and from rules made according to the law 2. hierarchy, authority and power are meant to be maintained organizationally 3. organization is impersonal (written documents serve as precedents) 4. administration is a specialist occupation (requires training) 5. orking for the bureaucracy is a full time job not a secondary activity. 6. office management is an activity that can be learned as it follows rules -Replacement of personal administration with an impersonal system with rules. -The position of the official: 1. is to be part of an elite with status higher of ordinary citizens 2. appointed by superior authority (bureaucratic) 3. position for life 4. if dismissed, discharged free from personal considerations 5. fixed salary based on status and pension 6. official set for ‘career’ within hierarchical order Wilson and political control There should be a strict separation of politics from administration. -The evils of the spoils system resulted from the linking of administrative questions with political ones. If administrators act in an overtly political manner, corruption and arbitrary decisions will rise. Separation of the political sphere (where policies are administration) can address evils of spoils system. -Political matters should be dealt with by the politicians, administrative matters by permanent public servants with the two spheres of action being kept as far apart as possible, -Three facets to political control in traditional model: . Clear relationship of accountability and responsibility (each agency has two basic roles; advise political leadership on development, review and implementation of policy and manage its own resources) 2. There is supposed to be a strict separation between matters of policy and administration. 3. Administration is presumed to be anonymous and neutral Taylor and management -Scientific Management: Taylor (1911) two main points: 1. Standardizing work, finding one best way of working 2. Controlling so extensively and intensively as to provide for the maintenance of all these standards. it involved: 1. Time and motivation studies to decide standard of working 2. Wage incentives 3. Changing the functional organization -Taylor sought fundamental change through scientific management as efficiency and science replaced ad-hoc decision making. -Human Relations: contrasted with scientific management. Its focus was on social context at work rather than regarding the worked as a machine responsive only to financial incentives. -Mayo found that social context of work group is most important factor in management.
He conducted the ‘Hawthorne experiments’ and found that productivity increased most by taking interest in workers (instead of other factors). He led to an improvement in working conditions. The Golden Age of public administration -From around 1920 to 1970s. Seemed that all that was need was to establish a set of nostrums, like POSDCORB –set of functions set out by Gulik and Urkwik: Planning: goal setting methods applied by executives. Organizing: arranging organizational structure in an appropriate manner. Staffing: recruiting and hiring personnel. Directing: supervising actual processes of doing assignments.
Coordinating: integrating the various detailed elements of tasks in cooperation with other units and people in government. Reporting: tracking and communicating the progress of work. Budgeting: fiscal and financial activities necessary to economically support the completion of these programs, services, or activities In the 1940s POSDCORB was attacked, along with other classical approaches, because they were viewed as attempts to exploit, control, and manipulate workers. But for the most time nobody questioned its principles and effectiveness. Problems with the Traditional Model (criticisms from the 1970s) 1. Model f political control was inadequate and illogical. a. The separation of policy and administration is unrealistic (they are intertwined). Work of public servants needs to be regarded as fundamentally political. b. Wilson’s idea was designed to counter the spoils system. c. Traditional form imposes a negative form of control (to avoid embarrassing mistakes rather than provide positive incentive to be more efficient. 2. One best way of thinking was problematic. d. Following Taylor, one best way was determined by examining all steps in task, measuring most efficient one and setting out method as a set of procedures.
Procedure manuals got larger and larger- the work was purely administrative (consult manual) with little space for thought or creativity + no responsibility. 3. Theory of bureaucracy no longer universally seen as efficient and tends to be undemocratic. e. Problematic relationship between bureaucracy and democracy (regarded as abrogating power of citizens or politician and thereby making political accountability problematic). f. Bureaucracy no longer seen as efficient: i. Extreme interpretations of Webber’s principles which led on to problems like the ‘time server’ – inefficient worker that cannot be fired and waits for retirement. i. Not efficient compared to flexible forms of management (imposes costs and may stifle creativity/innovation) 4. Criticism that bureaucracy took away freedom and inefficient to markets. Public Choice Critique g. Government bureaucracy restricted freedom of inidiciduals and its power needed to be reduced in the name of ‘choice’ h. Market economists argued that traditional bureaucracy model didn’t provide an equivalent structure of incentives/rewards to those of the market. i. The theory in essence: application of microeconomic principles to political and social areas.
Dunleavy’s rational actor lies at the heart of all public choice accounts: iii. People have well-formed preferences (perceived, ranked and compared) iv. Preference orderings are transitive or logically consistent v. People are maximizers (biggest benefits to lower costs) vi. People are egoistic Chapter 3 Public Management 1980s and 1990 saw the emergence of a new managerial approach in the public sector in response to what many regarded as the inadequacies of the traditional model. This approach may alleviate some of the problems of the earlier model but it requires dramatic changes.
Managerial approach, and its actual changes: 1. Represents a major shift from traditional public administration with greater attention to the achievement of results and personal responsibility of managers. 2. Expressed intention to move away from classic bureaucracy to make organizations, personnel, employment terms and conditions more flexible. 3. Organizational and personal objectives are set clearly and enables their measurement through performance indicators. 4. Senior staff are likely to be more politically committed to the government of the day rather than being non-partisan or neutral. 5.
Government functions are more likely to face market tests. (separating purchaser of government services from the provider) 6. Trend towards reducing government functions through privatization and other forms of market testing and contracting. * Argument: managerialism seen as against the traditions of public service. We should take account of the differences between public and private management, but recognize that the work done by public servants is now managerial instead of administrative Functions of general management STRATEGY 1. Establishing objectives and priorities for the organization. . Devising operational plans to achieve these objectives MANAGING INTERNAL COMPONENTS 3. Organizing and staffing: establish structure and procedures for coordination 4. Directing personnel and the personnel management system 5. Controlling Performance MANAGING EXTERNAL CONSTITUENCIES 6. Dealing with ‘external’ units: managers must deal with other managers of other units 7. Dealing with independent organizations: agencies from other branches, interest groups etc 8. Dealing with the press and public whose action/approval is required. The beginnings of a management approach 1968 Fulton Report (UK): concerned with managements capability of the public service. It recommended that the system be opened up, employ outsiders at all levels and removal of hierarchical barriers. -1978 Civil Service Reform Act: aimed giving managers greater responsibility for results –included merit pay and establishment of Senior Executive Service. -Reasons for disenchantment with the skills and capabilities of public services: 1. First oil shock of 1970s, governments experienced sever resource constrains. No cuts were made in actual service delivery to the public –manage the same or increased functions with less money/staff. . 1980s, new governments with new detailed ideas on how to change management of the public service (NZ, UK, Australia, Canada) 3. Explicit link between improving public sector management and re-structuring the national economy. 4. Arguments about the growth of government had their effect – so there was an intellectual climate conducive to reducing the public sector or making it work harder. The managerial program -There are various ideas of what is involved in public management reforms: 1. OECD 1991 claimed that there were two broad avenues to improve production and delivery of publicly delivered goods and services: i. aise the production performance of public organization- aimed mainly inside organizations to improve incentives for individuals, measure performance and improve client relations. ii. make greater use of private sector – early view of Hoods New Public Management 2. Hood considers the managerial program (new public management) with 7 points: i. Hands on professional management ii. Explicit standards and measures of performance iii. Greater emphasis on output controls iv. Shift to disaggregation of units in the public sector v. Shift to greater competition in the public sector vi.
Stress on private sector styles of management practice vii. Stress on greater discipline and parsimony in resource use 3. Holmes and Shand – regard as good managerial approach: i. More strategic approach to decision making ii. Replace centralized/hierarchical organization with decentralized management environments iii. Explore alternatives to direct public provision iv. Attention in matching authority with responsibility v. Creation of competitive environments within and between public sector orgs vi. Greater accountability and transparency through reports on results and costs vii.
Service-wide budgeting and managing systems to support these changes viii. Strengthening strategic capacity to steer government to respond to external changes 5. Pollitt argued there are a number of general elements of the new model accepted by most commentators: i. Shift in the focus of management systems, effort from inputs/processes to outputs/outcomes. ii. Shift towards more measurement iii. Preference for more specialized/autonomous organizational forms rather than large hierarchical bureaucracies. iv. Widespread substitution of contract for hierarchical relationships v.
Wider use of market for delivery of public services (privatization, contracting out etc) vi. Broadening and blurring frontier between public and private sectors vii. Shift in value priorities away from universalism towards efficiency and individualism. -Main points involved with public management reforms 1. Strategic Approach- for long-term planning and strategic management means deciding mission, looking for the achievement of goals, and how the organization fits in its environment looking for SWOT 2. Management not administration- governments want to know what they do, how well they do it, who is in charge and taking responsibility. . A focus on results- focus on outputs instead of inputs + expected to develop performance indicators to measure progress. Aim to monitor and improve progress of staff and agencies towards achieving objectives 4. Improved financial management – performance and program budgeting systems to replace line-item budget and accounting systems. 5. Flexibility in staffing- greater emphasis on policy advising, general management and skills rather than experience- aim is to improve service’s management capability. 6. Flexibility on organization- structural changes to organization for maximum efficiently. isaggregation: splitting of large departments into small parts by setting small agencies to deliver services for a small policy department. 7. Shift to greater competition- competition for provision through contracting can reduce costs compared to bureaucratic provision. 8. New contractualism- contractualism: any conceivable government service can be provided by contract wither externally through private sector providers or internally with other parts of government. 9. A stress on private sector styles of management- staffing changes (fit staff with positions), appraise their performance and reward them with merit pay. ability to terminate staff who are not performing. 10. Relationships with politicians –public manager must be a bureaucratic politician, able to interact with politicians and with the outside in a way that is beneficial both to oneself and organization- recognizes essential political character of government. 11. Relationships with the public –recognition of the need for direct accountability between managers and the public –client focus 12. Separation of purchaser and provider –government does not have to be final provider 13. Reexamining what government does -its role in economy and society and what is left for the private sector.
Ascertain government programs to make sure they are meeting their goals. Theoretical bases of management -Theoretical bases for traditional model: bureaucracy and separation of politicians and administrators. -Theoretical bases for new public management: economics and private management. 1. Economics: NPM is market based, using theories like public choice, principal agent, and transaction cost theories –it aims to move away from bureaucracy as an organizating principle. 2. Private management: flexible forms of management, focus on results Criticisms of managerialism 1.
Economic basis of managerialism: two main criticisms: a. Economics is a flawed social science and its application to government is similarly flawed. b. Application of economics in government is ill-conceived: i. Provider/consumer transaction in the public service are more complex ii. Public service customers are also citizens. 2. The basis in private management: the public sector might be so different that generic or private sector models of management become irrelevant to its operations. It is more difficult to determine objectives or to measure results in the public sector. . Neo Taylorism: Pollitt argued that managerialism represents revival of scientific management ideas, its ideas ignores the development of organizational behavior. Its emphasis on control of government spending and decentralizing management responsibilities with targets and performance measurement systems. 4. Politicization: changes to public services are said to involve ‘politicizing’ it: involving it directly in matters of party politics c. It could be said that those making arguments about politicization ignore the fact that public service is a political instrument. . Politicization could lead to problems of the kind that Wilson tried to repair. Separation of politics and administration. 5. Reduced accountability: Another concern was as to whether the new managerial concepts and procedures fit in with the system of accountability. Conflicts may occur between concepts of public management and public accountability (is manager is responsible, politician is less responsible? ) 6. Difficulties with contracting out: awkward details to be worked out and market solutions do not necessarily work well under all circumstances (Donahue) 7.
Ethical Issues: assumes a culture of public honesty as a given. 8. Implementation and morale problems: managerial changes have been instigated from the top with insufficient attention paid to implementation. Chapter 4 The Role of Government Governments have a variety of roles and their full scope is not easily measured. The attacks on the scale, scope, and methods of the public sector gave credence to measures to reduce government and change its management. The need for a public sector -economy is divided between private and public sectors i. ublic: engaged in providing services whose scope and variety are determined by government bodies in a democracy -two distinguishing features of government: universal membership and compulsion. (also main difference from private sector). -so do we need government? Government reflects the presence of political and social ideologies which depart from premises of consumer choice and decentralized decision making. Without government, markets will not work because: a. there must be no obstacles to free entry and all participants must have full market knowledge (govt regulation). b. eeded where competition is inefficient due to decreasing cost. c. contracts and exchanges cannot occur without protection and enforcement by legal structure d. public policy needed for securing high employment, price stability and economic growth e. problems of externalities can lead to market failure and require solution through public sector f. social values require adjustments in distribution of income from market system g. public and private points of view on rate of discount may differ. -The private sector relies on government for infrastructure and the system of laws.
Government relies on the private sector for the production and supply of goods and services and for tax revenue. Private and public management -There are several reasons why the two sectors are not the same and cannot be the same 1. Public sector decisions may be coercive. Private enterprises have more freedom to be arbitrary. 2. Public sector has different forms of accountability –public servants are accountable to political leadership, parliaments, public and various parts of judicial system. 3. Public service manager must cope with an outside agenda set by political leadership. . Public sector has inherent difficulties in measuring output or efficiency in production. 5. Public sector ‘s sheer size and diversity make any control or coordination difficult – must be political and never easy. ‘Government and Governance’ -Government is the institution itself -Governance is the broader concept describing forms of governing which are not necessarily in the hands of the formal government. – processes and institutions (both formal and informal) that guide and restrain collective activities of a group. Market Failure as the basis for public policy The market mechanism alone cannot perform all economic functions; public policy is needed to guide, correct, and supplement it. Key kinds of market failure: 1. Public goods: benefit all users whether or not they have paid the price. They are non-excludable (available to all). Also include merit goods: services that are socially desirable which markets may not provide optimally (education, health) 2. Externalities: market transactions affect 3rd parties or the environment, that only government can alleviate (pollution permits) 3.
Natural monopoly: (prevalent in utilities with household networks: gas, water, electricity) beneficial effects of competition are not likely to occur. Existence of natural monopoly has been used as rationale for some form of government involvement or ownership. 4. Imperfect information: consumer protection or packaging information, regulations on unsafe products, adverse selection and moral hazards. -Limitations of market failure: 1. Market economists disagree with market failures as justification of government action.
Government protection for consumer protection is inferior to the ‘let buyer beware’ theory and competition. – but public finds consumer protection unburden some compared to the sale of unsafe products. 2. Concept of market failure could be argued to artificially reduce the scope of government action- treats problems as technicalities and efficiency is the only value that should guide government intervention + it does little to explain current set of government policies. -Goods and services which markets cannot provide: education, law and order, environmental values, ational defense, roads and bridges, hospitals and healthcare. Instruments of government -the method it uses to intervene 1. Provision, where the government provides foods or services through the government budget. Funded by taxation 2. Subsidy, sub-category of provision, assists someone in the private economy to provide government desired goods and services. 3. Production, government produces goods and services for sale to the public 4. Regulation, using coercive powers to allow or prohibit certain activities (setting tariffs, granting licenses or permits and regulating labor market).
Can be social (seen as attempting to protect the interests of citizens and consumers- safety levels and pollution control) or economic (very widespread: financial regulation, price regulation, competition policy and antitrust legislation) -no simple answer as to which instrument of government policy is preferable, combinations are possible. Phases of government intervention -The laissez-faire society: late 18th century – governments very involves in economics. Aim was to use government to further economic ends of nation by a set of ad hoc decisions.
Adam Smith was against this (in the Wealth of Nations), and mentions what the duties of government should be: i. Defense ii. Provide a system of laws (as an extension of defense, and as a market role: enforce contracts and safeguard property) iii. Public goods and infrastructure (and desirable for government to stay away from economic life) -The Welfare state: 19th century in Germany with Otto von Bismarck. Relied heavily on government provision of goods and services through higher general taxation and redistribution of resources to less fortunate. Three problems: . aggregate problem of financing ii. a political program of this kind relies on broad based political support (which later in the 1970s and 1980s was no longer given freely as it once was) iii. economic and political theories behind the welfare state became less fashionable. -Neoclassicism: mid 1970’s movement away from the largest collectivist role of government. Dominance of neoclassical economics/economic rationalism. Four aspects: i. assumption of individual rationality (individuals are assumed to be best judges of their own economic interests) ii. laboration of models from this assumption iii. maximum role for market forces iv. minimum role for government Basic Functions of Government -Anderson’s seven basic functions of governmental roles: 1. Providing economic infrastructure 2. Provision of various collective goods and services 3. Resolution and adjustment of group conflicts 4. Maintenance of competition 5. Protection of natural resources 6. Minimum access by individuals to the goods and services of the economy 7. Stabilization of the economy Chapter 5 Public Enterprise First target of those aiming to reduce size of government
Matters of ideology about the overall role of government became bound up with the ownership of public enterprise Reasons for establishing public enterprise -Rees four reasons for existence of public enterprises: 1. to correct market failure (refers to services not adequately provided by markets) 2. to alter structure of payoffs in an economy (alter benefits received by certain people, referring to the payoffs being directed to the enterprises employees) 3. to facilitate centralized long term economic planning (due to development issues –where market did not provide right infrastructure, usually a otivation) 4. to change the nature of the economy from capitalist to socialist Kinds of Public Enterprise -A public enterprise is one that sells goods and services to the public on a large scale with financial returns accruing in the first instance to the authority itself; in the non-budget sector and operate with substantial independence (provide many service like telecommunications, electricity and gas supplies) a. Public utilities: provide services considered essential for the economy. Two features i. Household connection means there is a real tendency towards natural monopoly. ii.
Politically sensitive, can cause disruption to the private economy and households. b. Land Transport/Postal Service: essential services but face competition (from related industry usually) c. Enterprises in competitive environments: government owned trading enterprises which compete directly with private companies and in the same market. Why? When a company has failed in a market place, to stimulate competition, to maintain control of a strategic industry or for other reasons discussed earlier. d. Regulatory authorities: government owned and controlled, and finance theur activities by the sale of commodities.
The privatization debate -Main arguments: 1. Economic Arguments i. reduce taxes by using proceeds from sales ii. exposing activities to market forces and competition iii. reducing both government spending and governments share of cake iv. Reduce government borrowing (Public Sectors Borrowing Requirement) v. reduce cross-subsidies where an enterprise varies its prices so that within its overall function, profitable activities subsidize unprofitable but desirable activities. –most powerful: beneficial effect of competition. 2. Arguments about managerial efficiency
Privatization claims that private management is inherently better than public management. – but, these managers work in different environments with different objectives. + no evidence of private management vs public management. 3. Ideological conceptions about role of government i. one hand, there are those who argue that privatization affirms the limited role of government and superiority of private enterprise ii. on the other hand, there are some opponents of privatization are equally ideological; public enterprise is seen as bringing closer a fairer more socialist society.
Why can’t governments totally remove themselves from public utility sector? 1. Utilities remain a matter of political importance even when privatized 2. By not establishing a competitive framework at the beginning the government made it difficult to set one up later 3. Absence of effective competition means there must be conflict over price between enterprise and regulator. Control and Accountability -According to Aharoni, public enterprise inefficiency is not necessarily the result of ownership –result of structure of control and processes of management principal/agent theory suggests that accountability problems are worse in the public enterprise in particular (poor accountability justification for privatization +economic rationale from before) -problems of accountability derive for their position between two sectors (private and public) – sometimes subject to political influence and further public interest -enterprise management is regarded as risk-averse, + with poor accountability relationships allow possibility for evasion of responsibilities. -Government control and managerial freedom: politicians and central agencies of bureaucracy say there are insufficient controls.
Management of public enterprises claim there is too much interference in management prerogatives. Enterprises see government controls are too rigid and time consuming. In the commercial environment, the problem is worse: economic opportunities can be missed. -How can incompatible interests of institution’s members be dealt with? 1. reduce discretion to pursue conflicting purposes through monitoring 2. reduce incentives to pursue conflicting purposes through rewards and penalties 3. reduce conflicting purposes through education and persuasion 4. mbrace conflict and legitimize open bargaining under rules that promote efficiency Chapter 6 Public Policy and Policy Analysis There are two public policy approaches: 1. Policy analysis (focus on decision making and policy formation); 2. Political public policy (focus on results or outcomes of public policy, policy interactions and policy areas) Public Policy, administration and management -Public Policy: characterized as the output of diffuse process made up of individuals who interact with each other in small groups in a framework dominated by formal organizations. Public policy analysis: more formal, empirical approach to deriving and explaining policy. -Public policy analysts: people concerned with analytical methods and numbers as opposed to generalist approaches of public administration. Empirical methods -Two sets of skills needed for policy analysis: 1. ‘Scientific skills’: three categories a. information-structuring skills- which sharpen ability to clarify policy related ideas and to examine their correspondence to real world events b. information-collection skills- approaches and tools for observations c. nformation-analysis-guide in drawing conclusions from empirical evidence 2. ‘Facilitative skills’: policy, planning, managerial skills. -empirical methods used in policy analysis: 1. benefit cost analysis (optimal choice among discrete alternatives w/ no probabilities) 2. decision theory (optimal choice w/ contingent probabilities) 3. optimum level analysis (optimal policy where too much or too little is undesirable) 4. allocation theory (optimum-mix theory) 5. time consumption models -there are a variety of techniques and they share an empirical approach to policy. Policy Process models there are many models that may help, but they don’t guarantee to making better policy. -Patton Sawicki six step model – aim: assist someone who is required to analyze a given situation and to derive a policy to deal with it. 1. Verify, define and detail the problem: specify the problem and set an agenda 2. Establish evaluation criteria: consider effectiveness, political acceptability, votes or equity 3. Identify alternative policies: thinking hard, brainstorming and researched analysis and exp 4. Evaluate alternative policies: identify feasible alternatives, aren’t, expensive, impossible 5.
Display and select among alternative policies: implementation 6. Monitor policy outcomes –needs more attention to implementation and termination Limitations of the policy analysis approach -Quantitative methods: public policy gives too much emphasis to numbers (only some areas of government in which numbers are available for work at the highest level of abstraction) -Separate public policy discipline: public policy and administration were separated from the beginning, useless and unrealistic. -Overemphasis on decisions: there are a range of possible answers, each with its own costs and benefits.
Absence of personality. -Not used, or used less: little evidence that formal methods are actually followed. -The rational model: when faced with a problem a rational man clarifies his goals and then ranks/organizes them, then he lists all possible ways of achieving goals and investigates the consequences of alternative choices, then he compares consequences with goals and chooses policy with consequences close to matching his goals. Policy analysis in the 3rd stage warns against placing too much reliance on this model (most decisions are not politically feasible) problem: 1. Patton Sawicki model is a rational model . . Policy analysis has decline as a framework by being overtaken by an even more rigorous model of economics. -A faulty model of science: public policy analysis based on faulty, or at least old fashioned model of science. Its strength was that techniques for gathering data were well recognized, but it also means relying on same theory of science from 1960s/1970s. -Undemocratic: following the rational model of analysis of the facts, and deriving the best possible outcome could become undemocratic unless the solution happened to agree with that the target audience or wider political system wanted.
Responses to criticism -Nagel argued that policy analysis can incorporate other values than those which it is criticized and away from those things criticized earlier. He refers to traditional goals under the 3 E’s: a. Effectiveness: benefits achieved by alternative public policies b. Efficiency: keeping costs down in achieving benefits c. Equity And they have to be balanced with the 3 P’s as high level goals a. Public participation: decision making by the target group b. Predictability: refers to making decision so that a similar decision would be arrived c.
Procedural due process: those who have been unfairly treated have recourse to appeal Political public policy -viewed as a political process rather than a narrowly technical one. -instead if involving particular methodologies, policy making is a matter of adapting to and learning to influence political and organizational environments. -its focus is understanding how particular policies were formed, developed and work in practice. -effective managers of public policy -nine step approach to policy process, its mixed – used for both description and prescription. . deciding to decide (issue search or agenda setting) ii. deciding how to decide iii. issue definition iv. forecasting v. setting objectives and priorities vi. options analysis vii. policy implementation viii. evaluation and review ix. policy maintenance, succession, or termination -main difference between two public policy perspectives is the role given to the political process. Policy analysists look for one best answer from a set of alternatives and has a battery of statistical weapons at its disposal.
Political public policy sees information in an advocacy role, realizes that cogent cases will be made from many perspectives which then feed into the political process. Chapter 7 Strategic Management Strategic perspective considers the org in its external environment; aims to specify clear goals and objectives; attempts to move away from routine mgmt. tasks to consider long term considerations. Strategy in the private sector -Hax and Majluf are there are 5 stages in the evolution of planning: 1. Budgeting and financial control (limited – relying on immediate financial results can lead to a near sighted approach); 2.
Long range planning (doesn’t work if there is change in external environment or strong competition); 3. Business strategic planning; 4. Corporate strategic planning and 5. Strategic management. –all three forms of strategic planning identify an organizational mission, perform some environmental scan, specify a set of objectives and produce a strategic plan to achieve these objectives. -business strategic planning (1960) where concepts of mission and environmental scan or analysis first appear. The mission includes a clear definition of current and expected business scope, products, markets, and expectations.
The environmental scan involved detailed assessment of organizations internal strengths, weaknesses, opportunities and threats. Objectives are specific aims resulting from mission and environment scan. From the mission, environmental scan, specified objectives, a business strategy plan is derived for both short and long term combined with resource allocation and performance measures. -corporate strategic planning (1970s) concerned with higher levels of organization than business strategic planning and in allocating responsibility even among differing parts of the business.
Strategic plan is specified in much more detail. -both business and corporate strategic planning have their limitations/three serious problems: 1. “Paralysis by analysis” (plans produced little result) 2. “Organizational resistance” to the introduction of strategic planning and 3. Ejection of strategic planning if the support of top mgmt. was withdrawn or relaxed. Result: strategic management -strategic management (1980s) refined form that incorporated strategic planning function, but extends it much further- more comprehensive: aims to integrating planning with all the other parts of the organization.
Two main points: 1. There needs to be greater integration btwn planning, mgmt. control and the org structure; greater integration btwn communication and information system; with motivational and reward systems (planning should be responsibility of mgmt. ). 2. The org needs to pay attention paid to implementation because of the human factors present in the organizational culture and affecting its mgmt. – Strategic planning focuses on optimal strategy decisions/ Strategic management is focused on producing strategic results: new markets, products and/or technologies.
Strategy in the public sector -strategic planning and mgmt. are private secotr concepts that cannot be taken for granted that their ideas are going to work. Strategy in the public sector at first was not really valid, but a recent move towards strategic management may prove to be more promising. Bozeman and Straussman argue there are 3 main features of a strategic approach: defining goals and objectives, developing an action plan that mediates btwn the organization and the environment, and designing effective methods of implementation. Strategic planning models strategic planning is a disciplined effort to produce fundamental decisions shaping the nature and direction of govt activities within constitutional bounds. Olsen and Eadie, also claim that strategic planning consists of 5 basic components: 1. Overall mission and goal statements (targets toward which strategies are aimed) 2. Environmental scan/analysis (identification and assessment of current and anticipated external factors) 3. Internal profile and resource audit (catalogues and evaluates strengths and weaknesses of the orgs in a variety of factors) 4. Formulation, evaluation, and selection of strategies; . Implementation and control of strategic plan. (similar to strategic planning in private sector) -strategic planning is the process of examining an organizations or communities current situation and future trajectory, setting goals, developing a strategy to achieve these goals and measuring the results. Osborne and Gaebler: 1. Analysis of external/internal situation; 2. Diagnosis of key issues; 3. Definition of orgs fundamental mission; 4. Articulation of orgs goals; 5. Creation of a vision; 6. Development of a strategy; 7. Development of a timetable for strategy; 8. Measurement and evaluation of results. more similar to the corporate strategy model) -Bryson model of strategic planning: derived from the private sector with some variations for the public sector context; 1. Initiating and agreeing on a strategic planning process; 2. Identify organization mandate (very important because public orgs have mandates specified in legislation which limit the scope of their activity); 3. Clarifying organization and mission values (raison d’etre); 4. Assessing the external environment (opportunities and threats); 5. Assessing the internal environment (strengths and weaknesses); 6.
Identifying strategic issues facing an organization; 7. Formulating strategies to manage issues; 8. Establishing an effective org vision for the future (provide code, vision, shared view within the org for the future) –strategic planning does have limitations in the public sector . Strategic management -argued to be a more realistic approach than strategic management, argued to be a more realistic approach than strategic planning. It aims to integrate the planning function with the overall management task. Bozeman and Straussman see four aspects to strategic management: 1.
Concern with the long term; 2. Integration of goals and objectives into a coherent hierarchy; 3. Recognition that strategic management and planning are not self-implementing; 4. An external perspective emphasizing not adopting to the environment but anticipating and shaping of external change. (+ strategic public mgmt: strategic thinking must be cognizant of the exercise of political authority) – Edie argues that strategic mgmt. includes : 1. Action orientation (to make sure any document has built in processes of implementation: detailed plans, schedules, accountabilities and costs) 2.
Recognizes the importance of design; 3. Recognizes the importance of the human factor. Strategic management plan -strategic management includes strategic planning and a plan is formulated in a similar way as before. One particular useful model is that of Nutt and Backoff for strategic management plan: 1. Depict the orgs historical context in terms of trends in its environment, its overall direction and its normative ideals. 2. Assess the immediate situation in terms of current strengths and weaknesses and future opportunities and threats. 3. Develop an agenda of current strategic issues to be managed. . Design strategic options to manage priority issues. 5. Assess the strategic options in terms of stakeholders affected and resources required. 6. Implement priority strategies by mobilizing resources and managing stakeholders. Implementation -refers to both the implementation of strategic management and implementation of any strategic plan once it has been developed. – the biggest implementation problem will be convincing staff that a focus strategy is useful and that the changes that follow will be useful, and that the changes to follow will be beneficial in the long run. strategic planning models focused on steps involved without any consideration that there were people involved –human factor is important). -The process cannot simply be imposed: there must be ownership of the plan. Stakeholders need to be managed. One key change from strategic planning to mgmt. is the importance attached to stakeholders. -one reason it is hard to introduce strategic planning into public organizations is that many have been static in operation and thought processes for a long time. -the main aim of strategic mgmt. is to incorporate strategic thinking into mgmt. t all stages instead of undertaking a one-off planning exercise to produce a document that will not be used. Criticisms -one set of criticism applies to strategic planning or management in general, others to the application to a public sector context. 1. Formal strategic planning process is presented as more logical and analytical than it really is or can be. The design is too abstract and fails to take into account the sociopolitical dynamics at work in any human org (obvious difficulties in deciding what public agencies should do, deciding missions and goals is rarely easy and may not be meaningful) 2.
Formal strategic planning process is too rigid and slow-moving to respond adequately to a rapidly changing, turbulent environment. 3. The formal process works against creativity and innovation (but strategic planning process should be creative and innovative). 4. Application of strategic concepts to the very different public sector context (many problems) 5. Problems of accountability 6. Difficulties in setting objectives (they are so imprecise, a strategy would be meaningless- 2 responses: 1.
Imprecision of objective setting may not be that different from the private sector. 2. Substitute ideals for objectives. ) 7. Public sector has such short time horizons that a long term perspective is bound to fail. 8. Sufficient information may not be available to enable a plan to be developed. Chapter 8 Personnel and Performance Management monitoring performance was particularly weak in the traditional model and other internal management components (like budget) were aimed at monitoring inputs rather than outputs or performance of objectives.
Personnel Management -In organizing and staffing the manager sets out the structure and procedures and fits staff to the key positions. Personnel management in the traditional model of administration followed the bureaucratic theories of Max Weber almost to the letter –appointment for life, appointment by superior authority and not elected, positional appointment and promotion, old age security provided by a pension and a career in the hierarchical order of public service. seen as an advantage as a system of personal administration (provides a measure of stability for those inside). However, as personnel management there are a lot of problems: rigid hierarchy makes it difficult for management to aim to select, appoint and develop the best workers for the required tasks. Absence of performance measurement can also lead to other personnel problems.
Personnel systems in the traditional administrative era were obsessed with fairness rather than ability to achieve a result – more emphasis on following rules and procedures than flexibility to efficiently mobilize resources to achieve organizational objectives. Personnel system did not attract the right people to government service or promote the most able – rigidity made it more difficult to hire the right people as selection procedures were cumbersome and usually beyond control of manager +Difficult as well to provide appropriate reward structures or remove people who were not performing.
Reforms to personnel systems -in the personnel system there is a general aim to focus on results, flexibility and providing incentives. It is becoming easier to hire the right people, often contracts are used, reward and incentive structure has changed with performance pay, easier to remove staff who are not performing (cannot afford staff who are not contributing but can recognize good performers). ideas for changing personnel systems have been around for some time: Fulton Report in Britain (1968), Civil Service Reform Act of 1978 and Senior executive Service (elite of senior managers with the aim of allowing ready transfer between positions) -in general there was a move towards breaking own the rigid hierarchical structures and providing flexibility: rather than lifetime appointments, regular re-structuring of their agencies, contracting, term appointments at lower levels, base grade appointment becoming rare- more common to recruit graduates or even department heads directly from outside. these changes have been controversial and were resisted by employees and unions. But, the public service is more competent than it was- better methods of management and analysis as well as recruitment and promotion procedures are likely to make public sector managers smarter; greater flexibility in promotion and improved performance measurement should allow the competent to rise faster,- with the demise of the career service model, staff are less likely to spend their entire careers in one agency. -what public management reforms have done, among ther things, is unpack the various kinds of public service work. The service delivery function is a production function, management task, analogous to many in the market sector. -it is now realized that the personnel function (human resource management function( needs to be actively managed. Farnham’s 5 features of contemporary human resource management: 1. Personnel function is attempting to become more strategic than administrative; 2. management styles are tending to shift towards more rationalist, performance driven ones, away from paternalist pluralist ones; 3.
Employment practices are becoming more flexible and less standardized than in the past; 4. Employment relations are becoming dualist with most non/managerial staff continuing to have their pay and conditions determined thru collective bargaining, while public managers are increasingly working under personal contracts of employment; 5. State is moving away from being a ‘classical’ model employer – appears to be depending on HRM ideas and practices taken from private organizations. – the organizations overall strategy and its survival is linked to the competency of key staff.
Performance Management -performance management in the traditional model of administration was inadequate both to the performance of individuals and the organization. Measures which did exist were ad hoc and far from systematic. Little effort was made -assumed that results would follow from bureaucratic organization, so that any explicit measure made was not necessary. Evaluation of programs or people was infrequent and inadequate with no idea of progress towards objectives, indeed there were clear objectives. -reforms to performance management were an important part of the managerial program.
Performance indicators- some way of measuring the progress the organization has made towards achieving declared objectives. Statistical measures can be developed, performance of staff is also to be measured more systematically, performance appraisal system aims to measure the performance of individual staff. -There is a general aim to monitor and improve the progress of staff and agencies towards achieving objectives. One of the starting points was Financial Management Initiative (FMI) aimed at promoting in each department an organization and a system in which managers at all levels have: 1. clear view of their objectives, means to assess and whenever possible, measure, outputs or performance in relation to those objectives; 2. Well defined responsibility for making the best use of their resources =, including a critical scrutiny of output and value for money; 3. The information (in particular about costs), the training and the access to expert advice which they need to exercise their responsibilities effectively. – this had implications for financial management, but also for personnel and performance.
All three were linked together in a new management system which involved the specification of objectives for all government policies and for individual units within the bureaucracy; precise allocation of costs, and the development of performance indicators and output measures which can be used to assess success. -Performance indicators became a new movement within the public services with thee express aim of finding out how hard government activity was to measure –established for all kinds of activities.
Sometimes open for criticism for trying to specify the unspecifiable, given the inherent difficulties of measuring performance in the public sector. Managers will argue that the benefits brought by their organization cannot be quantified, or empirical measurement distorts what it does by focusing only on things that can be quantified and able to be processed by information system. Also, once objectives are set they should not be set in concrete- objectives of public organizations frequently change. -There are difficulties in measuring performance, especially in the public sector.
Without some attempt at measuring performance, other aspects of managerial program will not work. It is unlikely that any one measure will be as good as profit, reasons why performance measures keep on being used: 1. Individual public servants may see the use of indicators of appraisal as a threat, but can be opportunity pointing to good practices/performance; 2. As any public activity is under threat of being cut or removed altogether in the current climate, a function or position in which measures of performance are inadequate is much more vulnerable; 3.
There is little point in setting clear objectives, or funding programs accordingly, unless there is some means by which progress towards objectives could be monitored. Some problems of the personnel and performance changes -Personnel arrangements: public servants have greater scope to do things and to achieve results, but with this has an come increased attention as to whether or not results have been achieved. It is very difficult for public managers if they are expected to achieve results while following detailed procedures as in the bureaucratic model.
Another problem is the idea of providing incentives by means of extra pay (good idea in abstract but difficult to implement it in a fair and reasonable way). Finally, it remains difficult to measure the performance of personnel in the public sector, so problems of unfairness are not likely to be solved. -Performance management problems: there are problems in the implementation of performance measurement, in the type of performance indicators used so far, difficult to design a system that provides reliable comparisons and is accepted by those involved.
A pattern seems to occur in which performance measures are initially both opposed and poorly conceived. Perhaps too much can be claimed for the use of performance indicators, rather than being performance measures (perfect surrogates for profit in the private sector) they really are indicators of performance which are simply pointers to good or bad performance. -Problems of morale: a series of unrelenting attacks on government and bureaucracy, followed by a series of bewildering changes including those of performance measurement and personnel changes have brought about morale problems . anagerial changes and reforms have imputed the motives of public servants and taken away many of their hard-fought benefits (such as expectation of a job for life). No quick and easy solution, demoralized workers are less effective. The managerial workplace is more difficult and is more rewarding to those who are capable but less comfortable for those that want an easy life. Chapter 9 Financial Management -The ability to tax and to spend it is what sets the institution of government apart from other