The New Public Management in Action - Term Paper Example

Private Sector Services Introduction Private sector organisations have competition between individuals and ideas. There is confrontation and conflict within each department and between also over decisions that are made (Lawton and rose, 1994, 4). The main marketing objective of managers in the private sector is profitability. They market their goods and services in a bid to attract customers. Private sector managers distinguish between different customers and provide them with different services at different prices in order to maximise profitability (Flynn, 1997, 45). Private sector organisations are free from both political and legal constraints. Managers have the freedom to manage and have the ability to take risks and are driven by clear goals and responsibilities to their clients. The private sector has the ability to take long view of investment, as the management structure is not volatile (Lawton and Rose, 1994, 9). Fountain (2001, 55) observes strategic management within the private sector, which can be seen through manipulation, marketing and barriers to exit. In the private sector only those who pay directly for a good or service receives the benefits of them (Flynn, 1997, 31). In fact Fountain (2001, 53) argues that there is a relationship between the quality of service provided and the socio-economic status of customers. Furthermore the private sectors work hard to keep their customers happy, as they are aware that it is more profitable to keep existing customers than to go in search of new ones. Firms supply a service at just above the satisfactory level in order to retain customers. Also if customers are willing to pay more they will receive a better more efficient service. This means that the level of service is improved for those who are willingly to pay. Therefore the private sector focuses on those who can afford to pay. Flynn (1997, 38) illustrates that the private sector does not rationalise as the public sector does but it rationalises by price i.e. if a customer doesn't have the money they can't purchase the good or service. Marketing in the private sector is designed to attract customers and increase profits, as profits are a measure of how well a firm is competing in the market. New Public Management (NPM) involves the incorporation of private sector management principles into the public sector. The introduction of NPM has meant that managers are much more responsible for achieving efficiency and success and carrying out public policy (Horton, 1999, 3). The New Public Management describes together basic fragments of service management from the private sector (Fountain, 2001, 60). According to Farrell (2005, 90) NPM encouraged a shift from government to governance. The relevance of corporate governance stems from the 1980s and 1990s which contracting out; quasimarkets, quangos and executive agencies were established. NPM has weakened the political influences upon public sector organisations and has increased management by public sector boards. Privatisation Perhaps it can be acknowledge that privatisation may would encourage competition and therefore increase efficiency and production but it still remains that that privatisation along with private sector practices is not the answer to the problems held within the public sector. Public and private sector organisations have different, goals, influences and management strategies. It is a completely different set of activities to that of the private sector. The strategies that are adopted in the private sector fail to be easily implemented in government organisations. Although privatisation may improve efficiency, production and effectiveness of the public sector it is not the answer. Even politicians are willing to argue that public goods and services should be provided by the public sector. (Flynn, 1997, 48) The privatisation of the public sector would mean that merit goods would no longer be provided as merit goods are not generated by the market mechanism. It may acquire a long time for every society to allow and influence all citizens to build private condition of insurance for old age, health, unemployment and to sponsorship its own edification (Flynn, 1997, 59). Public sector management is in hazard of being twisted into a type of market connected and profit intended for management (Ackroyd, 1989, 604) Also privatisation of the public sector might amplify the redundancy rate as the public sector is the major employer. As management skills necessitate in the public sector are dissimilar to those in the private sector the abilities are non-transferable. There might be no payback to recompense the jobless. The increase of the economy as an entire would decrease in value. The public sector as an organisation aims not for profit but to deliver goods and services to citizens. Lawton (1994, 15) acknowledges that privatisation is widely criticised. It is widely accepted that all privatisation does is turn a state monopoly into a private monopoly and the consumer is unaware of the benefits that privatisation was supposed to produce. Also newly privatised companies have not faced competition before. As a whole the public sector continues to finance and deliver core goods and services that are of a major significance to society as a whole. (Ferlie, 1996, 3) Private Services in Education Private schools have the luxury of telling the students to take a hike if they are not doing the work. If public supported education were viewed as not being bound by time, then the public school system could offer its students the option of taking some time off if that student is unwilling, or unable, to continue in school. This would require a system that would track a student's learning through many years and many different locations. This system could be a major step towards a life long educational system. If there is an analysis of public and private education systems, proponents of private education argue that private schools offer higher quality at lower costs (West, 1991, 160). Others such as Levin (1991, 140) contend that public schools are better suited to meet the nation’s educational demands. Several studies provide some empirical support of the relative efficiency of private schools in finding that students from these schools outperform public school students on standardized tests (Peterson and Howell, 2004, 699; Barnard, Frangakis, Hill, and Rubin, 2003, 300). On the other hand, Krueger and Zhu (2004, 660) and Witte (1992, 371) find that the private school effect on achievement is very small when controls for student, family background, and other characteristics, are considered. However, these findings do little to resolve the debate because we do not know if a significant private school tests results effect (even with controls for student, family, and school characteristics) is due to a sector effect, or if omitted school or student characteristics are responsible for the private school advantage. Considering that the percentage of students attending non government schools are from fairly wealthy backgrounds, it seems as though this would be an extreme disadvantage for students from a lower class social background, as this kind of money may well be near impossible for the majority of lower class families. Private schools tend to select their pupils. This may be done in advance via the fees that not everyone can afford, whereas state schools must, by law, enrol all who seek entry. Private Services in Tourism In tourism, the private sector is the comprising of suppliers, tour operators and travel agents. Suppliers are the ones whose business is to provide a particular service, facility or commodity. Tourism suppliers are to supply such tourism service, facility and commodity that both directly and indirectly relates to customers. Travel, tourism and hospitality suppliers include: food companies, hotels, tourism attraction providers, land arrangements, cruises, event organisers, etc. The tour operators are typically combine tour and travel mechanism to create holidays for tourists. An example of tour operator’s creation would be a flight on an airline plus a transfer between airport and hotel, all for one price. European Tour Operators Association (ETOA) is a good example as it is one of the biggest tour operators in Europe. The success of the tourism industry depends on a close working partnership between the public and the private sectors. Many tourist attractions, such as heritage sites, are publicly owned, which means the private sectors “take” the tourists to the places, while the public sectors are responsible for the promotion and distribution of information about tourism, mostly through the tourists information centres. Private Management is the one of the main drivers of globalisation as it is them who finances most of the research, which bring about improvements in technologies and it is them who come up with new ideas, with hope to become more competitive. Globalisation has brought many challenges for companies all around the world and it is the organizations that are able to adapt and react, which tend to survive in this harsh competitive world. Our natural animal instinct is to react when threatened and it is the way we react that decides if we will survive or not. Private Services in Healthcare At the heart of the productivity problems in the public sector, including health and human services' administration is a system which rewards workers on a basis other than performance, and a system which had become cumbersome with guidelines and regulations such that it is difficult for service providers to effectively serve their customers. Both patronage and civil service are negatively affected when the normal course of competition, and merit reward is displaced by policies which arbitrarily reward workers. Introducing competition via privatization is a direct solution to this quandary. The challenge which the public sector faces by privatization is the challenge of competing, and producing the best product for the most economical price. This challenge is the means by which the public sector can find the motivation it needs to produce, and perform at a level which is equal to the products of the private sector. Facing the health and human services sector of public administration is a rising tide of regulations and compliance initiatives. For decades, the British system of health care has relied primarily on employer-sponsored insurance programs as a gateway through which individual's access health care services. Gaps have been filled in through public insurance programs - such as Medicare, Medicaid - to cover elderly, disabled and certain low income populations who cannot access the employer-based market. In addition, the government (federal, state and local) provides certain limited subsidies (e.g., tax deductions for the self-employed) for individuals to purchase insurance policies in the private market on their own. While this system has worked effectively for many British people, it has left behind a significant number who lack any form of health insurance coverage. For these individuals, the country has developed an institutional health care safety net to ensure that they nevertheless receive access to needed care. The interface of the private sector which is driven by profitability, and the public sector which is driven by meeting perceived needs through the use of public funds, has never been smooth. Like trying to talk on a cell phone while driving in traffic, the health practitioners are trying to meet the needs of the population they serve, while listening to government guide lines. This interface affects the services that can be provided, and the financial compensation which the provider can expect to receive. Conclusion Privatisation is the change of the public sector to private ownership, which will in turn generate enough income to sustain tax-cutting strategies even in economic recession. In the UK the roots of privatisation stem from Margaret Thatchers reign in Politics when she tried to tackle deficiencies in the supply side of the economy. The government argues that a move towards privatisation of the public sector would improve efficiency, performance and increase competition, which in the long run would increase the choice available to consumers (Lawton and Rose, 1994, 11). Privatisation as an approach to reforming the public sector is due to dissatisfaction with the traditional organisation structure of the public sector. Basically the argument against the traditional organisation structure is that it lacks management strategies, which enhance effectiveness, efficiency and productivity (Lane, 1993, 2). An argument for privatisation raised by fountain (2001, 59) is that the change of private sector organisations into governmental terms proves difficult as it hard to define the customer in the public sector and the effectiveness of customer services can not defined without prices as in the private sector profit argues how well it is doing. References Ackroyd, S., (1989), Public sector services and their management, Journal of Management Studies, Vol. 26 No.6, pp.603-19 Barnard, J., Frangakis, C., Hill, J., and Rubin, D., (2003). Principal Stratification Approach to Broken Randomized Experiments: A Case Study of School Choice Vouchers in New York City. Journal of the American Statistical Association, 299-311. Farrell, C., (2005). Governance in the UK public sector: the involvement of the governing boards, Public Administration, Vol. 83 No.1, pp.89-110 Ferlie, E. Et. al., (1996). The New Public Management in Action, Oxford: Oxford University Press Flynn, N., (1997). Public Sector Management, 3rd edn. Prentice Hall/Harvester Wheatsheaf, Hemel. Hempstead, UK, 30-60 Fountain, (2001). Paradoxes of Public Sector Customer Service. Governance 14 (1):55-73. Horton, S, Farnham, D., (1999). Public Management in Britain, Macmillan Press Ltd, London Krueger, A. and Zhu, P., (2004). Another Look at the New York City School Voucher Experiment. American Behavioural Scientist, 658-698. Krueger, A., (2003). Economic Considerations of Class Size. The Economic Journal, 34-63. Lane, J., (1993). The Public Sector, Sage, London Lawton, Alan & Aidan Rose (1994). Organization and management in the public sector, second edition, Pitman Publishing, London, 2-17. Levin, H., (1991). The Economics of Educational Choice. Economics of Education Review, 137-158. Peterson, P. and Howell, W., (2004). Efficiency, Bias, and Classification Schemes. American Behavioural Scientist, 699-717. West, E. (1991). Public Schools and Excess Burdens. Economics of Education Review, 159-169. Witte, J., (1992). Private School Versus Public School Achievement: Are There Findings That Should Affect the Educational Choice Debate? Economics of Education Review, 371-394. Read More