Effect of Globalization on Public Administration - Research Paper Example

?Running Head: Effect of Globalization on Public Administration Effect of Globalization on Public Administration Inserts His/her University Name Table of Contents 1- Abstract 3 2- Introduction 4 3- Defining Globalization 4 4- Effects of Globalization on Public Administration 5 5- Diversity and Public Administration 6 6- Management Issues and need for Varying Styles of Management 9 7- Public Administration and Competition 12 8- Globalized Financialiazation and Public Administration 15 9- Suggestion for a Video 18 10- Conclusion 18 11- References 19 Abstract Globalization has changed the dynamics of business throughout the world. It has transformed the world into a global village where boundaries do not matter. Alongside with other changes, globalization has also brought many important changes in the dynamics of public administration. The shaping of public policy today should be such that ‘the right’ people are attracted to the country. Globalization has also increased diversity in the workplace meaning that many people of different origins are working in the public sector. Management styles should also change in order to accept the changes of globalization. Competition is another dimension of public administration that globalization has contributed. Private sector is increasing its participation in the public sector due to deregulation and this is increasing competition. Global financialiazation has also affected public administration greatly. Introduction Globalization has changed the dynamics of business significantly all over the world. Newer business practices and management techniques have become inevitable in the new business environment that is dominated by diversity, both outward (customers) and inward (employees). Our world has transformed into a global village where distances no longer matter. This has both increased the problems and opportunities for businesses. Competition has increased but many new opportunities are also there to grab. Globalization has not only affected private firms who aim to maximize profits. Public sector organizations are equally affected by the process of globalization. In this paper we will attempt to explain how public administration has changed with globalization. We will try to highlight how management of public sector organizations has been affected by globalization. Diversity will be discussed and how it has increased problems for public administrators. Management issues that have come up as a result of globalization in the public sector will also be elucidated. The element of competition in the public services sector will also be explained alongside with the global financial markets and its effect on public administration. In the end an appropriate video will also be suggested that will shed more light on globalization. Defining Globalization Globalization refers to eradication of state regulations on trade and exchanges across country borders, and a highly integrated and complex system of production, finance, and exchange that has emerged as a result of it (Palmer, 2002). The term globalization refers to a phenomenon that has changed the world in the 20th century. During 20th century many changes occurred in the whole world. The two world wars fought gave rise to massive industrialization throughout the world. An increasingly capitalistic system became popular and regulation became ‘old-fashioned’. Countries soon realized that they were making more goods than they could consumer and this gave rise to global trade on a large scale. After that countries attempted to produce only goods in which they possessed a competitive advantage. This again bolstered globalization. Globalization does not only refer to the economic changes that occurred in the 20th century rather it encompasses many things like cultures, traditions, consumption patterns, technology etc. All these things have become ‘globalized’ today and country specific differences are shrinking. Cultural globalization refers to homogenization of global culture which is happening due to television and internet that are catering to worldwide population (Fotopoulos, 2001). Our world has today become a ‘global village’ where boundaries don’t matter anymore and this is due to the increasing globalization. Effects of Globalization on Public Administration The effects of globalization are not only limited to the private sector. Public sector organizations have also changed drastically due to increasing globalization all over the world. Public services like health, education, and transportation have become extremely complex and global integration has increased greatly. Management of public sector companies is a huge problem now days. They are being run in a very similar way to private organization. Public sector is innovating and often competing today and this is largely due to globalization. Administrators have to deal with diversity in their organizations as both employees and customers belong to diverse culture. Also novelty has become part and parcel of life with new technology coming out after every few days. This calls for a management system that is fluid and flexible so as to adjust to the rapid change in the outside environment. Public administration also has to deal with many problems that were previously not heard of. Public organizations now have to develop strategic plans, much like private companies, in order to solve such problems. Financial problem is an example of such a problem. Today government organizations have to invest in different financial products themselves in order to make use of excess cash. They also turn to markets when they want to raise money for some project. This has led to global financial exposure of public service organization meaning that a public organization will get affected by a flood in Japan or a Tsunami in India. This is how globalization has changed the realm of public administration. Many governments are outsourcing, even their social services programs to in order remain competitive and efficient (Kim, 2008). This shows how the game has changed due to globalization. Public organizations find that other firms may provide the same services they are providing in a better and more efficient manner at a lower cost. Therefore many governmental functions are being outsourced to specialized firms all over the world. Below we will discuss how diversity, management issues, competition, and global financialiazation has affected public administration. Diversity and Public Administration Diversity is a major issue that managers face in public sector organizations. Today boundaries between countries are dissolving and people are moving relatively freely from one country to another. This has contributed to a diversified workforce which is a problem for public administrators. Employees from different cultural and national backgrounds react to managerial instructions differently. Some may be from a collectivist culture, other from individualist culture, and this creates lots of problems for administrators. Employees of diverse background can create problems especially in the public health services industry. They may be accustomed to different standards (of their local cultures) and this can create potential problems. Diversity also influences public administrators because they have to deal with different employees differently. Public administrators cannot setup a manual with which they can manage and control employees. They have to adopt a fluid management style for employees. Motivational techniques and reward strategies can also not be made fixed for all employees rather a fluid system needs to be adopted where needs of all employees are met. Globalization has also diversified the clientele of public sector organizations. The customers that public administrators have to cater are becoming more and more demanding. They belong to different culture and now administrators have keep in mind the cultural orientation of customer when offering services. In a prison system, suppose, religious place of worship cannot be one, rather it should be designed so that prisoners of different religions can also use it. Changes like these are required because of increased globalization of public sector organizations. Institutional racism is an important part of public administration today due to increased gender diversity (Rice, 2010). Public organizations have now become diversified with regards to gender as well and both men and women are working together. This gives rise to gender bias and prejudice within public institution. An important dimension of public administration is to formulate a public policy for the society. This policy should be aimed to maximize the benefits of the people therefore it cannot be diluted with gender or racial discrimination. This is an important hurdle for public administrators as they have to come up with a public policy that is just for the whole society regardless of racial, ethnic, religious, and gender differences. The aim should be to do away with biases and prejudice, and it is extremely difficult. Globalization has increased the pace of change and material development. Within a century many things around the world changed to a great extent but on the other hand mindsets or thought patterns have not developed at the same speed. We, human beings, still are not able to accept the new gender role of women nor we are able to get pass the idea of supremacy on the basis of color and creed. This ‘mental block’ is a something public administrators have to deal in an appropriate manner if benefit of the whole society is to be achieved. Managers mostly use untested or ungrounded assumptions when dealing with diversity within their organizations (Wise & Tschirhart, 2002). This is a major barrier in public organizations and the ramifications of such an attitude are far reaching. Public administrators are not motivated by profit therefore they are not willing to improve upon their ways of dealing with employees. Instead they work on underlying assumption that control and discipline is the only way to handle employee related problems. This is why strict hierarchies are seen in public organizations and everyone is expected to follow the ‘boss’. The problem with this assumption is that when under strict control employees are not motivated to innovate or services for the general public. It is because of such ill founded assumptions that diversity is suppressed in public organizations instead of being used as an asset. Differences between employees are not recognized let alone used for public good. This is why management of diversity is a problem for public administration. Diversity provides a lot of opportunities for an organization if managed in an apt manner. It allows for different perspectives and ways of thinking in an organization which is the corner stone for innovation. Due to lack of vision diversity creates more problems than benefit in public organizations. It is important to train and teach public sector students with regards to diversity and focus should be on social equity (Rice, 2004). All the problems associated with the mismanagement of diversity can be resolved if public administration students were given education about equality. Mindsets should be shaped from the beginning in students who will work in the public sector in future. It is very difficult shape perceptions in employees and more difficult to teach managers about diversity and equality. Mostly discrimination is implicit today and it is difficult to counter. Diversity management is important and it can only be achieved if potential employees are educated about diversity at an early stage of their education. Management Issues and need for Varying Styles of Management Apart from diversity, globalization has also caused many other management issues in public organizations. These issues require varying management styles because no fixed management style is suitable to tackle the dynamic issues that stare public administration today due to increased globalization all over the world. The fact that newer dimensions are open for public administrators today like outsourcing which were not present in pre-globalization era is important to understand before providing solutions to management issues that face public organizations today. Effective reward strategy within the organization is an important management issue that has come up with increased globalization. Private sector enterprises have developed so much in such a short time and this has led to create a disparity between public and private sector organizations. Public organizations today need an effective reward strategy to cater to the needs of employees. Globalization has changed the needs of employees’ altogether and private sector organizations aptly recognized this. Employees now need leisure time as well as money to buy the things that are marketed by multinational organizations. Consumption patterns of employees have changed due to globalization as well. Private sector organization therefore developed reward strategy that is based on both monetary and non monetary rewards. But public organizations are lagging behind mainly due to the fact the public administration is not a profit seeking system as a whole. Lack of ineffective reward strategy causes management issues in the public organizations. Employees are mostly overworked and underpaid. Superiors have to motivate them to work harder but they cannot give high monetary rewards like private sector. This is a problem which needs to be solved in the public organizations. Lack of rewards can also disgruntle employees thereby reducing their performance. A need has been identified in public management to replicate private sector management techniques in order to achieve efficiency (Adams & Hess, 2007). This is important because public administration is usually charged with incompetence and inefficiency. It is mainly because there is a laid back approach in the employees of public organizations and management is myopic at best. Public organizations have resource issues because they are usually short of funds. But resource issues also exist because public administration is plagued by wastages. Employees and managers do not using resources in an efficient and the main reason behind is the non profit motive of public organizations. The main aim of public administration is to formulate policy and provide basic services to citizens. The aim is not to generate profits and therefore efficiency is not achieved in public sector organizations similar to private sector companies. This is a problem for management of public organizations because they cannot change the nonprofit element of their business. Public administration cannot be charged with making profits therefore other ways must be utilized to counter wastage. Management style of public administration has to be altered and a more participative style of management should be followed in public administration. Participative style of management involves taking all employees on board in the decision making process. This style of management is appropriate for public administrators because it can motivate employees by involving them into the decision making process. Also efficiency can be improved as a result of taking employees suggestion seriously. Employees can play a major role in avoiding wastages. Usually in public organizations supervisors are taking all the decision. Employees cannot contribute to decision making and this increases the dissatisfaction of employees. Their involvement in the core decision making process is important for their motivation as well as for their satisfaction Participative style of management also bolsters innovation in the organization (Jong & Hartog, 2007). Innovation is important for public sector organizations because of changing customer demand. The clientele of public organizations is changing and public organizations should be equipped to meet the demand of changing customers. Innovation is often ignored in public administration and this is why public services are always behind private sector companies. This can change participation of employees can be increased through application of this management style. Human resource issues are also a problem for management in public service organizations. About 70 percent of the costs in public sector organizations are related to human capital (Humphreys, 1999). This shows how important human resource management is in public administration. Public administration today is employing workers from a diverse background so their demand is also different. Management of public organizations should be apt in fulfilling these demands so that employee satisfaction can be enhanced. Public Administration and Competition Another contribution of globalization to public administration is increased competition. Now even public organizations have to compete with local and international public sector organizations. New methods and technology are coming up, and public organizations must adopt them in order to remain efficient. Competition has increased because the customers of public services are demanding better services and customers are also well aware of the services being offered internationally. Consumer demand public organizations to adopt newer and better methods as designed by other companies internationally. This pressure from clientele has brought a wave of competition even in the public sector organizations. Shaping public policy in the best interest of people is another important dimension of public administration. In today’s globalized world skilled labor is getting scarce therefore countries are desperately trying to attract skilled immigrants to their countries. Public organizations and public policy play a huge role in this regard because people look for residing in countries that offer better services and provide excellent opportunities for growth. Also the easiness of the immigration process is an important factor when people decide about the country of their residence. Travelling has become so much easier today that people are no longer bound to live in their country of birth. Especially skilled employees search for countries that provide better services and opportunities. This is how competition exists in public administration throughout the world. Competition in public sector organizations is also increasing due to rising costs. Even public service institutions like health and education system need to attract customers in order to cover their costs. This has led to an increase in competition between local public sector institutions. The only way through which public organizations can attract customers is by providing excellent services that are better than what the other institutions are offering to the customers. Public administration previously enjoyed a dominant position relative to private sector organizations due to government support. But this is no longer the case because efficacy of public institutions is being challenged daily. Moreover private sector is also coming up with newer and better ways to serve people. This has shaken the dominance of public sector companies as they now have to compete in order to remain efficient and cost effective. People are demanding better services similar to the services that offered by private companies. Public administration has to answer to this demand because customers are paying taxes which are the main source of revenue for governments. Deregulation is often argued for both public and private sector organizations as it is known to increase the efficiency of the overall industries (Morrison & Whinston, 1986). The direct consequence of deregulation is competition because it allows more companies to enter into business in turn increasing the competition. Public administration is increasingly being deregulated. Outsourcing is starting to take over basic governmental functions like prison systems and educational institutions. This trend is being followed at the highest level of public policy where independent Think Tanks are helping governments formulate public and foreign policy. In such an environment competition in public administration has increased greatly and this has many managerial implications. Managers have to think of other services as well when serving customers. They have to take into account that customers have other choices as well and this is not easy. Public administration never had to worry about competition. They mostly enjoyed monopoly power as private sector was not allowed to enter into public services. This has changed and now public administrators have to worry about competitors. Their attitude is rigid therefore they face problems in adjusting to the new environment. Customers mostly go for lower prices and better services, and this is why public administrators have to treat customers like a valuable community. Gone are the days when customers were being helped by the public service organizations. Today customers are all powerful and their needs and demands matter for managers. Public administrators should respond to changing needs in an environment where costs are rising and substitutes are available for the customers. Public policy makers are trying to reduce the thick middle level of bureaucracy and contracting out work (Light, 1995). This shows how governments are reacting to globalization. Actually the ways of doing business are changing. Employees need motivation to work, either in the form of incentives or non monetary rewards like recognition. Public sector organizations cannot provide both of these things and therefore middle level employees cannot sustain in such organizations. This is another consequence of competition in public administration. In order to remain cost effective governmental functions are being outsourced and this is why middle level employees are being systematically reduced. Globalized Financialiazation and Public Administration Financialiazation is defined as a process in which financial institutions and markets greatly influence economic policy and economic outcomes (Palley, 2007). It is a term given to describe the increasing development of financial markets all over the world, and much of this development is owed to globalization. Public administration, today, has many methods of raising capital from the market. Globalization has revolutionized the world of finance and has made the world globally integrated through stock exchanges and Over the Counter Markets. This has helped public sector organizations in raising funds they need for their operations. This particular contribution of globalization is largely beneficial for public administration but still managers have to adjust their attitudes and managerial skills to the changing environment. There are many ways at disposal for public sector organizations to raise money from the markets. Public sector companies can issue bonds of varying kinds to investors. There are different instruments for short term and long term loans. Now institutions can raise money in their individual capacity and this reduces the burden of government. All these new ways of financing are beneficial for public sector organizations but they also provide challenges for public administration as a whole. Globalization has also made financial markets sophisticated. Public firms can issue many instruments to raise money and at the same time they can also invest money in many products. There are bonds, securities, treasury bonds, commodities, etc. This diverse range of products forces public firms to invest their idle cash in different financial products. This is another dimension of global financial markets for public administration. Public administrators now have to deal with wide range of financial markets but that does not necessarily means that their life is simpler today. Managers of public services organizations have now display more awareness with regards to global environment because of the increased globalization of financial markets. Public organizations are expected to hold money in different stocks and bonds, and therefore apt responsiveness is required. This has made the job of public manager’s complex. Another challenge for public administrators today is to handle their accounts in a manner that maximizes profits. This calls for better cash management by public sector organizations. They should have the right amount of money at the right time if they are to fulfill their obligations and cover expenses. But at the same time they have to earn as much money as possible through investments. Public administration is therefore forced to become extremely sensitive and aware of finance. Investments are a way to make money and public sector organizations are expected to earn investment income today. Previously it was not expected of governmental organizations to hold investment but today not holding investments is impossible for public organizations. Due to increasing deficit and inefficiencies public sector is limiting its scope and this trend is more visible in European countries (Muller & Wright, 1994). Public sector is not trying to increase its presence rather it is giving private sector a chance. This development is mainly due to high public deficits that public sector organizations are facing. Globalized finance has also allowed public sector organizations to cover their deficit through more financing. It has also allowed governments to hide their debt from the world which is a downfall of financialiazation (Balzli, 2010). Many European countries are now facing problems as a result of this. Public administrators have to be aware of both the benefits and dangers of financial markets. They may seem quite attractive but can also cause massive havoc for the whole world, as it is happening today. Countries are finding it hard today to meet their financial obligations and fears of default are rising. In the wake of all this managers should make sure that they do not misuse financialiazation. Raising money from the markets has made public sector organizations, in a way, similar to private companies. When public sector firms raise money from markets they become obliged to make annual or semiannual payments. This forces public services to aim to make money for debt owners. So in a way globalization has reduced the differences between public and private administration. Suggestion for a Video The video I want to suggest is quite informative and is titled state and globalization. It explains how globalization and state have evolved over time. The video is of a university of India named IGNOU and two lecturers are explaining the concept of state and globalization (IGNOU, 2008). It is a very good introduction for people who are not experts of the subject. The video starts from the basic and then builds upon those basic concepts. The explanation of globalization is great in the video and the idea behind it is to explain how globalization has affected public administration. Conclusion Public administration is evolving rapidly due to effects of globalization. World has transformed into a global village where boundaries do not matter. In such an environment the hegemony of public sector organizations has been challenged and private sector is making inroads in the sectors that were strictly state owned. Globalization has increased diversity in the workplace. It has also changed management styles in the public administration. Competition is also increasing in public administration due to advent of private companies. Also globalization has financially changed the dynamics of public sector organizations. Overall globalization has strongly impacted public administration throughout the world. References Adams, D. & Hess, M. (2007). Innovation in Public Management: The role and function of community knowledge. The Innovation Journal: The Public Sector Innovation Journal, 12(1) Balzli, B. (2010). How Goldman Sachs Helped Greece to Mask its True Debt. Spiegel Online. Retrieved on November 08, 2011 from http://www.sauberanandcompany.com/images/How_Goldman_Sachs_Helped_Greece_to_Mask_its_True_Debt.pdf Fotopoulos, T. (2001). Globalisation, the reformist Left and the Anti-Globalisation ‘Movement’. The International Journal of Inclusive Democracy, 7(2). Retrieved on November 08, 2011 from http://www.inclusivedemocracy.org/dn/vol7/takis_globalisation.htm Humphreys, P. & Worth-Butler, M. (1999). Key Human Resource Management Issues in the Irish Public Service. Committee for Public Management Research Discussion Paper 10. Retrieved on November 08, 2011 from http://www.cpmr.gov.ie/Documents/Key%20Human%20Resource%20Management%20Issues%20in%20the%20Irish%20Public%20Service.pdf IGNOU. (2008). State and Globalization. YouTube Channel. Retrieved on November 08, 2011 from http://www.youtube.com/watch?v=b0W43pAG3PU&feature=related Jong, P.J. & Hartog, D. (2007). How leaders influence employees' innovative behavior. European Journal of Innovation Management, 10(1): 41 – 64 Kim, Chon-Kyun. (2008). Public Administration in the age of Globalization. International Public Management Review, 9(1): 39-55 Light, Paul C. (1995). Thickening governments: Federal Hierarchies and the diffusion of accountability. Washington D. C: The Brookings Institution. Morrison, S. A. & C. Winston. (1986). The Economic Effects of Airline Deregulation. Washington, D.C: Brookings Muller, W. & Wright, V. (1994). The state in Western Europe: retreat or redefinition? London: Routledge Palmer, T. (2002). Globalization is Grrrreat! Cato .org. Retrieved on November 08, 2011 from http://www.cato.org/pubs/letters/palmer-catoletters.pdf Rice, Mitchell. (2010). Diversity and Public Administration: Theory, Issues, and Perspectives. California: M.E. Sharpe Rice, Mitchell. (2004). Organizational Culture, Social Equity, and Diversity: Teaching Public Administration Education in the Postmodern Era. Journal of Public Affairs Education, 10(2): 143-154 Thomas, Palley. (2007). Financialiazation: What It Is and Why It Matters. Political Economy Research Institute. Retrieved on November 08, 2011 from http://www.peri.umass.edu/Publication.236+M505d3f0bd8c.0.html Wise, L. R. &Tschirhart, M. (2000), Examining Empirical Evidence on Diversity Effects: How Useful Is Diversity Research for Public-Sector Managers?. Public Administration Review, 60: 386–394 Read More