New Public Management in the UK - Case Study Example

Running Head: New Public Management in the UK New Public Management in the UK of the of the New Public Management inthe UK The traditional model οf public administration is based on the bureaucracy theory. It is characterized as "an administration under the formal control οf the political leadership, based on a strictly hierarchical model οf 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 administrating those policies decided by the politicians." The traditional model οf administration was an improvement compared to the earlier one, which was regarded as the replacement οf personal administration with an impersonal system based on rules. Indeed these were central concerns οf philosophers such as Aristotle in ancient Greece, Confucius in ancient China, and Machiavelli in medieval Italy. But the conception οf the activist, bureaucratic state, despite its earlier parallels, is in practice an essentially twentieth century phenomenon. The characteristics οf this bureaucratic state were set out most clearly by the German sociologist Max Weber in 1920, with strong echoes οf earlier writings by the American Woodrow Wilson (Hughes, 1998): "There should be a clear separation between politics and administration, and therefore distinct roles for political leaders (normally elected) and state officials (normally appointed). "Administration should be continuous and predictable, operating on the basis οf written, unambiguous rules "Administrators should be recruited on the basis οf qualifications, and should be trained professionals "Organization should reflect a functional division οf labour and a hierarchical arrangement οf tasks and people "Resources should belong to the organization, not to individuals working in the organization "The principal motivation should be a sense οf duty, or public interest, which should override organizational or private interests. Further refinement οf the traditional model οf public administration came through the application οf private sector based ideas οf scientific management, which introduced efficient operational methods based on standardization οf tasks, one best way οf fitting workers to tasks, and systematic control οf tasks, processes, and workers (Hughes, 1998,33-34). These principles were easily adapted to bureaucratic structures. A final addition to the traditional model was the application οf the insights οf social psychology, in a human relations approach which is often contrasted with the scientific management approach, but in practice sought to achieve greater efficiency οf performance too, though by paying attention to the need to motivate workers rather than merely control and direct them (Hughes, 1998, 35-6). Unfortunately, the ideal bureaucracy model had never happened in the real life. The critique οf the traditional model is based in a comparison οf the ideal model οf bureaucracy with what happens in real systems οf public administration. Due to the limitations, the practice οf traditional model resulted in the overlarge government constitution and inefficient political operation in the late 1970s in most developed countries such as UK and USA. Associated with the new development οf economic and organizational theories, the idea οf New Public Management" (NPM) became more and more popular. Those theories are coherent challenging with the problem οf traditional model. The first challenge comes from the market economic aspect, which is concerned with the public choice. The public choice theory argues who is able to make the best choice, the government or the individual? Public choice advocates the maximisation οf choice by individuals for both individual freedom and efficiency reasons. Dunleavy (1986) describes people are "rational actors" because they always seek the biggest possible benefits and the least costs in their decisions. Meanwhile the bureaucrats in the traditional model will attempt to maximize their own utility, which would overstate the budget and the cost οf providing service. Following this idea, there is a great wave οf privatization and contracting out activities in most developed countries, especially in UK. This period brought a substantial restructuring οf the public sector under a strategy οf privatization, applied to the publicly owned industries, the major utilities, and the services sector. The key procedure here was known as the Prior Options Review, under which all ministries were required to consider all activities and ask: 1. Is the work necessary? If not, abolish it. 2. Must government be responsible for it? If not, privatise it 3. Should government provide it directly? If not, contract it out to the private sector 4. If provided directly, decentralise to executive or other non-departmental agency Under this type οf arrangement, a private contractor assumes responsibility under a contract for providing a specified level and quality οf public services for a fee. The advantages οf contracting are clear; it offers, through competition, to cut costs and contain public expenditure; to set enforceable standards οf performance and quality; and to strengthen both policymakers and managers by drawing a clear distinction between the determination οf services and their delivery. The second problem with the traditional model focuses on the Weberian model οf bureaucracy. Critics question on the efficiency and responsiveness οf bureaucracy. "Formal bureaucracy may have its advantages but it is also argued to breed timeservers not innovators, it encourages administrators to be risk-averse rather than risk-taking and to waste scare resources instead οf using them efficiently"(Hughes, 1998). Hughes also presents the reasons for the inefficiency οf bureaucracy. Firstly, "there was always some divergence in practice from Weberian principle." Secondly, the rigid, hierarchical structure is also regarded as the killer οf efficiency. On the other hand, the bureaucracy model οf administration focuses more on the procedure than the result. It is becoming less and less responsive to the rapidly changed environment. Especially when people are more and more concerned with the quality οf public services, the traditional model οf administration is less and less to be satisfactory. Managerialism, Consumerism and Performance Measurement The management οf public services in the UK has undergone a period οf major change, which can be traced back to the Conservative Government οf 1979 who held the view that the sector had too large a share οf gross domestic product was inefficient in its operation and was not properly accountable for its activities (Glynn and Murphy 1996). Much was made at the time οf the "good" οf the private sector and the "bad" οf the public sector. As Isaac-Henry, Painter and Barnes (1997) describe the Thatcher Government placed the private sector on a pedestal to which the public sector should aspire whether they agreed to or not. The authors also outline the managerialist view at that time which was that public sector "failure" up to 1979 was due to a lack οf proper management which should be derived from the private sector, and the need for an emphasis on the role οf the consumer leading to improved quality at lower cost. Performance measurement approaches represent an attempt to address both the consumerist and managerialist agendas. It is important to note that the New Labour Government, post 1997 has, despite criticising the Conservatives whilst in opposition for its reform οf the public sector, not only embraced the approach but expanded the model further through the Public Private Partnership, Service First and Best Value initiatives. The adoption οf performance measurement can therefore be seen as having the ideological commitment οf both main political parties (Glynn and Murphy 1996). Why do we Measure Performance? Osborne and Gaeblers seminal work Reinventing Government (1993) outlines the following important reasons to measure performance: "h What gets measured gets done. Specifying measures can help organisations to formulate goals and outcomes. "h If you dont measure results, you cant tell success from failure. Successful outcomes give a focus for decisions for example increases in spending can be targeted based on established performance. "h If you cant see success, you cant reward it. Performance can be improved by incentives but these can only be offered if performance is measured. "h If you cant reward success, youre probably rewarding failure. Measures οf performance can be used to reward those high performers. This is a contentious argument, which challenges the notion οf focusing resources on areas most in need. Isaac-Henry, Painter and Barnes (1997) cite the complex socio-political environment in which public services operate and external factors, which can influence performance. It is however part οf the current approach οf "top slicing" budgets and offering incentives through challenge funds and "Beacon" status for public sector organisations, and must be given serious consideration within the performance measurement debate. "h If you cant see success, you cant learn from it. Identifying good performance can be a learning experience. Trial and error and feedback in terms οf outcomes are important in deciding future actions. "h I you cant recognise failure, you cant correct it. This asks the important questions "how do we know we are doing the right things?" and "how do we know we are doing things right?" "h If you can demonstrate results, you can win public support. This is a particularly important reason for performance measurement and again highlights the links to accountability and the consumerist agenda. Osborne and Gaebler link this to expenditure and taxation where the public will support tax increases if these can be linked to results. To summarise the above the overall aims οf performance measurement should be to improve services, ensure accountability and perhaps more contentiously to reward success. Principles οf Performance Measurement In the private sector performance measurement effectively comes down profit or profitability (Glynn and Murphy 1996). The public sector needs to demonstrate different aspects οf performance. Isaac-Henry, Painter and Barnes (1997) see public performance management as a range οf processes, techniques and methods aimed at achieving productivity, quality and added value in public services. In creating a framework for measuring performance it is important to be clear that such a framework highlights the needs οf the organisation in terms οf areas for improvement Isaac-Henry, Painter and Barnes (1997) characterise public sector organisations as having "multiple stakeholders" which gives a greater complexity to that found in the private sector. Performance measurement is a means to an end rather than an end in itself and must address organisational and stakeholder needs. Osborne and Gaebler (1993) highlight that what is measured gets done but it is therefore equally important to ensure that the organisations core business, and particularly those areas most in need οf improvement are focussed on. Bolton (2003) sees this as the monitoring οf critical success factors, which lead to the fulfilment οf the organisations mission. He also raises the need to find a balance, which offers views from different perspectives and covers both quantitative and qualitative measures. Such an approach allows for an element οf triangulation between the "reality" οf quantitative measures and the "perception" οf qualitative. If a service areas performance is improving against a measurable target but customer satisfaction rates are falling what is the analysis οf performance? Ownership οf the performance measures is crucial to ensure effectiveness and accuracy. Flynn 1997 states that managers, workers and service users must all be consulted on what should be measured and that a performance measurement culture is about learning and improvement rather than blame. This is an important factor in respect οf accountability. For a performance measurement system to be effective it must be subject to scrutiny to ensure that the correct measures are in place and that the data generated is reliable. Such scrutiny can be carried out internally through audit or peer review but for the public sector the various regulatory regimes, such as HMI and Audit Scotland play a significant role. This is an example οf what Wilson and Hinton (eds. 1993) call performance requirements as "methods οf regulation" and key to the debate on the use οf performance measurement in the public sector. In designing and maintaining performance measurement systems it must be understood that the changing environment both internally and externally must be addressed and systems must be updated to ensure measures remain current, appropriate and challenging. Isaac-Henry, Painter and Barnes (1997) link this point to the need for public organisations to use performance measurement as a means οf learning. The ongoing re-evaluation οf mission and objectives is imperative and the selection οf appropriate measures flows from this. Finally performance measurement must be seen as an aid to improvement. It is important to manage our performance as well as measure it and frameworks must pinpoint areas where corrective action must be taken to ensure performance targets are met. This highlights the issue raised earlier οf performance measurement as a means to an end rather than an end in itself. It also demonstrates the importance οf a performance framework, which does not merely report retrospectively but is constantly updated and has the acceptance οf all parts οf the organisation as highlighting the performance οf individuals towards organisational goals. This is what Isaac-Henry, Painter and Barnes (1997) call "supportive cultural and attitudinal characteristics within an organisation" (pp101). What Measures should be Set? In determining the measures to be used in the performance measurement framework it is important to recognise the different types οf measure available. Flynn (1997) identifies three types οf measure, economy, efficiency and effectiveness. Economy measures simply show how much money is spent by an organisation over a given period. Therefore improved economy would be the acquisition οf a greater number οf units for the same level, or a lower level οf resources. Flynn argues that although such measures say little about quality and customer satisfaction they are dominant in performance management systems due to their links to the budgetary process. Achieving high levels οf success can only be seen as an achievement if done within financial limits. Efficiency measures also known as productivity measures are more sophisticated and ask how much was produced for a given level οf expenditure. Improvements in efficiency take place when more units οf output are produced without an increase in expenditure or expenditure is reduced and the level οf output is maintained. Such efficiency measures are often used as comparitors in the public sector and Flynn warns that this can be misleading as it says nothing about the standard οf the output and fails to take account οf wider social issues. Measures οf effectiveness are concerned with outcomes and the impact οf services provided. Flynn highlights differences οf opinion on what are the desired outcomes οf public services and the political element contained in these debates i.e. outcomes related to voters rather than service users most in need. It is also possible to combine different types οf measurement to produce for example measures οf cost effectiveness which link the economy factors with the outcomes achieved. In all οf the above approaches there is an emphasis on measuring performance against established standards and targets and this is touched on in the later case study. References Bolton, Mike. (2003) Public sector performance measurement: delivering greater accountability. Work Study olume 52 . Number 1 . pp. 20-24. Dunleavy, P., and Hood, C (1994) From Old Public Administration to New Public Management in Public Money and Management 14,3,pp 9-16 Flynn, Norman. Public sector management. (1997). Hemel Hempstead. Prentice Hall. Gaster, Lucy. Quality in public services. (1995). Buckingham. Open University Press. Glynn, John J., Murphy, Michael P. (1996) Failing accountabilities and failing performance review. International Journal οf Public Sector Management, Vol. 9 No. 5/6, pp. 125-137. Hughes, O. (1998) Public Management and Administration: an Introduction 2nd edition, London Macmillan Isaac-Henry, Kester, Painter, Chris, Barnes, Chris. eds. (1997) Management in the Public Sector: Challenge and Change. 1997. London. Chapman and Hall. Minogue, M. (1998) Changing the State: Concepts and Practice in the Reform οf the Public Sector. In C. Osborne, David, Gaebler, Ted. Reinventing government. (1993). New York. Penguin. Polidano, C. (1999) The New Public Management in Developing Countries. Institute for Development Policy and Management, University οf Manchester, Manchester Wilson, John, Hinton, Peter. eds. Public services in the 1990s. (1993). Wirral. Tudor Business Publishing. Read More