How New Public Management Has Led to a Convergence between the Public and Private Sector - Case Study Example

New public management has led to a convergence between the public and private sector and enhanced the delivery and organization of public services. Discuss. Contents Contents 2 Introduction 3 Discussion 4 Background of Public administration 4 Origin of new public management 5 Main paradigms of new public management 6 Differences of new public management from private administration 6 Overview of new public management 7 Impacts of new public management on the organization and delivery of public services 8 Criticisms of new public management 11 Conclusion 12 References 14 Introduction New public management is a term which denotes the government policies which are aimed at modernizing the public sector and making it more efficient in terms of structure and functioning. This term was formally conceptualized and coined by Hood in 1991. The basic hypothesis of the concept of new public management is that the market oriented monitoring and managing of the public enterprises is expected to lead to higher cost efficiencies for the governments of respective countries, without having any kind of derogatory effects on the other related objectives and considerations involved in this sector. Currently, the paradigm of new public management in action is also described as the interdiction of efficient public services into the three M’s which are managers, marketing and measurement. This report is prepared with the aim of evaluating and researching into the topic of how the concept of new public management in action has resulted in the convergence of the private and public sector sand future helped to enhance the organization and delivery of the public services. For this purpose, the origin and convention of new public management are studied. Also, the impacts of the introduction of this concept within the public sector have been analyzed along with a consideration of the associated drawbacks and criticisms for new public management in action. Discussion Background of Public administration Public administration is done in the public sectors of every nation. Public administration is a discipline or a field of study which refers to the management of the public sectors by deriving theories from administrative and political science. Managerialism in the public sector is a type of entrepreneurial approach of public management that is done by emphasizing on the management rights and on a high scale reinvigorated and innovative scientific management. The new public management has been developed as a management technique which is especially applicable in the public sectors and aims to drive higher levels of convergence and exchange of ideas between the two sectors, thereby enhancing the efficiency of the public sector by drawing in the successful ideas of the functioning of the private enterprises and private sector administration. The concept of new public management emerged in the mid 1980s as a type of public administration that stressed on the aspect of dealing with the public or the citizens as the customers of the enterprises operating in the public sector (Hood, 1991). Later, the concept developed as a theory of managerial governance which was built on economic decision making perspectives, principal agent theories, market theories, public choice and transaction cost economics rather than on civic choices. New public management acted as a part of the reinventing movement that looks at the citizens of a nation as the customers of the public services, applies free market principles in the management of the sector and separates the public from the administration of the sector. The perspective of public choice in public administration was less focused on before the advent of the new public management which is why public bureaucracy seemed to have many constraints in achieving necessary competition and incentivizing (Talbot, 2004). Origin of new public management New public management is a new form of governance that includes the series of reforms that have been introduced in the public sector since the 1980s with the aim of making this sector more effective and efficient both in terms of structure and functioning (Esping- Anderson, 1990). The main aim of this form of management is to identify the reasons for the failures and the drawbacks existing in the public sector over time and provide suitable ways to negate these inefficiencies, so as to make the sector more consistent and effective in orientation and performance. The concept is used for the identification of both the nature and the scale of problems within the public sector and also focused on both the administration and the activities of the sector (Hood and Peters, 2004). The main idea of introducing the new public management concept was to bring in major public changes in the management strategies followed in the public sector by emphasizing in cost cutting, efficiency enhancement and the general assumption that the state governments should be able to deliver better and high quality services for lesser prices to be paid by the public or the consumers (Barzelay, 2000). Also, the new public management concept takes into account that the critical success factors and ideas that have been identified in the private sector can actually help to enhance the experiences of the entities that are using the planning system for the public sector enterprises (Dunleavy and Christopher, 1993). New public management seeks to develop public services that are customer oriented rather than being market oriented and also aims at reshaping the interactions of the public entities with the government of a state or a country. The ideological transformation of the public sector ethos and functions prevail at the core of these expected benefits and are collectively termed as new public management (Hambleton, 2004). Main paradigms of new public management The main characteristics of the new public management are developed over the following eight principles and aims (Lawton and Rose, 1994). Steering and strengthening the functions of the sector in a centralized manner. Developing authority while at the same time providing necessary degrees of flexibility in the management of the sector. Developing higher levels of control, performance and accountability. Improving the human resource management functions of the sector. Supporting and propagating the optimization of information and communication technology (ICT) within the sector. Enhancing the quality of the rules and regulatory policies governing the public sector. Ensuring the provision of high quality and quick response services to the stakeholders. Promoting and developing choice and competition in an inter sector and intra sector perspective. Differences of new public management from private administration There are several ways in which the public sector can differ from the private sector. These may include the factors that the degree of market exposure for the public sectors is often more than that of the private sectors, the legal and formal constraints for the two sectors including the hierarchy formats, courts and legislature are also distinct, the political influences and control are also of different levels for the two sectors, the breadth of impact within the sectors are varying, the range of coerciveness are more for the private sectors because many state activities are rendered to be monopolistic and unavoidable in nature (Walker, Brewer, Boyne and Avellaneda, 2011). Additionally, the public sector is more susceptible to public scrutiny, controlled by the political influences in the country, the decision criteria, complexity of goals and objectives and evaluation are also distinct and the employee management, employee relations and the role of the management of the enterprises are also distinct in nature (Mintzberg, 1993). There are also many differences between the way public sectors and private sectors are managed for achieving higher organizational effectiveness and performances, deciding the incentive structures and organizational and sector specific priorities. The general reforms and regulations in a country often tend to ignore these differences but in the practical situations, the consideration of the inherent differences between the public sector and the private sectors are to be done as a pre requisite while deciding on the regulations and policies for management and governing of these two sectors, respectively (McLaughlin, Osborne and Ferlie, 2002). Overview of new public management The new public management promotes the idea of the government promoting competition among the different public enterprise and service providers, empowering the citizens by segregating the power into the sector among both the bureaucracy and the community, measuring the performances of the agencies on the scales if outcomes and results and not on processes and inputs, motivating the sector and its entities by goals, objectives and incentives rather than by rules and regulations, re defining the citizens and the customers and offering them with choices, forecasting and preventing problems and issues of the consumers rather than only offering them mere services, directing the energy of the sector towards earning money and not only incurring expenses, fostering participative management and decentralizing authority, enforcing market mechanisms in place of stringent bureaucratic mechanisms , focusing on providing all kinds of public services but at the same time catalyzing every sector of the society including the private, public and voluntary sectors to engage in solving the problems of the community in a co operative and convergent manner (Griffiths, 1983). Impacts of new public management on the organization and delivery of public services The new public management works as a combination of management policies that help to split large bureaucracies into fragmented and small public entities, foster the growth of competition between different agencies functioning in the public sector and also between the private firms and the public agencies thereby developing higher incentivizing and competition that leads to the overall economic and financial growth within a nation (Propper, 2008). When defined from this perspective, the new public management seems to be a significant driver of the public sector management policies across the world starting from the 1980s. These management policies focus on management by objectives, decentralization, contracting out, customer orientation and competition within the government as the main strategies of managing and developing the sector (Perri, 2004). The new public management has become more profound in developing higher level of convergence between the public and private sector entities because, unlike the other management reforms introduced in the public sector, the new public management focuses on clearly specified objectives like orientation towards efficiency and outcomes through the better management and allocation of public budget. Also, the new public management has been an active component which has driven the competition level within the public sectors because it has brought about the concept of healthy competition as a main source of growth from the private sector to the public sector (Gershon, 2004). The new public management policies have also achieved higher levels of sustainable management through the application of several economic, leadership and management principles that have already been successfully used in the private sectors. The introduction of these reforms have made the service delivery as well as the functions of the public sector companies to be more effective and efficient because now these entities have to function in a dynamic and challenging sector rather than in a laid back and less demanding sector as existed before the introduction of the reforms of the new public management (Flynn, 2012). New public management has till date been the most effective management and reform aspect which has addressed a wide range of beneficiaries like the citizens and stakeholders who are directly associated to the public services. In the year 2007, the European Commission published a report on the governance issues in the public sectors of the union. The objective of this report was to propose an innovative kind of relationship between the citizens and the state. These included the basic features of the new public management like improved public management, flexible decision making processes, reform governance and globally functional service delivery processes (Hartley, 2005). New public management has driven the growth of the focus of the public sector entities through the development of management forces which have fostered competition and choice in different segments of the public sector. This has been done through the development of quasi markets in which both choice and competition are introduced to boost the efficiency, effectiveness as well as the incentives of each of the entities to form stronger organizational structures and perform in a more focused manner (Le Grand, 1991). The development of equity and responsibility has also been done and as a result a shift towards better integrated and networked forms of entities and services in the public sectors are performed in a proactive manner (Pettigrew, Ferlie and McKee, 1992). The emphasis of the new public management on the increased adoption of managerial strategies and practices that are originality used in the administration and functioning of the private sector, the promotion of enhanced levels of competition within the entities functioning in the public sector, more use of contracts and agreements in work divisions and allocation arrangements within as well as outside the government and the concentration given on results in place of procedures have been the main reasons which have helped the new public management to enhance the function and performance efficiency of the public sector entities, especially in the developed countries (Hughes, 1998). The formulation of efficient and explicit measures of performances and standards has led to the creation of more efficient and incentivized enterprises within the sector. Also, an open and flexible way of management which emphasised on the segregation of administrative units creates scopes and space for the enterprises to function in a more liberalised manner leading to higher empowerment levels in the sector (Propper, 2004). Additionally, the new public management has instigated a shift from the policy focus to management focus that has also supported the reduction of wastage in the public expenditures and helped to manage the budgets in public administration in a properly allocated manner. The flexible arrangements for the organization have substantially improved the employment, economy and efficiency conditions in different countries of the world and fostered a steering governing style rather than a rowing one which more than often created lack of direction and alignment within the different aspects and units of the sector (Ferlie, Freeman, McDonnell, Petsoulas and Rundle-Smith, 2006). It can be identified that the new public management system has delivered high levels of decentralization in the public sectors which was mandatory to make this sector compete effectively with the highly decentralized private sector. Also the market and consumer oriented mechanisms enforced by this management technique has fostered the growth of the different enterprises in this sector by improving the quality of services and the responsiveness of the enterprises to the emerging demands and requirements of the stakeholder groups. Criticisms of new public management Though there have been noticeable developments in the public sectors after the introduction of the new public management as an initiative for reforming the ways in which the public sector entities are governed and managed, yet may practitioners and industry experts are of the view that the initial introduction of the new public management was result bearing which is actually fading in the currently scenario. Many practitioners are also of the view that the new public management as a management concept had been significant earlier but is currently experiencing a decline because of the emerging complexities and expectations from the public sector entities complete on a globalised and highly integrated international platform (Perri, Leat, Seltzer and Stoker, 2002). The digital era governance seems to have replaced the new public management as a new form of corporate governance because of the higher level of congruence and relevance achieved through the use of this kind of governance. The new public management had started new techniques of management like the integration of concerns within government control and formation of joined up holistic governments which are carried forth by the digital era governance by embedding the aspect of digitalization in the way communications and storage are maintained in the government domain. The need of taking up a digitally holistic approach is felt across different areas of the public sectors across the globe due to which the countries which are technologically advanced are focusing on moving to the digital era governance as the new form of management of reforms and techniques for managing the public sector entities (Hughes, 2003). The new public management has brought about a new wave in the way organizational management is done in the public sector. The major organizational changes brought about by the new public management in the public sector are noted in the themes of competition, incentivizing and disaggregation. The effects of the new public management are highly profound and noted in the public sectors across different countries. However, the impacts of the new public management have started to become stalled or reversed in many of the leading edge countries in which the sector of digitalization has been sufficiently integrated into the way the public sectors are managed. The new public management is also said to have increase the levels of policy and institutional complexity because it has brought about major reforms in the private sector which may be beneficial in the privet sector but are not as successful and sustainable in the practical application in the public sector management (Haynes, 2003). Conclusion The reforms of new public management have added much value to the way in which the public sectors across all developed nations are organized. The effective implementation of these reforms has also added to the creation of a dynamic environment in the sector which enables the integration of multiple financial, structural, technological and human resource aspects. The reforms also give equal importance to the assurance of developing highly institutionalized government, mechanisms that help to address social and economic issues like unemployment and under utilization of skills and resources within the sector. The new public management has been used as a management reform and a set of tools which have been applied in specific situations and settings to achieve higher effectiveness and results. Not only does these management techniques pave the way for the development of new techniques and strategies that help to enforce multiple and diverse prospects within the sector, but also helps to generate new ideas, information and techniques across different segments of the public sector. Thus, it can be inferred that the role of new public management has been of great importance in enhancing the service delivery processes and the organization and structure development of the public sector and also it has contributed sufficiently towards the development of private public partnerships which help to deliver higher economic value to a country. However, changes should be made in the new public management system to include new strategies and techniques to ensure that the management process remains updated and flexible and contributes to the sustainability and continued success of the public sectors across different nations of the world. References Barzelay, M. 2000. The new public management: Improving research and policy dialogue. Berkeley: University of California Press. Dunleavy, P. & Christopher H., 1993. From old public administration to new public management. Public Money and Management, 14, 3, p.916. Esping- Anderson, G., 1990. The Three Worlds of Welfare Capitalism. 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