NEW PUBLIC MANAGEMENT Major Components and Salient Features

Reform of Public Administration is now a worldwide phenomenon, as governments grapple with rapid social, economic and technological change, including the effects of globalization. Several countries have implemented radical and comprehensive public-sector reforms since the mid-1980s. These reforms have established objectives and set incentives for productive performance and involve greater transparency. The opening of government agencies to competition, greater privatization and accountability standards contributed to improved government performance. In the contemporary governance cultures, New Public Management (NPM) and its reforms are conceived as deliberate policies and actions to alter organizational structures, processes and behaviours to improve administrative capacity for efficient and effective public-sector performance.

Definition

New Public Management (NPM) can be defined as a new set of experiments in public-sector management informed with the market principles of efficiency and economy to make ailing public sector effective.

MEANING

Unlike the traditional Weberian and Wilsonian paradigm of public administration, NPM calls for a paradigm shift in public-sector management informed with three E’s – Efficiency, Economy and Effectiveness. Moreover, in order to resurrect the sagging credibility of the public sector, NPM asks for liberal borrowing of market principles in public-sector management. It would be more appropriate to see it as an outgrowth of the initiatives of public-sector reform sweeping across the West since late 1980s. Christopher Hood considers NPM as ‘a marriage of opposites’, of which one partner being the new institutional economics, while the other is ‘a set of successive waves of business-type managerialism’.

In sum, the NPM portrays an image of a public administration informed with minimum government, de-bureaucratization, decentralization, market orientation of public services, privatization, performance measurement and so on.

ORIGINS

NPM was, basically, a late 1990s development in the public-sector management that gathered much momentum with the re-inventing movement and governance discourse in 1990s. The origin of NPM can be traced back to administrative reform measures in the West, to be more specific, in the Organization for Economic Cooperation and Development (OECD).

Christopher Hood has shown that the emergence of NPM coincided with four ‘administrative mega-trends’:

I. Changing trend in government growth

NPM attempts to slow down or reverse government growth in terms of overt public spending and staffing.

ii. Shifting towards administrative reforms

The shift towards privatization and quasi-privatization and away from core government institutions, with renewed emphasis on subsidiary in service provision is a trend of NPM.

iii. Developing automation

The development of automation, particularly in IT and in the production and distribution of public services is agenda of NPM.

iv. Internationalising

The development of a more international agenda increasingly focused on general issues of public management, policy design, decision styles and intergovernmental cooperation, on top of the older tradition of individual country specialisms in public administration.

MAJOR COMPONENTS

Christopher’s Doctrinal Component

Christopher Hood has encapsulated the doctrinal component of NPM as follows:

Hands-on professional management in public sector: It seeks to dole out extra ounce of professional manager – like freedom to public sector.

Explicit standards and measures of performance: NPM is in favour of laying out explicit parameters of performance. In other words, definitions of goals, targets and indicators are to be clearly expressed.

Greater emphasis on output controls: NPM stresses on results rather than procedures.

Shift to dis-aggregation of units in the public sector: NPM is proposed to break up formerly monolithic structures in the public sector into ‘manageable’ units. Moreover, it also asks for ‘unbundling of U-form management systems into corporatized units around products, operating on decentralized one-line budgets and dealing with one another on arms-length bases.

Shift to greater competition in public sector: NPM, in principle, favours infusing competitive spirit in public-sector enterprises. For example, competition brings down the cost of product/service and ensures efficiency.

Stress on private-sector styles: NPM lays emphasis on proven private-sector management tools in order to salvage the ailing public sector. Since the hierarchical bureaucratic management technique increasingly proved counterproductive for public sector, NPM calls for liberal borrowing of private-sector management technique.

Stress on greater discipline and parsimony in resource-use: NPM is sought to impose greater discipline and economy in resource utilization by adopting a series of steps, namely cutting direct costs, raising labour discipline, resisting union demands, limiting compliance costs to business and so on.

NICHOLAS HENRY’S 5 FUNDAMENTALS

Nicholas Henry has identified ‘five fundamentals’ of NPM:

Alertness: Government should improvise the problem and act before it actually hit the system, not the other way round.

Agility: Government should be agile in the sense that it should be ‘entrepreneurial, open and communicative.

Adaptability: Government should be continuously engaged in improving quality of its programmes and services and thereby adjusting with demands.

Alignment: Government should collaborate with other government, non-governmental and civil society organizations to achieve social goals.

Accountability: Government should have a clear and compelling mission that focuses on the needs of the people.

SALIENT FEATURES OF NPM

On the basis of the abovementioned components, the following features of the NPM can be identified:

i. Revamping of organizational structure

NPM proposes a thorough revamping of organizational structure so that it becomes conducive to leadership work. Organizational restructuring includes simplifying organizational procedures, flattening of hierarchies and so on.

ii. Empowerment of citizens

One of the major hallmarks of NPM is the empowerment of citizens. It re-conceptualises citizens as ‘active customers’ to be always kept in good humour. It calls for a huge perceptual change among the public bureaucrat’s vis-à-vis citizens.

iii. Greater autonomy for public sector manager

NPM calls for more autonomy to the public-sector managers. Unlike their counterparts in the private sector, public-sector managers have to work within a strict regime of laws and bylaws. Hence, they have no room for innovation and contemplation. NPM is in favour of greater elbow-room for managerial leadership.

iv. Application of performance measurement technique

Application of rigorous performance measurement technique is another hallmark of NPM. The root of performance measurement as a technique of quality assurance has its first forceful advocacy in Fredrick Taylor’s Scientific Management Theory. Though it has become a household name in private sector enterprises for quite some time, its acceptance in the public sector management is only a recent phenomenon. Thanks to the ‘re-inventing government’ movement in the US in early 1990s, a host of performance measurement techniques like TQM, counter services, citizen’s charter and so on, have increasingly become part of the bureaucratic parlance.

v. Dis-aggregation of public bureaucracy

Public bureaucracy has an uncanny knack of expansion and extravagance. The public choice theorists have shown how bureaucracy has blown out of proportion and eaten out the vitals of a given society. Parkinson has unpacked the intricacies of bureaucratic expansion by his famous Parkinson’s Law. NPM suggests dis-aggregation of public bureaucracies into agencies, which will deal with each other in a user-pay basis.

vi. Cost-cutting

NPM is strongly advocating economy in public sector. Inspired by New Right philosophy, NPM is in favour of cost-cutting in public sector.

vii. Goal-orientation

Another important feature of NPM is its goal-orientation. NPM is exclusively committed to goal.

viii. Use of quasi-markets and contracting out technique

NPM encourages quasi-markets and contracting out techniques to ensure better management of ailing cash-strapped public sector.

ix. Emphasis on managerial support service

NPM asks for managerial support service to facilitate public sector managers reaching the pre-set target. Under managerial support service, an array of policies has been undertaken collectively known as human resource management.

x. Organizational and spatial decentralization

NPM believes in decentralized form of governance. It encourages all kinds of organizational and spatial decentralization.

IMPLICATIONS

NPM has engendered an administrative reform spree of sorts across the globe. Ghuman has identified the following broad categories of administrative reforms:

i. Reorganization and downsizing of government

Though NPM does not directly suggest downsizing of government, however, the elaborate reorganization and restructuring measures it prescribes often lead to slimming of government. Concentrate on the major criticism labelled against it. The professed claim of universal applicability of NPM is a trusted antidote to any kind of ‘management ills’ irrespective of culture and contexts. Christopher Hood has enumerated some major objections:

a. Worked on superficial level: First, despite the initial hypes and hooplas, NPM seems to be worked only on superficial level, leaving most of the old problems and weaknesses intact. The only substantial change that has occurred is in the language that the public managers speak in public.

b. Claim of economy sounds hollow: Second, NPM’s claim of economy or cost-cutting also sounds hollow as it failed to bring down the cost per unit of service. Critics argue that the net result of NPM is an ‘aggrandizement of management’ and ‘rapid middle level bureaucratization of new reporting system’, which in effect hampered public service.

c. Promoting public good: Third, NPM on the pretext of promoting public good actually serves the ‘career interest of an elite group of new managerialists (namely the top managers, officials, management consultants and business schools).

d. Claim of universal applicability: Fourth, NPM’s claim of universal applicability is also not tenable as different administrative values call for different administrative designs.

ii. Mangerialism

Some critics argue that managerialism in the form of NPM is the revival of the Scientific Management principles advocated by F. W. Taylor. Pollitt, a staunch critic, sees managerialism representing a revival of Taylor’s Scientific Management ideas which, according to him, are contrary to the development of the organizational behaviour (human relations approach). According to him, the central thrust of NPM is to set clear targets, develop performance indicators to measure the achievement of those targets and to single out, by means of merit awards, promotion or other rewards, those individuals who get ‘results’. There is far less official acceptance of the complexities of workplace norms, beliefs and aspirations or of the equally complex issues of motivational biases in decision-making and inter-institutional interdependencies. Pollitt argues that managerial reforms in the 1970s and 1980s were dominated by the values of efficiency, economy and effectiveness, while other values such as fairness, equity, justice and participation were either off the agenda or were treated as constraints on the drive for higher productivity.

iii. Adoption of private sector styles of management practices

Another major implication of NPM is the adoption of private-sector managerial practices in public-sector management. NPM moved from bureaucratic model of Kanter’s model of flatter (non-hierarchical) and more focused structure of organizations to an entrepreneurial form of governance.

iv. Customer-driven administration

NPM is more customer-driven administration, unlike the traditional bureaucratically managed public sector management, elevates citizen to centre of discourse. Customer’s satisfaction index is considered ‘the’ criteria of public service. Several procedural innovations like Citizen’s Charter, citizens’ report card and so on are manufactured to reflect citizens’ choice.