Public Management and Administration - Owen E.hughes

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Public Management 61 basis from inductive work. Economics is, or can be, as mathematical as formal methods of policy analysis (Chapter 6), but is more directed in that it has assumptions of rational behaviour that can be operationalized. Theory comes first in deductive work. Events are predicted to occur following the assumption for which data are then sought. Economists and economic thinking became more influential in government from the 1960s and 1970s (Carter, Klein and Day, 1992). In the 1980s, a more rigorous kind of economics began to be used, one deriving from neoclassical economics and public choice theory in particular (Chapters 1 and 2). This gave theoretical backing to the attack on bureaucracy, reducing government in general, and gave a methodology for designing market-based public policies. Economists and economic thinking became dominant in government and bureaucracy in both theory and practice. It is easy to see why. Compared with the rather vague public interest theories of public administration, economics offered precision, prediction and empiricism, backed by a motivational theory of how people acted. Economics also had direct relevance to governing. The public sector does things: it provides goods and services and should do so in the most efficient way possible. The focus of management models on results, efficiency and measurement owes much to economics. The key theorist with regard to public administration was Ostrom. In the early 1970s, he argued that there were two opposing forms of organization: bureaucracy and markets, and that bureaucracy had major problems compared to markets. Bureaucratic organization was to Ostrom less efficient or effective than allowing choice through markets; competition, consumer sovereignty and choice provide incentives to lower costs, which are argued to be absent in the bureaucratic model of administration. He argued that ‘alternative forms of organization may be available for the performance of those functions apart from an extension and perfection of bureaucratic structures’ (Ostrom, 1989, p. 16) and also that the work of contemporary political economists, based upon a paradigm derived from economic theory, ‘challenges many of the basic assumptions in the traditional theory of public administration’ (1989, p. 64). The way that new public management has developed bears out much of what Ostrom advocated, even if the ideas took some time to be adopted. There are two main principles of new public management, both of which can be seen in the work of Ostrom. First, it is market-based – derived from economics – using such theories as public choice, principal–agent theory and transaction cost theory (Walsh, 1995; Boston et al., 1996; Kaboolian, 1998, p. 190) and, secondly, it aims to move away from bureaucracy as an organizing principle. The second theoretical basis for public management can be found in private management. There are several managerial changes with antecedents in the private sector. In the private setting, there is greater flexibility in tailoring the organization to circumstance, instead of necessarily following a rigid Weberian model. Though the private sector was once as bureaucratic as any government, it moved earlier towards more flexible forms of management and the managerial changes
62 Public Management and Administration in the public sector follow these. The focus on results could be said to derive from economics, but is also present in private management, as without results a company would be out of business. The greater attention now paid to strategic planning and management in the public sector also derives from the private sector (Chapter 7). Private sector personnel practices have been adopted to some degree, including the greater use of incentives and disincentives throughout the organization, such as paying more for good performance, or less for poor performance, or terminating staff relatively easily. To a lesser extent, the adoption of more formal means of evaluation has private sector roots, as does the improvement in information systems to provide accounting or other data. These could all be said to derive from the private sector, but none could be seen as exclusively being a private sector technique. Where private management is particularly helpful for managerialism is in deconstructing parts of the public system once considered to be fundamental. Of course, the public sector must be fair and impartial in dealing with clients, but this does not mean that public servants need be neutral or have a job for life. It may be difficult to measure performance in the public sector, but this should not mean that no attempt should be made. The political nature of the public sector does make it different from the private sector, but this does not mean that all acts are political, or that all policy actions need be undertaken by politicians. This is particularly the case with the input factors identified before, such as the generous staffing conditions once thought necessary for public servants. It is hard to see how service delivery is necessarily damaged by employment by contract or on a part-time basis, or if staff are initially hired at higher levels than the base-grade. However, all these are against what was once thought necessary for all public employment. If much work in the public sector is the same as the private sector, other than at the highest levels, it is hard to justify unusual employment practices. Perhaps the most important point imported from the private sector is the focus on objectives. Making results the primary aim, with everything else secondary, is a major change of mind-set. Also, bureaucratic organizations are not axiomatically efficient, as discussed earlier. The private sector has experimented with other organizational frameworks – profit centres, decentralization, staff flexibility – all of which have public sector parallels. The movement in the private sector towards flexibility is now being emulated by the public sector as well. Economics and private management are the main theoretical supports for new public management. Whether these are satisfactory supports or as good as those of the traditional model will be discussed later. Criticisms of managerialism It is argued here that following the implementation of the comprehensive reform programme, the work now done by public servants deserves the name
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Public Management and Administratio
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Also by Owen E. Hughes AUSTRALIAN P
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© Owen E. Hughes 1994, 1998, 2003
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Preface Over the past 20 years the
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viii Preface the Colorado link such
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7 Strategic Management Introduction
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10 E-government Introduction In the
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11 Managing External Constituencies
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12 Public Management in Developing
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13 Accountability Introduction The
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14 Conclusion: A New Paradigm for P
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284 References Borins, Sandford (19
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286 References Glor, Eleanor D. (20
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288 References Jordan, Grant (1997)
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290 References Monroe, Kristen Renw
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292 References Putt, Allen C. and S
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294 References Wilson, Graham K. (1
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296 Index bureaucracy 1-5, 9, 15-43
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298 Index information and communica
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300 Index ‘one best way’ thinki
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302 Index Ritter, G. 85, 86 role of
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