New Public Management (NPM) emerged in the early 1990s as a reform movement that aimed to apply private sector management techniques to the public sector. NPM was a response to criticisms of traditional public administration for being bureaucratic and inefficient. Key principles of NPM included decentralization, performance measurement, private sector styles of management, and increased emphasis on outputs and outcomes rather than inputs. While NPM led to some improvements in public sector management, it also received criticism for being too focused on market mechanisms and for potentially undermining important public service values.

1. PAD102: INTRODUCTION TO PUBLIC
ADMINISTRATION
CHAPTER 3: NEW PUBLIC MANAGEMENT
PREPARED BY:
MOHD IDHAM BIN MOHD YUSOF
SENIOR LECTURER (RESOURCE PERSON PAD102)
AHMAD FAIZ BIN YAAKOB
SENIOR LECTURER
FACULTY OF ADMINISTRATIVE SCIENCE AND POLICY STUDIES (FSPPP)
UiTM SEREMBAN CAMPUS

2. Upon the completion of this chapter, students should be
able to:
i. Explain on the birth of New Public Management (NPM)
ii. Explain on the reasons for the emergence of NPM
iii. Discuss on basic tenets and themes of NPM
iv. Discuss on the characteristics/features of NPM
v. Discuss on the disadvantages/criticism of NPM
vi. Discuss on the impacts of NPM
LEARNING OBJECTIVES:

3. 1.0 Birth of NPM
• NPM was introduced on the early of 1990s
• It is about the 2nd reinvention in the Public Administration. The first being
New Public Administration (NPA) of the late 1960s
• The term ‘New Public Management’ was coined by Christopher Hood in 1991
• The book – ‘reinventing government’- by David Osborne & Ted Gaebler in
1992
• Other names of NPM;
 Managerialism(by Pollitt)
 Entrepreneurial Government (by Osborne & Gaebler)
 Market-based Public Administration

4. 2.0 What is NPM?
• A proactive commitment to entrepreneurial and accountable innovation in
governance for the purpose of raising governmental performance, This
international movement was started and strongly showings in Australia,
Britain, Canada, France, Germany, the Netherlands, New Zealands, the United
States and most of Scandinavian nations (Henry, 2010)
• It is a new approach, a reform-oriented and seeks to improve public sector
performance (Rosenbloom and Kravchuk 2005).

5. 3.0 Reasons for emergence of NPM
• Era of “Liberalisation, Privatisation and Globalisation (LPG)” neo-liberalism
(roll-back of state)
• Thatcherism (UK) and Reaganomics (USA) of the 1980s
• Drawbacks of Traditional Public Administration:
 Bureaucratization, emphasis on principles and structures, Positivism, closed
system, political interference, poor quality and higher prices for services,
wasteful expenditures etc.
• Roles of International Financial Institutions such as the World Bank and
International Monetary Fund (IMF)

6. 4.0 Basic Tenets & Themes
• A synthesis of the Public Administration and the Private Administration
(business management). It takes ‘what’ and ‘why’ from Public Administration
and ‘how’ from Private Administration
• NPM aims at 3Es- economy, efficiency and effectiveness(by Pollitt)
 Economy-eradication of waste
 Efficiency- streamlining action
 Effectiveness- specification of objectives to ensure that resources are
targeted on problems
• Emphasizes on vital role of ‘market’ as against ‘state’ (as the key regulator of
society and economy)

7. 4.0 Basic Tenets & Themes
According to Christopher Pollitt, NPM has four (4) main aspects:
i. A much bolder and larger-scale use of market-like mechanisms for those
parts of the public sector that could not be transferred directly into private
ownership (quasi-markets)
ii. Intensified organisational and spatial decentralisation of the management
and production of services
iii. A constant rhetorical emphasis on the need to improve service “quality”
iv. An equally relentless insistence that greater attention be given to the
wishes of the individual service user/consumer
(Shafritz, Russel and Borick, 2011)

8. 4.0 Basic Tenets & Themes
• The NPM is ambitious
• NPM is far more ambitious than the traditional management aspects of public
administration (which can be called the “old” public management)
• It is a “new paradigm” that heralds a major change in the role of government
in society (Owen Hughes in Public Management and Administration as cited
in Shafritz, Russel and Borick, 2011)
• NPM seeks to replace the earlier model of public administration because that
model “has been discredited theoretically and practically”.

9. 4.0 Basic Tenets & Themes
Osborne and Ted Gaebler (1992) in Reinventing Government outlines the ten (10)
principles that become the guideline for NPM movement (as cited in Shafritz, Russel
and Borick, 2011)
i. Catalytic government: Steering rather than rowing
ii. Community-owned government: empowering rather than serving
iii. Competitive government : injecting competition into service delivery
iv. Mission-driven government: Transforming rule-driven organisation
v. Results-oriented government: Funding outcomes, not inputs
vi. Customer-driven government: Meeting the needs of the customer, not the
bureaucracy
vii. Enterprising government: Earning rather than spending
viii. Anticipatory government: Prevention rather than cure
ix. Decentralised government: From hierarchy to participation and teamwork
x. Market oriented government: leveraging change through market

10. 5.0 Characteristics and Features of NPM
Characteristics Perspectives in New Public Management
Values Cost-effectiveness and responsiveness to
customers
Organisational structure Competitive and firm-like
View of individual View individual as customer
Cognitive approach Using theory, observation, measurement and
experimentation
Budgeting Performance based and market driven
Decision making Decentralized and cost-minimizing
Governmental function characterized by: Execution of services
Sources: Rosenbloom and Kravchuk (2005)

11. 5.0 Characteristics and Features of NPM
1. VALUES IN NPM
• In NPM, it stress in the efficient public management of public organization in providing high quality
goods and services that citizen values the most.
• Hence, it emphasizes professional management on the basis of economic rationality.
• It stresses the need to inculcate entrepreneurial skills upon the administrative leaders
• In NPM, it make the public sector more organized to meet the challenges of liberalisation, privatisation,
globalisation (LPG). For this, it suggests certain shifts in the way these organization are organized.
These shifts include:
 Output targets
 Limited term contracts
 Monetary incentives to increased performance
 Freedom to managers (public managers)
• It favors not only raising governmental performance but also rigorous performance appraisal and
measurement and organization. Rewards including pay structures are based on fulfillment of
performance targets.
• Citizens and public managers expect their system of governance to provide cost-effective services to
more people. Thus, the institutional reforms associated the NPM are unprecedented in the formal
separation between policy making and service delivery.

12. 5.0 Characteristics and Features of NPM
2. ORGANISATIONAL STRUCTURE IN NPM
• In NPM, business administration was regarded as the right model for public administration.
• NPM managing public sector in a competitive and firm-like environment
• According to Waldo, business administration is the right model for government administration
• NPM is influenced by New Right philosophy which believes in the superiority of the market as the
guiding principle for the society as a whole
• NPM advocates the incorporation of the established principles of private sector organization and
market competition in the public sector
• It believes that the general management process, principles, skills and techniques are the same for
both private and public organization. Thus, the NPM emphasizes the business management
perspectives in the functioning of government organization
• Accordingly, if public organizations can make profits, then profitability is a highly relevant
objective, in addition to serving public interest
• Hence, the NPM aims at achieving the 3Es (economy, efficiency, effectiveness)
• In addition, NPM focus in competition and collaboration with other governments, companies,
and non profit organisations to enhance public performance and citizens participation in
governance. It thus, has changed public agencies to be more adaptable and alert with various
changes. It also focus on responsiveness

13. 5.0 Characteristics and Features of NPM
3. VIEW OF INDIVIDUAL & PEOPLE DIMENSION
• NPM views individuals as customers (put customer first)
• It focus on customer satisfaction and meet customer needs (i.e. Customers in a
market differ from citizens in a community. Customers seek to maximise their
individual welfare).
• Customers in this sense are:
Other agencies, governments and private organisations
Internal customers from the same public organisations
• NPM has a ‘people dimension’. It is not just a set of technical measures. It gives
importance to the human factor in organization
• The public managers must be primarily concerned with managing people. He can
perform his job more effectively by obtaining the best possible subordinates,
through proper planning, selection and training
• The trained subordinates should be allowed in making decisions.

14. 5.0 Characteristics and Features of NPM
4. COGNITIVE APPROACH
• NPM is largely driven by theory
• It borrows heavily from the public choice approach to public policy
• In public choice approach:
 It posits the individual as a consumer of government services and theorizes that both
consumer choice and administrative efficiency will be enhanced if governments can be made
to compete for individuals purchases of goods and services as firms in a market do.
 It argues that government should not supply a service or apply a regulation unless it cannot be
done as well by the private sector
 Markets are viewed as typically superior to public administrative operations in satisfying
individual preferences, developing technical efficiency and operating in cost-effective ways
• In testing this, observation, measurement, and experimentation is needed in determining
whether changes in administrative operations will contribute to situation that lead to good
public management performance (such as declining of crime rate and customer satisfaction)

15. 5.0 Characteristics and Features of NPM
5. BUDGETING
• NPM budgeting focuses on the production of services and regulatory enforcement (outputs)
and results (outcomes) rather than on inputs such as personnel and equipments
• It prefers agencies and administrative units to generate their own revenues i.e. charging user
with certain amount of fees
• Performace Based Budgeting and Market Driven concept budgeting
• Allocation of public budgets must be based on performance, creation of value for
customers, the public and the national interest
• Lack of output should be investigated whether the government investment into the function
should lead towards its termination, privatised or shifted to some other level or unit of
government
• Agencies should have: (a) flexibility in handling their budgets as long as they produce results
(let agencies manage the budget and expenditures) and (b) be entrepreneurial in
developing markets for services they can produce at competitive costs

16. 5.0 Characteristics and Features of NPM
6. DECISION MAKING
• Decision making in NPM should be based on responsiveness to customers,
performance levels, and cost effectiveness
• Decision making should be decentralised
• Decisions in missions and entrepreneurial opportunities should be made by agency
leaders generally with input from rank and file employees
• NPM decision making is cost-conscious

17. 5.0 Characteristics and Features of NPM
7. MANAGERIAL AUTONOMY, INDEPENDENCE AND ACCOUNTABILITY
• NPM lays emphasis on increasing managerial autonomy to public managers
• It gives them the necessary freedom to manage their resources, to achieve high
quality standards of service and increased client satisfaction.
• The people are redefined as active customers and just passive recipients. However,
the public service has been more open, more visible and more consultative. Thus,
the NPM is open-ended.
• With the freedom, public administrators/managers is accountable to the law,
professional and community values and the public interest

18. 5.0 Characteristics and Features of NPM
8. PUBLIC MANAGERS SHOULD BE POLICY SENSITIVE
• NPM emphasizes the development of policy sensitivity by public managers
• They should be flexible enough to explore alternatives to make public administration
more cost effective, that is to do more and better with less of expenditure
• It aims at cost cutting and reducing public expenditures. Its motto is ‘value for
money’.

19. 5.0 Characteristics and Features of NPM
9. LIMITED & ENTREPRENEURIAL ROLE OF PUBLIC ADMINISTRATION: BETTER
GOVERNANCE
• NPM aims at limited role of government, including privatization and contract
management
• It calls for retreat of the state and argues for deregulations, It emphasizes market-
driven management, which is receptive to competition, It uses quasi-market and
contracting out to foster competition within and between public sector organization.
• In the words of Osborne & Gaebler:
We don’t need more governments, we need better government. To
be more precise, we need better governance.
• Governance is the act of collectively solving our problems. Government is instrument
we use. The instrument is outdated and it is time to remake it.

20. 5.0 Characteristics and Features of NPM
10. STRUCTURAL ADJUSTMENT
• Hierarchies and structures are flattened
• Structurally, the preferred model for the design of the administrative system is
clusters rather than the pyramids
• In this system, autonomous agencies are linked to parent department on the basis
of contract
• Therefore in NPM, it favors in reducing central agency control

21. 6.0 Criticisms of NPM
1. NOTHING NEW
• NPM emphasis on management does not seem particularly new or original
• In fact the field of public administration began with the emphasis on management
L.D White: study of Pubic administration should start form the based of management
Willoughby emphasized the managerial role of public administrators
• In 1948, Waldo advocated business administration as the appropriate guiding model
for government administration
• NPM, however, contains something new and something old
• Its underlying philosophy is the old Weberian advocacy of politics administration
differentiation and the autonomy of management at the cost of politics
• It is new is that it is citizens friendly, market oriented and responsive administration.
• Thus, there is change of content, it is new in this sense

22. 6.0 Criticisms of NPM
2. DEMORALIZING BUREAUCRACY
• NPM perspective has resulted in overlooking the contribution of career civil service
by criticizing the bureaucracy as the mainspring of mal-governance
• This has demoralizing effect on bureaucracy
• Higher civil servants have a unique role in policy formulation. Such roles should not
be diluted in our focus for managerialism
• Furthermore, it gives importance to top management and overlooks the
contributions of other level of decision making in pubadministration

23. 6.0 Criticisms of NPM
3. OVER-EMPHASIS ON ‘MARKET’
• NPM overemphasis market orientation and over-reliance on the private sector
• Above all, there is a thing called ‘public interest’ which lies at the heart of
government operation, it is irreplaceable by any market philosophy.
• The purpose of public management is distinctive in that it support and develops
collective life by choosing goods and services essential to the community as a whole.
The market sponsors cannot realize this kind of response.

24. 6.0 Criticisms of NPM
4. CONCERN OF CITIZENS
• The ‘publicness” aspect of the NPM is not negotiable
• The sphere of public governance has some unique distinguishing features like
constitutional framework, fundamental rights, and accountability to the legislature,
judiciary and the people

25. 6.0 Criticisms of NPM
5. ILLS OF ‘ROLL BACK OF THE STATE”
• NPM favors downsizing the government
• But, it is argued that narrowing down the scope of government may be the universal
recipe, in view of the diverse development trajectories of nations
• In 3rd world countries governments have committed themselves to development
activities in social and economic spheres, This is because of the absence of a socially
responsible private sector in these countries. Hence, in post-colonial third world
countries, downsizing the government may not be possible

26. 7.0 Impacts/ outcomes of NPM
I. Efficient utilization of natural resources
II. Reduction of cost of production
III. Public private partnership
IV. Profit oriented bureaucracy
V. Cutting red tape
VI. Cutting down the size if bureaucracy
VII. Reducing budget
VIII. Outcome budget
IX. Putting customer first
X. Greater accountability, openness and transparency in administration

27. Conclusion
• Doctrines comes and doctrines go, but public administration is always and inherently
progressive
• Managerialism, the NPM and the reinventing government movements are just
landmarks towards progressivism
• There can be no end to the doctrine of public administration; there is only
continuous doctrinal reform

28. References
Henry, N. (2010). Public Administration and Public Affairs, Eleventh Edition, Pearson,
USA
Rosenbloom S.R and Kravchuk S.R. (2005). Public Administration: Understanding
Management, Politics, and Law in the Public Sector, 6th Edition, McGraw Hill, Singapore,
ISBN: 007-123843-3
Shafritz M.J, Russel E.W and Borick P.C. (2011). Introducing Public Administration, 7th
Edition, Pearson, USA, ISBN: 978-0-205-78050-1

29. Recommended Tutorial Questions
Question 1
Define New Public Management (NPM)
(10 marks)
Question 2
Discuss on any two (2) characteristics of NPM
(10 marks)
Question 3
Discuss on any two (2) advantages of NPM
(10 marks)
Question 4
Discuss on any two (2) disadvantages of NPM
(10 marks)

30. RecommendedActivityin Tutorial Classes(Interactive
tutorial approach)
Identify and discuss on any New Public
Management (NPM) approaches/practices
inculcated in Malaysian public administration