Managing in the Public Sector
New Public Management
Module: Managing in the Public Sector
Module Code: BUSN09021-9289
Date of Submission: 01/07/2015
Word Count: 2,200
The late 1980s public administration has evolved to demonstrate a businesslike
approach that is known as NPM (New Public Management). The author of this paper
will explain a brief history and the introduction of Christopher Hood’s seven tenets of
NPM and discuss the assertion that NPM has made managing in the public sector
similar as managing in the private sector. By demonstrating tools that’s used in the
private sector but also used in public sector with an end result.
The author will assess a strategy which involves a scorecard and examples of
Renfrewshire Council services, including service improvements within the community
with an overview of other public sector companies and a description of the private
companies finishing with a conclusion.
(Hood, 1991) labeled NPM as an abbreviated name for a set of generally similar
administrative doctrines that controlled the bureaucratic reform agenda in many
Organization for Economic Cooperation and Development (OECD) countries from the
late 70s early 80s and procedures of the public sector in order to make it competitive
and efficient in resource and service delivery (Hood 1996, p271) Figure 1 provides
seven doctrinal elements of NPM with a meaning and a justification.
It’s worth noting that such seven elements of NPM don’t occur in every situation
meaning if one element is absent from the list, it does not compromise the NPM
strategy. (Pollitt 1995,p133) states that such list of elements is a ‘shopping basket’
for whom, who wish to reform the public sector however internationalization NPM has
significant variations from country to country as they don’t have a single intellectual
provenance but do support common themes. In the past, most Organisation’s for
Economic Cooperation and Development (OECD) countries; Australia, New Zealand
and Sweden amongst others have experienced exposure to the seven doctrines
(Hood, 1995). Although OCED countries have experienced exposure, over the period
of the twentieth century, numerous countries have witnessed changes in the public
service that’s being provided (Pollitt, 2003, p.19)
These changes in reforms (Pollitt 2003,p.19) suggests that it impacts the connections
between the public and private sectors in a range of ways which still continue to
change and develop in today’s world, for example;
“In many OECD countries ‘public-private partnerships’ (PPPs) have become
very fashionable, especially in the area of urban regeneration, transportation
and other infrastructure”
“Many other public services have been ‘contracted out’. This means that the
public authorities still retain responsibility for seeing that the service is provided,
and still pay for it and set the standards and requirements for it, but the actual
work of delivering the service is undertaken, on contract, by some other
organisation” (Pollitt, 2003, p.19)
The New Public Management (NPM) concept emerged in the United Kingdom (UK)
and many developed countries in the 1980s (Hood, 1995). According to (Hood, 1995,
p.48) the description of The New Public Management is the term used to describe a
change in public management since the change of power from the election in 1979.
At this time, Britain’s first female swept to power at the doors of NO 10 Downing Street
on 4 May 1979. As newly elected Prime Minister, Margaret Thatcher (Conservatives)
served three consecutive terms in office (BBC, 2015).
During this period of time, the concerns were on the development of new mechanisms
for the accountabilities within the public sector. (Oliver and Drewry 1996, p.1) discuss
“the years since 1975 when Margaret Thatcher became the Prime Minister have
particularly associated with radical programs to reform public services, both
substantively, in terms of the nature and range of services provided by the state and
institutionally, in terms of the way in which service provisions is organized and funded”.
Albeit the state dominated and organized public services, it was not achieving to
deliver quality services efficiently or effectively to society before the rise of NPM in
the early 1980s.
Before the Thatcherism era, (Mackie 2005,p.5) discusses that the Plowden
Committee (1961-1963) was a key influence on the relevance of management in the
public sector, controlling the Public Expenditure which recommended a series of
reforms in planning and control and economic management. (Keeling 1973) supports
that such decisions by the Plowden Committee were essential to allow any significant
improvements in management within public service.
(Mackie, 2005, p.2) continues, “In 1968, the Fulton report (1968) gave a further
description of ‘management’ which was wider than any given previously and that was
much more consistent with the use of the word business.
Management in the public sector are more engaged which passes through to senior
level, allowing them to participate in operational and management strategy with a
more ‘hands-on approach’ requiring a clear responsibility for action (Hood, 1991). An
example of this, is the government outlining their own expectations for the
organisation in the public sector to achieve results, however the public sector
(organisation) will draft up its own strategic goals to submit for authorization to
implement such goals (Mackie, 1995). These goals could include but not exhaustive,
standard of performance, explicit and specific targets, performance indicators and
reporting. While considering Strategic planning, it’s also worth taking into account of
performance and value for money?
Governments can enhance performance by creating competition in service, using a
Compulsory Competitive Tendering (CCT) process, which was introduced in the early
80s in the United Kingdom (UK) that allows the ‘best’ contractor to win over the public
sector organisation that it can provide the best value for money. The government can
then ensure that performance monitoring and reviews take place, this allows such
government to determine costing for a particular service which can lead to term
contracts and other agreements. By being competitive, this may result in rivalry as
this would lead to reducing costs and better service standards (Hood, 1991).
An example of the tendering process is the Local Government Planning and Land Act
1980 that formed a set of rules to tender for building and civil engineering work which
was extended in 1988-1992 to other areas, to street and building cleaning, catering
and financial services amongst other sectors which allowed the winning contractor to
use their own employees and by doing such activity, the main objective is to reduce
the overall costs without impacting service and quality. By changing the pattern of
the workforce .i.e. reducing workforce or introducing younger employees for better
productivity which would lead to a competitive environment with the expectancy of
higher efficiency (Flynn, 1996. P58). NPM suggests that decentralisation has a role
to play within the public sector.
(Flynn, 1996) suggest that pushing bureaucracy into characteristics of public life
shifting power from government into elected councils and public service will create an
environment for sustainable growth, better public services and a stronger society.
This is supported by (Falconer, ND) “It is more efficient because smaller units of
activity are better able to establish objectives and work towards achieving them more
quickly and more directly. It is more accountable, because the new public
management replaces the ‘faceless bureaucrat’ with visible, responsible managers
who directly accountable to the public”. Does this mean that managing in the public
sector is the same as managing in the private sector?
(Hood, 1991) explains that the public sector can move away from a military style to
allow greater flexibility in recruitment and rewards, such move would allow private
sector management tools to be used which would have already been established.
(Falconer, ND) explains, it’s important within public management is that such public
sector should look to seek and behave in a business like environment with business
principles being applied, offering a reward structure for its employees like the private
sector, offering performance pay and flexible working to run parallel with members of
the private sector. On the back of such structure, resource management must be
aware of such labour disciplines.
The foundations of NPM will assist in introducing such disciplines reducing direct
costs financially and labour costs. In such activity, public sector needs to consider
public demands with an attitude of lean thinking, resulting in reducing costs, reducing
waste, while sustaining high quality and customer satisfaction by using a
methodology Six Sigma (Mackie, 2005).
Managers in the public sector must evaluate financial performance, customer
knowledge and internal processes and growth. Such measures are found in The
Balance Scorecard, originally designed by Kaplan and Norton, (Mackie, 2005) The
Balance Scorecard was designed for the private sector which has the company’s
strategy in mind, providing objectives. Managers can establish what’s to be delivered
and sustain the company’s strategy and monitor its development in four key
dimensions as demonstrated in figure 2.
Figure 2: (Mackie, 2005)
The success for the public sector is not measured by profit (unlike private sector) but
how efficiently and effectively the public sector can achieve the necessities of its
stakeholders with an end result of customer satisfaction (Mackie, 2005).
Ultimately, customer satisfaction can be influenced by state power (Government) and
its reforms, by such movement, the behaviors of public management have to be pro-
active to new policy wishes being introduced by the state. In turn, any decision made
can effect society resulting in public management being challenged from both sides
and politicians need to depend on public managers to achieve their goals set-out
(Pollitt, 2003, p83). The challenges from society can be based on the outcome of
poor elections turnouts, poor communication or general weakness of accountability.
(Joyce, 1999) explains “On the other hand, there are concerns about the ‘democratic
deficit’, meaning that there are problems about assuming that every direction set by
politicians, every priority or policy they establish, is completely in line with the genuine
wishes of the public”. The public sector has to consider a range of service strategy’s,
includes pressure-group lobbying, political bargaining and legislative mandates and
budgeting (expenditure) which can impact local authorities. In Scotland local
authorities can use annual capital “allocations” which is provided by the Scottish
Executive, which can be used on education, social work, roads and transport and
Reviewing the ongoing commitment of Renfrewshire Council, they are undertaking
actions to manage the impacts of the UK Government’s Welfare Reforms which
include the establishing the ‘Council Tenant Assistance Fund’ to assist those affected
under the occupancy rules. The council will also deliver a £138Million investment
program to date to upgrade council homes with new heating systems and kitchens
and bathrooms (Renfrewshire.gov, 2015). The above examples provide an insight
the work the local authority is doing and demonstrates that service is a priority within
local authority. (Mackie, 2005) supports the expenditure to homes by explaining that
council’s own housing stock is ring-fenced within Housing Revenue Account (HRA)
which includes income from rent which contributes to reinvestment within local
authority. Such investment is allowing Renfrewshire Council to rapidly improve the
housing service within, although compared to the Scottish Housing Quality Standard,
improvements have still to be made which is demonstrated in Figure 3.
Figure 3: http://www.improvementservice.org.uk/benchmarking/tool.html
Councils have their own each individual targets which is linked to performance and
service plans which relates to having a Single Outcome Agreement (North-Ayrshire
Council, 2015). All Scottish councils share their performance in delivering services to
communities and how satisfied society are with each council’s service which can be
used as a benchmark to review their own performance and drive to make
improvements to service delivery within the councils community.
(improvementservice.org, 2015). It’s not just councils that are public services in the
The National or Local Government have Schools, Hospitals, and local parks that
provide a service to society that are known as public sector which costs are covered
from the taxpayer which are unable to be used inappropriately. In public services, the
public does not pay for such facility such as Schools and Hospitals (Gov, 2015). In
recent years, public services are now private services, known as private sector, an
example of this is Rail Travel in the UK, which was privatised in 1993 (bbc,1993).
What are private services? This is a business activity that’s owned and run by
individuals which can be large companies or be owned by one person with an end
result to make profit. (Gov, 2015)
The author of the report has concluded that Margaret Thatcher and the Conservatives
have without doubt rightly or wrongly made an impact in the UK and still demonstrate
some values that was introduced in the late 70s early 80s. In 1991 saw the
introduction of the seven tenets by Christopher Hood, which saw the public sector
become more competitive and efficient in resource which appears to have peaked in
the 90s. Does such NPM still a valuable concept in an ever changing world today?
Its theory is still used in today’s environment although times change and adapt. Such
concept of NPM can still satisfy management service delivery but should be
rebranded to support a new era with the current times. Comparing the two sectors,
public and private, it’s clear that the two sectors have a goal to achieve, however its
two separate goals with private sectors goal is to produce profit and public sectors
goal is service delivery to society, therefore public service will never achieve the same
as private sector although its attempted to act like a business.
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