New
Public Management
Arguments against Tradi6onal Public
Administra6on
1. The government instruments in ge<ng things
done were the bureau and public enterprises.
2. The bureau and public enterprises handle
both the demand and supply sides of service
delivery.
Arguments against Tradi6onal Public
Administra6on
3. The rising cost of service delivery became
evident in the 1960s and 1970s.
4. The public choice theory argues against
tradi6onal public administra6on.
Six Core Issues of Global Public Management
Reform
1. How can governments find ways to squeeze more
services from the same or a smaller revenue base?
2. How can government use market-style incen6ves to
root out pathologies of bureaucracy?
3. How can government use market mechanisms to give
ci6zens (customers) greater choices among services or
at least encourage greater aVen6on to serving
customers beVer?
Six Core Issues Of Global Public Management
Reform
4. How can government make programs more responsive,
decentralize responsibility to give frontline managers greater
incen6ves to serve?
5. How can government improve its capacity to devise and track
policy? How can government separate its role as a purchaser of
services (a contractor) from its role in actually delivering
services?
6. How can governments focus on outputs and outcomes instead
of processes or structures? How can they replace top-down, rule
driven system with boVom-up, results driven systems?
Characteris6cs of New Public
Management
• The NPM movement began in the late 1970s and
early 1980s
Ø United Kingdom under Prime Minister
Margaret Thatcher
Ø municipal governments in the U.S., e.g.,
Sunnyvale, California
Ø Governments of New Zealand and Australia
Defini6ons of New Public Management
• Refers to a cluster of contemporary ideas and prac6ces
that seek, at their core, to use private sector and business
approaches in the public sector.
• An approach in public administra6on that employs
knowledge and experiences acquired in business
management and other disciplines to improve efficiency,
effec6veness, and general performance of public services
in modern bureaucracies.
• It has become a norma6ve model which signals a profound
shia in how we think about the role of public
administrators, the nature of profession, and how and why
we do what we do.
Doctrinal Components and
Assump6ons of NPM (Hood, 1990)
1. Hands-on professional management in the
public sector
2. Explicit standards and measures of performance
3. Greater emphasis on output controls
4. Shia to smaller units in the public sector
Doctrinal Components and
Assump6ons of NPM (Hood, 1990)
5. Greater compe66on in public sector
6. Private sector styles of management prac6ce
7. Greater discipline and economy in resource
use
Five Core Principles of NPM
1. Downsizing – reducing the size and scope of government
2. Managerialism – using business protocols in government
3. Decentraliza6on – moving decision making closer to the
service recipients
4. De-bureaucra6za6on – restructuring government to
emphasize results rather than processes
5. Priva6za6on – direc6ng the alloca6on of governmental
goods and services to outside firms
Characteris6cs of the New Public
Management
A. Undisputed characteris6cs (iden6fied by most observers)
1. Budget cuts
2. Vouchers
3. Accountability for performance
4. Performance audi6ng
5. Priva6za6on
Characteris6cs of the New Public
Management
A. Undisputed characteris6cs (iden6fied by most observers)
6. Customers (one-stop shops, case management)
7. Decentraliza6on
8. Strategic planning and management
9. Separa6on of supply and demand
10. Compe66on
Characteris6cs of the New Public
Management
A. Undisputed characteris6cs (iden6fied by most observers)
11. Compe66on
12. Performance measurement
13. Changed management style
14. Contrac6ng out
15. Freedom to manage (flexibility)
Characteris6cs of the New Public
Management
A. Undisputed characteris6cs (iden6fied by most observers)
16. Personnel management (incen6ves)
17. User charges
18. Separa6on of poli6cs and administra6on
19. Improved financial management
20. More use of informa6on technology
NPM in New Zealand
• Stagna6on of the country’s economy.
• Labor Party introduced NPM in mid-1980s.
• Key principles:
Ø Government should only be involved in ac6vi6es
that could not be more efficiently and effec6vely
handled elsewhere.
Ø Government should, wherever possible, be
organized along the lines of private enterprise.
NPM in New Zealand
Approaches
1. emphasis on management over policy.
2. shia from the use of inputs to performance targets vis-à-vis
quan6fiable output
3. devolu6on of management control coupled with the development
of new repor6ng, monitoring, and accountability mechanisms.
4. disaggrega6on of large bureaucra6c structures into quasi-
autonomous agencies, in par6cular the separa6on of commercial
from non-commercial func6ons.
5. preference for private ownership, contrac6ng out, and
contestability in public service provision.
NPM in Australia
• The government introduced managing for results in 1983.
Ø priva6za6on
Ø governmental restructuring
Ø program evalua6on according to specified/desired results
• Managers use corporate/ strategic planning processes to:
Ø iden6fy priori6es, goals and objec6ves
Ø beVer track expenditures according to desired results
Ø emphasize efficiency, produc6vity and accountability for
results.
NPM in Great Britain
• Context: Government suffered from the
defect of monopoly, high transac6on costs,
and informa6on problems that bred great
inefficiences.
• NPM was introduced by the late PM Margaret
Thatcher.
NPM in Great Britain
NPM introduced market compe66on and
marketlike incen6ves to shrink government’s
size, reduce its costs, and improve its
performance.
1. Disaggrega6ng services between those that
can be performed beVer by the private
sector and those that remained with
government but subjected to compe66on
whenever possible.
NPM in Great Britain
2. Financial Management Ini6a6ve
3. Ci6zen’s Charter to hold agencies responsible
for mee6ng specific service standards.
Advantages of NPM
1. cost efficiency
2. service effec6veness and efficiency
3. value for money by focusing on performance management
and audi6ng
4. encourages government to concentrate on the efficient
produc6on of quality services
5. replaces highly centralized hierarchical organiza6on
structures with decentralized management
Cri6cisms of NPM in Developing Countries
1. lacked the resources and managerial capacity to
adopt rather sophis6cated NPM reforms
2. centralized decision making can generate its own
pressure for arbitrary ac6on and corrup6on
3. liVle experience in the opera6on of markets, e.g., rule
of law to ensure compliance with contracts
4. difficulty to move to contractual arrangements for the
delivery of service because the necessary laws and
the enforcement of contract are not well established.
Cri6cisms of NPM in Developing Countries
5. promo6ng a ‘one size fits all’ approach to public sector reform
6. public expecta6ons of service quality from government in many
developing countries are jus6fiably low, with the consequences
that ci6zens are unlikely to feel that complaints are worth the
effort’
7. a sharp dichotomy between the formal and informal rules of the
game in developing countries and the predominance of the
informal realm which is non-bureaucra6c.
8. lack of administra6ve capacity to manage priva6za6on successfully
Classical PA vs NPA vs NPM
Classical Public New Public New Public
Administra1on Administra1on Management
Environment placid, permanent turbulent, temporary hos6le
Values 3Es: economy, 3Es plus relevance, sustainable
efficiency, client-orientedness, development
effec6veness social equity
Structures bureaucra6c non-bureaucra6c state-market-civil
society accord in good
governance
Processes 1. organiza6on and 1. distribu6ve 1. leadership
management 2. integra6ve (Poli6cs accountability
2. personnel of love) 2. par6cipatory
administra6on 3. boundary-exchange governance
3. fiscal administra6on 4. socio-emo6onal
