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New Public Management:

The Era of ManagerialismDr. Lloyd Bautista

Dwight Waldo’s Post-Bureaucracy

“…a future society in which bureaucracy in the Weberian sense would have been replaced by more democratic, flexible, though more complex, forms of large scale organization”.

Dwight Waldo

New Public Administration (1968 to 1980s)

Backlash from Vietnam and Watergate Counterculture Civil rights movement, feminist, consumer, and

gay movements Assassinations of charismatic figures – JFK

and Martin Luther King Growing anti-government

New Public Administration (NPA) (1968 to 1980s)

In 1968, Dwight Waldo sponsored a conference at the Syracuse University’s Minnowbrook Conference Center.

Deconstruct the value-free rational bureaucratic approach

Open it humanistic and democratic influence.

Issues affecting US society: poverty, inequality, neglect of human rights, racisms, or Vietnam war

Ethical tone and pro-active role of the government.

Minnowbrook Conference

New Public Administration

Need to re-define the role of the bureaucracy

What should it be within the broad concept of justice & equity

Bureaucrats should go beyond the positivist directives

They should gain a more broader & critical perspective of their role in governance

Reconciling PA w/ democratic representation

Not all interests are represented by Congress, Executive, or interest groups

PA has a valid claim to being a representative of the people

Is representation to be found only in elected officials?

PA is not subservient to any branch of government

It has a special trusteeship role within the Constitution

Public Administrator’s New Role

Exercise discretionary powers with respect to Constitutional values

Act in a professional manner Nurture the trustee role More than an artful dodger or referee of

interest groups To be critically conscious in pursuit of the

public interest

Public Administrator’s New Role

Expand the rank of judicious few by stimulating reasoned debate on public interest

Act responsibly and with responsiveness Educate and encourage hard work to solve

public problems Critical analysis (ex. Market) Work for the long-term education of elected

officials

Fall of Big Government

History of NPM Anti-government trend Deficit, high taxes, waste and inefficiencies Bureaucratic bashing

US President Carter called for deregulation of industries, reduction of federal red tape, and civil service reforms

US President Reagan reduced funding and authority of federal programs and agencies

US President Clinton came up with the NPR

US President Bush called for privatization of social security

US President Obama appointed a Chief Performance Officer

New Public Management Theory

Idea to run government like a businessUse of market mechanism in governanceNew ways (innovation) of achieving results or

outsourcing functions to the private sectorGovernment as Entrepreneurial & CatalystNew Institutional Economics (NIE)

Public Choice Theory (Maximizing Self-Interest)Moral Hazard and Principal-Agent ProblemInformation Assymetry

Public (Rational) Choice Theory

Maximize self-interest

Choice is based on benefits/costs

Human behavior

Moral Hazard/Principal-Agent Problem

Theory of Moral HazardPrincipal -Agent

Transaction costs for the Principal to monitor the Agent in order that the latter acts in accordance to the former’s interest.

How can one design a compensating system (contracts) that makes the agent act for the principal’s interest according to the agent’s own self-interest?

Agent (insured) behaves in a way that the Principal (insurer) perceives the probability or magnitude of harm rises to the principal

Examples

• Insurance• GOCCs• Outsourcing/BOT• Agrarian Reform• Decentralization of LGUs• Underpaid government employee

Solutions: Aligning objectives

• Sanctions or penalties• Monitoring• Participation, collaterals, or deductibles• Performance benchmarks• Stock options, profit sharing, and

commission

Public Management is rolling back government!

Dis-aggregationPurchaser-provider separation schemes (e.g. NAIA

& DMIA Terminal) De-coupling policy and operations (e.g. ERB &

IPPs )

CompetitionQuasi-markets (e.g. Attack helicopters for

competitive Bidding)Deregulation (e.g. Telecom)

Incentivization “Light touch” regulation (e.g. CHED) Privatizing asset ownership (e.g. Napocor) Performance-based pay (e.g. GOCCs)

Source: Dunleavy et. al., 2005

Reinventing Government Movement

David Osborne and Ted Gaebler wrote a best-selling book “Reinventing Government” in 1992

Similar to Tom Peters & Waterman’s “In Search for Excellence”

Provided provocative and challenging ideas on approaches to public management

They attacked the traditional public administration and called for reinvention

David OsborneTed Gaebler

Reinventing Government They cited examples of

entrepreneurial government Decentralizing Encouraging privatization Control of programs at the

community level Increasing attention to

customers Finding ways to make money

on government operations

Donald Kettl’s global public management reform:

Economic efficiency – less for moreUse of markets against the bureaucratic

pathologiesWider choices for citizensDecentralize services for responsivenessInnovativeness in monitoring policiesSeparate roles of government (consumer,

enabler, and direct provider)Focus on outputs vs. outcomes

Concepts

Restructuring

Re-organization

Rationalization

Reengineering

Moving & collapsingboxes

Organization wide restructuring & job movements

Addressing redundancy & duplication of functions

Reconfiguring the work process

Rethinking Re-evaluation of the org; its identity, purpose, & business models

HISTORY: Total Quality Management

Two catch phrases – “Doing things right for the first time” and “Working smarter, not longer”.

TQM is a set of principles, tools, and procedures that provide guidance in the practical affairs of running an organization.

It is ‘total’ because it attempts to involve everyone in controlling and continuously improving how work is done, in order to meet customers’ expectation of quality.

Historical Origin

Walter Shewart of Bell Laboratories in 1920s developed the Statistical Process Control (SPC), which is used to measure variances or problems in the production process.

He also invented the Plan-Do-Check-Act (PDCA) technique, which aims to increase the level of performance through iterative and continuous fashion

Japanese 5 - S• 5S is a method for organizing a workplace, especially a shared

workplace (like a shop floor or an office space), and keeping it organized.

• Phase 1 - Seiri ( 整理 ) Sorting: Going through all the tools, materials, etc., in the work area and keeping only essential items. Everything else is stored or discarded.

• Phase 2 - Seiton ( 整頓 ) Stabilize or Set in Order: We arrange the tools, equipment and parts in a manner that maximizes work efficiency .

• Phase 3 - Seisō ( 清掃 ) Shining: Systematic Cleaning or the need to keep the workplace clean as well as neat. At the end of each shift, the work area is cleaned up and everything is restored to its place.

• Phase 4 - Seiketsu ( 清潔 ) Standardizing: Standardized work practices is instituted. Everyone knows exactly what his or her responsibilities are to keep above 3S's.

• Phase 5 - Shitsuke ( 躾 ) Sustaining: Refers to maintaining and reviewing standards. Once the previous 4S's have been established, they become the new way to operate. Maintain the focus on this new way of operating, and do not allow a gradual decline back to the old ways of operating.

Japanese 5 - S

Historical Origin

After WWII, Deming and Co. introduced quality management with Kaoru Ishikawa adding the internal customers as beneficiaries of quality outputs.

The Japanese experience made ‘TQM’ teams popular.

The early forerunners of TQM opened the organization to a constant stream of new ideas for improving performance, derived from scientific study involving everyone to satisfy internal and external customers.

Lean Production Techniques

• Minimize waste, improve efficiency and quality, eliminate bottlenecks and slack

• Calls for job rotation, cross-training, multiple tasking, and teamwork

• Interaction and communication among work teams are facilitated by kamban system

• Just-in-time production – supply and raw materials are delivered only when needed; lean zero-nature of production

process.

Classical Public Administration

Service delivery Direct delivery Less discretion Efficiency and rationality

Systems and Structures Hierarchical Closed Rule-based

Role of the Public Servant Implementor/Executor Accountable to elected officials Neutral/Non-partisan

The People Petitioner Mendicants Powerless

New Public Management

Alternative

Service delivery

• Privatization• Public-Private partnership

Customer responsiveness • Cheaper, quality, and fast service

• Options & choices

Re-engineering • Streamlining• One-stop shop• De-layering

Decentralization • Local autonomy• Empowerment

Competitiveness • Markets• Incentives

Journey of Mgt

1920Taylor’s Time & Motion

1930Shewart’s Stat Sampling

1940Deming’s application of

stat sampling in BoC

1950Japanese

Reconstruction

1960Philip Crosby’s Zero

Defects

1980TQM Circles

Osborne & Gaebler

1988Hammer’s

Reengineering

The Managerial Approach

Focus on results and personal accountability Make organizations, personnel, and

employment more flexible Clear objectives and indicators for

measurement Senior staff are politically committed to the

government rather than neutral Separate “provision” from “sourcing-out” public

goods Lesser government intervention

Rise of Managerialism in the Public Sector

Government as a night watchman Spiraling budget deficits Government is synonymous to waste,

fraud, and abuse Public disillusionment & anti-government

sentiment

Rise of NPM Thought in West

Popularity in US and UK of Neo-conservatism in 80s– Ronald Reagan– Margaret Thatcher

Rise in post-modernism EU Charter’s fiscal demand -“All member

states shall avoid excessive governmental deficit.”

Privatization frenzy of state-owned enterprise

Role of Development Banks

WB, IMF, ADB and OECD– Aid and financial assistance linked to anti-

bureaucratic themes (SAPs) Fall of Communism and triumph of the

free market Advances in ICT made comparison

between private and public service

Public Management Reform

Political pressures to maintain the same levels of public service

Improve productivity (Cost, Quality, & Time)– Why should we hire when we can outsource?– Why should we have fixed security of

tenures?

First calls for Productivity: OECD

• Raise the production performance– Improvement HR management– Involve staff in decision making– Relax controls while impose strict

performance targets– Use ICT– Improve feedback from clients and quality

service– Bring supply and demand decisions together

Greater use of the private sector

• Dependable, efficient and competitive public procurement system

• End monopoly over public goods

Hood’s (1991) NPM

Hands-on professional management Explicit standards and performance

measures Greater emphasis on output controls Disaggregation of units Greater competition Private sector styles in management Fiscal discipline in resources

Privatization– Switch from public funded to user fees– Contracting-out public good or service– De-nationalization or selling-out state-owned

enterprises– De-monopolization or eliminating restrictions that

prevent private firms from competing with state-owned enterprises

Freeing the market thru privatization.

Where is it easy to register property – and where not?

City Ease of registering

property (rank)

Procedures(number)

Time(days)

Cost (% of property value)

Mandaluyong 1 8 21 4.5

Muntinlupa 2 8 26 4.5

Tanauan 3 8 32 3.5

Cebu 4 8 32 3.5

San Juan 4 8 26 4.5

Valenzuela 4 8 30 4.5

Parañaque 7 8 27 4.5

Pasig 8 8 30 4.5

Las Piñas 9 8 25 4.5

Manila 10 8 33 4.2

Navotas 11 8 31 4.5

Taguig 12 8 32 4.5

Mandaue 13 8 43 3.3

Malabon 14 8 32 4.5

Lapu-Lapu 15 8 41 3.7

Pasay 16 8 32 4.7

Marikina 17 8 32 4.7

Makati 18 8 33 4.6

Davao 19 8 33 4.8

Caloocan 20 8 33 4.8

Quezon City 21 8 39 4.7

Note: Rankings are the average of the city rankings on the procedures, time, and cost to register property. See Data notes for details.Source: Doing Business Database

Philippin

es

China

India

Indonesia

Japan

Rep of K

orea

Mala

ysia

Singapore

Thailand

Vietn

am

East A

sia &

Pacif

ic

World

Ave

rage

0

20

40

60

80

100

120

1018 16

12 10 11 114

9 12 11 10

10899

46

86

2517 14

9

34

94

68

42

116 3

73 2 1 2 4

8 6 4

Procedures (Number) Time (days) Days per procedures

Ease in starting a business for foreign companies, 2010

Source: Investing Across Borders, World Bank

Ranking of selected countries on the Global Competitiveness Index

Selected Countries GCI RankSwitzerland 1United States 2Singapore 3Switzerland 4Germany 7Japan 8Hongkong, China 11Taiwan, China 12Australia 15South Korea 19New Zealand 20Malaysia 24China 29Spain 33Thailand 36Italy 48India 49Namibia 74Vietnam 75Sri Lanka 79Philippines 87Jamaica 91Cambodia 110Zimbabwe 132Burundi 133

Table 2. Source: World Economic Forum, 2010

10 principles

Acronym Principles

S Steering rather than rowing

E Empowering customers rather than serving them

C Competition into service delivery

O Organizing by mission rather than rules

R Results, rather than inputs, are funded

I Intense customer orientation

D Decentralization and teamwork

E Entrepreneurial earning rather than bureaucratic spending

L Leveraging change through market-based incentive

P Prevention rather than cure

Program ownership and stakeholder participation

Marketization and private sector participation.

Inter-local cooperation or collaboration

Public-private partnership.

Performance measurements

Transparency and accountability

Program ownership and participation

1. Community-oriented - people assisting the technical staff sent by the government through the information they made available to them.

2. Community-based - partnership between the state representatives and people’s organizations during the decision-making process. Information to make proper decision are gathered and supplied by the members of the community.

3. Community-managed - the highest expression of people’s participation when the community itself initiates, creates, monitors, and evaluates projects and programs.

Marketization Idea to run government like a

business Use of market mechanism in

governance, such as outsourcing functions or privatization

Government as Entrepreneurial & Catalyst

• Section 13, Article 10 of the 1987 Constitution:

Sec. 13. Local government units may group themselves, consolidate or coordinate efforts, services, and resources for purposes commonly beneficial to them in accordance with law.

Public – Private Partnership

The PPP essentially ties the participants into a common goals, where both their fortunes are linked to the success of the overall project, thus, creating the incentives for both to cooperate, innovate, and even assume risks for mutual benefits (Forrer, et al, 2010).

Challenges in NPM Complexity (e.g. PPP) and power

struggles (e.g. IPP) Freedom from rules threaten

accountability and check-and-balances Diverging interests, values, vision, and

mission (Business vs. Public) Flexibility can also lead to dysfunctional

bureaucratic behavior Empowering customers can turn out to be

“interest groups”

Challenges in NPM Institutional uncertainty and instability Markets dilute the public service ethos Abandonment of less profitable customers User fees may hit the less privilege Competition rather than cooperation

Case 1: You were hired as a manager. You found out that your unit has 30 people to receive and process application forms in the insurance business. There were 5 steps required to process the application forms starting-off with receiving, inspection, evaluation, computation and ending with approval. Your 30 people were divided into 5 divisions. You were asked by your boss to improve the process? Give him ways and strategies to do so?

Receiving Inspection Evaluation Computation Approval

Case 2: A company has an in-house medical clinic servicing both central and field personnel offices. The problem is that the clinic is stationed in your headquarters in Metro Manila. Your employees in the branches had to travel to enjoy such privileges. You are the new SVP for Administration, in which said clinic is under your supervision. Provide a solution to address the problem.

Case 3: In your community, the local council wanted to promote the segregation of waste. An ordinance was passed to enforce segregation but the people just ignored. Lately, you noticed that the administrative expense in garbage collection, segregation and disposal was steadily rising. Thus, the local council asked your help to come up with a strategy to encourage people in following the ordinance.

Case 4: A government agency gives credit loans to farmers to assist them in increasing their rural productivity. However, the agency discovered that there is low collection payment, absence of technical competence and security in the loans. Farmers also complained of difficult loan requirements, such as documentation and accreditation, which results to barriers in access and availability.

How will you address this dilemma in light of NPM?