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New Public Management (NPM) is an approach to running
public service A public service is any service intended to address specific needs pertaining to the aggregate members of a community. Public services are available to people within a government jurisdiction as provided directly through public sector agencies ...
organizations that is used in government and public service institutions and agencies, at both sub-national and national levels. The term was first introduced by academics in the UK and Australia to describe approaches that were developed during the 1980s as part of an effort to make the public service more "businesslike" and to improve its efficiency by using private sector management models. As with the private sector, which focuses on
customer service Customer service is the assistance and advice provided by a company to those people who buy or use its products or services. Each industry requires different levels of customer service, but in the end, the idea of a well-performed service is that ...
, NPM reforms often focused on the "centrality of citizens who were the recipient of the services or customers to the public sector". NPM reformers experimented with using decentralized service delivery models, to give local agencies more freedom in how they delivered programs or services. In some cases, NPM reforms that used
e-government E-government (short for electronic government) is the use of technological communications devices, such as computers and the Internet, to provide public services to citizens and other persons in a country or region. E-government offers new ...
consolidated a program or service to a central location to reduce costs. Some governments tried using
quasi-market Quasi-markets are markets which can be supervised and organisationally designed that are intended to create greater desire and more efficiency in comparison to conventional delivery systems, while supporting more accessibility, stability and impart ...
structures, so that the public sector would have to compete against the private sector (notably in the UK, in
health care Health care or healthcare is the improvement of health via the prevention, diagnosis, treatment, amelioration or cure of disease, illness, injury, and other physical and mental impairments in people. Health care is delivered by health pr ...
). Key themes in NPM were "financial control, value for money, increasing efficiency ..., identifying and setting targets and continuance monitoring of performance, handing over ... power to the senior management" executives. Performance was assessed with audits, benchmarks and performance evaluations. Some NPM reforms used private sector companies to deliver what were formerly public services. NPM advocates in some countries worked to remove "collective agreements n favour ofnbsp;... individual rewards packages at senior levels combined with short term contracts" and introduce private sector-style
corporate governance Corporate governance is defined, described or delineated in diverse ways, depending on the writer's purpose. Writers focused on a disciplinary interest or context (such as accounting, finance, law, or management) often adopt narrow definitions ...
, including using a
Board of Directors A board of directors (commonly referred simply as the board) is an executive committee that jointly supervises the activities of an organization, which can be either a for-profit or a nonprofit organization such as a business, nonprofit orga ...
approach to strategic guidance for public organizations. While NPM approaches have been used in many countries around the world, NPM is particularly associated with the most industrialized
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
nations such as the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and ...
,
Australia Australia, officially the Commonwealth of Australia, is a sovereign country comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands. With an area of , Australia is the largest country by ...
and the
United States of America The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territo ...
. NPM advocates focus on using approaches from the private sector – the
corporate A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...
or business world–which can be successfully applied in the public sector and in a
public administration Public Administration (a form of governance) or Public Policy and Administration (an academic discipline) is the implementation of public policy, administration of government establishment ( public governance), management of non-profit es ...
context. NPM approaches have been used to reform the public sector, its policies and its programs. NPM advocates claim that it is a more efficient and effective means of attaining the same outcome. In NPM, citizens are viewed as "customers" and public servants are viewed as public managers. NPM tries to realign the relationship between public service managers and their political superiors by making a parallel relationship between the two. Under NPM, public managers have incentive-based motivation such as pay-for-performance, and clear performance targets are often set, which are assessed by using
performance evaluation A performance appraisal, also referred to as a performance review, performance evaluation,Muchinsky, P. M. (2012). ''Psychology Applied to Work'' (10th ed.). Summerfield, NC: Hypergraphic Press. (career) development discussion, or employee appr ...
s. As well, managers in an NPM paradigm may have greater discretion and freedom as to how they go about achieving the goals set for them. This NPM approach is contrasted with the traditional
public administration Public Administration (a form of governance) or Public Policy and Administration (an academic discipline) is the implementation of public policy, administration of government establishment ( public governance), management of non-profit es ...
model, in which institutional decision-making, policy-making and public service delivery is guided by regulations, legislation and administrative procedures. NPM reforms use approaches such as disaggregation, customer satisfaction initiatives,
customer service Customer service is the assistance and advice provided by a company to those people who buy or use its products or services. Each industry requires different levels of customer service, but in the end, the idea of a well-performed service is that ...
efforts, applying an entrepreneurial spirit to public service, and introducing innovations. The NPM system allows "the expert manager to have a greater discretion". "Public Managers under the New Public Management reforms can provide a range of choices from which customers can choose, including the right to opt out of the service delivery system completely".


Evolution

The first practices of New Public Management emerged in the United Kingdom under the leadership of Prime Minister
Margaret Thatcher Margaret Hilda Thatcher, Baroness Thatcher (; 13 October 19258 April 2013) was Prime Minister of the United Kingdom from 1979 to 1990 and Leader of the Conservative Party from 1975 to 1990. She was the first female British prime ...
. Thatcher played the functional role of “policy entrepreneur" and the official role of prime minister. Thatcher drove changes in public management policy in such areas as organizational methods, civil service, labor relations, expenditure planning, financial management, audit, evaluation, and procurement. Thatcher's successor,
John Major Sir John Major (born 29 March 1943) is a British former politician who served as Prime Minister of the United Kingdom and Leader of the Conservative Party from 1990 to 1997, and as Member of Parliament (MP) for Huntingdon, formerly Hunting ...
, kept public management policy on the agenda of the Conservative government, leading to the implementation of the Next Steps Initiative. Major also launched the programs of the Citizens Charter Initiative, Competing for Quality, Resource Accounting and Budgeting, and the Private Finance Initiative. A term was coined in the late 1980s to denote a new (or renewed) focus on the importance of management and 'production engineering' in public service delivery, which often linked to doctrines of economic rationalism (Hood 1989, Pollitt 1993). During this timeframe public management became an active area of policy-making in numerous other countries, notably in New Zealand, Australia, and Sweden. At the same time,
Organisation for Economic Co-operation and Development The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
(OECD) established its Public Management Committee and Secretariat (PUMA), conferring to public management the status normally accorded more conventional domains of policy. In the 1990s, public management was a major item on President Clinton's agenda. Early policy actions of the Clinton administration included launching the National Partnership and signing into law the
Government Performance and Results Act The Government Performance and Results Act of 1993 (GPRA) () is a United States law enacted in 1993,Congress, U. S., and An Act. "Government Performance and Results Act of 1993." In ''103rd Congress. Congressional Record''. 1993. one of a series o ...
. Currently there are few indications that public management issues will vanish from governmental policy agendas. A recent study showed that in Italy, municipal directors are aware of a public administration now being oriented toward new public management where they are assessed according to the results they produce. The term New Public Management (NPM) expresses the idea that the cumulative flow of policy decisions over the past twenty years has amounted to a substantial shift in the governance and management of the “state sector” in the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and ...
,
New Zealand New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 smaller islands. It is the sixth-largest island coun ...
,
Australia Australia, officially the Commonwealth of Australia, is a sovereign country comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands. With an area of , Australia is the largest country by ...
,
Scandinavia Scandinavia; Sámi languages: /. ( ) is a subregion in Northern Europe, with strong historical, cultural, and linguistic ties between its constituent peoples. In English usage, ''Scandinavia'' most commonly refers to Denmark, Norway, and S ...
,
North America North America is a continent in the Northern Hemisphere and almost entirely within the Western Hemisphere. It is bordered to the north by the Arctic Ocean, to the east by the Atlantic Ocean, to the southeast by South America and th ...
, and
Latin America Latin America or * french: Amérique Latine, link=no * ht, Amerik Latin, link=no * pt, América Latina, link=no, name=a, sometimes referred to as LatAm is a large cultural region in the Americas where Romance languages — languages derived ...
.Morisson, A. & Doussineau, M. (2019). Regional innovation governance and place-based policies: design, implementation and implications. Regional Studies, Regional Science,6(1),101–116. https://rsa.tandfonline.com/doi/full/10.1080/21681376.2019.1578257. For instance, regional innovation agencies were created under NPM principles to support the innovation process. A benign interpretation is that these decisions have been a defensible, if imperfect, response to policy problems. Those problems as well as their solutions were formulated within the policy-making process. The agenda-setting process has been heavily influenced by electoral commitments to improve macro-economic performance and to contain growth in the public sector, as well as by a growing perception of public bureaucracies as being inefficient. The alternative-generation process has been heavily influenced by ideas coming from economics and from various quarters within the field of management.


Globalization

The initial New Public Management (NPM) reforms implemented in Anglo-Saxon countries inspired reforms across the world. These reforms, which were triggered and motivated by a variety of factors and resulted in the development of various models, led to the emergence of a global NPM trend. Despite the global nature of the movement, the concepts and models of the reform were diverse and developed in accordance with each country's specific and unique context and in response to the distinct challenge that it was facing. Therefore, in spite of the common features of the reforms, their driving factors, objectives, extent, and areas of focus varied across countries. While, in many countries, NPM reforms were inspired and influenced by the reforms implemented beyond their national boundaries, the driving factors of the reforms varied significantly across regions as well as across countries of the same region. In
Europe Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a Continent#Subcontinents, subcontinent of Eurasia ...
, for instance, whereas the reforms in the Netherlands started in reaction to fiscal stringency, the driving factor for reform in Germany came from within the system as local government managers and politicians were dissatisfied with the traditional bureaucratic system and its shortcomings. Moreover, although the NPM reforms of Switzerland were influenced by the Netherlands' Tilburg model, their main motivator was dissatisfaction with the old public management system and its deficiencies. In
Africa Africa is the world's second-largest and second-most populous continent, after Asia in both cases. At about 30.3 million km2 (11.7 million square miles) including adjacent islands, it covers 6% of Earth's total surface area ...
, on the other hand, the main motivating and driving factors of the NPM reforms were bureaucratic
corruption Corruption is a form of dishonesty or a criminal offense which is undertaken by a person or an organization which is entrusted in a position of authority, in order to acquire illicit benefits or abuse power for one's personal gain. Corruption m ...
, dysfunctional governance system, fiscal crises, and the success of the reforms in other countries. For developing nations and former communist countries, the motivation for reforms was benefiting from participation in a globalized economy and fulfilling the requirements of international donors. Although NPM reforms mainly aimed at increasing efficiency and decreasing costs of the public sector, each country's reforms were focused on certain specific areas. In South Africa and Zambia, for instance, independent authorities were created for tax collection with the primary goal of promoting
accountability Accountability, in terms of ethics and governance, is equated with answerability, blameworthiness, liability, and the expectation of account-giving. As in an aspect of governance, it has been central to discussions related to problems in the pub ...
. In Germany, the NPM reforms mainly focused on internal reforms. In France, the 1982 Act of
Decentralization Decentralization or decentralisation is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group. Conce ...
, which created autonomous local collectivities in the areas of budgeting and taxation, led to
managerialism Managerialism is the reliance on professional managers and organizational strategies to run a society. It may be justified in terms of efficiency, or characterized as an ideology. It is a belief system that requires little or no evidence to justi ...
and
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
. The reforms also varied across time. For instance, while reorganization of responsibilities was the main focus area of the Tilburg model in the 1980s, the reform goals were reoriented from internal restructuring to the external environment focusing on the role of citizens in the 1990s. Across countries, various actors played different roles in initiating, facilitating, and implementing NPM reforms. In the Netherlands and Germany, for instance, the reforms were initiated by local governments. However, the reforms in the Netherlands were supported by the central government while the New Steering model of Germany did not receive any support from the federal government. In Africa, most of the reforms were introduced and implemented by national governments. While national and local governments played a central role in initiating and implementing the reforms, some international organizations had a crucial role in facilitating and driving the reforms. For instance,
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
played a vital role in facilitating the transfer of reforms across its member countries by developing tools and guidelines. Moreover, it was the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
and
IMF The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glob ...
that pushed non-western and developing countries for public management reforms. In Africa, for example, the reforms were part of the “
economic liberalization Economic liberalization (or economic liberalisation) is the lessening of government regulations and restrictions in an economy in exchange for greater participation by private entities. In politics, the doctrine is associated with classical liber ...
packages of structural adjustment.”


Aspects

NPM was accepted as the "gold standard for administrative reform" in the 1990s. The idea for using this method for government reform was that if the government guided private-sector principles were used rather than rigid hierarchical bureaucracy, it would work more efficiently. NPM promotes a shift from bureaucratic administration to business-like professional management. NPM was cited as the solution for management ills in various organizational context and policy making in education and health care reform. The basic principles of NPM can best be described when split into seven different aspects elaborated by Christopher Hood in 1991. Hood also invented the term NPM itself. They are the following:


Management

Because of its belief in the importance and strength of privatizing government, it is critical to have an emphasis on management by engaging in hands-on methods. This theory allows leaders the freedom to manage freely and open up discretion.


Performance standards

Its critical to preserve express measures and measures of execution in a workforce. Utilizing this strategy advances clarification of goals/intent, targets, and markers for movement.


Output controls

The third point acknowledges the "shift from the use of input controls and bureaucratic procedures to rules relying on output controls measured by quantitive performance indicators". This aspect requires using performance based assessments when looking to outsource work to private companies/groups.


Decentralization

NPM advocates frequently moved from a bound together administration framework to a decentralized framework in which directors pick up adaptability and are not constrained to organization restrictions.


Competition

This characteristic centers on how NPM can advance competition within the public sector which may in turn lower fetched, dispose of debate and conceivably accomplish a better quality of progress/work through the term contracts. Competition can too be found when the government offers contracts to the private segments and the contract is given in terms of the capacity to provide the benefit viably, quality of the merchandise given, subsequently this will increment competition since the other private division which did not get the contract will make strides to make strides the quality and capacity subsequently encouraging competition.


Private-sector management

This viewpoint centers on the need to set up short-term labor contracts, create corporate plans or trade plans, execution assentions and
mission statement A mission statement is a short statement of why an organization exists, what its overall goal is, the goal of its operations: what kind of product or service it provides, its primary customers or market, and its geographical region of operatio ...
s. It moreover centers on setting up a working environment in which open representatives or temporary workers are mindful of the objectives and intention that offices are attempting to reach.


Cost reduction

The most effective one which has led to its ascent into global popularity focuses on keeping cost low and efficiency high. "Doing more with less" moreover cost reduction stimulates efficiency and is one way which makes it different from the traditional approaches to management.


Issues


Criticisms

There are blurred lines between policymaking and providing services in the New Public Management system. Questions have been raised about the potential politicization of the public service, when executives are hired on contract under pay-for-performance systems. The ability for citizens to effectively choose the appropriate government services they need has also been challenged. "The notion of choice is essential to the economic concept of a customer. Generally, in government there are few if any choices." There are concerns that public managers move away from trying to meet citizens' needs and limitations on accountability to the public. NPM brings to question integrity and compliance when dealing with incentives for public managers – the interests of customers and owners do not always align. Questions such as managers being more or less faithful arise. The public interest is at risk and could undermine the trust in government. "Government must be accountable to the larger public interest, not only to individual immediate customers or consumers f government services.


Relevance

Although NPM had a dramatic impact in the 1990s on managing and policymaking, many scholars believe that NPM has hit its prime. Scholars like Patrick Dunleavy believe New Public Management is phasing out because of disconnect with “customers” and their institutions. Scholars cite the Digital Era and the new importance of technology that kills the necessity of NPM. In countries that are less industrialized the NPM concept is still growing and spreading. This trend has much to do with a country's ability or inability to get their public sector in tune with the Digital Era. New Public Management was created in the public sector to create change based on disaggregation, competition, and incentives. Using incentives to produce the maximum services from an organization is largely stalled in many countries and being reversed because of increased complexity.


Alternatives

Post-NPM, many countries explored digital era governance (DEG). Dunleavy believes this new way of governance should be heavily centered upon information and technology. Technology will help re-integrate with digitalization changes. Digital Era Governance provides a unique opportunity for self-sustainability; however, there are various factors that will determine whether or not DEG can be implemented successfully. When countries have proper technology, NPM simply cannot compete very well with DEG. DEG does an excellent job of making services more accurate, prompt and remove most barriers and conflicts. DEG also can improve the service quality and provide local access to outsourcers. AM Omar (2020)Omar, A. M. (2020). Digital Era Governance and Social Media: The Case of Information Department Brunei. In Employing Recent Technologies for Improved Digital Governance (pp. 19-35). IGI Global. challenged DEG by integrating the governance approach with social media technology. The work on Brunei's Information Department titled "Digital Era Governance and Social Media: The Case of Information Department Brunei. In Employing Recent Technologies for Improved Digital Governance" works to provide the theoretical and practical basis to substantiate the claim. The work concludes that digital dividends can be secured through the effective application of Social Media in the governance process. The New Public Service (NPS) is a newly developed theory for 21st-century citizen-focused public administration. This work directly challenges the clientelism and rationalist paradigm of the New Public Management. NPS focuses on democratic governance and re-imagining the accountability of public administrators toward citizens. NPS posits that administrators should be a broker between citizens and their government, focusing on citizen engagement in political and administrative issues.


Comparisons to New Public Administration

New Public Management is often mistakenly compared to New Public Administration. The New Public Administration movement was one established in the USA during the late 1960s and early 1970s. Though there may be some common features, the central themes of the two movements are different. The main thrust of the New Public Administration movement was to bring academic public administration into line with an anti-hierarchical egalitarian movement that was influential in US university campuses and among public sector workers. By contrast, the emphasis of the New Public Management movement a decade or so later was firmly managerial normative in that it stressed the difference that management could and should make in the quality and efficiency of public services. It focuses on public service production functions and operational issues contrasted with the focus on public accountability, 'model employer' public service values, 'due process,' and what happens inside public organizations in conventional public administration. The table below gives a side-by-side comparison of the two systems' core aspects/characteristics.


Further reading

* Andrews, Rhys and Steven Van de Walle (2013). ″New Public Management and Citizens' Perceptions of Local Service Efficiency, Responsiveness, Equity and Effectiveness.″ ''Public Management Review''. Retrieved March 9, 2015. *Cohen, Nissim (2016). "Forgoing New Public Management and Adopting Post-New Public Management Principles: The On-Going Civil Service Reform in Israel". ''Public Administration and Development''. 36 (1): 20–34. * Daft, R., & Marcic, D. (2014). ''Building management skills: An action-first approach''. South-Western Cengage Learning. * Eckerd, Adam; Heidelberg, Roy L. (YEAR). “Public Incentives, Market Motivations, and Contaminated Properties: New Public Management and Brownfield Liability Reform.” ''Public Administration Review''. Retrieved March 10, 2015. * Gruening, G. (n.d.). Origin and theoretical basis of new public management. ''International Public Management Journal''. * Holland, Kelley. ″Under New Management: How Office Politics and Real Politics Can Mix.″ nytimes.com. ''New York Times'', 8 Oct. 2006. Web. 9 March 2015. * Horton, Sylvia, ed. ''New Public Management: Its Impact on Public Servants' Identity''. Bradford, 2006. ProQuest ebrary. Web. 9 March 2015. * Jouke de Vries.”Is New Public Management Dead” oecd.org. OECD, June 2013. Web. 10 March 2015. * Lane, Jan-Erik. ''New Public Management''. London, 2000. ProQuest ebrary. Web. 9 March 2015. * Morales Casetti, M. (2014). ''New Public Management in Chile: Origins and Effects''. Revista de Ciencia Politica, 417-438. * Morisson, A. & Doussineau, M. (2019). Regional innovation governance and place-based policies: design, implementation and implications. Regional Studies, Regional Science,6(1),101–116. https://rsa.tandfonline.com/doi/full/10.1080/21681376.2019.1578257. * Navarra, Diego D.; Cornford, Tony. “The State and Democracy After New Public Management: Exploring Alternative Models of E-Governance.” ''Information Society''. Vol. 28 Issue 1 (Jan/Feb 2012) p37-45. 9p. 1 Chart. DOI: 10.1080/01972243.2012.632264. Web. 10 March 2015. * Raes, Koen.” Ethics & Accountability in a Context of Governance & New Public Management.” Vol. 7, (1998) p. 197-206. 10p. 1 Chart. Web. 10 March 2015. * Riccucci, N. M. (2001, March). The "Old" Public Management versus the "New" Public Management: Where does Public Administration Fit in? ''Public Administration Review'', 61(2), 172-175. Retrieved from jstor. * Schachter, Hindy.”New Public Management and Principals' Roles in Organizational Governance: What Can a Corporate Issue Tell us About Public Sector Management?” ''Public Organization Review''. Vol. 14 Issue 4, (Dec 2014) p517-531. Web. 10 March 2015. * Smith, D. (2014). ''Under New Public Management: Institutional Ethnographies of Changing Front-line Work''. Toronto: University of Toronto Press. * Vermeulen, Philippe. “Ethics & Accountability in a Context of Governance & New Public Management.” Vol. 7, (1998) p171-188. 18p. 2 Diagrams, 1 Chart. Web. 10 March 2015. * Williams, Helen M., Julie Rayner, and Christopher W. Allinson. ″New Public Management and Organisational Commitment in the Public Sector: Testing a Mediation Model.″ ''International Journal of Human Resource Management'' 23.13 (2012): 2615-2629. EBSCOhost. Web. 9 March 2015.


References

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