Building Competence. Crossing Borders.

Elective Public Management – Week 3

New Public Management: Strategic Elements

Andreas BergmannInstitute of Public Management

andreas.bergmann@zhwin.ch

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New Public Management as the answer to the shortcomings of Bureaucracy

Overview

Government as a grantor

Strategic elements

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What is strategic management about?

Once upon a time there were two corporations in the same industry. There were the two presidents of these corporations and they decided go camping, in order to talk undisturbed about a potential merger of the two corporations. On a sunny day, they went hiking in the forest. All of the sudden there was a snarling grizzly bear, which was about to start attacking them. The first president immediately took a pair of sneakers from his backpack. The second president responded: „You can‘t run away from a grizzly bear!“. The first president answered: „Perhaps, I‘m not faster than the grizzly, but I‘m certainly faster than you!“

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Government as a grantor

Grantor model

Applies both the areas of intervention and service provision

But is supposed to overcome the digital and often political decision about public goods

Politicians are supposed to decide on

• Degree of horizontal integration (which areas of activity)

• Degree of vertical integration (make or buy of services)

Vertical integration to be reduced under NPM

• Outsourcing

• Public-Private-Partnership

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Strategic elements

Schedler/Proeller Model

Strategy

Structure Potential

Culture

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Strategic elements

Mission StatementCorporate PolicyValue StatementsWhich businesses

MarketingOperationsFinanceR&DHRMIT

ZHW: Business UnitStrategy

Corporatestrategy

Functionalstrategies

Objectives

SBU Plat-forms

Whichbusinesses?

Goals

P/Mstrategy

Competitivestrategy

Where and how to compete?

ZHAW-SoM model

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Strategic elements

Generally agreed elements Customer orientation

- Customer satisfaction as a main component

Output and Outcome orientation

- Output (Leistung)

- Outcome (Ergebnis)

- Impact (Wirkung)

- Goal oriented legislation

Quality orientation

Competition

- Formation of agencies and “quangos”

- Privatisation

- Public Private Partnership

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Strategic elements

Controlling output

In Anglo-Saxon countries (especially GB, NZ, AUS) from the early 1990s, in continental Europe slightly later (BUSCHOR)

Answer to overcome the shortcomings of Bureaucracy

Characteristics- Operationalisation relatively easy

- Of rather limited political interest

- Directly supporting the internal planning of service providers (e.g. classes at school, beds at hospitals)

- Information required for cost accounting and pricing

output : input = efficiency

Only precondition: the product/service has to be defined!

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Strategic elements

Controlling Outcome and Impact

Of much greater political interest than outputs, i.e. policy goals

But operationalisation proves extremely difficult

Levels are politically controversial

Not feasible for short term adjustments, rather for long term policy making

Therefore reluctantly used in practice

Achievement of objectives = Effectiveness

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Strategic elements

Public Private Partnership

Logical consequence of the grantor model:• Grantor Government

• Financing Usually mixture of private investment and user or government payments for operation

• Operator Private sector partner

Alternative on its own or just preliminary step of privatisation?

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Strategic elements

Instruments of New Public Management

Statutory framework Laws, Decrees

Government goals for legislative period

Medium term planning (3 to 5 years,in Switzerland: KEF and IAFP)

Output-Based-Budget (annual; in SwitzerlandGlobalbudget)

Cf. Web-based course (in German)

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Strategic elements

Structural consequences (Strategy Structure)

Product-Market oriented structure

- Divisions and agencies grouping similar services

- Within the divisions and agencies market oriented units (e.g. case managers)

- Communication according to real life situations rather than administrative structures (e.g. birth, education, …)

Sometimes outsourcing of internal/corporate services (Schedler: „usually“)

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Strategic elements

Main obstacle: Roles of politics and administration

Policy making: Parliament- Political leadership

- Supreme oversight (oversight over the system itself)

Policy making and management: Government- Strategic leadership

- Oversight (oversight within the system)

Management: Administration- Collaboration in the strategy process

- Operational leadership

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Strategic elements

Appraisal of NPM

+ Renunciation of (pure) input control

+ Integration of political (normative), strategic and operational management

+ Use of generally accepted management skills

+ Customer and goal orientation

- Cultural change way beyond expectations

- Operationalisation problems, especially for outcomes/impacts

- Politicians don’t like to be restricted to policy making, if they voters stress operational issues, they like to react

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Strategic elements

Comparison to private sector corporations

Similar:

• Methods of management (MbO, process management, cost accounting)

• Customer- and goal-orientation

Different:

• Stakeholders are much more important

• Planning interval/time horizon longer

• Culture

• Ongoing scarcity of resources

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Links and references

Links

• Webbased training in German: Modul 1 „Das Prinzip der Wirkungsorientierten Verwaltungsführung“, http://e-learning.wif.zh.ch/index.php

Textbooks

• SCHEDLER, K./PRÖLLER, I.: New Public Management. 3. Auflage. Haupt/UTB, 2007. 37-60

• McLAUGHLIN, K.: New Public Management: current trends and future perspectives. London: Routeledge, 2005. Paperback. 5-33

Journals

• CAPERCHIONE, E./FEE-PSC: The New Public Management – a perspective for finance practitioners. Brussels: FEE, 2006. (One of the more recent appraisals of NPM)

• GRUENING, G.: Origin an theoretical basis of New Public Management. In: International Public Management Journal, Vol. 4, Number 1. 2001 (Generally accepted elements of NPM)

• GUTHRIE, J./OLSEN, O./HUMPHREY, C.: Debating developments in New Public Financial Management: the limits of global theorising and some new ways forward. In: Financial Accountability and Management, Number 3-4, 209-228. 1999. (Leading appraisal of NPM)

•HOOD, C.: A public management for all seasons? In: Public Administration, Number 69. 1991 (The first mentioning of NPM)