What is wrong with the new public management?

nal id 1. Snvoie

The new public management or, as the jargon has it, the ”entrepreneurial management paradigm,” has been in fashion in many countries, especially in the Anglo-American democracies, for about fifteen years.’ One can trace its origin to the political leadership which came into office in these countries in the late 1970s and 1980s. It arose from the conviction that bureaucracy was broken and needed fixing, and that private sector solutions were the key. The enthusiasm did not wane when a new political leadership assumed power. In the United States, President Clinton launched, with considerable fanfare, a National Performance Review exercise (NPR) designed to overhaul the civil service and asked his vice-president to lead the charge. It is hoped that the Review’s 800 recommendations will “reinvent“ government by bor- rowing the best management practices found in private business. As Ronald Moe points out, “virtually the entire thrust of the [NPR] report and its recommendations make sense only if this premise [i.e., the public and private sectors are alike] is actually the operative concept.fr2

In Britain, Prime Minister Major has vigorously pursued the various reforms introduced by Margaret Thatcher and has added some of his own, including the “Citizen’s Charter.”3 Meanwhile, the Canadian civil service has over the past ten years or so witnessed “a story of orgies of reform hardly punctuated by even brief periods of r o ~ t i n e . ” ~ The Canadian reforms include the introduction of Increased Ministerial Authority and Accountability (IMAA), special operating agencies, the make-or-buy concept and Public Ser- vice 2000 (rs 2000). Prime Minister Chretien’s new government appointed Marcel Masse, a former senior public servant, to a newly created position in the cabinet responsible for public service renewal. Masse lost no time in declaring his intention to “get government right.” His agenda for action borrows heavily from the new public management movement and its literature.

What is wrong with the new public management?

The author holds tlie Clement-Cormier Chair in Economic Development at tlie Universite de Moncton. The author would like to thank Peter Aucoin, Ronald C. Moe, B. Guy Peters and Chtistoplier I’ollitt for their coniments on an earlier draft of this article.

( ‘AN4DIAN PUBLIC ADMINISTRATION / ADMINISTKATION P U B L I Q U E DU C A N A D A VOLUME 3 8 , N O 1 (SPKING/PRINTEMPS) , PI‘. 112-121.

WHAT IS WRONG WITH THE NEW PUBLIC MANGEMENT? 113

Indeed, his statements on public service renewal speak to the need for instill- ing an entrepreneurial spirit in government operations and for making organizations more "client-~entred."~

What is the new public management? The new public management philosophy holds obvious appeal. It promises to provide the "Big Answer'' to real and imagined shortcomings in public bureaucracy. How else does one explain such telling titles as "Reinventing Government" and "Getting Government Right"?

The philosophy is rooted in the conviction that private sector management is superior to public administration. The solution, therefore, is to transfer government activities to the private sector through privatization and contracting out. Given that all government activities can hardly be transferred to the private sector, the next best solution is to transfer business management practices to government operations. However, public nzanagenzent is different from public administration: the former is derived from commer- cial operations and is meant to bring about a new mindset, a new vocabulary and a proliferation of management techniques.6 It is also meant to "debureaucratize" government operations and to reduce red tape substan- tially.

Unlike the traditional public administration language that conjures up images of rules, regulations and lethargic decision-making processes, the very word "management" implies a decisiveness, a dynamic mindset and a bias for action. Indeed, the vocabulary of the new public management reveals to what extent it borrows from the world of private sector management practices: "empowerment"; service to "clients" or "customers"; "responsiveness"; a shift from "process" to "performance"; and an emphasis on the need to "earn" rather than to "spend." David Osborne and Ted Gae- bler summed up the essence of the new public management when they called for a cultural shift away from bureaucratic government towards an entrepreneurial government? Entrepreneurial government is both competitive and customer driven.

The new public management is also attractive to politicians who are unwilling to make tough decisions in a very difficult fiscal environment. It is one thing to call for cutting government down to size while in opposition; it is another to discover that decisions to cut programs are not easily made once in office. Again, the next best solution is to insist that public servants run government operations like private concerns.

The new public management: a flawed concept

I argue that the new public management is basically flawed. By its very nature the public administration field does not lend itself to Big Answers

114 DONALD J. SAVOIE

because private sector management practices very rarely apply to government operations. As James Q. Wilson explains, public administration “is a world of settled institutions designed to allow imperfect people to use flawed procedures to cope with insoluble problems. ... Because constraints

... the new public tiinnagentent is basically flawed ... becnirse yrivirte sector rirarragenreiit practices uery rarely q y I y to goucriiment opcrntioizs ... ule still need to remind people thnt the public sector is riot the privafe sector

arc usually easier to quantify than efficiency, we can often get a fat government even when we say we want a lean one.”8 To be sure, the manner in which programs are conceived and delivered can be improved. This, however, usually happens incrementally and on a program-by-program basis.

I am astounded that some thirty years after the Glassco Commissions’ Report on Canadian government operation, we still hear the call for ”letting the manager manage” as if it were a new concept. I am equally astounded that we still need to remind people that the public sector is not the private sector.

Perhaps because the two sectors are ”fundamentally alike in all unimpor- tant ways,” changes proposed by the new public management movement have been strong on prescriptions but weak on diagnosis. We are told that governments must steer rather than row; that managers, like their counter- parts in business, must be empowered; that new emphasis must be placed on serving ”clients”; and that, to measure success by customer satisfaction, we must replace regulations with incentives. Rather than spend time on diagnosing the problems, supporters of the new public management rely on “old time religion to sell their message.”’ However, “as with other types of evangelical messages the authors expect readers to take a leap of faith and act out the vision they describe.””

But what were the problems that needed fixing? What is so wrong with the public administration that has evolved and taken shape over the past 130 years (in this country, at least) that warrants its replacement by an “entrepreneurial paradigm”?” We hear that bureaucracy is lethargic, cautious, bloated, expensive, unresponsive, a creature of routine and incapable of accepting new challenges. Assuming for a moment that some or even all of these charges are accurate, it only begs the question: why? I argue that it h a more to do with parliament, politicians and Canadians themselves than with public servants.

Public administration operates in a political environment that is always on the lookout for ”errors” and that exhibits an extremely low tolerance for


mistakes. The attention of the national media, Question Period and the audi- tor general’s annual report are sufficient to explain why public servants are cautious and why they strive to operate in an error-free environment. One would have to let the imagination run wild to visualize a headline in the Globe and Mail or an opposition member of Parliament in Question Period applauding the fine work of the “empowered” manager of the local Reve- nue Canada office in Saint John’s. Imagine, if you will, an opposition member saying that the opposition accepts that the local manager made two - or even just one - high-profile mistake because that is the price to pay for empowerment. The point is that in business it does not much matter if you get it wrong 10 per cent of the time as long as you turn a profit at the end of the year. In government, it does not much matter if you get it right 90 per cent of the time because the focus will be on the 10 per cent of the time you get it wrong.

The new public management has yet to deal head on with accountability in government. In Canada, as in Britain, the principle of ministerial responsibility still applies, though admittedly it has been battered about in recent years. The principle, however, still underpins the relations between senior officials and ministers and, in turn, relations between ministers and Parlia- ment. The principle of ministerial responsibility makes the minister ”blam- able” for both policy and administration but he in turn can reach into the bureaucracy, organized as it is along clear hierarchical lines, and secure an explanation as to why things have gone wrong as well as how things can be made right. The civil service, meanwhile, has “no constitutional personality or responsibility separate from the duly elected Government of the day.” As Herman Finer explained in his classic essay, the views and advice of civil servants are to be private and their actions anonymous: ”Only the Minister has views and takes actions. If this convention is not obeyed, then civil servants may be publicly attacked by one party and praised by another and that must lead to a weakening of the principle of impartiality.”’2

Those who argue that the principle of ministerial responsibility is dated have a responsibility to outline a new regime and to detail how it is to work. This has never been done. When Sir Robert Armstrong, then secretary of the British cabinet, was asked to deal with the issue in the 1980s, he tabled a memorandum in Parliament essentially restating the principle of ministerial responsibility and then proceeded to make the case for the status qu0.I3 Yet, it is the centrally prescribed rules and regulations that so inhibit effective management, force governments not only to steer but also to row, and to concentrate on inputs that underpin the principle of ministerial responsibility.

Lest we need to be reminded, there is also a world of difference between citizens and clients. Clients are sovereign. They can hold business accountable through their behaviour in a competitive market. In short, clients can turn to the market to defend their interests or walk away from an unsatisfac-

DONALD J. SAVOIE 116

tory firm and turn to one of its competitors. Citizens, on the other hand, have common purposes. They hold politicians accountable through the requirements of political institutions and through exposure via the media. Politicians, meanwhile, hold public servants accountable through the appli- cation of centrally prescribed rules and regulations. Albert Hirschman spoke to the issue when he wrote that in the business world “the customer who, dissatisfied with the product of one firm, shifts to that of another, uses the market to defend his welfare and to improve his position.” This is neat, tidy,

The soliitiotz lies in fixing our p l i t i ca l institutions and the lnws of Parlinttwit ...

impersonal, effective, and quiet. It easily lends itself to quantifying success and failure. With government, however, the customer uses “voice” to express dissatisfaction. Voice is, of course, much more messy than a quiet exit since it can range “all the way from faint grumbling to violent protest; it implies articulation of one’s critical opinions rather than a private secret vote in the anonymity of a supermarket; and finally, it is direct and straightforward rather than roundabout.” l 4 Public opinion surveys now capture voice on a monthly basis, or even more frequently if political parties desire it and are prepared to pay. The great majority of politicians react to the voice expressed in public opinion surveys, and government operations are often in their direct line of attack as they seek to introduce corrective measures.

Business executives are also accountable for their activities but the success of a business executive is much easier to assess than that of a government manager. There is also much less fuss over due process in the private sector than in government, if only because of the difference involved in managing private and public money. It is rarely simple and straightforward in government where goals are rarely clear.

The new public management gives short shrift to these considerations: it simply ignores them. Rather than tangle with these fundamental issues, the disciples of the new public management employ “a new highly value-laden lexicon to disarm would-be questioners. Thus the term ’customer’ largely replaces ’citizen’ and there is heavy reliance upon active verbs - reinventing, reengineering, empowering - to maximize the emotive content of what oth- erwise has been largely a nonemotive subject matter.”15

If the problem with bureaucracy is one of insensitivity or inflexibility in dealing with the specific concerns of individuals, of rigidity or of over-reliance on red tape, rules and regulations, then it may well be that the problem itself is fundamentally an institutional and legal problem. We all too often forget that one person’s red tape is another’s due process. The solution lies in fixing our political institutions and the laws of Parliament rather than in


“periodic preaching from the pulpit” that resorts merely to emotive words about the failings of bureaucrats and the public service.I6

The new public management has been with us for over ten years and it has very little to show for itself. To be sure, management consultants have profited extensively. The British government, for example, reported that it had spent over €500 million on consultants but could only identify about €10 million in savings that could be directly attributed to their advice.I7 It may be that it is better to steer than to row, but if you are a management consult- ant it is much more profitable to row.

What about the executive agencies in Great Britain? A recent study of the impact of these agencies, a number of which are now several years old, reveals that they have ”failed to spark off a cultural revolution at the local operational level of the civil service.”” Interviews with career officials in Washington over one year after the tabling of the NPR report suggests that if there is a consensus emerging about its impact it is that ”this too shall pass.”” Who in Ottawa still sings the praises of IMAA? The few who do insist that it is not dead but that it has been replaced or overtaken by the PS 2000 exercise. What about PS 2000? Marcel Mass6 now reports that “PS 2000 put its tail between its legs. In many government departments, managers no longer refer to it, as it has lost credibility as a symbol of reform and

One ought not to be surprised by this turn of events. Jonathan Boston summed up the problems with the new public management in 1991 when he wrote: ”It has been challenged on the grounds that it enjoys neither a secure philosophical base nor a solid empirical foundation. It has been crit- icized for its constitutional illiteracy, its lack of attention to the need for pro- bity and due process within government, its insensitivity to varying organizational cultures and its potential for reducing the capacity of governments to deal with catastrophes.”21

There is a substantial price to pay, however, for the rise and likely disap- pearance of the new public management. For one thing, it contributes to the “disbelief culture” found in government. Les Metcalfe and Sue Richards argue that the culture acts as a psychological defence mechanism against proposals or initiatives from the outside designed to overhaul the way they go about their workF2 One only needs to consider the alphabet soup of past efforts at reforms that have not lived up to expectations in order to appreci- ate why such a culture exists in government: among others, PPBS, PEMS, IMAA, and zero-based budgeting. These efforts, like the new public management, failed to live up to expectations. They too promised to deliver the Big Answer, but they too ignored the realities of work in the public service. The new public management is again offering the Big Answer, this time through simple palliatives that will remain simple palliatives as long as the prescriptions are not rooted in a proper understanding of the requirements of political institutions and public administration.

118 DONALD J. SAVOIE

The new public management, perhaps unwittingly, is leaving in its wake problems of morale in the public services. Its basic premise is that private sector management practices are superior to those found in government and that they should be imposed on government. Moreover, because it also suggests that whenever possible its activities should be transferred to the private sector, the implication is that public service has no intrinsic value. It also belittles the noble side of the public service profession: public servants became public servants because they wanted to serve their country. If they had wanted to become entrepreneurs, they would have joined the private sector or started their own businesses.

But the real damage inflicted by the new public management is that once again we have been diverted from confronting substantial issues of gover- nance and public admini~tration.'~ I can hardly overstate the fact that public administration begins and ends with political institutions, notably Parlia- ment and cabinet. Big answers - if they exist, and I am not suggesting that they do - are to be found by fixing these institutions. If the global economy now requires a well-honed capacity on the part of a national public service to innovate, to challenge the status quo, to take risks, to change course quickly, and to have the capacity to speak simultaneously to both the global and to subnational perspectives, then political leaders must begin to question the workings of their own institutions, what they do, and how they do it.

The new public management has also overlooked important problems that urgently require our attention. For instance, there was far more evidence in 1980 that the policy side of government and the ability of bureaucracy to be innovative and self-questioning needed more fixing than did the machine or production-like agencies.24 The new public management has very little to offer on policy. Instead, with its emphasis on private sector management techniques, it speaks to the need for more "doers" and fewer "thinkers."

If nothing else, we need a fundamental review of the merits of advising on policy from a sectoral or departmental perspective. The current machinery of government tends to compartmentalize such advice. It was no doubt

The new public management has u e y little to offer on policy ... it speaks to the need for more 'doers' and fewer 'thinkers'

appropriate at the turn of the century to establish vertical sectoral lines and deal with problems in agriculture, transportation and industry at various levels but in relative isolation from other departments. Issues and challenges confronting nation states, however, now increasingly cross departmental


lines. If key policy issues are more and more lateral or horizontal in their implications, then the bureaucratic policy formulation and advisory struc- tures must become horizontal as well. Public servants will have to bring a far broader and more informed perspective to bear on their work since issues are now much more complicated and interrelated.

The new public management is ignoring these new challenges. Indeed, it may well be making matters worse, given its call for a decentralized and empowered machinery of government. Empowerment and hiving off of activities into new executive or special operating agencies will make it more difficult to promote coherence in government policy and action. It will also make it more difficult for the political leadership to secure the necessary information to focus on the broad picture. With the lost of ”sameness” in government departments and operations, one is left with the question: What kind of information will be necessary to gain a cross-cutting look at policy? How will one secure the information in a consistent fashion, given that government bureaus are now being asked to look to clients for guidance and are being told that client satisfaction will measure their success?

Administration matters too The above is not to suggest that government should now concentrate solely on policy. Improvements in administration are also necessary. The solution, however, lies not in searching for the Big Answer: government will not be reinvented nor are we finally about to get it right.

Improvements in the administration of government will be made, as they have, for that matter, in recent years. One only needs to look to the partici- pants in the INSTITUTE OF PUBLIC ADMINISTRATION’S Annual Innovative Management Award to see solid progress being made on many fronts in the administration of programs. Many made full use of new information technology to strengthen their capacity to provide services while cutting back on costs; others looked to new partnerships with other government departments to coordinate services and resources; and still others decided to streamline their operations (e.g., cutting back on the number of government offices in one community delivering somewhat similar or overlapping services and programs). No one would take these achievements to task and the great majority of observers applaud the innovative thinking and the com- mitment of public servants behind the efforts. Government bureaus have always sought to improve their operations ever since they were first estab- lished. We must recognize that innovative thinking in government did not start with the new public management movement. Yet, one senses that anything significant taking place to strengthen the public sector tends to be attributed to the new public management by its advocates. Much more often than not, however, improvements are the results of new circumstances whether it is a tighter budget, new development in computer technology or

1 20 DONALD J . SAVOIE

old-fashioned common sense. The point to bear in mind is that the solutions that work are practical, rooted in the political and legal realities of government. They should not be expected to represent anything more than gradual and incremental improvements to public administration.

1 See Donald J. Savoie, 7?iatrher, Rmapvi, Miilroney: It1 Srnrcli of a Nrw Bitreaircracy (Pittsburgh: IJniversity of Pittsburgh Press, 1494); Christopher Pollitt, Managerialism and the I'iiblic Ser- 2,ic-c.: Tlit, A t f ~ / ~ - ~ J t i e r f C ~ ~ n Espr i rnre (Oxford: Ilasil Blackwell, 1988); and Ronald C. Moe, "The Reinventing Government Exercise: Misinterpreting the Problem, Misjudging the Conse- qu~~ncees," Piiblic Adtninistrat ion Rn+w 54, nn. 2 (March/April 1994), pp. 711-22.

2 Mor, "Tlie Reinventing Government Exercise," pp. 111-22. 3 "Citizen's Charter" (London: HMSO, July 1991), CM 1599. 4 Donald I. Sa\wie, "Reforming Civil Service Reforms," Policy Options 15, no. 3 (April 1994),

5 "The Rencwal Government: An Evolving Strategy." Notes for an address by Marcel Masd, miniqter of intergovernmental affairs and minister responsible for public service renewal to tlie APEX Svmpnsiuin, 10 May 1994, p. 8.

6 Nevi1 Johnson, "Management in Government," in Michael J. Earl, ed., Perspectioes on Man- npvnrrrf: A Mititi[fisci~Iinar!/!/ Arial!isis (Oxford: Oxford University Press, 1983), pp. 170-96.

7 David Osborne and Ted Gaebler, Rriiirwitirig Gtn~erninent: How the Entreprenritrinl Spirit is Trnirsformin~ t lw P r d h c Scrtor From Schoollroiise to Sta fe Hoitse, City Hall to Pentagon (Reading, MA: Addison-Wesley, 1992).

8 James Q. Wilson, "Can the Bureaucracy Be Deregulated?: Lessons From Government Agen- cies," in ]ohn 1. Dilulio, IT., ed., Dergirlating the Piihlic Seroice: Can Gorwnment Be Improved? (Washington, DC: Tlie Brookings Institution, 1954), p. 59.

p. 3 ,

9 See Paul Thomas, "Book Review," Public Sector Management 3, no. 2 (1993), p. 27. 10 lbid. I1 See, for example, Moe, "The Reinventing Government Exercise," p. 112. 12 Herman Finer, The Bri t ish Civil Senrice (London: Allen and Unwin, 1937), p. 196. 13 See Great Britain, Miuiites of Evidence Eketi Before tlie Treasitry and Civil Service Sub-committees

14 Albert 0. tlirschman, E x i t , Voice arid Loyalty: Resp i ses to Decline in Finns, Organizations and

15 Moe, "Reinventing Government Exercise," p. 114. 16 Christopher I'ollitt coincd the phrase "pmaching from the pulpit" in his "Management Teck-

niques for the Public Sector-Pulpit and Practice," in B. Guy Peters and Donald J. Savoie, eds., Goi.crrlnnre in a New E~ir1irontnen t (Montreal: McGill-Queen's University Press, 1995).

17 Ibid. 18 Jan Brooks and Paul Batc, "The Problenis of Effecting Change Within the British Civil Ser-

vice: A Cultural Perspective," British joitrnal of Mnriagernent 5 {1994), p. 185. 19 See B. Guy Peters and Donald J . Savoie, "Managing Incoherence: The Coordination and

Empowerment Conundrum" (Ottawa: Canadian Centre for Management Development, 1945).

20 Marcel Ma&, "Getting Government Right," an address to the Public Service Alliance of Canada, Regional Quebec Conference, Longueuil, 12 September 1993, p. 7. See also Savoie, "Reiorming Civil Service Reforms," p. 3.

21 Jonathan Boston, "The Theoretical Underpinnings of Public Sector Restructuring in New Zealand," in Jonathan Boston, et al., eds., Reshzpitlg the State: New Zealand's Biirearrcratic Kev- olirfitm (Melbourne: Oxford University Press, 1991), p. 20.

on the Armstrong M~~rnoraridriin (London: HMSO, 1986).

Stntes (Cambridge, MA: Harvard University Press, 1970), pp. 15-16.


22 Les Metcalfe and Sue Richards, Improving Public Management (London: Sage Publications, 1987).

23 Ronald Moe makes a similar observation in his ”Reinventing Government Exercise,” p. 118. 24 Rourke and Schulman, for example, argued that “bureaucratic think tank comes close to

being an oxymoron.” See Rourke and Schulman, ”Adhocracy in Policy Development,” The Social Science Jozirnal26, no. 2 (19811, p. 133.

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What is wrong with the new public management?