NEW PUBLIC MANAGEMENT (NPM):Strategy, Beginning of Management Approach

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Introduction To Public AdministrationMGT111

LESSON 43

NEW PUBLIC MANAGEMENT (NPM)

In the last three lectures we shall examine that public administration as a subject has moved full

swing i.e. that from the concept of administration to the concept of management.

Since the last one decade "administration" and "management" are used interchangeably. We shall

examine that what is "management" and how "administration" has evolved into "management".

New Public Management (NPM)

The 1980s and 1990s saw the emergence of a new managerial approach in the public sector, in

response to the inadequacies of the traditional model of administration. The new managerial approach was

the revival of the idea that private sector is more efficient. Administration was understood as static. It was

understood that administration was implementation of policies and programmes of government. The

concepts of efficiency were not the domain of "administration".

Management was understood as dynamic and applicable to private sector where efficiency was the

criterion of operations and task.

The various names for new public management reflect differing views of what is happening in

organizations, but they do have some points in common. These are discussed in following paragraphs:

First whatever the model is called, it represents a major shift from traditional public administration

with far greater attention paid to the achievement of results and the personal responsibility of

managers. Second, there is an expressed intention to move away from classic bureaucracy to making

organisations, personnel, and employment terms and conditions more flexible rather then rigid. Third,

organizational and personal objectives are to be set out clearly so that achievement or results are measured.

Fourth, senior staff is more likely to be politically committed to the government of the day and hence would

implement the agenda of the government. Fifth, government functions are more likely to face market tests,

such as contracting out, or reducing government functions through privatisation. This is the most important

facet of new public management, whereby the role of government as provider of service is reducing and

more and more services are being provided by the private sector. For example transport in city was

provided by government; which is now being provided by private sector.

New public management as an alternative paradigm may well offer a more realistic approach than

the traditional model of public administration, but managerialism has not been without controversy. The

main argument against new public management (NPM) is that it has attempted to take the place of

traditional model of public administration, and that public administration will be managerial

To understand the concept of administration and management we will see definition of the

concepts.

The Meaning of Management

Administration means following instructions and management means the achievement of

results. Public management has semantic origins that imply taking things in "hand" and this suggest

firmness and efficiency. This means that unlike administrator a manager has greater control over

determining goals, objectives and strategy and in achieving results. It would be appropriate to understand

the concept of strategy. Allison suggests that there are three main functions of `general management'. These

are (1) strategy, (2) managing internal component and (3) managing external component. The functions of

general management are discussed below:

Strategy

Strategy has following two components:

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Introduction To Public AdministrationMGT111

Establishing objectives and priorities for the organisation. On the basis of forecast of

external environments and the capacity of organization the objectives of organization are

established.

Devising operational plans to achieve these objectives

Managing Internal Components

The internal components of organization have following aspects:

Organizing and staffing: in organizing manager establish structure (position authority

and responsibility are assigned). In staffing selection of right man for the right job is done.

Directing personnel and human resource management system. The capacity of

organization is in its member and their skills and knowledge. The HRM recruits, selects,

trains etc., people to build capacity and select right people for right job.

Controlling performance: Various management information system i.e. budgeting,

accounts, reports, performance appraisal etc., help manage in making decisions and

achieving objectives.

Managing External Components

Dealing with external units of organisation subject to common authority: If the

organization is large and geographically dispersed then senior managers has to deal with

managers of unit which are geographically or otherwise dispersed.

Dealing with independent organizations: agencies from other branches or level of

government, interest groups or private enterprise that affect the organizations ability to

achieve its objectives.

Dealing with press and public whose action or approval and agreement is required

The first main function is that of strategy. This involves the future of the organization, establishing

objectives and priorities and making plans to achieve these objectives. Traditional public administration

required little conception of strategy, as that was presumed to be `given' by politicians. Public servants

`administered' in the dictionary sense, simply carrying out the instructions of the politicians, who were

presumed to develop and be responsible for policy and strategy. Managerialism on the other hand aims at

the longer term and at the relationship between the organization and the external environment. It is now

common for agencies to develop objectives and priorities rather than accepting policies from politician.

Politicians now demand that agencies and public servants under their control involve themselves in matters

of strategy.

The second main function is managing internal components. This involves to build structure of

organization, setting up departments (type of departmentalization) assigning roles and responsibilities etc to

achieve objective. Traditional public administration also focused on HRM but was not carried to fullest.

The NPM focuses on internal environment and on HRM policies to measure performance of individuals

and agencies.

The third function considers the organisation in its external context and the task of managing

external constituencies. Under the traditional model, the concepts of public service anonymity and

neutralities have certainly declined. Public servants are now much freer in performing tasks they have to

deal with press, public and other organization (NGO, private organizations etc.). There is a far greater focus

on external environment in new public management, through both strategy and the managing of external

constituencies, than was ever the case with the traditional model of public administration.

Beginning of Management Approach

For much of the twentieth century there was little difference in management structures or style

between private and public management. Large Companies were hierarchical and Weberian as any

government department. It was only from the 1950s or 1960s that the problems of bureaucratic rigidity

became evident in the private sector. Because it was realized that division of labour and working manual for

all management functions had limitation. Someone needed to take responsibility to achieve results.

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Introduction To Public AdministrationMGT111

It is hard to delineate exactly when `management' as a word began to take over from administration

in the public sector. The apparent success of mangers in the private sector led to concerns being expressed

that the public sector had fallen behind.

Even if the decline of public administration in legitimacy since the 1950s is true, that decade is too

early for a change of management style.

One starting point management is the 1968 Fulton Report in the United Kingdom. This report

noted concerns with the management capability of public service. It recommended that the system be

opened up, outsiders be employed at all levels and that the rigid hierarchical structure in which barriers

were placed at several points is removed.

Reforms in the public sector in developed countries like USA and Australia were introduced and it

was questioned if the public service had the management tools, flexibility and capacities to meet the

challenges of changing external environment.

Conclusions

This lecture has focused on the concept of NPM. From the traditional model of public

administration which emphasized hierarchical structure, dichotomy of policy formulation and

implementation, neutrality of public servants to more flexible organization structure the concept has

evolved and generated new controversy.

The NPM is driven by market. It is driven by the concepts of measuring individual and

organizational performance to achieve results. The NPM encompasses the concepts of general management

functions, whereby the strategy, internal components and external components are to be understood well to

achieve results.

The NPM has evolved in developed countries after the recommendations made by the Reform

Committees in UK and UK. The concept of NPM has generat4d debate on the role of government.

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