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A critical look at the new management

Today, the new management of the public sector is not just a set of ideas and political intentions for change. He has become widely involved in the practice of some countries, using many of his approaches and techniques. The results of their application are particularly important. They test hypotheses about the effectiveness of privatization and regulation, the coverage between the value of public services and taxpayers’ money, the effect of quasi-markets, and other approaches to new management. They serve as an analytical basis for subsequent rational changes in the activities of public institutions.

The positive and negative results of the research on the new management

Several British economists have tried to synthesize the positive and negative results of numerous studies on the results of the new management. First, they find that it has significantly increased the efficiency of public service delivery.

Walsh, for example, cites data on the effectiveness of the introduction of the public procurement system. In the US and Canada, the savings made amount to about 30% of the previous spending model, and in the UK – 25%. Second, the current and long-term strategic decision-making process has become much more streamlined and flexible. Reference: “Strategic modeling for organizations“, https://www.mmrls.org/strategic-modeling-for-organizations/

Many public institutions are already defining their short- and medium-term goals and developing business plans to achieve them. The contractual system with public service providers is widely used.

They already define much more precisely the targets that contractors (executive agencies or private companies) must achieve. This has led to greater cost accounting and the achievement of higher standards in the provision of services. Third, public institutions have become much more responsible and open to their customers. They already provide more information about their activities, the resources they use, and the quality of the services they offer. It can be assumed that the orientation to the needs of the clients is already a practice in the activity of many public institutions.

Fourth, the influence of politicians, bureaucrats, and trade unions in the organization and management of public activities was limited. Reference: “Management of innovation in organizations and business“, https://www.worldforgemagazine.com/management-of-innovation-in-organizations-and-business/

Managers of executive agencies and state-owned enterprises (working under a management contract) are much more independent. They focus on performance indicators, thus eliminating attempts at political change or trade union pressure. In this regard, they use techniques to stimulate well-performing professionals, which has changed their motivation to work.

Fifth, in conditions of managerial freedom, government agencies (especially executive agencies) have become more flexible, enterprising, and resourceful in their actions. The traditional, bureaucratic style of behavior began to shift from the market-oriented culture of the organization. As a consequence, the offering of many public services today is determined by the actual needs of their customers. This has significantly improved the behavior of many government organizations.

The analysis of the results of the application of the new management

However, the analysis of the results of the application of the new management also revealed some weaknesses in its approaches. In the first place, it does not synchronize and complements to a large extent with the professionalism of those working in government agencies.

The managerial approach is technocratic: it offers solutions that lead to efficiency. In such cases, professional managers ignore the arguments of working professionals and unions in the decision-making process. However, they have traditionally had a great influence on the management of public activities. On this basis, conflicts arose between the new managers and their professional management style with the working doctors, teachers, administrators in certain public activities.

The new management was imposed politically Second, the new management was imposed politically through the decisions of governments, ie from top to bottom to the creators of public services. This largely objective approach has turned senior civil servants into agents of the principal, ie the contracting authority, in the face of government and the ruling political force.

As a result, a fully professional approach to effective change, such as the new management, has come under political scrutiny and criticism. Opposition forces always find reasons to absolutize some of his weaknesses.

This has raised some doubts about whether the new management is the best alternative to change in the public sector or whether it is just a policy of earning political rents. Reference: “Change management in organizations“, https://w-europe.org/change-management-in-organizations/

The new management affected the interests of the workers Third, the application of the new management has significantly affected the interests of employees. Many of them were laid off. The rest were forced to work much harder and take more risks in their profession without significantly affecting their income.

Job security has become significantly lower. All this led to manifestations of dissatisfaction and lower morale of staff, including corruption. Indeed, the application of the new management has led to some losses for workers, which are assessed as additional social costs. However, the question is: in the name of what are public services offered?

Of course, to provide work for certain professional groups and rents for bureaucrats! Higher productivity of public sector employees, other things being equal, means that less budget spending achieves greater service delivery or higher social well-being. In this case, the criticism of him is subjective. It represents the interests of certain professional groups, not the interests of all members of society.

Some of the tools and techniques of the new management did not give the expected results Fourth, some of the tools and techniques of the new management did not yield the expected results. The reports of the audit committees state the facts that the increased independence in the management of public activities causes irrational costs and losses from incorrect decisions.

An explanation is sought in poorly trained staff or the emerging new ethics in the public sector. It means the culture of the organization and the style of the employees, who are beginning to be determined by the market nature of the relationship with suppliers and customers. On this basis, some phenomena have emerged (emphasis on profit, abuse of power, taking bribes, and the like), which conflict with the goals of offering public goods. Fifth, the formation of independent units in public activities led to the division of the system into separate parts.

Coordination between them is carried out through competition for attracting resources and signing contracts for implementation. Within this framework, the opportunities for a centralized and efficient supply of public institutions with consumables for their activities have been lost. This has led to losses in the public service budget.

However, they are rather the result of irrational modeling of changes that have limited opportunities for economies of scale. The implementation of the contract system and the creation of market relations between the internal units of the organization led to an increase in transaction costs (transaction). Initially, “ex-ante”, transaction costs were negotiated, which subsequently, “ex-post” turned out to be significantly higher. The contractor always finds reasons to prove higher costs in the process of implementing the contract.

Indeed, the study of consumer demand, the maintenance of an information system for the management of activities, the implementation of the control itself, increased the cost of offering public services by the contractor. They naturally reduced the net benefit of more effective approaches to the new management. The weaknesses in the results of the application of the new management give grounds for criticism of it. It is made by a variety of subjects, which can be conditionally grouped into three groups:

First, representatives of opposition political parties who criticize the extraction of political rents. It can be ignored; Second, representatives of the bureaucrats and contractors affected by the reforms in the field of public services. In most cases, they closely defend their professional interests, not the public ones (although they claim to be). However, there are rational elements in them. It is appropriate to take this criticism into account. Third, the representatives of the specialized committees for public audit and control.

Their criticism is embedded in the reports of the inspections carried out, which is why it is professional. It is very useful for improving the approaches and techniques of the new management.

A critical view of the new management is not entirely positive

From a critical look at the new management, it became clear that it brings with it some actions and decisions that conflict with the values ​​of the public sector. It is a question of the absolutization of marketing (introduction of market mechanisms) and commercialization (the search for profits) in the supply of some public goods of great social significance.

This, of course, became an occasion for new analysis and reflection on the new management, as well as for the overall management of the public sector. Many scientific publications have emerged that have launched ideas for a new paradigm for public sector governance: integrating new management (as an economic approach to public goods supply) into the richer concept of “better governance”.

It is a managerial approach that incorporates not only the idea of ​​economic efficiency in the supply of public goods but also the achievement of higher satisfaction of citizens and their organizations with the overall functioning of the state. Many governments began to incorporate the idea of ​​better governance into their policies in the second half of the 1990s.

Privatization, marketing, and efficiency are no longer the only benchmarks for the modern development of the public sector. Along with them, the principles of accountability, the involvement of stakeholders in policy-making, and predictability and transparency in the actions of public authorities have begun to be applied.

By Robert Brown

Robert Brown is a longtime manager of a technology organization and author of a management book. In his spare time, Mr. Brown helps students get a better education by helping to publish free study materials.

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