Today, new public sector management is not just a set of ideas and political intentions for change. It has become widely practiced in a number of countries that use many of his approaches and techniques. The results of their application are particularly important. They test the 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 new management approaches.
They serve as an analytical basis for subsequent rational changes in the activities of public institutions
A number of English economists have attempted to synthesize the positive and negative results of numerous studies on the results of new management. First, they find that it has significantly increased efficiency in the delivery of public services. K. Walsh, for example, cites performance data from the implementation of the procurement system. In the US and Canada, the savings made amount to about 30% of the previous cost model and in the UK to 25%.
Long-term strategic decision-making process
Second, the current and long-term strategic decision-making process has become much more streamlined and flexible. Many public institutions already define their short and medium-term goals and develop business plans to achieve them. The contract system with public service providers is widely used. They set out much more precisely the goals that contractors (executive agencies or private companies) must achieve. This has led to higher cost reporting and higher standards of service delivery.
Public institutions are responsible and open to customers
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 customer orientation is already a practice in the activities of many public institutions.
Managers of executive agencies and state-owned enterprises
Fourth, the influence of politicians, bureaucrats and trade unions in the organization and management of public activities has been limited. Managers of executive agencies and state-owned enterprises (working with a management contract) are much more independent. They focus on performance indicators, thus eliminating attempts at political change or union pressure. In this regard, they use techniques to encourage well-working professionals, which has changed their motivation to work. Reference: Strategic Management
Fifth, under managerial freedom, government agencies (especially executive agencies) have become more flexible, enterprising and resourceful in their actions. The traditional, bureaucratic style of behavior has begun to shift away from the organization’s market-oriented culture. As a consequence, the provision of many public services today is determined by the actual needs of their customers. This has raised considerable perfection in the behavior of many government organizations.
Implementation of the new management revealed some weaknesses
However, the analysis of the results of the implementation of the new management revealed some weaknesses in its approaches. First of all, it does not synchronize and complement to a great extent the professionalism of the employees in the state institutions. The managerial approach is technocratic: it offers solutions that lead to efficiency. In such a case, professional managers ignore the arguments of working professionals and unions in the decision-making process. However, they have traditionally had a great influence in the management of public activities. On this basis, conflicts arose between new managers and their professional management style with working physicians, teachers, administrators in certain public activities. Reference: Emergency and development of scientific management in the USA
Second, the new management was politically imposed through government decisions, ie from the top down to the public service creators themselves. This largely objective approach has made senior civil servants agents of the principal, that is, of the contracting authority in the face of the government and the governing political force. As a result, a completely professional approach to effective change, such as new management, has become the subject of political evaluations and criticism. Opposition forces always find reasons to absolutize some of its weaknesses. This has raised some doubts as to whether new management is, in fact, the best alternative to change in the public sector, or whether it is simply a policy for winning political rents.
Application of the new management significantly affected the interests of employees
Third, the application of the new management significantly affected the interests of employees. Many were cut. The rest were forced to work significantly more intensively and take more risks in their profession without significantly affecting their income. Job security has become significantly less. All of this has led to manifestations of discontent and a decline in staff morale, including corruption.
Indeed, the implementation of the new management has led to some losses for employees, who are assessed as additional social costs. However, the question is: what is the public service offered for? Of course, to provide work for certain professional groups and rents for bureaucrats! Higher labor productivity of the public sector employees, all things being equal, means that with lower budgetary expenditures more service provision or higher social well-being is achieved. In that case, the criticism referred to him is subjective. It reflects the interests of certain professional groups, not the interests of all members of society.
New management tools and techniques
Fourth, some of the new management tools and techniques did not deliver the expected results. Audit committees’ reports state that increased autonomy in the management of public activities results in irrational costs and losses from incorrect decisions. The explanation is sought in poorly trained staff or in the emerging new ethics in the public sector. It refers to the culture of the organization and the style of the employees who begin to determine the market nature of their relationships with suppliers and customers. On this basis, some phenomena (emphasis on profit, abuse of power, bribery and the like) have emerged, which go against the objectives of offering public goods.
Fifth, the formation of autonomous units in public activities led to the breakdown of the system into separate units. Coordination between them is achieved through competition for attracting resources and signing performance contracts. Within this framework, the opportunities for centralized and efficient supply of public institutions with supplies for their activities were lost. This has led to losses in the public services impasse. Rather, they are the result of irrational modeling of change, which limited the scope for economies of scale.
Implementation of the contract system and the creation of market links
The implementation of the contract system and the creation of market links between the internal units of the organization led to an increase in transaction costs (transaction). Initially, ex ante contracted transaction costs, which subsequently turned out to be significantly higher. The contracting company always finds reasons to prove higher costs in the process of contract realization. Indeed, the study of consumer demand, the maintenance of an information system for managing activities, the exercise of control itself, have increased the cost of providing public services by the contractor. They naturally reduced the net benefit of the more effective new management approaches.
Modern management give grounds for criticism
The weaknesses identified in the results of the application of modern management give grounds for criticism of it. It is made of a variety of entities that can be conditionally grouped into three groups:
First, representatives of opposition political parties who criticize for leveraging political rents. It can be ignored;
Secondly, representatives of the bureaucrats and contractors affected by the reforms in the field of public services. In most cases, they protect their professional interests rather than public interests (though they claim to be). However, there are rational elements in them. Tackling this criticism is appropriate.
Third, the representatives of the specialized committees for public audit and control. Their criticism is embedded in the audit reports and is therefore of a professional nature. It is very useful for refining the approaches and techniques of new management.
The assessments of the scenarios for public sector management in the next 10-15 years give a clear advantage to the new management. The critical point of its development as a concept and policy is already over. The benefits of new management are obvious and convincing. The return to the old bureaucratic model of public activity management seems anachronistic.
Privatization, marketing and management in public sector
Privatization, marketing and management in public sector development are no longer intellectual exercises of scientists or conservative experiments, but a rational policy for effective changes in the public sector. It is self-correcting for mistakes made, which gives rise to a tendency for greater excellence in the activities of public institutions.