New Public Management
A public sector management theory that sought to make government more efficient and responsive by employing private sector techniques and creating market conditions for the delivery of public services.
(Savoie, Donald J. 2003. Breaking the Bargain: Public Servants, Ministers and Parliament. Toronto: University of Toronto Press, pp. 337)
NPM theorists suggested that because much of the civil service focuses on the delivery of core services that are free of political machinations, governments should employ private sector management principles and try to create market conditions to make the delivery of services more efficient and autonomous. The focus of NPM was on re-examining what government does, and attempting to make it more strategic and results-oriented, to increase the flexibility of staffing, to improve financial management and rely increasingly on competitions and contracts, and to change the relationship between government and the public. According to Savoie, “NPM’s goal is to break down formal systems of control and instil a new ‘bias for action’ in government bureaucracies.” (2003 pp. 12-3)
NPM involves a paradigm shift in approaches to Government and Policy Analysis. Its hallmarks are the values of entrepreneurship, flexibility and creativity as opposed to prudence and stability from traditional ways of conducting public administration. NPM involves risk-taking, accountability by results, and decentralization as opposed to traditional public administration which is risk-averse, is accountable through processes and is highly centralized. It takes as its basis an open, transparent and empowering approach to government that is highly consultative and competitive.
Though NPM had a significant effect in influencing government reform throughout the Western world during the 1980s, it is most closely associated with Prime Minister Margaret Thatcher in the UK. It was driven by the changing political ideology and difficult economic circumstances of the times, as well as by the belief in improved public sector efficiency and cost containment. It also brought forth a number of challenges, including the difficulty of measuring objectives, reduced public accountability for more autonomous organizations, politicization, and some fundamental ethical issues.
Weikert (2001) asserts that “the ideas behind NPM are not new” and that “NPM builds on a long history of using business practices in government and reflects a resurgence of old ideas about the form and functions of government” (362). During the first years of the twentieth century, reformers and business leaders demanded greater accountability in local government, and many politicians and public officers turned to business principles to improve government activities, invigorate performance, and decrease corruption. However, the vision of NPM is also far different from the old business-guided governance because it aspires to decrease government size and lower its involvement in citizens’ lives. NPM relies on the theory of the marketplace and on a businesslike culture in public organizations. For example, in an extensive review of NPM literature, Hays and Kearney (1997) find five core principles of this approach: (1) downsizing - reducing the size and scope of government; (2) managerialism - using business protocols in government; (3) decentralization - moving decision making closer to the service recipients; (4) debureaucratization – restructuring government to emphasize results rather than processes; and (5) privatization - directing the allocation of government goods and services to outside firms (Weikert 2001). All of these principles are mutually related, relying heavily on the theory of the private sector and on business philosophy, but they are aimed at minimizing the size and scope of government activities. Integrated with ideas rooted in political economy, they became applicable for public-sector institutions (Farnham and Horton 1995).
It has been suggested that NPM theory takes its intellectual foundations from Public Choice theory, which looks at government from the standpoint of markets and productivity, and from Managerialism, which focuses on management approaches to achieve productivity gains. At its core, NPM represents a set of ideas, values and practices aimed at emulating private sector practices in the public sector. NPM has both protagonists (Osborne and Gaebler, 1992; Osborne and Plastrik, 1997) and vehement opponents. It has been criticized for the values it promotes, the disaggregation of the concept of a unified public service and the effects of managerialism on democratic values (Terry, 1993; Carroll and Lynn, 1996).
While the Classic public administration theory gave us a sound foundation, the NPM theory starts from the wrong value proposition. However, the underlying issues NPM attempts to resolve – some of which had previously been neglected – deserve our careful attention. Three of the most important issues include:
• Citizen-centred services;
• Value for taxpayers’ money;
• A responsive public service workforce.
A New Public Administration theory may be able to help us to address these issues from a public sector perspective, based on public sector values.
Several theorists have provided competing definitions of this complex term. Osborne defines NPM as: The assertion of the superiority of private-sector managerial techniques over those of public administration and with the assumption that the former would lead to improvements in the efficiency and effectiveness of public services.
Osborne describes the key elements of NPM as:
The key elements of the NPM can be summarized as:
• an attention to lessons from private-sector management;
• the growth both of hands-on ‘management’ – in its own right and not as offshoot of professionalism – and of ‘arm’s length’ organizations where policy implementation is organizationally distanced from the policy makers (as opposed to the ‘inter-personal’ distancing of the policy – administration split within PA);
• a focus upon entrepreneurial leadership within public service organizations;
• an emphasis on inputs and output control and evaluation and upon performance management and audit;
• the disaggregation of public services to their most basic units and a focus on their cost management; and
• the growth of use of markets, competition and contracts for resource allocation and service delivery within public services. and
In the research community, this led to a focus upon public management as a discipline in its own right often located, in the UK at least, within management and business schools.
In the years since it first contested the territory of public administration and management with public administration, though, the nature and/or successes of the NPM have been questioned on a range of grounds (see, for example, Farnham and Horton 1996; Ferlie et al. 1996; McLaughlin et al. 2002). Critics have argued, inter alia, that:
• the NPM is not one phenomenon or paradigm, but a cluster of several (Ferlie et al. 1996);
• the NPM has a number of distinct personae, dependent upon the audience, including ideological, managerial and research-oriented personae (Dawson and Dargie 1999);
• the geographic extent of the NPM is limited to the Anglo-American, Australasian and (some) Scandinavian arenas, while public administration continues to remain dominant elsewhere (Kickert 1997);
• the nature of the NPM is also geographically dependent with, for example, the British and American variants actually being quite distinct from each other in their focus and locus (Borins 2002);
• in reality, the NPM is simply a sub-school of public administration that has been limited in its impact by the lack of a real theoretical base and conceptual rigour (Frederickson and Smith 2003);
• the benefits of the NPM are at best partial and contested (Pollitt and Bouckaert 2004); and
• the NPM is a failed paradigm (Farnham and Horton 1996).
In the dedicated textbooks on this topic, one will find both advocates of the NPM (Hughes 2002) and its critics (Flynn 2002).
Vigoda 2007, 533
Bourgon 2007, 13
Osborne 2006, 78-380