Elective Public Management – Week 3 New Public Management: Strategic Elements

1. Elective Public Management – Week 3New Public Management: Strategic Elements • Andreas Bergmann • Institute of Public Management • andreas.bergmann@zhwin.ch

2. New Public Management as the answer to the shortcomings of Bureaucracy • Overview • Government as a grantor • Strategic elements

3. What is strategic management about? • Once upon a time there were two corporations in the same industry. There were the two presidents of these corporations and they decided go camping, in order to talk undisturbed about a potential merger of the two corporations. On a sunny day, they went hiking in the forest. All of the sudden there was a snarling grizzly bear, which was about to start attacking them. The first president immediately took a pair of sneakers from his backpack. The second president responded: „You can‘t run away from a grizzly bear!“. The first president answered: „Perhaps, I‘m not faster than the grizzly, but I‘m certainly faster than you!“

4. Government as a grantor • Grantor model • Applies both the areas of intervention and service provision • But is supposed to overcome the digital and often political decision about public goods • Politicians are supposed to decide on • Degree of horizontal integration (which areas of activity) • Degree of vertical integration (make or buy of services) • Vertical integration to be reduced under NPM • Outsourcing • Public-Private-Partnership

5. Strategy Structure Potential Strategic elements • Schedler/Proeller Model Culture

6. Objectives • Which • businesses? SBU Plat- forms • Marketing • Operations • Finance • R&D • HRM • IT Strategic elements ZHAW-SoM model • Mission Statement • Corporate Policy • Value Statements • Which businesses Corporate strategy ZHW: Business UnitStrategy Goals Functional strategies • Where and how to compete? Competitive strategy P/M strategy

7. Strategic elements • Generally agreed elements • Customer orientation • Customer satisfaction as a main component • Output and Outcome orientation • Output (Leistung) • Outcome (Ergebnis) • Impact (Wirkung) • Goal oriented legislation • Quality orientation • Competition • Formation of agencies and “quangos” • Privatisation • Public Private Partnership

8. Strategic elements • Controlling output • In Anglo-Saxon countries (especially GB, NZ, AUS) from the early 1990s, in continental Europe slightly later (BUSCHOR) • Answer to overcome the shortcomings of Bureaucracy • Characteristics • Operationalisation relatively easy • Of rather limited political interest • Directly supporting the internal planning of service providers (e.g. classes at school, beds at hospitals) • Information required for cost accounting and pricing • output : input = efficiency • Only precondition: the product/service has to be defined!

9. Strategic elements • Controlling Outcome and Impact • Of much greater political interest than outputs, i.e. policy goals • But operationalisation proves extremely difficult • Levels are politically controversial • Not feasible for short term adjustments, rather for long term policy making • Therefore reluctantly used in practice • Achievement of objectives = Effectiveness

10. Strategic elements • Public Private Partnership • Logical consequence of the grantor model: • Grantor  Government • Financing  Usually mixture of private investment and user or government payments for operation • Operator  Private sector partner • Alternative on its own or just preliminary step of privatisation?

11. Statutory framework Laws, Decrees Government goals for legislative period Medium term planning (3 to 5 years,in Switzerland: KEF and IAFP) Output-Based-Budget (annual; in SwitzerlandGlobalbudget) Strategic elements • Instruments of New Public Management Cf. Web-based course (in German)

12. Strategic elements • Structural consequences (Strategy  Structure) • Product-Market oriented structure • Divisions and agencies grouping similar services • Within the divisions and agencies market oriented units (e.g. case managers) • Communication according to real life situations rather than administrative structures (e.g. birth, education, …) • Sometimes outsourcing of internal/corporate services (Schedler: „usually“)

13. Strategic elements • Main obstacle: Roles of politics and administration • Policy making: Parliament • Political leadership • Supreme oversight (oversight over the system itself) • Policy making and management: Government • Strategic leadership • Oversight (oversight within the system) • Management: Administration • Collaboration in the strategy process • Operational leadership

14. Strategic elements • Appraisal of NPM • + Renunciation of (pure) input control • + Integration of political (normative), strategic and operational management • + Use of generally accepted management skills • + Customer and goal orientation • - Cultural change way beyond expectations • - Operationalisation problems, especially for outcomes/impacts • - Politicians don’t like to be restricted to policy making, if they voters stress operational issues, they like to react

15. Strategic elements • Comparison to private sector corporations • Similar: • Methods of management (MbO, process management, cost accounting) • Customer- and goal-orientation • Different: • Stakeholders are much more important • Planning interval/time horizon longer • Culture • Ongoing scarcity of resources

16. Links and references • Links • Webbased training in German: Modul 1 „Das Prinzip der Wirkungsorientierten Verwaltungsführung“, http://e-learning.wif.zh.ch/index.php • Textbooks • SCHEDLER, K./PRÖLLER, I.: New Public Management. 3. Auflage. Haupt/UTB, 2007. 37-60 • McLAUGHLIN, K.: New Public Management: current trends and future perspectives. London: Routeledge, 2005. Paperback. 5-33 • Journals • CAPERCHIONE, E./FEE-PSC: The New Public Management – a perspective for finance practitioners. Brussels: FEE, 2006. (One of the more recent appraisals of NPM) • GRUENING, G.: Origin an theoretical basis of New Public Management. In: International Public Management Journal, Vol. 4, Number 1. 2001 (Generally accepted elements of NPM) • GUTHRIE, J./OLSEN, O./HUMPHREY, C.: Debating developments in New Public Financial Management: the limits of global theorising and some new ways forward. In: Financial Accountability and Management, Number 3-4, 209-228. 1999. (Leading appraisal of NPM) • HOOD, C.: A public management for all seasons? In: Public Administration, Number 69. 1991 (The first mentioning of NPM)