Gunel Mukhtarova
Chapter 4
Public Management
The 1980s and 1990s saw the emergence of a new managerial approach in the public sector, in response to what
many regarded as the inadequacies of the traditional model of administration. It was noted earlier that the
managerial approach has had many names, although the literature has now more or less settled on ‘public
management’ or ‘new public management’. First, whatever the model is called, it represents a major shift from
traditional public administration with far greater attention now being paid to the achievement of results and the
personal responsibility of managers. Secondly, there is an expressed intention to move away from classic
bureaucracy to make organizations, personnel, and employment terms and conditions more flexible. Thirdly,
organizational and personal objectives are to be set clearly and this enables measurement of their achievement
through performance indicators. Similarly, there is more systematic evaluation of programmes, in more rigorous
attempts than before, to find out whether or not government programmes are achieving their goals. Fourthly, senior
staff are more likely to be politically committed to the government of the day rather than being non-partisan or
neutral. Fifthly, government functions are more likely to face market tests; in separating the purchaser of
government services from the provider, in other words separation of ‘steering from rowing’ (Savas, 1987).
Government involvement need not always mean government provision through bureaucratic means. Sixthly, there is
also a trend towards reducing government functions through privatization and other forms of market testing and
contracting, in some cases quite radically.
However, the managerial model is still controversial. Advocates view public management as offering a new way of
looking at and carrying out management functions within the public sector. As an alternative to traditional
administration, public management may offer a more realistic approach given the manifest problems of the earlier
model. Critics, however, regard it as simply an unquestioning adoption of the worst features of private management,
which pays no regard to the fundamental differences in the public sector environment. Some writers, particularly
from a public administration tradition, argue that the good parts of the old model – high ethical standards, service to
the state – are being cast aside in the headlong rush to adopt the new theory.
The meaning of Management: Essentially, administration means following instructions and management means the
achievement of results and taking personal responsibility for doing so.
Allison’s (1982) Functions of general management
STRATEGY (The first main function of general management is that of strategy. This involves the very future of the
organization, establishing objectives and priorities and making plans to achieve these).
1. Establishing objectives and priorities for the organization (on the basis of forecasts of the external
environment and the organization’s capacities).
2. Devising operational plans to achieve these objectives.
MANAGING INTERNAL COMPONENTS (The second main function is managing internal components. This
involves staffing, setting up structures and systems to help achieve the objectives identified by strategy. In addition,
the financial systems available in traditional administration were unable to provide information in a form to enable
the monitoring of performance; this too has changed as part of the public management reforms).
3. Organizing and staffing: in organizing, the manager establishes structure (units and positions with
assigned authority and responsibilities) and procedures for coordinating activity and taking action). In
staffing, he tries to fit the right persons in the key jobs.
4. Directing personnel and the personnel management system: the capacity of the organization is
embodied primarily in its members and their skills and knowledge. The personnel management system
recruits, selects, socializes, trains, rewards, punishes, and exits the organization’s human capital, which
constitutes the organization’s capacity to act to achieve its goals and to respond to specific directions
from management.
5. Controlling performance: various management information systems – including operating and capital
budgets, accounts, reports, and statistical systems, performance appraisals, and product evaluation –
, Gunel Mukhtarova
assist management in making decisions and in measuring progress towards objectives.
MANAGING EXTERNAL CONSTITUENCIES (The third function considers the organization in its external
context and the task of managing external constituencies. Under the traditional model, the concepts of public service
anonymity and neutrality meant that this function was also assumed to be carried out by politicians and not by
managers. Any dealings with the press, the public, or other organizations were not matters involving the public
service. Public service anonymity has certainly declined, and in a generally welcome way. Public servants are now
much more free to speak out in public, to appear at professional forums, to write articles for journals and generally
to be visible and public figures).
6. Dealing with ‘external’ units of the organization subject to some common authority: most general
managers must deal with general managers of other units within the larger organization above, laterally
and below to achieve their unit’s objectives.
7. Dealing with independent organizations: agencies from other branches or levels of government,
interest groups, and private enterprises that can affect the organization’s ability to achieve its
objectives.
8. Dealing with the press and public whose action or approval or acquiescence is required.
The beginnings of a management approach
For much of the twentieth century there was little difference in management structures or styles between private and
public sectors. Large companies were as hierarchical and Weberian as any government department. Someone
needed to take charge and to take personal responsibility for results.
Instead of there being reforms to the public sector, new public management represents a transformation of the public
sector and its relationship with government and society.
The managerial programme, Hood’s seven main points of NPM
1. Hands-on professional management in the public sector. This means letting the managers manage. The
typical justification for this is that ‘accountability requires clear assignment of responsibility for action’.
2. Explicit standards and measures of performance. This requires goals to be defined and performance targets
to be set, and is justified by proponents as ‘accountability requires [a] clear statement of goals;
3. Greater emphasis on output controls. Resources are directed to areas according to measured
performance, because of the ‘need to stress results rather than procedures’.
4. A shift to disaggregation of units in the public sector. This is justified by the need to create manageable
units and ‘to gain the efficiency advantages of franchise arrangements inside as well as outside the public
sector’.
5. A shift to greater competition in [the] public sector. This involves ‘the move to term contracts and public
tendering procedures’ and is justified as using ‘rivalry as the key to lower costs and better standards’.
6. A stress on private sector styles of management practice. This involves a ‘move away from military-style
“public service ethic” ’ and ‘flexibility in hiring and rewards’, and is justified by the ‘need to use “proven”
private sector management tools in the public sector’.
7. A stress on greater discipline and parsimony in resource use. Hood sees this as ‘cutting direct costs, raising
labour discipline, resisting union demands, limiting “compliance costs” to business’ and is typically
justified by the ‘need to check resource demands of public sector and “do more with less” ’.
‘Good managerial approach’ by Holmes and Shand:
1. More strategic or results-oriented (efficiency, effectiveness and service quality) approach to decision-
making;
2. The replacement of highly centralized hierarchical organizational structures with decentralized
management environments where decisions on resource allocation and service delivery are taken closer to
Chapter 4
Public Management
The 1980s and 1990s saw the emergence of a new managerial approach in the public sector, in response to what
many regarded as the inadequacies of the traditional model of administration. It was noted earlier that the
managerial approach has had many names, although the literature has now more or less settled on ‘public
management’ or ‘new public management’. First, whatever the model is called, it represents a major shift from
traditional public administration with far greater attention now being paid to the achievement of results and the
personal responsibility of managers. Secondly, there is an expressed intention to move away from classic
bureaucracy to make organizations, personnel, and employment terms and conditions more flexible. Thirdly,
organizational and personal objectives are to be set clearly and this enables measurement of their achievement
through performance indicators. Similarly, there is more systematic evaluation of programmes, in more rigorous
attempts than before, to find out whether or not government programmes are achieving their goals. Fourthly, senior
staff are more likely to be politically committed to the government of the day rather than being non-partisan or
neutral. Fifthly, government functions are more likely to face market tests; in separating the purchaser of
government services from the provider, in other words separation of ‘steering from rowing’ (Savas, 1987).
Government involvement need not always mean government provision through bureaucratic means. Sixthly, there is
also a trend towards reducing government functions through privatization and other forms of market testing and
contracting, in some cases quite radically.
However, the managerial model is still controversial. Advocates view public management as offering a new way of
looking at and carrying out management functions within the public sector. As an alternative to traditional
administration, public management may offer a more realistic approach given the manifest problems of the earlier
model. Critics, however, regard it as simply an unquestioning adoption of the worst features of private management,
which pays no regard to the fundamental differences in the public sector environment. Some writers, particularly
from a public administration tradition, argue that the good parts of the old model – high ethical standards, service to
the state – are being cast aside in the headlong rush to adopt the new theory.
The meaning of Management: Essentially, administration means following instructions and management means the
achievement of results and taking personal responsibility for doing so.
Allison’s (1982) Functions of general management
STRATEGY (The first main function of general management is that of strategy. This involves the very future of the
organization, establishing objectives and priorities and making plans to achieve these).
1. Establishing objectives and priorities for the organization (on the basis of forecasts of the external
environment and the organization’s capacities).
2. Devising operational plans to achieve these objectives.
MANAGING INTERNAL COMPONENTS (The second main function is managing internal components. This
involves staffing, setting up structures and systems to help achieve the objectives identified by strategy. In addition,
the financial systems available in traditional administration were unable to provide information in a form to enable
the monitoring of performance; this too has changed as part of the public management reforms).
3. Organizing and staffing: in organizing, the manager establishes structure (units and positions with
assigned authority and responsibilities) and procedures for coordinating activity and taking action). In
staffing, he tries to fit the right persons in the key jobs.
4. Directing personnel and the personnel management system: the capacity of the organization is
embodied primarily in its members and their skills and knowledge. The personnel management system
recruits, selects, socializes, trains, rewards, punishes, and exits the organization’s human capital, which
constitutes the organization’s capacity to act to achieve its goals and to respond to specific directions
from management.
5. Controlling performance: various management information systems – including operating and capital
budgets, accounts, reports, and statistical systems, performance appraisals, and product evaluation –
, Gunel Mukhtarova
assist management in making decisions and in measuring progress towards objectives.
MANAGING EXTERNAL CONSTITUENCIES (The third function considers the organization in its external
context and the task of managing external constituencies. Under the traditional model, the concepts of public service
anonymity and neutrality meant that this function was also assumed to be carried out by politicians and not by
managers. Any dealings with the press, the public, or other organizations were not matters involving the public
service. Public service anonymity has certainly declined, and in a generally welcome way. Public servants are now
much more free to speak out in public, to appear at professional forums, to write articles for journals and generally
to be visible and public figures).
6. Dealing with ‘external’ units of the organization subject to some common authority: most general
managers must deal with general managers of other units within the larger organization above, laterally
and below to achieve their unit’s objectives.
7. Dealing with independent organizations: agencies from other branches or levels of government,
interest groups, and private enterprises that can affect the organization’s ability to achieve its
objectives.
8. Dealing with the press and public whose action or approval or acquiescence is required.
The beginnings of a management approach
For much of the twentieth century there was little difference in management structures or styles between private and
public sectors. Large companies were as hierarchical and Weberian as any government department. Someone
needed to take charge and to take personal responsibility for results.
Instead of there being reforms to the public sector, new public management represents a transformation of the public
sector and its relationship with government and society.
The managerial programme, Hood’s seven main points of NPM
1. Hands-on professional management in the public sector. This means letting the managers manage. The
typical justification for this is that ‘accountability requires clear assignment of responsibility for action’.
2. Explicit standards and measures of performance. This requires goals to be defined and performance targets
to be set, and is justified by proponents as ‘accountability requires [a] clear statement of goals;
3. Greater emphasis on output controls. Resources are directed to areas according to measured
performance, because of the ‘need to stress results rather than procedures’.
4. A shift to disaggregation of units in the public sector. This is justified by the need to create manageable
units and ‘to gain the efficiency advantages of franchise arrangements inside as well as outside the public
sector’.
5. A shift to greater competition in [the] public sector. This involves ‘the move to term contracts and public
tendering procedures’ and is justified as using ‘rivalry as the key to lower costs and better standards’.
6. A stress on private sector styles of management practice. This involves a ‘move away from military-style
“public service ethic” ’ and ‘flexibility in hiring and rewards’, and is justified by the ‘need to use “proven”
private sector management tools in the public sector’.
7. A stress on greater discipline and parsimony in resource use. Hood sees this as ‘cutting direct costs, raising
labour discipline, resisting union demands, limiting “compliance costs” to business’ and is typically
justified by the ‘need to check resource demands of public sector and “do more with less” ’.
‘Good managerial approach’ by Holmes and Shand:
1. More strategic or results-oriented (efficiency, effectiveness and service quality) approach to decision-
making;
2. The replacement of highly centralized hierarchical organizational structures with decentralized
management environments where decisions on resource allocation and service delivery are taken closer to
