New Public Management

What is NPM?
New Public Management (NPM) is the label given to a series of reforms from
the 1980s onwards, to improve the efficiency and performance of western
governments and/or public sector organizations.
NPM points to the failures and inadequacies of public sector performance
over time, and locates the problem in the nature and processes of public
sector activity and public administration.
Implications of NPM
Key public change in public sector ethos.

Basis of NPM has been an emphasis of efficiency and cost cutting and
general assumption the government should deliver more for less.

Ideas borrowed from private sector can improve experience and serve of
those who use the planning system.

NPM seeks to reshape public interactions with the government.

Customer oriented public service.

At the core of these changes has been a fundamental and ideological

transformation of public sector ethos collectively referred to as New Public
Management.

Driving Paradigms of New Public Management

According to Kickert, the characteristics of NPM are the following eight
aspects:
Strengthening steering functions at the center.
Devolving authority, providing flexibility.
Ensuring performance, control and accountability.
Improving the management of human resources.

Optimizing information technology.

Improving the quality of regulation.

Providing responsive service.

Developing competition and choice

Important criteria of New Public Management

Emphasis on increasing adoption of managerial practices of private sector in
public administration.
Promotion of competition within public sector.
Greater use of contract arrangements within the government as well as
outside it.
Emphasis on results rather than procedures.
Formulation of explicit or definite standards and measures of performance.
Emphasis on separation of administrative units.

A shift away from policy to management .

Encouragement of lack of wastefulness in public expenditure.

The Public choice perspective in public administration was increasing in the
early seventies.
Various Authors criticised public bureaucracy in their books.
David Osborne and Ted Gaebler made a proposal for re-inventing the
Government in their book.
It was soon adopted by the United States Government via Al Gores (VicePresident) Report of the National Performance Review (1993).
It prescribes a ten point programme :
1. Government must promote competition among service- providers.
2.

It must empower citizens by pushing control out of the bureaucracy into the
community.

3.

It must measure the performance of their agencies focussing on outcomes,

not on inputs.

4.

It must be motivated by goals , not by rules and regulations.

5. It re- defines its clients as customers , and offers them choices.

6. It must prevent problems before these emerge, rather than simply offering
them services afterwards.
7. It must direct its energy towards earning money not simply spending it.
8. It must decentralize authority and promote participative management
9. It must prefer market mechanisms to bureaucratic mechanisms.
10.It must focus on providing public services but on catalyzing all sectors in the
society-public , private , voluntary-into action to solve the communitys
problems.
Criticisms
Economist Ha-Joon Chang claims that "increased NPM inspired reforms have
often increased corruption, creating new opportunities for bribes and future,
direct or indirect, employment in the private sector.
The reform strategy of the Australian government failed in two important
respects:
1.

The reform techniques were expensive and have increased costs in the short
term.

2. An attempt to save costs has damaged the organizational capacity to

maintain quality services and innovation.
Attributes of NPM:
1. Localization
2. Externalization
3. De-bureaucratization
NPM Result oriented and objective focused.
Flexible arrangements in organizations, conditions of

employment etc.

Driving motives : Three Es Economy, Efficiency , and Effectiveness.

Change in the governing style : From rowing to steering.

NPM: Guiding Principles

an emphasis on hands-on professional management skills for active,
visible, discretionary control of organizations (freedom to manage)
explicit standards and measures of performance through
clarification of goals, targets and indicators of success
a shift from the use of input controls and bureaucratic procedures to
rules relying on output controls measured by quantitative
performance indicators
a shift from unified management systems to disaggregation or
decentralization of units in the public sector
an introduction of greater competition in the public sector so as to
lower costs and achievement of higher standards through term
contracts, etc
a stress on private-sector style management practices, such as the
use of short-term labor contracts, the development of corporate
plans, performance agreements, and mission statements
a stress on cost-cutting, efficiency, parsimony in resource use and
doing more with less (Yamamoto, 2003)

NEW PUBLIC MANAGEMENT (NPM)

HISTORY OF NEW PUBLIC MANAGEMENT

NPM viewed as a modern approach of management in public sector arose in

UK in 1970s as the reaction toward the insufficiencies of traditional public
administration approach

Critics towards unsatisfied public sector performance

Public sector organisations were seen unproductive, inefficient, always suffer

loss, low quality, poor innovasion and creativity

These conditions triggered the movement to reform public sector

management

Then NEW PUBLIC MANAGEMENT emerged

HISTORY OF NPM

The notion of New Public Management firstly introduced by Christopher Hood

in 1991

NPM emphasized decentralisation, devolusion, and modernized provision of

public services

Several Name refer to Modern Public Sector Management

Managerialism,

New Public Management,

Market-Based Public Administration,

Post-Bureaucratic Paradigm,

Entrepreneurial Government

The Goal of NPM

The Essence of NPM

NPM is public sector management theory that assumed that private sector
management practices are better than management practices in public
sector.

So, in order to improve its performance, public sector should adopt practices
and management techniques applied in business sector, for example:

The adoption of market mechanism,

Compulsory Competitive Tendering Contract,

Privatisation of public corporations

Characteristics of NPM by Christopher Hood

1. Profesionalism in public sector

2. The existence of performance standard and performance measure
3. The emphasis on control of output and outcome
4. Split of organization unit

5. Competition in public sector

6. Adoption of private sector management style into public sector
7. Discipline and economic used of resources

Characteristics of NPM by Mathiasen (1999)

1. A closer focus on results in terms of efficiency, effectiveness, and quality of

service
2. The replacement of highly centralized, hierarchical structures by
decentralized management environments where decisions on resource
allocation and service delivery are made closer to the point of delivery
3. The flexibility to explore alternatives to direct public provision and regulation
that might yield more cost-effective policy outcomes
4. A greater focus on efficiency in the services provided directly by the public
sector, involving the establishment of productivity targets and the creation of
competitive environments within and among public sector organizations
5. The strengthening of strategic capacities at the center to guide the evolution
of the state and allow it to respond to external changes and diverse interests
automatically flexibly, and at least cost.
Adoption of business sector management style

Reinventing Government by David Osborne & Ted Gaebler

1. Catalytic Government: Steering Rather Than Rowing

2. Community-Owned Government: Empowering Rather Than Serving
3. Competitive Government: Injecting Competition into Service Delivery
4. Mission-Driven Government: Transforming Rule-Driven Organizations
5. Results-Oriented Government: Funding Outcomes, Not Inputs
6. Customer-Driven Government: Meeting the Needs of the Customer, Not the
Bureaucracy
7. Enterprising Government: Earning Rather Than Spending
8. Anticipatory Government: Prevention Rather Than Cure
9. Decentralized Government: From Hierarchy to Participation and Teamwork
10.Market-Oriented Government: Leveraging Change Through the Market