Public Sector Reformation Values Driven Solutions To Fiscal Constraint

Public Sector Reformation
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Public Sector Reformation
Values-driven Solutions to Fiscal
Constraint
Ian Chaston
Centrum Catolica, Peru; Moustraining Ltd, UK
© Ian Chaston 2012
Softcover reprint of the hardcover 1st edition 2012 978-0-230-37934-3
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First published 2012 by
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Contents
List of Tables and Figures vi

Preface vii
1 Towards the Inevitable 1

2 Societal Values and Expectations 22
3 Politicians 44
4 The Media 68
5 Leadership 89
6 Employees 109
7 Organisational Values 130
8 Vision, Mission and Strategy 153
9 Values Gaps 173
10 Values Congruency 194
11 Translating Vision into Strategy 213
12 Objectives, Plans and Implementation 236
13 Failure 257
14 Possible Futures 282
Index 303
v
List of Tables and Figures
Tables
10.1 Comparative review of process 199
Figures
1.1 Organisational values and sources of influence 18

2.1 Public Sector Service Gap Model 41
4.1 System interactions 77
5.1 Factors of influence on leadership style 104
7.1 Stakeholder Strategy Matrix 132
8.1 Conflicting values 163
8.2 Linear Sequential Strategic Planning Model 168
8.3 Vision-centred approach to public sector strategic
planning 169
9.1 Values gaps and values influencers 178
10.1 Organisational value options 195
10.2 Organisational and participant values 197
10.3 Values development priorities 210
11.1 The 4Ps of strategic management 214
11.2 Strategic options 222
11.3 Service provision space map 223
11.4 Strategic service options 227
11.5 Strategic fit assessment matrix 232
12.1 Determining final objectives and plans 238
12.2 Knowledge asset management 245
vi
Preface
In the 1990s, in order to retain electoral support, many Western govern-

ments pursued strategies of increased public sector spending to grow the
welfare state and to stimulate economic growth through bank deregula-
tion and low interest rates. The inevitable outcome of the latter strategy
in the USA and UK was an expansion in consumer lending by the banks,
creating a ‘housing bubble’. To support expansion of their lending activi-
ties the banks created collateralised debt obligations (CDOs) as a mecha-
nism for removing a significant proportion of mortgage debt from their
balance sheets. Eventually these actions led to the collapse of the financial
system when the sub-prime mortgage crisis erupted in America. In the UK,
the government was forced to intervene to rescue financial institutions
involved in profligate lending in the UK housing market. Governments
and their financial regulators realised there existed a massive level of toxic
debt within the financial services sector. This eventually resulted in bank
failures and large-scale government intervention to avert a crisis similar
to that which occurred during the 1930s Great Depression.
The outcome of government intervention was a huge increase in
the level of the public deficit in some Western democracies. Then, just
when it seemed a global financial crisis had been averted, it emerged
that some EU countries, especially those in the Mediterranean region,
had used a period of low interest rates to dramatically increase their
level of borrowing to sustain public sector spending, thereby adding fur-
ther to their already excessive public sector deficits. The country most
affected by this problem was Greece. In order to avoid a collapse of the
entire eurozone region, the European Union (EU) and the International
Monetary Fund (IMF) were forced to come to the rescue. This rescue
involved making funds available to Greece on the understanding that
the country’s government would implement a period of severe austerity
by reducing the scale of the country’s public sector spending, accompa-
nied by increased taxation. Other countries such as Ireland, Spain and
Portugal are facing similar, but less spectacular, problems. These coun-
tries will also face a period of public sector austerity in order to rebuild
their battered public sector finances.
The consequence of these recent events is that governments in many
Western democracies have been forced to significantly reduce public
sector spending in order to reduce the size of their public sector deficits.
vii
viii Preface
For the foreseeable future, these nations’ electorates will face a period
of austerity during which taxes will be higher and public sector services
will decline. In theory, some degree of protection of public services
could be achieved by public sector organisations (PSOs) implementing
a new approach to service provision through restructuring, maximising
the proportion of resources allocated to frontline services and exploit-
ing innovation to evolve new services or delivery systems. This text
posits that this should occur; however, there is a need for public sector
reform. It is further posited that a critical antecedent to implementing
reform is a need to alter the values which currently exist within many
PSOs. This is because a fundamental change in organisational values is
necessary to ensure there is a genuine commitment within these organi-
sations to more effectively fulfil their defined social purpose. Proposed
changes to values and actions include leaders being more interested
in service provision than sustaining their own high salaries, unions
putting service delivery ahead of protecting their members’ pensions
and employees adopting an orientation of optimising performance by
welcoming innovation and reducing bureaucracy.
The text examines the issues associated with achieving a value shift
within the public sector so that PSOs are able to optimise ongoing
service provision in the face of financial constraints caused by cutbacks
in government spending. Chapter 1 examines Western governments’
previous attempts to enhance public sector performance through the
New Public Management (NPM) model. The proposition presents a
need to focus on innovation in order to more effectively sustain service
provision responsibilities in the face of financial constraint. Reliance on
innovation to develop new services and effective internal operational
processes cannot occur unless there is a value shift within PSOs. The
required shift is to place greater emphasis on integrity and commitment
in order to fulfil their social purpose. External factors influence the
values which exist within PSOs. The behaviour of PSO staff is partially
determined by their personal values. Chapter 2 examines how these
values develop and are influenced by society in general.
Ultimately, the behaviour of politicians will determine whether PSOs
are persuaded that their governments are genuinely seeking to achieve
long-term welfare state reform. Chapter 3 reviews the behaviour of
politicians and how this influences perceptions and values within PSOs.
In the electronic age, the media has a major impact on the values of
societies and the behaviour of organisations within society. Chapter 4
assesses the influence of the media and implications in relation to caus-
ing value shifts within populations.
Preface ix
The performance of any organisation depends on its guidance by an

effective leader. Chapter 5 reviews the key role these individuals play
and the managerial attributes which they should possess in order to
achieve a value shift within a PSO. Employees in Western democracies
tend to expect to be able to influence management thinking and have
a desire to be involved in organisational decision making. Chapter 6
examines how this employee orientation can influence values and
performance within PSOs.
Ultimately, the quality of public sector services and the effectiveness
of delivery is determined by the overall values exhibited by the organi-
sation. Chapter 7 reviews the issue of organisational behaviour and the
factors which influence an organisation’s performance. The welfare state,
especially in Europe, has evolved from a philosophy of social equality
towards a desire to create systems which deliver services designed to
combat social exclusion. Chapter 8 examines the processes associated
with PSOs achieving value congruence in vision, mission and strategy.
Managing organisational change through actions such as restructur-
ing and revising internal operational processes is an extremely difficult
task. Chapter 9 examines the nature of values gaps and the associ-
ated implications in relation to the performance of PSOs. Chapter 10
presents some of theories and their applicability in seeking to shift
values within organisations to achieve greater congruence. Chapter 11
covers the issue of converting the defined organisational vision into a
strategy through which to fulfil the stated mission of the organisation.
Merely developing a vision, mission and strategy to exploit organisa-
tional values is no guarantee that desired service provision outcomes will
be achieved. Chapter 12 examines the issues of effectively implementing
a strategy based around achieving a value shift that will lead to the crea-
tion of more innovative PSOs. Rarely, however, is implementation of a
new plan a totally problem-free process. Hence, Chapter 13 considers
how barriers to achieving a values shift can arise within PSOs and how
these can be avoided.
Chapter 14 examines the nature of value shifts in society and the
ability of politicians to deliver fundamental reform. A review of specific
areas of service provision, such as defence, education and healthcare
are examined. The final conclusion is that the limited capability of
politicians to deliver reform means that the responsibility for achieving
change rests within the PSOs themselves.
1
Towards the Inevitable
Introduction
Following the end of World War II, Western politicians, aware of their
predecessors’ failings after the 1914–18 war to deliver on the promise to
‘create a land fit for heroes’ and diminish the misery faced by millions
following the 1930s Great Depression, recognised the urgent need for
greater social equality. This understanding led to the creation of the
welfare state which, in varying degrees in different countries, offered
free or subsidised education and healthcare, unemployment benefits
and pensions for the elderly.
The proportion of gross domestic product (GDP) allocated to the
creation of a welfare state in the 1950s varied by country and was deter-
mined by the degree to which governments adopted a ‘universalist’
model proposed by the UK’s William Beveridge. His model was based
upon a philosophy that access to welfare should be offered ‘free at point
of delivery to all’ with no restrictions in relation to an individual’s abil-
ity to pay (Lindbeck, 1995). Over time, however, the ever-rising costs
associated with a universalist model have caused some governments to
move towards a revised or ‘encompassing’ model. Under this alterna-
tive system, some welfare services are free at point of delivery (such as
education), whereas others are based upon contributions from people
(such as earnings-related sickness benefits).
The scale of the public sector spending in some countries after World
War II was also increased by public sector ownership of services such as
utilities, broadcasting and telecommunication. In some cases, this out-
come was achieved by a post-war nationalisation of certain industries
such as rail provision, coal mining and steel production. The motive
behind these latter actions usually reflected politicians deciding that
1
2 Public Sector Reformation
more secure and safer working environments could be created for work-
ers by the state becoming their employer.
By the mid-1970s, rising inflation, union unrest and an inability to
generate sufficient tax revenues to support public sector spending gave
rise to a reconsideration of the purpose, scope and scale of some Western
nations’ welfare states and the need to regain control over an increas-
ing public sector deficit. From the 1950s onwards, governments had
justified deficit spending by reliance upon ‘Keynesian economics’. The
economist John Maynard Keynes posited that, to avoid high unemploy-
ment during periods of adverse economic conditions, there is a need to
increase public sector spending. The purpose is to stimulate demand
during a recession even though the outcome would be a larger public
sector deficit. Keynes concluded there would be insufficient saving to
finance the increased investment required following the end of World
War II to rebuild war torn, shattered economies. He proposed that the
implementation of social investment by governments would comple-
ment private investment; thereby leading to more stable economic
conditions. However, governments seemed to conveniently ignore that
Keynes advised against lengthy periods of unchecked deficit spending
on social programmes as a means of stimulating consumption. In his
view, increased government deficits should only be permitted during an
economic downturn. These deficits should then be repaid from public
sector financial surpluses generated through taxation during periods
of economic growth. Consistent with this emphasis on countercyclical
public investment, Keynes was generally opposed to policies aimed at
varying incomes via tax policy in order to stimulate consumption. In
his view, the outcome of such policies would be rising inflation, which
would eventually lead to even higher unemployment (Brown-Collier
and Collier, 1995).
Keynes accepted that long-term deficits should be created by govern-
ment borrowing to fund capital investment such as the building of
roads or hospitals. Even in these scenarios, which he referred to as a
‘productive debt’, Keynes felt that borrowing was only justified where
there was evidence of a long-term return on the investment. This return
could be via savings in welfare payments resulting from the creation of
jobs associated with the capital spending and from the revenue flows
from services generated once a capital project has been completed.
Neoclassical economists agreed with Keynes’s view that the outcome
of prolonged deficit spending is inflation and collapsing economies
( Jordan et al., 1993). The University of Chicago Professor Milton
Friedman wrote a number of academic papers and a successful book
Towards the Inevitable 3
entitled Capitalism and Freedom. He sought to demonstrate the abuses

which can be created by a misuse of Keynsian economic theories.
Friedman’s perspective, known as ‘monetarism’, proposed that, in order
to defeat inflation, governments should rely upon central banks to
establish stable monetary policies. Concurrently, the emphasis of politi-
cians should be on creating an affordable welfare state by focusing on
promoting the wealth generation activities of capitalism that led, via
taxation, to a non-inflationary supply of public sector funds ( Jordan
et al., 1993).
The degree to which public sector reform was deemed necessary in
Western nations in the 1970s and 1980s was influenced both by the
health of respective economies and the degree to which political parties
in power supported the importance of the public sector’s involvement
in the provision of services. For example, because countries such as
Germany and France enjoyed more robust economies than other EU
countries and the political parties in power were committed to a more
socialist manifesto, there was less interest in reducing the size of the
public sector through actions such as privatisation. Nevertheless, by the
mid-1980s, inflation and rising unemployment confronted virtually
every Western democracy. Where reduction in the size of the public
sector was deemed either inappropriate or unacceptable, governments
focused on initiatives designed to upgrade the ability of their public
sector entities to more effectively manage increasingly scarce resources
(Kim and Hong, 2006).
New Public Management
In the 1980s, the growing pressure on politicians in nations such as the

UK and the USA to find ways of controlling rising public sector spend-
ing led to the introduction of ‘managerialism’. This was intended as a
mechanism through which to achieve the ‘3Es’ of economy, efficiency
and effectiveness within public sector organisations (PSOs). Reform
of the public sector, implemented under the banner of ‘New Public
Management’ (NPM), was seen as increasingly necessary in order to
reduce the public sector’s share of GDP (UN/DESA, 2005). These policies
were adopted by some governments for ideological reasons. In other
countries, changes in public policy reflected the increasing vulnerability
of national economies in the face of increased competition due to glo-
balisation. From the outset, NPM was often characterised as introducing
private sector management models into the public sector. Politicians
who favoured such moves considered this strategy to be the most
effective way of improving the efficiency and effectiveness of service

provision (Osborne, 2010).
From the outset, one of the obstacles confronting NPM was that
delivery of services in many areas of the public sector (such as educa-
tion and healthcare) is the responsibility of professionals who may be
resistant to the idea that resource utilisation should be controlled by
administrators. This perspective was reinforced by the fundamental
purpose of NPM doctrine being the use of performance measurements
as the basis for determining how to achieve cost savings in public sector
expenditure (Hood, 1991). Criticism from professionals and administra-
tors caused politicians to perceive public sector staff as ‘bureaucrats’
more interested in retaining control over decision making than in
meeting the needs of the general public to whom services are delivered.
Politicians commented on the obstructionism of civil servants to imply
that public sector employees were the primary obstacle standing in the
way of change (De Bruijin, 2005).
Under the umbrella of NPM, various concepts and initiatives were
introduced into PSOs with varying degrees of success. A common aim
connecting many of the reforms was to introduce ‘market forces’ into
the public sector on the grounds that the pressures of competition would
lead to increased efficiencies. In the UK, one approach to creating a
market forces scenario was to privatise PSOs such as the utilities and the
railways. An added benefit of this approach was that the sale of public
sector assets provided the government with a significant influx of incre-
mental funds. The sale of these operations also removed their deficits
and liabilities from the public sector balance sheet. Less openly discussed
in any political manifesto was that some politicians saw an even greater
benefit of privatisation as a highly effective tool for limiting the power
of the unions. In the UK in the 1970s, for example, employees in sec-
tors such as the utilities, mining and transportation demonstrated that,
through prolonged strikes, they could disrupt the entire economy until
the government finally assented to their demands. Privatisation under
the Conservative Prime Minister Margaret Thatcher resulted in disaggre-
gation of the power of unions. This was because, following privatisation,
the unions turned their attention towards representing the needs of
their members in specific industrial sectors and became less interested in
fighting for social reform at a national level (Foster and Taylor, 1994).
Politicians often believe that private sector firms automatically
respond to market signals in a competitive market and alter their strate-
gies to optimise the allocation of resources to reflect changing customer
demand. Hence, in those areas of the public sector (such as healthcare
and education) where privatisation was not an option, politicians, sup-

ported by certain academics, put forward the view that PSOs should
become more customer orientated (Cervera et al., 2001; DaSilva and
Barista, 2007). However, these politicians and senior civil servants failed
to understand that many marketing concepts that originally evolved in
the private sector are either not relevant or not easily transferable into
the public sector. One fundamental difference is that commercial firms
are usually engaged in meeting the needs of a relatively homogeneous
customer segment. Furthermore, a company can opt to ignore those
customers whose needs cannot be satisfied or can alternatively use dif-
ferential pricing to influence or modify customer behaviour (Larson,
1997). By contrast, many PSOs face the problem of seeking to fulfil the
needs of highly diverse external and internal customer segments and,
in many cases, are barred by law from using differential pricing. As a
consequence, creating quality standards and delivering services to meet
such standards, especially when operating with limited annual budgets,
is often impossible. A sub-optimal solution under such circumstances is
to seek to satisfy the majority of customers and to accept that a minor-
ity will not receive the services they demand. This difference between
service provision in the private and public sectors often seems lost on
politicians. They seem too willing to exploit the dissatisfaction being
expressed by one small group in society as the basis for criticising an
organisation’s overall achievements (Schofield and Raynes, 1992).
NPM is about improving efficiency and effectiveness. To achieve this
aim, one of the processes favoured by politicians is to introduce key
performance indicators (KPIs). As a consequence, PSOs have found an
increasing proportion of resources have to be allocated to record data
and submit detailed information to the government departments that
oversee specific areas of the public sector. With politicians and govern-
ment departments increasingly relying on KPIs to assess performance,
many PSOs have placed high priority on ensuring that their activities
fulfil whatever criteria are defined by these indictors, to the overall
detriment of their service provision activities. In some cases, this can
eventually lead to managers becoming less concerned about sustaining
service quality. Cassidy (2003) concluded that compliance with defined
indicators led to a managerial philosophy of ‘box-ticking’, accompanied
by a lack of concern about the needs of employees, customers, suppliers
and the wider community. Furthermore, in order to undertake the box-
ticking task, many PSOs have shifted resources away from delivering
frontline services towards funding a major expansion in the number of
administrators and associated administrative systems.
Public sector managers are sometimes prepared to manipulate events

to the detriment of the general public in order to remain able to tick the
‘right boxes’. One example of this practice in the UK emerged follow-
ing government legislation requiring all outpatients arriving at hospital
accident and emergency departments to be seen within two hours.
Some administrators who decided this target could not be achieved
allowed patients to be left outside the hospital in ambulances for several
hours because this permitted deferment of recognising the patients had
arrived at their hospital (Chaston, 2011).
Initially, NPM received strong support in most management and
social science texts as a philosophy capable of reforming the public
sector (Hughes, 2002). Nevertheless, as problems over the impossibility
of implementing genuinely customer-orientated strategies and exces-
sive emphasis on meeting KPIs began to emerge, a small minority of
academics began to question the potential of NPM to achieve funda-
mental reform. Hood and Jackson (1992) concluded that NPM was a
‘disaster waiting to happen’ and Farnham and Horton (1996) perceived
it as a ‘failed paradigm’. In their analysis of the benefits claimed for
NPM, Pollitt and Bouckaert (2004) determined that claims made for
positive outcomes were at best partial and, in some cases, questionable.
Frederickson and Smith (2003, p.11) concluded that in reality NPM was
‘simply a subschool of Public Administration (PA) theory which lacked
any genuine theoretical validity and conceptually was insufficiently
rigorous’.
Politicians and some of their loyal PSO senior managers responded
to such criticisms by pointing to higher levels of service, quoting
examples such as reduced waiting times in the UK’s National Health
Service (NHS). What these defenders of NPM often seem to neglect to
mention is that such achievements should possibly not be attributed
to NPM but instead to a rise in the scale of public sector spending.
Despite the growing popularity of NPM concepts across the Western
democracies, data from the Organisation for Economic Co-operation
and Development (OECD) indicates that public sector spending
showed no sign of being brought under control in the early years of
the 21st century. In the UK, for example, government expenditure as
a percentage of GDP rose from 33.5 per cent in 1965 to 49.7 per cent
in 2004. In the EU it rose from 33.1 per cent to 46.8 per cent and in
the USA it rose from 25.6 per cent to 31.3 per cent. In view of the
huge level of incremental funds that have been allocated to the public
sector, one might conclude that NPM has not been an overwhelming
success.
KPIs in higher education
Case aims: To illustrate the problems that can be created through reliance
upon performance assessment using a very specific KPI.
In the 1990s, Western governments’ faith in NPM and the benefits
of management by KPIs resulted in the philosophy being extended
into the higher education sector. By collecting information on per-
formance, governments sought to use these data for decisions related
to performance-based funding in areas such as discretionary or incre-
mental expenditure. It was assumed that KPIs offered governments
the ability to undertake rational analysis as a basis for deciding which
institutional activities were more effective and efficient (Orr et al.,
2007).
A number of KPIs now exist in the university sector. Examples
include profiling student recruitment, course quality assessments,
monitoring course completion rates and measuring employment
outcomes after graduation. The assumption of governments is that,
in creating these systems, generated data assists both educational
policy makers and universities in identifying more effective strategies
for change management in financially constrained environments.
However, in assessing the benefits associated with the provision of
more data to assist in the management of change, Todnem et al.
(2008, p.21) concluded that, as in other areas of the public sector,
adverse outcomes can occur. In relation to the HE sector in Europe
they commented that:
audit culture and managerialism have created an environment

that encourages opportunistic behaviour such as cronyism, rent-
seeking and the rise of organizational psychopaths. This develop-
ment will arguably not only lead to a waste of resources, change
for the sake of change, further centralization, formalization and
bureaucratization but, also, to a disheartened and exploited work-
force, and political and short-term decision-making.
The performance assessment indicator which has possibly received

greatest attention in the academic literature is the Research Assessment
Exercise (RAE). This was first introduced in the UK in the 1990s,
with a similar KPI philosophy subsequently being adopted by the
Australian and New Zealand governments. A justification for this key
performance indicator was that it assesses a university’s commitment
to sustaining a knowledge ethos. Heald and Geaughan (1994), in their

review of the advent of RAE in the UK, suggested that the system
reflected a government desire to expand outputs, without needing to
increase financial inputs.
Some academics have proposed that research KPIs are an ineffec-
tive mechanism through which to assist governments or university
leaders in optimising research productivity or enhancing overall edu-
cational quality. Taylor (2001) expressed concern that the importance
attributed to research assessment exercises results in a strengthening
of the ‘publish or perish’ ethos that is usually detrimental to teach-
ing quality. Craig (2002) noted this KPI has changed career expecta-
tions and lowered morale among those academics whose primary job
satisfaction comes from teaching. It would also appear that many
vice-chancellors, especially in the second-tier universities in the UK,
perceived a high RAE rating as providing access to income sources
which were not previously available. Hence, their strategy has been to
increase their institution’s spending on research in an attempt to join
the ‘research-driven’ category of universities. This has led to recruit-
ing staff whose quality of publications promises to improve research
ratings in subsequent RAEs. There is a suspicion within the sector
that the real motivation of some vice-chancellors’ desire to upgrade
their institution’s research ratings is actually a desire to enhance their
personal prestige by being seen as the leader of a higher research-
ranked college. It is then extremely worrying that the financial cost
and human effort resulting from RAE has been huge.
Ball and Butler (2004) proposed an estimated £27m to £37m
was spent on the RAE in the UK in 1996. Glass et al. (1996) also
undertook an assessment of the financial impact of the RAE in the
UK. They determined that the government’s allocation of research
funding based upon published journal outcomes tended to increase
the resource gap between the high-scoring, long-established universi-
ties and their newer, second-tier institution counterparts. Similarly,
Johnston’s earlier study (1993) concluded that there have been sub-
stantial unintended consequences from using RAE scores to allocate
funding. In his view, this had produced resource allocation anoma-
lies which were difficult to justify.
In relation to the use of research output to assess university per-
formance, Cutt et al. (1993) felt that, where research is given prior-
ity, there may be a detrimental impact on teaching quality. In their
view, this situation can arise because resources are withdrawn from
teaching by those university managers who are willing to believe

that a ‘satisfactory’ rating instead of ‘excellence’ in teaching is an
acceptable price to pay in seeking to achieve an enhanced insti-
tutional research reputation. Concern about a possible decline in
teaching standards caused Mathews and Sangster (2009, p.128) in
their assessment of RAE outcomes in Australia to propose that:
perhaps we would be better served, in whatever country we reside,

by re-thinking whether our universities should all seek to emulate
the prestigious, sandstone universities and be research power-
houses. Should the newer universities have different charters?
Should there be a more diverse set of expectations regarding the
performance of academics within our university systems?
From problem to crisis
Even as early as the 1980s, Western politicians were aware that the com-
bined effects of population ageing and increasing costs associated with
the latest advances in healthcare treatments would mean that, unless
the level of deficit spending was permitted to increase, by the early 21st
century it would no longer be financially viable to sustain financial
support for the public sector. Presumably because of the risks of losing
the support of the electorate, few politicians, and certainly not any of
those currently in power, openly articulated their concerns over what
essentially was ‘an already ticking time bomb’.
Henry Simons was one of the first economists to express concerns
about the behaviour of politicians in the USA. He pointed out that leg-
islators’ primary motivation of wishing to be re-elected every few years
had already resulted in the major political parties using government
spending as a mechanism to ensure they retained the allegiance of the
electorate. In support of his viewpoint, Simons noted that, in the 1930s,
public sector spending stood at 12 per cent of GDP, by 1976 it stood at
36 per cent of GDP and, assuming no change in the behaviour of politi-
cians, would reach 60 per cent of GDP by 2000 (Orcutt, 2003).
By the 1980s, politicians perceived inflation as the most dangerous
factor impacting the economic survival of nations. This concern led
to a consensus that Western nations needed to adopt sound monetary
policies. This view, especially in relation to sound monetary policies,
was championed by influential institutions as the OECD, the US Federal
Reserve and the European Central Bank (ECB). As a consequence, by the

late 1990s, most governments had accepted the need to insulate mon-
etary policy from the actions of politicians by transferring the respon-
sibility of managing monetary policy to their nations’ central banks.
These entities were assigned the role of implementing actions designed
to reduce inflation (Schettkat, 2001).
Central bankers were aware that, in order to reduce inflation, public sec-
tor spending as a proportion of GDP needed to be reduced. Unfortunately,
despite warnings in the 1990s from central bankers about the need to
control public sector spending, most industrialised countries continued
to run persistent deficits that led to rising debt-to-GDP ratios. In the
United States, gross government debt as a percentage of GDP rose from
44 per cent in 1980 to 69 per cent in 1994. Over the same period, gov-
ernment debt rose from 32 per cent to 50 per cent in Germany, from 52
per cent to 83 per cent in Japan, and from 58 per cent to 129 per cent in
Italy. To a large extent, this deterioration in fiscal balance sheets was due
to politicians who, in the face of declining productivity and increasing
levels of structural unemployment, continued to approve further expan-
sion of public sector expenditure in such areas as unemployment bene-
fits, pensions and healthcare (Weiner, 1995). With politicians apparently
still favouring expenditure to support the socially disadvantaged in their
societies, the issue facing central bankers was how their influence over
monetary policy could contribute towards reversing the trend of public
sector spending increasing as a percentage of GDP.
By the late 1980s, the banking industry, especially in the USA and
the UK, began to pressure politicians to remove the regulations such
as the Glass-Steagall Act of 1933, which had been introduced to avoid
a repetition of the type of banking collapse which occurred during the
1930s Great Depression. Bankers promised the politicians that deregula-
tion would enhance economic growth. This promise and the potential
incremental tax flows were of sufficient appeal that, by the mid-1990s,
most Western governments approved massive deregulation in the bank-
ing industry. Politicians’ confidence in avoiding another banking crisis
was reliant upon their assumptions that their central banks and other
regulatory agencies (such as the SEC in the USA and the FSA in the UK)
had sufficient expertise to provide early warnings of potential problems
or misbehaviour within the financial services sector (Kaufman and
Wallinson, 2001).
Concurrent with deregulation, as part of their anti-inflation and
economic stability policies, central bankers kept interest rates very low,
which resulted in a sustained period of low inflation. Policy makers
were pleased with the apparent effectiveness of this new approach.

Politicians’ satisfaction remained unchanged despite the fact that some
economists (Wray, 1993) and central bankers (Eisenbeis, 1997) had
expressed major concerns about the risks associated with deregulation
and excessive concurrent reliance upon a monetary policy based upon
retaining low interest rates. The rise in developed nations’ GDP in
the 1990s and early 21st century was achieved by an upswing in con-
sumer spending. This was based upon private citizens perceiving rapid
increases in house prices and borrowing against their houses to either
speculate in the property market or to sustain their spending on a bet-
ter lifestyle (Connelly, 2008; Whalen, 2008). What governments did
not seem to understand is that, when the world is awash with money
based upon uncontrolled lending to support an expanding asset bubble,
central bank monetary policy is unlikely to have a significant impact on
any attempts to sustain economic stability (Nesvetailova, 2005).
In the USA in the 1990s, bankers keen to expand consumer lending
entered the sub-prime mortgage market by offering low interest loans
and reducing the level of assets that borrowers needed to secure a loan.
Low income families were told they could finally afford to own their
homes because they could be confident that the value of their house
would continue to rise. The banks’ huge success in selling this idea to
the public created the problem that their higher balance sheet liabilities
restricted further lending. To remove this obstacle, the banks bundled
together loans in a process known as ‘securitisation’ and sold these as
collateralised debt obligations (CDOs) to other banks and various finan-
cial and public sector organisations. When it became apparent that
many of these ‘sub-prime mortgages’ were not secure and that many
CDOs represented toxic debt, the US banking industry went into crisis.
Some companies such as Bear Sterns and Lehman Brothers collapsed.
To avert a banking industry meltdown, the US government approved
a huge bail-out fund and implemented quantitative easing to sustain
liquidity in the financial markets (Hoenig, 2008).
Concern over toxic debt caused European banks to severely reduce
their inter-bank lending activities, thereby causing short-term interest
rates to rise. The UK government was forced to take over some major
banks that were unable to service their short-term borrowing and to
assist other banks in buying some of the smaller, more financially dis-
tressed institutions. Simultaneously, to sustain financial liquidity and
to inject stability into the economy, the Bank of England initiated a
programme of quantitative easing, making over £200 billion available
to the financial markets.
As the financial crisis in the banking system worsened and the world
economy entered recession, it became apparent that countries such as
Greece had funded their growing economy in large part by increased
borrowing on the short-term money markets. By mid-2010, it was clear
that Greece was heading for financial meltdown, and problems of a sim-
ilar nature, but on lesser scale, were emerging in other Mediterranean
countries such as Spain and Portugal. Within a short time it became
apparent that the scale of the sovereign debt problem was beyond the
capacity of the IMF. Suddenly, the conventional view that sovereign
debt crises and the potential for default on gilts was only a problem in
developing countries was altered overnight (Bauer et al., 2003).
To avoid a global, non-reversible financial collapse, the US and
European governments were forced to greatly increase the size of their
countries’ respective public sector deficits. Despite the adverse impact
on the welfare state, many governments announced programmes to
drastically reduce public sector spending. In the case of countries such
as Ireland and Greece, a reduction in public sector spending was a man-
datory requirement before the IMF and ECB were willing to make funds
available to rebuild these nations’ shattered economies.
The net effect of all of these events is that PSOs in virtually every
Western democracy can expect to face a lengthy period of financial
constraint as their respective governments struggle to reduce the size of
public sector deficits.
Crisis reaction
When faced with significant cuts to their budgets, PSOs usually respond
by announcing a cutback in the provision of services and the need to
make employees redundant. Although this is an understandable reac-
tion, the question does arise of whether this is the only option avail-
able to these organisations. When examining alternative options, one
approach may be to examine the response, and subsequent outcome, of
the private sector to a period of financial constraint.
A feature of markets during an economic downturn is that the intensity
of competition will usually increase as firms seek to sustain revenue in the
face of declining customer spending (Hall, 1980). The majority of firms
adopt a survival strategy of seeking to reduce internal operating costs and
utilising the savings achieved in order to offer lower prices (Bacot et al.,
1992). Goodell and Martin (1992) concluded that, as well as increased
intensity of competition during a recession, firms often begin to behave
in unpredictable ways, such as offering high price discounts or major sales
promotions. These actions can risk permanently damaging the financial

viability of the business. Although price cuts may assist a firm in sustain-
ing an acceptable revenue flow during a recession, the strategy will usu-
ally be accompanied by a severe reduction in profit margins (Weer et al.,
2004). Firms that enter a recession with limited financial reserves, are
servicing high debt levels or are unable to attract new investors, can face
the risk that declining profit margins can ultimately lead to bankruptcy.
Joseph Schumpeter (1934) examined the performance of firms dur-
ing the Great Depression. He concluded that those organisations which
chose to adopt an entrepreneurial orientation based upon exploiting
innovation to respond to changing external environments tended to
emerge from an economic downturn in a much stronger position than
their counterparts who cut back on output and made their employees
redundant. Building upon theories generated by the Austrian School
of Economics concerning the impact on industry of major changes in
prevailing economic conditions, Drucker (1985) posited that a char-
acteristic of post-war business was the increasingly volatile nature of
market environments. He regarded a key attribute of successful manag-
ers to be their ability to act entrepreneurially in exploiting innovation
as a response to significant market change, such as that which occurs
during an economic downturn. His viewpoint has subsequently been
validated by studies of firms which survive a recession. Trott (1998)
concluded that businesses which focus on innovation are more likely to
emerge from a recession in a stronger market position than competitors
who choose to focus entirely on cutting costs and improving internal
efficiencies. Gilbert’s (1990) analysis of the behaviour of American firms
during the 1980s recession revealed that the majority tended to focus
on implementing short-term actions. This behaviour was apparently in
response to major shareholders demanding that firms should continue
to sustain current profitability and dividend payments.
Ghemawat (1993) reviewed the failure of the US semi-conductor
firms, then global market leaders, to invest in the development of the
next generation of random access memory chips (DRAMS) during the
1970s recession. He concluded that, even during a recession, to remain
successful firms must retain a long-term perspective on exploiting inno-
vation to achieve and sustain competitive advantage. This viewpoint
has recently been endorsed by a survey of over 1000 CEOs of major
businesses conducted by IBM (2008). They believed that, in the face
of the worst recession since the 1930s, long-term survival and growth
is critically dependent upon sustained spending on innovation and
embedding an entrepreneurial culture across their entire organisation.
Given that the current political philosophy is that PSOs can always
learn valuable lessons from the private sector, it seems appropriate to
suggest that the strategic response of using innovation to survive a
period of financial constraint might also be valid for the public sector. If
so, then PSOs should give greater emphasis to a stronger entrepreneurial
orientation as the basis for identifying and implementing actions that
permit the development of new or improved products and internal
operational processes (Chaston, 2011).
Values
Organisational culture reflects the widely shared and strongly held val-
ues of the workforce, which in turn influence behaviour in the execu-
tion of assigned responsibilities and tasks. In most cases, embedded
values within an organisation reflect the influence of senior manage-
ment who define the purpose and strategic aims of the organisation for
which they are responsible.
Where the strategy has remained unchanged over an extended
period, one can expect deeply embedded organisational values which
are extremely difficult to shift or change. Since the creation of the mod-
ern welfare state in the late 1940s and early 1950s, the fundamental
premise of many PSOs has been, firstly, that annual budgets determine
scale of service provision and, secondly, in most years budgets will
either increase or remain unchanged. Hence, when PSOs are confronted
with major cutbacks due to governments’ actions to reduce national
deficits, not unexpectedly these deeply embedded values based upon
past experience result in decisions to reduce future service provision
and staffing levels.
A key tenet of NPM was that encouraging the adoption of private
sector practices would lead to greater efficiency and effectiveness. This
occurs as PSOs acquire the flexibility to redefine internal processes, lead-
ing to enhanced productivity, and by exhibiting initiative in finding new
ways of resolving operational problems or enhancing service provision.
Assuming this outcome has been achieved, it seems reasonable to expect
the advent of NPM to have resulted in many PSOs finding ways of retain-
ing services and minimising redundancies when confronted with recent
budget cuts. The fact that this outcome is not apparent could probably
be explained by NPM forcing many public sector employees to discard
their long-established professional values based upon ethical and critical
deliberation. Instead, individuals have come to understand that success-
ful career progression is greatly enhanced by being seen to satisfy the
latest demands of their political masters and to base their values around
self-interest and personal opportunism (Caron and Giauque, 2006).
In the 19th century, politicians were forced to reform the civil serv-
ice. This was deemed necessary to eradicate the favouritism, cronyism,
intimidation and corruption of a system that encouraged mediocre
governance caused by rewarding friends and granting political favours
in return for favours received. The replacement model involved the
creation of a merit-based civil service. The role of civil servants was to
act as moral guardians of democracy by accepting rule-based and vir-
tue-based codes of behaviour. Public servants were expected to be loyal
to the system of government, not to a particular political party. This
allowed them to give free and candid advice because their positions
were safeguarded by both legislation and by the prevailing values of the
political parties. In return, civil servants were expected to be responsive
and efficient in their delivery of services. Competence was the founda-
tion of ethical public management, with highly professional managers
leading the response to government requests by guiding the activities
of non-partisan employees and ensuring these individuals were shielded
from the actions of unscrupulous politicians.
During the introduction of NPM, it appears some politicians did not
take too kindly to being told by their senior civil servants that their
ideas were not feasible or that the cost/benefit outcome argued against
introducing new ways of managing the delivery of services. The solution
to this perceived barrier to change was to revise civil service practices.
Vocal critics were offered early retirement, sent on ‘gardening leave’ or
given new jobs far away from the centre of government. It also became
apparent to civil servants that a willingness to agree with politicians and
to produce reports which supported the validity of their policies was an
excellent mechanism through which to receive higher salaries and be
promoted into more senior positions. This new form of politician–civil
service relationship caused Bowman and West (2007, p.177) to make
the following observation:
When choices are guided by benevolence, creativity, and an ethic of

compromise and social integration – a moral tenet of democracy –
there is at least the satisfaction that the problem has been fully exam-
ined and that the decision can be rationally defended. Those who
remain in the more politicized workplace may displace their loyalties
from serving the public to obeying political masters. Manipulating
public servants as disposable commodities or interchangeable parts
is demeaning and misguided.
Adverse images
Case aims: To illustrate how certain behaviours can create adverse images
concerning the activities of senior individuals within the public sector.
In times of austerity within the public sector there is a greater need
to avoid behaviour that could be interpreted as exhibiting values
which might cause dissonance among employees and the general
public. One example of how such dissonance can be caused were
reports in 2010 that pay awards for senior local authority staff in the
UK, already earning six-figure salaries, had increased by an average
of 15 per cent over a two year period. Examples of high salaries being
paid to local authority CEOs included Suffolk County Council’s CEO,
who earned £220,000 a year (18 per cent up on two years before),
Kingston-upon-Hull’s CEO, who earned £213,162 (13 per cent up on
2007) and Stoke-on-Trent City Council’s CEO, who earned £195,000
(up 34 per cent on two years before).
These disclosures came as local authorities, in response to govern-
ment cutbacks, were announcing major staff redundancies, imposing
higher council taxes and cutting public services. Additional contro-
versy was provided by senior local authority managers demanding
a further 1 per cent pay increase in 2010 despite the government’s
imposition of a public sector wage freeze (Peev, 2010). In the face of
growing criticism about the need for transparency over public sector
salaries, the UK government agreed to name those executives earn-
ing more than £150, 000, but insisted that their pension packages
would remain confidential on the grounds that this information is
too ‘personal and sensitive’ (Peev, 2010).
Further dissonance was caused by the fact that, despite being
required by the UK government to cut spending by almost 30 per cent,
senior local authority executives appeared to be spending hundreds of
thousands of pounds on dinners at Michelin-starred restaurants, over-
seas trips and expensive gifts including iPads and video games, whilst
simultaneously reducing staff numbers and cutting back services. An
investigation by The Daily Telegraph revealed councils and local gov-
ernment spending more than £2 million on overseas travel during
the previous three years. As well as flights to exotic locations such
as Thailand and Bermuda, councils spent £2 million on hotel bills,
including the Four Seasons New York, the Pan Pacific Singapore and
the Hilton Athens. To this can be added hospitality bills totalling £2.6
million, charged to credit cards, which included dinners at Claridge’s,
hog roasts and champagne receptions. In addition, £500,000 was

spent on gifts such as Tiffany jewellery, Gucci products and silk ties, as
well as online spending in excess of £300,000 at Argos and £150,000
at Amazon.com (Blake and Quilty-Harper, 2011).
Questions over expenses incurred by public sector officials are not
just restricted to the UK. In Canada, the Chief Public Health Officer,
Dr David Butler-Jones, claimed $210,393.66 in travel and hospitality
expenses in a single year. This figure was only exceeded by General
Walt Natynczyk, the chief of defence staff, who was overseeing
the country’s military mission in Afghanistan. Furthermore, since
Dr Butler-Jones was appointed in late 2004, he had claimed over $1
million in expenses, making his expenditure higher than that of most
government ministers and any of the nation’s senior civil servants.
Even though the global banking crisis could be expected to lead to
a reduction in Canadian government spending on activities such as
air travel, ministers and senior officials expenditure was 28 per cent
higher in 2009 than in 2005. One example of high spending is pro-
vided by Ambassador Marc Lortie, who, in 2008, hosted a dinner for
72 guests at his official residence in Paris, costing $12,820.91. A few
months later, Ambassador Lortie took a one-night trip to Montreal
to give a speech at a seminar. His plane ticket cost $6,171.94, even
though an executive-class ticket purchased only a few days in advance
of the travel date was priced at $1,800 (Gillis, 2010).
Values shift
There is little question that the irresponsible, possibly immoral, activities

of financial institutions that led to the global banking crisis caused the
breaking point in relation to the public sector deficit crisis now facing
many Western democracies. Nevertheless, it is important to recognise
that the actions of the bankers merely accelerated the onset of a public
sector funding crisis which was already long in the making. For exam-
ple, in 2006, the US Federal Government’s General Accounting Office
concluded that the State Government’s employee pension schemes were
facing a $1 trillion deficit in relation to fund inflows versus pension
liabilities. At a Federal level, it had been known for years that, without the
nation’s social security system, there would be an irrevocable deficit posi-
tion sometime around 2030. In 2007, mainland Western Europe public
sector pension obligations were estimated at being between 100 and 500
per cent underfunded. In the UK, between 25 and 35 per cent of all local
taxes are now being used to fund pension payments by local authorities
(Ennis, 2007). The other major problem is the continuing rise in the costs
of healthcare provision. If no public sector reforms are introduced, medi-
cal costs could eventually equal or exceed some nations’ entire GDP.
In view of these observations, it is clear that fundamental change
is required in the welfare state models that are utilised by Western
democracies. Revising funding models or reducing the scale of service
provision will not prevent population ageing and rising healthcare costs
leading to a devastating fiscal crisis in most Western nations. Avoiding
this outcome demands decisive leadership from nations’ politicians
accompanied by a fundamental shift in the values which determine
philosophy and service delivery processes within PSOs.
Attempting to achieve a values shift in any organisation is never a sim-
ple process. This is because such change can raise fundamental questions
among individual employees, especially senior management, concerning
personal ethical and moral values, doctrinal and ideological values, social
values and even aesthetic values. Any attempt at achieving a values shift
will need to gain acceptance of a new set of shared mental assumptions
that constitute future organisational values (Gouillartt and Kelly, 1995).
In the case of PSOs, any attempt to achieve a fundamental shift in val-
ues is complicated, as illustrated in Figure 1.1, by a number of external
Politicians Society
PSO VALUES Leadership

Employees
AND OUTPUTS
Private sector suppliers The media
Figure 1.1 Organisational values and sources of influence

variables which can, at times, pre-empt or require fundamental changes

in the decision-making and organisational operational processes. Given
the proposed need for a fundamental reconsideration of the operation
of the welfare state in the face of increasing fiscal constraint and the
complexities of organisational behaviour, the purpose of the remainder
of this book is to examine the issues associated with achieving a values
shift, and the management of the processes required to improve future
service provision in PSOs.
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2
Societal Values and Expectations
Personal values
Personal values are the attitudes and beliefs held by an individual. These
values are not just formed through personal experience, but are also
influenced through a complex interaction of factors. Examples of influ-
ence include parents, siblings, friends, education, work, religion and
the media. The existence of personal values is a critical determinant of
how consumers view PSOs and the interactions which occur during the
three phases of search, consumption and post-experience assessment.
By acquiring an understanding of the values of private citizens, PSOs
are in a much better position to design and develop an optimal service
portfolio.
There are a number of different paradigms for describing the nature of
personal values. One model which has been used in consumer market-
ing is the Rokeach Value System. Several domains of values are within
this system:
(1) Hedonism reflected by a comfortable, stress-free life.

(2) Achievementt reflected by a sense of accomplishment, ambitiousness
and good capabilities.
(3) Self-direction reflected by independence, imagination and intellec-
tual abilities.
(4) Social powerr reflected by position in the social hierarchy, the degree
of power over others and recognition of this power by others.
(5) Conformityy reflected by acceptance of social norms, obedience and
politeness.
(6) Security reflected by feeling safe within the context of the family,
social groups, work groups and society in general.
22
Societal Values and Expectations 23
(7) Benevolence reflected by being forgiving, helpful, loving, honest,

friendly.
(8) Universalism reflected by inner harmony, wisdom, high self-respect,
a sense of equality, a belief in the existence of social justice, and
achieving a degree of peace within family social groups and society
in general. (Schwartz, 1994)
It is important that PSOs understand the existence of personal values

among users of their services. This is because these personal values have
a direct and indirect influence over the general public’s understanding
and preferences in relation to accessing and utilising the services made
available by a provider. By comprehending these values, the PSO is better
able to determine how consumers perceive available services and how they
evaluate the quality of the services provided. Knowledge of personal values
also permits the provider to more accurately predict consumers’ response
both to information communicated by the supplier and to the probable
need which consumers exhibit in relation to accessing available services.
Although Allen’s (2001) perspective on the role of personal values
relates to private sector marketing practices, his viewpoint is equally
applicable in the context of public sector goods. He noted the critical
importance of not assuming that consumers make rational attribute-
specific judgments about the utility of services. Consumers also judge
products or services on the basis of emotion, intuition and current per-
sonal circumstance. Allen also notes that a major problem confronting
any supplier is how to identify which values the consumer associates
with the service and how to incorporate this knowledge into both com-
municating with the consumer and seeking to optimise the consumer’s
service experience.
The general public’s perceptions about public sector services are
influenced by the mental image formed through exposure to infor-
mation about available services and their direct experiences gained
through using them (Anon., 2001). The nature of formed perceptions
will be affected by each individual’s personal values. For example, an
individual who has survived a life-threatening experience as a result of
excellent care by doctors in a national healthcare system is more likely
to have formed a positive view of the system. By contrast, an individual
who has received poor treatment, such as being kept waiting in a hos-
pital accident and emergency department for hours before receiving
treatment, will probably have a negative image of their nation’s health-
care system. In addition, because personal values can be influenced by
others, any family and friends informed of these experiences are likely
to use this knowledge to reinforce their existing perceptions about the

quality of their nation’s medical services. It is also important for PSOs
to realise that values change over time as a result of an individual’s
experiences or by receiving information by others. Consequently, those
PSOs seeking to optimise the general public’s perceptions of service
availability and quality need to continuously monitor consumer opin-
ions to identify which operational processes or employee behaviour and
competences need to be enhanced in order to sustain a positive image
of the organisation’s activities.
Generational values
Case aims: To illustrate the values that exist between people from different
age groups.
Generational historical factors, such as the economy, scientific
progress, politics, technology or social shocks (such as a family
member going off to war) will all have significant impacts on indi-
viduals within a generation (Eisner, 2005). These impacts will be
reflected in the different values exhibited by that generation com-
pared with others from a different age group. These differences can
be illustrated by the generational taxonomy which exists in relation
to the US population (Williams and Page, 2010):
(1) The Pre-Depression Generation, born before 1930, experienced

economic hardships and high unemployment during the Great
Depression. Their expectations were influenced by World War II and by
subsequently experiencing radical social and technological change. In
terms of their lifestyle and attitudes, these individuals are conservative,
altruistic and tend to be less materialistic as they grow older. Their pri-
mary concerns are health, ageing, and financial and personal security.
(2) The Depression Generation, born between 1930 and1945, were

small children during the Great Depression or World War II. Their
values include careful consumption, saving, morality and ethics.
Conformity, social tranquillity and family are important. In terms of
values not changing, they are slow to embrace change. Many are still
in excellent health and are quite active.
(3) The Baby Boomers were born between 1946 and 1964, and their
parents’ improving income meant they were often indulged as
children. Their values include individualisation, self-expression and
optimism, and they define themselves by their careers and high work
ethic. They tend be self-centred and suspicious of authority.
(4) Generation X were born during 1965 and 1977, so became adults
during a period of more difficult economic conditions that reduced
their confidence levels compared with those of their parents. They
value family but their experience of rising divorce rates has caused
many of them to take greater responsibility for raising themselves.
Their values tend towards pessimism, scepticism and disillusion-
ment, and they are questioning of social conventions. There is a
desire to achieve an effective work/life balance.
(5) Generation Y
Y, born between 1977 and 1994, grew up in a time
of immense and fast-paced change, including more employment
opportunities for women and dual-income households becoming
standard. Their values are orientated towards self-reliance, a strong
sense of independence and autonomy. They have a need for peer
acceptance, to fit in socially and to participate in social networks.
(6) Generation Z were born after 1994. In general, their parents married
later and are less likely to have divorced. This generation has faced
global terrorism (such as the attacks on 9/11), school violence, economic
uncertainty, recession and the mortgage crisis. Generation Z individu-
als are confident and optimistic, being the ‘new conservatives’ who
embrace traditional beliefs, valuing the family unit, self-control and
are more accepting of responsibility. Peer acceptance is very important,
with their concept of self being partially determined by their member-
ship in social networks, which are increasingly accessed online.
Cultural values
We tend to rely upon our own cultural values as an unconscious ref-

erence point when trying to understand and relate to others. This is
known as a ‘self-reference criterion’. The potential drawback is that we
may see others in an adverse light because their cultural behaviour is
different to our own. This attitude is known as ‘parochialism’. Further
problems may be created because we often exhibit an ‘enthnocentric’
orientation: this is a tendency to consider our attitudes and capabilities
to be superior to individuals and organisations from a different culture.
To succeed in the effective delivery of services today’s increasingly mul-
ticultural society, PSOs need to exhibit a high level of cultural sensitivity
in order to avoid parochial and ethnocentric mindsets that damage

service provision effectiveness (Nafstad et al., 2007).
To understand why variations in national culture exist, it is necessary
to be aware of the influence of certain key factors. These include:
Religion
Different religions across the world have both similar and sometimes very
different views. These have an impact on the values of the societies in
which they are practised. Religion usually provides the moral norms by
which a society is expected to abide. The degree to which a nation’s popu-
lation will adhere to these moral rules will vary, with some nations being
perceived as highly secular and others being strongly influenced by specific
religious beliefs. Furthermore, in certain cases, religious values determine
the basic economic tenets by which an entire nation’s lifestyle is defined.
Kinship
These are the values which exist inside the family unit into which an
individual is born and raised. In some countries, kinship encompasses
an extended group of relatives and spans a number of generations. This
orientation is reflective of tribal and agricultural societies where the
family is a critical economic unit to ensure survival. Kinship is often
particularly strong in Asian countries, and results in an individual’s
primary loyalty being with their family. This sometimes influences
behaviour inside organisations. This can be contrasted to countries such
as the USA where kinship values are restricted to immediate family and
rarely determine values in the work environment.
Education
As individuals participate in education, they are exposed to new knowl-
edge and ideas. These may influence their existing attitudes or can lead
to a values shift. In some cases, new concepts may contradict exist-
ing values that have come from the family or religious beliefs. At the
extreme, changing values through involvement in education can cause
problems with a person’s family or within their religious community.
Economics
The shift from an agrarian to an industrial society can cause people in
rural communities to move to urban areas to obtain employment. Where
industrialisation is accompanied by a rising standard of living, new
values may emerge, such as materialism replacing those community-
orientated values typically associated with agricultural regions.
Politics
Political systems reflect values and viewpoints on aspects of social and
national policy. In highly autocratic societies, governments usually
maintain a tight control over the beliefs and values of their entire soci-
ety. In democratic systems, differences in viewpoints are permitted and
elections often change the political party which is in power.
Colonisation
Groups or entire nations have sought to own the resources of other
countries. New entrants into a country often attempt to implant aspects
of their home country’s culture as part of the colonisation process. Over
time, these introduced values may be merged with those already exist-
ing within the colonised country, leading to a hybrid national culture.
Immigration
People continually cross from one nation to another in search of a better
life or to escape oppression. Over time, some aspects of the immigrants’
culture are absorbed into their new location, while other values disap-
pear within one or two generations. This process leads to the emergence
of multicultural societies (Berges et al., 2006).
The Protestant ethic
Case aims: To present the theories which provide a framework for examin-
ing the relationship between religious values and capitalism.
Possibly one of the most influential writers on the relationship
between culture, religion and business was the German sociologist
Carl Weber (Ryman and Turner, 2007). His first contribution, writ-
ten over 100 years ago, was the The Protestant Ethic and the Spirit of
Capitalism. This text examined the influence of the Protestant faith on
the behaviour of European societies, and how it provided the founda-
tion from which the first industrial revolution emerged. Weber’s ideas
subsequently became known as the ‘Protestant Work Ethic’ (PWE).
Weber posited that the catalyst of modern capitalism, which emerged
in Western society in the 16th and 17th centuries, was an entrepreneur-
ial approach to work and the generation of profit. He proposed that,
in contrast, traditionalism reflects an attitude of work being a reality
of life, with profit being seen as unethical. The impetus for a society-
wide attitude shift was the Protestant reformation. In particular, the
more ascetic sects of Protestant Christianity (Calvinists, Baptists and

Methodists) supported the religious values of personal restraint and
abstention. This played the key role in forming and spreading capital-
ism because people were encouraged to work harder, save what they
earned and reinvest the profit to serve and glorify God. Personal eco-
nomic success was seen as an indication of God’s favour and so indi-
viduals within Protestant congregations were exhorted to be diligent
in every aspect of their economic endeavours. According to Weber’s
analysis, economic success, coupled with the advent of democracy
and the rise of science and industrialisation, spread these values across
the Western democracies. Eventually these values replaced the more
fatalistic beliefs prevalent in pre-industrial societies.
Subsequently, Weber extended his analysis to other religions to
assess whether their values influenced the degree to which nations
were willing to accept industrialisation and the introduction of
capitalism. In his analysis of China, Weber found some compat-
ibility between ascetic Protestantism and Confucianism because
both encouraged a sober lifestyle, self-control and the accumula-
tion of wealth. However, Weber identified the key difference that
Confucianism and Taoism accommodate existing social structures in
ways that ascetic Protestantism does not. Confucianism is the reli-
gious ethic of privileged or vested interests, where the educated and
the patrimonial state maintain the dominance of tradition. Within
Confucianism, tradition is sacred and there is no acknowledgement
of a transcendental God, only a belief in the ancestral spirits to
which everyone has an obligation. Education is a form of personal
endeavour and not a source of expertise and functional technology.
In Weber’s view, these differences resulted in significant religious-
based barriers to the emergence of capitalism in Asia. Technical
innovation was discouraged because it would potentially disturb the
spirits of the ancestors. For example, the sale of land was prohibited.
Social structures of extended kinship groups protected members
against economic competition from adversaries, thereby discourag-
ing repayment of debts, a disciplined approach to work and adopting
innovative or more efficient work processes. Thus, in Weber’s view,
Confucianism is firmly rooted in the past and as such does not pro-
vide the cultural force sufficient to break free from the traditional-
ism, and therefore blocks the emergence of capitalism.
When examining the influence of religion in India, Weber focused
on how its social structure inhibited the emergence of capitalism.
In the case of Hinduism, he concluded that the concept of karma

and the accompanying caste system created a rigid society. Karma
dictates that the individual’s lot in this life is a result of their behav-
iour in previous lives. Tradition is enforced through the belief that
the only way to better the next life is by accepting one’s position
in the current life by fulfilling occupational and social obligations.
This philosophy prevents capitalism from being accepted. Weber also
concluded that Buddhism advocates a form of asceticism that entails
the rejection of the world. Its source of salvation is rooted in mystic
meditation that completely disconnects the individual from the
present and so offers no incentive for rational economic activity.
Subsequent studies by other researchers have not found such
close relationship between the level of the PWE in societies and
their prevailing religious values. Nevertheless, Weber’s writings have
provided a framework illustrating that religious values will influence
the behaviour of both individuals and organisations in different
nations.
Assessing values
Geert Hofstede (1983) undertook one of the earliest large-scale research

projects on how cultural values vary by nation. He surveyed over 11,000
IBM employees living in 50 different countries. From this study, he ini-
tially identified a number of value dimensions.
(1) Power distance

This is the level of acceptance by a society of unequal power distribu-
tion within institutions. In the workplace, power inequalities are exem-
plified by hierarchical superior–subordinate relationships. The degree to
which the subordinate accepts power inequalities is determined by the
society in which the individual has lived for an extended period of time.
In countries such as Malaysia and Mexico, employees acknowledge their
superiors’ authority based on their formal position in the organisational
hierarchy. Staff would rarely consider bypassing the chain of command
so, in such societies, many organisations have centralised structures
and autocratic leaders. In countries such as Denmark and Israel, where
people display low power distance, superiors and subordinates usually
regard each others as equals. This leads to a co-operative attitude inside
the organisation and it is unlikely that superiors will exhibit an auto-
cratic leadership style.
(2) Uncertainty avoidance

This refers to the extent to which people in society feel threatened by
ambiguous situations. In countries such as Japan and Greece, where
there is a high level of uncertainty avoidance, there tends to be strict
adherence to prevailing laws, conventions and procedures, accompa-
nied by a strong sense of national pride. Within organisations, this
value dimension results in formal rules and procedures designed to
make employees feel secure and certain about their job role. This can
be contrasted with countries such as the UK, where low uncertainty
avoidance means that nationalism is less pronounced and it is more
acceptable to question rules. Within organisations in low uncertainty
avoidance nations, job roles are less formally structured and relation-
ships between superiors and subordinates are more informal.
(3) Individualism
This refers to the tendency of people to look after themselves and their
immediate families, placing these needs ahead of society in general.
In countries which prize individualism, such as Australia, personal
initiative and personal freedom are considered extremely important.
People place importance on self-respect, autonomy and independence.
Within countries where low individualism prevails, such as Pakistan,
there are tight social frameworks, an emotional desire to belong to an
organisation and a strong belief in the importance of putting the group
before the individual. This latter orientation is known as ‘collectiv-
ism’. Community activities in collectivist societies place great emphasis
on paternalism and the importance of the group in decision making.
Personal achievement and personal goals, while important in high indi-
vidualist countries, are rarely apparent in collectivist societies.
(4) Masculinity
This refers to the degree to which perceived male values, such as assert-
iveness, materialism and a lesser concern for others, prevail in a society.
In contrast, a feminine orientation tends to be reflected by a greater
concern for others and the importance placed on relationships and
quality of life. In highly masculine societies such as Austria, women are
generally expected to stay at home, raise a family and not seek to have a
successful career. This can be contrasted with a low masculinity country
such as New Zealand, where many women have successful careers and
there is less evidence of assertiveness being exhibited by their male col-
leagues at work.
(5) Long-term/short-term orientation

This orientation is related to what Hofstede perceived as an aspect of
Confucian dynamism found in Chinese society. Long-term orientation
relates to the extent to which individuals accept delayed gratification
of material, social and emotional needs. This orientation is common in
Asia. Inside organisations, managers are future orientated, striving to
achieve long-term goals and being willing to sacrifice short-term success
to achieve longer term aims. This can be contrasted with countries such
as the UK and the USA, where a short-term orientation tends to prevail.
As a consequence, managers tend to focus on achieving immediate or
short-term performance goals over longer-term intentions.
The GLOBE (Global Leadership and Organizational Behaviour Effect-
iveness) project is a cross-cultural study of the interrelationships
between organisational leadership, and societal and organisational
culture, co-ordinated by Robert House, Professor of Wharton Business
School (Papalexandris and Panayotopoulou, 2004). The initial aim of
the project was to develop societal and organisational measures of cul-
ture and leadership attributes that could be used to analyse different
cultures. The first phase of the study identified nine cultural attributes,
based on a literature review of existing culture measurements. These
were uncertainty avoidance, power distance, in-group and institutional
collectivism, gender egalitarianism, assertiveness, future orientation,
performance orientation and humane orientation.
(1) Culture: shared motives, values, beliefs, identities and interpreta-

tions or meanings of significant events that result from common
experiences of members of society which are transmitted across
generations.
(2) Performance orientation: the extent to which an organisation or society
encourages and rewards group members for performance improve-
ment and excellence.
(3) Future orientation: the degree to which individuals in organisations
or societies engage in future-orientated behaviours such as plan-
ning, investing in the future, and delaying gratification.
(4) Assertiveness: the degree to which individuals in organisations and
societies are assertive, confrontational and aggressive in social
relationships.
(5) Institutional collectivism: the degree to which organisational and
societal institutional practices encourage and reward collective dis-
tribution of resources and collective action.
(6) Gender egalitarianism: the extent to which an organisation or a

society minimises gender role differences.
(7) Power distance: the degree to which members of an organisation or
society expect and agree that power should be unequally shared.
(8) In-group collectivism: the degree to which individuals express pride,
loyalty and cohesiveness in their organisations, families and other
groups.
(9) Uncertainty avoidance: the extent to which members of an organi-
sation or society strive to avoid uncertainty by reliance on social
norms, rituals and bureaucratic practices to alleviate the unpredict-
ability of future events.
(10) Humane orientation: efforts and practices exhibited by a society to sup-
port its people. These include generosity, concern and friendliness.
(11) Recruitment and selection: this covers various employee categories.
(12) Performance and reward management: the use of the performance
appraisal (PA), individuals participating in the process of PA, level
of pay determination for various employee categories, type of
rewards and employee benefits utilised.
(13) Training, development and career planning: the use of needs analysis
and training evaluation, as well as the importance of training
issues and career development.
(14) Internal communications: the existence of trade unions, other rep-
resentative bodies and methods of upward and downward com-
munication.
Criticisms of Hofstede’s methodology point out that his study focused

on a single organisation and also that his dimensions for most of his
cultural distance scores were out-of-date or too condensed to effectively
capture critical aspects of culture. Stephen Schwartz, a psychologist,
developed an alternative scale based upon existing theories of human
behaviour to create a framework for assessing culture (Ng et al., 2007).
Schwartz considered human values as desirable goals, each varying in
importance, that serve as guiding principles in people’s lives. These
principles are consistent with the key assumptions that human needs
are based upon individuals’ requirements as biological organisms,
society’s requirement for co-ordinated social interaction, and groups’
requirement for survival and support. Schwartz concluded that indi-
viduals’ values are organised along two basic dimensions:
(1) from conservation through to openness to change;

(2) from self-transcendence through to self-enhancement.
Within these two dimensions, he identified the following cultural

values:
(1) Powerr in terms of social status and prestige, control or dominance

over people and resources.
(2) Achievementt in relation to personal success, by demonstrating com-
petence according to social standards.
(3) Hedonism which relates to personal pleasure and sensuous
gratification.
(4) Stimulation in relation to excitement, novelty and challenge in
life.
(5) Self-direction in terms of permitting independent thought and
actions.
(6) Universalism in terms of understanding, appreciation, tolerance
and protection for both the welfare of people and for the environ-
ment in general.
(7) Benevolence that leads to preserving and enhancing the welfare of
people with whom one is in frequent contact.
(8) Tradition which supports respect for, commitment to and accept-
ance of, the customs and ideas that traditional culture or religion
imposes on the self.
(9) Conformityy leading to restraint of actions, inclinations and impulses
likely to upset or harm others and to violate social expectations or
norms.
(10) Securityy in terms of seeking safety, harmony and stability of society,
of relationships and of self.
Schwartz applied multi-dimensional scaling to use these 10 variables as

the basis for classifying cultures into the following seven types:
(1) Conservatism: a society that emphasises close-knit harmonious rela-

tions, the maintenance of status quo and avoids actions that disturb
traditional order.
(2) Intellectual autonomy: a society that recognises individuals as auton-
omous entities who are entitled to pursue their own intellectual
interests and desires.
(3) Affective autonomy: a society that recognises individuals as autono-
mous entities who are entitled to pursue their stimulation and
hedonist interests and desires.
(4) Hierarchy: a society that emphasises the legitimacy of hierarchical
roles and resource allocation.
(5) Mastery: a society that emphasises active mastery of the social

environment and the individual’s rights to get ahead of other
people.
(6) Egalitarian commitment: a society that emphasises the transcendence
of selfless interests.
(7) Harmony: a society that emphasises harmony with nature.
Research using Schwartz’s cultural dimensions suggests that value con-

gruence between different countries is likely to influence economic
activities. The six items that measure individualism against collectivism,
and the seven items that measure hierarchy against egalitarian, reveal
incompatible values between countries. These possibly explain inter-
cultural negotiation failures which can occur between US and Japanese
firms. It is also likely that the congruence of values, such as egalitarian-
ism, will influence other dimensions such as those products and services
that are most valued with a specific society. For instance, products with
harmful side effects to society (such as cigarettes) may face more barriers
in countries scoring high on egalitarianism. Products which promote
the preservation of harmony with nature (such as bicycles) may be more
strongly encouraged by countries scoring high on harmony.
Equality
Case aims: To illustrate how religious values can influence gender equality
and women’s rights.
Until recently, there was inequality in the rights granted to men
and women even in the Western democracies. In the UK, one of
the oldest democracies, women were not granted the vote until the
early 20th century and only after years of demonstrations and social
struggle. It is perhaps not surprising, therefore, to find that one of
the fundamental social values in many developing economies is that
women are considered to be second-class citizens with fewer rights
than their male counterparts.
The strong influence of the Islamic faith in Arab countries pro-
vides an example of an area of the world were women continue to
be confronted with major inequalities in terms of their social rights
and freedoms (Metcalfe, 2008). For example, women are not allowed
to vote in Saudi Arabia, UAE and Kuwait, and no country in the Arab
region has a law that makes domestic violence a criminal offence.
Furthermore, the emergence of Islamist organisations in recent years

presents a threat to the gains that women living in Arab regions have
achieved, as well as creating greater obstacles to social reform.
The Arab countries can be divided into three categories: labour-
abundant and natural resource-rich countries; labour-abundant and
natural resource-poor countries; and labour-importing and natural
resource-rich countries. Women’s participation in the workforce
tends to be higher in countries with abundant labour and relatively
limited resources, such as Egypt, Lebanon, Morocco and Tunisia. This
can be contrasted with countries that have abundant labour and are
rich in resources such as Algeria, Iraq, Syria and Yemen, where there
is a high degree of gender and occupational segregation, with the
majority of employed women working in the service and public sec-
tors. Some oil-rich countries that are abundant in natural resources
but import labour, however, exhibit high rates of female participa-
tion. Kuwait, Bahrain and Qatar are the three Arab countries with the
highest levels of women in employment.
A key factor influencing women’s rights are the social values around
their perceived role in society. In Arab countries, these values define
women’s role as homemaker and mother, while the man’s responsi-
bility is to support and protect his wife and the family. The man is
considered to be head of the household, even where the woman’s
salary forms the larger proportion of the family’s total income. Hence,
women enjoy limited recognition of their material contribution to the
family, and are often seen as legally, financially and socially dependent
on their husbands. Additionally, a code of modesty depends on the dig-
nity and reputation of the woman, with restricted interactions between
men and women anchored in Shar’ia law. This is supported by the
dominant cultural practice of qiwama (protection), which requires men
to protect a woman’s honour and sexuality. In most countries, these
cultural practices create working environments in which organisa-
tional structures sustain sex-segregated work spaces and occupations.
Across the Middle East, and in other areas of the world, the Islamic
faith is the source from which the cultural fabric and rules of society
are defined. This is because Islam plays a significant role in shaping
economic and social relations. The importance of Islam as a social
and organising influence is demonstrated by the critical role of the
Qu’ran and Hadith in defining a moral framework which guides the
behaviour of men and women. A recurring theme is the equal but
different identities of men and women in Islamic countries.
Some Arab countries already accept there is a need to provide

women with greater equality in terms of their role in society and
legal rights. In Egypt, for example, as part of the Women at Work
Programme, equal opportunity units were established in 32 min-
istries to ensure equality between men and women, and to ensure
that women’s constitutional rights in the workplace were observed.
In Bahrain, the Supreme Council For Women was established under
the decree of the National Charter. It exists to define and lead the
women’s movement to equip women to take up their rightful role
in the society by establishing constitutional and civil mechanisms
for the development and empowerment of women. The Jordanian
national strategy focuses on the empowerment of women in the
fields of legislation, economics, society, education and health.
Problems can arise when changing values within a society are at
odds with demands to adhere to strict religious laws or rules laid
down by an autocratic leadership. When the changing values of the
majority of the population conflict with prevailing rules or laws, gov-
ernments may be unable to retain the loyalty of the police and mili-
tary. In such circumstances, fundamental change and the emergence
of a new political order may be an inevitable outcome. Although this
scenario is being played out in the Middle East’s ‘Arab Spring’, this
type of fundamental change has occurred repeatedly through the
ages. In some cases, change can be achieved with only minimal soci-
etal conflict (such as the suffragette movement in Western democra-
cies at the beginning of the 21st century) but massive social disorder
and widespread suffering can accompany change (such as that result-
ing from the 1918 Bolshevik revolution in Russia). (Lewis, 2002)
Managing services
The first major obstacle confronting the PSO seeking to understand

how societal values influence the needs of consumers is that services
are intangible in nature. To reduce consumer uncertainty, PSOs need to
concentrate on providing tangible evidence of service quality. Some of
the mechanisms available for achieving this goal include:
(1) Place, which is the physical setting around which the provision of
services is delivered (e.g. reception areas having a clean, modern
appearance).
(2) People who are involved in working with customer–organisation

interface (e.g. well-trained, uniformed employees in the PSO’s recep-
tion area).
(3) Equipmentt, which should be of the necessary standard to rapidly and
efficiently support the service provision process (e.g. a computer
system which can instantly provide answers to consumers’ enquir-
ies).
(4) Communication systems composed of a diversity of channel flows to
maximise the breadth of the communicating platforms that inform
the general public of the organisation’s role in the provision of
services.
A second characteristic of services is inseparability, which describes the

fact that many services are simultaneously produced and consumed. The
implication is that, in order for many service outcomes to occur, both
the PSO provider and the customer must be able to interact with each
other. Hence, there is a critical need to ensure that there are sufficient
PSO staff resources to permit consumers to efficiently and effectively
interact with individuals responsible for service provision. Clearly, this
is a difficult problem for PSOs facing increasing financial constraint,
especially where there has already been a reduction in employee num-
bers. Where this occurs, the PSO should seek to find alternative service
delivery mechanisms. One solution for replacing the need to meet a
staff member in person is to create an online system offering download-
able forms, smart system guidance software to assist form completion,
and an online contact centre service when the consumer needs assist-
ance from another person.
The third characteristic of services is their variability, which is caused
both by diverse customer needs and the differing service delivery capa-
bilities of employees within the provider organisation. Thus, for exam-
ple, some customers entering a local authority’s offices may just want
an application form to claim housing benefit. Other consumers may
require detailed assistance to understand the benefits available and to
find out how they can be approved to receive these benefits. In order
to manage these types of variability, all of the local authority’s frontline
staff need training in how to efficiently handle simple enquiries and
how to ensure customers with more complex service needs are handed
on to an appropriately qualified advisor within the organisation.
Unlike manufactured goods, which can be produced and inventoried
for later use, a fourth characteristic of services is that they are highly
perishable. For example, a practice nurse in a general practitioner’s
(GP’s) surgery who could have seen more patients on one day cannot
transfer that unused service capacity to a later time because by then
they are fully occupied in treating patients. Sasser (1976) has proposed
a number of strategies for responding to the perishability problem by
more effectively matching supply and demand. These include:
(1) Differential pricingg where the customer is charged a fee by the public
sector. This moves demand from peak to off-peak periods (e.g. lower
dental treatment fees for retired persons during certain times or days
of the week).
(2) Alternative service provision to meet the needs of customers during
peak periods (e.g. hiring temporary staff to answer enquiries at a tax
office as the final date for filing tax forms approaches, but not to
provide this service at other times).
(3) Service modification to ensure that during peak periods major cus-
tomers receive priority (e.g. a planning office only being available
to meet with developers and construction companies and not being
available to private householders on certain days of the week).
(4) Demand management systems which permit the service provider to
rapidly identify current available capacity and propose alternative
solutions (e.g. a computer system that can advise GPs on which
local hospitals can accept additional emergency patients on a spe-
cific day).
(5) Temporary capacity expansion whereby the provider can increase their
ability to respond to customer needs during peak periods (e.g. hiring
additional staff during seasonal periods of increased demand).
(6) Service sharingg where a number of organisations work together and
are willing to cross-refer clients (e.g. a partnership of two or more
local authorities engaged in the provision of planning services).
(7) Customer participation in which customers are encouraged to become
self-providers (e.g. an online service for accessing and submitting
forms).
Service alienation
Case aims: To illustrate how a lack of understanding of value differences

can create service provision problems.
As Western societies become increasingly multicultural, PSOs must
take into account the different values of other cultures and sub-
cultures, when managing service provision. These differences can
result in conflicting beliefs and attitudes emerging between the

provider and the service user. This can be illustrated in relation to
healthcare providers needing to take religious beliefs into consid-
eration when treating patients from different ethnic minorities who
may hold religious values that conflict with a healthcare system
(Anon., 2001). For example, patients may fail to understand the
process of obtaining treatment, misunderstand the doctor or mis-
interpret the nature of the proposed treatment. Providers must also
realise that neither the patient nor their family may understand the
implications of their health problem, the basis for the diagnosis or
the proposed treatment. Even where understanding is achieved the
provider may not realise that a diagnosis could have greater implica-
tions in terms of social problems for some patients than for others
from a different ethnic background. For example, diagnosing that an
unmarried teenager is pregnant and informing her parents has very
different implications in different cultures.
Communication problems or different beliefs can result in ineffec-
tive treatment. For example, the patient or their family do not fulfil
their responsibilities for a treatment involving self-medication in the
home. Similar problems can arise for healthcare workers engaged
in providing health education services designed to prevent people
from becoming ill. One example is where the health worker fails to
consider the cultural restraints facing women in a particular ethnic
group, or fails to behave in a culturally sensitive manner. Alienated
patients are likely to ignore advice and, even more importantly, com-
municate their discontent about their experience to others in the
community, which then deters more people from seeking medical
assistance.
Determining expectations
The key aim in delivering consumer satisfaction is to ensure that the

perceptions the customer holds about a service are equal to their actual
experience of the service provided. To ensure that perceptions equal or
exceed expectations, PSOs can use the Service Gap Model (Parasuraman
et al., 1985; Zeithmal and Bitner, 1996) which proposes that five poten-
tial problems can arise from their management of service quality.
Gap 1 occurs because the PSO has not acquired accurate information
about what customers expect in terms of service delivery.
Gap 2 occurs because the PSO has failed to set quality standards that
can be used by management and employees to monitor the service
delivery process.
Gap 3 occurs because the PSO lacks the internal capabilities to deliver
the required standard of service.
Gap 4 occurs because of incorrect information being communicated
to potential and actual service users.
Gap 5 represents the overall combined impact of the problems created
by Gaps 1 to 4.
In the private sector, many organisations can provide standardised serv-

ices because their customers exhibit relatively homogeneous needs. This
is much rarer in the public sector because consumers often have diverse
needs in relation to services such as education and healthcare. As a
consequence, actual utilisation of the basic Services Gap model may not
prove effective. This can occur when the PSO has not recognised that the
needs of different consumer groups can be extremely heterogeneous and
that expectations among consumers can change over time due to needs
shift (for example, as people grow older and develop different healthcare
needs). The failure to recognise these two trends may result in a PSO
lacking the capability to fulfil the service quality expectations of those to
whom services are being provided. The potential consequences, as sum-
marised in Figure 2.1, are the emergence of the following service gaps:
Gap 1a occurs because the PSO has not acquired accurate informa-
tion about what different consumer groups expect in terms of service
delivery.
Gap 1b occurs because the PSO does not have up-to-date information
about how expectations are changing over time.
Gap 2a occurs because the PSO fails to set quality standards reflecting
expectation variation among different consumer groups.
Gap 2b occurs because the PSO is slow in updating its quality stand-
ards to accurately reflect the current quality expectations of different
consumer groups.
Gap 3a occurs because the PSO fails to develop the internal capabili-
ties required to deliver differentiated standards of service across different
consumer groups.
Gap 3b occurs because the PSO is slow in updating its internal
capabilities to deliver ongoing changes in expectations within different
consumer groups.
Gap 4a occurs because the same information is being communicated
to consumer groups with different information requirements.
GAP GAP
Generic 5a Segmented Changing 5b Delays in
consumer consumer expectations perception
perceptions expectations updates
Undifferentiated
communication
Service delivery GAP 4a
Outdated
GAP 3a GAP 3b communication
Undifferentiated Delayed updating GAP 4b
service processes of service processes
GAP 2a GAP 2b
Undifferentiated Slow performance

performance standards standards updates
GAP 1a GAP 1b
Figure 2.1 Public Sector Service Gap Model
Gap 4b occurs because outdated information is being communicated

to different consumer groups.
Gap 5a represents the combined impact of the problems created by
Gaps 1a to 4a.
Gap 5b represents the combined impact of the problems created by
Gaps 1b to 4b.
SERVQUAL – A public sector example
Case aims: To illustrate how SERVQUAL can be utilised to identify service

gaps and provide the basis for recommending change.
The use of the conventional SERVQUAL model to assess gaps between
expectations and perceptions of public sector service provision is
illustrated by Chowdhury’s (2008) study of public healthcare provi-
sion in Bangladesh. He concluded that service failings were present
across all aspects of the provision process. Some of his recommended
actions in relation to the identified service gaps included:
Gap 1: Implement continuous market research to find out custom-

ers’ requirements.
Maintain customer complaint records to assess changing cus-

tomer attitudes.
Gap 2: Use knowledge of changing needs to develop new or
improved services.
Set specific standards to define what, how, when and by whom
service is to be delivered.
Gap 3: Train employees on standards and procedures, and on the
technical and interactive skills required for providing prompt
service.
Provide employees with the needed supportive technology and
equipment.
Gap 4: Providers should only promise what is possible.
Providers should change promotional and educational messages.
Gap 5: Implement actions proposed for closing Service Gaps 1 to 4.
Chowdhury linked the SERVQUAL analysis with other data to

develop policy guidelines for improving public sector healthcare
provision. He determined that many doctors in government hospi-
tals were not user-friendly, particularly in relation to their treatment
of clients from poorer backgrounds. He suggested that these doctors
should be assisted to change their behaviour towards socially less
privileged patients. He also suggested that local hospitals should
appoint female doctors and family planning health advisors to pro-
vide services to women in their own villages. In his view, there is
also the need to emphasise the promotion of primary healthcare to
exploit the fact that ‘precaution is better than cure’. Additionally,
there was a need to expand immunisation, nutrition, sanitation,
sources of drinking water, family planning and improved infrastruc-
ture to reduce illnesses such as malaria and dengue fever. Given
the low income of the majority of the population, the government
should put more effort into providing healthcare services which are
accessible and affordable to all. Chowdhury also concluded there was
a need for greater transparency among medical associations, man-
agement committees and healthcare organisations.
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3
Politicians
Changing structures
The emergence of nation states early in the social history of humanity

was usually the result of the ability of one or more individuals to success-
fully wage war on people. The winner would be appointed as the head
of state, usually the monarch or emperor. Having come to power, the
usual outcome was the individual would seek to ensure that, upon their
death, succession would pass to their male heir. Within this system, the
monarch or emperor retained absolute control over the population by
passing laws and a willingness to use violence or the threat of violence
to ensure that there was no effective opposition. Although this leader
held absolute power, in many cases their decisions were influenced or
determined by a small group of advisors, who were typically granted
titles and given tracts of lands (or ‘estates’) to ensure their loyalty.
The length of any reign was determined by the ability of the monarch,
emperor or their descendents to remain in power. Where dissent emerged,
change usually resulted from war followed by its winner being enthroned
as the new head of state. The source of dissent could come from a power-
ful family within the country or from other nations wishing to install a
new head of state whose values were more compatible with theirs.
In Europe during the Middle Ages, dissent or an invasion by another
nation was frequently based upon differing religious views. The two pri-
mary factions were the Roman Catholic Church, led by the Pope, and oth-
ers, typically Protestants, who objected to the tight control that the Catholic
Church retained over issues such as nature of worship and the theological
underpinnings of belief. One major social change which involved both
different religious opinions and an anti-monarchy perspective was the
1642 English Civil War. The winner of this conflict was the Protestant faith
44
Politicians 45
under the leadership of General Oliver Cromwell. After King Charles I was
executed, power and authority shifted to parliament. The focus of change
in this new political structure was an emphasis on the rights of the people
to govern without interference from the monarchy.
An alternative approach to change was via a people’s revolution, such
as that which occurred in France in 1789 with the aim of abolishing
monarchy and creating a republic. The philosophy of this republic and
its perceived benefits was congruent with views in the USA of the need
for countries to be republics to avoid any interference from a power-
ful monarchy. A fundamental aspect of some of these new political
structures was the desire to reduce the ability of the minority to dictate
and control the rights of the majority. In France, this desire led to the
publication of the Declaration of the Rights of Man and of the Citizen. This
philosophy was also enshrined in the 1776 American Declaration of
Independence, which opens with the statement:
We hold these truths to be self-evident, that all men are created

equal, that they are endowed by their Creator with certain unalien-
able Rights, that among these are Life, Liberty and the pursuit of
Happiness. – That to secure these rights, Governments are instituted
among Men, deriving their just powers from the consent of the
governed, – That whenever any Form of Government becomes
destructive of these ends, it is the Right of the People to alter or to
abolish it, and to institute new Government, laying its foundation
on such principles and organizing its powers in such form, as to
them shall seem most likely to effect their Safety and Happiness.
Democratic society
Prior to the 20th century, once a parliament or congress had acquired

control and the ability to determine the laws of a nation, the elected
representative was rarely truly representative of the values, needs and
opinions of the majority of society. This was because there were often
specific restrictions about which individuals within the population had
the right to vote or the right to stand for election. In many cases, these
restrictions only gave these rights to owners of land or property. The
outcome was that the majority of politicians tended to be drawn from
the upper or middle-classes.
The Industrial Revolution was a catalyst for fundamental change due to
the emergence of individuals within society whose wealth came not from
inherited land but from owning a large, successful business. The activities
of some socially aware industrialists led to an increasing awareness of the

living conditions of the poor and emergence of unions to represent the
rights of workers. As a consequence, there was an increasing demand for
social change and greater equality. Eventually, this led to some nations
creating a parliamentary system in which politicians of widely differing
opinions stood for election, and a greater proportion of the population
was granted the right to vote. It was this change that provides the basis
of what is now referred to as ‘the democratic society’.
Social change in a democracy
Case aims: To illustrate the path of social change enabled by the actions
of politicians.
Although the English Civil War led to the temporary abolition of the
monarchy, difference of opinion between politicians and religious
groups caused the period to be known as the English Interregnum (or
English Commonwealth). The period was fraught with difficulties.
Problems came to a head following the death of Oliver Cromwell
in 1658 and eventually resulted in the restoration of the monarchy
when Charles II was invited to return to Britain. From this point for-
ward, the UK has remained a constitutional monarchy but the pow-
ers of the reigning monarch are restricted by acts of parliament.
By the 1870s, the urbanisation which had accompanied the
Industrial Revolution in some Western nations had created severe
social problems. This led to politicians accepting the need for reform
in areas such as social welfare, healthcare and education. A key
influence over the democratisation of British society was a series of
reform acts which gradually expanded the voting franchise to cover
an increasing proportion of the male population. These included the
1832 Reform Act, which gave the vote to more of the middle classes,
and the 1867 Reform Act, which gave the vote to every adult male
householder living in a town and male lodgers paying £10 or more
in rent. The 1884 Reform Act gave the vote to tenant farmers and
agricultural labourers. This last change also included a re-definition
of electoral districts to reflect a population shift from rural to urban
areas. This tripled the size of the electorate and established the prin-
ciple of ‘one man, one vote’ for males over 25. It would be another
34 years, however, before the right to vote was extended to women
in 1918, but only those aged over 30.
Politicians 47
The wider franchise and the emergence of the trade union move-
ment in the UK led the Liberal party to legalise the rights of workers
to become members of a union in 1871 and in 1875 to make strikes
legal. In 1875, the Conspiracy and Protection of Property Act
granted the right of workers to peacefully picket their place of work
when on strike. At the beginning of the 20th century, unions in the
UK began to sponsor their own candidates for parliament. In 1906,
the Labour Party was formed under the leadership of Keir Hardie
and managed to get 29 MPs elected in the same year. By the1920s,
the Labour party replaced the Liberals as the second biggest political
party in Britain.
An early focus of social reform in the UK was the 1870 Education
Act, which authorised the creation of school districts and required
primary schools to be built at the expense of local ratepayers in areas
where one did not already exist. In 1880, education was made com-
pulsory up to the age of 10 and in 1891 was made free to these chil-
dren. The 1902 Education Act established the principle of funding
secondary schools from local rates, assisted by grants from central
government.
To alleviate the living conditions of the majority of the popula-
tion, the 1872 and 1875 Public Health Acts led to creation of health
authorities. This was accompanied by legislative actions over sewer-
age, drains, water supply, housing and preventing disease. Although
these reforms had significant impact on living conditions, even by
1900, 30 per cent of the population were thought to still still be
on the edge of starvation. There was also huge disparity between
social classes in relation to income and wealth. In 1906, the Liberal
government was elected on a manifesto based upon challenging the
Conservative government’s failure to support social change. The
new government introduced a number of key social reforms. These
included compensation for employees injured at work, a small pen-
sion for people over 70, national insurance to be paid to workers in
times of sickness and, in certain industries, unemployment benefits
(Oliver, 2003).
Social change
Significant social change usually starts with a small minority of a popu-

lation expressing dissent. Unless the group uses violence to achieve
their aims, the usual path of change is that new ideas gain acceptance
among a broader section of society. Even at this juncture, however,

change is unlikely to occur until a sufficient number of politicians, or a
political leader with strong control over their party, are convinced that
they should support actual change. An example of failure to gain such
political support is provided by the Campaign for Nuclear Disarmament
(CND) in the UK. The campaign achieved a reasonably high level of
interest among the population but never convinced enough politicians
of the merits of nuclear disarmament. As a result, banning the atomic
bomb in the UK was never supported by either the Conservative or
Labour parties when in government. This outcome can be contrasted
with the anti-Vietnam war movement in the USA. Initially emerging
on the campuses of American universities, the movement had to over-
come an embedded cultural belief that supporting the nation when at
war was a patriotic duty, and that patriotism was especially necessary
in order to combat Communism. Over time, as more and more body
bags came home and influential members of the media started to
criticise the military’s failure to succeed, the average citizen and some
politicians began to openly express their concerns. Eventually, a high
level of popular support among members of Congress was a key fac-
tor which forced President Nixon to open peace negotiations with the
North Vietnamese.
A fundamental tenet of a democratic society is freedom of speech,
which allows any member of society to express a view. Where an indi-
vidual is seen to represent a common viewpoint, they may eventually
become an elected politician representing these views at a national
level. Politicians have the power to legislate for change and, in the
democratic system, change is usually initiated by the political party
which is in power. Where the social perspectives of the government
are at variance with the majority of the population, under a democratic
system a new party offering social reform may be elected. This can be
contrasted with a dictatorship, which often operates under the guise of
a single party political manifesto, where removing those in power often
only occurs as a result of a revolution.
Whether or not a country is a democracy, the individuals in power
have a strong influence over determining the nation’s social framework.
By implementing their political philosophy, this group will determine
the scale and nature of public sector spending and define the role of the
country’s PSOs. Some Western countries have two major parties which
are typically characterised as being ‘left’ or ‘right’ wing. If additional,
smaller political parties also exist, their manifesto falls somewhere along
a continuum between extremely left- or right-wing views. Left-wing
Politicians 49
parties are usually associated with representing the values, opinions and
needs of the socially disadvantaged, such as the workers and the lower
middle-class. By contrast, right-wing parties usually seek to represent
the middle, upper-middle and upper-classes within society. Personal
material wealth and perceived position in society will cause voters to
support that political party which they feel best represents their own
needs and personal interests. When a new political party comes to power
their manifesto will often result in changes in the structure, content
and breadth of social inclusion policies. These are then reflected in the
nature of the ongoing public sector services being made available to the
nation. Although political parties would like to appeal to every individ-
ual, the value differences caused by social status, income, material values
and personal social conscience will usually mean that the platform upon
which a party or president is elected cannot appeal to everybody. Hence,
drafting a manifesto is usually a difficult process because of the need to
maximise consensus among the electorate over issues considered to be
embedded beliefs of a specific political party. When a manifesto doesn’t
appeal to the majority of the population, the political party concerned
usually fails to win the election. In most democracies, the final decision
over the contents of a party’s manifesto tends to be determined by the
party leader, assisted by a small group of close advisors. As a conse-
quence, the actions of an elected party will usually be closely aligned
with the political and personal values of the party leader.
Although, in theory, candidates in a presidential election are able to
define their own political agendas, in most cases the candidates wish
to be seen by the electorate as being associated with a major political
party. This is because the candidate benefits from being seen to support
specific national policies and, possibly even more importantly, the core
party members play a critical role at a local level gaining support for
their party’s presidential nominee.
Roosevelt’s New Deal
Case aims: To illustrate how a political leader can challenge conventional

thinking in pursuing the aim of achieving social change.
Following the economic downturn after the 1929 Wall Street Crash,
social conditions dramatically worsened in the USA. By the time
Franklin D. Roosevelt was elected as president in 1933, unemploy-
ment was at 25 per cent, numerous people were homeless, banks had
foreclosed on many farms due to unpaid mortgages, and a declining

GDP was causing a fall in tax revenues (Rose, 1994).
As a Democrat, Roosevelt’s natural inclination was to seek a solu-
tion to reduce the nation’s level of social distress. He was less con-
cerned by criticisms from business and some economists who argued
for legislation to protect industry or to avoid placing additional tax
burdens on the wealthy. Roosevelt horrified his critics by violating
prevailing policy dogmas through abolishing the gold standard and
announcing the explicit objective of inflating the price level to pre-
Depression levels through deficit spending.
Roosevelt’s first act in his aptly named ‘New Deal’ bill was to
gain congressional approval for the National Industrial Recovery
Act (NIRA). The aim of this legislation was to create more employ-
ment through activities such as increased public sector spending on
infrastructure programmes, shortening the working week and paying
employees a reasonable wage. The Act also permitted the President
to approve codes of practice drawn up by trade or industrial groups
concerning agreed labour practices, as long as such codes were equi-
table and not designed to promote monopolist outcomes. Much to
the horror of America’s industrialists, NIRA removed the requirement
for workers to sign contracts banning them from union membership.
The Act also guaranteed the right of employees to organise and bar-
gain collectively though representatives of their own choosing.
Many corporations attempted to avoid labour codes in relation to
bargaining rights, wage protection and prevention of child labour, by
such actions as establishing their own company unions or by refus-
ing to recognise the legal rights of legitimate unions. In order to frus-
trate such activities, in 1935 Roosevelt signed into law the National
Industrial Labour Act (NILA). This Act significantly helped America’s
unions to gain more control and influence in the work place, which
benefited their members in relation to pay, working conditions and
employer-funded pensions. The control achieved by the unions was
retained for many years after World War II. Their power from the
1970s onwards probably had a detrimental effect on corporations
seeking to create more flexible working environments in response
to the threat posed by overseas competitors. However, the NLRA
did not benefit everybody. For example, prior to World War II most
unions refused membership to non-whites. Further lack of equality
was also caused by the various legislative reforms not covering agri-
cultural labourers or domestic servants (Shlaes, 2007).
Politicians 51
In recent years, some economists have concluded that Roosevelt’s

New Deal had no real economic benefit and may have actually con-
tributed to slowing down economic recovery in the 1930s (Cole and
Ohanian, 1999, 2004). Whether these post-event perspectives are
valid depends to a certain degree upon the values and the school
of economic thought to which the critics are aligned. On the basis
of assessing the New Deal in the context of social benefits, the leg-
islation does appear to have had a significant impact. Agricultural
programmes provided money for the mechanisation of agriculture,
which led to the phasing out of share cropping. New infrastructure
such as national parks, roads, bridges and dams, was built which, as
well as assisting the US economy, also provided wages to programme
participants. In addition, federal deposit insurance assisted in the
elimination of bank runs and the introduction of social security
enabled many older people stay out of poverty.
Political values
Major economic or social change is often associated with one individual

gaining political power and implementing required actions. In the USA,
the New Deal is associated with President Franklin D. Roosevelt. The era
of privatisation deregulation of the UK economy is associated with the
Conservative Prime Minister Margaret Thatcher. Fundamental legisla-
tive changes often demand the existence of an exceptional leader with
the skills and willingness to defy political conventions. This individual
may also need a high level of personal courage, especially where reforms
challenge existing embedded political thinking or are unpopular with a
large proportion of the electorate (Besley, 2005).
The success of any major reform is often closely linked to strong per-
sonal values of the national leader, such as honesty, integrity, fairness
and humility. No doubt these are values that an entire population hopes
to encounter in all of their political representatives. Unfortunately,
many individuals entering politics have always exhibited a willingness
to engage in self-dealing, abuse their political influences, grant favours
to particular interest groups and, in some cases, willingly accept bribes.
Since the mid 20th century there has been an increase in laws and rules to
enforce greater honesty among politicians. It is unlikely that this reflects
a massive decline in political integrity, but instead is the outcome of the
media being more willing to put the behaviour of public officials under
greater scrutiny. As a consequence of more politicians being highlighted

in the media for financial or sexual misdemeanours, there has also been
an increase in public cynicism about whether politicians can be trusted
to act with integrity. The public also perceive politicians’ primary role to
serve the electorate. Sometimes a political party is able to use the mis-
behaviour of incumbent politicians as a key element in their successful
election campaign. Unfortunately, achievement of power often seems to
lead to a decline in the integrity among certain members of the newly
elected government, as demonstrated in the UK by the claims of dishon-
esty among the Conservative government which assisted the Labour
party to win the election in the late 1990s.
The fiduciary model of political motivation theory is based upon the
concept that individuals seek entry into public office because of a per-
sonal motivation to ‘build a better or more equitable society.’ In part, this
philosophy is linked to the much older notion of civic virtue, whereby
individuals should act with integrity and fairness in their relationships
with others (Putnam, 1993). This motivation also assumes that the
reward sought by politicians is the personal satisfaction of contributing
towards building a better society. If this theory is correct then finding a
trustworthy politician is merely a simple matter of identifying and select-
ing politicians who exhibit a desire to represent and serve the needs of
the general public. Putnam (2000) posits that there has been a decline in
the civic values of entire population, which is manifested in reduced par-
ticipation in charitable or socially minded activities. He also suggests that
this decline in social capital is linked to other social forces within society.
He believes that this shift in societal values is reflected by a decline in the
number of politicians who genuinely strive to achieve social change.
Further evidence of politicians tending to be biased towards actions
that may fulfil their own self interests is provided by research on the
primary motivators of their behaviour. Anderson and Guillory (1997)
concluded that the most important concern for politicians is to win
elections and to avoid the loss of status and power which they associate
with not being elected or re-elected. As a consequence, many politi-
cians, especially in a country’s major parties, are often averse to policies
associated with reform. This is because of the perceived risks that
such policies may be detrimental to their image amongst the voters.
Politicians may attempt to hide this aversion when their party leaders
are promoting change. In this instance, many politicians decide what
is best for their own self-interests: either supporting the leadership at
the risk of upsetting voters, or criticising the proposed reform in order
to obtain more votes in a forthcoming election (Bowler et al., 2006).
Politicians 53
Self-interest is also reflected by politicians within a government being

much more positive towards the effectiveness of the current electoral
system, and usually strongly critical of attempts by smaller parties to
effect electoral reform. This opposition suggests a concern that reform
may more accurately reflect support for these smaller parties, and would
reduce their own larger party’s votes in the next election (Anderson and
Guillory, 1997).
In addition to the importance which politicians place on remaining
in power, Soderbaum (1982) concluded that many politicians perceive
this career path as offering a great material reward, both as an elected
representative and also by exploiting the opportunities which exist in
the private sector upon leaving politics. Gerbach (2007) examined an
issue that irritates many voters and clearly influences why politicians
are often held in low regard – namely the frequent habit of politicians
making election promises which are then forgotten when they come
to power. He concluded that, although it was a simple matter for a
party to make appealing pledges in its pre-election manifesto, upon
coming to power, politicians discover that implementation of proposed
promises is both complex and problematical. At this juncture, difficult
pre-election promises are often quietly forgotten or actual legislative
reform achieves much less than had been originally promised in the
period leading up to the election.
In the past, the general public tended to believe that the country’s
civil servants could protect them from the dishonest or ill-conceived
activities of politicians. This was because the civil service attracted peo-
ple who were either motivated by a desire to help society or who wanted
job security and generous pension benefits. Civil servants in this type
of regime are presumed to be professionals or experts who can provide
unbiased advice to politicians about the effectiveness, shortcomings
and potential drawbacks of any proposed legislative change. However,
recent attempts to introduce market forces and private sector practices
into the private sector have begun to alter the role and behaviour of
civil servants. These newer systems may rely more on the employment
of public sector staff on short-term contracts and also involve using
performance-related pay (Aberbach and Rockman, 2006). As a conse-
quence, the public increasingly perceives that civil servants’ behaviour
is reflective of an understanding that career advancement and salary
levels are dependent upon agreeing with their political masters. As well
as the general public believing the civil service to be less able to protect
the country from politicians lacking in integrity, there is a growing
awareness that politicians are prepared to ignore constructive criticism
from their civil service and instead rely on the advice of their own ‘per-
sonal advisors’ or ‘spin doctors’ (Chaston, 2011).
Political scandals
Political scandals have occurred regularly ever since nation states came
into existence. Scandals are not unique to any country or political phi-
losophy. They occur in countries with dissimilar political trajectories,
economic standards, political cultures, media systems and overall levels
of private sector corruption.
Castells (1997) has proposed that the growth of the global criminal
economy in areas such as drugs and people-smuggling is a key factor in
the upsurge of scandals now occurring within politics. Another possible
factor is politicians accepting doubtful or illegal donations in order to
meet the increasing costs of financing their election campaigns (Burnell
and Ware, 1998).
In authoritarian regimes governments have sufficient control over
the media that, although scandals may occur, few outside the inner
political circle are aware of these events. These conditions do not exist
in democracies, where openness and access by the media results in
scandals being identified and brought to the attention of the electorate.
Societal values that expect wrongdoers to be held accountable have
also resulted in more active monitoring of politicians and, in the case of
illegal acts, appropriate punishment can be imposed by the courts.
Tumber and Waisbord (2004) posit that, in many Western democ-
racies, convergence in the manifestos of major political parties has
resulted in politicians’ careers becoming more dependent upon their
personal credentials. This causes politicians to seek support on the basis
of their personal qualities and claims of impeccable behaviour. Under
these circumstances, both their opponents and the media are increas-
ingly interested in finding evidence of scandal which can be used to
contradict claims of personal integrity, which raises questions over the
real motivations of the individual seeking to be elected. Individuals now
focus on scandals involving their opponents to achieve their political
ambitions. In some cases, ‘mud-slinging’ has replaced public debate as
the mechanism to influence electoral outcomes (Ginsberg and Shefter,
1990). A scandal offers a highly effective means for eliminating politi-
cal rivals and gaining support in defeating the specific policies being
promoted by these rivals (Garment, 1991).
Politicians have to face two behavioural restrictions. The first originates
from legislation which controls the behaviour permitted of politicians.
Politicians 55
The second restriction is related to politicians’ need to legitimise their

power by positioning themselves as a trustee of social norms and moral-
ities. As a consequence, the public expects their politicians to exhibit a
higher level of integrity and openness than is expected of individuals
in most other sections of society. Frequent media reports of politicians
being involved in sexual liaisons, making fraudulent expenses claims or
spending large sums of money on luxury hotels and restaurants serve to
remind the electorate that some politicians are failing to meet accepted
forms of behaviour.
The views of the electorate about the standards of behaviour they
expect of politicians are strongly influenced by the prevailing values of
society in general. These values differ between countries and between
different groups within the same country. In 2011, for example, the
head of the International Monetary Fund (IMF), Dominique Strauss-
Kahn, was arrested in New York following allegations of sexual assault
on a housekeeper who had entered his hotel room, although all charges
were subsequently dropped by the District Attorney’s office. The reac-
tion of the American media was to present the events as totally scandal-
ous behaviour by a senior public sector figure who previously had been
a senior politician in France. In contrast, French media coverage was
somewhat muted, even suggesting that Strauss-Kahn had been caught
in a ‘political sting’ arranged by his opponents in the IMF. This very dif-
ferent media reaction reflected the fact that the French public is some-
what more philosophical and accepting of senior government officials
being involved in scandals of a sexual nature.
In relation to intra-country variance of response to political scandal
Barker and Tinnick (2006) assessed how religious beliefs might influence
the reactions of the general public. They determined that members of
fundamentalist churches hold much stronger, more conservative opin-
ions over issues such as equal rights, gay rights and abortion. Hence,
this group in the population are more likely to be scandalised when
the adverse behaviour of politicians is linked to one or more of these
issues.
Major scandals can undermine the public’s attitudes to the morality
and integrity of the entire political process. This was illustrated in the
UK over the expenses scandal in which numerous members of parlia-
ment were found to have submitted questionable, and sometimes illegal,
expense claims in relation to their parliamentary activities. Further ero-
sion of public belief in politicians can occur due to parliamentary or pub-
lic enquiries over specific matters. An example is the issues arising during
the inquiry into and the actions and behaviour of the UK government
leading up to the second Iraq war. Revelations about the behaviour of

certain politicians led to a drop in popular support for the Iraq war and
the former Labour Prime Minister, Tony Blair.
Changing public attitudes
Case aims: To illustrate how a series of damaging events can erode the
electorate’s support for a political party.
Gaining the confidence of the public through an image of integrity
and a desire to achieve greater social equality was an important factor
in assisting the Spanish Socialist Party win the 1982 general election.
Even at that time, some media reports suggested that the party did not
always exhibit a high level of integrity. A socialist town councillor in
Madrid, Alonso Puerta, accused his council of having awarded a con-
tract for garbage disposal in exchange for kickbacks to the local section
of the Socialist Party in Madrid. This case appeared to have no adverse
impact on the party’s image. Then, in 1988, the activities of two well-
known senior officials indicated a close relationship between business
and Spain’s Socialist Party government. Concerns over this matter led
to a parliamentary commission into ‘influence trafficking.’ Julio Feo,
secretary general to the Prime Minister until 1986, was subsequently
found to have acted as a broker in certain important business activities,
including the awarding some of the contracts to build the high-speed
Madrid–Seville train. Another individual, Jose Maria Calvino, was head
of the Spanish public broadcasting company. In 1987, he created a
private television company and sought to gain assistance from politi-
cians to circumvent the legislation forbidding private sector television
broadcasting. These cases, however, did not appear to generate a sig-
nificant adverse response from the public.
What appears to have radically altered the attitude of the elector-
ate is when, in 1990, the media began to make public some of Juan
Guerra’s activities. He was the brother of the Deputy Prime Minister
of the Socialist government and, since 1982, had occupied an office
in a state building. Available evidence suggested that, prior to the
election, Juan Guerra faced severe financial problems and received
unemployment benefits. However, shortly after the Socialist party
election victory, Guerra had acquired substantial assets mainly in the
form of real estate. Apparently, he had earned his wealth by acting
as broker for companies that needed government building licences
Politicians 57
and or wanted to win public sector contracts. Unlike the 1980s,

media reports about the Guerra scandal led to a major decline in the
public’s confidence in the integrity and credibility of the Socialist
Party. Concern over corruption became even greater following the
government’s decision to accept the resignations of senior figures
in government and senior public sector officials. By resigning, the
former General Director of the Guardia Civil, Luis Roldan, escaped
retribution for his behaviour, as did the Governor of the Bank of
Spain, Mariano Rubio, and the Minister of Agriculture. Baltasar
Garzon resigned from both his office as Minister of the Interior and
his parliamentary seat on the grounds that the Socialist government
had no real intention of fighting political corruption. The combined
effects of these events were seen as the primary reasons why the
Socialist Party lost power in the 1996 national elections.
While the electorate’s belief in the integrity of their politicians was
rapidly declining in Spain, a similar trend of increasing political scan-
dals was emerging in the UK, involving the Conservative government
under John Major. The first major scandal was the Matrix Churchill
affair in 1992. A number of businessmen were accused of illegally
selling defence equipment to Iraq. Government ministers refused
to release public documents about the case on the grounds of it not
being in the public interest. The judge insisted that the documents
were released to the defence counsel. The government minister, Alan
Clarke, then admitted in court that the government knew that arms
equipment was being exported to Iraq and the case collapsed.
This scandal was followed by the ‘cash for questions’ affair, which
came to light when the media revealed that members of parliament
were being paid by lobbyists to raise specific issues during parliamen-
tary debates. In return for these payments, Conservative politicians also
arranged meetings with ministers, tabled amendments to bills passing
through the House of Commons and made speeches in parliament sup-
porting the lobbyists’ interests (Oliver, 2003). Then the Prime Minister
made a speech about family values and the Conservatives’ commitment
to a return to integrity. This speech was perceived as further reducing
the government’s credibility with the electorate, especially when subse-
quent revelations about the private lives of ministers emerged, includ-
ing John Major’s affair with his colleague Edwina Curry.
As in Spain, the behaviour of Conservative Party members cost
them the next election, when the Labour Party, led by Tony Blair,
returned to power in part due to a manifesto emphasising the need
for a return to higher moral values in national politics. Within a

short period of time, however, the Labour Party also became mired in
a series of scandals. These included revelations about the private life
of the Foreign Secretary, Robin Cook, the resignation of the Welsh
Secretary, Ron Davies, amid rumours about his sexuality, Tourism
Minister, Janet Anderson, being accused of adultery, and charges of
electoral fraud against Labour members of parliament Fiona Jones and
Mohammad Sarwar. These events were followed by the resignation of
the Ministerial Aide, Derek Draper, over allegations of cash received
for gaining access to ministers, the Agriculture Secretary admitting
he was gay, and a revelation that the boss of Formula One, Bernie
Ecclestone, had donated £1 million to the Labour Party before the
election, which influenced the new government’s decision not to
ban tobacco advertising in Grand Prix motor racing.
Opinion polls indicated that the general image of the Blair admin-
istration was better than that of the Conservatives when they were in
office. As a consequence, the Labour Party was still able to win the next
election despite the scandals. Certain factors may explain this outcome.
The 1992 election came after a decade of Conservative rule and elector-
ates have a tendency to become tired of an incumbent party, hoping
that another party can implement change beneficial to their future
living standards. Another probable influence was John Major becom-
ing Prime Minister after a damaging internal party struggle to depose
the previous Conservative Prime Minister, Margaret Thatcher. A third
factor is evidence that the influence of scandals on the electorate var-
ies according to prevailing economic conditions. Smyth and Taylor
(2003), in their analysis of the adverse impact of scandals involving
US presidents, concluded that the public is more likely to forgive bad
behaviour during an economic upturn than in a downturn. President
Clinton was less damaged by the sexual scandal involving Monica
Lewinsky because, at the time of the revelations, Americans were enjoy-
ing a period of economic growth. In contrast, the public’s reaction to
Watergate and the presidential tapes was much more damaging to
President Nixon because, at that time, the country was in the middle of
an economic downturn. In the UK, John Major faced re-election during
the early-1990s recession, whereas during much of the Tony Blair era
consumers enjoyed economic prosperity due to low interest rates sup-
porting borrowing and owner-occupiers experiencing a rapid increase
in the value of their homes.
Politicians 59
Political leadership
In Western countries, the financial crisis facing governments will mean

that PSOs will receive much smaller annual budgets for the foreseeable
future. If the leaders of a PSO believe a government to be sincerely com-
mitted to sustaining delivery of the highest level public services then
they will probably support government reforms and seek to maximise
resources allocated to the delivery of frontline services. For a PSO to
commit to such action, the organisation’s leadership must be certain
that actions they have implemented will not be rendered pointless if
the country’s politicians subsequently decide against retaining reforms
they have previously announced.
The widespread use of Key Performance Indicators (KPIs) often causes
PSO leaders to remain unconvinced by a government’s announcement
of change. KPIs are used by ministers to monitor the actual outcomes
of announced changes in public sector policy. For example, a govern-
ment might announce the purpose of education is to ‘give schools the
freedom to deliver teaching programmes which optimise the students’
learning experience and to effectively prepare them for entry into the
work place.’ Most school heads would perceive this to be an admirable
goal and act accordingly by having staff focus on appropriate teach-
ing methods to achieve the stated purpose. If, however, the chosen
KPI to monitor the education sector is based upon how many students
achieve a C level grade in five subjects in national examinations, the
heads face a dilemma. They must decide whether to cancel planned
actions designed to optimise learning experience or to focus instead on
maximising the number of examination passes in order to deliver the
outcomes demanded by the prevailing KPIs.
Whether PSOs trust politicians sufficiently to confidently implement
operational reforms is a critical topic. This issue needs careful consid-
eration by a nation’s leaders when seeking to find ways of optimising
the provision of public sector services in the face of severe budgetary
constraints. Unfortunately, the prevailing image of politicians as con-
sistent, capable, committed and honest leaders is already tarnished by
what seems to be an increasing number of scandals over recent years.
This poor image can be expected to continue to influence the perceived
credibility of announcements concerning the genuine desire of politi-
cians to reform public services.
In both the USA and the UK, belief in the integrity of the political
leadership has been severely eroded by the case presented for the war
in Iraq, and by the West’s subsequent attempts to defeat terrorism in
countries such as Afghanistan. More recently in the USA, due to the

influence of partisan politics, President Obama has faced major difficul-
ties in gaining Congressional and Senate approval for his proposals for
reforming the nation’s healthcare system. These problems have been
followed by the partisanship of both Democrat and Republican politi-
cians in placing obstacles in the path of resolving the banking crisis and
finding ways of reversing the country’s economic downturn.
Similar problems over partisan politics faced Australia’s Prime Minister,
Julia Gillard, during her first year in office. For example, in 2011, she
failed to persuade parliament to agree on actions to reduce the country’s
greenhouse gas emissions. In the UK in 2010, the Conservative Party
was forced to enter into a coalition with the Liberal Democrats in order
to regain power. This has created credibility problems when ministers
from the two parties openly contradict each other on various aspects of
government policy. In addition, following public dissent over policies
proposed by ministers designed to assist public sector reform in the face
of budget cuts, the Prime Minister David Cameron has made a number
of U-turns by intervening and overruling his own ministers’ proposals.
In commenting upon the growing problems that political leaders
have in being trusted by the electorate, Smith et al. (2007, p. 297) con-
cluded that:
Those who wish to improve citizens’ perceptions of governmental

decisions and of decision makers, as well as increase the willingness
of citizens to accept those decisions, should take steps to make it
so that people believe elected officials are not in office because of a
desire for authority but rather because they have earned or otherwise
acquired authority without making any conscious effort to do so.
Smith et al. also felt that, to regain the general public’s confidence,
political reformers should avoid causing people to believe that decision-
makers perceive themselves to be smarter than other people and are
clearly achieving personal financial advantage from their activities. This
viewpoint indicates that that a reformer with a genuine commitment to
fundamental social change must be able to persuade voters that they are
not excessively ambitious, that their motivation is merely the satisfac-
tion of contributing to the public good, and that they will not receive
any personal gain as a result of their actions.
Both political and social scientists have sought to identify the char-
acteristics of certain political leaders that cause them to be trusted by
the electorate, why their policies are successfully implemented and
Politicians 61
why there is widespread acceptance of their actions by both public

sector employees and the public. Various studies have concluded that
the personal characteristics of national leaders play a critical role in
shaping their policy choices and how they exercise their authority in
implementing new social policies. Proposed factors of influence include
personality, social background, education, communication skills, prior
experience, reputation, motivation for seeking high office and political
beliefs (Feldman and Valenty, 2001; Llanos and Margheritis, 2006).
Bennis and Nanus (1985) believed that, in addition to certain person-
ality traits, successful leaders must engage in personal learning, provide
a role model for subordinates and be able to sustain a vision even during
periods of adversity. Casson (1991) posited that successful leaders also
strive and succeed in gaining acceptance for their clearly articulated
values. A key trait of such individuals is an optimism which sustains
their beliefs when confronted with obstacles or criticism. Their personal
values provide the basis for justifying the correctness of their actions
and permit the retention of an open-minded attitude over which path-
ways can be built to persuade others of the validity of their policies.
These individuals place great importance on the need to interact with
others to achieve broad support for their policies. Nevertheless, they
have a clear understanding that aggressive or dominant behaviour can
alienate potential allies. An additional mind-set required of a successful
national leader is the realisation that many years may pass before the
benefits of implementing a fundamental policy change become evident
to the electorate. Hence, these leaders must accept that their greatest
accomplishments may not be realised during their time in office, or
possibly even during their lifetime (Womack, 2008). At the same time,
they understand the need to avoid the trap into which many politicians
can fall by focusing on policies which can sustain the popularity of their
party and impact their personal popularity, but which they recognise
over the longer term can offer no real benefits to society.
One of the most widely accepted theories in the field of leadership
studies is that presented by Burns (2003). He argued that most individu-
als are ‘transactional leaders’ whose recognise that others are motivated
by economic, political and psychological benefits and achieve consensus
by offering these outcomes to others to gain their support. The drawback
in this approach is that agreements of this nature have no enduring
purpose because the parties concerned are willing to revise their position
when a more attractive value-gaining opportunity comes along.
Burns contrasted this scenario with the ‘transformational leader’, who
has the capabilities and single-minded focus to achieve enduring outcomes
by being more likely to actually deliver promises made about achieving

fundamental change. Such individuals gain support by working with oth-
ers to generate motivation and assisting in the development of a higher
sense of morality. Burns posited that Gandhi was a transformational
leader who raised the aspirations of millions of Indians by persuading his
followers that they could achieve the political and economic outcome of
freedom from British rule.
A potential drawback in many interpretations of what makes a suc-
cessful leader is the tendency to assume that different styles, such as
transactional versus transformational leadership, are distinct, isolated
and completely different. Such perspectives risk ignoring real-world
observations. These often reveal successful styles that lie somewhere
along a continuum between the two extremes of transactional and
transformational. Another questionable conclusion is to assume that
success demands certain characteristics to be exhibited. For example, a
commonly espoused opinion is that successful leaders are always able
to define an effective vision for their organisation. In reality, many lead-
ers succeed by understanding a diversity of opinions to create a vision
which brings together areas of congruent thinking (Chaston, 2010). It
is also important to recognise that, when assessing leadership effective-
ness, qualities that are appropriate in one situation may be ineffective in
another. For example, Winston Churchill proved to be a highly effective
leader of the British nation during wartime but was somewhat less effec-
tive when re-elected as a peacetime Prime Minister.
The influence of the environment on leadership behaviour, and the
capability to achieve fundamental change, is affected by the degree of
autonomy which has been granted to the individual. In the 19th and
first half of the 20th century, leaders of both private and public sector
organisations tended to be perceived as acting in the best interests of
others. As a result, they were permitted to make major policy decisions
without any significant level of oversight. Examples of individuals
who enjoyed such freedom were Henry Ford and Theodore Roosevelt
in America and, in the UK, the press baron Lord Beaverbrook and the
Liberal Party Prime Minister David Lloyd George. Over the last 50 years,
however, the degree of oversight faced by national leaders has increased.
In the political sphere, leaders are now required to appear before parlia-
mentary or congressional committees to justify major policy proposals
and actions. Further constraints over autonomous decision-making can
exist due to the power of the media and, in some countries, the elector-
ate expecting there to be some form of broader consultation prior to the
implementation of fundamental policy changes (Keeley, 1990).
Politicians 63
Barber (1992) proposed that three essential personality components

determine the effectiveness of a political leader: character, global per-
spective and style. Barber used this framework to evolve a taxonomy
which classifies national leaders into active-positives, active-passives
and passive-positives. Active-positives exhibit a congruence of working
hard, being active and enjoying being always active. The active-positive
has high self-esteem and sufficient self-confidence to be flexible and
adaptive in their approach to resolving a nation’s problems. Examples
of this style are Theodore Roosevelt in the USA and Margaret Thatcher
in the UK. By contrast, active-passives perceive power to be burden,
associate it with facing hostility from others and tend to only have an
average or below-average level of personal energy. Active-passives tend
to be inflexible and are often aggressive and petty when working with
others. Their own self-image fluctuates and they do not enjoy having
to work extremely hard to fulfil their responsibilities. Barber proposes
that two US examples of this style are Presidents Herbert Hoover and
Richard Nixon.
Passive-positives have a low self-esteem based on perceptions of being
unlovable and unattractive, but outwardly appear reasonably optimis-
tic. They tend not to have strong personalities, and are dependent on
powerful advisers who can be the dominant influence at a national
or even international policy level. These leaders can be enmeshed in
a scandal or other circumstances that damage their image among the
electorate. Burns proposed that Presidents Calvin Coolidge and Dwight
Eisenhower provide examples of this leadership style. He also suggested
that the nature of the election process, and the huge influence of the
media on public opinion, cause this latter type to be increasingly rare
in modern Western politics.
Skowronek (1997) proposed that, in analysing the capabilities of a
nation’s leader, it is necessary to recognise there are two important
factors of influence. These are whether the leader is affiliated with or
opposed to the political party currently in power and whether this
party is resilient or vulnerable to the changing opinions of the elector-
ate. In his view, a president affiliated with a party in power which cur-
rently enjoys a high level of popularity is in a much stronger position
to achieve fundamental legislative change. Where the leader is not
affiliated with the ruling party, then achieving fundamental change
is significantly more unlikely. America’s President Obama provides an
example of this latter situation. He is affiliated to the Democrats, whose
popularity has declined since his election, and the party does not hold
sufficient seats in the Upper and Lower Houses of the Senate to ensure
that any of Obama’s policies, such as social reform, can be guaranteed

to pass into law.
Skowronek also suggested that, in view of the potential constraints
over political affiliation and a party’s current popularity, a leader wish-
ing to achieve fundamental reform may need to wait until existing
political philosophies have been discredited and there is widespread
social discontent. This situation can provide an environment in which
the leader’s ideas will be easily and more widely accepted. Once reforms
are in progress, the leader should focus on consolidating their position
by forming new coalitions and alliances that provide protection from
competing interests and attempts by opponents to create disruption or
alter public opinion. Successful leaders also need to appreciate that, just
after their election, they have a ‘honeymoon period’ in politics. Beyond
this point the leader will have to spend more time ensuring various
political interests remain satisfied and be prepared to engage in exten-
sive activities to retain the support of grass root supporters, even though
this will seem somewhat trivial compared with leading the nation. An
astute leader recognises that any successor must be genuinely support-
ive of the prevailing reformist process and, once in power, can control
senior party activists and retain the party’s grass root support.
Sustaining an effective leadership image
Case aims: To illustrate the problems a politician may face in seeking to

sustain an image as an effective national leader.
Under the leadership of Tony Blair, the UK Labour Party won an
unprecedented three national elections in a row. Initially, Tony Blair
was perceived by the electorate as new blood and the author of ‘New
Labour’ philosophy which promised economic growth through real-
istic understanding of the benefits of free markets existing alongside
social justice and the welfare state. By the beginning of the party’s
third term, Blair’s image had become somewhat tarnished in relation
to his apparent domination of his cabinet and questions over the
validity of the government’s case for the war in Iraq. He stood down
and was replaced with the very different, rather dour Scotsman,
Gordon Brown (Beech, 2009).
Brown’s public image as a careful, steady-thinking individual was
formed during his years as Chancellor of the Exchequer. This image
was re-enforced in early speeches as the new Prime Minister where
Politicians 65
he communicated that his religious beliefs and commitment to

social equality provided the basis for his moral compass. The first
indication of his possible weakness as a leader came when he decided
against a snap general election. Despite the clear advantage he was
enjoying within the honeymoon period of his new post, apparently
he was nervous about data which indicated the Conservative Party
had a slight lead in the opinion polls. This perceived lack of nerve
and confidence created a negative image among the British electorate
and provided ammunition to the more vocal critics inside his party.
Brown’s next source of damage was the global banking crisis
and subsequent UK recession. Although he attempted to project a
statesman-like image in persuading other governments of the need
for unified action to avert a global financial meltdown, the media
and other political parties focused upon the fact that it was Brown
as Chancellor of the Exchequer who had permitted the deregulation
of the UK banking industry and the creation the Financial Services
Authority. This organisation was thought not to have exhibited the
level of oversight which might have prevented the breakdown of
financial institutions such as Northern Rock and the Royal Bank of
Scotland.
Consumers, worried about the security of their savings and the
possibility of becoming unemployed as economic conditions wors-
ened, no longer perceived Brown as a careful, deep-thinking politi-
cian. His policy of spending millions of pounds from the tax payer
to take over sick financial institutions that had previously been run
by highly paid bankers created the perception amongst the electorate
that the government had little interest in defeating social exclusion
or fighting to protect peoples’ jobs. Brown faced further criticism
during the general election campaign. Questions over his commit-
ment to enhancing public sector services were countered by the
opposition, which pointed out that these improvements had come at
a huge cost to the exchequer and that the huge size of the country’s
public deficit could in part be attributed to Brown’s failure to con-
trol government spending. At a personal level, Brown also suffered
in comparison with the younger, trendier images presented by the
Conservative leader David Cameron and the Liberal Democrat leader
Nick Clegg. Further damage occurred during the campaign when
Brown, not realising his microphone was still on, was overheard
complaining angrily about questions asked of him by an elderly loyal
Labour party supporter.
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4
The Media
Evolution
Accompanying the Industrial Revolution was the launch of the first

magazines and newspapers, which were seen as a socially acceptable
alternative to reading books. As with books, however, the high cost of
these publications and relatively low literacy rates restricted readership
to the upper and middle-classes. In order to obtain information about
news at a national and international level, the rest of society relied on
word-of-mouth and having pamphlets read to them in public places
such as inns and taverns.
It was not until the early 19th century that magazines and news-
papers began to become openly partisan in their support of specific
political parties and the social policies within the manifestos of the
different parties. The rise in literacy levels during the second half of
the 19th century led to the launch of new magazines and newspapers
aimed at attracting working-class readers. In the UK, newspapers known
as ‘penny dreadfuls’ emerged in recognition that bad news and scandal
will always help to sell more copies. These were designed to maximise
circulation by carrying stories of political scandal and misbehaviour
by famous people. The development of penny dreadfuls formed the
basis of what is now known as the ‘mass media’. Declining printing
costs led to a rapid increase in the number of pages in newspapers.
To fill this space, and also to ensure retention of the public’s interest,
editors appointed specialist correspondents, columnists and freelance
reporters – causing news gathering to emerge as significant new source
of employment (Anon., 2003).
One of the first examples of the media influencing the beliefs and
attitudes of an entire nation occurred in the period leading up to the
68
The Media 69
American Civil War. In the North of the country, newspapers focused

on portraying the South as consisting of elegant plantations and obtain-
ing its wealth from slavery. Newspapers in the South presented the
North as consisting of overcrowded cities, with citizens being forced
to work in unhealthy factories and politicians enviously plotting to
acquire, through legislation and taxation, the South’s wealth and assets.
Once the civil war began, the newspapers on both sides portrayed the
other’s armies as engaged in rape, pillage, murder and the mistreatment
of prisoners.
Newspapers similarly presented the enemy as an uncivilised monster
in Europe during World War I. By this time, governments had rec-
ognised the press as a powerful propaganda tool capable of influenc-
ing opinions and stimulating patriotic fervour. Even before war was
declared in 1914, the UK’s Daily Mail under Lord Northcliffe was already
publishing virulent articles that increased anti-German feeling in the
country. The outbreak of hostilities further deepened anti-German
attitudes when newspapers reported on, not always truthfully, German
atrocities. At the end of the war, demands by the newspapers for full
retribution encouraged politicians to believe their nations wanted
Germany to be stripped of all assets and reduced to an impotent agricul-
tural state. These same politicians during the war, fearful of the demor-
alising effect of bad news such as the huge loss of life on the Western
front, and a desire to avoid the ineptitude of the nation’s leadership
becoming widely known, imposed strict censorship to ensure that only
news that the government found acceptable was communicated to the
general population.
The 1920s saw the advent of a totally new form of mass communica-
tion: the radio. This new medium influenced beliefs and attitudes not
just by the way it handled news stories but also through the content
of the entertainment it broadcast. Recognising the potential power of
radio for mass communication, most governments decided to retain
control over the medium by only permitting public broadcasting. In
those countries where dictators came to power, such as Germany, Italy
and Russia, radio was utilised to persuade the general population to sup-
port the espoused values of the country’s single political party. This can
be contrasted with the USA, where ownership of radio stations was per-
mitted to remain in the private sector. Even here, however, presidents
such as Franklin D. Roosevelt recognised the power of radio to influence
and alter social values. He used radio broadcasts from the White House
to gain public support for his New Deal as the most effective route to
economic recovery (Bingham, 2005).
The other influential medium which came to prominence in the 1920s

was the cinema. Although early developments in cinema occurred in
Europe, after World War I America’s Hollywood film studios came to dom-
inate the industry. Via owning or linking closely with film distributors
and cinemas across the world, Hollywood became a critical influence on
an international scale, especially in relation to materialism and lifestyle.
By making films that portrayed the glamour and wealth of some segments
of American society, Hollywood had a major impact, especially on those
living in poverty in poorer countries. Hollywood’s ability to sell the world
the ‘American dream’ influenced people’s aspirations to own certain prod-
ucts such as clothing, cars, electrical appliances and houses. Hollywood
was sufficiently powerful that many Communist countries during the
Cold War banned American films because they were seen to undermine
beliefs in the political ideologies espoused by these countries’ leaders.
After World War II, the next expansion of the mass media came
through the launch of television. As with radio, European countries
usually permitted television only to operate as part of a country’s public
broadcasting system. Also as with radio, in the USA television remained
in the private sector, and was run by the same companies which owned
the majority of the nation’s radio stations (ABC, NBC and CBC). In
terms of the power to influence opinion, television, by communicating
through both sound and vision, made a greater and more rapid impact
than the introduction of either radio or newspapers had done. The
household penetration of television in Western democracies is much
higher than for most radio stations. This, and the trend of declining
newspaper readership, means that television has until recently been the
primary source of information for most of the general public.
The internet is causing another shift in terms of the dominance of
one information provision medium over another. This is because people
engaging in email and online social networking are often exposed to the
news headlines whilst online.
Although television news programmes still attract a reasonably high
number of viewers, there is growing evidence that many people now
acquire information on issues such as politics and a country’s foreign
policy from what is known as the ‘soft media’. These are programmes
that offer various forms of information through commentary, entertain-
ment and coverage of arts and lifestyle. In the USA, an example is the
highly popular Oprah Winfrey show. The soft media tends to present
political issues in a somewhat different form than that of traditional
news programmes. The way political information is provided to peo-
ple can influence their opinions. Hence, it is possible the information
The Media 71
delivery format used in soft news programmes may have greater influ-
ence on public opinion than in-depth, current affairs programmes
which tend to be watched by fewer viewers.
Baum (2002) posited that the socio-demographic variations between
viewers of hard news and soft media mean that politicians need to learn
how to modify their communication style to reach these very different
segments of the population. It could be argued that broadening viewer
types to encompass those who watch the soft media increases a nation’s
overall awareness of national and international events. Commentators
such as Baum are concerned about the quality, diversity and accuracy
of the information delivered via the soft media. He questioned whether
citizens who learn about the world through the lens of entertainment-
orientated soft news media are being provided with sufficient informa-
tion upon which to reach reasoned and appropriate conclusions.
Censorship
A fundamental right often believed to form the basis of true democracy

is ‘freedom of speech’, or possibly more accurately, ‘freedom of expres-
sion’. This view is reflected in statements made by various American
presidents down through the years. President Clinton (1996, p.712)
stated: ‘I believe in religious liberty. I believe in freedom of speech’.
Similarly, President George Bush (2005, p.451) proposed that ‘successful
democracies are built on certain common foundations... First, all suc-
cessful democracies need freedom of speech’.
Freedom of expression is considered to be a fundamental right of
news media, and journalists are at times prepared to risk prison to
defend this right. In commenting upon a review of the potential draw-
backs and risks of controls over press freedom, Shugan (2006) proposed
that censorship:
(1) creates the potential for corruption and a transfer power to those
who censor
(2) can enhance the power of less reliable anonymous information
sources
(3) can inhibit debate and reduce enlightenment
(4) may permit governments to mislead the general public
(5) permits misleading or illegal statements to go unchallenged
(6) increases the need for civil litigation, attorneys and expert wit-
nesses; thereby burdening society’s resources and frustrating private
individuals with limited financial resources to obtain legal redress.
Muzzling the media
Case aims: To illustrate how governments can restrict press freedom to

reduce criticism of their behaviour.
Autocratic regimes are very aware of the power of the media to
influence public opinion, so use strict censorship laws or even take
control of newspapers to avoid being criticised by journalists. This
situation is exemplified in Peru in the 1970s when the armed forces
took over the country and sought to gain popularity for their actions
among the general public. One major newspaper, Expreso, was appro-
priated by the military regime and became a vocal supporter of it.
Expreso’s publisher, Manuel Ulloa, went into exile and one the news-
paper’s leading journalists, Manuel D’Ornellas, was stripped of his
Peruvian citizenship. The country’s other newspapers became very
careful about their content and editorial comment.
In July 1974, the regime’s paramilitary police occupied the offices
of, and took control over, eight more newspapers. Television and
radio stations then experienced the same situation. The justifica-
tion was that the media had been distorting and redirecting public
opinion to support the interests of business and certain politicians.
The management of the media was undertaken by government-
appointed bureaucrats. When a democratically elected civilian regime
returned to power in July 1980, the new President, Fernando Belaunde,
returned the newspapers and the television and radio stations to their
owners. The government also permitted certain journalists with ties
to the previous military regime to establish new newspapers. The
next 10 years were volatile and turbulent, with Peru experiencing
high inflation accompanied by violence, led on one side by the
Communist-inspired terrorists, the Shining Path, and, on the other,
by the military and police attempting to defeat the terrorists. During
this time, a number of journalists died while attempting to report
the acts of violence. One journalist, Eduardo Ayala, disappeared in
1984 after entering a navy infantry base in Huanta, and another
journalist, Hugo Bustios, was murdered by an army death squad in
the same city. Barbara d’Achille was killed by Shining Path guerrillas
and Alejandro Perez died when a Shining Path truck-bomb demol-
ished a studio at Lima’s Channel 2 television station.
The police and military during this period wanted the public to
support overt forms of counter-insurgency activities and accept that
army death squads were a necessary evil in order to defeat the Shining
The Media 73
Path rebels. Some in the media took a somewhat different view, and
continued to investigate human rights violations and corruption on
the grounds that somebody had to fight to retain democracy. After
President Fujimori came to power in 1992 following a coup d’état, t a
few magazines and papers continued to investigate human rights
violations as part of their attempt to create a more democratic system.
Most of the leading newspapers and the Channel 2 and Channel 5
television stations were more supportive of the Fujimori regime and
desisted from covering civil liberty violations. However, two promi-
nent weekly magazines, Caretas and Oiga, were vocal opponents of
the new regime. They were probably only permitted to exist in order
to enable the government to reject international criticism over a lack
of freedom of the press in Peru (Gorriti, 1993).
The power of the media
Governments have long realised that the media is the most powerful
tool available to use propaganda to influence public attitudes or to
retain support for a country’s leader. Within most democracies, the abil-
ity of the media to communicate a single unified message is impaired by
multi-ownership of newspapers and broadcasting stations. This results
in the public accessing diverse sources of information.
The power of the press began to concern politicians when mass cir-
culation newspapers emerged in the second half of the 19th century,
and started to influence public opinion. However, it was only after
World War I that the newspaper industry achieved such social reach and
importance that widespread concerns among governments began to
grow. The key factor influencing this attitude shift was the activities of
‘press barons’ such as Randolph Hurst in America and Lords Beaverbrook
and Rothermere in the UK. Politicians, academics and social observers
became concerned that these press barons were competing by using
social gossip, rumours and celebrity scandals to increase circulation.
Having acquired control of newspapers that reached millions of readers,
the press barons appeared to feel that they had the right to use their
publications as a platform for presenting their personal agendas and
political views. One example was during the 1924 UK general election
when Lord Rothermere’s Daily Mail tried to discredit the Labour Party
by giving huge publicity to ‘the Zinoviev letter’. It publicised a forged
document which the newspaper presented as having been written
by the head of the Communist International, urging revolution by left-

wing activists in Britain.
With the decline in the importance of newspapers in the face of com-
petition from radio and television, the power of the press barons also
decreased. Nevertheless, some individuals still recognise the benefits
of dominating the media and, where appropriate, using owned assets
to communicate personal views about political, social or economic
issues. One of the most powerful of the current media barons is Rupert
Murdoch. Having built up a string of newspapers in Australia, Murdoch’s
News Corporation then moved into other countries in Asia, the USA
and the UK. In the UK he duplicated his Australian growth strategy by
purchasing numerous newspapers. In the US, after initially entering the
newspaper business, he changed direction by moving into television by
creating the Fox Broadcasting Company. Most recently, in order to cre-
ate the largest global media company in the world, he built up a port-
folio of satellite broadcasting companies such as BSkyB in the UK and
acquired Hong Kong company Star TV in Asia. In 2011, revelations of
phone hacking by journalists at a British Murdoch newspaper, the News
of the World, reignited politicians’ concerns that media owners cannot
be trusted to use their power to influence public opinion over important
issues. Hence, there is growing pressure in the UK and possibly elsewhere
to limit the domination of the media by a single company.
The advent of the internet led to the emergence of a ‘new media’.
Journalists, would-be journalists and members of the public soon real-
ised that government legislation and regulations which exist in the
terrestrial world can often be breached or ignored in cyberspace. This
led to individuals posting blogs that ranged from complaining about
poor service when purchasing goods from a major company through
to leaking confidential documents and spreading rumours about the
behaviour of politicians and celebrities (Schiffer, 2006).
A widely publicised use of the internet for keeping the public informed
has been by WikiLeaks, a website which has positioned itself as a
‘non-profit media organisation dedicated to bringing important news
and information to the public’. The operation gained international
prominence when, in 2010, WikiLeaks began publishing 251,287 United
States embassy cables, which represented the largest set of confidential
documents ever to be released into the public domain. These documents
provided people around the world with an unprecedented insight into
the US government’s foreign relations activities. A crucial attribute of
the internet is the speed with which items posted are spread between
individuals who are linked through membership of social networks. One
The Media 75
example is Twitter, a real-time information network that permits users to

instantly write and access 140-character messages via their computers and
mobile phones. Although a significant proportion of total usage is purely
social, Twitter also permits almost instantaneous global communication of
scandals involving people in the public eye. In May 2011, for example, a
Twitter user published details of 13 alleged ‘super injunctions’ which had
been granted by UK courts to protect the privacy of well-known celebrities.
The anonymous user uploaded links to court documents, the names of
those alleged to be involved and even their addresses. Although this infor-
mation was rapidly removed, more than 500 people has already accessed
it and passed it onto others via tweets and social networking. The British
legal system must now determine how to control such activities. It may
be argued that an online site hosted outside the UK cannot be the focus of
any legal proceedings such as being found in contempt of court.
Another aspect of new media is the ability of private citizens to cir-
cumvent the censorship laws which apply to terrestrial media. This
is graphically illustrated in the Middle East, where autocratic regimes
such as Iran and Syria have banned the international media from
entering their countries in an attempt to prevent the world seeing the
scale of repression which exists. However, by using the internet and
their mobile phones, citizens within these countries have been able to
export vivid images that are then used by the media in the rest of the
world. Autocratic regimes are very aware of the damage to their image
that can be caused by new media. Hence, during periods of civil unrest,
they usually attempt to stop electronic information leaking from the
countries by shutting down the internet and mobile phone transmis-
sion systems. These efforts are rarely entirely successful. In addition to
the world’s media remaining aware of the scale of dissent, the citizens of
these oppressive countries also use new media to orchestrate and organ-
ise anti-government demonstrations. A graphic example was provided
in Egypt in 2011, where people used new media to keep each other
informed of planned demonstrations and to warn each other of dangers
emerging from retaliation by the police or the military.
Media behaviour
Case Aims: To illustrate how the media decide to adopt a position that is
not necessarily based upon the facts of the situation.
The interaction between the media and the public is not a one-way
process. As illustrated in Figure 4.1, both parties’ behaviour directly
influences the other, as well as indirectly through interaction with

societal infrastructure such as parliament and PSOs. This three-way
interaction was illustrated after the death of Diana, Princess of Wales,
in a Paris car accident in 1997. Following news of her death, certain
newspapers assumed a role as speaking on behalf of the general pub-
lic, and criticised the royal family for not expressing their grief over
the woman who was previously married to their Prince Charles, the
Prince of Wales. For example, some in the media claimed the public
was upset about the failure of the Queen to speak to the nation. In
reality, however, media claims about the mood of the people was
merely an interpretation by the journalists concerned because no
polls were commissioned to ascertain the true feelings of the public
in the days following the princess’ death. America’s ABC News did
commission a poll, the results of which were supplied to the British
media. Yet there was virtually no coverage of these data in the British
press.
It took five days for the royal family to respond to mounting pub-
lic pressure to demonstrate their sympathy. On the Friday afternoon
the Duke of Edinburgh, the Prince of Wales and his two sons visited
the mounting floral tributes in the streets and that evening the
Queen delivered a personal message to the nation. The media sought
out people who knew Diana to obtain positive quotes about her per-
sonality and life. In contrast, requests to respect the royal family’s
privacy seemed to be ignored by the media. Furthermore, individu-
als often found that any invitation from the media to comment was
withdrawn when it was found that these individuals thought the
royals’ behaviour defensible or that they were prepared to comment
upon their perceptions of flaws in Diana’s personality. At no time,
for example, did any of the major commentators raise the possibility
that the Queen was protecting her grandchildren from the glare of
the media while they were grieving and recovering from the shock
of their mother’s sudden and tragic death.
The coverage of Diana’s death was one of the world’s largest live
broadcast events. Media coverage was heavily focused on apportion-
ing blame, the royal family’s reactions, and apparent overwhelming
tide of national emotion and collective grief. Furthermore, in the
days after the funeral some of the popular press seemed to be pri-
marily interested in publicising the claims of Mohamed Al-Fayed
that Diana and his son Dodi were killed in a crash organised by MI6
acting on the instructions of the Duke of Edinburgh (Worcester,
1997a, b).
The Media 77
SOCIETAL INFRASTRUCTURE
Government, PSOs, Judicial system
THE GENERAL
THE MEDIA
PUBLIC
Figure 4.1 System interactions
Influence over society
Eckersley (1993) expressed the view that the media is the most powerful
determinant of a nation’s culture. In his opinion, it is not in a nation’s
best interest to permit the media to continue to operate without
attempting to self-impose any real degree of moral standards. Eckersley
believed that it is a major concern that today’s media are:
(1) failing to project a coherent and consistent view of the world

(2) dividing, rather than uniting, society and, at the extreme, are stimu-
lating public debate on the basis of conflict rather than seeking
consensus
(3) heightening peoples’ anxieties by depicting the world outside
one’s own personal experience as one of turmoil, exploitation and
violence
(4) fuelling social dissatisfaction by promoting a superficial, materialis-
tic, self-centred and self-indulgent lifestyle well beyond the reach of
the average citizen
(5) eroding self-worth by promoting a sense of inadequacy through
images of others whose lives are more powerful, more beautiful,
more successful and more exciting.
Langman (2002) argued that an example of adverse impact on social

values in the USA is the tabloid press, such as the National Enquirer,
printing articles about people being kidnapped by aliens, fad diets,
political sleaze and unsubstantiated rumours about the private lives of
celebrities. In his view, the tabloids’ own defence that they have allowed
ordinary folks to find out about the failings of the rich and famous is
an inadequate justification for articles based upon innuendo and sexual
titillation. Langman further posited that the decline in the standards of
print journalism has been accompanied by a decline in the standards
of broadcast media. He pointed to the increasing popularity of the talk
show format in which three or four people are involved in some kind of
non-standard sexual behaviour, such as a father, mother and son each
having an affair with the same bisexual woman. The guests will call
each other vulgar names and may attack each other, sometimes ripping
their clothes.
Accompanying these apparently declining moral standards in the
media are new approaches to support the status of individuals as celeb-
rities. It is common for celebrities in the professional sports and the
entertainment industries to become better known for revelations about
their sex life, affairs, addictions, diets, personality quirks or temperament
than for any accomplishment in their field of endeavour (Mitroff and
Bennis, 1989). Langman contrasted this with earlier times in Western
society when the Protestant ethic caused more people to believe in
hard work, piety, justice and high moral values. In his view, the decline
in support for the Protestant ethic occurred after World War II when
economic prosperity, the growth of the popular entertainment indus-
try, advertising and consumerism supported the emergence of a media
industry focused upon communicating an imagery based around mass
consumption. In some Western countries, this shift was accompanied by
the growing secularisation of society. Langman argued that, in a secular
world which extols sexuality and material success, it is almost impossible
for parents to successfully retain a belief in high moral values or to instil
these values in their children.
Norberg-Hodge (1999) posited that a worrying aspect of globalisation
has been the mass media dissemination of the cultural values associated
with Western-style consumerism to the rest the world. In her opinion,
this has been possible because modern media corporations have a
virtual monopoly over the communications industry. For example, in
1999 Time-Warner was the world’s largest media corporation, estimated
to be worth $25 billion. In second place, Disney Corporation was worth
$24 billion. Over the previous decade, nine multinational conglomer-
ates had acquired over 200 British newspapers, with total circulation in
excess of 46 million.
Chan and Zhang (2007) identified the impact of the globalisation of
the media on young people in modern China. They noted that social
The Media 79
comparison and imitation of celebrities is influencing material values.

This can lead to a negation of the moral influence that comes from the
social learning provided by parents, other family members and teach-
ers. Under the previous, stricter, version of Communist rule, the media
informed Chinese consumers that a desire for goods such as cars and
wearing fashion products was a manifestation of decadent bourgeois influ-
ences. In today’s China, the media now communicates a message that
possessions bring success and happiness, that it is acceptable to be envious
of others with more possessions, and that striving to acquire possessions is
now acceptable as an activity occupying a central position in one’s life.
Norberg-Hodge noted that many large media companies are owned
by a small number of huge transnational corporations, which in turn
are owned by certain wealthy individuals. The senior managers of these
parent corporations expect the management of their subsidiary media
companies to ensure that no adverse criticism is published or broadcast
about either the parent company or their owners. An added constraint
is that the commercial media is reliant upon retaining the loyalty and
support of the major companies that purchase advertising space and
airtime. Hence, editors are forced to carefully curb their journalists in
order to avoid offending major advertisers and risk losing vital advertis-
ing revenues.
Another problem is the preference of governments for receiving
positive media coverage. Politicians and their advisors are acutely aware
that media organisations want to be first with the latest news and, if
possible, to ‘scoop’ the opposition. There is an incentive for editors and
reporters to adopt a neutral, non-controversial approach to reporting
political events, to avoid losing access to leading politicians. The risk of
becoming more critical or making negative assessments of politicians’
decisions is that sources inside government suddenly become unavail-
able and the competition is able to be first in reporting the latest politi-
cal outcome or government decision (Bourdieu, 1998).
Following their review of the coverage of international events by
Norwegian newspapers, Galtung and Ruge (1965) proposed twelve
values that should be used by the media when deciding the content of
articles or broadcasts. These values were frequency, threshold, unambi-
guity, meaningfulness, consonance, unexpectedness, continuity, com-
position, reference to elite nations, reference to elite people, reference to
persons and reference to something negative. Upon revisiting Galtung
and Ruge’s earlier study, Harcup and O’Neill (2001) presented their 10
revised values: power elite, celebrity, entertainment, surprise, bad news,
good news, magnitude, relevance, follow-up and newspaper agenda.
Shoemaker et al. (1991) evolved a simpler values model, suggesting

that newsworthiness could be assessed in relation to two main con-
cepts: deviance and social significance. Deviance refers to news events
that are unusual, threaten the status quo or breach social norms. Social
significance refers to events perceived to be important in a society. This
attribute has four dimensions: political, economic, cultural and public.
Lee (2009) proposed that the perceived news value of a story will
directly influence the level of media coverage. This in turn will deter-
mine audience awareness and attention. The story’s news value and
amount of media coverage will indirectly influence audience percep-
tions about the importance of the news story. His study of journalists’
behaviour confirmed that their perception of the value contained
within a news story assists in determining the amount of coverage an
event will receive. The research also confirmed the importance which
the media attaches to a story by using its level of coverage to suggest
to the general public which stories should receive greatest attention
and hence be of interest the population. Lee concluded that media
organisations decide which stories they wish the public to be most
interested in.
By drawing upon Shoemaker et al.’s conceptual dimensions of devi-
ance and social significance, Lee also showed that these factors can be
used to predicate the level of attention that a news story will generate
among the general public. Furthermore, journalists often rely on the
dimensions of deviance and social significance when deciding the level
of coverage that should be given to a specific news event. Lee was also
able to confirm that the public has the ability to use deviance and
social significance to determine the amount of attention they should
pay to a news story. This seems to suggest that some members of the
public are able to filter, amplify and interpret the flow of information
about a news story; thereby rendering themselves somewhat insulated
from the activities of the media. For this to occur, it seems probable
that learning from prior real-world experiences and from non-media
interpersonal communication sources enhances the degree of critical
assessment which people utilise when accessing the print or broadcast
media.
Public sector impact
News stories revealing wrongdoings by large organisations, especially

those in the public sector, are recognised by the media as being of
high interest to the general public. Governments, even in Western
The Media 81
democracies, have a natural inclination towards avoiding releasing

information which can result in criticism. Even where wrongdoing is
known to have occurred, governments tend to divert accusations of
blame via actions such as instigating a public enquiry that is limited
in scope or lacks adequate powers of investigation. An alternative solu-
tion is to identify an appropriate scapegoat who is required to resign
(McConnell, 2008). The problem with politicians or public officials ‘fall-
ing on their sword’ is that this can defuse criticism and divert attention
away from the probable real causes of the scandal or the fundamental
problems that still exist within the troubled organisation. Furthermore,
attempts by a private citizen to facilitate restitution for wrongdoing
by a PSO are often defeated because the individual lacks the financial
resources to obtain a court ruling to gain access to required information
(Capelos and Wurzer, 2009).
Fortunately, news stories revealing wrongdoing by large organisa-
tions, especially those in the public sector, are recognised by the media
as being of high interest to the general public. Hence, in democracies
the media plays a vital role in assisting the private citizen in exercis-
ing their democratic rights by publicising wrongdoings. This often
causes the PSO in question to release information, apologise, revise
its service provision procedures or even agree to pay compensation to
the injured party (Paterson, 1997). Even in countries where corruption
scandals do not result in legal actions against the miscreant individuals
or PSO, media reports can still have an important role in keeping the
general public informed. In Ukraine, for example, the public’s sources of
information about wrongdoings were 66.6 per cent received from televi-
sion, 49.4 per cent received from newspapers and 27.5 per cent received
from the radio (Belkova and Hanousek, 2004).
The willingness of reporters to reveal corruption and political wrong-
doing in some countries requires a high degree of personal courage
because the authorities or another organisation (such as organised crimi-
nals who participate in the corruption) often retaliate by murdering the
reporter. For example, the journalist Anna Politkovskaya, famous for her
revelations about corruption in Russia, was assassinated in Moscow in
2006. The risk of assassination can become so high that reporters are
forced to flee their countries in order to save their own lives and those
of their families. This is the case in Mexico, where journalists are targeted
for revealing the level of corruption which exists between the drug car-
tels and members of the armed forces, the police and the judiciary.
The willingness of the media to publicise both wrongdoings and the
nature of different types of socially unacceptable behaviour among
politicians or by PSOs varies over time (Summers, 2000). In the early

19th century, for example, American cultural values resulted in close
media scrutiny of the sexual behaviour of politicians and major pub-
lic office holders. This reflected voter’s concerns about ensuring such
individuals were ‘men of virtue’. By the beginning of the 20th century,
however, American media revelations about sexual scandals involving
prominent elected officials had virtually disappeared. As a consequence,
although the media were aware of the questionable moral standards of
presidents such as Warren Harding and John F. Kennedy, these matters
were not brought to the attention of the general public. More recently,
media self-censorship have changed, as demonstrated by the wide
coverage given to the activities of President Clinton and the Monica
Lewinsky affair.
The nature of the scandals that the media choose to publicise also
varies between countries. For example, the UK media is always willing
to focus on the sexual proclivities of people in the public spotlight. By
contrast, until recently similar events in France and Italy have tended
to receive minimal coverage and may not be reported at all. These
differences reflect the fact that there has been a tendency in certain
European countries for the public to accept that public officials engage
in morally questionable behaviour but are uninterested in such matters
receiving extensive coverage by the media (Wolfrey, 2001). In many
Western nations, the combined influence of changes to their respective
Freedom of Information Acts, the willingness of public sector officials
to leak documents and the ability of reporters to use methods such as
accessing, sometimes illegally, PSO electronic databases, have in recent
years combined to make the public both more aware and significantly
less trusting of their politicians and PSOs (Rahn, 2000). The conse-
quence is that PSOs that claim to be ensuring that limited resources
are being directed towards sustaining frontline services may encounter
greater public scepticism. PSOs that genuinely want to ensure that
their primary concern remains serving the general public will need to
demonstrate their sincerity through factors such as speed of response,
quality of service, immediately admitting to mistakes and being totally
open about where and how cutbacks have required revisions in their
service provision portfolio.
In a world of shrinking public sector resources, the media clearly has
a key role to play in bringing identified failings in the performance of
PSOs due to poor management or illegal activities to the attention of
the public, regulatory bodies and the government. This role, however,
can only be totally effective if the media is less selective about what
The Media 83
is reported and exhibits less bias in the way facts are presented to the
general public. Scandals are appealing because they offer an extremely
effective way of increasing ratings for broadcasters and circulation for
newspapers. The problem, however, is a tendency amongst some media
owners to present the details of a scandal in a way that reflects their pre-
vailing political bias. The need of the audience or readership, coupled
with political bias, can result in a scandal being incorrectly reported
because the quality of news coverage can suffer from one or more of the
following problems (Tiffen, 2004).
(1) Inaccuracy: one or more important facts are either wrong or inten-
tionally omitted.
(2) Selectivity: a news organisation may exhibit excessive zeal and
outrage based on internal perspectives about the PSO being inves-
tigated.
(3) Disproportional: the scandal is given much more coverage than it
actually deserves relative to other news stories.
(4) Misrepresentation: reporters’ interpretations of events either misrep-
resent the views actually expressed by participants who are involved
in, or affected by, the scandal or views presented in the media criti-
cise certain participants relative to others.
(5) Generalised insinuations that mislead the general public into think-
ing that the scandal is greater or more widespread than is actually
the case.
Headline opportunities
Case aims: To illustrate the role of the media in bringing to wider attention
public sector wrongdoings or mistakes.
Healthcare is an area of the public sector which has received intense
scrutiny from the media over the years. It would seem that, even in
the most democratic nations, new scandals are unearthed on a regular
basis. In some cases, these scandals appear to be the result of corrupt
collaboration between the pharmaceutical industry and the public
sector. One example occurred in France in respect of the weight loss
drug, Mediator. Launched in 1976, the drug was widely prescribed to
overweight people with diabetes and as an appetite suppressant for
healthy women trying to remain slim. Despite widespread reports
of the drug’s association with heart problems, over 5 million French
people have used Mediator. Even though it was banned in the USA,
Spain, Italy and the UK, Mediator was not banned in France until
2009, some 30 years after initial market entry. To a large degree this
somewhat belated action by the French government was the result
of ongoing pressure from the media about the dangers which had
been widely known among the medical profession for a significant
time (Chrisafis, 2010).
A factor that has led to healthcare scandals is that population
ageing and advances in medical technology mean the public sector
faces increasing costs which, even without government cutbacks,
is resulting in providers facing severe difficulties sustaining an
adequate quality of care. As a consequence, the sector provides a rich
source of stories for a media seeking out new scandals and wishing
to be perceived as acting as the guardians of society. In the USA in
2007, the Washington Postt published a series of articles describing
the neglect of patients at the Walter Reed Hospital in Washington.
This was reported to the newspaper by wounded soldiers and their
families. The first article focused primarily on Building 18, a former
hotel just outside the Washington Post’s main gates. However, cover-
age was also given to matters such as disengaged clerks, unqualified
platoon sergeants and overworked managers. This situation meant
that wounded soldiers returning from overseas often received inad-
equate or inappropriate medical care as a result of the complicated
bureaucracy (Priest and Hull, 2007).
In the UK, patients and their families were unable to obtain any
positive outcomes when expressing their individual concerns about
the quality of care at Mid Staffordshire NHS Foundation Trust hos-
pitals. It was only after the media began to highlight the public’s
concern that the government forced to initiate the Francis Inquiry.
This revealed a series of systematic failings in healthcare which rou-
tinely left patients neglected, humiliated and in pain as the Trust
focused on cutting costs and hitting government targets (Alghrani
et al., 2010).
One of the richest veins of opportunity for the media to bring
another public sector scandal to the attention of the public is that
of police corruption and misconduct (Tiffen, 2004). Corruption is
the term usually applied when the police involved achieve some
form of material gain from their activities. Misconduct is related to
a violation of defined organisational standards of behaviour or if
behaviour results in the law being broken. Procedural misconduct
occurs when the police violate their own departmental rules and
The Media 85
regulations. Misconduct becomes criminal when police violate a

nation’s criminal laws. Conduct becomes unconstitutional when
the police violate a citizen’s constitutional rights. Examples of mis-
conduct include excessive physical or deadly force, discriminatory
arrest, physical or verbal harassment and selective enforcement of
the law.
Extreme misconduct was graphically illustrated in 1991, when four
Los Angeles Police Department (LAPD) officers were filmed beating
Rodney King after a high-speed traffic chase. The video aired by local
and national television stations showed a black man being beaten
by white officers and sparked widespread rioting and civil unrest
in Los Angeles and across the USA. Further riots ensued after the
officers were acquitted in California State Court. In recognition of
the need for justice to be seen to be done, the four officers were then
tried in federal court for depriving King of his constitutional rights.
Two of the officers were found guilty.
Corruption and misconduct by the police, which occur in vary-
ing degrees at different times and in different countries, provide the
media with a regular source of news stories. Often when a scandal
breaks, senior police officers or politicians respond that these are the
activities of ‘a few bad apples’ and should not be interpreted as a sys-
temic failing within the entire police force. Unfortunately, the avail-
able research tends to indicate that, in most cases, the events reflect
the influence of a prevailing culture, not just the activities of a few
out-of-control officers (Marche, 2009). An occupational culture, to a
certain degree, occurs as an outcome of the nature of police work.
The need for secrecy and, at times, unaccountable power, provides
a potential breeding ground for corruption. In addition, the inher-
ent difficulties of policing, such as the need in both intelligence and
enforcement to involve dealing with characters operating on the
fringes of respectability or even beyond the law, presents opportuni-
ties and temptations to which the rest of the population is never
usually subjected. The police are expected to remain honest despite
their exposure to the huge wealth accrued by criminals, the values
exhibited by the criminals with whom they are required to associate,
and the need for restraint when facing violence or life-threatening
dangers (Finnane, 1994).
Public perception of the scale and seriousness of police misconduct
or corruption is probably greater than actual incidence levels. To a
certain degree, this reflects the predilection of the entertainment
industry to focus on corrupt police as a core element of many film

and television crime dramas. An even more important influence of
perceptions is the nature of attention crime and police activities
receives in the media, which gives special attention to murder or
sexual depravity. This is because the media know these will provoke
attention and outrage among the general public. Another influenc-
ing factor is the media covering the apparent inability of the police
to bring to justice cases such as white collar fraud. This can give the
impression that the police are in some way unable or unwilling to
bring the perpetrators to justice. Another favourite topic of the media
is where the crime appears associated with political controversy. For
example, while the Labour Party was in power, some newspapers in
the UK gave intensive coverage to ‘money for votes’ and donations
which appeared linked to the subsequent election of these donors
to the House of Lords. These court cases provided a steady source of
news stories. The media rarely reported on the evidence and cross-
examination that took place on a day-to-day basis during the actual
trials. Instead, they preferred to use interviews with key witnesses,
the arresting officer or the defendant’s legal representatives only
after the court announced whether individuals were found guilty or
not guilty.
News coverage of a scandal involving the public sector over a long
period of time is unlikely to remain completely coherent, consistent
or sustained in such a comprehensive manner that all the facts are
made widely known. This reality has long been acknowledged by
reporters. The values of the public will cause certain scandals to be of
more interest than others. Furthermore, societal values undergoing
significant change will be reflected in the level of coverage given to
a public sector scandal.
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5
Leadership
Difficult times
Life for everybody working for large organisations has been made more
difficult by a need to sustain performance in the face of a rapidly chang-
ing, increasingly volatile and unpredictable world. It is not unusual
for an effective strategic response to new external threats to require
significant changes in employee responsibilities, accompanied by revi-
sions in organisational structure. Nohria and Berkley (1994) observed
that the world is no longer constituted of stable, unitary organisations
built upon rules, procedures and norms with leaders who are able to
be rational, universalistic thinkers. Many organisations are now more
unstable, facing greater uncertainty and are required to respond rapidly
to changing circumstances.
Since the introduction of NPM, staff within many PSOs have continu-
ally been forced to revise operational processes in response to new gov-
ernment reforms which are promised to result in higher quality and more
cost effective service provision. Over the years, governments and their
senior advisors have promoted the introduction of whole series of differ-
ent techniques, many originally developed in the private sector. Examples
of techniques which governments believe will drive successful public
sector reform include business process re-engineering, process mapping,
lean thinking and benchmarking. Additionally, even before the public
deficit crisis arose, demands for higher service output were accompanied
by governments introducing key performance indicators and closer
oversight by means of new external audit systems. Pedersen and Hartley
(2008) concluded that these fundamental changes mean that most PSOs
often have to deliver clearly defined performance targets with inadequate
resources. As a consequence, these organisations are increasingly placed
89
into a ‘no-win’ situation. Whatever their best intentions for optimising

ongoing service provision, these organisations can expect adverse reac-
tion and criticism from influential stakeholder groups.
Ongoing reductions in government funding are leading to more policy
tensions inside PSOs as staff attempt to fulfil their assigned tasks with
access to fewer resources. Furthermore, even though resources have been
reduced, staff are still expected to meet ambiguous and sometimes out-
moded performance targets which may have been defined by politicians
long before the current actions to reduce the scale of national debt. Long
before the focus on national austerity, politicians claimed that PSOs
have been granted greater autonomy over decision-making and in the
self-determination of strategic priorities. However, when the media are
highly vocal about announced service cutbacks, politicians tend to inter-
vene by taking back partial control of activities or ordering the reinstitu-
tion of recently terminated service provision. In such cases, politicians
may try to deny that budget reductions are the cause of service cutbacks.
Instead, to divert criticisms from their policies, politicians may suggest
their actions have been caused by PSOs failing to implement effective
actions that could lead to better efficiency, productivity, user satisfaction,
responsiveness and quality standards. As a consequence, staff within
affected PSOs are forced to continue to fulfil their roles whilst knowing
that external claims of organisational incompetence are unjustified. The
only hope of these staff is that over time the level of media attention will
decline as politicians turn their attention to another area of the public
sector which has become the latest target of media criticism.
Even where there has been no intervention by politicians, there often
remains the problems of influential stakeholder groups inside or outside
the organisation who feel they have been unfairly treated by decisions
relating to cuts in service provision or internal organisational changes.
In theory, many PSOs have been granted autonomous authority over
resource allocation decisions. However, influential stakeholders are
often able to force the organisation to refer matters to some higher
level within the public sector bureaucracy. Where this occurs, the PSO
is no longer able to operate within a clearly defined set of autonomous
responsibilities. Instead, it is forced to navigate through an ill-defined
network-like structure to identify who exactly holds ultimate responsi-
bility for approving key decisions. This leads to internal organisational
uncertainty because the PSO cannot foresee how politicians or senior
civil servants may react when pressured by an influential stakeholder
group whose proposal, if approved, would disadvantage other stake-
holders both inside and outside the organisation (Chaston, 2011).
Leadership 91
Leadership
The performance of organisations is heavily influenced by the effective-

ness of the individuals appointed to lead them. Furthermore, even when
other factors have been recognised as major influencers in determining
the success or failure of an organisation (such as intransigent behaviour
by a militant trade union), there is still a tendency by observers, critics
and especially the media to ignore these variables. Instead, they prefer
to attribute blame for poor performance on whoever is currently leading
the organisation (Meindl and Ehrlich, 1987).
Given the increasing external and internal pressures facing PSOs as a
result of funding cutbacks, huge pressures are being placed upon leaders
in the public sector. Possibly these are even greater than those facing
their counterparts in the private sector. When identifying manage-
ment theories that can provide PSO leaders with appropriate guidance
on how to fulfil their role, despite years of research, leadership theory
attracts numerous different and often conflicting viewpoints. This is
exemplified by Bass (2007, p.16) who commented that:
there are almost as many different definitions of leadership as there are

persons who have attempted to define the concept… the meaning of
leadership may depend on the kind of institution in which it is found.
Despite these differences in the definition of role and responsibility,

writing on the subject usually presents a concept of leadership as differ-
ent to managing (Kotter, 2007). Managers are engaged in implementing
actions, allocating resources and monitoring the results of day-to-day
operations. In contrast, leaders are engaged in visioning, defining strate-
gies and inspiring employees to accept and deliver organisational goals.
This view of the leadership role appears to be widely accepted within
the literature. One example is provided by Stephen Covey, who distilled
his views and experiences into a model entitled the Seven Habits of
Highly Effective People (Covey and Gulledge, 1992; Carlone, 2001). He
proposed seven leadership roles:
(1) Initiation and ongoing attention to mission, vision, values and

principles.
(2) Prompting early involvement of others in defining and implement-
ing actions.
(3) Encouraging widespread feedback and dialogue within the
organisation.
(4) Delivering timely communications to the entire workforce about

what is going within the organisation.
(5) Allocating sufficient time for new decisions to be implemented and
avoiding ‘knee-jerk’ reactions when the organisation faces criti-
cism from influential stakeholders early in the introduction of new
organisational processes.
(6) Exhibiting commitment and leading by example.
(7) Encouraging individual departments to develop their own interpre-
tation of the organisation’s overall mission statement, whilst ensur-
ing these remain compatible with the overall aims and purpose of
the organisation.
During the early years of the Industrial Revolution, leadership style was
based upon a power and control model in which employees fulfilled
management’s instructions or risked being fired. The advent of political
and social change accompanying the evolution of democratic societies
rendered the completely autocratic leadership model as ineffective when
managing the modern organisation. To be effective, leaders must be able
to motivate and inspire the workforce, which can only be achieved when
employees believe the behaviour of the leadership to be a true reflection
of the real values and beliefs of these individuals.
In the public sector, leaders tend to use the rhetoric of empower-
ment, equality and participation as the way to embed a culture into the
organisation as the most effective approach for managing in a world
of scarce resources (Kim, 2002). Unfortunately, the experience of many
employees is that the actual policies and procedures instigated by the
organisation’s leadership are not reflective of their articulated desires to
create a more participative and empowered organisational culture. The
dissonance between articulated claims and actual leadership behaviour
inevitably leads to employees becoming cynical about the real values
and beliefs of the organisation’s leadership (Fleming and Spicer, 2003).
Unless leaders begin to exhibit more appropriate behaviour or are
replaced by individuals whose espoused values are perceived to be genu-
ine, then eventually employee cynicism will become deeply embedded
into the organisation (Byrne and Hochwarter, 2008). The consequence
is that employees will view their leaders’ behaviour as manipulative,
designed principally to serve their own self-interests. Once cynicism has
become the prevalent perspective of the majority of employees, there
will be an accompanying lowering of morale and a decline in employees’
commitment to effectively fulfilling their job roles (Eisenberger et al.,
1990).
Leadership 93
Ineffective leadership
Case aims: To illustrate how personal values can make leaders unable to
fulfil their assigned responsibilities.
The Harvard professor, Barbara Kellerman (2005, 2004), proposed
that the values held by different individuals can result in the follow-
ing types of bad leadership:
(1) Incompetence reflected by the leader lacking the skills, willingness

and ability to make effective decisions.
(2) Rigidity reflected by the leader being competent but unable to
accept new ideas or proposals to change future activities.
(3) Impatience reflected by the leader expressing anger or emotions
which do not achieve desired outcomes but merely make life for
employees both unbearable and unpredictable.
(4) Callousness reflected by the leader ignoring the needs, wants and
wishes of others.
(5) Insularity reflected by the leader ignoring everybody except the
close group with whom they work on a day-to-day basis.
(6) Corruption reflected by the leader’s willingness to lie, cheat and
steal to achieve an objective.
(7) Evilness reflected by a psychopathic leader being willing to con-
sider any possible action to achieve an objective without any
regard to prevailing society values and morals.
Dotlitch and Cairo (2003) posit that behavioural flaws which may
not have been apparent in the past often begin to emerge when the
leader is placed under exceptional stress. They identified the follow-
ing values which can become apparent in a leader who feels unable
to cope in the face of increasing pressures from either within or
outside the organisation:
Arrogance reflected by the leader deciding everybody else must be

wrong.
Melodrama reflected by the leader needing to be the centre of
attention.
Volatilityy reflected by the leader exhibiting extreme mood
swings.
Excessive caution reflected by the leader being unable or afraid to
make a decision.
Distrustt reflected by the leader believing that others are out to get
them.
Aloofness reflected by the leader exhibiting impersonal, cold
behaviour.
Childishness reflected by the leader deciding that, in their case,
rules can be ignored.
Eccentricityy reflected by the leader behaving differently just to
annoy others.
Passiveness reflected by the leader never revealing what they really
think.
Perfectionism reflected by the leader’s excessive emphasis on trivial
issues.
Self-imagingg reflected by the leader placing popularity above every-
thing else.
Leadership style
With Western corporations needing to implement fundamental stra-

tegic changes in the face of increasing competition from Pacific Rim
countries, Burns (1978) rejected the idea that managerial process, which
he labelled as ‘transactional leadership’, should inevitably impose
decisions on the workforce without seeking their input over systems
most likely to optimise organisational productivity. In his view, effec-
tive leaders understand the need for interaction and a collaborative
approach in seeking to deliver organisational performance goals. Burns
entitled this approach ‘transformational leadership’. It is exhibited by
individuals whose values include integrity, placing organisational suc-
cess ahead of personal career aspirations and a commitment to support-
ing and encouraging the best from others.
Bass (1988) expressed a slightly different perspective about the nature
of transformational leaders being concerned about the needs of oth-
ers. In his view, it is the example set by their own behaviour which
permits the really effective leader to cause staff to transcend their own
self-interests for the sake of the larger group or organisation. As such,
Bass presents a somewhat narrower perspective concerning the moral
foundation associated with transformational leaders. Nevertheless, he
concludes that usually a leader will be unable to sustain the support of
their workforce unless employees can be convinced that integrity and
commitment to others are genuine, not merely a façade designed to
Leadership 95
ensure the organisation’s performance goals and to promote the leader

to an even more senior position.
Burns posited that there are three important leadership values: ethi-
cal, modal and end. Ethical values are character tests such as sobriety,
chastity, abstention, kindness, altruism and other rules of personal
conduct expected of the leader by society. Modal values are attributes
such as integrity, honesty and accountability. These tend to be shared
by all effective leaders and are not just confined to those exhibiting a
transformational management style. End values cover issues such as
liberty, equality, justice and community. In Burns’ opinion, end values
are the core attributes of transformational leadership and reflect the
individual’s wider view of their contribution to society in seeking fun-
damental changes to improve the lives of all, enhance individual liberty
and expand justice to ensure equality of opportunity.
As leaders must take on greater responsibility, and interact with a
large number of people, they should carefully consider the opportuni-
ties available to exercise their personal ethical values. Events such as
the collapse of the US energy company Enron, and the questionable
behaviour of certain bankers which contributed to the global financial
crisis, raise questions about the moral values of some leaders of large
organisations. Sison (2003) concluded that leadership failure reflects
in part a moral failure of leadership, which will eventually cause an
organisation to collapse.
One of the pressures confronting leaders is an apparent expectation
in the literature and amongst many employees that leaders should have
higher moral standards than the rest of society. But leaders are also
human beings. Hence, although employees and stakeholders might
expect leaders to exhibit a high standard of moral behaviour, this
should not extend to demanding moral perfection from them. Palmer
(2009) suggested that a more appropriate expectation is to require lead-
ers to be ‘authentic.’ Their behaviour will be based upon genuinely
seeking support and consensus from everybody within the organisation.
This is achieved by developing effective relationships with employees
and gaining acceptance for shared strategic goals and reforming organi-
sational processes. This can be contrasted with inauthentic leaders,
who are not genuinely concerned about others but are willing to use
whatever manipulative techniques are available to persuade others of
the apparent credibility of their proposals for the organisation.
Burns used the term ‘transactional leadership’ to describe the style
of individuals who favour more structured organisations accompanied
by the use of rigid policies and rules to manage employee performance.
The major drawback of this style is that the behaviour of the leader
causes the organisation for which they are responsible to be inflexible
and unable to respond to change; which decreases the capability of the
organisation to perform effectively in a volatile and uncertain world. At
the extreme, organisations led by completely ineffective transactional-
ists are prone to failure or will begin to be unable to meet the needs of
those to whom services are being provided.
An established feature of PSOs is the long tenure enjoyed by sen-
ior managers and their ability to survive even after making the most
disastrous strategic errors. With the advent of NPM, greater focus has
been placed on the need to upgrade the senior management capability
within many PSOs. This caused both academics and government advi-
sors to propose replacing incumbents who were perceived as exhibiting
a highly transactional style with transformational leaders. Researchers
such as Denhardt and Campbell (2006) posited that the values of trans-
formational leaders are necessary to create a more efficient and effective
public service capable of responding to an ongoing decline in financial
resources. These authors consider there to be a strong justification for
accepting that PSOs engaged in responding to more difficult and chal-
lenging changing times will only succeed with the appointment of a
transformational leader.
Olsen (2009) posited that a move towards transformational leadership
in the public sector is necessary because decisions made by leaders affect
both their own employees and also the nature of the services made
available to the general public. His view was that, by expanding con-
sideration of leaders’ performance to include the impact on society as
a whole, the concept of transformational leaders becomes linked to the
concept of democracy and the transformation of society through greater
community involvement. He supports his argument by suggesting that
central to the concept of the benefits delivered by transformation PSO
leaders is that this type of individual has the necessary personal values
to ensure delivery of fundamental changes in society, enhancing civil
liberties and achieving equality of opportunity for all. Denhardt and
Campbell also believed that the appointment of transformational lead-
ers will have a critical influence on ensuring PSOs will seek to act with
integrity and effectiveness in the face of increasing resource constraints.
This should achieve the goals of sustaining employee motivation while
being perceived as acting in the best interests of a nation’s citizens.
In order to be effective in today’s organisations, a leader usually
needs to motivate and inspire the workforce by exhibiting an orien-
tation towards promoting participative decision making across the
Leadership 97
organisation (Kim, 2002). Nevertheless, there will be occasions when it

is necessary for a leader to act autocratically, to impose their decisions
on others and mandate the actions required of all staff. This scenario
may arise when the PSO is facing a massive financial crisis and requires
immediate action in order to avoid a major decline in the provision of
services or, in some situations, to avert closure of the operation.
The traditional Weberian model of bureaucracy is of organisations con-
taining a hierarchy of authority, impersonal rules to define tasks, stand-
ardised procedures and personal advancement based upon time served
and level of educational qualifications. Although the model has served
the public sector well in the past, it has long been recognised that lead-
ers in such organisations can become too heavily reliant upon the use of
rules and rigid control over the behaviour of employees when managing
internal processes and providing services to customers. Unfortunately,
individuals whose career path has only involved employment in highly
bureaucratic organisations often tend to develop values based upon a
belief in their own infallibility, never openly contradicting their supe-
riors and employees and, when left to their own devices, putting the
minimal level of effort into fulfilling their assigned job roles.
The most extreme examples of leaders exhibiting such values tend
to be most commonly found in those areas of the public sector with a
need for hierarchical structures, such as the military and the emergency
services. Here, a traditional adherence to outmoded codes of behav-
iour is required to ensure lower-level staff fulfil assigned tasks without
questioning the validity of instructions issued by their leaders. One
example of the adverse results of this philosophy is often apparent in
the military during the early years of a war which has been preceded
by a long period of peace. Often during this prior period spending
cuts have occurred and service personnel have focused on fulfilling
peacetime duties. In peacetime, promotion is slow, and is often based
on time served and an individual’s willingness to espouse support for
long-established values and military traditions. Unfortunately, as dem-
onstrated by the British troop losses at the Somme and by the French at
Verdun during World War I, the values, behaviour and military tactics
of individuals appointed to senior roles in peacetime often prove to be
totally inappropriate in wartime. This is because many military leaders
fail to appreciate that the nature of warfare may have undergone mas-
sive and fundamental change. In the UK, during World War II, such an
approach was summarised by the phrase ‘lions led by donkeys’, and the
archetypal leader was enshrined in the cartoon character created by the
cartoonist David Low, aptly named ‘Colonel Blimp’.
Comparing generals
Case aims: To illustrate the differences between two famous military

leaders.
Fulmer and Conger (2004) proposed that there is a cause-and-effect
relationship between a leader’s inappropriate values and consequent
adverse outcomes. Included in their list of cause and effect exemplars
are:
(1) Failure to deliver results caused by blaming others for a failure to

achieve promised results and/or making excessively optimistic
promises and then failing to deliver.
(2) Betraying trust caused by promising to do one thing and then doing
something completely different, making excuses about outcomes,
blaming subordinates, or hiding or modifying key information
which is damaging to their personal reputation.
(3) Resistant to change caused by an inability to adapt to new ideas,
plans or priorities, excluding any opinions other than their own,
failing to accept alternative perspectives, rejecting the opinions
of others or failing to engage in discussions when alternative
opinions are presented.
(4) Making incorrect decisions caused by indecisiveness when an urgent
or immediate key decision is required and/or always accepting the
opinion of any individual who is perceived to have influence over
their future with the organisation.
Some of the best documented cases of Fulmer and Conger’s cause-

and-effect model are provided by well-known military leaders.
Regretfully, many of these military examples involve individuals
identified as successful in leading their forces in one major battle,
but subsequently performing poorly at a later date. The problem
with this type of leadership mistake is that progress towards ulti-
mate victory is often delayed and usually accompanied by a high
level of casualties. During World War II, the British army general
Sir Bernard Montgomery fought a successful campaign in North
Africa. Appointed as a commander of land forces in the invasion
of France in 1944, Montgomery confidently forecasted that British
and Commonwealth forces would lead a rapid break out from the
Normandy beachhead. Fighting proved more difficult than expected.
Montgomery subsequently claimed it to have been his intention all
Leadership 99
along to concentrate German forces in the Caen sector in order for

the Americans to have an easier time breaking through German lines
to the west of Caen.
Possibly of even greater concern was Montgomery’s rejection of the
Allied Commander Dwight Eisenhower’s strategy to strike towards
Germany on a broad front. Montgomery, whose behaviour by this
time was causing friction with his American colleagues, pushed for
‘Operation Market Garden’, a lightning thrust through Holland
involving parachute troops capturing and holding key bridges, finish-
ing with the key bridge over the Rhine at Arnhem. The ground forces
responsible for linking up with the various parachute drops were
forced to fight their way along a single narrow road. The speed of
their advance was insufficient to reach the bridge at Arnhem. British
and Polish parachute brigades were virtually wiped out and the whole
operation had to be terminated without achieving Montgomery’s
‘lightning thrust’ into Northern Germany (Hastings, 2004).
Montgomery’s failures can be contrasted with the success of a
much more private figure, renowned for his humility and avoidance
of any form of publicity over his achievements: General ‘Bill’ Slim
(McLynn, 2010). Slim led Allied forces in the lengthy and geographi-
cally complex task of defeating the Japanese in Burma, fighting with
far fewer resources than those available to Montgomery. Military
historians have concluded that Slim was one of most brilliant army
leaders of the 20th century. A key to his success was that his troops
perceived him to be an honest, trustworthy and loyal leader. As a
consequence, troops were willing to undertake the difficult tasks he
asked of them and were proud to be known as the ‘Forgotten Army
fighting a Forgotten War.’ This phrase reflected the fact that neither
they nor their commander ever received adequate recognition for
their outstanding achievements in defeating the Japanese army,
either during the war or afterwards in peacetime.
Leadership and culture
It is a major risk to accept the prevailing dominant theory concerning

the values required of an effective leader because this ignores factors
such as national culture, socio-demographic expectations and sectoral
norms, which may influence a leader in the context of the individual,
the organisation being led and the current problems confronting the
organisation (Kouzes and Posner, 1993). Hence, current and future lead-
ers, along with those advising on the development of leadership skills,
must be aware that variations in preferred or necessary values will differ
over time and in different organisations.
One example of such variations is provided by the research undertaken
by Holt et al. (2009). They undertook an extensive study of individuals
from different parts of the world and with different socio-demographic
backgrounds. The researchers assessed respondents’ perspectives on the
relative importance of various leadership values:
(1) Intelligence: overall conceptual and critical reasoning ability.

(2) Charisma: appeal and attractiveness to others.
(3) Commitment: acceptance of responsibility for mission or task.
(4) Vision: defining a compelling picture of the future.
(5) Integrity: exhibiting an uncompromising level of honesty.
(6) Drive: level of personal power and involvement.
(7) Courage: a willingness to challenge the status quo.
(8) Empathy: understanding others’ feelings.
(9) Competence: an ability to successfully complete assigned tasks.
(10) Servility: willingness to put the needs of others ahead of their
own.
The study revealed differences between how individuals from differ-

ent parts of the world prioritised the importance of these ten values.
East European respondents rated charisma, responsibility and vision
in descending order of importance and gave low importance ratings to
servility and authenticity. Africans rated vision, responsibility and cha-
risma in descending order of importance. Empathy and courage were
seen as unimportant. South American respondents rated responsibility
and authenticity as extremely important, whilst considering courage,
competence and intelligence as being relatively unimportant. North
Americans identified charisma and authenticity as critically important,
whilst in contrast Mexicans felt passion and courage were the most
important leadership values.
The researchers also used data from North American respondents to
examine the influence of age on individuals’ opinions on the importance
of the values expected of effective leaders. The 18 to 24 age group rated
responsibility, competence and authenticity as highest, in descending
order of importance. Within the 36 to 45 age group, charisma, responsi-
bility and authenticity were most highly rated. Among older age groups,
passion, responsibility and authenticity were seen as most important,
Leadership 101
in descending order of importance. Variations across levels of education

were also evident: those with only a high school certificate rated respon-
sibility as the most important value expected of an effective leader, both
those with an associate degree and honours degree rated charisma, and
those with a post graduate qualification rated passion.
Religious faith has a varying degree of influence over the embedded
beliefs and values of a society. The Western democracies can, in general,
be considered as somewhat secular in their behaviour, and believe
materialism is an acceptable motivation for determining behaviour in
everyday society. Even here, however, variations exist between differ-
ent countries and also between different Christian groups within each
country. In contrast, the Islamic faith is more reflective of a religious
belief with a strong determining influence on the behaviour of people
in everyday life. It is important to recognise when seeking to identify
the most appropriate leadership style that most accepted theories and
substantiating case materials on leadership originate from nations
where Christianity tends to be the dominant religious faith.
Variations that might be caused by adherence to Islamic values influ-
enced Karakas’ (2010) decision to study leadership values in Turkey,
where Islam is the dominant faith. The project focused on spiritual
principles associated with Sufism, which is an Islamic concept that
focuses on building character based upon an inner life concerned with
purifying the heart spiritually and seeking to diminish ego. The ulti-
mate aim is to receive the pure love of God, thereby achieving ultimate
personal satisfaction (Uzunoglu, 1999). Adherence to these beliefs will
influence how a person thinks, feels and behaves at work and in eve-
ryday life.
Karakas’ study examined the viewpoint of a sample of Turkish busi-
ness executives in relation to the following five spiritual values:
(1) Perfectionism as defined through attention to details, rules and

principles.
(2) Compassion as reflected by wanting to help, serve and care about
people.
(3) Commitmentt reflected in a desire to progress and to be successful in
life. This value is equivalent to the ‘work ethic’ principle found in
the Protestant faith.
(4) Inspiration in relation to searching for meaning, authenticity and
personal identity.
(5) Investigation in relation to seeking knowledge and developing
insight.
(6) Dedication in terms of contributing to community and protecting

others.
(7) Appreciation in terms of appreciating the better aspects of life.
(8) Determination in relation to making decisions, implementing change
and making a difference.
(9) Spiritualityy through exhibiting patience, receptivity and tolerance.
Although Karakas only undertook a small-scale, qualitative study, the

results demonstrated how spiritual values that are embedded into a
society through emphasis on religions such as Islam will cause leaders to
exhibit different values depending upon which of the nine values used in
the study has the most influence on the beliefs and attitudes of that indi-
vidual. Karakas suggested that leaders are more likely to be more effective
when they understand the relative importance of these values within the
workforce and act accordingly when seeking to ensure that employees
are both motivated and satisfied with their assigned responsibilities.
Participative management
The advent of NPM and neoliberal economic theory have been accom-
panied by proposals that the complex and competitive nature of modern
societies can only be effectively managed by changing the operational
policies and processes within PSOs. Typically, those expressing such
views considered most PSOs to be hierarchical, rely excessively on rules
to define actions and lack flexibility. To overcome these problems, the
espoused view is that there is a need to move towards transformational
leadership and for more emphasis on participative decision making.
The nature of the tasks undertaken by the emergency services means
that such organisations tend to rely on top-down, hierarchical manage-
ment systems. Hence, attempts have been made to introduce a more
participative managerial philosophy into the emergency services in
some Western democracies. Steinheider and Wuestewald (2008) assessed
the benefits of a more participative approach to management in the
police. The police authority that was being studied had moved to a
management system involving greater collaboration over decision mak-
ing and co-determination of working conditions, information process-
ing, problem solving and goal setting. The new approach was based
upon a ‘shared leadership’ model in which tasks and responsibilities are
shared up, down and across the organisation.
By comparing the results of organisational surveys from 2002 and
2005, the researchers concluded that officers’ perceptions of their chief
Leadership 103
and their division commanders had improved. Many officers felt that
a more participative managerial philosophy had led senior managers
to have a better understanding of policing in today’s changing society,
and that their personal contribution to achieving success was now more
widely recognised and understood. Their study did reveal, however,
that the force in question retained a traditional hierarchy with watch
commanders running their shifts, division commanders managing their
divisions, and the chief’s office maintaining authority over all major
operational activities.
‘Community policing’ is one factor which has led some police forces
to adopt a more participative management philosophy. This alterna-
tive approach to policing places greater emphasis on crime prevention,
working closely with other PSOs such as social services and healthcare
providers. As a consequence, the police are increasingly involved in
addressing social problems, combating discrimination, assisting people
with mental illnesses and attempting to reduce a perceived increase in
antisocial behaviour. These new challenges have placed a greater bur-
den on police forces that remained charged with fulfilling their exist-
ing responsibilities of catching criminals and ensuring public safety
(Weisburd and Braga, 2006). Some research studies are beginning to
reveal participative management leads to resource problems and declin-
ing morale across the entire force when senior managers commit their
forces to new initiatives to enhance their own image among politicians
and community leaders (Ransley and Mazerolle, 2009).
Transformational leadership and a more participative managerial
orientation is now thought to enhance performance when a police
force is undertaking its traditional role of fighting crime and arresting
criminals. However, as forces are required to act as nodal points in a
broader welfare role, senior officers must have the strength of leadership
to ensure their force’s primary focus on managing crime is not dimin-
ished or weakened by resources being used to assist other agencies in
the resolution of broader social issues. Without senior officers fulfilling
this leadership responsibility, the rank-and-file may associate a transfor-
mational style and participative management with excessive involve-
ment in social welfare and an insufficient focus on the conventional
role of fighting crime (Ford, 2002). For example, since the advent of
community policing in Australia, those senior officers who seem to be
most effective in successfully motivating their officers, sustaining staff
loyalty and resisting pressure to divert more resources into expanded
social welfare programmes are those individuals who tend to exhibit a
more transactional management style (Densten, 1999).
Added complexities
Although a new leader will usually wish to sustain their preferred per-
sonal style, they may decide this is not a feasible objective when they are
exposed to the situation confronting the organisation. This is because,
as illustrated in Figure 5.1, there are a number of external factors which
will need to be taken into account when considering implementation
of new or revised operational policies.
One such factor is the pace and scale of the reforms demanded by
government. Where these are required to occur over a short time span
and involve a major reduction in ongoing funding, then a participa-
tive approach that involves subordinates in extended dialogue may not
be practical. In such situations, a leader whose personal preference is
towards a transformational style may be forced to adopt a highly trans-
actional approach and impose the required change on the organisation
without any discussions with colleagues. Another source of influence
is the nature of the government KPIs that have been introduced to
ensure reforms are put into practice. These KPIs may cause significant
internal dissent between departments. This is because certain aspects of
the operation deemed to be more critical in the new KPI system may
Pace and scale of

government-
demanded reform
FEASIBLE Managerial
Employee LEADERSHIP hierarchy
resistance resistance
STYLE
External Government-imposed Media

stakeholder KPIs pressure
resistance
Factors of influence on leadership style

Leadership 105
require a transfer of scarce resources out of other areas of the opera-

tion. Under such circumstances, a leader whose preference is to specify
actions required following limited debate, may be forced to adopt a
more transformational approach in order to gain understanding and
internal support over the need to move scarce resources between differ-
ent departments.
A new leader will also need to take into account the degree of
employee resistance that can be expected to a government’s proposed
reforms. Where this resistance is extremely high, an individual whose
personal style is that of a transformational leader may need to act in
a more transactional fashion and mandate changes despite the ill-will
this generates amongst the workforce. An opposite situation might
emerge in relation to the existing management hierarchy. Should these
individuals prefer a collaborative approach to defining revised policies
and processes, then a leader who exhibits a transactional style may need
to adopt a more transformational orientation when working with their
new management team.
Other factors, although possibly less important in terms of their
potential influence on leadership style, are the views of external stake-
holders and the media. External stakeholders expressing strong opinions
about the need and nature of proposed reforms may include the client
groups served by the PSO and the unions representing the employees.
The influence on the leader of views expressed by a specific external
stakeholder may be assisted by the media, depending upon whether
stakeholder views are supported or rejected by reporters.
Mixed outcomes
Case aims: To illustrate differences in the influence of leadership style in

the education sector.
An area of the public sector which has sought to implement reforms
proposed under NPM has been education. As a new generation of
leaders were appointed, some of these individuals promoted a more
inclusive culture and sought out the contribution of teaching staff to
define the best way of sustaining student learning outcomes in the
face of diminishing financial resources (Hallinger and Heck, 1996).
Others, influenced by their background and prior experience, exhib-
ited a more transactional style based upon their perceptions that
the financial circumstances facing their institutions demanded that
teaching staff must change the ongoing delivery of the educational

process (Gleeson, 2001).
Studies of these two scenarios have revealed a mixed outcome.
Some transformational and transactional leaders have enjoyed suc-
cess, but others have been so dispirited by the failure to introduce
reform that they have resigned (Harris, 2001). In relation to this
latter outcome, research in the US has shown that strong trans-
formational leaders, instead of achieving change, merely provoke
passive resistance in the staff (Beachum, 2004). This is because the
staff know that the new leader will become frustrated by their lack
of response and will eventually move onto another job elsewhere
within the educational system. A generalised conclusion that can be
reached from the literature is that either transformational or trans-
actional leadership style can be effective as long as the behaviour of
the new appointee is perceived as acting with integrity, seeking the
best for the institution and thus is able to command the loyalty of
the majority of the teaching staff.
Educational reform often demands actions such as making some
staff redundant, increasing class sizes and reducing the educational
choice of the students. A major external obstacle to introducing
such reform, which either type of leader will usually encounter,
will be the highly aggressive response of the teaching unions. These
organisations may opt to refuse to enter into a participative dialogue
with heads of colleges, local authorities or relevant government
departments. Instead, they may decide upon a more impactful influ-
ence such as instructing their members to work-to-rule or to strike.
The effectiveness of such action will often depend on whether the
teachers are able to gain the support of parents or the media around
reversing financial cutbacks and redundancies within the affected
colleges.
Dissent within the university sector over financial constraints has
tended to be somewhat more muted. In recent years, as government
funding has been cut in response to mounting public sector deficits,
and student fees increased at a rate above inflation, the mood has
begun to change. A major focus of academic dissent is the fact that,
in many universities, the proportion of costs associated with admini-
stration has increased whilst funds for course delivery have fallen.
In some cases, this rise in administration costs has been accompa-
nied by huge increases in the salaries paid to senior management
whilst teaching salaries have remained virtually unchanged. Some
Leadership 107
academics are resistant to surviving with smaller teaching budgets.

This is because some newly appointed vice-chancellors and college
presidents exhibit a highly transactional leadership style on their
arrival, making autocratic decisions such as making staff redundant,
demanding a ‘sign or leave’ policy when introducing a revised staff
contract, and not being prepared to follow existing contractual
obligations to consult staff representatives before implementing any
major reforms (Anon., 2011).
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6
Employees
The nature of values
Rokeach (1973, p.5) defined a value as an ‘enduring belief that a spe-

cific mode of conduct or end state of existence is personally or socially
preferable to an opposite or converse mode of conduct or end state of
existence’. Values provide the basis for the criteria which individuals
use, both at work and in their personal lives, to determine the desir-
ability of certain actions or motivations. Values may be considered as an
expression of an individual’s needs which can evoke a strong emotion
such as anger or sadness challenged or contravened. Values provide the
basis of global beliefs which underpin an individual’s attitudes towards
the world around them. These attitudes provide the basis of an orienta-
tion towards specific objects, situations and outcomes. Values and atti-
tudes are the key determinants of behaviour ( Jones and Garard, 1967).
Locke (1991) posited that, because values are an integral component
of an individual’s motivations, they will have a strong influence over
the behaviour of employees within an organisation. Some management
theorists, especially when examining the issue of organisational per-
formance, suggest that managers should create an internal environment
with a set of overarching values. Such actions are more likely to influ-
ence employee behaviour than merely relying upon well-defined poli-
cies, procedures and structures (Anderson, 1997). This viewpoint can be
contrasted with that of some public administration theorists, who tend
to focus on how employee values only determine appropriate behaviour
associated with meeting the needs of those in society to whom services
are delivered (Kernaghan, 2000).
Weberian bureaucracy theory assumes that the behaviour of pub-
lic sector employees reflects an ability to execute their superiors’
109
instructions, and that they do not allow their personal values to influ-
ence their behaviour at work. The implications of this scenario are that
a public sector employee would, without question, execute an instruc-
tion even when it conflicts with the individual’s personal moral values
(Weymes, 2004). This perspective places the employee as sustaining
normative standards of reliability, legality (such as sustaining prevail-
ing legislated procedures and upholding the law) and justice (such as
sustaining the protection provided by the law and ensuring equality of
service provision). The advent of NPM, with its emphasis on a market
orientation to the provision of services, to a certain degree has caused
a shift away from the Weberian concepts towards a greater focus on
values associated with cost orientation, greater efficiency in the use of
resources, enhanced client responsiveness and greater flexibility in the
face of changing internal and external environments (Van Bockel and
Noordegraaf, 2006).
Even with the advent of NPM, the culture within PSOs has still tended
to favour stability and security whilst avoiding any significant effort to
implement actions that might change the actual nature and quality of
public service provision policies or activities. This bias towards sustain-
ing the status quo results in employees preferring to be provided with
specific job descriptions and clear procedural guidelines because this
minimises the level of workplace ambiguity. The benefit of a low toler-
ance for ambiguity is that, by providing a stable internal environment,
employees are better able to focus on task and technical concerns, so
that service provision is systematic and efficient.
Abbas (1992) proposed that employee behaviour traits associated with
these value preferences:
(1) Tribalistic: exhibiting a submissive response to authority.

(2) Conformist: having a low tolerance for ambiguity, accompanied by a
preference for structure and rules to defined assigned job tasks.
(3) Sociocentric: the preference for being affiliated with a stable, unchang-
ing organisation is stronger than a desire for achieving greater wealth
or social status.
These behaviour traits can be contrasted with those more likely to be

encountered in a private sector organisation:
(1) Egocentric: being aggressive, selfish, impulsive and preferring some-

what loose structures and rules in relation to how assigned job tasks
are defined.
Employees 111
(2) Materialistic: believing themselves and other employees should

be committed to ensuring that external stakeholders regard the
organisation as extremely successful and, if possible, exceeding the
performance achievements of similar organisations.
(3) Existentialist: exhibiting a preference for ambiguous situations and
accepting others who hold completely different values.
(4) Conceptualist: believing higher performance is achieved by exploring
new options, forming new strategies, creativity and taking risks.
Value differences
Case aims: To illustrate how differences in the values of employees, man-

agers and organisations can create performance obstacles.
Effective internal communication is critical to achieve congru-
ence between the values of employees and those articulated by
management. Information flows can be formal and informal. Formal
communication is an important mechanism for delivering infor-
mation on key issues such as performance goals, strategy and data
concerned with employees’ fulfilment of their job role. This type of
information tends to flow downwards through the chain of command
to frontline employees. Upward flows can occur when, for example,
employees identify a problem that should be communicated to super-
visors or management or during a formal dispute between a number
of employees and the organisation (Ricardo, 2010).
A tragic example of a failure of effective communication to ensure
values congruence is provided when, in 2010, 13 employees at
Taiwan’s Foxconn ended their lives, stressing a lack of internal com-
munication within the organisation. Employees felt they were under
constant pressure to work as quickly and efficiently as possible and
to avoid social interaction with their co-workers. This reflects an
apparent difference between employee and organisational values in
relation to the work environment. If Foxconn’s management had
encouraged communication and articulated a commitment to a
stronger sense of community across the organisation which allowed
employees to develop deeper relationships, then perhaps these sui-
cides could have been avoided (Ricardo, 2010).
Human capital is an extremely expensive resource and, in many
PSOs, represents over 80 per cent of total operating costs. Where
newly recruited or existing employees’ loyalty is strongly influenced
by the value they place on skills development and job enhancement,
then it is critical that the employer creates an effective employee

development programme. Failure to fulfil employees’ aspirations
will be reflected by declining productivity and poorer service quality.
Organisations must recognise the importance of appropriate learning
so that employees are able to shape their behaviour to fulfil their
assigned responsibilities. All organisations also need to be able to
navigate the political and social intricacies of the organisation. This
need tends to be more critical and hence more important in PSOs
(Chaston, 201l). Ensuring that employees are able to apply critical
thinking to the technical, political and social aspects of their job role
is likely to deliver high service quality and identify areas of concern
which a proactive response can ensure are corrected before they
damage productivity, employee relations or the provision services to
clients (Jones and George, 2010).
Increasingly, both private and public sector organisations are mov-
ing away from the employee working in isolation and instead relying
on teamwork to fulfil assigned tasks. In certain areas of the public
sector, teamwork is assumed to be the standard modus operandi. One
long-established example is in the healthcare sector where nurses,
doctors and technicians co-operate and collaborate in optimising the
delivery of effective treatment to patients. Key to team effectiveness is
that team members share values common to the wider team’s objec-
tives and the processes to be used to fulfil these objectives. Ricardo
notes that, where there is a strong focus on each member’s contribu-
tion to the process, the need for shared understanding and common
values is critical. In order for this to be achieved in a complex envi-
ronment such as a hospital then the employer must ensure that the
team can access ongoing involvement in high levels of learning.
Some of the worst examples of unprofessional conduct in the
public sector (such as a social worker’s failure to realise that a child is
being abused by their parents) can be explained by an individual or
PSO being inadequately committed to fulfilling ethical values. Most
public sector employees would say it is unethical to ignore clients’
needs, treat employees unfairly, misuse financial resources or ignore
health and safety guidelines. There is, however, an increasing pos-
sibility of PSOs taking short cuts when attempting to sustain service
provision with much reduced financial budgets. Hence, it is critical
that, while resources remain severely limited, PSOs and their staff
must retain a high awareness of ethical values when fulfilling their
responsibilities to provide services to the general public.
Employees 113
An example of how apparent differences in personal and public

sector organisational ethics can lead to major problems emerged
in the UK in 2011. The Sunday newspaper, The News of the World,
had for some time been suspected of engaging in widespread phone
hacking to obtain stories. In 2011, Andy Coulson, previously a
senior employee at the paper, was hired as an advisor to the Prime
Minister, David Cameron. Another ex-employee, Neil Wallace, was
hired as advisor to the Metropolitan Police. As it became apparent
that phone hacking was not merely confined to one or two report-
ers at the paper, and allegations emerged that senior management
may have been aware of this unethical behaviour, the issue arose of
whether the personal ethics of Coulson and Wallace were compatible
with the public sector contexts in which they were now working.
Eventually, both men departed their advisory roles. Both the Chief
Commissioner of the Metropolitan Police, Sir Paul Stephenson, and
Assistant Commissioner, John Yates, decided that the decision to hire
Neil Wallace gave them no other choice than to resign. Subsequently,
the Independent Police Complaints Commission ruled that neither
individual had acted unethically in this affair.
The only way for Western democracies to sustain services in the
face of massive national deficits will be to rely on innovation and
creativity to identify new ways of delivering services and enhancing
internal process productivity. This will require both employees and
employers to embed a value that places greater emphasis on permit-
ting unconventional solutions than on rigidly following policies and
rules, many of which were originally defined to suit very different
circumstances. However, a major obstacle facing many innovative
public sector employees is that their leaders continue to retain a
highly bureaucratic culture. As noted by Schultz (1992), the charac-
teristics of these bureaucratic leaders include:
(1) a belief that their position and title gives them legitimate author-
ity to act autocratically
(2) an insistence that the hierarchy provides an effective definition
of authority by only permitting leaders to make major decisions
(3) a lack of leadership skills because these individuals have progressed
up the organisation through promotional process that emphasises
level of education or technical skills over managerial capability
(4) an implicit faith in the philosophy that successful organisations are
those that adhere to restrictive and inflexible rules and procedures.
As a consequence, the public sector entrepreneur will often face

problems such as a lack of co-ordination between departments, low
enthusiasm at all levels within the management hierarchy, unions
wishing to prevent the introduction of change and an unwillingness
to adopt difficult new technologies.
Sector differences
Employees’ personal values can influence job satisfaction, motivation

and competence. Therefore, it is critically important for senior manag-
ers to understand the personal value systems of employees. This knowl-
edge provides the basis for establishing an organisational culture and
internal organisational environment most likely to maximise employee
performance and productivity. The differences between the perform-
ance goals and strategies of private sector and public sector organisa-
tions has led academics to propose that employees in these two sectors
will have different values which, as a consequence, lead to different
behaviours at work (Driver et al., 1993).
Work motivation is perceived as reflecting behaviours associated with
seeking a specific role and performing assigned tasks effectively (Pinder,
1998). The academic literature presents employee motives and work
motivation as two distinct variables. Employee motives are influenced
by factors which the individual finds attractive and leads to rewards,
such as higher remuneration and better working conditions. Work
motivation is the internal drive that prompts the individual to perform
their assigned role and to fulfil the performance expectations of the
employer. Where the individual perceives differences in the nature of
the job role and employment conditions, they will prefer one employ-
ment opportunity over another (Rainey, 1982).
The two main factors that influence how an individual is attracted to
a specific employment role are known as ‘motivators’ and ‘hygiene’ fac-
tors (Herzberg et al., 1957). Motivators are intrinsic and are influenced
by variables such as job content, nature of task, importance, respon-
sibility, career advancement and personal development (Ryan and
Deci, 2000). Hygiene factors are determined by factors external to the
individual and include variables such as earnings and job security. The
combined influence of motivators and hygiene factors are believed to
influence individuals into accepting a job that provides more personal
fulfilment and represents the best possible fit with their personal val-
ues. Where the public and private sector is perceived to offer different
Employees 115
working environments and a differing probability of satisfying personal

values, this will influence an individual’s preference of which sector is
perceived to offer the best employment prospects.
When considering the motivation of certain individuals to opt for
a career in the public sector, one perspective is they want to serve the
public, contribute to social change and to be part of implementing
policies that impact social change. This perspective views public service
as a distinct profession to which certain types of people feel morally
compelled to enter. Assuming the validity of this perspective, it could
be inferred that an individual who has a strong desire to work in the
public sector is less influenced by the higher salary that may be paid for
a comparable job in the private sector (Zeffane, 1994).
The validity of this perspective probably varies according to the nature
of the job role and the educational background of the individual. Thus,
one might expect to encounter this motivation among professionals,
such as social workers or nurses, where the individual would choose
this job even if the economic rewards do not compete with comparable
jobs in the private sector. There is little evidence to suggest that similar
values will be encountered among lower level administrative staff. This
latter scenario suggests that many job seekers do not necessarily view
private sector and public sector jobs as competing options. Instead,
their decision is often determined by which employer is first to offer
them a job.
Perry and Wise (1990) undertook a study of American workers to
determine whether there is a unique value set that differentiates public
sector and private sector employees. Their conclusion was that, although
differences were apparent in the values of employees in the two sectors,
of much greater importance were differences in socio-demographic vari-
ables. These findings led the researchers to conclude that, at least in the
context of people in the USA, public sector employees are probably no
more altruistic than employees in the private sector. This conclusion
would appear to indicate that in America the presence of a ‘unique call-
ing’ is not a value which can determine the motivations of public versus
private sector employees.
Nevertheless, Perry and Wise did identify differences in terms of
employees’ perceptions over the importance of their job making a con-
tribution to society. Public sector employees valued their contribution
to society more highly than their counterparts in the private sector.
This finding caused the researchers to propose that people motivated by
altruistic goals are more likely to work in the public sector. The research-
ers believe the most plausible reason is that public sector employees are
attracted to an organisational culture which places greater importance

on values associated with the provision of services concerned with car-
ing about the needs of society.
The study determined that private sector employees place greater
value on the level of prestige associated with their work than employ-
ees in the public sector. This may reflect a general decline within the
USA of the level of esteem in which public sector institutions are held
by society. This perspective is supported by the lower level of commit-
ment which public sector employees have for either their job or their
employer when compared with their private sector counterparts. This
suggests that private sector employees feel their personal goals and val-
ues are more compatible with the organisation for which they work.
The link between motivation, values and a preference for working in
the public sector has been the subject of a large number of academic
studies. Much of this research has focussed upon an individual’s intrin-
sic motivations when seeking employment. A prevailing view in the
literature is that the individual who opts for a public sector job is more
likely to derive satisfaction from contributing to the general good of
society and that extrinsic factors, such as salary, are of less importance
(Buelens and Van den Broeck, 2007). The issue of the importance of
salary has changed in some countries since the advent of NPM. In part,
this reflects PSOs seeking to attract private sector senior managers with
expertise in areas such as marketing, service quality management and
innovation. Understandably, upon moving into the public sector, these
individuals expect to at least sustain the salary earned in their private
sector job. The higher salaries paid to such individuals has led to higher
salary demands from managers who have spent their entire lives work-
ing in the public sector moving to a new job within their organisation
(Chaston, 2011). However, the higher salaries paid by PSOs have tended
to be restricted to senior managers. Many employees lower down in
these organisations have not benefitted from significant salary increases
following the advent of NPM. Furthermore, many PSOs utilise a hier-
archical structure in which earnings are defined by relatively inflexible
salary bands. Hence, those seeking to increase their earnings have to
progress upwards into the next pay grade. This system provides a strong
motivation for those wanting to increase their income to exhibit the
behaviour and performance traits demanded by the organisation in
order to be promoted (Kettl and Fesler, 2005).
Karl and Sutton (1998) undertook a comparative assessment of public
and private sector workers in the USA. They concluded these workers
have significantly differing job values. Private sector workers ranked
Employees 117
‘good wages’ higher in importance than public sector workers, who

rated the most important job value as ‘interesting work’. The impli-
cations of this finding would suggest that, in the USA, public sector
employees would respond more favourably to efforts to make their jobs
more interesting (such as job enrichment or working in self-managed
teams) than an increase in salary. This conclusion probably cannot be
assumed to have universal relevance because preferences will vary by
country depending on how well paid public sector workers are relative
to their counterparts in the private sector.
Another area of difference which Karl and Sutton identified was the
greater importance that private sector employees place on ‘feeling they
are in on things’. ‘Things’ in their survey were described as the way
in which employees felt they were kept informed of events and the
degree to which employees’ inputs were sought by management. The
researchers concluded this difference reflects the more bureaucratic
environment within PSOs, reflected in the fact that the majority of staff
are engaged in tasks involving standard responses and decisions based
upon clearly defined organisational rules. An associated factor is that,
within many PSOs, management’s downward communication tends to
be strongly determined by a ‘need to know’ attitude when deciding on
what information should be made available to employees.
One dimension of conventional HRM thinking is that individuals
are attracted to public sector employment because it offers greater job
security than the private sector. In the case of US public sector employ-
ees, Karl and Sutton’s research findings did not support this view. Their
study indicated that concerns about job security were very similar
across both sectors. They concluded that this similarity probably reflects
the increasing downsizing within both sectors, as organisations have
sought ways of reducing operating costs under worsening economic
conditions.
National cultural values
Case aims: To illustrate how national cultural values may influence

employee behaviour and attitudes.
The majority of materials on personal and organisational values
are concerned with organisations in countries such as Australia,
New Zealand, the UK and USA. However, to understand how per-
sonal values may influence employee behaviour and commitment
to their employer, it is necessary to recognise that national culture

may cause a variation in attitudes and beliefs between countries. An
example of a study into a non-English speaking nation is provided
by Markovits, Davis and Van Dick (2007), who researched employee
values in Greece.
The researchers based their hypotheses on prevailing views in the
literature. These included:
(1) employees who strongly identify with the values of their

employer will exhibit higher extrinsic and intrinsic satisfaction
(2) public sector employees express greater loyalty based upon the
stability of employment and the high cost of leaving a Greek
public sector organisation.
The results of the study, which covered both private and public sec-
tor employees, indicated that strong organisational commitment
is accompanied by employees’ reporting high extrinsic and intrin-
sic job satisfaction. Individuals who are not committed to their
employer exhibit a lower level of job satisfaction. Loyalty towards
the organisation is important in determining job satisfaction and
higher levels of loyalty are exhibited by public sector employees than
among their counterparts in the private sector. The researchers sug-
gested that higher loyalty in the Greek public sector reflects factors
such as being required to swear a loyalty oath, extensive employ-
ment benefits and higher job security.
Markovits et al. noted that Greek societal culture has embedded
certain values into the population, such as a collectivistic orienta-
tion. Public sector employment conditions are more closely aligned
to Greek societal values around job security, structured career pro-
gression and avoiding uncertainty. Predictable progression within
the public sector is compatible with an individual’s likely personal
values. In contrast, private sector employment opportunities tend to
be short term and less secure. This difference probably explains why
intrinsic job satisfaction and organisational commitment is lower
among those working in the Greek private sector.
In the face of a massive national debt, the EU and the IMF
demanded that the Greek government must significantly reduce pub-
lic sector expenditure in order to qualify for external financial sup-
port. Under these circumstances, public sector jobs will be perceived
as less secure. This scenario may lead to employment conditions
Employees 119
becoming as uncertain in the public sector as they have been for years
in the private sector. As noted by Bellou (2009), value incongruence
between individuals and organisations does not necessarily lead to
behaviour shifts. Even when faced with the prospect of being made
redundant, individuals may not decide to leave their PSO because
they regard the private sector as a poor alternative. Nevertheless,
government actions made necessary in the face of Greece’s sovereign
debt crisis will probably lead to organisational loyalty, employee
commitment and job satisfaction among Greek public sector workers
beginning to decline.
Psychological contracts
Academics and HRM specialists have recently been focussed on under-

standing which factors around employee performance and job satisfac-
tion influence intentions to stay at or to leave an organization. This
research has led to the identification of a concept known as the ‘psy-
chological contract’. A psychological contract is based upon employees’
beliefs and values about the terms of the implicit exchange relationship
which exists between the individual and their employer (Rousseau,
1998). The formation of this relationship begins during the recruitment
and selection process and continues throughout the time an individual
remains with the employer.
Variables influencing an employee’s perceptions about the promises
made by an employer include being paid a competitive wage, opportu-
nities for promotion, healthcare benefits, receiving adequate equipment
to perform their job, challenging and interesting work, opportunities for
promotion and being offered higher levels of responsibility over time.
In return, the employee implicitly undertakes to give their energy, time,
technical skills and commitment to the organisation. Unlike formal
employee–employer contracts, the psychological contract is inherently
perceptual. This can cause problems where the employee’s interpreta-
tion of outcomes differs from that of the employer (McLean Parks and
Schmedemann, 1994).
To assess the factors that may influence employee performance, it is
necessary to identify which of the inducements offered by an employer
are important to the workforce. By analysing employee perceptions to
identify the most important perceived promises, it is possible to deter-
mine whether the workforce believes the employer to be fulfilling the
psychological contract. Assessing the potential impact of identified
differences in perception involves measuring the degree of correlation

between psychological contract discrepancy scores and behavioural
variables, such as job satisfaction, performance and an intention to
remain with the organisation (Lester and Kickul, 2001). Where differ-
ences suggest that the employer is seen not to be fulfilling specific terms
within the psychological contract, this can indicate why employees
appear to lack motivation or are exhibiting undesirable work attitudes
and behaviours (Robinson and Morrison, 1995).
The nature of the promises contained in an employee’s psychological
contract can be created through communication channels such as a writ-
ten document, discussions or by the content and nature of an organisa-
tion’s policies, procedures and working practices (Sims, 1994). Employers
with proactive psychological contracts are less likely to encounter poor
employee performance, low employee morale or high staff turnover.
Employees will attempt to reach a balance between what they contribute
to the organisation and what they perceive they are receiving back in
return (Shore and Barksdale, 1998).
Certain psychological contract outcomes can be considered to be intrin-
sic, such as those which relate to the work environment and the assigned
job. Other factors are related to extrinsic outcomes, such as being paid a
competitive salary or receiving a promised promotion. In their study of
US employees, Lester and Kickul concluded that individuals are inter-
ested in both types of outcome. The highest importance is attached to
intrinsic outcomes, such as open communication, managerial support,
managerial integrity and involvement in challenging and interesting
work. The results of the study showed that psychological discrepancies
concerned with extrinsic outcomes, such as competitive salary, were
ranked by respondents as relatively unimportant. Consequently, the
researchers concluded that American employees tend to be more inter-
ested in non-monetary rewards. This conclusion would seem to indicate
that, although money is important to employees, in many of today’s
organisations, employers need to focus on delivering promises relating
to intrinsic outcomes in order to maximise employees’ motivation and
productivity. The area which caused Lester and Kickul most concern
was the indication that respondents perceived most US organisations
as failing to be open and honest when communicating with their
employees.
Some research has indicated that employees in the public and not-
for-profit sector may place a higher importance on the intrinsic incen-
tive of being engaged in serving the needs of others (Frank and Lewis,
2004). Although most PSOs and non-profit organisations are seeking to
Employees 121
assist the general public, the way in which this role is fulfilled within
these two sectors tends to be somewhat different. PSOs are funded by
governments to implement policies resulting from political decisions
about how available resources should be allocated across a population.
In contrast, many non-profit organisations serve a narrower and specific
client group (Lipsky and Smith, 1989).
Assuming that people choose to work in the sector that they expect
to best fulfil intrinsic and extrinsic outcomes, Lee and Wilkins (2011)
compared job motivations of public managers in state government in
the USA with those who worked in the not-for-profit sector. To assess
respondents’ level of motivation, the researchers selected a number of
variables including:
(1) opportunity for advancement within the organization’s hierarchy

(2) salary
(3) the organisation’s pension or retirement plan
(4) desire for increased responsibility
(5) ability to serve the public.
The data indicated that those who value opportunities for advancement
as an important outcome tend to prefer working in state governments.
This reflects the fact that promotion opportunities tend be lower in
not-for-profit organisations. No statistically significant difference was
found between sector preferences on the scale of monetary reward. This
suggests that potential earnings have little influence over the decision
to accept the job in one sector rather than the other. In contrast, those
individuals who desire a pension plan perceive employment in the
public sector as more attractive than the not-for-profit sector. People
who perceive opportunities for increased responsibility are more likely
to work for a not-for-profit organisation. The value concerning ‘the
ability to serve the general public’ is seen as more relevant in the public
sector. Hence, not surprisingly individuals who consider this outcome
to be personally important were more likely to work for a government
organisation.
Lee and Wilkins’ study confirms the perspective that intrinsic and
extrinsic outcomes will influence an individual’s choice in relation to
working in their preferred sector. Although the study compared public
and not-for-profit sectors, it can be expected that differences also exist
in relation to a preference for working in the public versus the private
sector. Perry and White, for example, concluded that even where sala-
ries are similar in these two sectors, an individual who is seeking the
intrinsic outcome of serving the needs of society is usually more likely

to choose a career in the public sector. The implications of such findings
are that senior managers within PSOs need to recognise the needs for
sector-specific management practices and incentive structures in order
to motivate their employees and to sustain high productivity in the
provision of services.
Deci and Ryan (2004) proposed a rather different model of employee
motivation known as ‘Self-Determination Theory’ (SDT). This theory
assumes that motivation exists on a continuum. Along this continuum,
extrinsic and intrinsic motivation is graded from non-autonomous (or
controlled) motivation at one end through to autonomous motivation
at the other. Public sector institutions are considered to exhibit organi-
sational values based upon an interest in policy making and meeting
the needs of the general public whilst exhibiting compassion, self-
sacrifice, customer orientation, democratic values and good governance
(Hondeghem and Vandenabeele, 2005; Vandenabeele et al., 2006).
Vandenabeele (2007) proposed that SDT theory supports the concept
that an individual’s self-identity and their perception of self-image has
a direct impact on their attraction to government employment, seek-
ing increased job satisfaction and exhibiting highly ethical behaviour.
Although the individual’s behaviour will be determined autonomously,
it will be more consistent and more positive where the PSO’s culture is
also based around variables such as compassion, self-sacrifice, customer
orientation and democratic values. The fit between the organisation
and the individual’s values will be greater where the PSO is able to
self-determine image and organisational behaviour in the provision of
services to clients.
Senior managers in the public sector seeking to motivate their
employees need to recognise that personal values within society and
at work may change over time. Posner and Schmidt (1994) researched
two competing value systems within PSOs: emphasis on ‘individualism’
versus ‘collaboration and co-operation’. They found that US govern-
ment employees were equally divided over which was perceived to be
more important. This can be interpreted as a major values shift, because
earlier research had indicated that 66 per cent favoured individualism
over collectivism. In their view, this shift reflected that, in both the
American private and public sector, an increasing emphasis on self-
managed teams and employee empowerment.
Value shifts are caused by employees’ personal experience and changes
that they encounter in the workplace. Posner and Schmidt proposed
that a number of changes in the public sector workplace had occurred
Employees 123
over recent years. They believed some had influenced the values of pub-
lic sector employees in the USA:
(1) Greater emphasis being given to the quality and level of customer
service.
(2) Higher importance being attached to the goal of meeting the needs
of the general public.
(3) Belief that the quality of life requires a society based upon a more
co-operative and collaborative values system.
(4) Private and personal life considerations should be at least equally
balanced when fulfilling the demands of employers.
(5) Greater focus on seeking to support the needs of others in the organi-
sation instead of being only concerned with one’s personal needs.
People / Organisational Fit
Another approach for examining the interrelationships between the val-

ues of the employee and organisation is the socio-psychological technique
known as Person–Organisation Fit (or POF). An assessment indicating a
strong fit reflects an agreement between employees’ personal attitudes
and the beliefs espoused by the employer (O’Reilly et al., 1991). POF can
be interpreted as the level of compatibility between an employee and
their place of work, and the degree to which their work fulfils their aspi-
rations and expectations. The closer the fit, the greater the congruence
between an individual’s values and those of the organisation. Variables
in the individual’s needs may include issues such as fairness, teamwork
and opportunities to excel. A poor level of need fulfilment may lead to a
lowering of an individual’s performance. This can damage service qual-
ity and the overall productivity, thus harming the overall effectiveness
of the organisation. A low POF will also probably cause employees to be
disappointed and frustrated. Where these feelings are common across the
workforce, employee–employer alienation can occur, causing a decline
in employee commitment to the organisation and fall in job satisfaction
To measure POF, Bretz and Judge (1994) developed a scale to cover the
following four phases of assessment:
(1) Assessing the degree to which individual knowledge, skills and abili-
ties match the organisation’s expectations of a new employee.
(2) Determining the degree of congruence between individual needs
and the organisation’s system and structure (e.g. compensation,
hierarchy and information flows).
(3) Matching organisational values with those of the individual (e.g.

fairness, helping others).
(4) Matching the individual’s personality with the perceived image of
the organisation (e.g. flexibility, conformity).
Organisations that have successfully recruited individuals who fit in well

can expect to outperform other organisations which have been unable to
achieve a high POF. This is demonstrated by higher productivity and service
quality, accompanied by lower absenteeism and staff turnover (Piotrowski
and Rosenbloom, 2002). Caldwell and O’Reilly (1990) suggested the con-
cept of POF is a good denominator of values congruence between employ-
ees, managers and the overall organisational environment.
Vigoda-Gadot and Meiri (2008) undertook a study to determine the
applicability of POF in the context of public sector employees in Israel.
They identified that the values most frequently mentioned in literature
on NPM were responsiveness to clients (Vigoda, 2002), transparency
(Piotrowski and Rosenbloom, 2002), innovativeness (Osborne and
Gaebler, 2002) and an achievement orientation based on clear perform-
ance indicators reflecting the increased efficiency and effectiveness of
the bureaucratic machinery. The research utilised scales based upon the
technique validated by Piotrowski and Rosenbloom with methodology
based upon two sets of questions. The first set asked respondents to
indicate how well each statement described their current work environ-
ment. The second set asked them to indicate how well each statement
described themselves as individuals. Responses provided a measurement
of the empirical distance between an individual’s and an employer’s
values in relation to responsiveness, transparency, innovation and
achievement. The research tool also included questions to assess the
relationship between POF scores and job satisfaction, organisational
commitment and service provision climate.
The study identified that a high congruence between individual and
organisational values over innovativeness indicated a high level of job
satisfaction. Congruence over transparency was positively related to
the service provision climate. A close fit for achievement influenced
both job satisfaction and service provision climate. A weak relation-
ship was only found between organisational commitment and the two
outcomes of job satisfaction or service provision climate. Vigoda-Gadot
and Meiri concluded that a PSO implementing NPM actions to acquire
higher competences in responsiveness, transparency, innovativeness or
achievement orientation will be unproductive unless these fit comfort-
ably with the employees’ individual values.
Employees 125
Moss and Weathington (2008) undertook a POF assessment for

employees in the US public sector. These researchers utilised a different
set of values:
(a) superior quality and service

(b) innovation
(c) importance of people as individuals
(d) importance of details of execution
(e) communication
(f) profit orientation
(g) goal accomplishment.
Respondents were asked the extent to which each value existed in their
organisation and then to describe their personal level of job satisfaction.
When assessing the relationship between POF and a specific organisa-
tional outcome, the researchers opted for the variable of whether the
respondent intends to leave the organisation.
The study determined that high POF congruence correlated signifi-
cantly with job satisfaction, organisational satisfaction, personal com-
mitment and organisational commitment. Where congruence was high,
fewer respondents planned to leave their organisation. In terms of POF
relationships, ‘importance of people as individuals’ was reflected as
being important in influencing job satisfaction. The values of ‘superior
quality and service’, ‘importance of people as individuals’ and ‘com-
munication’ all had a positive influence over organisational satisfaction
and organisational commitment. With regard to minimising staff turn-
over in PSOs in the USA, Moss and Weathington concluded that high
congruence between the organisation and employees’ personal values
over the ‘importance of people as individuals’ was a critical factor. They
recommended that PSOs seeking to optimise their role as service provid-
ers through the retention of experienced and trained staff must focus on
ensuring that employees perceive their organisation as treating its staff
as its most important asset. This will lead to higher job satisfaction and
thereby maximise staff retention levels.
Ethical values
Ashkanasy, Falkus and Callan (2000) examined whether exposure to

professional practice whilst working in the public sector will cause
employees to rely on their profession’s codes of ethics when faced
with a difficult problem. Their research indicated that variables such as
demographics and personal values influenced employees’ ethical values.

Ethical tolerance of other employees’ behaviour was predominantly
predicted by an employee’s personal values in relation to the degree
of leniency they allowed when evaluating unethical behaviour of col-
leagues. The implication of these findings is that formal codes of ethics
may not translate into desired ethical behaviour and attitudes within
the workplace.
Roozen, De Pelsmacker and Bostyn (2001) proposed that employees
with a high organisational commitment while working for a company
with ethical organisational goals can be expected to behave more ethi-
cally than individuals working in the same organisation but exhibiting
a lower level of organisational commitment. Their research indicated
that ethical attitudes of individuals will be influenced by the environ-
ment of the organisation in which they work. For example, public sec-
tor employees in an education institution can be expected to be more
ethical than their counterparts working in the private sector. These
researchers believe that their study indicates that individuals with a
higher ethics level have more idealistic values, exhibit lower materialis-
tic values and are less interested in personal success.
Ethics and outcomes
Case aims: To illustrate the issues to be considered in relation to how per-

sonal values can influence decisions in the workplace.
Baker (1996) noted that nurses must be certain that they have the
competences to perform as professionals. This requires balancing
their responsibilities to the patient with those of the healthcare
organisation in which they work. She notes that decisions and
actions are influenced by ‘normative ethics.’ These are based upon
the individual’s moral principles in relation to the criteria used in
judging right from wrong. In reaching a decision, the nurse may
have a conscientious objection to participating in the provision of
a specific medical treatment. This refusal is based upon a perceived
violation of their own personal and professional ideals.
Conscience can be considered to reflect the interaction between
three different influences: an inner sense of responsibility, inter-
nalisation of parental or family norms and an internal assessment
of personal integrity. Baker proposed that ethical issues surrounding
healthcare can result in a challenge to traditional ethical thinking,
Employees 127
causing conflict with an individual’s personal conscience. One

example is the greater acceptance of the concept of euthanasia in
modern society.
Baker suggests that nurses are often caught in the middle of ethi-
cal issues. This can occur when they participate in procedures that
may directly challenge deeply held values and convictions, such
as turning off a life-support machine. In the USA, a nurse is gener-
ally protected by state Right of Conscience Acts, employment laws,
conscience clauses and laws concerning religious discrimination.
Additionally, nurses are also guided by the Nurses Association Code
of Ethics and standards of practice established by state nursing
boards. Nevertheless, a nurse who expresses an objection based upon
personal values that conflict with those of their colleagues may find
their work environment unbearable and, by expressing their con-
cerns, may, in extreme cases, lose their job.
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7
Organisational Values
Stakeholder management
An ongoing debate in the private sector, stimulated in part by major

financial scandals such as collapse of the Enron Corporation in the
USA or the Royal Bank of Scotland (RBS) crisis in the UK, is whether
the fundamental purpose of a firm is to maximise shareholder value.
Those who oppose this perspective argue that managers have a wider
responsibility, which should include a sense of social and moral obli-
gation that meets the needs of all key stakeholder groups. Those who
reject the stakeholder perspective usually argue that managers are
agents of the shareholders and, in many countries, there is a fiduciary
responsibility for organisations to ensure shareholders are rewarded by
implementing actions which maximise the value of their investment.
As noted by Smithee and Lee (2004), the prevailing view that the only
goal of the firm should be to maximise its profits for the benefit of the
shareholders denies the legitimacy of claims of customers, suppliers,
intermediaries and employees, without whom the firm would not be
able to exist.
When considering the relevance of applying agency theory principles
to a public sector scenario, a dilemma arises over the identity of the
shareholders. It could be argued that, as the public sector is funded by
taxes, the shareholders are the public and corporate tax payers. This
concept creates certain practical difficulties due to the impossibility of
accurately assessing who owns what proportion of the total value of a
PSO. Fortunately, in today’s increasingly complex world, the dilemma
of applying agency theory in the public sector has been circumvented
because most management theorists now accept that effective manage-
ment of any organisation requires optimising long term performance to
130
Organisational Values 131
meet not just the needs of shareholders but all the entities that can be
considered stakeholders.
It is necessary to recognise that utilisation of stakeholder theory
in the context of the organisational planning process has not been
totally accepted by all academics, experts or management practitioners.
Furthermore, there is only limited evidence in the literature that organi-
sations utilise the concept and even less evidence that plans based upon
stakeholder theory offer any genuine advantage in achieving superior
performance in organisations which continue to use more conventional
approaches to defining future actions. Despite this potential drawback,
there is support in the literature for the view that stakeholder theory
can assist the organisation in developing a broader perspective. Groups
inside or outside the organisation can assist in enhancing the opportu-
nities and threats which will need to be effectively managed to achieve
intended performance aims.
Freeman (1984) defined stakeholders as any group that is affected
by, or can affect, the organisation’s achievement of its aims. Mitchell
et al. (1997) proposed that managers need to assess stakeholders’ power,
legitimacy and urgency. Power reflects an ability to act as an advocate
capable of influencing others to result in a positive or negative out-
come for the organisation. When an organisation has greater power
than a stakeholder, the organisation is more likely to attempt to assert
some form of control over the stakeholder. This may be reflected by a
lack of concern about the stakeholder exhibiting an adverse response
to treatment received. Legitimacy reflects the degree to which others
perceive the stakeholder’s right to express views, thereby determining
whether their opinions are likely to influence the behaviour of others.
Urgency reflects the speed of response demanded of the organisation
by a specific stakeholder once this stakeholder has communicated their
viewpoint or decision.
Mitchell et al. identified eight different types of stakeholders: dormant,
discretionary, demanding, dominant, dangerous, dependent, definitive
and non-legitimates. The way in which an organisation seeks to manage
a stakeholder depends upon how the organisation perceives the relative
power, legitimacy and urgency of the individual or group. Polonsky
and Scott (2005) noted that managers may misunderstand the degree
to which a stakeholder can influence the organisation and, as a conse-
quence, make incorrect decisions about how best to respond to them.
This lack of comprehension may lead to mismatch in firm–stakeholder
relationships. To optimise the organisation’s response to stakeholders,
Freeman suggested a need to determine how much of a threat the
stakeholder poses and whether the stakeholder can be expected to be

co-operative or adversarial when seeking to gain acceptance for their
views. He suggested the use of a stakeholder strategy matrix as an ana-
lytical tool for defining appropriate strategic responses according to the
stakeholder’s intentions and their potential willingness to collaborate
with the organisation. An example of this type of matrix is provided in
Figure 7.1.
The matrix presented covers two types of strategic intention, accord-
ing to whether there is an opportunity or a threat, and whether the
stakeholder is exhibiting either congruent or divergent values relative to
the organisation’s own values. Proposed strategic responses in relation
to whether the stakeholder represents an opportunity or a threat are the
same in two situations. One situation is when the stakeholder threat or
opportunity is high and the stakeholder and the organisation’s values
are congruent. The other situation is where the threat or opportunity is
low and the stakeholder and the organisation’s values are divergent.
Acceptance of the concept of stakeholder analysis has been assisted
by a recognition that firms can be made more successful by the forma-
tion of collaborative relationships through business networks. These
structures are an extremely effective strategy for firms sharing scarce
resources or for achieving scale effects. Further support from the field
of marketing theory emerged following recognition that buyer–seller
interactions, which traditionally have been presented as adversarial,
can actually be more effective when buyers and sellers recognise the
benefits of forming closer, more collaborative, relationships. Payne et al.
(2005) proposed that organisations need to identify elements within
their market systems which can be assessed in terms of stakeholders.
Level of threat posed by stakeholder

Low High
Tolerate threat
or
Convergent monitor Collaborate
Stakeholder
values in relation opportunity
to the
organisation’s Negate threat
values or
Divergent Educate
negotiate
opportunities
Figure 7.1 Stakeholder Strategy Matrix

In their taxonomic analysis of market systems, their identification of

stakeholders included:
(1) Referral stakeholders who were of two types: customer and non-customer.
The customer category contained two groups: company-initiated
customer relationships and customer-initiated relationships. Non-
customer referrals are constituted of general referrals, reciprocal referrals,
incentive-based referrals and staff referrals.
(2) Supplier stakeholders consisted of those organisations supplying the
physical and service resource inputs required by the firm to success-
fully convert inputs into revenue-generating outputs.
(3) Alliance stakeholders, whose role is to provide knowledge-based
inputs to the firm to support acquisition of new understanding
and internal competences that, through innovation, can enhance
revenue-generating activities.
(4) Influence stakeholders, which are the most diverse range of potential
external influences. Examples include financial institutions, unions,
industry bodies, regulatory bodies, the media, environmental
groups, politicians, government agencies and competitors.
(5) Internal stakeholders comprise all employees but may be consti-
tuted of different sub-groups based upon criteria such as seniority
within the organisation, job function, departmental location and
profession.
Simply transferring the language and process analysis tools of the pri-
vate sector stakeholder model into the public sector without any modi-
fication is rarely an appropriate solution due to the problems associated
with accurately representing the diversity of vested interests and the
total number of entities that constitute stakeholder groups in public sec-
tor scenarios (McAdam et al., 2005). Despite these added complexities,
the basic concept underlying stakeholder theory still remains appropri-
ate because the theory assumes that there are different groups inside
and outside the organisation representing a community for which
the organisation is responsible. Senior management must accept the
existence of the community in order to provide the basis for recognis-
ing a need to satisfy differing stakeholder needs. The responsibility of
management is to identify actions which ensure that the most critical
needs are considered in terms of influencing performance, and that
these needs are given priority when determining appropriate actions.
The community concept also ensures that senior managers seek to
avoid, where possible, any actions that are damaging or detrimental to
any single stakeholder group that has sufficient power and influence to
block the organisation’s future plans (Anderson, 1997).
The starting point when attempting to fulfil stakeholder needs in
the public sector is to assume that all groups deserve equal treatment.
However, this is rarely a feasible proposition, because meeting the needs
of one group may entail a reduction in the resources available for sat-
isfying other stakeholders. For example, senior managers may decide
there is a strong moral argument for increasing funding for the employ-
ees’ pension scheme. This action would be very acceptable to employees
but would probably lead to a reduction in the funding of services to
the general public. Hence, in order to determine the optimal strategy
for satisfying stakeholders, senior managers will be required to move
beyond making decisions purely on the basis of balancing financial
demands and fulfilling economic targets. Instead, they will need to use
the defined values of the organisation to guide their decision making
(Hosmer and Hosmer, 1994). The advantage of a values-driven approach
is that managers are, to a large degree, relieved of the burden of attempt-
ing to resolve competing stakeholder demands. Basing decisions upon
seeking to achieve congruence between stakeholder and organisational
values greatly increases the probability that optimisation of internal
activities and meeting the needs of the customer can be achieved.
Stakeholder analysis provides an equitable way of determining how
changes in service provision can be defined to minimise the adverse
impact on specific stakeholder groups (Martin, 2000). In most cases, the
imposition of major budget cuts by governments has required changes
in organisation structure, staffing levels and management systems.
Wisniewski and Stewart (2004) posit that the most effective response
to government demands for reform is for the PSO to initiate a compre-
hensive assessment based upon a philosophy of seeking to maximise
stakeholder satisfaction. They propose understanding the different
stakeholder demands which need to be considered when planning
future actions. Wisniewski and Stewart’s proposal assumes that differ-
ent stakeholders will exhibit differing and possibly conflicting demands
in the face of financial cutbacks. They believe the ‘one size fits all’
approach, when attempting to optimise stakeholder value in the public
sector, is unlikely to be successful. Hence, they propose that a PSO’s suc-
cessful development of a future plan depends upon the answers to the
following questions:
(1) What are the values of the organisation?

(2) Who are our stakeholders?
(3) How can stakeholders be categorised to identify areas of common

need?
(4) What are the needs of each of the identified stakeholder groups?
(5) How can adherence to organisational values assist in the prioritisa-
tion of allocating available resources to meet the needs of stake-
holder groups?
Public sector managers can expect this type of analysis to reveal differ-
ent and potentially conflicting performance requirements among the
organisation’s various stakeholders. As a consequence, managers will
need to utilise a framework for assessing the suitability of alternative
outcomes (Moullin, 2002). One possible framework in the public sector
is to adopt a version of the balanced scorecard that involves linking
strategies with organisational values (Chaston, 2011). This system uses
the following assumptions:
(1) Values provide the basis for justifying the ongoing existence of
delivered services.
(2) Values permit output decisions which optimise the satisfaction of
clients and other key stakeholders.
(3) Values provide the basis for defining achievable excellence and are
effective for evaluating internal processes, structures and staffing
levels.
(4) Financial performance measures for the optimal management of
allocated funds provide the basis for assessing achievement of equal-
ity of purpose across key stakeholder groups.
The advantage of adopting this type of stakeholder philosophy is that

it is more likely to be effective than continuing to rely upon a hierar-
chical approach that adheres to rigid rules and policies in determining
the future number of employees, their assigned roles and the volume
of services to be delivered. In commenting on the benefits of a values-
driven approach relative to the conventional top-down directive style
of management, Anderson (1997, p.31) noted that:
Decision practices relying on fear as a primary motivator are a poor

substitute for community… cumbersome controls and routines of
most organizations are also dispensable. The superficial use of annual
goal setting, measurement, and review does not ensure that people
use their minds, energy, commitment, and creativity to identify
the right problems and to craft imaginative solutions. By providing
the guidance inherent in values-based management, management

assures an efficient and consistent response to most problems.
In the public sector, the contractor customer is the stakeholder that

provides all or most of the required financial resources. This stakeholder
is capable of stopping the PSO from achieving performance goals relat-
ing to the provision of services to a maximum number of user custom-
ers. As the PSO is highly dependent on the continuing support of the
contractor customer, exhibiting an aggressive orientation or openly
criticising this stakeholder is usually unwise. Where the PSO feels that
the contractor customer is expressing views and requiring actions that
are genuinely detrimental to the PSO’s ability to provide their public
service, senior management may decide that the only ethical solution
is to challenge the legitimacy of the contractor customer’s demands.
The success of such a challenge often relies upon forming alliances with
other stakeholders who can exert influence on the customer contractor.
Potential allies include the public, the media, professional bodies and,
in some cases, members of the government.
Defining values
Kotter and Heskett (1992) concluded that the strength of an organisa-

tion’s values can influence performance. Actual performance outcomes
are influenced by the ability of management to align organisational
values with those of the market and to revise strategies and policies
where a lack of congruence in values is identified. Sagiv and Schwartz
(2007, p.178) proposed that organisations can be considered to be insti-
tutions as ‘nested within societies’. They believe this implies a need for
the organisation to ‘develop and evolve in ways that are compatible
to some degree with the societal culture in which they are nested’. As
a consequence, a key aspect of optimising the performance of organi-
sations in both the private and public sector is to match the values
exhibited by the organisation with the societal values which exist at a
national or local level (Handy, 1993).
To survive and prosper, organisations must be able to retain societal
support in order to avoid outcomes such as high legal costs or being
denied access to resources. This is demonstrated by the case of the oil
company, BP, following the massive pollution caused by a rig explosion
in the Gulf of Mexico. As well as facing massive compensation claims
from people and firms affected by the spill, BP’s drilling licence was
temporarily withdrawn by the US government. Once an organisation is
perceived as exhibiting values which conflict with those of society, it can

be expensive to regain societal support and it may be a long time until
the organisation is finally forgiven. Frequently, a major gap between the
values of an organisation and society can have such adverse impact that
the ongoing existence of the organisation can be at risk. Sales of the US
McDonald’s Corporation, for example, have been adversely impacted
in recent years. Firstly, the organisation was identified as being engaged
in environmentally damaging behaviour, for example by using poly-
styrene packaging and, more recently, by the growing concerns among
health professionals that fast food products are a primary cause of the
rising obesity levels. If the values of an organisation are perceived to be
unacceptable, there can be problems in recruiting and retaining work-
ers. This issue has confronted the coal-mining industry in some Western
nations. Local communities’ perceptions about mine owners’ lack of
concern over health and safety issues have led to parents encouraging
their children to leave the community or obtain an education that will
enable them to find an alternative form of employment.
The issue of organisations needing to ensure congruence between
employees’ and organisations’ values has been examined by Posner and
Schmidt (1993). They concluded that individuals who understood and
accepted their employers’ organisational values are more likely to be
committed to the organisation and be more positive about undertak-
ing their assigned tasks. In contrast, individuals who do not accept an
organisation’s values tend to be less committed and exhibit a less posi-
tive attitude.
Rokeach (1973) posited that values have greater influence over an
individual’s internal evaluative hierarchy than attitudes or beliefs. This
is because values provide the basis of framing value judgments for defin-
ing attitudes. Once established, personal values are influential in deter-
mining whether the individual accepts or rejects the values espoused
by an employer. Schwartz (1994) proposed that suspicions over real
intentions are increased when an employer’s statement of values con-
tradicts or conflicts with evidence an employee can observe. He also
noted, however, that the scale of socialising at work will influence the
individual. This is because social activities lead to greater acceptance of
the attitudes and beliefs of others. As a consequence, the act of social-
ising inside an organisation may cause individuals to revise their per-
sonal values and develop opinions that are compatible with the social
norms and values of their employer. Research by Mills et al. (2009)
validated these perspectives in the context of the UK construction
industry. These researchers also concluded, however, that the nature of
the values of individuals and organisations in one sector of an industry

may be very different from those in another sector of the same industry.
Hence, employers seeking to achieve congruence between the values of
employees and their organisation’s values must be aware of these differ-
ences and use sector-specific research when seeking to determine values
gaps within their workforce.
Examples of organisational values
Case aims: To illustrate how organisations present their perspectives on

vision and values.
(1) GlaxoSmithKline – a multinational pharmaceutical company.

• Vision serves as the framework for our Roadmap and guides
every aspect of our business by describing what we need to
accomplish in order to continue achieving sustainable, quality
growth.
• Culture defines the attitudes and behaviours that will be
required of us to make our 2020 Vision a reality.
• Values serve as a compass for our actions and describe how
we behave in the world – Integrity, Be Real, Accountability,
Passion, Diversity, Quality.
• Work Smartt – Act with urgency, Remain responsive to change,
Have the courage to change course when needed, Remain
constructively discontent, work efficiently.
• Focus on the Market.
• Act Like Owners.
(2) The Mayo Clinic – a US hospital and research centre which is a
leading global innovator in medical treatments.
• Vision: the needs of the patient come first.
• Values which guide Mayo Clinic’s mission to this day, are an
expression of the vision and intent of our founders.
• Respect: treat everyone in our diverse community, including
patients, their families and colleagues, with dignity.
• Compassion: to provide the best care, treating patients and
family members with sensitivity and empathy.
• Integrity: by adhering to the highest standards of professional-
ism, ethics and personal responsibility, worthy of the trust our
patients place in us.
• Healing: inspire hope and nurture the well-being of the

whole person, respecting physical, emotional and spiritual
needs.
• Teamwork: by valuing the contributions of all, blending the
skills of individual staff members in unsurpassed collabora-
tion.
• Excellence: to deliver the best outcomes and highest quality
service through the dedicated effort of every team member.
• Innovation: to infuse and energize the organization, enhanc-
ing the lives of those we serve, through the creative ideas and
unique talents of each employee.
• Stewardship: to sustain and reinvest in our mission and extended
communities.
(3) The Los Angeles Police Department (LAPD) – one of the largest
police departments in the USA.
Vision: LAPD is committed to serving the community while
protecting the rights of all persons and, as closely as possible,
achieve a City free from crime and public disorder.
Mission: to safeguard the lives and property of the people we
serve, to reduce the incidence and fear of crime, and to enhance
public safety while working with the diverse communities to
improve their quality of life.
Core values:
Service to our communities
Reverence for the law
Commitment to leadership
Integrity in all we say and do
Respect for people
Quality through continuous improvement.
(Sources: www.gsk.com, www.mayoclinic.com,
www.lapdonline.org)
Values and vision
The philosophy of an organisation defines the principles and values

associated with the production and provision of outputs. Schein (1983)
proposed that the source of this philosophy should be a mirror image
of the values of organisation’s founders and early leaders. One possible
way of ensuring that these values are sustained is by the crafting of a

vision statement for the organisation. The aim of this statement is to
communicate the organisation’s core values and beliefs to internal and
external stakeholders. An effective vision statement will provide endur-
ing guidance to leaders and employees about how they should fulfil all
aspects of their assigned responsibilities.
Kirkpatrick and Locke (1996) concluded that an organisation’s vision
has a positive impact on employee performance and attitudes. Baum,
Locke and Kirkpatrick (1998) proposed that, to be effective, a vision
statement should exhibit the attributes of clarity, future orientation, sta-
bility, challenge, abstractness and an ability to inspire. These researchers
concluded that, in the private sector, the vision statement can have a
positive effect on growth, profits and net worth.
Morin (1995, p.10), in an analysis of American business, observed
that we:
are becoming a people without rudders, without vision and with

values that have very little value at all… a turned-off, disenfranchised
society that gives up in silent disapproval; it’s a worker who comes
in later and goes home earlier than he or she did 10 years ago; it’s
people at work who just don’t care.
In his view, in order to counteract this situation, organisations should

seek to ensure that a common set of values is communicated to the
workforce via a clearly articulated vision. Collins and Porras (1997)
concluded that a fundamental element of successful companies is the
presence of core values. These core values provide a sense of purpose
that can inspire people throughout the organisation over a relatively
long period of time. These researchers posited that, in the private sector,
organisations which have created an effective vision tend to be driven
more by ideology than by seeking to maximise profits.
Levin (2000) noted that, although organisational values are an impor-
tant foundation for the crafting of a vision, values alone do not con-
stitute the entire vision. Although, to be effective, a vision needs to be
congruent with an organisation’s values, vision statements should put
values into the context of their application of fulfilling organisational
purpose. In Levin’s opinion, a vision should be both relevant to current
conditions and orientated towards the future. He also considers it to be
critical that the vision is compelling, bold, aspiring and inspiring, while
remaining believable and achievable.
Meyerson and Martin (1987) posited that the following critical

dimensions require consideration when there is an intention to revise
organisational values:
(1) Values must be viewed as an integrating mechanism providing the

normative glue that binds the workforce together.
(2) Inconsistencies will emerge between different groups or depart-
ments, reflecting the different impact which external and internal
experiences have on the validation of relevant values.
(3) Values constituted of differing beliefs and attitudes may create con-
tradictions in employees’ minds.
(4) Ambiguous values are inevitable within any organisation due to
individuals agreeing with each other over some issues but disagree-
ing or being indifferent over others.
(5) Consensus, disagreement and confusion will occur and create obsta-
cles in achieving acceptance of a common set of values across the
entire organisation.
The variation in attitudes and beliefs within a workforce caused

Willmott (1993) to observe that, instead of identifying strongly with
corporate values, employees may be selective in accepting those which
they believe will offer them material or symbolic advantage. Ogbonna
and Wilkinson (1990) referred to this trait as the ‘resigned behavioural
compliance’ reflecting employees exhibiting apparent compliance
with espoused values in order to avoid sanctions or formal disciplinary
actions instigated by management. Murphy and MacKenzie Davey
(2002, p.20) noted that compliance and resistance are not an ‘either/or’
response. They commented that:
instructions may be obeyed willingly or unwillingly; they may

equally be obeyed grudgingly, inaccurately, ritualistically or sarcasti-
cally. In all of these cases, compliance and resistance can coexist in
the same form of behaviour.
To gain further understanding of such behaviour traits, Murphy and

MacKenzie Davey studied employee attitudes in a privatised utility
company. In the 1980s, the company’s four organisational values were:
‘Seek to excel’, ‘Put the customer first’, ‘Respect the employee as an
individual’ and ‘Care for the environment’. Slightly later, the company
announced a commitment to ‘Success, responsiveness, professionalism,
honesty and integrity, respect for others, challenge and innovation.’

The research study revealed that employees’ ability to recall these offi-
cial values was generally poor. There was an evident lack of certainty
concerning the exact number of values and confusion over the mean-
ing of company communications concerning how employees were
expected to fulfil the espoused values. In many cases, employees did not
see these values as self-evident truths but rather unachievable corporate
aspirations towards perfection. As a consequence, the prevailing opin-
ion was the values were laudable but largely irrelevant to people’s expe-
riences at work. Honesty, integrity and respect for others were believed
to be appropriate values for defining personal standards of morality
and behaviour but few employees considered these values to be funda-
mental ‘givens’ and hence saw no benefit in them being articulated in
internal communications.
A key reason for employees rejecting the company’s value statements
was personal experience of situations where stated values were contra-
dicted by actual organisational behaviour. Examples of perceived con-
tradictions of the value ‘Respect for others’ included interdepartmental
rivalry, a blame culture and an obvious desire by some individuals
to be promoted to positions which increased their status within the
management hierarchy. Employees perceived ‘Honesty and integrity’
was vitiated by the existence of a ‘yes culture’ and individuals who
questioned management decisions were typically forced to leave the
company. Murphy and MacKenzie Davey proposed two key reasons
why the organisation’s value statement failed to gain support among
employees: that the espoused values were too close to normal standards
of behaviour and that actual managerial behaviour was perceived as
proving that the stated values had never really been embedded into the
company’s operations.
The researchers also proposed that similar employee attitudes will
often be encountered in organisations. In their view, this reflects the
low expectations which exist because past experiences have caused
many of today’s employees to become cynical about the real inten-
tions of their employers. Dean et al. (1998) suggested that organisa-
tional cynicism is a belief that an organisation lacks integrity. This
belief leads to the emergence of a negative attitude, accompanied
by a tendency to be disparaging and critical about the organisation’s
activities. Murphy and MacKenzie Davey presented an alternative
explanation for the responses obtained from employees in their study:
that the company’s value statement merely duplicated accepted
standards of behaviour and hence inspired neither positive nor
negative emotions. This suggestion of an ‘attitude of indifference’ has

also been identified by Roniger (1994). These researchers examined
the causes of the failure of the UK government’s ‘Next Steps’ change
initiative in the civil service. He concluded that the rigid hierarchi-
cal nature within the PSOs and the existence of powerful divisional
‘fiefdoms’ combined to produce cultural norms that permitted those
in power to ignore and thereby violate the official values promoted by
the Next Steps initiative. Employees reacted by focussing upon self-
preservation, by remaining quiet and appearing to be loyal to their
department. As a consequence, employees exhibited indifference to
any attempt to change organisational values because these activities
were perceived as irrelevant, insignificant or not worthy of any real
attention.
Turnbull (2001) posited that middle management experience is
demonstrably different from that of senior management. In his view,
middle managers, when confronted with proposals for change, wish to
be perceived as supportive of whatever values are imposed on them by
top management. Turnbull suggested that this behaviour is reflective of
the following variables:
(1) A fear of being ‘deviant’ which results in a preference for ‘play-acting’

or ‘surface-acting’ (Mangham and Overington, 1987).
(2) An ability of the individual to internalise the values and beliefs
required by a new corporate ideology without questioning the valid-
ity of these new ideas.
(3) A desire to belong and to develop a ‘self-identity’ compatible with
the perceived community which exists inside the organisation.
To assess the degree to which middle managers might create an obsta-

cle between senior management and the workforce in relation to the
desire to achieve a shift in values, Turnbull examined the activities
inside a company implementing a programme known as ‘Worldclass’.
The new values at the heart of the programme were ‘Innovation and
Technology’, ‘People’, ‘Customers’, ‘Partnerships’ and ‘Performance’.
Having experienced previous initiatives aimed at enhancing organisa-
tional performance, which had either failed or were terminated upon
the departure of the latest CEO, the middle managers were careful to
assess the attitudes and behaviours of the senior-management group
above them before exhibiting any shift in personal behaviour towards
the new role model expected of them within the Worldclass initiative.
Middle managers did not initiate any actions to influence the behaviour
of their work groups until after they had determined the severity of
probable punishment should they fail to embed the Worldclass concept
into their work groups.
From the data acquired, Turnbull determined that middle managers
could be divided into the following groups:
(1) Critical thinkers who were highly committed but constantly ques-
tioning. These individuals encouraged debate and challenged senior
managers with questions about the validity of the new initiatives.
Although rarely cynical, the individuals had sufficient confidence
in their own beliefs and capabilities to challenge the validity of
espoused strategies.
(2) Untouched professionals accepted the new concept or were uncon-
vinced, but felt they could easily find a new job elsewhere.
(3) Evangelists exhibited an apparent blind faith in whatever senior
management proposed. They seemed to believe that senior man-
agement’s strategies were correct and would avidly support any new
initiative.
(4) Open cynics held the view that whatever senior management pro-
posed would be detrimental to both themselves and the rest of the
workforce.
(5) Sceptics were committed to their job but sceptical about the benefits
of new initiatives and the sincerity of senior management. These
individuals behaved as conformists in order to avoid being per-
ceived as holding critical opinions.
(6) Actors were prepared to exhibit whatever behaviour traits are
expected in order to avoid being perceived as unsupportive of any
new initiative.
Turnbull concluded that the high proportion of behaviour traits he

observed meant that middle managers would do little to embed the
organisation’s new values into the workforce. This was due to the ongo-
ing ‘blame culture’ that had provoked middle managers to seek to retain
a low profile to avoid being identified as the cause of failure when the
organisation’s latest strategic initiative proved unsuccessful. These mid-
dle managers also perceived that, although senior managers claimed a
desire for a values shift, no apparent changes were made to structure or
process in order to achieve this aim. The organisation retained a hier-
archical structure, with most decisions remaining the sole preserve of
senior management.
Where actual values prove inappropriate
Case aims: To illustrate how an organisation can fail to ensure that

espoused values are actually used.
In those areas of the public sector where professionals constitute a
significant proportion of the workforce, such as healthcare and edu-
cation, PSOs need to ensure adequate alignment between the organi-
sation’s values and those espoused by the professional bodies of
which some staff are members. In addition, where there is a risk that
certain professionals perceive their views to be more important than
those of other employees, there is a need to communicate the organi-
sation’s expectations over values and associated behaviour through
well-defined conditions and rules of employment. This action should
be linked with an appropriate system for dealing with unacceptable
behaviour by any member of staff. The requirement to align organisa-
tional and professional values linked to an effective human resource
management (HRM) system statement can be of critical importance
where certain individuals have a tendency to impose their personal
values on less senior employees and those who the individual per-
ceives as being less qualified in making effective decisions.
Some PSO organisations tend to avoid challenging the behaviour of
individuals who are perceived as key to the delivery of the organisa-
tion’s services. This is not unusual in the healthcare sector where, for
example, a hospital’s senior management may prefer to avoid ques-
tioning the capabilities of their senior consultants. As a consequence,
official recognition that values dissonance exists in such situations
often only occurs as a result of an independent enquiry concerning
unacceptable, and sometimes illegal, behaviour within a PSO.
An example of this type of outcome is provided by Casali and Day’s
(2010) analysis of the outcomes of a formal enquiry into practices at
Bundaberg Hospital in Australia. The focus of the enquiry was on
poor decision making in the employment of an inappropriate staff
member. The hospital was deemed to have failed to exercise a duty
of care to others by hiring Dr Jayant Patel, which occurred despite
clearly defined organisational values and strong shared values on
the fulfilment of professional standards among the medical staff.
The enquiry found that the hospital had hired Dr Patel as Head
of Surgery without exhibiting due care in checking his medical
qualifications and employment history. Such a check would have
raised serious questions over his suitability and capability to fulfil

the role. As a consequence, it was only after nearly two years of
complaints from both staff and patients about substandard surgical
care and treatment that eventually the doctor was relieved of his
responsibilities.
Another area where the hospital was found to be at fault was
in poor decision-making. The Commission of Inquiry determined
this was caused by organisational values which favoured ‘cover up
and protection’ despite the fact that the hospital openly publicised
an espoused importance given to values such as honesty, integrity
and duty of care. The situation was highlighted by the case of the
nurse, Tini Hoffman, in relation to her concerns about Dr Patel’s
behaviour. The nurse had followed hospital procedure and reported
her concerns by filing an adverse medical event report with the
hospital management. When she received no response, she collected
evidence of the doctor’s poor clinical outcomes and submitted these
to the District Health Manager. When this also appeared to have
been ignored, she eventually forwarded a copy of her report to a
state Member of Parliament, who raised the matter in parliament. It
was only at this juncture that action was taken, by establishing the
Bundaberg Hospital Commission of Inquiry. This inquiry concluded
that formal procedures and the hospital’s claim to value honesty,
integrity and duty of care were in practice perceived as less important
that an organisational culture of supporting senior management’s
prior decisions and avoiding these being made open to scrutiny.
The inquiry also received evidence that the organisational culture
in Bundaberg Hospital supported behaviours incompatible with the
espoused organisational values of friendship, honesty, compassion
and care. Workplace harassment and bullying were claimed to be
widespread. Submitted evidence indicated that the major reason
for a high number of staff resignations was an environment that
accepted intimidation, bullying and victimisation.
This intolerable situation provides a strong example of how a
failure to ensure congruence between espoused and actual organi-
sational values can cause a PSO to fail to fulfil its assigned responsi-
bility to deliver the highest possible quality of care to patients. The
case also demonstrates how employees will become demoralised if
prevented from fulfilling the values defined by their respective pro-
fessional bodies and if their expressions of concern are ignored by
senior management.
Values and strategy
Early coverage of strategic planning in academic literature tends to

emphasise a ‘linear model’, which focuses on sequential goals and
actions with a key assumption of a stable external environment. In
the linear model, leadership usually exerts the ultimate influence over
strategy selection, with a preference for logical, consistent goals and
objectives.
In contrast, an ‘adaptive strategy’ model will tend to focus on how
best to align the organisation with what is usually a changing external
environment. External forces are assumed to be of greater importance
than internal capabilities. The leadership will probably be required to
defer to environmental change when selecting an appropriate strategy.
A third model is the ‘interpretive strategy’ which focuses on establish-
ing an agreed relationship over actions to be implemented. This model
reflects a contractual view of strategy, with the leadership working in
partnership with employees to shape the management of meaning,
symbols and values within the organisation (Chaffee, 1985).
The influence of NPM on strategic management practices in PSOs
has tended to result in philosophies and processes being imported from
the private sector. One consequence has been to highlight the funda-
mental dilemma of whether duplication of private sector practices is
compatible with the traditional values which exist within the public
sector (Weller and Lewis, 1989). This dilemma arises from values-based
actions being perceived as central to the fulfilment of the responsibili-
ties assigned to PSOs.
Two value types exist within the administration processes associ-
ated with the provision of public sector services: ‘instrumental’ and
‘expressive’. Instrumental values can be considered as an orientation
towards selecting actions for their utility and their economic benefits.
Expressive values are associated with actions reflecting care and con-
cern for others when selecting the most optimal decision or action.
Instrumental values are manifested in the academic literature and in
real life through the use of terms such as ‘value-added’ or ‘value chain
performance’. This contrasts with expressive values that focus enhanc-
ing humanity and achieving social equality (Mason, 1996).
In many Western democracies, the advent of NPM has been accompa-
nied by the emergence of PSOs showing preference for utilising instru-
mental values. This is probably caused by public sector reform having
been driven by governments’ desire to achieve greater efficiency and
effectiveness (Gardner and Palmer, 1992).
To gain further understanding of the nature of post-NPM value

shifts in Australia, Steane (1999) undertook a comparative study of
strategy planning practices in PSOs and not-for-profit organisations.
He concluded that, as efficiency has become the dominant strategic
issue within PSOs, instrumental values were now more influential than
expressive values when decision making. In contrast, strategic man-
agement in not-for-profit organisations appeared to have remained
dominated by expressive values. The study did reveal, however, that
these organisations were also being forced to adopt certain instrumental
values in order to successfully compete for grants and resources from
sources such as state or federal government agencies.
It would appear that most PSOs are accepting of values shifts on stra-
tegic management by recognising the need to move away from classic
linear models in which leadership relies upon a top-down decision-
making style and a reliance on rules to define appropriate actions. In
a post-NPM world, senior managers appear to be more accepting of an
approach which could be interpreted as a mixed adaptive/interpretive
model. This is reflected by leaderships accepting the need to recog-
nise that external events have significant influence over determining
strategy. Nevertheless, these leaders may prefer to use an instrumental
model of strategy execution to retain influence over the management
of purpose and values within the organisation.
Changing values
In the USA, the federal government sought to implement NPM via a

programme entitled the National Performance Review. The five out-
come themes of the programme were:
(1) Cutting Red Tape

(2) Putting Customers First
(3) Empowering Employees To Get Results
(4) Back to Basics
(5) Reduce Bureaucracy (Gore, 1993).
In his analysis of the programme, Van Mart (1996) concluded that achiev-
ing the proposed outcome themes necessitated a major organisational
value shift in American PSOs. The identified value shifts included:
(1) Shifting the status quo because of the many years during which the
public sector used values which emphasised tradition, risk avoid-
ance and consistency.
(2) Shifting from centralisation to decentralisation, reflecting the view that

existing systems have become over-centralised. Senior managers,
many of whom are political appointments, want to have absolute
control over administrative decision-making by ensuring that all
major issues remained under their absolute control at the top of the
organisation. Their justification for this preference is that it leads to
consistency, uniform visions, orderliness and economies of scale.
(3) Shifting from a process-orientation to a results-orientation culture because
the latter places more emphasis on values directed towards achieving
enhanced service quality outcomes. The justification for a process ori-
entation is that it ensures consistency and careful scrutiny of process,
thereby avoiding problems over failure to follow due legal process.
(4) Shifting from a monopolist to a competition orientation on the grounds
that injecting values normally associated with the private sector
will lead to greater efficiency and cost effectiveness. The justifica-
tion for public sector monopolies has been that these are the only
option when national interests are at stake, that the private sector
has a limited ability to deliver certain specific services and that this
permits economies of scale in areas such as procurement.
(5) Shifting from autonomy to collaboration because values associated with
this move are associated with recognising the benefits of resource
sharing, accompanied by access to new knowledge and expertise.
Autonomy has been a traditional value of government agencies
on the grounds that it permits effective specialisation of purpose,
reduces role overlap and protects specialist resources from being
diluted after re-allocation elsewhere within the public sector.
(6) Shifting from an expert to a consumer focus because this value enhances
a PSO’s orientation towards effectively meeting the real needs of the
organisation’s clients. The justification for an expert focus is that
delivery of public services is a complex system not understood by
clients and so can only be effectively managed by experts within
these organisations.
(7) Shifting from a manager to an employee focus because this ensures
that productivity and service quality be can optimised by adopting
a team-orientated approach to service provision. The previous val-
ues were associated with a management preference for hierarchical
organisations and a reliance upon carefully crafted rules and regula-
tions in the delivery of services.
In his analysis of the values that are critical to ensure the operational
success of a national government agency, Muris (2006) posits that
an organisation’s values must be understood and supported by key

stakeholders so that the assigned core responsibilities can be fulfilled.
He notes that this does not mean that a PSO must be popular or that
stakeholders are unanimous in their support for all of the organisation’s
actions.
Muris also proposed that the vision of the PSO must be accepted by
stakeholders over the longer term. This is necessary in order that the
organisation’s values are not distorted by a change in assigned responsibili-
ties following the election of a new government with a different manifesto.
Nevertheless, the requirement for long term relevance should be chal-
lenged where the current mission is no longer deemed fit for purpose. The
example quoted by Muris is the situation that the US Civil Aeronautics
Board’s long-established core mission of tight regulation of the airline
industry failed to be justified because evidence emerged that the costs of
regulation exceeded the benefits claimed by the organisation.
The other requirement proposed by Muris relates to how a PSO exerts
authority and utilises resources. Where values fail to result in the defini-
tion of a positive outcome, the organisation may become passive, with
its actions defined by external events and political pressure. Hence, he
suggests that a key value is to ensure that the PSO retains a positive
attitude towards delivering real benefits to the nation.
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8
Vision, Mission and Strategy
Evolving theory
The increasing complexity of managing very large companies has

resulted in the need to seek new ways of developing a more structured
approach to planning future actions and to effectively monitor actual
versus planned performance. By the 1960s, lessons learned in business
planning in major corporations, mainly those based in the USA, in sec-
tors such as car manufacturing and fast moving consumer goods (FMCG)
saw the adoption of what became known as ‘strategic planning’. In their
1965 text, Learned et al. proposed that the process should involve setting
performance goals and defining a strategy that together provide a frame-
work upon which to define the nature of future operations. These authors
suggested that organisations should assess relevant internal strengths and
weaknesses to decide which distinctive internal competences can ensure
that the organisation’s strategy is aligned with the opportunities and
threats in the external environment. Any subsequent plan should specify
appropriate actions to ensure that functional departments act in an inte-
grated fashion to optimise future performance. This approach is often
described in management texts as involving the three questions:
(i) Where are we now?

(ii) Where are we going?
(iii) How to get there?
Most texts also present a linear sequential approach to the planning

process, involving activities which include:
(1) Situation analysis to assess recent events and trends in the external
and internal environment.
153
(2) SWOT analysis to evaluate strengths and weaknesses within the orga-
nisation and opportunities and threats in the external environment.
(3) Performance aims defining organisational targets in relation to vari-
ables such as sales and profits.
(4) Strategy definition specifying the basis upon which performance aims
will be achieved.
(5) Action plan describing the actions to be implemented to support the
proposed strategy.
Over the years, there have been significant differences in opinion among
academics over the nature, purpose and process of strategic planning.
A key factor influencing this debate has been about defining precisely
what a strategy is. In commenting upon this situation, Markides (2004,
p.6) noted that:
the confusion is not restricted to academics. If asked, most practising

executives would define strategy as how I could achieve my compa-
ny’s objectives. Although this definition is technically correct, it is so
general that it is practically meaningless.
A key issue has been different perspectives on the most critical factors
that influence the determination of strategy. Most of the early literature
adopted the perspective that a strategy should provide an effective response
to external environments and lead to the satisfaction of customer needs.
This can be contrasted with the supporters of the Resource Based View
(RBV) of the organisation. These theorists posited that, as most organisa-
tions understand their external environment and how to satisfy custom-
ers’ needs, then success is achieved by a superior exploitation of internal
competences. In commenting on the apparent differences between these
two schools of thought, Klein (2002) proposed that all organisations need
to respond to their external environment and satisfy customers, but to
achieve a competitive advantage this demands the exploitation of supe-
rior competences. Consequently, he suggested that both the environmen-
talist and competence perspectives should be included in any definition
of strategy. Klein proposed that, despite combining these two theories,
any definition of strategy should remain simple. Following this advice,
the following definition seems reasonable:
Strategy is a statement which defines how internal competences cre-

ate a superior competitive advantage over organisations serving the
same customer(s) and market sector(s).
Vision, Mission and Strategy 155
Another criticism of the traditional linear, sequential strategic planning

model is that some researchers have often found real-world manage-
ment practices to be at variance with espoused theory. This has led
to proposals of alternative process models that organisations might
utilise when crafting future strategies. Mintzberg (1990), for example,
described the linear sequential planning process as being part of the
‘Design School’ approach to management. He felt that the ‘Planning
School’ and the ‘Positioning School’ shared the same philosophy of
using detailed analysis, leading to the prescriptive definition of a stra-
tegic solution. He also concluded that, in many organisations, strategy
evolves gradually over time as managers make sense of influences over
performance and develop a deeper understanding of the factors influ-
encing success. His typology for this latter form of strategic behaviour
is the ‘Learning School’. He proposed that this shares a number of traits
with other views on strategic process management such as the ‘Power
School’, the ‘Cultural School’ and the ‘Environmental School’. He con-
cluded that the common traits support the perspective that strategies
emerge through experience and cannot be defined through the analysis
of historical organisational activity (Mintzberg, 1999).
The debate over the validity of prescriptive versus descriptive strate-
gic planning management models can prove somewhat confusing for
students and management practitioners seeking guidance over which
might be the most effective process model for developing a strategic
plan. It is also probable that, because different models are suited to
different industrial or organisational circumstances and managerial
cultures, there will be no consensus over a universal process applicable
to every organisational scenario. The majority of students and manage-
ment practitioners from Western countries tend to be rational, logical
thinkers who prefer to reach a conclusion based upon quantitative
analysis of the variables impacting on organisational performance.
As a consequence, and despite articulated criticisms of process weak-
ness, Western managers are still likely favour systems which reflect
the Design School approach. Liedtka’s (2000, p.29) justification for the
ongoing acceptance of this approach was that:
Design offers a different approach and would suggest processes that

are more widely participative, more dialogue-based, issue driven,
conflict-using rather than conflict avoiding, all aimed at invention
and learning, rather than control… Finally and perhaps most impor-
tantly, we should recognize that good designs succeed by persuading,
and great designs by inspiring.
Public sector adoption
To achieve an economic, effective and efficient delivery of services pro-

posed by NPM, academics and government advisors promoted greater
use of strategic planning to assist public sector managers in developing
more appropriate plans for coping with capped or declining resource
availability. Bryson (1995, p. 11) proposed the activity provided ‘a disci-
plined effort to produce fundamental decisions and actions that shape
the organisation, what it is, what it does and why it does it.’
Early attempts to introduce strategic planning into the public sector
from the private sector often proved unsuccessful. To a certain degree,
this was because existing managers and some managers recruited from
the private sector, failed to modify the planning process to reflect dif-
ferences between the two sectors. As a consequence, process models
were not revised to reflect the operational realities confronting PSOs.
Ring and Perry (1985) noted that one of the fundamental differences
between the two sectors is the nature of the customer, and the degree
of freedom in the availability and allocation of resources for delivering
services.
A private sector organisation determines the nature of its customer
needs and then determines how best to satisfy these needs. In contrast,
the public sector provider has to attempt to satisfy two customer groups:
the ‘contracting customer’ (usually a legislative entity who decides the
nature of the services to be delivered and the level of resources avail-
able) and the ‘served customer’ to whom the organisation delivers
services. Seeking to meet the needs of these two customer groups often
creates added strategic planning complexities, because the ability of the
provider to satisfy the served customer is influenced by such factors as
the service role defined by legislators and the performance indicators
which the contracting customer decides should be met for the PSO to
receive the funding resources it has been promised.
Ring and Perry expanded the analysis of the complexities that are
likely to confront the PSO. They proposed that the public sector planner
can expect to encounter the following issues:
(1) The specific nature of the policies and desired service outcomes are
often ill-defined by the contractual customer. This creates problems
when the PSO attempts to translate these specifications into viable
and understandable actual services.
(2) Closer examination and scrutiny by legislators, policy makers, the
media and the general public reduces the PSO’s ability to act in
a way which is perceived as being in the best interests of served

customers and the organisation’s own staff.
(3) Complications over service delivery and staff responsibilities are cre-
ated by highly diverse groups of stakeholders, each concerned with
achieving its own vested interests.
(4) New government policies or enacted legislation may create an impos-
sibly short schedule in which to acquire resources and develop the
PSO’s capabilities to revise the existing service portfolio or to deliver
new services.
(5) Service delivery partners with which government policy dictates the
PSO must collaborate may prove to be unreliable due to incompe-
tence or unpredictable behaviour.
Mission
A potential weakness in the application of the classic linear planning

model is that users may be persuaded to base future strategies on an
extrapolation of prior organisational performance. This approach was
possibly acceptable in the 1950s and 1960s, when markets in developed
economies were either stable or growing steadily at a predictable rate,
and the intensity of competition was relatively low. However, occur-
rences such as the OPEC oil crisis, high inflation and militant unions
all contributed to the emergence of market instability. Hence, by the
1980s, the classic linear planning model began to be a poor platform
from which to define future strategic actions.
One issue which arose in the debate about the need to revise the plan-
ning process to reflect new environmental realities was the fact that few
plans provided an effective description of organisational purpose. The
absence of such a definition was perceived as weakening managers’ eval-
uation of the viability of existing strategies. As a consequence, organisa-
tions began to introduce a ‘mission statement’ as the entry point into
the strategic planning process. In reviewing the benefits of defining a
mission for an organisation, Buckingham (2005) proposed that a mission
statement provided a ‘controlling insight’ which can be used to evaluate
whether proposed strategic actions will lead to long-term success for the
organisation. Buckingham recommended that the mission statement
should describe the core activities of the organisation and the way in
which these will permit organisational goals to be achieved. He further
suggested that a mission statement should apply across a diversity of
situations, accurately define the nature of outcomes that are achievable
and act as a guide to essential actions required of the entire workforce.
A similar debate to that over defining ‘strategy’ has occurred in

the literature on what exactly should be contained within a mission
statement. Pearce (1987) proposed that the mission statement should
include measurable objectives, and define organisational purpose and
strategy. Panda and Gupta (2003) recommended that, in the private
sector, mission statements should express key organisational features
including primary markets and customers, primary product or service,
technology used to deliver the product or service, geographic territory,
profitability and concern for firm survival, company philosophy, the
firm’s desired public image, and the firm’s self-concept.
Calingo (1989) proposed that mission statements should:
(1) guide the strategic planning system

(2) define the organisation’s scope of business operations and activities
(3) provide a common purpose or direction, transcending individual
and department needs
(4) promote a sense of shared expectations among all levels of employ-
ees, thereby building a strong corporate culture
(5) guide leadership style.
Not surprisingly, given the diversity of these recommendations by different

academics on the constituent elements of an effective mission statement,
the strategist in any organisation will face an extremely difficult task when
attempting to meet Buckingham’s recommendation that the key aspects of
mission should be contained within a single sentence. The virtual impos-
sibility of achieving this aim meant that, within only a few years of mis-
sion statements regarded as necessary for an organisation, the length and
complexity had, in many cases, caused these statements to become totally
incomprehensible. Not surprisingly, this led many employees to perceive
mission statements as just another exercise in futility, the latest ‘bright
idea’ from either senior managers or expensive management consultants
who had been hired to rejuvenate an organisation that may already be in
non-reversible, terminal decline (Byers and Neil, 1987).
During the initial introduction of strategic planning into many PSOs
following the advent of NPM, the process model tended to be based
upon the classic three-phase analysis: Where are we now? Where are we
going? and How to get there? As a consequence, minimal emphasis was
given to the concept that a mission statement could assist the planning
process by providing an overall statement of purpose against which
proposed strategies and planned actions could be assessed. In the face
of politicians’ criticisms that NPM was not delivering the expected
enhanced efficiency and effectiveness, a view emerged within the public

sector that reformed and better performance could be achieved by uti-
lising mission statements as the entry point into the planning process.
In commenting upon mission statements for public sector educational
institutions, Kotler and Fox (1985) suggested that these must take into
account institutional history, constituencies, environment, resources
and distinctive competences. As with the private sector, many PSOs
soon became the proud owners of lengthy, highly complex mission
statements. In part, this reflected senior managers’ failure to recognise
that, unless the mission statement is comprehensible, it will serve no
purpose. The other cause of the problem was the public sector’s ten-
dency to engage in consensus-based decision making involving many
of the organisation’s major stakeholders. These various vested interests
usually have very different perspectives on the purpose and role of
a PSO. Not surprisingly, achieving a consensual decision will usually
mean that the approved mission statement is not only lengthy but also
unspecific or, alternatively, contains contradictions.
This outcome is confirmed by Morphew and Hartley’s 2006 comparative
study of corporations and public sector educational institution mission
statements. They found that statements from corporations were more
inspirational and significantly more readable than those used by colleges
or universities. In their view, public sector mission statements contained
exaggerated aims within extremely complex phraseology, which greatly
contributed to reducing effectiveness as a device for assisting the planning
process. Given the role of the mission statement as communicating organ-
isational purpose, and the need to retain simplicity in order to ensure
effective communication and understanding, the following proposed
generic mission statement could be recommended for use by PSOs:
Provision of excellent services to the organisation’s customer(s)

by optimising the effective and efficient utilisation of all available
resources.
Content versus memorability
Case aims: To illustrate the nature of diverse opinions about the effective-
ness of mission statements’ content.
Mission statements are often presented in management texts as
the cornerstone of the strategic planning process. However, there
remains a question over the degree to which the mission will influ-
ence organisational performance (Krohe, 1995). In seeking to deter-
mine the validity of theories on the role of the mission statement
and the use of the concept in the public sector, Bart and Hupfer
(2004) surveyed senior managers in Canadian hospitals. Respondents
were asked to comment on 23 possible items that might be included
in a mission statement on a scale ranging from ‘Not used’ to ‘Used
extensively’. The respondents were also asked to assess impact of a
mission statement on performance indicators in the areas of behav-
ioural, financial and organisational service provision. Respondents
were questioned about the extent to which staff were committed to
fulfilling their organisation’s stated mission.
The researchers identified the following top seven factors which
respondents believe should be covered by a mission statement:
(1) Business definition (e.g. compelling goal, specific customers/

patients, specific products offered, unique identity and desired
public image).
(2) Benefactors (e.g. employees, concern for society, stakeholders,
society in general).
(3) Competitive orientation (e.g. distinctive competence/strength,
competitive position).
(4) Grand inspiration (e.g. purpose, values and vision).
(5) Location and technology.
(6) Concern for suppliers.
(7) Concern for organisational survival.
Respondents believed the most important component to be the

inclusion of an inspiring statement to motivate service provision and
internal organisational processes. Next in importance is the need to
satisfy the organisation’s benefactors. The third most important vari-
able is competitive orientation in relation to attracting and retaining
customers.
Inclusion of business definitions appeared to be seen as less rel-
evant to hospital managers. Compared with the other components,
the business definition factor seems to be subject to individual differ-
ences in perception. Among respondents who considered a business
definition to be an important component of a mission statement,
the prevailing view was this aspect of mission should be restricted to
a brief description of the services that the hospital offers to patients.
Respondents believed that mission statements have a positive impact

on performance but only when they cover grand inspiration, bene-
factors, competitive orientation and business definition. The other
three factors of location, suppliers and survival were seen as having
no relevance or impact on performance.
Bart and Hupfer expressed concern that ‘grand inspiration’ and
‘satisfying benefactors’ are usually imprecisely defined, measure-
ment of impact can be difficult and business definitions selected
by hospitals were based upon a narrow evaluation of performance.
In their view, mission statements that do not contain a measurable
component will create difficulties for managers and staff because
managers will be unable to determine whether a mission is being
achieved. They recommended that hospital leadership needs to able
to assess the degree to which a mission is achieving its purpose and
that all aspects of performance must be translated into performance
indicators which are specific, measurable, acceptable, realistic and
timely.
Bart and Hufer concluded that visionary, stakeholder and com-
petitive content appear to have a greater impact on important per-
formance measures than a description of an institution’s patients
and services. They proposed a model hospital mission statement
which contained five rather lengthy statements covering inspiration,
benefactors, competitive orientation and business definition, which
contained more than 100 words.
Although the research provides some useful insights into pub-
lic sector managers’ views about mission content, it is necessary
to recognise that there remains a diversity of opinion about what
should be covered in the statement. This diversity relates to both
the length and content of an effective mission statement. Bart
and Hupfer’s proposals can be contrasted by those of Hill and Jones
(2002) and Thompson and Strickland (1996) who posit that lengthy
mission statements of the type proposed by Bart and Hupfer risk not
being understood or can lead to confusion among employees and
other stakeholders due to different interpretations of the intended
meaning. Another concern is that there is evidence that mission
statements must be sufficiently memorable to provide guidance
when any employees are fulfilling their job roles (Chaston, 2011).
Assuming this is a valid perspective, the risk is that the length of Bart
and Hupfer’s proposed model statement would probably vitiate any
hope that the mission be memorable.
Vision
In seeking to manage the development and implementation of plans for

complex organisations, Dilts (1996) proposed a need to divide activity
into a number of logical elements which are reflective of an organisa-
tion’s culture. In his view, these elements should represent the natural
relationships that exist in social systems and their impact on the overall
system. Dilts proposed that the logical elements should include purpose,
identity, values and beliefs, capabilities, behaviours and environment.
Branson (2005), in researching the influence of personal values on
behaviour, proposed that these elements are key to assisting people in
understanding how the organisation’s strategic values are formed and
how these values provide the basis for an organisational culture which
can support the organisation in achieving its performance goals. He also
posited that employees need to understand the antecedent influences
that have led to the adoption of the organisation’s preferred values. It is
only in this way that employees are able to align their personal values
and the strategic values of the organisation. This alignment ensures that
the organisation’s strategic values provide the ‘guiding beliefs’ which
form the framework against which to develop and assess every key ele-
ment within the strategic plan. Given the importance of organisational
values, it is recommended that these are contained with a ‘vision’ state-
ment that is always the entry point into whatever strategic planning
model is being utilised by a PSO.
In reviewing the critical importance of vision, Van Wart, (1966,
p.460) proposed that:
vision concentrates on what should or could be, not on what cur-

rently is. It integrates mission (the purpose of the organization) and
values (the standards and preferences of the organization) into a
cohesive action-oriented plan.
Van Wart also suggested that organisations without vibrant visions

are normally either standing still or moving into decline. In his view,
organisations have a much greater chance of success by establishing
challenging visions. Modest visions often fail to capture the imagina-
tion of employees so are not sufficiently motivating for employees to try
to overcome any obstacles during the execution of their assigned tasks
and in seeking to deliver the highest possible service quality.
In developing a vision for a PSO, it is necessary to recognise that the
often rather conservative and traditional nature of senior managers
Co-operation
and Flexibility Innovation
collaboration
Values-based
definition of vision
Rules and
Control KPIs
regulations
Figure 8.1 Conflicting values
can be reflected in a preference for values associated with adhering

to prevailing rules or regulations, a leadership style based upon top-
down control and the use of tightly defined KPIs to assess performance
against plan. This preference conflicts with the values required by a PSO
attempting to respond to changing external environments and declin-
ing resources. Success in this situation will require values associated
with co-operation and collaboration between groups inside and outside
the organisation, flexibility and a commitment to sustained innovation
(Quinn, 1988). Unfortunately, as summarised in Figure 8.1, these last
three values often conflict with the values associated with conservative,
conventional organisation behaviour. Hence, a key aim when defin-
ing the future vision for a PSO is to reduce or nullify the influence of
traditional values whilst amplifying the importance to be placed in the
values associated with co-operation/collaboration, flexibility and inno-
vation (Van Muijen and Koopman, 1994).
In relation to specific guidelines for developing an effective vision
statement Kantabutra and Avery (2010) proposed that the vision
should:
(1) be brief
(2) contain a prime goal to be achieved
(3) encompass all organisational interests
(4) provide guidance which is relevant to both the current and long-
term circumstances of the organisation
(5) present a long-term perspective for the organisation
(6) provide a source of strong motivation for employees
(7) not need to be revised in the face of market or technological
change
(8) be viewed as desirable by all employees.
Kantabutra and Avery posited that vision statements containing these

characteristics can be expected to result in higher performance out-
comes because the vision provides the basis for ensuring that the organ-
isation’s plan prioritises achieving customer and employee satisfaction.
Kantabutra and Avery noted that simply creating an effective vision
statement is not sufficient. To maximise benefits during both the plan-
ning and implementation phases, the vision must be communicated to
all employees. Optimal performance can only be achieved when all the
organisation’s systems are aligned with the vision.
As with the guidance over what should be contained in a mission state-
ment, the well-meaning intentions of academics for the desirable features
of an effective vision has led some organisations to develop lengthy and
sometimes convoluted vision statements. These are rarely understood by
the workforce and are often perceived as ‘organisational furniture’; created
for the comfort of senior management but with no relevance for develop-
ing or delivering strategic plans. In an attempt to avoid this outcome, the
following generic vision statement is proposed for use by PSOs:
Excellence through a proactive innovative commitment to service

provision emphasising optimal use of available resources to satisfy
external and internal customer(s) needs.
The inclusion of ‘proactiveness’ in the proposed vision statement is

necessary to ensure that PSOs do not rely on duplicating past behav-
iour, but instead focus upon anticipating and acting on future service
needs in the face of declining resource availability. The inclusion of the
proactiveness variable is guided by Morris and Jones’ (1999) conclusion
that the most successful PSOs anticipate and avoid service provision
problems. Proactive organisations also exhibit a high level of commit-
ment, perseverance, flexibility, adaptability and a willingness to take
responsibility for possible failure. Strategies based upon the proposed
vision statement will typically include creative interpretation of rules
and leveraging scarce resources (Chaston, 2011). Inclusion of customer
satisfaction in the vision statement reflects Cervera, Molla and Sanchez’s

(2001) conclusion that achieving optimal service delivery in the public
sector should be a fundamental value for PSOs. The researchers posited
that adopting customer orientation results in PSOs proactively respond-
ing to their environments, a willingness to dismantle bureaucratic bar-
riers and provision of new, high quality services capable of satisfying
social needs.
In recent years, services marketing theory has placed greater emphasis
on the benefits offered by ‘relationship marketing’. This philosophy is
based upon the perspective that, given the intangible nature of serv-
ices, the focus of the marketeer is to build closer relationships with
customers to build stronger customer loyalty. In their assessment of
how public sector bodies could enhance their operations, Da Silva and
Batista (2007) posited that effective implementation of a relationship
marketing philosophy depends on the existence of co-operative and
collaborative information exchange and process activities between indi-
viduals, groups and departments inside a PSO. It is for this reason that
the proposed vision statement includes satisfaction of both internal and
external customer needs.
Overcoming value schisms
Case aims: To illustrate how value differences create barriers in the identi-
fication of an agreed organisational purpose.
Accompanying the introduction of strategic planning as a compo-
nent of NPM was a concurrent emphasis on adopting a managerial
approach to decision making. The managerial perspective presumed
that rationally planned change, based upon careful empirical
analysis, will lead to enhanced effectiveness and efficiency (Epstein,
1993) The justification for this shift to a managerial approach partly
reflected the perspective that professionals’ retention of absolute
control over resource allocation inside a PSO may result in decisions
aimed at protecting personal fiefdoms rather than optimising the
provision of services. The research on welfare reform by Friedlander
and Burtless (1995) suggests that the success of substituting profes-
sionals determining strategies with managerial decision making
ranged from modest to negligible. Examples of limited success were
identified in most sectors including healthcare, social work and
education.
An inability of those appointed to managerial roles to work in part-

nership with professionals can be explained by the fact that these two
groups tend to base their decisions on totally different organisational
and personal values. For actions such as budget cuts, standardisation,
efficiency programmes and KPI-based performance measurement,
professionals feel they are no longer permitted to deploy their skills
and expertise to fulfil their assigned roles. Furthermore, the empha-
sis on the quantity or volume of work rather than its quality is why
PSOs have often encountered an increase in the level of complaints
from service users following the introduction of NPM. This can be
contrasted with the perceptions of those in managerial positions,
who believe that service provision problems are caused by the intran-
sigent behaviour of professionals who are unwilling to admit that
their approach to task delivery is no longer appropriate in a world of
declining resource availability (Ahmad and Broussine, 2008).
Winter (2009) identified that a schism in values has emerged in the
university sector. The academic environment was based upon long-
established values associated with collegial governance, institutional
autonomy and personal academic freedom. Academics’ personal values
are usually related to ideological rewards, such as the value of scholar-
ship, intellectual curiosity and accountability based upon peer assess-
ment from the wider academic community. Resource constraints, such
as declining government funding and the need to attract students
capable of affording higher fees, has led academic professionalism to
be replaced with managerial philosophies. In these new, manager-
orientated regimes, financial performance and cost effectiveness have
become more important than academic prestige. As a consequence,
academics find that their professional values are often in conflict with
the values of their institution’s senior management, which is focused
on ensuring the organisation’s ongoing financial viability.
Having studied case materials concerning the healthcare sector,
Moore (1998) concluded that successful reforms were more likely to
occur when professionals and management accepted that differences
in values exist but that, through dialogue and negotiation, individu-
als can modify their attitudes and beliefs to create value congruence.
Only once this has occurred is it possible to evolve strategies and
plans in which professionals and managers can agree that optimis-
ing service provision requires an emphasis on the most effective
and efficient approaches in the allocation and utilisation of scarce
resources.
In an assessment of the impact of reform in Norwegian hospitals,

Opdahl (2008) concluded that sustaining healthcare provision with
constrained resources requires medical staff to balance managerial
and professional considerations to create collective responsibility
for defining appropriate strategies. In the case of medical services,
Opdhal believes it is crucial to rely upon the expert knowledge of the
professional to ensure that decisions are legitimate. He believes that
long-term success will involve further value congruence, as medical
staff gain additional experience of participating in decision making
beyond that associated with determining appropriate treatments for
patients.
A similar conclusion was reached by Hardy, Lawrence and Grant
(2005) in relation to the definition and implementation of successful
strategic plans in the higher education sector. These researchers pro-
posed that ‘generative conversation’ between academics and manage-
ment is necessary to achieve identity convergence. These conversations
permit managers and academics to begin to understand each other’s
values so that they can collaborate in achieving the long-term aims
of the organisation in an increasingly resource-constrained environ-
ment. Such interactions can lead to the creation of mutually beneficial
relationships based upon collaboration, sharing ideas and achieving
consensus over the most appropriate solutions to the problems facing
an institution.
Process model
Having observed the process in numerous corporations, Drucker (1994)

concluded that strategic planning in many organisations is merely con-
cerned with organisational policies and the analysis of information. In
his view, planning should involve acquiring new knowledge to assist in
developing a better understanding of potential external environmental
conditions in order to determine the most appropriate future opportu-
nity for the organisation. In presenting his ‘theory of business’, Drucker
proposed that an effective process model should involve accumulat-
ing assumptions about future environments, specifying mission and
determining which internal competences are required to achieve future
performance aims. Although Drucker had a well-deserved reputation as
an insightful academic thinker, it seems reasonable to supplement his
theory of business by adding a fourth element to the process: specifying
a vision for the organisation. This addition of vision for those PSOs
which prefer to retain a sequential linear approach leads to the adop-
tion of a process model of the type shown in Figure 8.2. The other
important addition to the process model is the insertion of ‘Prevailing
values’. This is to register the importance of testing the validity and
viability of all proposed actions and decisions on the values which have
been established for the organisation.
Evidence from the private sector indicates that, in the case of innova-
tive organisations, especially where the innovation is of an entrepreneur-
ial nature, the actual planning process often exhibits the appearance of a
‘spider’s web’ (Chaston, 2009). This reflects that the planning is typically
centred upon a focal hub concerned with vision. Given the perspective
that that values are the variable against which all actions and outcomes
should be assessed, then one possible process model that reflects this
objective is summarised in Figure 8.3. The values upon which a vision is
based are especially crucial for services provided by a PSO because these
are more likely to be effective where they reflect high ethical principles
and standards. The model presented in Figure 8.3 seeks to emphasise
Vision
Mission
External environment Internal organisational

analysis environment analysis Where are
we now?
PREVAILING VALUES
SWOT
Where are we
Objectives
going?
Business strategy
How to get
Operational plan
there?
Financial plan
Control system
Figure 8.2 Linear Sequential Strategic Planning Model

Current service Current service

provision delivery capacity
SWOT
CURRENT
Current
Current vision
strategy
Future vision
Future
strategy FUTURE
Future mission
Service
Service Future
Future delivery
delivery capability
services plan
plan
Objectives
Figure 8.3 Vision-centred approach to public sector strategic planning
the need to review current values to determine whether they have pro-
vided an ethical basis for guiding the effective and efficient provision
of current services and whether proactive innovative behaviour and
commitment to customers has been embedded into the organisation.
There may also be a need for the vision to be revised to establish an
effective platform upon which to base future strategies and policies for
the production and delivery of services.
The market forces doctrine introduced by NPM creates the risk that
service strategies are primarily concerned with economic principles, to
the detriment of the served customer.
For example, the UK government’s decision to raise the level of stu-
dent fees from approximately £3000 per year to a maximum of £9000
per year does provide a solution to the problem of how to reduce public
sector funds for higher education and so helping to reduce the size of
the nation’s deficit. Despite actions proposed by the government, such
as requiring universities to allocate a proportion of places to school leav-
ers from disadvantaged backgrounds, evidence suggests that individuals
and their parents from lower socio-demographic groups are more likely
to decide that they cannot afford the increased costs of studying for a
degree. As a consequence, although the government’s actions can be
justified on purely economic grounds, it seems likely that this policy
will reduce opportunities for higher education enhancing social mobil-

ity within the UK.
A values-based strategic management approach increases the prob-
ability that adequate attention within PSOs will be given to linking
plans, policies and actions to socially important attributes of a demo-
cratic nation, such as compassion, justice, equality, integrity and fru-
gality. The existence of a value hub of the type shown in Figure 8.3
also ensures that decision making includes an assessment of whether
organisational values are being fulfilled. Decisions will be made to fulfil
organisational governance requirements to ensure that:
(1) managerial self-interest will not be given priority over the long-term
interests of both customers and the workforce
(2) universal rules are utilised in all situations, to avoid responding to
demands for faster or different treatment from individuals or groups
who are able to exert political influence on a PSO
(3) at all levels within the organisation, nobody is exempt from being
held to account where government regulations or prevailing legisla-
tion has been ignored (Baetz and Bart, 1996).
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9
Values Gaps
Value differences
In a perfect world, an organisation will create a vision statement that

is based upon values which are acceptable to employees, the leadership
and all external stakeholders. The reality is somewhat different. There
will rarely be total agreement among external stakeholders over the val-
ues they desire to be exhibited by an organisation. Internally, there are
likely to be differences of opinion between the workforce and the lead-
ership. PSOs face a high probability that leadership and employees have
differing perspectives on what services should be given priority when
deciding how best to allocate scarce financial resources. The situation
in the public sector will typically be further complicated because there
is often a fundamental difference between the values of the contractor
and the user customers.
When seeking value congruence there is a requirement to recognise
that user customer expectations will change over time due to their prior
experience of utilising a service. For example, American adults who
experienced the federal government’s creation of the social security
system during the Great Depression tended to remain satisfied with the
payments they received from the system. In contrast, many of those
born from the 1960s onwards, who have no experience of the economic
hardships faced by earlier generations, may judge benefit and pension
provision within the social security system as inadequate. Similarly,
those adults in the UK, who for the first time in 1947 were able to
access medical care without worrying about paying for treatment, can
be expected to support the staff and healthcare service provision within
the National Health Service. This view is not necessarily shared with
those born ten or more years later. Many are very critical when, for
173
example, they are not able to see their local doctor within 48 hours or
if they have to wait several hours for treatment at a hospital’s accident
and emergency department.
Another source of values change is caused as newly elected politi-
cians implement a manifesto which is somewhat different to that of the
previous government in relation to issues such as funding and ongoing
welfare services. Changes tend to be reflective of the political values
which are held by different political parties. Within Western democra-
cies, right-wing politicians tend to favour lower taxation accompanied
by reducing the number of people who qualify for certain welfare serv-
ices, such as unemployment benefits. Left-wing parties tend to favour
expansion of welfare services, especially to assist socially disadvantaged
people. This latter philosophy usually requires an increase in welfare
budgets and the usual approach to funding the additional resources is
through increased personal and corporate taxation.
Even without recent increases in their national debt, politicians in
many Western nations were already beginning to accept that popula-
tion ageing required a fundamental rethink of pension provision and
the need to increase the retirement age. Attempts to implement pen-
sion reforms have already created a growing values schism between
governments and electorates. This schism can be expected to widen
further as PSOs that deliver welfare state services reduce the scale of
provision in response to governments introducing drastic funding
cuts to reduce national deficits. The scale of these cuts varies between
nations. Some of the most draconian measures are necessary in those
Mediterranean economies which can only survive by being bailed out
by the International Monetary Fund (IMF), the European Commission
and the European Central Bank.
Understanding employees
Case aims: To illustrate that actions to enhance efficiency should include

management understanding of employee attitudes and job satisfaction.
The Segreteria Studenti office at an Italian university manages the
administration of each of the students’ study programmes. The uni-
versity has 40,000 registered students. Half of the Segreteria Studenti
staff specialise in the administrative procedures for one faculty and
half specialise in the procedures of the other faculty. Over the last 10
years, the number of registered students has quadrupled, whereas the
Values Gaps 175
number of employees in the Segreteria Studenti has been reduced by

40 per cent (Landau, 1993).
Traditionally, staff have specialised in fulfilling a specific job role
but the university has decided that service levels can be improved
by increasing staff flexibility. The selected strategy has been to create
units containing a group of staff to facilitate knowledge sharing and
to operate as a team. The units were reorganised to cover two areas:
student entry and first year students, and subsequent student years
to graduation. No unit leaders were appointed and unit members are
expected to participate in all activities, regardless of their previous
seniority level. Furthermore, no new formal mechanism to reward
individual effort could be introduced because of a union agreement
that any new system must be applied across the entire workforce.
Budget constraints also meant that, despite rising student numbers,
no new administrative staff members could be hired.
In the past, task specialisation permitted individuals to manage
their own time and self-organise their working day. Group working
means that an individual’s activities are now scrutinised by other
team members. Staff perceived group working as reducing their spe-
cialist knowledge, removing personal power and decreasing personal
privacy. The new structure resulted in staff providing guidance serv-
ices to fewer students than under the previous structure, when they
fulfilled a specialist service provider role.
When faced with a problem, the leadership style of the head of the
Segreteria Studenti was to immediately communicate her solution
to any staff in the office. She did not accept any feedback from staff
about the viability of her solution, or at a later point, explain her
solution to staff absent from the office when she had issued her origi-
nal instructions. In recognition of this problem, it was decided that
staff would participate in weekly quality circles to discuss operational
issues. Outcomes from circle meetings, such as solutions to problems
or suggestions to revise office practices, would then be submitted to
the head of the Segreteria Studenti.
Initially, the revised organisational structure appeared to be work-
ing well and students seemed to be receiving the necessary support.
However, at an end of the term review, staff listed a number of
operational problems which had emerged. Two identified problems
were that nobody was replenishing stocks of the forms required by
students and that staff were refusing to open the envelopes contain-
ing students’ forms. This was because neither activity was seen as
anyone’s responsibility. Additionally, although new computer termi-

nals were able to instantly produce student course certificates, the
staff informed students that there was a three day wait before they
would receive their certificates.
The staff recognised that they had assisted in the design of the
new system and that their behaviour was damaging their relation-
ship with the students. At the end of the meeting, the staff agreed
that that identified problems could be resolved. They stated that this
would only happen, however, when they received a pay increase
for the extra work and broader range of responsibilities now being
required of them. This was despite the staff being fully aware that the
employer/union agreement meant that a pay increase to only one
section of the university would never be sanctioned.
Landau had been appointed as an external consultant advising
on the implementation of operational changes within the Segreteria
Studenti. Her explanation for the employees’ impossible request for
more money reflected their need for some form of individual recog-
nition that was not happening. Landau also determined that the lack
of co-operation in not restocking forms or refusing to open enve-
lopes was the staff’s way of communicating to both the university
and the students that their achievements were not being recognised
and that, by rigidly applying existing rules and procedures, they had
the power to damage the quality of services provided.
The situation and outcome described by Landau can be expected in
many PSOs that seek to improve internal processes through the for-
mation of work teams. In the case of the university, the only way for
employees to receive recognition for their achievements was through
promotion – but promotion for everybody in an entire department
is not a viable solution. Furthermore, even in the unlikely event that
this was found to be feasible, it would probably breach the univer-
sity’s conventional approach that promotion is based on seniority,
with no connection between advancement and recognition of an
employee’s actual performance.
The case described by Landau represents a microcosm of the prob-
lems that many PSOs will face in seeking to enhance productivity
whilst sustaining their operation with fewer financial resources. The
solution which applies to the university and any other PSO is to
introduce some other form of achievement recognition, which is val-
ued by staff. The nature of this recognition will vary by organisation.
Possible actions might include managers regularly communicating
Values Gaps 177
their recognition of staff achievements on a one-to-one basis, abol-

ishing unnecessary non-productive workplace rules, permitting staff
greater autonomy over decision making and introducing more flex-
ible employment conditions such as ‘flexi-working’ or job sharing.
Identifying values gaps
There is little point in a PSO attempting to implement strategies

designed to cope with reduced government funding where major values
gaps already exist among internal or external stakeholders. These value
gaps will result in an organisational vision constituted of values unac-
ceptable to the workforce or to one or more of the external stakeholders.
Value divergence will inevitably lead to workforce demotivation and a
decline in organisational productivity.
The critical importance of avoiding value divergence suggests that the
first priority for the leadership within any PSO is to assess the magni-
tude of the values gaps and to understand why they exist. The cause of
most values gaps is that individuals expect values to be higher or dif-
ferent from the actual organisational values. As illustrated in Figure 9.1,
values gaps can exist both inside and outside the organisation. The
types of gap which may exist include:
Gap 1 where the leadership’s preferences for the organisation’s values

are at variance with the perceived values of the organisation during
the actual provision of services.
Gap 2 where employees’ preferences for the organisation’s values are
at variance with the perceived values encountered during fulfil-
ment of their assigned tasks.
Gap 3 where customers’ preferences for the organisation’s values in
the provision of services are at variance with the perceived values
encountered during the actual receipt of services.
Gap 4 where customers’ preferences for how the organisation’s values
are exhibited are at variance with values communicated in infor-
mation provided by the organisation during the service provision
process.
Gap 5, which is the cumulative impact of Gaps 1 to 4.
Generation of an empirical evaluation of the magnitude of Gaps 1 to 4

requires a three-phase research process based upon a technique known
as SERVQUAL, which was developed by Parasuraman, Zeithaml and
Influence 4
CONTRACTOR USER
CUSTOMER CUSTOMER
VALUES VALUES
Gap 4 Gap 3
Influence 2
Influence 3
ORGANISATION’S
VISION-BASED VALUES
Gap 1 Gap 5
Gap 2
LEADERSHIP Influence 1 EMPLOYEE

VALUES VALUES
Values gaps and values influencers
Berry (1985, 1988). Phase 1 involves one or more focus groups of indi-
viduals who are the source of a potential gap. These focus groups are
used to generate statements of values which participants consider to be
important to them in the provision of services. Typically, this activity
will yield some 20 to 30 statements of preferred values. These statements
are then used in Phase 2, which is a survey of individuals who are the
source of the gap being researched. Respondents are asked to rank the list
of value statements in descending order of importance. In most cases, a
small number of value statements will explain most of an individual’s
total value preferences. Hence, it is usually only necessary to research
attitudes towards the top five preferred values that were identified in the
ranking exercise. Phase 3 is a survey in which respondents are asked to
comment on each value statement using a five-point scale ranging from
‘strongly disagree’ to ‘strongly agree’. These data obtain a measurement
of preferred and perceived organisational values. Preference is assessed
by respondents expressing their level of agreement in terms of values
they wish to be exhibited by the organisation. Perception is assessed by
respondents expressing their level of agreement from their experience
of actual values exhibited by the organisation. The difference between
the overall mean score for all preferred and perceived values provides a
measurement of the magnitude of the values gap. The overall mean for
Gaps 1 to 4 provides the measurement of Gap 5, which represents the
organisation’s overall gap in delivering services.
Values Gaps 179
Obtaining employee inputs
Case aims: To illustrate how employee silence can block actions by the
leadership to achieve acceptance of different values or new organisational
activities.
When an organisation’s leadership is seeking to persuade employees
of the relevance of certain values or that some values are no longer
relevant, there must be interaction between themselves and the
workforce. Without such dialogue, leaders are incapable of determin-
ing why employees regard certain values as important and whether
these individuals are likely to co-operate in a programme to achieve
a shift in organisational values. Unfortunately, a common problem
in organisations where employees are demotivated, dissatisfied or do
not trust the leadership is that of ‘employee silence’ (Scott, 1993).
A number of factors can cause employees to remain silent when
asked for their ideas and opinions. Unwillingness to participate
may reflect a low level of personal work motivation or job satisfac-
tion. Silence reflecting workplace disengagement may be caused by
employees being resigned to leadership always ignoring input from
the workforce when reaching any major decision. As employees
expect their input to have no influence on future changes in the
work environment, they may passively withhold their ideas and
opinions from their line managers or the organisation’s senior lead-
ership team. Employee silence may also reflect a defensive response
to being perceived as a trouble maker by expressing opinions which
contradict those held by management. Often, employees only break
their silence to express agreement or acceptance when they wish to
be perceived as conforming, although in reality their comments in
no way reflect their real opinions (Van Dyne, Ang and Botero, 2003;
Morrison and Milliken, 2000; Milliken and Morrison, 2003).
Remaining silent when one fears repercussions after expressing
an opinion is an effective strategy for avoiding the risk of annoying
management. This behaviour is becoming increasingly common in
PSOs and reflects the possibility that some of the workforce will be
made redundant as the leadership seeks to manage the organisation’s
significantly reduced annual budget (Milliken and Morrison, 2003).
The leadership can further exacerbate employee silence when they
do not wish to hear critical comments about their decisions. Senior
management may explain the lack of employee feedback as reflecting
the fact that staff are selfish and untrustworthy (Bhatta, 2003). Once
employees become aware of such managerial attitudes, it is probable

that employees will just silently observe as the latest management
initiative fails to deliver desired outcomes.
Gambarotto and Cammozzo (2010) undertook a study of an Italian
PSO to gain further understanding of the nature of employee silence.
The researchers noted that the Italian public sector is seeking ways to
optimise the allocation and utilisation of scarce resources. The pri-
mary focus is on achieving reductions in operating costs through the
restructuring of organisational processes. A formidable obstacle in the
path of sectoral reform are public sector employment contracts that
provide employees with permanent jobs and a precise specification of
the expected tasks to be undertaken within an assigned job role.
Gambarotto and Cammozzo’s survey of employees within the PSO
revealed a climate of uncertainty. Furthermore, staff were much less
interested in collaboration with each other than they were only a
few years before. Decision-making is perceived by staff as very cen-
tralised, there are poor prospects for promotion, and senior manage-
ment appears uninterested in assisting employees to acquire new
knowledge or upgrade their job skills. Some of the resultant forms
of silence and non-collaboration which Gambarotto and Cammozzo
identified in their PSO survey included:
Defensive silence reflects a fear of voicing objections to what are

perceived as negative actions by management (e.g. stricter rules,
reduced autonomy).
Pro-social silence reflects a fear of expressing an opinion to col-
leagues who report these comments back to management.
Acquiescent silence indicates resignation over what is perceived to
be an ongoing decline in working conditions.
Contributive silence indicates an unwillingness to offer advice
to others, including colleagues at the same level within the
organisation.
Self-centred silence reflects a fear that any expression of opinion
could lead to increased workload without any reward or com-
pensation for undertaking assigned additional tasks.
Where the leadership of an organisation seeks to embed a vision based

upon exploiting innovation to enhance performance, or to introduce
new ways of working to optimise scarce resources, then employee
silence will usually frustrate any attempts to create an internal
Values Gaps 181
environment in which the workforce contributes new ideas or enthu-

siastically participates in new ways of discharging their responsibilities
(Bhatta, 2003). Hence, where employee silence is evident, the leader-
ship needs to implement actions to persuade employees to actively
participate in information sharing, idea generation and collaboration
with others both horizontally and vertically within the organisa-
tion. Until this goal is achieved, there will not be greater congruence
between the organisational values espoused in the vision statement
and the values held by the employees. Persuading the staff to begin
to actively communicate their views and ideas will only occur after
the leadership are perceived as honest and acting with integrity, with
a genuine desire to listen and learn from every employee, no matter
their position within the organisational hierarchy.
Internal influence
In order to develop solutions which might reduce the size of a values

gap, it is necessary to identify the nature of interactions which may
have influenced the development of difference beliefs and attitudes.
Inside the organisation, as illustrated in Figure 9.1, a single internal value
influence, Influence 1, involves the interaction between employees and
leadership. Two possible causes of divergent opinions are:
(i) a leadership which has adopted values associated with giving prior-
ity to meeting the KPIs laid down by the contractor customer
(ii) employees whose values reflect a belief that the organisation’s
attempts to move away from existing traditional values will damage
its ability to fully meet the needs of user customers.
Jehn (1994) concluded that productivity is enhanced where the organi-

sational values include praising good performance, sharing information,
high expectations of employees, valuing quality, attention to detail,
collaboration and being supportive. She also found that job satisfac-
tion was higher where organisational values included tolerance, sharing
information and a team orientation. Mueller and Wornhoff (1990) deter-
mined that it is not unusual for organisational values to diverge from
employees’ personal values. Enz (1986) concluded that this outcome
is due to organisational values being determined by a minority of the
organisation’s staff. In most cases, this minority is the senior manage-
ment, whose views are in part influenced by key external stakeholders.
To gain further understanding of congruence between employee and

organisational values, Suar and Khuntia (2010) undertook a comparative
study of private and public sector organisations in India. They found that
the most important personal values in the private sector were product
quality, obedience to organisational rules, customer service and honesty.
Less important personal values were employee welfare, development
of the community near to the organisation, tolerance for diversity and
meeting the service needs of the general public. Important organisational
values were customer service, product quality, sincerity and the reputa-
tion of the firm. Less important organisational values were meeting the
service needs of the general public, quality of personnel and a tolerance
for diversity. The important shared organisational and employee values
were customer service, product quality, honesty and sincerity.
In the public sector, high personal values included product quality,
customer service, sincerity and honesty. Less important values were work-
place conditions, development of the community, service to the general
public and a tolerance for diversity. Important organisational values in the
public sector were financial performance, organisational reputation, prod-
uct quality and customer service. Of less importance were concern for the
local community, innovation, tolerance for diversity and providing serv-
ices to the general public. Therefore, both sectors indicated similar levels
of importance were attached to product quality and customer service.
The study also concluded that the personal values of middle manag-
ers in the private sector were similar to those of senior management but
this was not the case in the public sector, where the personal values of
middle managers were higher than those of senior managers in all the
dimensions except social concern. Senior managers in the public sector
did not attach much importance to values concerned with organisa-
tional excellence and working as effective managers. Suar and Khuntia
posited that this difference is due to the fact that, in India, senior man-
agers tend to be appointed to their position in a public sector organisa-
tion toward the end of their career. Frequently, they are transferred in
from another organisation or have recently retired from a different job
role. As a consequence, these individuals tend to be more concerned
about their own well-being than that of the organisation.
The middle manager
Middle managers, positioned between senior management and the work-

force, have a key role in influencing the achievement of congruence
between organisational and employee values. In recent years, changes
Values Gaps 183
such as deregulation, increased flexibility, decentralisation and the reduced

influence of the unions have together created major additional burdens for
middle managers (Brewster and Hegewisch, 1994). Stewart et al. (1994)
proposed that the middle manager role comprises the ability to be:
(1) an interpreter and implementer of strategy

(2) an employee motivator and arbiter of employee
(3) a creator of effective working conditions to ensure optimal opera-
tional activities
(4) a manager of information flow by co-ordinating, listening and
evaluating
(5) an allocator of resources.
Downsizing usually leads to organisations reducing the number of

management layers. As a consequence, there are usually fewer mid-
dle managers in the downsized organisation. Those who remain have
larger workloads and are expected to handle more complex and more
diverse activities (Dopson et al., 1992). Westley (1990) concluded that
these pressures have led to higher dissatisfaction among middle manag-
ers, especially in their perception that senior management is excluding
them from strategic decision making.
The role of middle managers has become that of the change agent
responsible for delivering the revised workforce practices demanded by
senior management. In the public sector, alienation from senior man-
agement is increasing because middle managers are often expected to be
successful in the delivery of change while lacking any real managerial
authority. This is because senior management tend to retain control
over key decisions, especially in relation to the allocation of scarce
resources (Staehle and Schirmer, 1992).
Middle managers have a critical role in attempting to achieve con-
vergence between the organisation’s vision and the personal values of
the workforce. Failure to fulfil this assigned responsibility is often the
cause of value divergence between senior management and staff. Holden
and Roberts’ 2004 research on middle manager attitudes in the UK, the
Netherlands and Sweden revealed that many feel trapped in the profu-
sion of conflicting roles which are expected of them. This often gives rise
to ethical and moral dilemmas in having to choose between supporting
the actions of senior management, and protecting their subordinates
from revised actions and processes imposed by senior management.
The leadership of a PSO may have differing views of the effective-
ness of their middle managers’ role in promoting congruence between
the organisation’s vision statement and employees’ personal values. In

some PSOs, the leadership may perceive their middle managers to be
an impediment to change and, in other PSOs, as a critically important
catalyst for accelerating the pace with which employees accept revisions
proposed to the organisational vision (Jaeger and Pekruhl, 1998). These
different leadership attitudes reflect the fact that middle managers
usually have the ability to exercise considerable power. Where senior
management encourages middle managers to participate in strate-
gic decision-making, and their activities are not constrained by rigid
organisational policies or rules, middle managers can potentially be a
pivotal hub in achieving value congruence (Kanter, 1979). This can be
contrasted with multi-layered, hierarchical organisations where middle
managers are seen primarily as a top-down communication channel
between senior managers and staff. Here, middle managers tend to feel
alienated and marginalised, which may lead to them actively encourag-
ing values divergence across the workforce.
The potential of organisational culture to provoke differing behav-
ioural traits to emerge among middle managers has led to the proposal
that, there are the following four types of PSO within which the middle
managers fulfil very specific roles (McAuley, 2002; Clegg and McAuley,
2005):
(1) The corporate PSO

There is strong emphasis on managers at all levels making a positive
contribution towards optimising organisational performance. Managers
draw upon the values defined in the organisation’s vision in all activities
from strategic planning to resolving day-to-day problems. The organi-
sation operates a top-down decision model in which middle manage-
ment accepts the operational philosophy that senior management are
primarily responsible for defining the overall nature and purpose of the
organisation. Middle managers seek to align themselves with the identi-
fied purpose and, through their own behaviour, act as exemplars whom
organisation’s vision provided appropriate guidelines when fulfilling
assigned responsibilities.
(2) The strong culture PSO

A well-established understanding of the purpose and vision of the
organisation in providing public sector services is embedded into the
entire workforce. As a consequence, the primary role of middle managers
working across boundaries is to remind their staff of the nature of the
values contained within the organisation’s vision statement.
Values Gaps 185
(3) The community PSO

Staff collaborate but at the same time retain control over their indi-
vidual tasks and responsibilities. The majority of the staff are likely
to be highly trained professionals engaged in activities such as the
research or resolution of complex technology-based problems. Most
staff tend to reject any attempts to involve them in what they perceive
to be management activities, and staff can become very obstructive
when they perceive the organisation’s senior managers as seeking to
implement change that would alter their work environment or task
delivery style. As a consequence, middle managers are forced to tread
with caution and are advised to use a non-directive, mentoring style
when interacting with the staff to gain their acceptance of new organi-
sational values.
(4) The divided PSO

Senior management adopts a top-down decision-making style for issues
such as defining the organisational vision where there are significant
variations in employee values across different departments. The greatest
area of value differences is between departments that provide output
services to user customers and departments responsible for administra-
tive or support activities such as finance and personnel management.
Middle managers expect to face significant problems in achieving
congruence between the organisational vision and employees personal
values because of the time spent seeking to resolve problems that arise
during the interchange of information and fulfilment of tasks on behalf
of another department. To minimise the scale of these problems, mid-
dle managers often rely on rigid application of organisational rules and
policies and to justify the behaviour of their own staff when seeking
to resolve interdepartmental disputes. Within this type of organisa-
tion, senior management cannot expect middle managers to achieve
any genuine level of success if they are assigned the role of attempting
to deliver greater congruence between the organisation’s vision and
employees personal values.
External influence
As shown in Figure 9.1, other sources of influence are external to the

organisation:
Influence 2 results from interactions between the employees and user

customers.
Influence 3 results from interactions between the leadership and con-

tractor customers.
Influence 4 results from interactions between contractor and user
customers.
Developing solutions capable of reducing an external values gaps is a

much more difficult task than instigating actions to resolve internal dif-
ferences. In the case of Influence 2, this will usually require actions by the
workforce such as improving the level of service quality, upgrading inter-
nal productivity to enhance service response times or building closer rela-
tionships with user customers, causing service users to acquire a greater
appreciation of the operational issues faced by the service provider.
Despite the electorate being consumers of most of a nation’s public
sector services, it is politicians who have a greater influence on the actual
roles and activities of PSOs. One would hope these politicians to be
capable of exhibiting integrity and honesty to reach decisions reflective
of these values. Unfortunately, as noted by Holcombe (2009), even in a
democracy the concept of politicians being principled individuals who
are not influenced by the opinion of others is a well-substantiated myth.
In reality, politicians recognise that their survival is dependent upon
retaining the support of the majority of the electorate. Hence, politicians
are always willing to compromise when needing the support of voters.
Besley (2006) proposed that politicians can be divided into two
groups: ‘good’ and ‘bad.’ The good politician has strong principals and
seeks to act for the good of society. In contrast, bad politicians have few
principles and are willing to sell themselves to the highest bidder. Given
that politicians have the control and authority to instruct the public
sector to expend billions of their nation’s wealth, one might assume
that the electorate has confidence in politicians to make these spending
decisions in a way that is best for the nation. The alternative assump-
tion is that voters feel they lack the power to influence politicians but
that eventually the ‘bad’ politicians will either be arrested for criminal
behaviour or be voted out of power at the next election.
The level of trust in which citizens hold their government is relatively
high in democracies, where there is a relatively intense level of compe-
tition for votes among politicians, and much lower in those countries
where genuine voter choice is either restricted or non-existent (Helliwell
and Putnam, 1995). In reviewing published data on an electorate’s trust
in the public sector, Bjørnskov (2010) noted that it is often difficult to dis-
tinguish between people’s level of trust in their politicians and the level
of trust in the bureaucrats responsible for implementing government
Values Gaps 187
policy. In general, however, it can be assumed that a relationship exists

between the standards of governance within a government and the
standards exhibited by public sector employees. Thus, where there is evi-
dence of adequate standards of governance PSOs are also usually led by
individuals who can be expected to act with integrity. Where government
governance standards are low, one can usually expect to encounter the
same poor standards when interfacing with public sector employees.
Expressions of anger by the general public when informed of illegal or
socially unacceptable behaviour often seem to be much greater when the
person or persons involved are employed in the public sector. Politicians’
response to illegal or socially unacceptable behaviour by public sector
organisations is usually more muted. This difference suggests that the
public have higher expectations of the values that should be exhibited
by public sector employees than by the country’s politicians. This reality
needs to be understood by PSO senior managers as the majority of voters
will probably believe the politician who claims that a service failure is
caused by a PSO, rather than believe the PSO manager who seeks to prove
that the problem reflects poor policy decisions made by the government.
As illustrated in Figure 9.1, a values gap can occur where contractor
customers perceive PSO performance to be lower than their expecta-
tions. Where this occurs, the PSO is likely to come under pressure in
terms of threats of funding withdrawal, the government proposing a
change in policy or the introduction of new legislation. Given that the
public is more likely to believe their politicians’ reasons for any pro-
posed actions, PSO senior managers need to be extremely careful when
attempting to persuade politicians or senior civil servants not to imple-
ment a proposed reform. Open confrontation or leaks to the media are
also inadvisable. A much safer approach is to use closed-door negotia-
tions and, where possible, to present a solid case to justify the reasons
why a proposed reform may not be the most sensible decision. Senior
PSO managers should also be willing to offer some form of compromise
because this will provide senior civil servants with a way of ‘saving face’
when discussing issues with their political masters.
Attempting to persuade the contractor customer to revise its poli-
cies for future service provision is usually a task best undertaken by
the organisation’s leadership. In many cases, the leadership will aim to
negotiate some form of revision in the contractor–provider relationship.
This might involve gaining approval from the contractor customer for
the PSO to modify the nature or form of service provision. Another
solution might be to persuade the contractor customer to relax certain
KPIs. The benefit of meeting an adjusted KPI which reflects a more
realistic level of service delivery is that a realistic aim reduces the stress
associated with seeking to meet contractor customer expectations.
For PSO senior managers seeking to persuade contractor customers
not to implement a proposed reform or to introduce the reform in a
modified form, a critical issue is the prevailing relationship between
senior civil servants managing a government department and the politi-
cian who is in charge of that department. Sometimes the politician and
their senior civil servants enjoy a harmonious relationship, whereas at
other times there may be significant schisms in their relationship. In
the event of this scenario, the PSO senior manager will probably have to
decide whether negotiations to avert a proposed reform would be better
held with the senior civil servants or the politician (Borins, 2002).
It is not easy to determine the degree to which politicians are the source
of a reform rather than merely acting as the figurehead for a reform actu-
ally initiated by senior civil servants in their role as policy advisors and
administrators. One aspect of public sector behaviour which can shed
some light on this issue is the management of innovation in the public
sector. Borins’ (2000) research on public sector behaviour in the USA
concluded that an innovation initiated by the administrative head of a
government department is more likely to be adopted when supported
by the political head of the government agency. Innovations initiated
by politicians are more likely to be adopted where there is strong sup-
port from the president or state governor, the legislature, the media and
the public. Public sector employees are more likely to have their ideas
accepted by following the correct bureaucratic processes. Project failure
is likely to be higher if employees attempt to go over the heads of their
immediate superiors and appeal directly for support from a politician.
Politicians have long realised that, to deflect public criticism away
from their office when something goes dramatically wrong, the best
solution is to remove the incumbent PSO leader and to appoint a new
person from elsewhere. Once in post, this new person needs to assess
the degree and duration of the support they can expect to receive from
their political sponsor. This is critical because, to succeed, the new leader
may need to reverse a previous reform or cancel a proposed reform. This
is more likely to be achieved while the new appointee is still supported
by the politicians.
In his analysis of individuals appointed as a ‘turnaround leader’ in
American PSOs, Borin (2002) concluded they are rarely the classic char-
ismatic leaders who can inspire staff to immediately follow their new
orders. In his view, leaders who are more likely to be successful have wide
expertise in service provision, accompanied by a deep understanding of
Values Gaps 189
the key stakeholders and how their support can be retained. Borin noted
that turnaround leaders in the public sector face two major challenges:
retaining the confidence of politicians and gaining the loyalty of staff
within the PSO. Where the leader inherits a demoralised workforce, they
need to convince people that a return to success is a feasible objective.
One tactic to gain their acceptance of this idea is to blame the previous
leaders as the source of the PSO’s problems. This step should only be
taken when the previous incumbent was not very popular. Criticising
someone who had been very effective but was removed because the
politicians needed a scapegoat is not an advisable strategy.
Politicians make a much higher proportion of senior public sector
appointments on a purely political basis in the USA than in many other
parliamentary democracies. Nevertheless, even in other countries, the
most senior public sector appointments will in some way be influenced
by politicians. Senior government officials are therefore very aware that
their job security and career prospects are controlled by individuals who
may be removed from their post by their party leader or as a result of an
election, and will normally blame one of their own officials when fac-
ing criticism over the effectiveness of the government department for
which they have been assigned responsibility. As a consequence, most
senior civil servants believe in retaining strong control over their own
staff, show a preference for risk avoidance and a willingness to punish
subordinates or others lower down within the system in order to divert
potential criticism which might otherwise be directed towards them.
Senior leaders in PSOs engaged in service delivering need to remember
this behaviour when seeking to gain the support of their senior civil
servants. It is more likely to occur where the PSO leader can demon-
strate that, if a proposed plan fails, senior civil servants and possibly
their minister will be absolved of any blame for an adverse outcome.
Troubled leadership
Case aims: To illustrate how politicians can frustrate the achievement of

common shared values within PSOs.
PSO leaders have a critical role in defining their organisation’s vision
and ensuring that their staff exhibit the values necessary to fulfil this
vision. In most organisations, leaders can only function effectively
where there is a congruence of opinion among key stakeholders. In
the private sector, the stakeholders with the greatest influence are
the financial community who have made loans available, or institu-

tions such as pension funds that own a significant proportion of a
company’s shares.
Within the public sector, the most important stakeholder is usually
the government (Gray and Jenkins, 1993). In promoting the benefits
of NPM, politicians have focused on the importance of introducing
managerialism into PSOs because they believe it is the only way to
ensure the necessary changes are implemented to improve efficiency
and effectiveness. Politicians have imposed managerialism by requir-
ing government departments to demand that PSOs provide evidence
of implementing change in return for receiving ongoing funding.
The standard approach to the acquisition of evidence has been the
use of increasingly complex KPI systems. To persuade PSO leaders
to accept these KPIs, politicians promised policy changes such as
increased local control and delegated authority over the determi-
nation and delivery of service portfolios. In reality, many of these
promises has proved to be illusionary. Nationally determined per-
formance measures often reduce PSO managers to ‘box ticking’ and
their staff are unable to exhibit any sensitivity to create the services
required to meet the diversity of social needs that occur in different
geographic locations (Clarke and Newman, 1994).
In the case of UK local authorities, Young (1996) concluded
that NPM, accompanied by increased government centralism, has
reduced the level of strategic thinking within local government. He
believes local authority managers have become demoralised by fre-
quent government policy changes, which have caused authorities to
decide that there is little point in developing future service provision
plans or attempting to restructure their organisations. Young notes
that this outcome is especially relevant to social services depart-
ments, where NPM has resulted in a loss of status and a decline in
clear direction about how managers can be expected to fulfil their
assigned responsibilities.
Similar outcomes have been reported in the NHS in the UK.
Maddock and Morgan (1998) concluded that restructuring and
organisational change has led to real job losses and, among those
still in employment, the fear of future job losses. They provide the
example of nurses experiencing a loss of role identity, a loss of job
satisfaction, a lack of confidence occurrences within their working
environment and a growing level of mistrust over the capabilities of
their organisation’s leadership team. This situation was not helped
Values Gaps 191
by senior managers attempting to introduce new structures and sys-

tems while concurrently new national directives were being issued
to alter professional occupational standards. Furthermore, where the
leadership of an NHS unit genuinely wished to promote the devel-
opment of innovative solutions for meeting increasing demand for
healthcare services, these initiatives were frequently frustrated by the
existence of inappropriate KPIs.
Maddock and Morgan believed that a frequent outcome of mana-
gerialism in the NHS has been the introduction of more rigid man-
agement systems, which in turn leads to role compartmentalisation
and a reduction in staff collaboration. New leaders brought in from
the private sector often wish to focus on financial objectives in order
to meet government KPIs. These new leaders often have no knowl-
edge of the healthcare services which they are trying to manage and
so do not understand that the implementation of systems mandated
by government can actually be detrimental to the quality of service
provision. Maddock and Morgan also felt that, while many senior
managers are driven by narrow financial targets, the organisations’
medical staff are committed to delivering the standards of healthcare
they believe is needed by the patients. These very different values
around organisational outcomes can lead to a lack of trust between
senior management and medical staff.
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10
Values Congruency
Values orientation
Organisational values are a powerful and potentially important sta-

bilising influence on ensuring strategic success (Howard, 1998). Van
Kemenade et al. (2008) proposed that organisations need to achieve
equilibrium between an external and an internal orientation whilst
ensuring the correct balance between flexibility and control. Berger
and Milem (2000) suggested that, unless equilibrium and balance are
achieved, instability will undermine the achievement of perform-
ance goals as a consequence of an inability to define and implement
an appropriate strategy. Quinn et al. (1996) also believe the issue of
internal–external orientation and process control–flexibility are critical
influencers of organisational vision. These concepts provided the basis
of the Organisational Culture Assessment Instrument (OCAI) model
developed by Cameron and Quinn (1999). Kleihnen et al. (2009) subse-
quently validated the use of the model for assessing the values of leaders
and employees in public sector situations.
For many years, a common attitude in long-established PSOs was
that the provider was the source of expertise so was in the best posi-
tion to decide the nature and content of service provision. This resulted
in many PSOs exhibiting a somewhat insular attitude towards the
provision of alternative services more capable of meeting customer
needs. Additionally, the tendency of the public sector to favour hier-
archical, rule-based internal environments often results in many PSOs
refusing to adopt a more flexible orientation when confronted with evi-
dence of the increasing diversity of service needs. To avoid this mistake,
PSOs need to become more strongly orientated towards responding
flexibly as the emergence of diverse customer needs becomes apparent.
194
Values Congruency 195
Cameron and Quinn’s OCAI model can be used to examine alterna-

tive value options in PSOs in relation to adopting an external orienta-
tion and increased flexibility. The model permits the creation of a ‘value
options’ matrix of the type illustrated in Figure 10.1, which describes
the four alternative positions available to a PSO:
(1) Rule-based service process orientation in which PSO activities are

inward-looking and based upon rigidly defined rules to ensure mini-
mal variation in service delivery activities.
(2) Rule based customer orientation in which the PSO exhibits a strong
interest in customer needs but uses rigidly defined rules to ensure
minimal variation in service delivery activities.
(3) Responsive service process orientation in which the PSO activities are
inward-looking but employees have the necessary competences and
are allowed flexibility in undertaking service delivery.
(4) Responsive customer orientation in which the PSO exhibits a strong
interest in customer needs, and employees have the necessary
competences and are allowed flexibility in undertaking service
delivery.
Flexibility
Responsive Responsive
service process customer
orientation orientation
Internal External
focus focus
Rule-based Rule-based
service process customer
orientation orientation
Control
Figure 10.1 Organisational value options

Values positioning
There will be differences in values in most organisations. Examples can

include differences between the workforce and the leadership, between
different departments and between employees in the same department.
As organisational values will determine the success of any organisation,
prior to defining a future strategy there is a fundamental requirement
to understand preferred values and to determine whether any of these
will need to be shifted.
The start point of the evaluation is to determine the preferred overall
values of the organisation. These values provide the basis of the organisa-
tion’s vision. One approach to determining preferred organisational values
is to undertake a cluster analysis of the type suggested by Padaki (2000).
This researcher proposed that data on people’s beliefs provide the basis
for identifying value clusters. To permit an evaluation of different cluster
values, it is necessary to establish a values benchmark. Possibly the most
useful benchmark is the preferred values of the total organisation. Where
this has not yet been clearly defined, identification of appropriate vales
can be achieved through the use of a Delphi analysis. This form of analysis
brings together a group of experts and draws upon their joint knowledge
to define an optimal scenario. The approach provides the Delphi partici-
pants with a list of value choices related to the two dimensions of value:
customer orientation and flexibility. Individuals’ ratings are reviewed to
determine the degree of consensus between participants. In most Delphi
projects, this first cycle of opinions will usually reveal some variation
in viewpoints expressed. In order to reduce variation, the majority view
expressed in the first review cycle is identified and then supplied to partici-
pants. They are asked to consider whether, as a result of seeing the majority
view, they wish to revise their opinions. The usual outcome is that, upon
comparing their first input with the overall group opinion, participants
who initially expressed very different views tend to revise their perspective,
bringing them more in line with the majority opinion. This second major-
ity opinion is then used as the outcome of the Delphi analysis.
When establishing an empirical measurement of preferred organisa-
tional values, one technique is to use the combined mean values for
degree of flexibility and degree of external orientation. These values, when
multiplied by 1.96 times their respective standard deviations, will provide
the range within which 95 per cent of all actual values can be expected
to fall. These calculated values for flexibility and external orientation
provide the two parameters for visualising the preferred organisational
values. These can be plotted on a values option diagram of the type shown
High
Flexibility
Preferred
organisational
values
Employee
values Leader
values
Low
Low External orientation High
Figure 10.2 Organisational and participant values
in Figure 10.2. The positioning example in Figure 10.2 reflects a ‘middle

ground’ organisational values set. This outcome is probable for many PSOs
because, in the face of constrained financial resources, there will be limita-
tions placed upon the degree to which the organisation can exhibit flex-
ibility in the provision of services. Resource constraint will also limit the
degree to which the PSO is able to sustain a bias towards being strongly
customer orientated.
The next stage of the analysis is to decide which groups within the
organisation will be included in the analysis of value options. Each group
is provided with the same list of preferred value choices for the dimensions
of orientation and flexibility that were used in the Delphi analysis. In this
analysis, however, the data being sought are the actual values of the group.
The mean values for flexibility and external orientation, multiplied by 1.96
standard deviations, are used to plot the group’s current values. As shown
in Figure 10.2, the results for the groups within the organisation provide
an understanding of the degree of difference between a group’s values and
the overall preferred organisational values. In the example in Figure 10.2,
there is an indication that value shifts are required:
(1) Employees need to exhibit greater flexibility in relation to organisa-

tional processes and become orientated towards meeting the needs
of customers.
(2) The leadership needs to exhibit greater flexibility in relation to organi-

sational processes and concurrently focus on ensuring that the needs
of the employees inside the organisation are being satisfied.
Different values
Case aims: To illustrate that organisations with similar visions may have
different values in relation to delivering their respective visions.
Organisational values exist along a continuum ranging from a strong
consensus to no internal agreement. Padaki notes that evidence
of minimal consensus is useful in terms of indicating whether the
organisation is likely to face major problems when identifying and
implementing a strategy for which there is an adequate level of com-
mitment among the workforce. In addition to assessing the degree of
values congruence or divergence, Padaki supports the perspectives of
Woodcock and Francis (1989) and Moothy (1998), who recommend
an examination of organisational structures and processes. This is
because data on these issues may be useful in explaining variation in
values that may exist within an organisation.
Padaki noted that different organisations which share similar
vision statements may exhibit very different policies and processes
when implementing their respective strategies. In his view, this dem-
onstrates the critical importance of not assuming that there is only
one organisational philosophy within the public sector and not-for-
profit sector that permits desired performance goals to be achieved.
Padaki illustrates his viewpoint by presenting comparative research
of two NGOs in India. Both are perceived as being successful in
achieving social justice through the creation of sustainable economic
development schemes. The findings of the comparative study are
summarised in Table 10.1.
Values repositioning
In the 1960s and 70s, a relatively popular concept in the field of psy-
chology was ‘values clarification’. This proposed that, once values have
been identified, an individual’s values can be altered. Early proponents
of the concept were Rath et al. (1966). However, as noted by Kinnier
(1995), by the late 1970s, criticisms have led to values clarification
falling out of favour. Kinnier suggested there were three main sources
Table 10.1 Comparative review of process
Process NGO 1 NGO 2

Performance Focus on quantitative targets. Focus of facilitation aims.
achievement Rule-based approach. Innovative approach.
Internal co-operation focus. External co-operation focus.
Organisational Group based. Team based.
structure Vertical control. Horizontal and vertical control.
Emphasis on individual Emphasis on interdependency
roles. of roles.
Single senior leader. Multiple leadership.
Performance Focus on getting things done. Focus on empowering people.
style
Strategy Maximise efficiency. Maximise collaboration.
Internal Focus on task completion. Focus on co-operation.
transactional
style
Project Follow clearly defined Exhibit flexible approach based
outcome action plan. upon learning from experience.
aim
of criticism that caused this outcome. Firstly, religious conservatives

argued that God, not the individual, is the ultimate arbiter of human-
kind’s values. A second group of critics were political conservatives
who argued that values clarification was a clever tool of educational
liberalists who wanted to give a false sense of acceptability to views
which were actually at variance with the rest of society. The third, and
probably most influential, criticism was that values clarification was a
false paradigm shift. Supporters of this perspective pointed to the fact
that there was no sound evidence in the literature that the technique
worked in assisting individuals to enhance personal performance
(Kirschenbaum, 1976).
Kinnier suspects this latter criticism was assisted by many of the con-
cept’s supporters lacking any formal psychological training but using the
technique in both one-to-one and group therapy. Some of these individ-
uals promoted the idea of everybody’s right to be ‘free spirits’ even where
certain values might be socially destructive or provide justification for
ignoring prevailing rules or laws. Possibly even more dangerous were
those people who lacked appropriate facilitator skills and so were in no
position to provide guidance when the process resulted in some people
needing professional help from a qualified psychiatrist.
Kinnear concluded that the demise of the concept was unfortunate

because, when utilised in the examination of a specific context, he
believes there is valid evidence that the process can assist in problem-
solving and decision-making. This is one of the reasons why the tech-
nique has regained popularity over the last few years with individuals
engaged in mentoring or business coaching (Atkinson, 2003). In com-
menting upon the re-emergence of the concept, Kinnear suggests that the
previous demise in popularity might have not occurred if the technique
had been labelled differently, for example with a phrase such as ‘values
assessment’. The other factor is that, for many years, ethics literature
(which focused on the influence of personal values) and management
leadership literature ran on parallel but virtually separate paths. However,
events such as the collapse of the American Enron Corporation and, more
recently, problems within major institutions in the banking sector, have
resulted in a convergence of theory that caused management academics
to give greater attention to the issue of values in the determination of
effective organisational strategies (Poff, 2010).
The reason for providing some background about values clarification
is that, having identified the positioning of current preferred values, the
next step is to utilise this knowledge to gain further understanding of
these values. This provides guidance in deciding the actions that might
be considered to reposition a group’s value. The aim of any reposition-
ing is to bring the group’s values nearer to the identified overall organi-
sational values (Piciacchia, 1996).
As noted by De Zils (2007), having implemented a values repositioning
programme, the PSO should not expect to achieve perfect congruence
between preferred organisational values and the various groups within
the organisation. The best that can be expected is some degree of overlap
between preferred organisational values and the actual values of each
of the groups. In her view, it would be unrealistic to aspire to achieving
complete congruence within a PSO. A key factor negating this aspiration
is the low probability in most PSOs that all groups within the workforce
will be prepared to exhibit the same values as the leadership. In most
scenarios, especially when a group is constituted of professionals such
as doctors or research scientists, there will always be differences between
the values of the leadership and certain employee groups. Hopefully,
however, the definition of a preferred set of organisational values will
provide the basis for discussions within the organisation. This should
promote greater understanding of different groups’ perspectives and their
associated values, which will tend to reduce the magnitude of values gaps
between different groups and the organisation’s leadership team.
Shifting healthcare values
Case aims: To illustrate the process whereby repositioning of values with

a PSO can be achieved.
Repositioning values within a PSO will usually require both further
research and facilitated discussions with the members of the groups
whose values are at variance with the preferred organisational posi-
tion. The process can be exemplified by sustaining the example
illustrated in Figure 10.2. One (disguised) scenario which is known to
the author relates to a situation in a hospital accident and emergency
(A&E) unit. The employees’ values reflected the culture favoured by
older senior medical professionals such as senior hospital consul-
tants, which was adherence to tightly defined rules. For example,
only specific individuals were authorised to engage in the diagnosis
and treatment of patients as this was regarded as the only risk-free
way of minimising potential medical errors.
Nurses’ resistance to any shift in this group’s values was reinforced
by hospital management attempting to improve patient perceptions
over the somewhat clinical atmosphere encountered in the A&E unit.
A management consultant was contracted to deliver a nurse skills
development programme which focused upon concepts associated
with services marketing. The consultant had previously only worked
in the tourism and leisure industry, and had no experience or under-
standing of either the professional values of the nurses or the working
environment confronting nurses in a busy A&E department. As a con-
sequence, the consultant presented concepts such as calling patients
‘customers’ and used techniques such as the Boston Consulting
Matrix to identify which A&E services should receive greater or lesser
emphasis to ‘increase customer satisfaction.’ Understandably, the
nurses decided the training was irrelevant to their situation and also
rejected the idea of moving away from an internally focused orienta-
tion when fulfilling their job roles. The hospital’s training initiative
failed to demonstrate to the nurses the benefits of being seen as
more externally orientated. For example, spending a little more time
explaining a diagnosis and treatment to patients will reduce patient
fears and ensure they are more likely to complete recommended post-
hospital treatments such as taking the full dose of prescribed antibiot-
ics or putting a fresh bandage on a wound within 3 to 5 days.
When changing the culture of a strict adherence to medical pro-
cedures, both the senior consultants and the rest of the medical staff
within the A&E unit has to be persuaded of the potential benefits of

adopting a more flexible attitude to which of the medical staff are
authorised to undertake which tasks in the diagnosis and treatment of
patients. To achieve this culture shift, it was necessary to demonstrate,
especially to senior doctors, that in today’s busy and under-resourced
hospital A&E departments, there are significant benefits in creating a
multi-skill group-based working philosophy which permits a number
of individuals (after appropriate training) to fulfil a wider variety of
roles. This aim was achieved by A&E staff, relevant hospital senior
consultants and senior hospital managers after visiting other hospitals
which had already adopted a team-based multi-tasking approach.
These visits had a positive impact and led to greater acceptance of a
multi-tasking approach. However, as noted by Merali (2006), introduc-
tion of this change should not occur into the hospital’s A&E depart-
ment until all relevant staff have received appropriate training in the
medical and interpersonal skills required in order to adopt this more
flexible orientation towards delivery of medical services.
The actions concerning the benefits of adopting greater flexibil-
ity should simultaneously lead to acceptance of the required values
shifts shown in Figure 10.2 that are desired by the hospital’s leader-
ship. This still leaves the issue of senior management’s bias towards
exhibiting a stronger external orientation than that indicated by the
preferred organisational values. The factors influencing the hospital
leadership’s prevailing external orientation included the hiring of a
new senior manager from private industry who had no experience
of the healthcare sector; a forceful chairman of the hospital board
whose experience in the airline industry caused him to believe all
service quality problems would disappear when the hospital installed
an automated computer-based patient appointment system; and
Department of Health KPIs which place high priority on the NHS
becoming more ‘customer orientated’. To achieve a values shift would
require the hospital’s senior management and board to recognise
that their current orientation risked misusing scarce resources which,
when linked with an adverse impact on job satisfaction, could reduce
overall organisational productivity. Once they had recognised this, the
leadership could recognise the need for their values to shift towards a
greater focus on the needs of the staff and optimising internal service
provision activities. It would remain the responsibility of the hospital
board, in partnership with senior management, to persuade the con-
tractor customer that their policy emphasis on customer orientation
is detrimental to productivity within the hospital.
Designing intervention
Before instigating a programme to achieve greater congruence of val-

ues, the initiators need to appreciate some realities. The public sector
has been inundated with numerous new policies under the banner of
NPM, as different political parties are elected to government and seek
to impose their policies improving the performance of PSOs. As a con-
sequence, most public sector employees have been overwhelmed by
the frequency with which new initiatives keep being imposed on their
organisations. Furthermore, the transient nature of many of these ini-
tiatives means that positive outcomes are rare because, before any real
benefit becomes apparent to PSO staff, typically another new initiative
is introduced.
Achieving fundamental shifts in organisational values should be per-
ceived as a long-term process – but politicians and the electorate expect
immediate solutions (Greasley et al., 2009). Hence, senior management
within PSOs must be prepared to be seen to put the organisation’s and
the organisation’s employee needs ahead of demands for more change
from governments or contractor customers. The ability to resist these
external pressures will be enhanced by senior managers forming alli-
ances with key stakeholders, such as other PSOs in the same sector,
professional bodies representing staff and the public sector unions.
Another issue associated with the plethora of new initiatives is that
both managers and staff perceive ambiguities in the nature and pur-
pose of their government’s latest proposals in relation to the ongoing
operation of their organisation. A common cause of ambiguity is where
policy changes have resulted in the organisation’s actual service provi-
sion activities conflicting with what the employees have considered to
be the organisation’s long-accepted values. The contradiction can cause
staff to be no longer willing to exhibit a common sense of purpose in
fulfilling their job roles (McLoughlin et al., 2005).
Randall and Procter’s 2008 study of the UK government department
HM Revenue and Customs concluded that the age of the employee
and the time spent working in the public sector influences the level of
ambiguity which an individual believes is created by a new government
initiative. Older individuals, especially those with many years’ experi-
ence of working in the public sector, tend to be philosophical about
a new initiative, perceiving it as having little impact on their job role
or the assigned service provision responsibilities. In contrast, younger
employees, especially those who have been recruited from the private
sector, often react negatively. They tend to perceive the initiative as cre-
ating a major redefinition of assigned tasks and organisational purpose.
This potential for variation in the reaction of different staff will need
careful handling when senior managers present a programme aimed at
achieving congruence between the preferred values of the organisation
and the actual values of members of staff.
The American psychologist, Kurt Levin, proposed a three-phase proc-
ess model called ‘unfreezing – transition – refreezing’, which is some-
times perceived as a rather simplistic model for use in the management
of change. Unfreezing involves the individual’s willingness to question
current attitudes and beliefs, and accepting the view that these may no
longer be relevant. Transition is the phase where the individual comes
to perceive that revised attitudes and beliefs are probably more benefi-
cial. The final phase of refreezing is the point at which revised attitudes
and beliefs are accepted as the basis for determining task completion
activities. As external environments are in a continuous state of flux, it
can be argued that refreezing will be more effective when accompanied
by a willingness to remain open to further revisions in attitudes and
beliefs in the future.
In her review of implementing organisational change based upon
the Levin model, Woodall (1996) noted that disputes and conflict
will occur over preferred values within an organisation. Furthermore,
organisational environments are relatively homogeneous and some of
the most hotly disputed items are the organisation’s basic values. Thus,
any attempt to insist that all employees must exhibit exactly the same
values is an unrealistic objective. In fact, such actions will only lead
to increasing organisational conflict, because staff will perceive it as
senior management seeking to impose greater control over all internal
activities.
Woodall stressed that, prior to any attempt to unfreeze staff, it is criti-
cal to hold adequate discussions between key stakeholders within the
organisation to gain their consent and co-operation. If this requirement
is ignored, the outcome from the transition phase will be an even larger
gap between preferred and actual staff values. Refreezing is supposed to
involve consolidation and integration, leading to higher staff morale
and job satisfaction. From her observations of many organisational
development programmes, Woodall believes that a more probable out-
come is for employees to exhibit compliance but in reality not accept
the new values which have been imposed.
For a genuine acceptance of new values, Woodall posits that there
must be genuine mutual benefit for both the employer and the employ-
ees. This will require an open dialogue between all stakeholders to
create an environment where employees feel that a genuine sense of
community and belonging exists within the organisation. To achieve

this outcome, the prevailing behaviour of all stakeholders must reflect
honesty, openness, integrity and fairness. There should also be a will-
ingness to accept some deviant behaviour among staff where there is
danger of such behaviour having a significant detrimental impact on
other staff or overall organisational performance.
A values shift cannot occur by merely informing employees that it
must occur. It is only achievable if the employees engage in some form
of organisational learning which convinces them of the benefits of
change. In his review of ensuring organisational learning is effective,
Schein (1993) posits that learning can only occur if the learner perceives
a problem to exist and if that problem is a cause of personal anxiety.
He further posits that acceptance of a new idea requires presenting ‘dis-
confirming data’. These data must convince the learner that sustaining
existing attitudes, beliefs and behaviours will only increase the eventual
magnitude of the identified problem. Schein describes this process of
amplifying the scale of the identified problem as ‘creating a new anxi-
ety’. This new anxiety must be larger than the initial anxiety. One type
of new anxiety is convincing the individual that not engaging in the
learning activity is potentially detrimental to the future morale and
job satisfaction of friends and work colleagues within the organisation.
Having established the new anxiety, the individual can be expected to
participate in the organisational learning activities necessary to acquire
the proposed change in attitudes, beliefs and behaviours. Schein notes,
however, that the individual must be placed in a learning environ-
ment in which they feel secure about making mistakes and questioning
propositions. Additionally, when the individual encounters difficulties
when learning, this must remain confidential and not communicated
to their line manager or others within the organisation.
Prioritising service provision
The hardships encountered by people during the Great Depression and

the barbaric treatment of some nations during World War II led to a
strong desire to ensure equality in terms of a right to a standard of living
adequate for the health and well-being of the individual and their fam-
ily. This laudable objective was enshrined in the Universal Declaration
of Philosophy Human Rights adopted by the United Nations General
Assembly in 1948. In Western democracies, where fulfilment of this
objective was an economically viable promise, the philosophy of
free lifelong welfare provision emerged. However, in most Western
democracies, the concept soon proved to be unaffordable. In some

cases from the outset, and in other cases within only a few years, people
receiving certain services were expected to make a contribution (such as
prescription charges) or means-testing was used to determine the scale
of service provision to be made available to individuals.
Despite the obstacles created by affordability, people in the Western
democracies have benefited from governments seeking to maximise
equal rights for all. This is reflected in legislation such as prohibiting
discrimination in the workplace, welfare services and gender equal-
ity. Politicians have always been aware of the vote-losing potential of
withdrawing or reducing public sector service provision. Hence, govern-
ments have sought to avoid public service cutbacks whenever possible.
By the 1990s, however, the inability of governments to sustain increas-
ing public sector spending saw the advent of NPM and the emergence of
concepts such as the privatisation of public services, reducing the power
of the trade unions and the withdrawal of benefits from individuals
who refused to actively search for employment.
The political label for adopting the principles of NPM is ‘neoliberalism’.
Acceptance of this political philosophy has varied across the Western
democracies. Countries in mainland Europe, which tend to favour social
democratic values, have been less willing to accept welfare state reform
than countries such as the UK and the USA. In the UK, for example, the
Labour Party, which has traditionally sought to represent the needs of
the working classes, had to adopt a more neoliberal manifesto in order
to return to power in the 1990s. Ideas which remain an anathema to the
left-wing party members appeared in ‘New Labour’s’ manifesto, includ-
ing withdrawing benefits from those refusing to seek employment, and
the social stratification of welfare provision (Morris, 2007).
A major factor influencing the emergence of neoliberalism in the
1990s was the ability of governments to fund expanding provision of
public sector services. Although politicians have sought to avoid upset-
ting electorates by capping the level of service provision, the ability
to sustain this philosophy has been severely impaired by the need to
reduce public sector deficits following the crisis in the banking industry
and the emergence of unmanageable sovereign debt in some countries.
The government cutbacks caused by needing to reduce public sector
deficits mean that virtually all PSOs are having to ‘ration’ services. The
majority of PSOs under these circumstances seek to protect the most
disadvantaged and vulnerable in society. Nevertheless, decisions over
the reduction or withdrawal of a service can create difficulties in terms
of managing angry public reactions and also a moral dilemma for public
sector workers who feel such actions are in breach of their professional
and personal ethics.
The degree to which staff in PSOs are willing to accept the need to
reduce or withdraw services is determined by the personal values of
each individual. To comprehend the value judgments that will increas-
ingly face public sector staff, some understanding may be gained from
the healthcare sector, where certain forms of service prioritisation and
rationing have been in place for several years, and the magnitude of
cutbacks is expected to increase exponentially due to massive national
debt and population ageing.
One of the first Western democracies to face the need to revise health-
care policies was New Zealand. This occurred in the 1980s, when the
country’s weakened economy forced its government to implement a
drastic rethink over the scale of public sector spending. The conservative
government of the early 1990s introduced a purchaser–provider model to
control exponentially rising costs, which was seen as an explicit action to
ration healthcare services. Unusually for a democracy, the New Zealand
legislature was remarkably open about needing to ration access to publicly
funded healthcare, although the politicians preferred to use the phrase
‘prioritising access’ (Manning and Paterson, 2005). The New Zealand
Public Health and Disability Act 2000 aimed to provide appropriate, effec-
tive and timely services but contained a caveat concerning the extent that
this could be achieved within the funding available. Access to publicly
funded pharmaceuticals was regulated via a new management agency,
Pharmac, which, compared with many other countries, has been success-
ful in stabilising government expenditure on prescription drugs.
New Zealand’s Code of Patients’ Rights and Human Rights legisla-
tion do not support an automatic right to access healthcare services. As
a consequence, a number of test cases have been brought by patients
or their families who believe they have been discriminated against by
hospitals failing to offer a specific treatment or withdrawing treatment
from a patient. The courts have been forced to determine whether a
hospital’s actions can be justified on clinical grounds or whether the
decision has been biased by a factor such as the age of the patient.
These cases have attracted extensive media attention. In their review
of the outcomes of these cases, Manning and Paterson concluded that,
in general, the court rulings have upheld the principle that the public
can legitimately expect the most efficient use of public sector resources.
Nevertheless, the judgments have acknowledged that treatment deci-
sions based purely upon cost effectiveness are potentially inequitable
and may lead to socially unacceptable consequences. This is because the
potential exists for an unfair distribution of treatment when patients’

eligibility is defined by characteristics such as age, socio-economic
status, race or ethnicity, or levels of disability.
The scale of equality over access to healthcare varies between coun-
tries. In Canada, access to basic hospital and medical services is universal.
Over the border in the USA, more than 40 million people are estimated
to be without any funded healthcare coverage. President Obama sought
to resolve this problem but, although appropriate legislation has been
passed through Congress, its actual implementation has remained lim-
ited. In addition to limitations of coverage, age is acknowledged as a
legitimate factor in healthcare rationing in America. For example, age is
a major factor in decisions regarding transplant surgery, in part due to a
limited availability of suitable donors. Nevertheless, any form of ration-
ing does mean that medical staff are frequently required to make values
decisions. For example, as noted by Norton (2000, p.40), in comment-
ing upon the professional values common to most medical staff:
If it has been determined by sound clinical practice that a patient

requires a specific medical treatment, that treatment should be avail-
able within a safe time period. To ration or otherwise hinder such a
patient is neither good, cost effective nor ethical medicine.
The issue of healthcare rationing involves three fundamental questions:
(1) Can medically necessary procedures be ethically denied?

(2) Do people have a right to unlimited access to healthcare regardless
of cost?
(3) Should healthcare resources be denied to those able to purchase
desired treatments?
In the USA, one of the catalysts for stimulating the rationing debate has
been the Oregon Health Plan. This uses a ‘quality-adjusted life years’
method to determine access to publicly funded healthcare. Additionally,
the state promotes the concept of self-rationing to consumers and
encourages healthcare providers to actively and openly participate in
bedside rationing. The supporters of the Oregon Health Plan point out
that the utilised parameters are economic efficiency, fairness and utility.
These parameters provide an explicit and equitable allocation of scarce
healthcare resources.
In his analysis of the healthcare sector, Boscheck (2004) points out
patients have not been granted inalienable rights. In his view, there are
‘quasi-rights’ which are typically defined by governments in the form of

performance targets or frameworks requiring providers to make certain
resources available to their served community. There are also ‘moral
commitments’ such as the publication of patient charters. Nevertheless,
legislative rights to receive treatment tend to be rare and usually only
apply to vulnerable groups in society such as disabled persons. Boscheck
also noted variations between countries in relation to the nature the
rights granted to patients. In Nordic countries, where treatment contracts
and care guarantees are most clearly defined, the public is not offered any
legal right to guaranteed treatment. In the UK, the government’s Patient’s
Charter mentions certain rights concerned with access, quality assurance
and processes for submitting complaints. Here again, however, the docu-
ment does not confer the patient with any real legally enforceable rights.
In the USA, the 1988 Consumer Bill of Rights and Responsibilities was
designed to strengthen patients’ confidence in the healthcare system. In
Boscheck’s view, the paucity of well-defined operational standards and
enforcement mechanisms vitiates any real benefit, and the Bill of Rights is
also weakened because a number of states have never passed the necessary
complementary legislation required for its effective implementation.
The problem now confronting many PSOs is that people, agencies and
charities with a liberal perspective are relying on human rights legislation
to attempt to reverse decisions to withdraw or reduce the scale of welfare
service provision. For example, Albisa (1999) argued that people in the
USA have an inalienable right to receive social benefits and a healthcare
service, and that a withdrawal of such services by the federal or state gov-
ernments is a ‘retrogressive act’ prohibited by human rights legislation. In
her view, retrogression is represented by changes in the welfare reform laws
that reduce people’s rights to qualify for Medicaid or receive food stamps.
The use of the Human Rights Act is even more prevalent in Europe, as
people have sought to challenge government welfare reforms. Increasingly,
people who lose their case in their own country’s courts turn to the
European Court of Justice to obtain more favourable rulings over the
level of governance that is appropriate to protect social welfare within EU
member states. The apparent increase in the number of European Court
of Justice rulings in favour of private citizens appears to indicate that the
judges’ interpretation of the European Human Rights Act is that this leg-
islation means that social values must be protected even if they conflict
with a government’s abilities to fund an all-encompassing welfare system.
In commenting upon this situation, Newdick (2006) expressed the opin-
ion that the European Court of Justice’s policy preferences appear to favour
the rights of the individual and do not accept arguments about the risks
of refusing to permit governments to invoke rationing on the grounds of

insufficient national financial resources. Newdick’s (2006, p.1667) conclu-
sion in relation to this situation is that ‘This is a legitimate political objec-
tive, but the Court’s jurisprudence of individualism in respect of national
health resources is more likely to generate unequal access to care and a
lack of trust more familiar to patients in the US.’
Although PSOs can expect legal challenges over decisions to reduce or
withdraw services, in reality these actions will become increasingly neces-
sary in order to handle budget cutbacks. Where the PSO is engaged in pro-
viding a large portfolio of services, there are benefits in determining which
services should receive priority when planning future service provision. In
terms of setting priorities, one approach is to recognise there are two fac-
tors which can be critical to the PSO: the expected level of future demand
for a specific service and the scale of the values gap between key staff
and the organisation’s preferred overall values. One approach is to classify
each area of future service demand into low, average and high. A similar
analysis is undertaken to classify the level of existing congruence between
the values of key staff responsible for the delivery of this service and the
organisation’s preferred values. These data can be used to construct a val-
ues development priority matrix of the type shown in Figure 10.3.
Future service provision demand

Low Average High
1 2 3
Not a key area. No Potential future issue. Major problem. Assess
Low staff development Monitor situation but value congruency
programme to be do not schedule staff feasibility and fallback
scheduled. development. plan.
Congruence 4 5 6
between Reasonably critical Important area.
Potential future issue.
values of staff area. Implement Immediately
Monitor situation but
and preferred programme(s) as implement programme
do not schedule staff
organisational time and resources to achieve closer
development.
values permit. values congruency.
7 8 9
No action required, Critical area.

Average but service demand Immediately
No action required. suggests ongoing implement new
monitoring of staff programme if adverse
values. values shift emerges.
Figure 10.3 Values development priorities

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11
Translating Vision into Strategy
Progressing the plan
For many years, the world of marketing has utilised the ‘4Ps’, which is a
useful mnemonic of the elements which constitute the marketing mix:
product, price, promotion and place. As summarised in Figure 11.1, this
mnemonic can also be exploited to describe the actions associated with
the concept of strategic management:
Philosophy: creating a vision

Purpose: defining a mission
Process: defining strategy to define process
Plan: developed by utilising these elements.
The other important aspect contained within Figure 11.1 is the feedback
loop, which communicates the importance of testing the validity of
mission, strategy and plan against the values which form the basis of
the organisation’s vision statement.
In recent years, the adoption of strategic planning by many PSOs has
involved significant time and resources assigned to crafting an appro-
priate mission statement. This expenditure of effort usually reflects the
well-intentioned aims of senior management to craft a mission statement
which is acceptable to the diverse range of interests of the different
groups or departments within the organisation. The major drawbacks
with this approach are that it can create a lengthy statement which few
people can remember and also that the phrasing may permit groups
or entire departments to adopt a personalised interpretation of mis-
sion, which creates misunderstandings with others who have different
perspective on meaning (Chaston, 2011). It is much more effective to
213
VISION MISSION STRATEGY PLAN

= = =
PHILOSOPHY PURPOSE PROCESS
Figure 11.1 The 4Ps of strategic management
aim to keep the mission statement as short as possible. This increases

the probability that people will utilise the statement to assess whether
plans and actions are compatible with mission. Brevity also reduces the
ability of groups or departments to use the mission statement as an
opportunity to justify actions which are divisive or represent a misuse
of scarce resources.
In the private sector, organisations are often confronted with a diver-
sity of opportunities. This can make selection of purpose a somewhat
lengthy and complex activity. In contrast, the purpose of most PSOs is
usually defined by government policy or legislation. Hence, PSOs do
not have to spend much time considering the purpose of either their
existence or their service provision responsibilities. To achieve brevity,
one approach is to accept the recommendation made in Chapter 8 to
consider adopting a mission statement such as ‘provision of excellent
services to the organisation’s customer(s) by optimising the effective
and efficient utilisation of all available resources.’ Assuming this sug-
gestion is acceptable, and that the organisation’s purpose is defined by
the contractor customer, most PSOs can probably avoid spending time
crafting an appropriate mission statement.
Based upon the standard sequential models presented in most man-
agement texts, the proposed model in Figure 11.1 could be criticised on
the grounds that a statement of strategic objectives is not included. This
reflects the perspective that, at this stage, definition of detailed quanti-
tative or qualitative aims has two drawbacks. Firstly, there is the prob-
lem associated with sequencing logical decisions. For PSOs, the issue
arises of whether it is realistic to specify objectives before management
has defined an appropriate future strategy. Secondly, there is the issue
of optimising behavioural efficiency in relation to decision-making.
By requiring the PSO to define performance aims at this juncture, the
Translating Vision into Strategy 215
planning process risks being diverted and valuable time wasted while
discussions take place, which may delay more important deliberations,
such as identifying an effective future strategy. When defining strategy,
staff require some degree of direction over the organisation’s perform-
ance aspirations. For this reason, the mission statement that was pro-
posed in Chapter 8 contains the extremely important clause: ‘to sustain
the provision of excellent services’.
Ensuring failure of purpose
Case aims: To illustrate how senior management’s inappropriate values

and behaviour can defeat attempts at successful development and imple-
mentation of strategy.
The management of a hospital asked Appelbaum (1992) to under-
take an organisational development project with the aim of build-
ing greater co-operation and collaboration between the doctors
and nurses. In the briefing provided by a senior executive, he
was informed that enhancing the performance of the organisa-
tion was in part frustrated by doctors who were perceived as an
unco-operative group of professionals. What Appelbaum did not
know, until after some way into the project, was that the real aim
of management was to deflect attention away from the real prob-
lem. The Board was seeking to impose a new strategy of moving
the hospital towards a fuller academic/university status without
discussing the viability of the strategy with the staff. He also later
determined that the Board and Executive Director felt that focus-
ing on reducing dissension between the doctors and nurses was a
convenient and administratively acceptable explanation for the
lack of discussions with the hospital over whether the new strategy
was acceptable.
In preparation for the first team building exercise, Applebaum
supplied participants with a document developed by the Board that
described how to operate their new strategy. At the first meeting,
it became apparent to Applebaum that the provision of this docu-
ment was in fact unhelpful. A large proportion of the participants
stated that they had never taken part in discussions about the new
strategy, were not supportive of the idea and had no clear idea
of the benefits to the hospital of seeking to achieve academic/
university status.
As a consequence, Applebaum was rapidly exposed to the perspec-

tives of the two groups. The doctors’ concerns included the following
issues:
(1) The strategy did not reflect an ongoing commitment to patient

care.
(2) They did not know who would become responsible for patient
care when doctors were required to focus on enhancing the hos-
pital’s academic status.
(3) Nurses were perceived as having more influence inside the
hospital than doctors and more control over the budgets and
resources. As a result, the administration favours nurses in con-
flict situations.
(4) Concerns about the nurse-manager concept, which was perceived
as making nurses, not doctors, responsible for patient care.
Nurses’ concerns included:
(1) Doctors perceiving nurses as a cost which reduced resources

made available to the doctors.
(2) Nurses perceived as support mechanisms and not perceived as
complementary members of a medical team.
(3) Doctors needing training in communication and conflict reso-
lution techniques to reduce the problems that their behaviour
caused amongst other doctors and with the nurses. In essence,
nurses perceived themselves as filling a vacuum in patient care
since the doctors’ style was counterproductive to collaborative
relationships.
(4) The strategy of seeking academic status was incompatible with
the new direction taken by the training of nurses.
(5) It was not clear whether the movement towards enhanced aca-
demic status included nursing.
(6) There was apparently no definition of how nurses would partici-
pate in research to enhance the hospital’s academic status.
Areas where both doctors and nurses shared the same concerns
included:
(1) A conspiracy of silence where doctors and nurses choose not to

criticise or confront each other.
(2) The decisions of the hospital administrators were driven by

financial imperatives and ignored the issue of how decisions
might impact patient care.
(3) The climate in the hospital was one of ‘management by crisis’
and solving emergencies only after they arose.
(4) The mission of academic status was in conflict with the more
important issue of the quality of patient care, and could result in
patients being neglected.
(6) Research efforts should begin with focused projects supporting
patient care but nurses needed an equal role in working with doc-
tors on research projects, and not just be assigned a supportive
role.
Appelbaum’s conclusion, having heard the views expressed by

participants in the team-building exercise, was that the Board’s
expectation of obtaining tacit approval and automatic acceptance
of its strategy was totally unrealistic. In his view, the negative feed-
back from participants was strong evidence of senior management
attempting interventions that imposed unacceptable strategic deci-
sions on the hospital’s staff. He believed that the hospital would
be unable to resolve any key problems associated with developing
a more co-operative employee culture until the Board and senior
management appreciated that their behaviour and approach in the
development of a revised strategy had created fundamental internal
problems. If such an appreciation did not occur, the probable out-
come would be an ongoing decline in job satisfaction, morale and
organisational productivity. Furthermore, given the critical role of
the doctors and nurses in the delivery of services, a failure to define
a strategy which reflected congruence in vision and mission meant
these professionals had the power to defeat the successful implemen-
tation of any strategy which the Board attempted to impose of the
organisation (Stein et al., 1990).
Defining strategy
The role of a strategy is to define the processes by which an organisation

fulfils the philosophy and purpose respectively defined by its organi-
sational vision and mission statements. The benefit of a brief mission
statement is that it should be perceived as memorable and, therefore
of practical benefit to employees, is also applicable when evolving a

strategy statement. However, prior to crafting a final strategy statement,
the PSO does need to consider the different ways of serving customer
needs and selecting the option most likely to ensure fulfilment of the
organisation’s vision and mission.
With many PSOs facing budget cuts well in excess of 20 per cent, a
necessary reality will be to reduce services and the size of the workforce.
What should be avoided is the ‘knee jerk’ reaction of instigating such
actions and making no attempt to re-examine future strategy. A more
productive reaction for both customers and employers is to use the
budget reduction as a catalyst for a complete re-assessment of vision,
mission and strategy. Assuming the PSO accepts the perspective that
vision and mission should focus on excellence in service provision
through the optimal use of scarce resources, then evolving a new strat-
egy requires analysis of the positioning of future benefits offered to
customers.
As with defining a vision or mission, strategy statements in many
management texts tend to be both lengthy and complex. The risk is
that the strategy may not actually be realistic or, if the strategy is not
understood by employees, it is either misinterpreted or fails to deliver
the PSO’s proposed objectives. Hence, one solution is to develop a single-
sentence strategy statement that fulfils the criteria relating to the effec-
tive management of a PSO, so that:
Strategy specifies the means to be used for achieving the organi-

sation’s strategic objective(s) through the optimal use of available
resources.
The reality confronting PSOs is that they rarely enjoy a monopoly in

the provision of services or are guaranteed that governments will not
change their assigned role or transfer their current responsibilities to
another organisation. The implications associated with this situation
lead to proposing the following definition:
Strategy specifies the nature of the competitive positioning for

achieving the organisation’s strategic objective(s) through the opti-
mal use of available resources.
This proposed definition of strategy may be challenged on the grounds

that the concept of competitive advantage is rarely applicable to PSOs.
However, further consideration of the activities of many of these
organisations will usually lead to the conclusion that competition is

present within most external environments. This reflects the fact that
successfully out-competing other PSOs in the same sector usually results
in the organisation receiving additional resources. In the case of higher
education in some democracies, for example, government funds fol-
low students. A university perceived by potential students as offering
courses that are compatible with their educational needs or career plans
can expect to be rewarded by receiving additional funds.
Another factor influencing the emergence of competition is that some
governments, in seeking to achieve greater efficiency and effectiveness
in PSOs, promote the concept of offering the public greater choice over
providers from whom they will seek services. One sector where the
choice concept has been very popular is healthcare with, for example,
people being offered a choice of hospitals when requiring surgery. Service
provision may appear monopolistic by being defined by a decision vari-
able (such as individual location determining which local government
authority will supply waste collection services), but PSOs still need to
recognise competitive threats. One threat is that the government may
determine that service provision is so inadequate that a replacement
provider may be appointed from either the private or the not-for-profit
sector. The other potential source of competition comes from other areas
within the public sector, such as education, social services and healthcare,
that will continue to compete for a larger share of a nation’s total public
sector budget.
Identifying and sustaining a competitive advantage is also becoming
more important as public sector agencies seek to ensure their ongoing
existence while governments are making massive cuts in public sector
spending. Those organisations capable of demonstrating a competitive
advantage of superiority in the fulfilment of their assigned roles are
less likely to be the focus of budget cutbacks. By contrast, organisations
perceived by a government to be performing poorly face a higher prob-
ability that the level of budget cuts will be much larger.
The inclusion of the word ‘positioning’ in the above strategy defi-
nition is necessary because PSOs have a number of strategic options
available to them in order to meet the criteria specified by their vision
and mission statements. One of the most frequently utilised models
for describing alternative positioning options is that proposed by the
Harvard Professor, Michael Porter (1985). His proposition is based upon
the two dimensions of product or service performance and market cov-
erage. In relation to performance, Porter proposed the choice of ‘cost
leadership’ or ‘delivering superior performance’ (or ‘differentiation’). In
his view, cost leadership was a low-scale advantage because it is probable

that another provider will eventually enter the market offering a product
or service at an even lower price. In relation to market coverage, Porter
proposed that an organisation could opt to offer products or services to
the majority of the market or alternatively adopt a ‘focused’ approach of
meeting only the specific needs of a small group of customers.
Although the Porterian model remains a simple yet effective method
for reviewing strategic options, Treacy and Wiersema (1995) proposed
that the increasing need for organisations to reflect the changing nature
of external environmental conditions when determining strategy causes
market coverage and product performance to no longer be an adequate
analytical tool. In their view, the key issue was the growing importance
of relationship marketing, which caused some organisations to seek
to build long-term customer loyalty by moving away from traditional
transactional marketing. This perspective was subsequently expanded
by Chaston (2009), who felt the Treacy and Wiersema model gave insuf-
ficient attention to the influence of product or service value during the
determination of strategy. He proposed that this potential weakness
can be overcome by using the four dimensions of transaction, relation-
ship, product performance and value. In the context of the public sec-
tor, several features were associated with a strategy that includes these
dimensions:
(1) Transactional excellence

Standard services.
Excellence in managing internal service processes.
Information system to rapidly identify production and/or service
delivery errors.
(2) Relationship excellence
Service combination designed to fulfil varying and often diverse
customer needs.
The most effective service solutions for the sector in which an
organisation is located.
Employees obsessed with finding even more effective service
solutions to customer problems.
Information systems rapidly identify errors in service provision.
All employees committed to working closely with counterparts in
other PSOs to optimise fulfillment of customer needs.
(3) Service performance excellence
Service propositions offer outstanding superior performance
compared with alternative service provision that may be available
Orientation towards always seeking to extend the performance

boundaries of existing services.
Excellence across the entire workforce in understanding how the
latest advances in technology might be incorporated into services
and/or service provision processes.
(4) Value performance excellence
Costs of service provision significantly lower than any other
providers.
Skilled in the processes associated with making available ‘no frills’
services.
Excellence in exploiting existing technology and recycling capital
equipment to further reduce service provision costs.
Information systems designed to rapidly identify adverse cost
variance trends across procurement, service processes and service
delivery.
Culture of employees striving to apply conventional thinking to
further reducing operating and/or fixed costs.
As summarised in Figure 11.2, the two dimensions of service perform-

ance and customer relations provide the basis for four alternative posi-
tioning options.
For PSOs in sectors where the user customer is able to exhibit choice
in selecting a service provider, there is also a requirement to determine
the nature of service demand and the relative capability of providers to
fulfil these demands. One approach for gaining further understanding
of this issue is to create a service provision space map of the type shown
in Figure 11.3.
In the example illustrated in Figure 11.3, user customers are assumed
to have varying preferences in relation to the level of service customi-
sation and level of service performance. The first stage of the analysis
is to determine the nature of these differences. This can be achieved
by surveying potential customers and using cluster analysis to identify
the various demand segments which exist in a sector. In the example
presented in Figure 11.3, there are the following three main customer
clusters:
Cluster 1: constituted of individuals seeking high value standardised

services. Presenting Cluster 1 as the largest circle indicates this is
the segment of greatest service demand.
Cluster 2: constituted of individuals seeking less standardisation
of services and a limited degree of high service performance.
SERVICE BENEFIT
High performance
Maximised high service Customised high service

quality quality
SERVICE TYPE
Standard Customised
services services
Maximised high value Customised high value

services services
High value
Strategic options
Presenting Cluster 2 as the second largest circle indicates there is

lower service demand than for Cluster 1.
Cluster 3: constituted of individuals seeking customised services and
high service performance. Presenting Cluster 3 as the smallest
circle indicates there is lower is service demand than for the other
clusters.
The next stage in the analysis is to determine the degree to which providers
have the capability to fulfil service demand. This is achieved by analysing
actual service capability in relation to standardisation and high perform-
ance. These data are then also entered onto the space map. The position
of each service provider relative to the position of the identified user cus-
tomer segments indicates the degree of compatibility between needs and
the ability of a provider to satisfy these needs (Schoemaker, 1992). In the
case presented in Figure 11.3 the following outcomes can be observed:
Provider A is very able to fulfil the service needs for customers in

Cluster 1.
Provider B is reasonably able to fulfil the service needs for customers
in Cluster 2 but the position of B indicates that a revision in com-
petence would enhance this provider’s ability to achieve greater
customer satisfaction.
High
Desired level of service customisation 3

C
?
2
?
B D
A
1
Low High
Desired level of high performance services
Figure 11.3 Service provision space map
Provider C is somewhat able to fulfil the service needs for customers

in Cluster 3 but the position of C indicates that a revision in com-
petence would enhance this provider’s ability to achieve customer
satisfaction.
Provider D faces a significant problem because it is apparently unable
to satisfy any of the customer clusters. Hence, this organisation
needs to decide which customer cluster offers the greatest potential
opportunity and then determine whether competences can be suf-
ficiently revised to reposition the organisation.
Entrepreneurship
In the face of declining financial resources, especially where strategic

repositioning is deemed necessary, few PSOs are likely to continue with
their existing approach in the future provision of services. The implica-
tion is that many PSOs will need to emphasise entrepreneurial behav-
iour as an ongoing component in both planning and implementing
strategic actions. Miller (1983) suggested that the entrepreneurial ori-
entation of an organisation is demonstrated by the extent to which top
managers take risks, favour change and exploit innovation to achieve a
competitive advantage. Georgelli et al. (2000) proposed that the skills
of entrepreneurship comprise a capacity for changing internal processes
and for launching of new products or services. Covin and Slevin (1988)
posited that entrepreneurial orientation is based upon the extent to
which managers are inclined to take risks, favour change and are com-
mitted to supporting innovation.
Du Gray (2004) suggested that entrepreneurship no longer just refers
to the creation of business ventures or a strategy for achieving growth in
the private sector. Instead, he considers entrepreneurship to now refer
to the ways in which economic, political, social and personal vitality
is best achieved by organisations of all types, including public sector
and not-for-profit entities. Morris and Jones (1999, p.74) proposed a
definition for public entrepreneurship as ‘the process of creating value
for citizens by bringing together unique combinations of public and/or
private resources to exploit social opportunities’.
Some of the factors influencing why entrepreneurship has spread
from the private sector and is accepted within the public sector appear
to include increasingly uncertain environments, devolution of power
from central government, reduced reliance upon hierarchical structures
and delegation of authority to staff engaged in service provision activi-
ties. Another factor of influence is where governments or government
agencies determine there is a need to implement fundamental changes
in the ongoing provision of services.
Kearney et al. (2009) believed entrepreneurship in the public sector,
unlike the private sector, does not rely upon the particular attributes of
a specific individual but on a group desire for organisational change.
This is because opportunities for innovation arise from circumstances
peculiar to the public sector, such as the pace of innovation being influ-
enced by changing societal needs. Additionally, innovation is seen as
possibly the only solution for sustaining or enhancing service provision
within financial constraints. Kearney et al. proposed that certain internal
variables influenced the effectiveness of PSOs as innovators. These
include structure, scale of delegated decision-making, degree of emphasis
upon rigid rules and control systems, and organisational culture.
Morris and Jones asserted that innovativeness in the public sector
will tend to be more concerned with novel process improvements, new
services and new organisational forms. Risk is a central component
to the study of entrepreneurial behaviour. Hence, innovative public
sector managers must be prepared to take risks and expect to face
bureaucratic and political obstacles from other, more conservatively
orientated managers, contractor customers or politicians. Another key
aspect of effective innovation is the degree of proactivity within a PSO.
Proactivity refers to a posture of anticipating and acting on future wants
and needs, accompanied by a concern over implementing an appropri-

ate course of action in order to bring an entrepreneurial concept to
fruition. Achievement of this outcome involves a high level of commit-
ment, perseverance, flexibility and adaptability, as well as a willingness
to take responsibility for possible failure. Morris and Jones considered
public sector proactivity to also involve an emphasis on anticipating
and preventing public sector problems before they become unmanage-
able. Effective actions may include creative interpretation of rules and
leveraging scarce resources.
For most organisations, a critical objective of the selected strategy is
to ensure the long-term survival of the organisation. There is the risk
that a poorly defined strategy may only provide a temporary advantage.
This view is supported by Mintzberg (1994, p.15) who concluded, in
relation to the Design School approach to strategic planning, that there
is ‘the danger that the strategy will be outdated within three months.
If you go back to that strategy you may be focusing your attention on
the wrong areas in the business’. To avoid the risk of short-term organi-
sational thinking, and to fulfil the requirement that strategy should
be compatible with vision and mission, the need for greater emphasis
on innovation leads to the following revision in the earlier strategy
definition:
Strategy specifies the nature of the innovative behaviour required to

support a competitive positioning for achieving the organisation’s
long-term strategic objective(s) through the optimal use of available
resources.
Failure to recognise the importance of entrepreneurship as a key ele-

ment of strategy may eventually lead to the demise of the organisation
or, alternatively, leave the organisation as a shadow of its former self.
Sadly, the world of business is littered with such examples (such as the
airlines Pan Am and TWA in the USA, and the car companies Rover and
Morris in the UK). The responsibility for such outcomes must rest with
the leadership, often across a number of generations, who has perhaps
decided that life would be easier if their organisation ignored inno-
vation and instead focused on short-term activities to maximise the
financial performance of the existing product or service portfolio. These
failed leaders neglected their long-term responsibilities to their stake-
holders, such as loyal customers, employees, other members of their
supply chain, for example by creating new employment opportunities
in the communities where their operations were based.
In an increasingly uncertain world, leaders of PSOs also need to

adopt a more realistic long-term perspective of the risks to future
survival as governments act to reduce huge public sector spending.
In the past, some leaders may have believed that governments would
not be prepared to let major public sector operations go bankrupt. As
demonstrated by the US government refusing to support certain finan-
cial institutions and the car giant General Motors during the banking
crisis, this is an increasingly dangerous perspective. For example, in
the UK, the government recently commented that some universities
may have to be closed after exhibiting an inadequate degree of fiscal
responsibility. Should this occur, student needs will be sustained by
transferring their programmes to other, more effective higher educa-
tion providers.
Osborne and Brown (2005) proposed that innovation is necessary in
order to respond to both ‘planned’ and ‘emergent’ change. The former
involves the public sector manager determining that changing external
or internal circumstances will require crafting and implementing a new
or revised strategy. An example would be the senior management in a
hospital deciding to increase ‘keyhole’ surgery, which would require
changes to the structure of physical facilities, treatments and the skills
of hospital staff. More difficult to manage are emergent strategies
because these are caused by a significant change or the onset of a crisis
demanding a fundamental re-evaluation of future strategy. The impact
of major government cutbacks in public sector spending is an example
of an emergent scenario.
For senior management to determine the role of innovation as a
key component of future strategy, they need to determine the require-
ments of their PSO’s future role as a service provider. One typology is
to assume there are two dimensions associated with innovation: a focus
on internal processes versus a focus on service outputs, and new service
provision versus sustaining the delivery of existing services. Both these
dimensions can be treated as continuums. This approach generates the
typology illustrated in Figure 11.4. This proposes four potential areas of
focus in determining how innovation will influence future strategy in
a PSO:
(1) Efficiency innovation focuses upon innovation in relation to the

internal processes that can enhance the future delivery of existing
services.
(2) Effectiveness innovation focuses on innovation in relation to enhanc-
ing the provision of output for existing services.
Provision of new services
Development Benefit
innovation innovation
New
Internal service
processes options
Efficiency Effectiveness
innovation innovation
Enhancement of existing services
Figure 11.4 Strategic service options
(3) Development innovation focuses on innovation that utilises changes

in internal process that can support the development of new
services.
(4) Benefit innovation focuses upon innovation directed towards the
creation of new services that enhance the organisation’s future serv-
ice provision portfolio.
The other aspect of innovation management in the public sector is

the degree to which the activity is identified as a fundamental aspect
of strategy and strategy implementation or whether it is treated as
an unplanned and unmanaged process (Veenswjik, 2005). In the
latter situation, innovation is an unexpected outcome from an inter-
action of factors and activities inside the PSO which can subsequently
be linked to new opportunities in the external environment. For
example, a group of individuals in a local authority might develop
a computer-based information management and decision system for
enhancing the effectiveness and efficiency of the authority’s hand-
ling of planning applications. Media coverage about the success of
the proprietary software encourages other organisations to contact
the local authority for more information. The local authority might
then establish a new revenue-generating consultancy service to advise
other PSOs on the design and operation of computer-based decision-
support systems.
Identifying with organisational vision
Case aims: To illustrate the benefits of achieving congruence with employee

and organisational values.
In knowledge-intensive organisations, values, beliefs and overall
vision are critical because the employees are the key value drivers
(Davidson, 2002). In the public sector, successful organisations will
need to evolve into knowledge-intensive entities in order to more
effectively exploit innovation to develop the new services or delivery
processes which are the only real solution to overcoming resource
constraints.
Some of the important environmental and organisational changes
required in the effective formulation of revised visions, missions and
strategies, as identified by Rylander and Peppard (2003) include:
(1) rapid rate of change and technological advance, which means

organisations have to become more agile and flexible
(2) more informed, discerning and knowledgeable customers, whose
expectations will place greater pressure on the need to deliver
excellent services
(3) the importance of support for employee creativity in order help
identify new ideas and to convert these ideas into viable service
solutions.
Rylander and Peppard believed that the effective management of

these forces is not really understood in many organisations but reli-
ance upon traditional linear, sequential strategic planning models
is no longer a feasible option. As a consequence, they posited that
changes are needed in the way organisations approach the formula-
tion and implementation of strategies that provide adequate responses
to a rapidly changing world. In their view, a key fundamental shift
is the move from reactivity to proactivity as an organisation. They
supported Kanter’s (2002) view that, increasingly, organisations that
are confronted with major problems should reduce their reliance
upon detailed, structured, inflexible plans and instead be prepared
to improvise and experiment in their search for more effective
solutions.
Formulating a vision, mission and strategy will not be achieved by
a linear process involving the acquisition of detailed data sets and
then undertaking rigorous analysis of the data. Rylander and Peppard
proposed that managers and employees should work together in

teams exploring internal and external conditions and engaging in
‘sense-making’ to comprehend why certain trends are emerging. This
will require a planning philosophy whose process is both circular and
iterative. A benefit of this approach is that new ideas can be evalu-
ated to determine whether they are understood, acceptable and, most
importantly in the public sector, are feasible within the context of
severely constrained resources.
Castells (2000) noted that, to effectively respond to increasingly
difficult conditions, employees must identify with the organisation’s
values and mission. He feels this objective is particularly important
in knowledge-intensive organisations. Normann (2001) proposed
that, with organisations continuously being forced to redefine and
reshape themselves in a rapidly changing world, it is critical to
ensure that employees identify with their organisation in order to
develop plans to respond to future events. Where management is
unable to persuade employees of the validity of the organisation’s
values, mission and strategy, internal instability will be reflected
in declining morale, job satisfaction and productivity (Goia et al.,
2000). Fombrun (1996) believed that, not only should the employees
identify with their organisation’s values and beliefs, but that there
must also be acceptance among key external stakeholders.
Strategic fit
In part, because of academics’ enduring desire to challenge established

ideas, Porterian theory has been criticised by researchers adopting an
excessively market-orientated approach when selecting the most appro-
priate form of competitive advantage. Some leading critics, such as
Pralahad and Hamel (1990), are strong supporters of the ‘resource based
view’ (RBV) of the organisation. Their perspective is that RBV theory
is a more realistic rationale for explaining success. In their view, this is
because an organisation will be able to outperform other organisations
only through exploitation of a superior key competence, especially
when seeking to serve the same customer needs.
In the private sector, most organisations share a common under-
standing of the marketing activities and process technologies required
to be successful. As a consequence, they can expect to encounter huge
difficulties in achieving any meaningful differences in the nature of
the services offered to customers. The ability to differentiate the organi-

sation where other providers operate in the same sector is even more
difficult. This is because the nature of most public sector services means
that prevailing legislation and government policy typically mandates
the nature of the services to be provided. Under these circumstances, a
feasible strategic philosophy is to focus on identifying a core internal
operational competence that might provide the basis for a competitive
advantage to differentiate the organisation from competition (Hayes
and Upton, 1998).
Hamel and Prahalad (1994) proposed that RBV theory is also vali-
dated by examples from high technology industries, where the key
competence is contained within an organisation’s ability to assem-
ble a bundle of skills and technologies which permit it to develop a
unique technology platform. These authors suggested a private sector
example of this perspective is provided by Microsoft. The company’s
core competences in the development of new software platforms have
permitted the company to become the dominant provider of software
installed in both business and home computers. Another advantage
of achieving a leadership position based upon superior innovation
competence is that it greatly increases the probability that this inter-
nal capability will stimulate the development and launch of more
successful new products, services or processes (Wonglimpiyarat, 2004).
Similar outcomes in the public sector, although rare, provide equiva-
lent examples of the benefits of attaining and then retaining leader-
ship based upon superior innovation capabilities. Possibly the best
example is at the leading university teaching hospitals, where some
of a country’s most eminent doctors achieve and sustain a leadership
position in the delivery of advanced treatments and complex surgical
procedures.
Kay (1993) proposed that a preferable approach to determining a
strategy is to take a more balanced tactic which encompasses both
internal capability and the external environment. In his view, distinc-
tive competences are of little potential benefit as source of competi-
tive advantage when utilised in unsuitable market environments. Kay
suggested that strategy selection should be concerned with relating the
organisation’s core competences to external environments, and that
successful competitive advantage should be sustainable and preferably
also unique. Kay suggested that there are four major sources of strength
available to the organisation: reputation, innovation, internal and
external relationships, and organisational assets.
Even in the public sector, where the nature of the services is deter-
mined by the contractor customer, linking competence to external
relationships to meet the user customers’ needs is probably a more
secure proposition than sole reliance upon acquiring superior internal
capabilities. It is also a more valid perspective than the NPM concept
that the primary aim of a PSO is to be customer orientated. In terms
of explaining why certain organisations appear to be more successful
than others, an accepted perspective now appearing in the litera-
ture is that of ‘strategic fit’. This theory proposes that organisations
that have achieved a close fit are able to deliver a superior customer
propositions because they have positioned themselves in the exter-
nal environment by the exploitation of internal capabilities. Capon
et al. (1990) concluded that a key driver in achieving strategic fit is
to ensure an organisation’s activities are more closely aligned with
prevailing market conditions than their competitors. Naman and
Slevin (1993) were specifically interested in how entrepreneurial firms
achieve strategic fit. By using multivariate analysis of variance and
modelling of data from a large number of firms, they concluded that,
for success through innovation, it is necessary to demonstrate congru-
ence between entrepreneurial competence, flexible and responsive
structure, accompanied by a strategy which emphasises exploiting
new products, services or processes to achieve and retain a leadership
position. These researchers also posited that, as environments become
more uncertain or there is an increase in the intensity of competition,
sustaining superior performance requires an even faster response to
accelerating the pace of innovation and making further adjustments
to organisational structure.
In the private sector, where an opportunity exists to exploit cur-
rent internal capabilities or there is a need to upgrade competences
to ensure a closer strategic fit in existing markets, the organisation
can either draw upon internal financial reserves or access more funds
from external sources. This opportunity is rarely available in the public
sector because financial resources are usually fixed or in decline. As a
consequence, a key aspect of evolving appropriate actions to deliver
the selected strategy is for the PSO to undertake a portfolio of services
analysis to determine which areas of service provision might need to be
revised or prioritised to assist in optimising the allocation of resources
to different areas of organisational activity.
One approach to assist this type of decision is to construct a stra-
tegic fit assessment matrix of the type presented in Figure 11.5. The
illustrated decision tool is based upon an assessment of priorities

in relation to the two dimensions of ‘Future service demand’ and
‘Available resources and competences’. This type of strategic analy-
sis permits the PSO to make decisions about which services will be
terminated or receive no incremental resources, areas where resource
transfers are feasible, and if services are in high demand, where the
input of additional resources is advisable. The matrix in Figure 11.5
also contains a cell labelled ‘Major problem’, reflecting expected high
demand for services and resources and competences that are inade-
quate to meet user customer needs. It is probable that this type of sce-
nario will become more common as governments continue to reduce
public sector spending. If an area of critical importance is identified
and the solution can only be developed by being granted incremental
resources, a special plea might be made to the contractor customer to
reverse the decision to cut budgets, or to release additional resources
from available financial reserves. Where such requests fail to generate
a positive response, the PSO will need to take urgent action to identify
other solutions to the resource constraint problem. This might involve
actions such as entering into collaborative relationships with other
PSOs to share service provision or resources, or emphasising internal
innovation to develop new, more productive systems for supporting
future service provision.
Future service demand

Low Average High
1 2 3
Low Zero opportunity: close Low priority: monitor but Major problem: inadequate
down service provision make no revisions to capability situation
current service provision demands major change
Available 4 5 6
resources
and Low priority: monitor but Average priority: add High priority: invest in
Average
make no revisions to resources when opportunity competence upgrade to
competences current service provision permits support high service
activities demands
7 8 9
Excess capability: transfer Capability diversification: Capability leadership:

High
resources to area of transfer some capabilities to retain by sustaining
higher other activities investment in ongoing
service demand capability upgrading
Figure 11.5 Strategic fit assessment matrix

Maximising achievable congruence
Case aims: To illustrate the processes associated with delivering customer

orientation through a focus on values and appropriate strategy.
The traditional interpretation of customer orientation tends to be
associated with initiating reactive responses to external environ-
mental changes. This may remain a feasible philosophy for major
multinational corporations with access to resources on a scale which
permits them to succeed by outspending competition. For organisa-
tions with limited resources, success through customer orientation
more typically depends on being a proactive responder capable
of exploiting innovation in response to expectations over market
change (Hax and Wilde II, 1999).
Tarnovskaya et al. (2008) presented a broader perspective on
customer orientation. They proposed that the philosophy must be
concerned with achieving a congruence of shared values across all
key stakeholders. Hence, as well as positioning itself in a way that
fulfils the value expectations of customers, an organisation should
also strive for values congruence which includes employees, suppli-
ers and any other influential organisations within a market system.
Tarnovskaya et al. believe the success of this broader customer orien-
tation philosophy depends upon innovation providing the basis for
superior products, services and business processes. Their proposal is
that essential characteristics of this approach must include:
(1) a clear organisational vision

(2) employees given the authority and resources to exploit personal
creativity in ensuring the vision is a feasible reality
(3) a focus upon building greater understanding of the organisation’s
values through activities aimed at educating the customers.
Tarnovskaya et al. believed an excellent example that demonstrated the

power of their definition of customer innovation was provided by the
Swedish furniture retailer, IKEA. Sixty years ago, the company’s founder
Ingvar Kamprad defined the company vision as ‘creating a better every-
day life for the many people’. IKEA’s orientation towards proactivity
is reflected in the company mission of ‘inspiring customers through
solutions based on the product range’. Implementation of vision and
mission is through a strategy of making available a wide range of well-
designed, functional home furnishing products at affordable prices.
The articulated values which underpin IKEA’s vision, mission and

strategy are described as the ‘IKEA Way’ (www.ikea.com) and include:
(1) togetherness and enthusiasm

(2) constant desire for renewal
(3) cost-consciousness
(4) willingness to accept responsibility
(5) humbleness and willpower
(6) simplicity
(7) striving to meet the reality
(8) leadership by example
(9) daring to be different
(10) constantly being on the way
(11) permitting people to make and learn from mistakes.
These values are not just utilised to guide the activities of IKEA staff,
but whenever possible the organisation seeks to imbue other mem-
bers of their market system with the same values. For example, the
core value of ‘cost-consciousness’ is reflected in the strategic concept
of ‘IKEA does a half and the customers do a half.’ This core value
guides product design, choice of materials, the self-service flat-pack
concept, inbound logistics and outbound product deliveries.
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12
Objectives, Plans and
Implementation
Objective setting
The existence of hierarchical structures and a rules-based approach to

service provision means that objective setting and planning is often a
top-down process in many PSOs. Although this may have been effective
in an age when PSOs could expect increasing budgets, retention of such
an autocratic orientation in an age of financial cutbacks rarely remains a
viable managerial philosophy. The need to achieve a common purpose
in the face of financial constraint, and to generate ideas to create new
forms of service production, requires a move towards the more organic
participative structures proposed by Burns and Stalker (1961). Such a
change in the approach to determining future plans does not imply,
however, that senior management should delegate the entire planning
process to the staff in their PSO. As noted by Fidler (1998), in a time
of uncertainty, decision-makers at the top of the organisation are ulti-
mately responsible for attempting to deliver the contractor customer
KPIs. Hence, these individuals must retain the ultimate authority over
key decisions when faced with competing demands from resources by
different departments within their PSOs.
Some academics support the concept of self-managed teams with
empowered authority for setting their own objectives, strategies and
resource utilisation decisions (Pryor et al., 2009). The supporters of self-
managed teams posit that it is critical for the creation and operation of
high performance organisations (Richardson and Denton, 2005). Much
of the research on high performance teams has been on American firms,
most of which are engaged in high technology, knowledge-intensive
sectors such as the computer software industry. The effectiveness and
relevance of the concept beyond these sectors and in other countries,
236
Objectives, Plans and Implementation 237
where employee culture may be very different, creates doubts about

the relevance and suitability of utilising self-managed teams in most
organisations (Castka et al., 2001). Although most PSOs will benefit
from adopting a participative approach to objective setting and plan-
ning, it is probably not advisable for more than a minority of specialist
service providers to use self-managed teams as a structure for determin-
ing strategic objectives and plans.
Most PSOs’ service provision is determined by an annual budget defined
by the contractor customer. As a consequence, the process of setting per-
formance objectives is usually much simpler than in the private sector,
where planners need to assess the implications of changing market
conditions and expectations of possible changes in competitor behav-
iour. Although competition may be an issue in some areas of the public
sector, providers are usually allocated a defined budget for the coming
year. Hence, whether competitors might influence future performance
of a PSO is usually a relatively unimportant issue.
Having been informed of the proposed budget by the contractor
customer, the PSO could initiate the process of setting of objectives by
making a preliminary allocation of funds to the various units or depart-
ments within the organisation. For units engaged in the provision of
services to customers, the assigned objective is usually that of delivering
the same volume of services at the same cost per unit of service as in
the previous year. Units such as the senior management group, finance
and human resource management are not engaged in the delivery of
frontline services. Instead, their role is to support the internal sup-
port functions to ensure that service provision units are able to func-
tion effectively. Given this different role, setting objectives is likely to
be concerned with ensuring that expenditure per employee remains
unchanged within the various support units.
Most PSOs can expect annual budgets to decline or remain unchanged
for the foreseeable future. Hence, when confronted with the assigned
objective of sustaining either service volume or achieving the same cost
per employee in the delivery of support activities, most units’ depart-
ment heads will probably initially see this as an impossibility. In some
cases, due to the changing circumstances of role or the advent of new
government legislation, this may be a valid claim.
Assuming that senior management has adopted a participative
approach to setting strategic goals, the next step in the planning proc-
ess, as illustrated in Figure 12.1, involves ‘gap analysis discussion’. This is
based upon open and honest dialogue between all parties to debate the
validity of allocating unit budgets on the basis of prior year expenditure.
ASSIGNED TOTAL BUDGET
SUPPORT SERVICE
UNITS DELIVERY UNITS
Expenditure per Gap analysis Cost per service

employee discussion unit delivered
analysis
Final support unit Final service delivery

budgets budgets
Draft plans
discussion
Consolidated final plan based upon agreed outputs from support units and
service delivery units
Figure 12.1 Determining final objectives and plans
This dialogue provides senior management with the knowledge to make

their final decision over the actual budget to be allocated to each unit
for the coming year. Given that many PSOs retain a genuine desire to
fulfil their role as an effective provider of services, some of the most
robust areas of debate may be the size of the budget allocated to support
service units. This is because, over recent years, the greatest increase
in expenditure in many PSOs has been on support activities, usually
accompanied by a reduction in the allocation of funds to units respon-
sible for delivering frontline services. The two commonest reasons why
support activities, as a percentage of total spending, has increased are
the awarding of much higher salaries and bonuses to senior managers
(although earnings for staff have remained virtually unchanged), and
new legislation in areas such as health and safety forcing organisations
to add staff and associated resources to manage burdensome bureaucracy
being imposed by government. Having received senior management’s
initial decision over budget allocations, the units can conduct internal
discussions to determine how to achieve the assigned goal of delivering
the same volume of services or the provision of support services at the
same cost per employee as in the previous year.
On the basis of the knowledge acquired during discussions over
funding gaps, senior management is now in a more informed posi-
tion to decide the final unit level budget allocations for the coming
year. Having been informed of the final budget decision, all units can
commence final internal discussions on how to deliver the same vol-
ume of services or the provision of support services at the same cost
per employee as in the previous year. For any unit facing a reduced
budget for the coming year, the easiest solution may seem to be mak-
ing a significant proportion of staff redundant. However, unless there
has been overstaffing or ‘budget stuffing’ within a department then
adopting the staff reduction solution will probably result in a decline
in service quality as the remaining staff seek to cope with the increased
workload.
Where there is a reasonable level of value congruence over vision and
mission, the redundancy solution is less likely to feature as the priority
of the units’ strategic plans. Instead, plans will tend to focus on how the
exploitation of innovation can minimise the adverse impact of reduced
financial resources. Areas of innovation examination may include exploit-
ing new technology, upgrading or multi-skilling staff, task delegation and
outsourcing. In a small number of cases, the PSO may be in a position
to exploit new sources of revenue that can be used to offset the budget
reduction imposed by their contractor customer.
Final decisions by any unit within a PSO are likely to have impli-
cations for other units within the same organisation. This is why, as
proposed in Figure 12.1, there is a need for further cross-organisational
discussions of all units’ proposed strategic plans. These discussions will
necessitate intervention by senior management to resolve potential
interdepartmental conflicts over certain actions being planned. These
discussions may also assist in identifying new actions that will minimise
the need to make staff redundant. Regretfully, however, the current
public sector deficit and sovereign debt problems in many Western
nations will mean that, for the foreseeable future, reductions in staff
numbers are likely to be a necessary component of viable plans for cop-
ing with reduced annual budgets. Hopefully, however, the scale of these
redundancies can be mitigated by staff opting for voluntary redundancy
or early retirement.
The importance of learning
Case aims: To illustrate the importance of exploiting new knowledge in the

resolution of resource constraint problems.
To respond to the need to utilise innovation in the development of a
strategic plan, senior management must not be seen to exhibit favour-
itism in the allocation of funds to units across the organisation. There
is also a requirement for senior management to be decisive if leaders
or staff in any unit exhibit an unco-operative attitude in refusing to
change their long-established approaches to task fulfilment. Hopefully,
most units will have identified new approaches that offer cost sav-
ings in the fulfilment of assigned responsibilities (Koch, 1992). This is
another reason for ensuring that an interactive discussion approach to
planning, as illustrated in Figure 12.1, occurs within the PSO. This is
because such activities provide the basis for proactive problem resolu-
tion through the exploitation of ‘organisational learning’.
Senge (1990) proposed that a clear relationship exists between
the failure of organisations to achieve their strategic aims and their
inability to learn from experience. Hamel and Prahalad (1993) have
extended this perspective by proposing that the organisational learn-
ing process must involve the acquisition of new knowledge that can
be used to upgrade core competence, which permits organisations to
be more effective in responding to environmental change. Argyris
and Schön (1978), in reviewing the concept of learning, proposed
that poorly performing organisations tend to exhibit a ‘single-loop’
or lower-level learning style. The consequence is that virtually no
new learning occurs due to a tendency to rely upon utilising exist-
ing knowledge in the problem–solution process. This style can be
contrasted with the ‘double-loop’ or ‘higher-level’ learning encoun-
tered in more entrepreneurial organisations. This latter learning style
involves utilising new knowledge when faced with a problem and, as
a consequence, the outcome is usually a more effective solution than
that which can be achieved though single-loop learning.
The preference for a specific learning style has no real benefit to
the organisation unless appropriate internal structures, policies and
processes exist to exploit the knowledge available to the organisa-
tion. Argyris (1998) posited that the existence of ‘higher-level
learning’ leads to improved organisational performance because the
organisations are more versatile, flexible and adaptive. This can be
contrasted with a ‘lower-level learning’ style which occurs in poorly
performing organisations where virtually no new learning occurs

because management tends to rely upon utilising existing knowledge
in the problem–solution process.
The ability of organisations to exploit learning to develop success-
ful growth plans depends upon the creation of an effective learning
system. DiBella et al. (1996) concluded that effective systems are
constituted of six key elements: knowledge source, product–process
focus, documentation mode, dissemination mode, value-chain focus
and skills development. Chaston et al. (1999) utilised this framework
to undertake an empirical study of UK organisations. Their study
revealed that there are distinct differences between the learning sys-
tems used in conventional, conservative organisations compared with
their more entrepreneurial counterparts. Their study provided empiri-
cal validation of the concept that learning systems are an important
factor influencing whether an organisation is able to develop and
implement innovative, proactive strategic actions capable of deliver-
ing a viable survival or growth strategy in the face of rapidly changing
external environments.
One of the problems for PSOs seeking to embed an organisational
learning philosophy into their operation is that the majority of aca-
demic literature on this topic contains only limited guidance on pro-
cess implementation. Easterby-Smith (1997, p.1109), in commenting
on this situation, noted that ‘much of the existing research is based
on case studies of organisations that are said to be successful, and
these sometimes seem to rely more on public relations than on any
rigorous grounded studies.’ This lack of detailed guidance can cause
PSOs to assume that the process, with appropriate external specialist
assistance, is a relatively trouble free activity. In their evaluation of
a project to introduce organisational learning into the educational
sector, Reeves and Boreham (2006) concluded that the activity is
more complex than similar initiatives in the private sector. They
determined that it is often necessary to involve vested interests exter-
nal to the PSO in order to permit the activity to progress without
subsequent adverse intervention from key stakeholders. Inside the
PSO, there is also the problem that those engaged in service provi-
sion often have a limited appreciation of the financial realities that
influence the behaviour of senior management. Reeves and Boreham
concluded that extensive time and effort needs to be invested in
shaping opinions and building shared mental maps prior to the
actual implementation of the learning activities in a PSO.
Planning
The viability of a strategic plan in any private or public sector organisation

is dependent upon the proposed actions passing the test of suitability,
feasibility and acceptability. Plan suitability is concerned with determining
an appropriate strategic fit between the external environmental expectations
of the organisation and defined internal competences. Feasibility is con-
cerned with whether the organisation has access to sufficient resources to
achieve the performance aims defined in the plan. Acceptability, especially
in the context of the public sector, is concerned with whether the plan
is accepted by the management and staff inside the organisation and
whether it will also receive the support of key external stakeholders.
Fidler (1998) believed that suitability and feasibility are essentially
concerned with technical issues and rational decision-making. In the
context of the public sector, he felt that achieving acceptance for a plan
is often a much more difficult and complex process. This is because,
within many PSOs, problems will arise in achieving total consensus
between different professionals and between professionals and admin-
istrators. Furthermore, in the case of controversial plans (such as a hos-
pital maternity department moving from 24 hour to daytime patient
coverage), then, prior to implementation, it will usually be necessary to
gain the support from one or both of the contractor and user consumer
groups. Fidler advises people engaged in developing strategic plans
in public sector environments to recognise that they are operating in
what he describes as a ‘pluralistic culture’. In his view, it is necessary
to ensure acceptability discussions are conducted in a non-hierarchical
and preferably informal environment. This permits influential individu-
als to avoid being forced into communicating a specific position purely
because this is expected of them by their subordinates or supporters, as
may happen in a formal meeting. Instead, informal discussions will per-
mit them to reflect on the alternative propositions being raised and, if
persuaded of their validity, have adequate time to develop a persuasive
argument to explain their support for a new approach to others. Fidler
also suggests that managers within PSOs who hope to gain support for
a particularly radical plan should develop some alternative propositions
that are more likely to be accepted by internal or external stakeholders.
This permits the manager to execute the art of compromise in the hope
that, at some later date, dissenting stakeholders may be more willing to
approve the original, more radical plan.
Gaining the support of key stakeholders can be made more difficult
where risk aversion has led to senior managers seeking to avoid their
PSO from accusations of making a mistake. A standard way of achieving

this aim is to remove decision-making authority from frontline staff
or to require the involvement of other public sector agencies before
any decisions are made. Where a new strategic plan involves permit-
ting frontline staff greater self-responsibility, by implementing actions
without input from senior managers or other agencies, proposers of the
plan should be prepared to exhibit patience. In this way, they should
avoid the personal frustrations of their new idea initially being rejected.
Patience is a necessary behaviour trait because there is always the pos-
sibility that, as funding is reduced even further, senior managers and
other agencies recognise the requirement for a process reform. Thus, by
remaining patient, the plan proposer upon re-presenting their original
idea at a later date may find it is accepted.
Miller (1994) concluded that some plans fail upon implementation
because the organisation did not notice the existence of weak signals
during the planning process. Identifying these weak signals would have
provided sufficient time to direct resources towards the exploitation of
innovation to develop an effective response. Miller’s observation was
concerned with private sector scenarios but Fidler has suggested that
the same problem now exists in the public sector as external environ-
ments undergo fundamental change and the attitudes of the general
public are beginning to change. Hence, PSOs would probably be advised
to include a review of weak signals as a component of the planning
process. Probably the most common weak signals are those provided
by politicians who, upon realising a need to revise policy, often use the
media to gain a preliminary indication of whether their new idea will
be favourably received.
The typical organisational structure in the public sector is based upon
the logical concept of employees fulfilling their assigned tasks by work-
ing together in specific departments, such as operations, service delivery
or finance. Although this structure can be effective, there may be a
tendency for employees to perceive their primary role as ensuring the
optimal performance of their own department, even where there is rec-
ognition that this can be detrimental to the performance of other areas
of the organisation. Such selfishness can cause massive damage to long-
term performance when seeking to successfully deliver a PSO’s overall
strategy and service provision responsibilities. In relation to departments
exhibiting excessive insularity, Miller and Warren (1989) posit that, in
the private sector, a key reason for the failure of Western companies to
compete effectively with new entries from Pacific Rim nations is senior
management failing to ensure that a philosophy of strategic alignment
is embedded across their company’s entire operations. These authors

contrasted this situation with Japanese multi-location manufacturing
firms, where all departments at each location and management across
all countries focus on ensuring their actions underpin and support the
organisation’s overall strategy.
Achieving a high level of strategic alignment requires all departments
to fully understand their role in terms of the prevailing key responsi-
bilities and the actions required to contribute towards delivering the
organisation’s future performance goals and strategy. To achieve this
outcome requires all departments to interact with each other in order to
effectively orchestrate and co-ordinate their activities during both the
planning and plan implementation phases (Chaston, 2011).
Strategic plans define how the organisation can enhance future per-
formance by the most effective utilisation of available assets. In PSOs,
both their largest area of cost and their most valuable asset is people.
This is because service delivery and administrative support tend to be
person-intensive activities often undertaken by knowledge workers.
Herremans and Isaac (2004) noted that the information age has acceler-
ated the employment of knowledge workers in service organisations. As
a consequence, the strategic plan must address the most effective way
of exploiting these resources.
Possibly one of the greatest opportunities to increase the effective-
ness and efficiency of a PSO is to promote a participative culture that
fully exploits the knowledge contained within the organisation by
ensuring knowledge-sharing between individuals and between differ-
ent departments. When assessing whether this aspect of a strategic plan
is proving effective, Herremans and Isaac proposed that an analysis is
undertaken of two dimensions: ‘Level of knowledge required by staff’
and ‘Level of required knowledge sharing’. As illustrated in Figure 12.2,
there are four potential actions, depending upon a PSO’s requirements
concerning the exploitation of knowledge in the future delivery of
strategic plans.
Strategic approach
Although they were commenting on the United Nations development

of a strategic approach to upgrading public health provision in devel-
oping nations, the observations and conclusions of Fajans, Simmons
and Ghiron (2006) have relevance to public sector planning in any
nation. The authors noted that most national governments remain
committed to a social agenda of increasing the availability of, and
Level of required knowledge

Low High
Sustain status quo over

Sustain status quo over recruiting professionals
recruitment and staff and investing in
Low training professional development
schemes
Level of
required
knowledge
sharing Increased emphasis on
formal and informal Invest in programmes to
High knowledge sharing accelerate acquisition of
between individuals and advanced knowledge
departments
Figure 12.2 Knowledge asset management
access to, services such as education and healthcare, continuing to

improve service quality and responding ever more effectively and equi-
tably. Unfortunately, emphasis on these issues by politicians is causing
public expectations to increase at a time when weaker economic con-
ditions are reducing the ability of nations to even sustain delivery of
current service levels. In an attempt to overcome this major obstacle,
the strategic approach methodology emphasises strategic plans that
exploit innovation to sustain and, where possible, achieve growth in
service provision.
The generic features of the strategic approach include:
(1) a philosophy of service based upon equity, and social justice

(2) linking together strategic needs assessment, applied service delivery
research and scaling up of successful innovations
(3) a client-centred philosophy for identifying and resolving the man-
agement, technical, socio-cultural and resource availability prob-
lems that affect service provision capability
(4) participative planning with service providers, policy makers and
other relevant stakeholders, emphasising how each contributory
group can assist actions which focus on innovation.
In terms of a successful strategic approach for innovation, Glaser et al.

(1983) identified certain key characteristics than can ensure facilitation
of the widest possible application of new services or service processes.

These include exploitation of innovation that:
(1) is based on sound evidence or actually provides a credible solution

(2) is clearly observable to assist the potential adopter (if evidence of
the innovation in use is available)
(3) is clearly relevant to improving the resolution of the identified
problem
(4) provides evidence of offering a genuine tangible advantage over
other solutions
(5) provides a significant cost/benefit outcome compared with existing
solutions
(6) where possible, is relatively easy to utilise and preferably avoids
complexities that can limit use to highly trained staff
(7) is compatible with the potential users’ established values, facilities
and staff capabilities
(8) is able to be tested without committing the potential user to com-
plete adoption in those cases where effectiveness testing is still in
progress.
Fajans et al. also noted that the United Nations’ strategic approach
stipulates that effective exploitation of innovation by PSOs requires
decision-makers to carefully consider the interactions between the three
key variables of people (their needs, rights and perspectives), policies
(managerial and resource utilisation issues, and available services) and
technologies (effectiveness, accessibility and opportunities for innova-
tion). Furthermore, in defining planned actions, PSOs should avoid
attempting to overcome resource constraints by excessively reducing
the services made available to the user customer target market or by
drastically reducing the range of services being delivered.
Avoiding strategic gaps
Case aims: To illustrate how gaps can weaken the effectiveness of a stra-
tegic plan.
Integration of the strategic plan and the service delivery process is
critically dependent upon clear links between these two compo-
nents. Plant (2009) proposed that PSOs’ failure to achieve this aim
can lead to ‘strategic gaps’ which only become obvious once plan
implementation has begun. In his analysis of strategic gaps, Plant

suggested these can be avoided by the planner(s) ensuring that:
(1) no opportunities are missed that could enhance cost/benefit out-

comes in either service delivery or execution of internal organisa-
tion processes
(2) any new or emerging risks are clearly identified and appropriate
proposals made over how these will be managed
(3) any new legislation is identified and appropriate proposals
made over how requirements specified in the legislation will be
managed
(4) proposed actions are clearly prioritised to ensure that constrained
resources are allocated to the most critical areas of the PSO’s
service delivery responsibilities. Criteria for setting priorities
can include level of impact, dependence on fulfilling other
organisational responsibilities and degree of legal, political or
financial risk
(5) planned expenditure is aligned with the PSO’s priorities for the
provision of services. Where possible, these links should be appar-
ent within the planning document to clarify how expenditure
priorities will support achievement of efficiency and effectiveness
aims at organisational and departmental level.
(6) performance measurement systems are in place to assist internal
evaluation of whether organisational strategic aims are being
met. These systems should give greatest emphasis to assessing
key aspects of mission and strategy. For example, in the case of
the organisation striving to deliver ‘service excellence’, the meas-
urement system should contain a definition of service excellence
and the performance indicators that will be used to evaluate
whether the organisation is fulfilling this aspect of the defined
strategy
(7) the plan is sufficiently comprehensive and comprehensible that
staff at all levels of the organisation understand their assigned
aims and responsibilities in contributing to the successful
delivery of the organisation’s strategic plan and in developing
actionable strategic initiatives.
From his research on public sector strategic planning, Plant encoun-

tered few examples of PSOs implementing what he calls ‘holistic
planning’. In his view, many PSOs tend to leave gaps in their strategic
plans. Commonly encountered gaps include a lack of involvement of

key stakeholders in the development and execution of the strategic
plan, a failure to align the overall strategic plan with departmental
level plans, and inadequate tracking and reporting of outcomes upon
strategy implementation.
Ettlie and Reza (1992) undertook an empirical study to determine
avoidance of the strategic gap that most influenced successful inno-
vation in organisations in the USA. They concluded that possibly
the most critical factor is effective co-operative horizontal interac-
tion between departments, in terms of sharing information about
identified opportunities and problem/resolution activities whilst the
innovation project is in process. The study did not reveal a statisti-
cally significant correlation between the strength of vertical relation-
ships and the level of successful innovation inside the respondent
organisations.
Ettlie and Reza reasoned that in organisations which are more
internally orientated, there is a tendency to place greatest priority on
actions for improving internal process flows and resolving problems
in the ‘design through to production phase’ during the develop-
ment of new products. This is contrasted with organisations which
place emphasis on sustaining close links with sources external to the
organisations. These entities tend to have a much broader perspec-
tive on opportunities for innovation, gaining their ideas from other
similar organisations, customers and suppliers.
Externalising strategy
In the 1990s, increasing levels of competition, rapidly changing tech-

nology, the pressure to improve innovation capability and the need
to achieve scale caused some firms to move from a transactional to a
relationship-orientation, accompanied by creating alliances or becom-
ing members of business networks. There is growing evidence to sug-
gest that similar strategic opportunities for supply chain optimisation
also exist in the public sector. Public sector planners can no longer
consider acting in isolation to achieve proposed performance goals.
Consideration also should be given to determining how strategy imple-
mentation can be enhanced through collaboration with other PSOs,
not-for-profit organisations or even commercial businesses. Moving
away from an isolationist position over service provision does require
a strategy which is based upon understanding the strategic aims of
potential collaborators, and includes a determination of how collabora-

tion can contribute towards achieving the aims of the PSO.
Kopczak and Johnson (2003), in reviewing trends in the increasing
importance of collaborative relationships in the private sector, con-
cluded that a number of fundamental changes in organisational behav-
iour are required to exploit the benefits of working more closely with
other organisations. Chaston (2011) proposed that these concepts are
just as applicable in the public sector, and may permit enhanced overall
effectiveness and efficiency by achieving cross-organisational integra-
tion of their individual strategies. Kopczak and Johnson proposed a
number of actions and benefits:
(1) Cross-organisational integration, which involves going beyond achiev-

ing strategic success by merely ensuring integrated actions inside the
PSO and instead adopting a philosophy of engaging in integrated
actions with other organisations. Achievement of this goal demands
discussion of strategic objectives and reaching a consensus on the
optimal approach for ensuring convergence in strategic actions
across all participating organisations.
(2) Mutual cost savings that are required to overcome the obstacle of most
PSOs previously concentrating on actions to minimise their own inter-
nal costs. There was little or no concern about whether this behaviour
created problems or inefficiencies for other organisations involved in
the provision of the same or similar services. Successful collaboration
requires organisations to exchange data about costs and to determine
what operational changes can be made to achieve a net reduction in
overall costs.
(3) Optimal service design, which is necessary to overcome the problem
that most PSOs and their contractor customers tend to focus on
developing the new services or service processes which they per-
ceive provide the greatest self-benefit. Usually, no consideration has
been given to whether these actions will increase the operational
costs of other PSOs active in the same service sector. To optimise
overall service provision costs, the planner must examine all aspects
of their organisation’s service portfolio and operational processes to
determine whether redesigns can lead to a net reduction in overall
delivery costs across a specific service sector.
(4) Increasing end customer value, which involves potential collaborators
examining how new innovative approaches to operational process
can lead to the user customer receiving additional value from the
service(s) provided.
In considering the benefits of becoming involved in collaboration with

other organisations, the public sector planner is cautioned against
believing that all forms of system integration are guaranteed to be suc-
cessful. In most areas of the public sector, there is a power asymmetry
in which one member, most typically the contractor customer, has the
capability to enforce their requirements upon others. Hence, in deter-
mining both the benefits and operational realities of externalising their
strategy, the planner needs to assess factors such as the rationale for
collaboration, the authenticity of claims made by potential collabora-
tors, the expectations of benefits that each organisation uses to justify
their desire for participation, the probability that an adequate degree of
trust exists at the outset, and whether the level of trust can be expected
to strengthen over time (Vanger and Huxham, 2010). Where the plan-
ner’s assessment raises doubts over the efficacy of other organisations, it
would probably be advisable to avoid planning actions associated with
strategy externalisation.
Planning service integration
Case aims: To illustrate some of the issues to be considered when develop-

ing a strategic plan involving increased service integration.
Traditionally within PSOs, the preference for hierarchy and closely
defined rules has resulted in the most important boundaries being
vertical. Bureaucracies will usually favour a clear definition of each
employee’s level of permitted authority in fulfilling their assigned
roles. Traditional thinking on effectiveness and efficiency in the field of
organisational design has favoured the view that management of com-
plexity is best assured by decisions flowing downwards and the assess-
ment of outcome flowing upwards (Lowendahl and Revang, 1998).
Two factors have influenced reconsideration of this traditional
perspective. One is that, as service provision becomes more complex,
different agencies may need to work together, sometimes with not-for-
profit and commercial enterprises, to ensure a successful outcome. The
second factor is the emerging view among politicians that complex
social issues are more successfully resolved when the service delivery
of government-funded public programmes involves integrating the
activities of a number of different agencies.
The acceptance of service provision based upon the integrated
activities of several PSOs is now popular both among politicians and
the government departments they control. Hence, the PSO plan-

ner needs to give careful consideration to the integration of opera-
tions with other organisations when developing new ideas on the
reformulation of internal processes or in assigning service delivery
responsibilities. Kettl (2006) noted that politicians’ aspirations over
the greater success of public sector performance following the inte-
gration of services have been much higher than the outcomes which
have actually been achieved. As a consequence, Kettl identified a
number of issues that the planner should keep in mind when devel-
oping strategy concerned with inter-organisational integration:
(1) Mission and strategy: Definition of the PSO’s future mission and
strategy may become more difficult and harder to define because
compatibility with other organisations is often necessary.
(2) Collaborative capability: Integration requires more complex prob-
lems to be addressed. For this to be achieved, all participants
must be capable not just of fulfilling their own primary role but
also of working effectively with partner organisations.
(3) Resources: Most PSOs are facing a future of flat or declining
resources, which will create obstacles in even fulfilling the organi-
sation’s primary role. Politicians demanding integration tend to
define ever more ambitious service outcomes and greater effec-
tiveness in problem resolution. This can result in the need for
additional resources, and complications can arise in the processes
used by contractor customers when allocating these resources.
The planner must remain conscious of this risk and avoid
planning actions which will place greater strain on the limited
resources available to their organisation. An example of this haz-
ard was provided by the Chief Constable of Greater Manchester
Police, who commented that, in order to fulfil requirements
under prevailing child protection legislation in the UK, his force
were required to visit one family 58 times in a year at an esti-
mated cost of £49,000, and, with the other agencies that also had
to be involved, an estimated additional cost came to £250,000
(Bound, 2011).
(4) Capacity: The obvious outcome of being granted fewer resources
is that the PSO will have problems retaining its capacity for
delivering the service outputs specified by contractor custom-
ers. Hence, where integration is a potential option, planners
must assure themselves that any such move does not result in
weakening the PSO’s capability of meeting the output require-

ments for which they remain solely responsible.
(5) Responsibility: Within a single PSO, senior management is able to
define which departments are responsible for specific activities
and can assess whether departments are fulfilling their assigned
tasks. When integrated service provision involves a number of
organisations, the ability of senior managers within one organi-
sation to identify who might be responsible for service errors
becomes much more difficult. The planner will need to carefully
determine whether effective systems can be created to either
permit a genuine form of shared responsibility or alternatively
permit their own PSO’s responsibilities to be carefully ring-
fenced, if this is acceptable to the contractor customer.
(6) Accountability: As noted by Lipsky (1980), senior managers in the
public sector are highly skilled in avoiding being held account-
able for mistakes within their organisation. Given this trait, the
complexities of assigning accountability in an integrated activ-
ity are significantly greater. Hence, the planner needs to ensure
that effective systems can be created to permit their PSO’s areas
of accountability to be clearly defined in a way which will be
accepted by the contractor customer.
Service collaboration
Implementing a strategic plan which involves entering into alliances

with other PSOs or becoming a member of a network will only prove
effective where the participants have common values over what they
wish to achieve. In their analysis of successful alliances in the private
sector, Wassmer et al. (2010) proposed that one or more of the following
aims needed to be present among all participants:
(1) Achieve economies of scale by pooling similar assets, knowledge or

skills.
(2) Obtain access to a partner’s complementary assets, knowledge and
skills.
(3) Obtain access to new skills.
(4) Reduce competition in the market and increase market power.
Although the fourth common aim of reducing market competition is a

somewhat rare phenomenon in the public sector, occasionally overall
financial savings can be gained. Typically, this occurs where there is excess
capacity within a sector or the PSOs are engaged in expensive promo-
tional activities to compete with each other to attract new customers.
The concept of working with other public sector bodies, not-for-profit
organisations or private firms is most effective when the collaboration
offers synergy. One form of synergy is sharing or recombining know-how.
An example of this outcome is provided by a number of PSOs sharing their
knowledge of the computerisation to enhance the efficiency of data acqui-
sition, storage and utilisation when implementing internal organisational
processes. The other potential synergy is where collaboration strengthens
an existing alliance, both in terms of achieving new scale effects and by
reducing competition where PSOs now work together to deliver services.
Wassmer et al. recommend the following process model when devel-
oping a strategic plan which involves a collaborative approach to the
future delivery of services:
(1) Identify the potential members of the proposed alliance.

(2) Identify the nature of the benefits associated with entering into the
collaborative relationship.
(3) Undertake a cost/benefit analysis of the proposed collaboration.
(4) Compare this with the cost/benefit implications of continuing to
deliver the PSO’s service portfolio without entering into any alliance.
(5) Assess the potential conflicts between partners that could result in
an adverse cost/benefit outcome.
(6) Jointly develop a strategic plan.
(7) Evaluate how the strategic plan may alter the PSO’s own strategic
plan and gain internal support for both the alliance plan and the
organisation’s modified strategic plan.
(8) Create effective managerial and operational process systems for
managing the alliance-based future delivery of services.
In the USA, the formation of public sector networks has been a response
to finding ways of stabilising healthcare provision cost through closer
integration of primary, acute and tertiary care providers. Gertner et al.
(2010) researched the formation of such a network in Lehigh Valley in
eastern Pennsylvania. The selected mission statement was ‘To heal, com-
fort and care for the people of our community by providing advanced
and compassionate healthcare of superior quality and value’. One of
the identified requirements on the project’s strategic plan was the need
to achieve congruence across providers and patients who exhibited a
diverse set of values, beliefs and behaviours. It was also recognised that
success was dependent upon the identification of new resources, in-

kind contributions of administrative time and redeployment of existing
resources to areas of greatest need.
Some of the critical factors which contributed to the success of the
network included:
(1) defining an infrastructure and allocation of resources

(2) establishing a clear definition of organisational expectations and
network member accountability
(3) acquiring and analysing data to assess service provision outcomes
and to prioritise areas for service delivery improvements
(4) customising services to meet the unique needs of specific popula-
tions to reduce barriers to care and address healthcare disparities.
Plan implementation and assessment of performance led to the iden-

tification of five key areas in need of improvement: standardising the
collection of patient demographics, delivering language-appropriate
services, increasing recruitment and retention of diverse employees,
offering effective staff and provider education, and ensuring effective
communication across the network.
Walker et al. (2010) researched the utilisation of networks by local
government organisations in the UK. They concluded that a critical
factor influencing success was that a specifically developed strategic
plan defining responsibilities and processes was required to optimise
organisational performance. Where the PSOs treated the network as an
extension of their existing strategic plan, network performance tended
to be poorer. Superior performance also occurred where the network was
constituted of participants who are innovative, outward looking and
responsive to changes in the external environment
The study also concluded that staff interacting with the staff at
other councils and with user group representatives is likely to achieve
higher levels of organisational level performance. Inputs from user
group representatives were found to enhance understanding in local
authorities of the delivery of appropriate services. Data analysis sug-
gested performance was higher when managers consulted their peers
in other councils. It was presumed that this activity allows managers
to acquire new knowledge that can be used to improve services in their
own authority. A similar outcome was reported in a study of networks
in public education in the USA (O’Toole and Meier, 2004).
Walker et al. also concluded that interaction with central govern-
ment officials tended to have a negative impact on service performance.
The researchers proposed three possible reasons for this outcome.

Firstly, civil servants at a national level tend to promote a single, stand-
ard universal model when implementing NPM. These models can often
be inappropriate where there are significant socio-demographic and
cultural differences between the local and national situation. Secondly,
central government officials are spatially distant from local government
authorities, which can be a barrier when either side needs to build closer
and more collaborative relationships. Thirdly, central government civil
servants often have little or no experience of managing the delivery of
local authority services. Hence, their recommendations may be inap-
propriate or impossible to implement.
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13
Failure
Poor leadership
Analysis of a failure to implement a strategy that was designed to

improve performance often reveals that the blame can be attributed to
poor leadership. Events associated with politicians’ apparent inability
to reduce the scale of national deficits are seen by many observers as
exemplifying this scenario. In the USA, fundamental differences in
political philosophies between the Democrats and Republicans by fail-
ing to approve an increase in the nation’s deficit ceiling during the
summer of 2011 almost resulted in Congress plunging the country into
economic chaos. Concurrently, differing views among the leaders of
eurozone countries contributed to a weakening of the euro, severely
damaging confidence in the financial community which, in turn, drove
up government borrowing costs.
Research studies seeking to explain why strategies have led to poor
performance and organisational collapse in both the private and public
sectors have frequently concluded that the primary cause was shortcom-
ings in the capabilities of an organisation’s leadership. In some public
sector cases, this has occurred following demands for politicians or the
public for ‘strong leadership’. This has resulted in the appointment
of an individual with a reputation for embedding their authority into
the organisations where they have fulfilled a leadership role. There is the
risk, however, that this individual’s values are centred on a belief that the
only solution in any situation is to exhibit an autocratic leadership style.
It is also probable that the individual will rely upon traditional hierarchi-
cal structures to sustain a rules-dominated environment. The potential
drawback is where organisational performance can only be enhanced
by a strategy of achieving greater internal values congruence. In these
257
circumstances, the autocratic leadership approach is unlikely to be effec-

tive. This is because strategies involving values shifts typically require
generative learning in order to embed common values across the organi-
sation (Fairholm, 1991). When a leader’s previous success has relied on
an autocratic style and top-down decision making, they are likely to fail
to achieve the values congruence necessary for effective implementation
of a new strategy. There are several internal events which may eventually
lead to failure (Kouzmin and Korac-Kakabadse, 2000):
(1) No genuine acceptance of, or commitment to, delivering a new

vision, mission or strategy.
(2) Lack of dialogue and communication based on trust, openness and
respect.
(3) Insufficient encouragement and reward for team learning and risk
taking.
(4) No real effort to challenge entrenched individual and organisational
assumptions and beliefs.
(5) No support for inventiveness and innovative thinking.
There is a need to recognise that prevailing national or political values can

support a public sector leadership style which subsequently proves to be
inappropriate. During the first few days of the riots in London, in August
2011, the police were heavily criticised for apparently only attempting to
stop public disorder from spreading to other areas and for their unwill-
ingness to take more aggressive action such as interceding and arresting
the rioters. In commenting upon this situation, the journalist Daniel
Johnson (2011, p.19) commented that ‘Mr Cameron got it wrong – and
by implication, so did the politicians’. This view was echoed by another
journalist, David Green (2011), who proposed that the behaviour of the
police probably reflected years of criticism by politicians and the media
over racism and the excessive use of force. This has resulted in a genera-
tion of police leaders whose career progression has been enhanced by
articulating the views that the police should act not as a ‘force’ but as a
‘service’. These individuals have sought to redefine the role of the police
towards protecting the human rights of the individual, even where this
has apparently resulted in favouring the rights of the criminal over that
of the victim or society in general. In his analysis of police behaviour dur-
ing the London riots, Green (2011, p.19) concluded that:
Learning the buzz management words of the last few years has not
produced leaders able to command men in a riot… we have plenty
Failure 259
of men and women prepared to be brave when needed, but they are
lions led by donkeys who listened a bit too intently to the sociology
lecturers about ‘hate crime’ at the Bramshill police college.
Kroll et al. (2000) used the example of Napoleon’s ill-fated retreat from
Moscow to illustrate the point that leaders who have been lauded for
achieving success in the past may develop a sense of infallibility which
renders them ineffective when facing a new or different situation.
This sense of infallibility may be reflected in an overwhelming sense
of grandiosity, self-absorption, narcissism and a continuous need for
admiration. These authors note that narcissism is often an attribute of
successful people, who are driven to seek new leadership roles because
these offer the opportunity for power, status and self-affirmation. Kroll
et al. also suggest that narcissism may be reinforced by subordinates
who idolise a leader because of a belief that they are unable to resolve
problems without clear direction and affirmation from a leader.
Kroll et al. note another risk is that some leaders believe success has
primarily been the result of their own actions but any failures were the
fault of others. This attitude is often accompanied by a belief that they
are not bound by normal rules of society, and that social norms only
apply to the behaviour of other people. This type of behaviour is exem-
plified by a PSO chief executive self-approving expenditure on costly
office refurbishments or repeatedly going on overseas ‘study visits’,
travelling first class and staying in luxury hotels. Such individuals’ self-
confidence often evolves into complete arrogance to the point where
even constructive criticism from staff is rejected and these staff may
even be fired or assigned to lower level jobs.
Fulmer and Conger (2004) identified the following factors, which
they feel can result in a failure by leaders to ensure the successful imple-
mentation of a new strategy:
(1) Failure to deliver results

Blames others for a failure to achieve promised results.
Makes excessively optimistic promises and then fails to deliver.
(2) Betrayal of trust
Undertakes to do one thing and then does something completely
different.
Makes excuses about outcomes, accompanied by blaming
subordinates.
Hides or modifies key information which is damaging to personal
reputation or the organisation’s market reputation.
(3) Resists change

Unable to adapt to new ideas, plans or priorities.
Excludes consideration of any opinions other than their own.
Fails to understand or accept alternative perspectives.
Rejects or belittles the opinions of others.
Fails to engage in discussions when alternative opinions are
presented.
(4) Failure to take a stand
Indecisive when an urgent or immediate key decision is required.
Listens to the last opinion expressed by another individual
who they perceive has influence over their future within the
organisation (such as the chairman of the board).
(5) Inability to become involved
Considers information as unimportant if it contradicts their view
when making a big decision.
No interest in being involved in day-to-day activities within the
organisation.
Strategic dilemma
Case aims: To illustrate that the required strategy may not deliver the out-
come desired by the contractor customer.
The PSO leader may be confronted with the issue that the strategy
that the government or the contractor customer requires them to
implement is based upon impractical or conflicting philosophies. For
example, in the UK, the focus on improving educational standards
has to a large degree been based upon increased accountability (such
as inspection, test scores and league tables) and actual performance
against specified standards (such as target setting and strategic plans).
The problem with this universal solution is the assumption that all
schools can achieve performance targets without consideration of
its location and the degree to which the students come from disad-
vantaged backgrounds (Harris and Chapman, 2004). This situation
continues to exist despite research supporting the perspective that the
greater the proportion of students from socially disadvantaged back-
grounds, the higher the probability that the school will underperform
in national tests and examinations (Rainwater and Smeeding, 2003).
The dilemma facing school heads is whether they should seek to
meet these national standards when local circumstances indicate
Failure 261
that many of the national normative policies are of minimal rel-

evance or benefit to the majority of students (Harris and Chapman,
2004). In fact, it has been argued national educational policies
aimed at raising educational standards have achieved precisely the
opposite outcome in many schools located in disadvantaged areas
such as inner cities. The probable reason is a government’s apparent
preference for standardised, ‘fit for all’ intervention policies. As a
consequence, actions aimed at tackling underachievement are not
compatible with the diversity of need within certain schools and
reflect minimal attempts by governments to address the structural
and social inequalities in society (Harris et al., 2005).
In attempt to develop a more customised approach to educational
provision, the UK’s Labour government, in their final years of power,
sought to provide school heads with greater autonomy and greater
choice of educational curricula through the creation of specialist
academies. This was accompanied by a move to reduce the influence
of local politics on education by offering schools the opportunity
to be released from direct control of their local education authority.
Since coming to power in 2010, the UK coalition government has
sought to sustain the momentum of the previous government’s edu-
cational reforms. Although these policies are well intentioned, the
reality is that the performance of school heads, to a large degree, con-
tinues to be assessed on the basis of their institution’s performance
in the national examination league tables and their willingness to
conform to whatever policies are specified by their local authority.
The ethical problem is that, to ensure ongoing receipt of an adequate
share of scarce financial resources, school heads are forced to imple-
ment strategies which both they and their staff recognise are totally
inappropriate (Harris and Ranson, 2005).
Another issue is the strategic dilemma between the performance
required by the contractor customer and a PSO leader’s own profes-
sional standards (Giessner and Van Quaquebeke, 2010). In these situ-
ations, the leader is confronted with the ethical dilemma of whether
to fulfil their responsibilities of implementing a strategy of achieving
the performance standards demanded by the contractor customer,
or whether to fulfil the actual service needs of user customers. An
additional problem may be that, by meeting contractor customer
demands, the PSO leader will be forced to violate the values norms
of their staff. This may force the leader to choose between either
risking their career by supporting their staff or deciding on the safer
option of seeking to deliver the performance outcomes demanded by

the contractor customer. The threat of not fulfilling this requirement
is that the contractor customer has the ability to withdraw financial
resources and also to inflict permanent damage on the leader’s career
prospects.
Managing implementation
A failure to successfully implement major initiatives in the public sec-

tor is often reflected by consequences such as not meeting deadlines,
not delivering outcomes within the assigned budget and not sustaining
the specified level of service quality (Donnelly, 1999). These failures are
often linked to poor leadership at the planning stage or inadequate staff
competences during the implementation of strategic plans (Shenhar
et al., 1997).
In terms of assessing project outcomes, Klakegg (2009) proposed that
the two key issues are relevance and sustainability. Relevance refers to
whether actual expenditure is the most appropriate way of implement-
ing a strategic plan when judged in relation to the perspectives of the
contractor customer. The contractor customer’s assessment will be based
upon whether agreed objectives of whether their specification of user
needs have been met. Where the service provision is not proving ben-
eficial then the contractor customer may decide to terminate further
expenditure or seek to dissuade other PSOs from implementing a similar
strategy.
Sustainability in this context refers to achieved outcomes being
maintained after the initial project funding phase has come to an end,
so is concerned with the long-term economic and social benefits of the
initiative. Where the project is not found to be sustainable, considera-
tion of further similar initiatives should not occur. This is because of the
high probability that implementation will again result in failure.
Klakegg believed the commonest reason for the failure of strategy
implementation is a lack of understanding of the user customer needs
among the project planners. He believes this outcome usually indicates
that the project planners had mistakenly decided that:
(1) They were completely qualified to assess the customer users’

needs and could ignore any preferences that these users may have
communicated.
Failure 263
(2) Their own political goals and priorities were more important than
the needs of the user customers.
Another potential problem is when the planners do not define clear

objectives at the outset of a new project. This may be justified on the
grounds that imprecise aims permit adjustments to policies and proc-
esses once implementation is in progress. In reality, this type of think-
ing is probably best avoided because difficulties will arise among those
engaged in the implementation phase not being in a position to assess
whether their actions are effective or whether to implement process
changes to enhance outcomes. A lack of clear aims also creates the risk
that, when things do go wrong, the planners can easily transfer blame
to those engaged in project implementation. Hence, where the contrac-
tor customer or the project leadership appear to be reluctant to specify
performance aims, PSO staff should be concerned that this indicates a
lack of competence amongst the contractor customer, their own senior
management or those engaged in developing organisational plans.
Once the initial front-end investment phase is over and a project is
expected to become self-sustaining, research undertaken by Klakegg
identified that the following problems may emerge:
(1) Conflict over objectives and/or project strategy between the user
contractor and the PSO project implementers.
(2) Lack of commitment to, or by, key stakeholders.
(3) Actual economic and financial benefits are much lower than those
forecast at the time of project justification.
(4) Environmental conditions have changed significantly between the
original concept stage and actual implementation.
Klakegg concluded that the most critical issue in relation to sustain-

ability is a failure to resolve conflicts between key stakeholders. In his
view, this reflects a values set among key participants which prefers to
neglect issues which could raise the need to disagree with anybody. This
attitude may be accompanied by a certainty that, given sufficient time,
most problems will disappear or resolve by themselves. Such outcomes
rarely occur in real life. Instead, by being left unresolved, the magnitude
of problems tends to increase and may eventually cause the project to
fail. Problem avoidance is a behaviour trait which, in the public sector,
can often be attributed to a lack of commitment by key stakeholders.
This can arise because PSO leaders, despite having severe misgivings
about the project, do not wish to be seen by the contractor customer or
the government as an obstacle to progress that should be replaced with

more malleable individuals.
The issue of external environmental conditions changing between the
concept stage and project completion is increasingly important. In order
to manage huge national deficits, governments are being forced to cancel
or modify project funding during the implementation phase. As a con-
sequence, aspirations to improve effectiveness or efficiency as a result
of the initiative may disappear because allocated financial resources are
reduced or withdrawn. In view of this trend, PSO leaders and their staff
need to be careful to avoid spending excessive time on any project where
the contractor customer may not fulfil their funding promises.
On the basis of his research, Klakegg identified a number of factors
likely to result in implementation failing to achieve defined perform-
ance outcomes:
(1) A failure of key stakeholders to take an active part in the planning

phase, which would have ensured that everybody has a common
understanding of the project aims and intentions.
(2) A failure to define service outcomes which are of real benefit to user
customers.
(3) A failure to clearly define how sustainability criteria will be met.
(4) A lack of understanding among stakeholders of the consequences
of failing to reach, or to postpone reaching, agreement over key
decisions.
(5) Omission of any processes through which project progress can be
assessed and, where failure to achieve outcomes has become evi-
dent, appropriate remedial solutions can be made available.
(6) Lack of transparency during either the planning or implementation
stage which causes people to be misled, to be unaware that mistakes
are occurring or to be unable to identify the real causes of any major
problems.
(7) Inability to grant sufficient flexibility to PSO staff that would give
them the authority and necessary resources to implement required
new solutions without having to wait for permission from the con-
tractor customer.
Why strategies fail
Case aims: To illustrate some of the common errors that lead to strategies
failing to deliver desired outcomes.
Failure 265
By reinterpreting Bradley et al.’s (2011) proposals concerning the top

10 reasons why strategies succeed, it is possible to provide a similar
assessment of factors that can cause strategies to fail.
(1) Fail to be different: Over time, best practices are adopted by others
and the PSO fails to sustain sufficient difference to outperform
existing competitors or potential new service suppliers.
(2) Fail to offer a real advantage: The PSO may have persuaded itself
that customers are offered a genuine advantage when in reality
this is an internal delusion that has evolved though discussion
and never actually validated through market research.
(3) Inappropriate segmentation: The PSO has determined that certain
segments of the market offer the best opportunity for the organi-
sation to be perceived as excellent, but then offers a portfolio of
services which fails to differentiate the PSO from other providers.
(4) Following, not leading: The PSO has assumed that duplicating
other providers’ activities is appropriate and as a result merely
behaves as part of the crowd when, in fact, a more effective
strategy would be to exploit innovation to offer new products,
services or service provision systems.
(5) Lack of insight: The PSO has failed to identify the changing needs
of customers and as a consequence is offering an obsolete ser-
vice proposition for which there is clear evidence of declining
demand.
(6) Failure to recognise uncertainty: The PSO has assumed that the exter-
nal environment will remain unchanged and so its strategy is
unable to provide an effective and rapid response to a change such
as a reduction in funding or a behaviour shift by user customers.
(7) Inadequate flexibility: The PSO is deeply committed to fulfilling exist-
ing service needs and, when customer requirements begin to
change, the organisation lacks the flexibility required to develop
a more appropriate portfolio of services.
(8) Biased perceptions: The PSO’s understanding of the current service
portfolio is based upon the internal perspectives of influential
managers who have made an incorrect assessment of current or
future service needs.
(9) Lack of commitment: Although the PSO has identified an effective
strategy, a lack of conviction or commitment inside the organi-
sation results in actual service delivery failing to meet required
standards.
(10) Failed action plan: Although the PSO has identified an effective
strategy, the lack of a detailed action plan results in staff having
no clear sense of purpose or an in-depth understanding of their
assigned task roles.
Chasing the numbers
The purpose of a strategic plan is to define how the organisation intends

to create and sustain the long-term existence as an enduring organisa-
tion. A potential obstacle to a PSO achieving this aim is the dilemma
that actual funding is usually for a 12 month period. This can result
in senior managers’ values causing them to place excessive focus on
annual performance. This can result in resources being diverted away
from more important long-term initiatives such as those involving
innovation to enhance effectiveness and efficiency.
Excessive emphasis on achieving short-term aims has been increased
in recent years by the introduction of performance related pay (PRP)
into the public sector. This involves a component of total salary being
paid in the form of a bonus that is related to some aspect of annual
organisational performance. As a consequence, staff are confronted
with senior managers’ increased emphasis on ‘making sure we make
the numbers’ in order to receive their bonuses. Although the introduc-
tion of PRP has been justified on the grounds of it being an effective
motivator, available evidence from the private sector would raise serious
doubts over the validity of this claim (Chaston, 2011).
Concerns about the detrimental effect of paying annual bonuses
have also intensified because of the practice probably contributing to
the questionable behaviour of some bankers during the global finan-
cial crisis. Guerrera (2009), when discussing the excessive emphasis on
short-term bonuses in relation to the world banking crisis, quoted the
Yale professor, Jeffrey Sonnenfeld, that ‘immediate shareholder value
maximisation by itself was always too short term in nature. It created a
fleeting illusion of value creation by emphasising immediate goals over
long term strategy’. This view was supported by Jack Welch, the previ-
ous CEO of the American conglomerate, GE Corporation. His apparent
hindsight opinion about role, while in leadership, of placing emphasis
on always reporting quarterly profit increases was the ‘dumbest idea
in the world’. He now believes that the maximisation of shareholder
wealth should not be the basis of the organisation’s long-term strategy
Failure 267
and that organisations should exhibit a values set reflecting the impor-
tance of their main constituencies – employees, customers and prod-
ucts, and not the financial press.
In the private sector in the 1990s, as organisations’ ability to accurately
forecast environmental change became more difficult, efforts were
made to identify key performance indicators (KPIs) that could be used to
evaluate achievement of the performance aims specified in a strategic plan.
Initially, KPIs were enthusiastically welcomed by the private sector because
the technique appeared to offer an effective and rapid way of identifying
performance problems. Over time, however, enthusiasm has declined.
Suspicions arose that KPIs can result in managers focusing too much on a
small number of quantitative performance measures and failing to seek to
comprehend the actual underlying causes of a performance downturn. As
a consequence, these senior managers tended to use KPIs as the basis for
demanding immediate action without permitting more insightful analysis
that might diagnose the long-term implications of actions.
In their analysis of the effectiveness of strategic management processes
involving the use of KPIs, Lavy et al. (2010) confirmed that, in many
organisations, the approach had proved ineffective. This outcome was
due to a lack of applicability, a failure to establish a holistic measurement
system and a failure to generate data that could assist in understanding
the underlying causes of identified performance shortfalls. Despite such
evidence from the private sector on the weaknesses associated with the
use of KPI systems to assist in the effective implementation of strategic
plans, the technique has been enthusiastically adopted by politicians and
government agencies. Most KPI-based control systems in the public sec-
tor are designed to act as assurance-focused performance indicators that
verify improvements in areas such as service quality and productivity.
In his review of the performance audit systems which have been
introduced into the UK’s National Health Service (NHS), Freeman
(2002) suggested that politicians’ and senior civil servants’ faith in the
effectiveness of these new measurement systems may be misplaced. He
concluded that the introduction of structured KPI systems may displace
more effective existing informal modes of quality assurance. In his
view, replacing long-standing, highly effective informal internal tech-
niques with an externally imposed, formalised system can often lead to
suspicion or fear among PSO staff. This will undermine the conditions
of trust that are required for staff to continue to strive for achieving
enhanced productivity or service quality
Freeman accepts that the use of performance measures is appropri-
ate for monitoring compliance with regulations or comparing actual
financial outcomes to the original plan. In his view, however, many of

the current KPI systems in the UK are of little or no use in understanding
how government or contractor customer interventions in service delivery
implementation processes have contributed towards improving organisa-
tional performance. His perspective is similar to that expressed by Lavy
et al. about KPIs in the private sector: that these systems are rarely capable
of explaining why a particular outcome has occurred and merely increase
the costs of operating the organisation’s performance control activities.
Smith (1995) noted that another problem over the use of KPIs in the
public sector is that, even when reliable data are available, the generated
information may actually be misleading and easily misinterpreted. In his
opinion, measurement validity should reflect the extent to which indi-
cators represent the influence of an organisation’s important abstract
variables on service provision outcomes. Hence, valid measures in areas
such as healthcare quality need to reflect attributes of the healthcare
system instead of merely measuring patient data or other non-healthcare
issues. An example of a simplistic KPI system is one which uses patient
re-admission rates as an indicator of quality of care. The logic of this
system is that re-admission rates are solely a reflection of deficiencies
in the quality of services delivered during the patient’s previous stay in
hospital. This conclusion, without examining other data on variables
such as the nature of the treatment, the socio-demographics of the
patient population and quality of post-operative care in the local com-
munity, could lead to an erroneous conclusion about the quality of
healthcare service being delivered. Thus it is imperative that, when KPIs
are utilised to manage public sector service provision, they should only
relate to factors that are under the control of the public sector staff being
scrutinised by the indicator. Given that few contractor customers or PSO
senior managers would ever consider adopting a system that involves an
extensive analysis of data generated, there are strong grounds to suspect
the abolition of existing systems will never occur. This is because many
of these only marginally increase knowledge about the performance of
PSOs. Thus, termination of use could provide significant savings in the
time and resources currently allocated to their operation.
A major drawback with public sector KPIs is the tendency of govern-
ments to suddenly review which performance outcomes are now consid-
ered critical. In some cases, the government’s change of position over an
issue is accompanied by a revised set of KPIs. This can create difficulties for
PSOs when attempting to apply these new assessment criteria to the per-
formance of an earlier strategic plan which was designed to meet a com-
pletely different set of KPI priorities. The other adverse outcome is that
Failure 269
contractor customers may introduce new KPIs by merely adding them

to the existing list of indicators. This adds time and resource burdens for
PSOs, without, in most cases, providing any additional information that
might be used by senior managers or the contractor customer to identify
ways of enhancing internal processes or service quality outcomes.
Where different government agencies are involved in issuing KPIs,
PSOs may be required to fulfil apparently contradictory outcomes.
Murray and Dollery (2005) highlighted this problem in their analysis of
the situation facing the Australian universities. As part of their emphasis
on NPM for reducing bureaucracy and increasing self-determination,
the government had sought to reduce the amount of data they
required from these institutions. However, following the need to gain
greater control over the allocation of student funding, the government
required more data from the universities, such as course participation
levels, course completion rates and student numbers. Concurrently, the
Australian University Quality Agency (AUQA) imposed tighter controls
over course content and expected the universities to provide a growing
volume of data covering course quality assessment activities. The gov-
ernment also imposed penalties for under-enrolment so, to avoid these
penalties, universities moved to over-enrolling. This led to entry stand-
ards needing to vary year-on-year to achieve revenue maximisation and
penalty minimisation. This strategy then affected the universities’ abil-
ity to meet the AUQA’s demands for quality consistency.
A further contradiction was created by the government seeking to
increase the quality and volume of research activities within Australian
universities. This was achieved by demanding data on the volume of
published research output. These data, when made available, created a
league table in Australian higher education which caused some univer-
sities to decide there was a need to improve their research ratings. To
achieve this aim, resources were diverted away from teaching, which
reduced institutions’ ability to achieve the improvements in course
quality being demanded by the AUQA.
Understanding differences
Case aims: To illustrate the potential difficulties which can arise due to
diverse service provision activities within a single PSO.
Most PSOs have existed for many years. There is a strongly embed-
ded sense of mission which has evolved through the experience of
surviving numerous changes required by different governments or

new legislation. Hence, when there is a need to implement a new
strategy that requires a change in mission, there is a risk that staff
confronted with changing circumstances will invoke the values
associated with the previous mission. This common behaviour trait
occurs because employees are more comfortable relying on previous
values, traits and experience than having to invoke a new behav-
ioural framework to implement a new strategy.
In large PSOs with different specialist departments engaged in
providing a diverse range of services, there is the added complication
that, over time, these departments will have evolved modified ver-
sions of the prevailing overall mission and strategy. This evolution
has occurred because departments perceive these modifications to
permit more effective and efficient ways of fulfilling the needs of
the customers to whom they deliver specialist services (Peters, 2001).
As a consequence, when a PSO’s overall strategy has to be changed,
there may appear to be agreement to the revisions among the staff
but actual implementation is hampered by differing interpretations
of how to manage the new mission and strategy at a departmental
level (McMahon, 2004).
McMahon identified a similar problem in relation to the retention
of prior values and traits when a new PSO is formed by merging a
number of different PSOs. He exemplifies this finding by presenting
a summary of the post-formation activities within the Environment
Agency for England and Wales, which was created by the merger of
several PSOs that were previously responsible for different aspects
of environmental management. McMahon identified one example
where staff from one of the pre-merger PSOs sought, both through
their behaviour and even in their office layout, to retain a clear
separation between themselves and new colleagues from other pre-
merger PSOs.
When PSOs have been created by the merger of different special-
ist service provision activities, there is an understandable desire
for senior management to seek to embed a common mission and
universal strategy across the entire organisation. McMahon noted
that senior management in both the long-established American
Environmental Protection Agency, and the newly established UK
Environment Agency, preferred a universal mission and strategy to
be accepted and utilised by all departments. In his view, this aspira-
tion is extremely difficult to achieve in a large PSO, in part because
Failure 271
of such a diverse group of professionals from different scientific

and technological backgrounds engaged in the provision of a broad
portfolio of services. The divergent values of these professionals
probably means that the senior management in either organisation
should not expect to achieve universal acceptance of every aspect
of a new strategy. Nevertheless, in the planning and execution of a
revised strategy, there should be a clear understanding of how dif-
ferent interpretations of strategy may occur across the organisation,
and the actions that should be taken when identified differences are
creating service provision or service delivery problems. Where senior
management fails to exhibit such understanding, the implementa-
tion of a new strategy is likely to be accompanied by failures, inef-
ficiencies, ineffectiveness and errors.
Attempting rescues
A relatively common reason for poor performance in private sector

organisations is a lack of fit between the external environment and
internal competences (Weitzel and Jonsonn, 1989). A failure to imple-
ment a new strategy to improve performance in the public sector can
also be caused by an inadequate match between planned actions and
internal capability (McCurdy, 1991). Failure may also be attributed to a
change in government policy that leads to the imposition of new goals
and priorities that a PSO lacks the resources or strategic flexibility to
fulfil (Boyne, 2006).
The reasons for strategic failure in a commercial operation can often
be determined by reviewing published financial data. In the public sec-
tor, reported measurements of performance are more complex. This is
because PSOs are often assigned multiple goals which have been poorly
defined or are contradictory in relation to which performance outcomes
should be given greatest priority (Rainey, 2003). Another problem con-
fronting the PSO is the inadequate time period utilised by the contractor
customer when deciding either that failure has occurred or how much
time the PSO should be given to demonstrate that effective remedial
action has been taken to rectify problems (O’Brien, 2002).
The prevailing view until recently is that governments rarely sup-
port the idea of permitting major PSOs to fail. As a consequence,
where a decline in performance is identified, the PSO in question
might remain in existence but face a major budget reduction or
imposed constraints in the nature of services to be offered in the
future. Unless some way is found to rejuvenate the PSO by an action

such as the appointment of a new, more dynamic leadership team,
the usual outcome is that the PSO continues to deliver poor service or
fails to optimise available resources. Given the financial problems now
facing many Western governments, this situation may become less
common. Alternatives such as closing the operation or transferring
service provision to another PSO or the private sector can be expected
to occur with greater frequency.
A common solution in the public sector when strategy implementa-
tion has proved inadequate is to instigate organisational restructuring.
Boyne has suggested that the popularity of this option may reflect the
difficulties associated with a repositioning strategy in the sense that
new market opportunities are restricted or government policies limit the
ability of the PSO to exhibit the flexibility required to revise the service
provision portfolio. Unfortunately, there is a lack of empirical research
on whether organisational restructuring can lead to improvements in
service provision (Boyne and Walker, 2004). Nevertheless, anecdotal
evidence tends to suggest that most restructuring merely leads to title
changes and new lines of managerial responsibility without any meas-
urable improvement in organisational performance.
Why implementation failed
Case aims: To illustrate how the implementation of public sector reform

strategies may encounter problems.
The introduction of NPM in American federal government agencies
was known as National Performance Review (NPR). The arrival of
a new administration under President Clinton was determined to
be an opportune time to investigate the outcomes to-date of the
National Performance Review. Two of the key questions for which
the assessment sought answers were:
(1) have stated objectives been accomplished?

(2) to the what extent has implementation of NPR failed in achiev-
ing enhanced effectiveness and efficiency with government
agencies? (Thompson, 2000).
The NPR strategy in the Social Security Agency (SSA) sought to

improve customer orientation by importing managerial philosophies
Failure 273
from the private sector. The total number of supervisors was reduced
and front line staff were given greater powers over determining
appropriate actions. Although the number of supervisors had been
reduced, this was accompanied by the creation of 1,900 new, non-
supervisory positions. These new posts were mainly filled by ex-
supervisors and their job descriptions effectively mirrored assigned
tasks previously performed by supervisors. In part, this outcome was
found necessary because the concept of not requiring supervisors
was based upon the assumption that front line staff would operate as
self-directed teams. However, this never occurred, because employ-
ees, supported by their unions rejected the concept of working as
members of self-directed teams. These new positions were therefore
required in order to provide guidance to front line employees, which
was previously supplied by supervisors, when they were faced with a
non-standard situation.
It was also apparent that the intention to achieve a culture shift
towards the SSA becoming a more customer-orientated organisation
had proved ineffective. Although staff learnt to use the words and
phrases expected of individuals engaged in customer-orientated
activities, such as ‘empowerment’ and ‘delegated decision-making’,
in reality the managers, especially at senior levels, retained a pref-
erence for the traditional ‘command and control’ culture. Stronger
customer orientation assumes improvements in service quality and
there was evidence that some improvements, such as quicker
response times to initial enquiries, had occurred. The benefits of this
change, however, were undermined because the time taken to actu-
ally process and respond to benefit applications had lengthened
considerably.
A key philosophy underlying NPR is that cost reduction has to be
accompanied by increased efficiency. Various initiatives under the
banner of ‘business process re-engineering’ (BPR) had been intro-
duced on the grounds that these offered highly innovative, radical
approaches for achieving change. Available evidence suggested that
BPR projects rarely delivered such promises, in part because of signifi-
cant staff resistance inside government agencies. As a consequence,
achieving major change was de-emphasised within NPR and resources
re-allocated towards merely seeking some degree of incremental
change.
In their assessment of NPR, Thompson and Jones (1995) identi-
fied a number of contradictions within the NPR concept which were
creating barriers to success. They concluded that some of the major

contradictions were that:
(1) downsizing intended to make departments more responsive and

flexible was actually impeding attempts at innovation and creat-
ing adverse reactions from front line staff
(2) planned decentralisation of service provision did not occur due
to a cap on employee numbers accompanied by budget cuts. This
meant that implementing appropriate relocation of staff and ensur-
ing adequate staffing levels at the new locations rarely occurred.
In commenting upon the failure of NPR to achieve its intended aims

of public sector reform, Thompson (2000, p.519) concluded that:
agencies will continue to take a ‘coping’ attitude toward NPR,

characterized by technical compliance and an effective damp-
ening of many of the interventions. … Implementation strate-
gies need to be congruent with the nature of the reform being
implemented. Broad, top-down directives appropriate to the
macro-context and characteristic of past reforms are not appro-
priate where change is directed at the more micro elements of
administration.
Mergers
One strategy for sustaining the performance of firms in the private

sector is to merge with another organisation. Perceived benefits can
include achievement of scale in areas such as administration and pro-
curement, entry into new markets and access to new technology. The
level of merger activity tends to be cyclical, with periods of numerous
mergers being following by a decline in mergers. One of the problems
confronting a firm considering a merger is that, in terms of achieving
improved performance, the actual outcomes are somewhat mixed.
Meeks’ (1977) extensive review of post-merger financial performance
concluded that the aspiration for enhanced performance often did
not materialise. In some cases, performance declined and, in other
cases, the subsequent appointment of a new leader was followed by a
demerger strategy.
Failure 275
Reasons why mergers can be unsuccessful in the private sector include

(Anon., 2002):
(1) the rationale that a merger will increase the company’s share value
proves incorrect
(2) mergers have occurred only because this strategy is being used by
competitors
(3) assumptions about synergy prove to be invalid and hence expected
cost savings never materialise
(4) senior management lacks the required skills to manage the post-
merger phase
(5) inertia among employees leads to a failure to implement actions
crucial to success of the merger
(6) fundamental differences in organisational cultures create barriers
which block effective collaboration between employees.
Despite the known problems and complexities over utilising mergers

to enhance performance, the concept has gained in popularity in the
public sector in recent years. In the USA and UK, healthcare is the sector
most frequently perceived by governments as offering opportunities to
achieve scale effects and cost savings. Hospital mergers in the USA have
proved beneficial for larger, well-run operations, such as major teaching
hospitals. However, in reviewing the outcome of a number of mergers,
Spang et al. (2001) concluded that there is the risk that mergers are seen
as providing a magic formula for improving performance when, in fact,
actual cost savings, tend to be relatively modest. Salit et al. (2002) con-
cluded that, in New York, the outcome of mergers was to increase the
gap between the ‘have and have nots’ by reducing access to healthcare
for people in socially disadvantaged neighbourhoods. In part, this was
caused by small community hospitals, which tend to be geographically
isolated and engaged in providing care in poorer communities, being
the institutions most likely to be closed following hospital mergers in
the city.
There is similar evidence in the UK healthcare sector that mergers
are not a universal panacea. Hackett (1996) noted that there is a strong
belief among some healthcare trusts that a merger will add value,
ensure better quality, reduce costs and deliver more effective services
to patients. What he describes as ‘merger mania’ is an attempt to solve
deep-rooted performance problems facing a healthcare trust. However,
the merger only provides a short-term removal of the symptoms of
inadequate performance, but brings no resolution of the fundamental
problems which are the real cause of poor performance. Haigh (2000)
reached the same conclusions following his analysis of the merger of
three NHS hospitals, which were geographically located close together
but all of which valued their long-established autonomy. As a conse-
quence, staff support for the merger was limited and a great deal of
scepticism was expressed as to the ability of the merger to achieve the
benefits which its supporters insisted could be achieved.
Another example of a poor outcome is provided by Burnes and
Mohamad (1995), who examined a merger of five colleges of midwifery
and nursing in the UK. The merger was not a success. In their view,
there were a number of reasons for its failure. Firstly, the steering group
did not undertake a detailed analysis of how the merger could be
managed. Secondly, the individual appointed to lead the project was
a highly autocratic transactional manager, a management style that
proved completely incompatible given the need to persuade staff in all
five organisations to co-operate and collaborate. Thirdly, each of the
colleges were careful to put the needs of the own organisation ahead of
any strategy which was aimed at ensuring success for all of the colleges
in the new larger entity.
Problems with networks
Although some academics and governments have embraced networks as

an effective solution for PSOs facing a decline in available resources, the
universal applicability of the concept has been challenged by a number
of theorists (O’Toole, 1997). This is because networks often lack account-
ability mechanisms, are difficult to control and participants may have
divergent values. These factors can cause major problems when seeking
to achieve agreements over desired outcomes and appropriate actions
(Keast and Brown, 2002).
One problem is that the values of PSO leaders are orientated towards
wishing to dominate decision-making. This brings them into conflict with
leaders in other PSOs who have similar behaviour traits. As a consequence,
arrangements agreed on an informal basis during the crafting of the net-
work strategy often prove to be ineffective when leaders refuse to fulfil
earlier promises made concerning their PSO’s involvement in the network,
such as making available required resources. The network strategic plan
often assumes that achievement of a mission is based upon improving a
wide range of social services. However, upon plan implementation some
leaders wish to ensure that their own PSO’s narrow sectional interests are
given priority in the allocation of scarce resources (Keast et al., 2004).
Failure 277
A well-established fundamental requirement for the effective imple-

mentation of a network strategy is trust and commitment by all par-
ticipants. These are values which some PSOs claim they will exhibit,
but upon plan implementation it becomes apparent that their real
values are based upon self-interest and avoiding any loss of power
over decisions concerning sharing their resources with other organisa-
tions. Furthermore, although some participants may attempt to build
trust and commitment, achieving this outcome is negated by different
perceptions, values and organisational culture attitudes among other
network members. The situation may be further complicated by the fact
that, although governments may promote the concept of creating net-
works, once they have been established politicians and senior civil serv-
ants begin to worry about a loss of role clarity, and ambiguity emerges
in relation to responsibility and accountability. Such concerns may
cause contractor customers to impose the same KPI systems that were
previously perceived as appropriate when assessing the performance of
individual PSOs. Evidence suggests this approach is not effective. This
is because the KPIs reflect an inadequate understanding of complexities
associated with managing entities which depend upon the sharing of
responsibilities across a number of organisations (Keast et al., 2006).
Networks may not deliver
Case aims: To illustrate that, although networks may be seen as effective

for achieving cost savings, evidence may indicate that this is more of a
hope than a reality.
Discourse between academics about the benefits networks in the
public sector has promoted the view that the concept has provided
new ways of governing. These interactions led to the conclusion that
the world was entering a new stage in the evolution of public admin-
istration, which has been labelled New Public Governance (NPG).
Politicians are enthusiastic acceptors of network theory and have
begun to avidly promote ‘partnerships’ and greater inter-agency co-
operation between government departments, PSOs, private sector
companies and third sector organisations (DWP, 2004).
Unfortunately, many supporters of NPG apparently failed to learn
from the lessons of the private sector that the formation and success-
ful operation of networks is a complex and often highly problematic
process. Few in government appeared to have heeded the warnings
that collaboration in the public sector is unlikely to achieve a benefi-

cial outcome, unless there is a genuine need and real agreement by
all parties that the most effective solution will be achieved through
cross-organisational collaboration (Mattessich et al., 2001).
An example of the risk that networks will not provide the most
effective solution is provided by the US federal government’s strategy
for the management of public sector spending on healthcare, known
as the Patient Protection and Affordable Care Act (PPACA). One of
the potential problems with PPACA is that state governments in the
USA may be forced to reduce spending in other areas, such as educa-
tion, to compensate for the additional healthcare costs created by
this legislation (Kaufman, 2010).
A key feature of PPACA is the recommendation that healthcare
providers form networks known as Accountable Care Organisations
(ACOs) as a strategy for reducing the costs of service provision. The
concept is that the ACO creates a shared cost savings programme
for Medicare fee-for-service patients. A number of demonstration
projects have been funded to create ACOs. The purpose of the ACO is
to collaborate over care provision, to result in payments based upon
the cost savings achieved by the group through improved quality
and efficiency of healthcare service delivery. After four years, only16
shared savings payments were distributed to the 40 groups involved
in the project. Conclusions that can be reached are, firstly, that it is
difficult for even the most integrated medical groups to generate sig-
nificant savings on Medicare fee-for-service and, secondly, that the
scale of payments received were not sufficient to cover the infrastruc-
ture costs associated with operating these networks. In an evaluation
of the project, Lake et al. (2011) concluded that the economic and
market rewards from the formation of networks may either never
materialise or take many years to be achieved.
Kaufman’s (2011) perspective is that any savings that were achieved
came as the result of reductions in admission levels and less use of
high-cost medical procedures such as medical imaging. Nevertheless,
a number of doctors and hospitals have formed clinically integrated
networks which they plan to evolve into ACOs. Even in their current
form, few of these networks have been able to reduce the cost of service
provision care. Kaufman posits that the federal healthcare reforms to
improve care and lower costs may have only a limited impact on the
provision of the high-cost patient treatments that consume much
of America’s public sector medical resources. In his view, instead of
Failure 279
promoting the formation of networks, a more effective focus should

be on innovation and the exploitation of technology, because this
offers a more feasible strategy to reduce healthcare costs. Examples
of this approach include using digitally connected electronic medical
records with point-of-care protocols, more effective disease manage-
ment programmes, closer relationships between acute and post-acute
providers, and changing the culture from values concerned with
retaining autonomy and maximising revenue to one concerned with
a commitment to reduce the costs and improve the quality of care.
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14
Possible Futures
Value shifts
Seeking to understand the interaction between personal, employee,

managerial, organisational and societal values is a complex process. It is
not made any easier by the fact that values are continually undergoing
change. Sometimes, value shifts occur very slowly. This presents difficul-
ties in identifying exactly when the new trend will lead to a widespread
shift in prevailing beliefs and attitudes. In other cases, value shifts are so
rapid and significant that it is impossible for any organisations to fore-
cast the change and have time to implement appropriate revised or new
actions. A recent example of this situation is provided by the rapid shift in
public opinion in the UK, when many people suddenly began to express
discontent over prevailing liberal views about human rights. Instead, in
the days following the August 2011 riots, public opinion swung towards
wanting tougher policing followed by stiffer sentences for offenders.
Some of the world’s fundamental values, such as sustaining peace
and compatibility among members of a specific social group, have
been embedded in the human race since the beginning of time. These,
accompanied by some expansion and modifications, have provided the
basis for societal values presented in religious texts such as the Bible and
the Qur’an. Nevertheless, despite the existence of long-established basic
values and specification of values underlying religious faiths, societal
values have continued to change through the ages. In some cases, new
values were initially espoused by a single individual or a small group of
like-minded individuals, who often had to fight for many years before
gaining broader acceptance for their ideas. An example is provided by
the politician William Wilberforce, who, after 26 years trying, achieved
passage through parliament of the Slave Trade Act 1807, which
282
Possible Futures 283
abolished slavery in the UK. Sometimes, values shifts have been rapid
as the result of a large proportion of a nation’s population rising up and
overthrowing their country’s leaders. A recent example of this scenario
is provided by the 2011 ‘Arab Spring’ in the Middle East.
Achieving congruence in personal and societal values is easiest in an
autocratic country. This is because a single individual is in power and,
through mechanisms such as control of the media, secret police and
people’s fear of expressing a contrary opinion, can create what appears
to be population with similar values. The usual outcome is that even-
tually a segment of the population challenges the prevailing political
social climate and the incumbent government or dictator is removed
from power. In contrast, it is impossible for a government in a democ-
racy to achieve complete values congruency because the belief in the
fundamental right of freedom of speech will create a huge diversity of
opinions. Consequently, variation in the values of different socio-eco-
nomic groups or political parties will occur. Unlike autocratic nations,
where leadership change is often accompanied by revolution and a
major shift in societal values, in democratic societies values shifts in
relation to political opinions tend to be of a more gradual nature. One
exception is a major deterioration in economic conditions leading to a
decline in the standard of living for many of the population. This can
result in a sudden rise in the popularity of a minority political party.
Examples are provided by the emergence of the Labour party in the UK
at the beginning of the 20th century which represented the views of
the working classes and, more recently, the Tea Party in the USA, which
articulates the opinion of people with particularly right-wing values.
Future economic prospects
As inhabitants of the world’s richest nation at the end of World War II,
Americans enjoyed unprecedented economic growth and rising per
capita incomes. This provided the basis for society engagement in ‘mass
consumerism’. It would be another ten years before post-war austerity
came to an end and the nations of Western Europe could also begin to
enjoy the benefits of economic growth. The end of the war also saw the
launch of a welfare state in many of these countries. Politicians aimed
to remove the social inequalities and economic hardships which the
majority of people had faced during the 1930s Great Depression.
Expansion of the welfare state in Western democracies was justified
in the minds of many politicians by Maynard Keynes’ economic theory
of using public sector spending to remove or reduce the adverse social
impact of any future economic downturns. The combined outcome of

economic growth and an expanded welfare state meant that adults and
their children in the Western democracies enjoyed over half a century
of steadily rising living standards. The advent of an expanded welfare
state also resulted in the public sector providing an increased propor-
tion of the total employment in many of these nations.
Sustaining welfare provision depends upon a nation’s economy
continuing to grow and generate the taxes needed to fund public sec-
tor spending. By the mid-1970s, economic growth in many Western
economies began to slow down. Politicians were required to reduce gov-
ernment spending by reforming the public sector. The scale of public
sector reform in different Western nations was influenced by the health
of their respective economies and whether governments supported
retaining a public sector that was engaged in the provision of welfare
services. Within the EU, economies such as Germany and France were
reasonably healthy with governments committed to socialist demo-
cratic manifestos. Hence, there was less support for reducing the size of
the public sector through privatisation and reform than in the UK at
that time. Nevertheless, by the mid-1980s, inflation and rising unem-
ployment confronted virtually every Western democracy. Where reduc-
tion in the size of the public sector was deemed either inappropriate
or unacceptable, governments, under the auspices of NPM, focused on
enhancing the ability of PSOs to be more effective managers of increas-
ingly scarce resources (Kim and Hong, 2006).
During the 1990s, although there was general acceptance of the need
for greater austerity in public sector spending, many Western democ-
racies preferred to continue to increase it. Politicians were assisted
by low inflation, caused in part by central banks being prepared to
keep interest rates low. This policy also provided the benefit of greatly
reducing the costs of government borrowing. Tanzi and Schuknecht
(2000) estimated that, on average, real total public sector spending in
the developed nations increased from 12.6 per cent of GDP in 1960 to
17.3 per cent in 1995. To a large degree, this increase reflected expan-
sion of welfare benefits to socially disadvantaged members of society
and the need for some governments to provide financial support for
more unemployed persons.
By the early 21st century, most politicians were aware that factors
such as population ageing and the rising cost of healthcare meant that
public sector deficits were becoming unmanageable. Despite this knowl-
edge, public sector spending showed no sign of abating ( Jackson, 2009).
In the UK, for example, government expenditure as a percentage of GDP
rose from 33.5 per cent in 1965 to 49.7 per cent in 2004, from 33.1 per
cent to 46.8 per cent in the EU and 25.6 per cent to 31.3 per cent in the
USA. The final tipping point over excessive public spending occurred in
2008 in the UK and USA, when governments were forced to borrow vast
sums of money to avert a meltdown in their banking systems. These
events were followed by recognition of the unmanageable sovereign
debts that had been accumulated by some European countries where
governments had sought to avert economic downturns by continuing
to increase public sector spending.
In order to reduce massive deficits, most Western democracies are
now forced to reduce public sector spending and to make large num-
bers of public sector workers redundant. As well as increasing unem-
ployment levels, the implications are that, firstly, the general public
is encountering a reduction in the availability of welfare services and,
secondly, many private sector firms providing goods and services to
the public sector can expect a significant reduction in future revenues.
The only way many Western democracies will ever be able to return to
historic levels of public sector spending is via a significant upswing in
economic growth. The probability of this outcome occurring is virtually
zero. This is because the world’s only source of economic growth for
the foreseeable future will be from emerging economies such as China
and India. As firms from these nations gain an increasing share of total
world trade, Western firms will face declining sales and profitability.
This will be reflected by virtually no economic growth in the Western
democracies accompanied by a declining standard of living for most of
their inhabitants.
Societal values always shift in the face of changing economic condi-
tions. In the Western nations, average per capita incomes will decline
and access to welfare services will be curtailed for at least the next five
years. This will have the greatest detrimental impact on the living
standards of the unemployed and elderly. Working people, however,
will increasingly need to self-fund a greater proportion of services, such
as education and healthcare, which were previously provided by the
public sector. This will further reduce consumer discretionary spending
and reduce prospects for economic growth.
The problem facing governments and PSOs is how to identify and
respond to societal value shifts that result from the widespread decline
in living standards. For example, the public is already facing unprec-
edented increases in energy bills. It is probable that, as the consumer
tipping point over rising energy prices occurs, governments will be
pressured to drop their plans for greater reliance on more expensive
renewable energy sources as a response to global warming. Furthermore,

the issue of reducing greenhouse gas emissions is likely to rapidly slip
downwards on the political agenda of many of the world’s developed
economies.
Political change
Ultimately, the scale and nature of fundamental public sector reform

lies in the hands of the politicians. Events in the US Congress in 2011,
during approval of America’s debt ceiling, and attempts by EU gov-
ernments to resolve the European sovereign debt crisis, suggest the
prevailing values of many Western politicians are to avoid or postpone
decisions. Presumably, this indecisiveness reflects a hope that economic
problems will correct themselves and thereby permit the avoidance of
actions which will make these politicians unpopular with the electorate.
The risk of indecision is that eventually voters may become so frustrated
that minority parties offering solutions based upon more extreme
political values may begin to attract significant support. In the 1930s,
this regrettably led the rise to power in Europe of fascist dictators such
as Franco, Hitler and Mussolini. Currently, there are few signs that the
adverse economic conditions facing the Western democracies will result
in similar extreme political outcomes. Nevertheless, the strong support
for extremist right-wing politicians in the USA, and the popularity of
the right-wing politician, Marine Le Pen, as a potential candidate in the
2012 French presidential election, are indications that more extreme
political manifestos might start to appeal to electorates as the level of
personal austerity continues to deepen.
The early decades of the 20th century were a period of massive social
change (Jenkins and Brents, 1989). In some cases, this change was the
result of violent revolution but other democracies were able to avoid
a breakdown in social order. In these countries, the response of the
authorities to sustaining law and order did not result in the nation being
driven into social meltdown. For example, in the USA, the combination
of ineffective unions, a patronage-based political system and a relatively
weak federal bureaucracy permitted politicians to provide a positive
response by implementing actions such as passing the Social Security
Act and introducing legislation to curb the worst excesses of the bank-
ing industry and Wall Street (Corner, 2002). Lessons learned during the
Great Depression caused economists, politicians and sociologists in the
Western democracies at the end of World War II to identify and imple-
ment policies aimed at achieving greater social equality. Keynesian
theories for sustaining economic growth and the benefits of policies

designed to achieve ‘full employment’ caused fierce debates (Stanfield,
1984). Some individuals argued against any form of economic or social
intervention. In their view, promoting a social contract that ignored the
reality of market forces and sought to achieve an extreme redistribution
of wealth would eventually create new, potentially destabilising schisms
in society. Emmerij (1994), for example, posited that many social secu-
rity systems, while intuitively appealing, were risking inflation due to
governments’ inability to sustain their funding of an expanded wel-
fare state. He also noted that some social benefit reforms could prove
extremely expensive because of the administrative costs associated with
the complex systems required to manage payments and to avoid wide-
spread fraud. Emmerij’s overall conclusion was that:
too much ‘social’ without sufficient ‘economic’ leads to bankruptcy

and an end to growth; too much ‘economic’ without sufficient
‘social’ leads to social unrest and therefore also to an end to growth.
(1994, p.463)
In Western Europe, the issue of achieving full employment, social equal-

ity and economic viability has been further complicated over the last 20
years by the EU’s introduction of a governance model which forms the
basis of the European Employment Strategy (EES). This has increased the
number of regulations and introduced less specific guidelines designed
to offer greater flexibility, variation and choice for employees. As a
consequence, a new vocabulary has emerged that includes terms such
as ‘employability’, ‘partnerships’ and ‘gender mainstreaming’. The EU’s
social equality agenda increasingly determines the nature of national
government legislation of the member states. EU Commissioners and
European MEPs tend to define the social values of member nations and
influence economic policies and employment laws (Pascual and Suárez,
2007). A potential risk is that the EU Commissioners and MEPs, in seek-
ing to impose universal solutions, may create insurmountable financial
barriers which will block the economic and social reforms required to
reduce the high level of sovereign debt within some European nations.
Politicians who were prepared to lead fundamental social reform
were numerous in late-19th and early-20th centuries. Examples in 19th
century Britain included Benjamin Disraeli and William Gladstone, the
respective leaders of the Conservative and Liberal parties. Emphasis
on social reform in the UK at that time was seen as necessary to avert
the widespread social unrest which was occurring in mainland Europe.
In the early 20th century, President Woodrow Wilson was a force for
reform in the USA. As well as promoting domestic reform, Wilson
also sought to achieve greater social equality on an international scale
through the creation of the League of Nations at the end of World War I.
This attempt to achieve world peace proved unsuccessful but was again
promoted by another American President, Franklin D. Roosevelt, towards
the end of World War II.
More recently, politics seems to have evolved into a saga of political
leaders modifying their manifesto to suit emerging value shifts and the
changing nature of society. Birnbaum (1999) illustrated this trend by
reviewing the election campaigns of President Clinton in the USA and
the Labour leader Tony Blair in the UK. Birnbaum posits that Clinton’s
shift towards a quasi-Republican perspective of reducing the national
debt, limiting regulations affecting business, reducing taxes and pro-
moting ‘back to work’ policies reflected his concern that traditional
Democratic voters were against further expansion of the welfare state.
Tony Blair in the UK, in order to counter the popularity enjoyed by
the previous Conservative Prime Minister Margaret Thatcher, was forced
to break with Labour’s past over matters such as Clause 4 in the party
manifesto, which undertook to bring key industries back into public
sector ownership. In fact, Blair went as far as suggesting that UK citizens
were now all members of the middle-classes when he launched a new
party manifesto entitled ‘The Third Way’. This manifesto was prima-
rily designed to reassure an electorate of office workers, small business
owners and professionals that the Labour party had undergone a meta-
morphosis. Furthermore, the party also became supportive of further
financial deregulation in order to persuade the private sector that the
Labour Party was now ‘business friendly’.
In those democracies where governments are formed through coali-
tions, one explanation for a lack of reforming fervor is the unwilling-
ness of the political leadership to express views that could fracture their
alliances. However, even in countries where a single party has been able
to attract sufficient votes to form a government, younger politicians
seem unwilling to risk damaging their careers by openly challenging
their party leadership. Another potential constraint to political reform
is the intense pressure not to make statements that might be perceived
as politically incorrect. For example, during the riots in England in
August 2011, politicians, social commentators and the police were all
at pains to avoid any observations concerning the social mix of those
involved in the rioting. Furthermore, anybody attempting to raise
this issue was immediately accused of ‘racism’, such as the historian,
Professor David Starkey, when he appeared on Newsnight, t a television

current affairs programme. He later wrote a newspaper article in which
he explained what he was seeking to stimulate a wider debate over suc-
cesses and failures of racial integration over the past 50 years in Britain
(Starkey, 2011). An example of his failure to persuade individuals to join
this debate was reflected in a letter that more than 100 of his fellow
historians sent to The Times Higher Education Supplement, t in which they
stated that (Singh, 2011):
His crass generalisations about black culture and white culture as

oppositional monolithic entities demonstrates a failure to grasp the
subtleties of race and class that would disgrace a first-year history
undergraduate.
A similar risk of being driven into political or social obscurity faces indi-
viduals who might wish to stimulate debate on other emotive issues,
such as the legalisation of drugs to reduce crime levels and the costs
of policing in many countries. The prevailing socially correct perspec-
tive is that such a proposal is complete heresy and its implementation
would lead to the complete breakdown of society. This attitude was
reflected in the response of the majority of politicians and social com-
mentators in Western democracies following the UN’s publication, the
Global Commission on Drug Policyy (Wolf, 2011). Among the signatories
of this report were George Schultz, former US Secretary of State, Paul
Volcker, former chairman of the US Federal Reserve, Kofi Annan, former
UN Secretary General, Ernesto Zedillo, former President of Mexico, and
Fernando Cardosa, former President of Brazil. All these respected and
highly experienced people supported the view that the criminalisation
of drugs has led to huge levels of corruption among public officials and
the destruction of significant proportions of society, especially in those
Central American countries that are embroiled in ongoing drugs wars
between the state and the traffickers. There was virtually no coverage of
the UN report in the Western media; most politicians remained silent
on the issue, and the few that did comment rejected the report’s recom-
mendations as completely wrong and uninformed.
Public sector unions
In the 19th century, when workers received minimal legal protection

from actions by their employers, such as laying off workers or reduc-
ing wages, the only effective form of defence lay in the formation
of the labour unions (Mah, 2009). In the 20th century, the power of
the unions became more reliant upon the support of politicians and
the general public. By the late1970s, in some nations such as the UK,
unions were prepared to create economic chaos by bringing their mem-
bers out on prolonged strikes in order to achieve their aims (Babcock
et al., 1997). One of the reasons for the Conservative Prime Minister
Margaret Thatcher including privatisation as a key component of NPM
was to reduce the power of the unions across industries that were still
in the public sector such as coal mining, steel production and provi-
sion of the utilities. Her ability to successfully confront and defeat the
unions in these sectors was only achieved because the public no longer
supported the UK unions disrupting their everyday life.
From the mid-1980s, another factor that influenced the union move-
ment in some Western democracies was a decline in employment
opportunities, as economies contracted and firms sought to survive the
competitive pressures from the emerging ‘Asian Tiger Nations’ such as
Japan and Taiwan. Some unions recognised that strikes and walkouts
were likely to worsen the problems facing major companies, thereby
contributing to a further loss of jobs among their members. Recognition
of this reality led to the emergence of a more pluralist, consultative
approach between management and unions, as they jointly sought ways
of protecting the jobs of employees. Hyman (2001) described this values
shift as ‘business unionism’, whereby sustaining sector performance
became more important than disputes based upon class, or differences
in the beliefs and attitudes of managers and workers. Hyman proposed
that the new values of union leaders in the private sector focus upon
the ‘here and now’ in terms of achieving better pay or working condi-
tions and shorter hours for their members, but only after taking into
account the financial viability for the companies with whom they are
negotiating. This values shift has replaced the traditional philosophy of
concern for the rights of the working classes or fighting at a national
level to achieve political or social change.
A fall in public support for the unions became apparent in a number
of countries during the 1980s. In Sweden, for example, union pressure
for wage solidarity declined in the face of new issues such as the need
for wage flexibility to ensure the survival of companies involved in
exporting. Even leading Social Democrat politicians became concerned
that the upward pressure on wages was reducing the competitiveness
of industry, and that increasingly unaffordable wage settlements were
being agreed within the public sector (Thörnqvist, 2007). Lengthy pub-
lic sector strikes failed to achieve the desired aims of higher wages for
public sector workers. This led to a strategic repositioning in the union

movement towards a focus on ‘collective individualisation’. This led the
nurses’ union to place an emphasis on formal competence and indi-
vidual qualifications as the new basis for negotiating salary increases.
There was also recognition of the need to move away from national
wage agreements and to accept a geographic wage variation based upon
factors such as living costs and availability of suitably qualified staff in
a particular area (Roan et al., 2002).
It remains difficult to utilise past events for a universal prediction
that the values associated with a consultative orientation towards
industrial relations will be retained by public sector unions while sig-
nificant numbers of their members are made redundant as their PSO
employers face greater austerity. In part, this difficulty exists because of
the different labour laws in many Western nations in relation to public
sector workers’ ability to strike. Additionally, in some countries such as
Canada and the USA, collective bargaining agreements require the use
of binding arbitration as the basis for resolving disputes (Hurd, 2003).
Another factor influencing union behaviour in some countries is that,
in recent years, governments have introduced legislation designed to
curb the powers of the unions. Examples include banning cross picket-
ing of organisations not directly involved in a specific labour dispute,
and the requirement of unions to ballot the membership, where the
majority of members must vote for a strike for it to become legal.
Predictions concerning the return of widespread strikes to defeat
austerity measures in the public sector also need to take into account
national culture and which issues are most likely to cause resentment
among PSO employees. In Greece, Spain and Portugal, the labour unions
have been extremely active in organising national demonstrations and
national strikes in an attempt to persuade their respective governments
to reverse decisions over economic austerity measures. In the UK, unions
remained relatively quiet during the first rounds of public sector job
cuts. This probably reflects the unions’ concerns that current legislation
risks employers persuading the courts to grant injunctions forbidding
a strike and, in extreme cases, the courts could impose fines that could
bankrupt the unions (Tuckman, 2010). However, whether such passiv-
ism will prevail among public sector unions in Western democracies
remains to be seen. It is likely that a more militant attitude will emerge
as union members exhibit resentment over their employers’ actions. For
example, in the UK in mid-2011 the public sector unions decided that
the time had come for a more militant response, by organising a series
of national strikes among their members following the government’s
decision to reform public sector pension schemes to bring them more

in line with those in the private sector.
Defence spending
The advent off perestroika and glasnostt under the Russian president
Mikhail Gorbachev ultimately led to the dissolution of the USSR. Some
experts predicted that the end of the Cold War in the 1990s would
be accompanied by a major downturn in defence expenditure across
Western nations that would release funds for expanding domestic social
policies. Any such hopes were dashed by the destruction of the World
Trade Center in New York on 11 September 2001, which led President
Bush to declare his ‘war on terror’. Subsequent events, such as the inva-
sion and occupation of Iraq and Afghanistan, reignited an increase in
military spending. This led the US to spend $698 billion or 4.8 per cent
of total GDP on defence in 2010, followed among the Western democra-
cies by $59.6 billion (2.8 per cent of GDP) in the UK and $59.3 billion
(2.3 per cent of GDP) in France. These figures exclude the huge domestic
spending increases in response to terrorist threats, such as strengthen-
ing internal security, increased staff levels in key anti-terrorist agencies
and purchasing improved monitoring systems at countries’ ports, air-
ports and borders.
The need for austerity is beginning to force Western democracies to
seek cutbacks in defence spending, although with varying degrees of
success and effectiveness. In part, this reflects the long-term nature of
capital spending on defence, where many years often pass between ini-
tiation and completion of a project. One example of a strange outcome
this situation can cause is provided by the UK government’s decision to
purchase two new aircraft carriers. The construction of both will con-
tinue but, upon completion, one is likely to be decommissioned and
the other may have to wait for a further five years until the aircraft to
be flown from the carrier can be delivered.
Another complication facing those seeking defence cuts based upon
rational decisions is the disagreement between armed services chiefs,
who each present strong arguments for why their colleagues in the other
armed services should be the primary target of proposed cuts. Further
complicating decisions is political pressure by the defence industry,
which claims that military cutbacks will lead to plant closures and
redundancies in their respective workforces. Politicians need to be aware
of the power and influence of these companies for, as noted as early as
1961, President Eisenhower, himself a highly experienced military leader,
warned of the capability of America’s ‘military-industrial complex’ to

influence politicians and political thinking in the Western world.
The scale of defence spending in Western democracies can be
expected to decline following the withdrawal of troops from Iraq and
Afghanistan. Furthermore, allocating funds to intervention activities
elsewhere in the world would, on the basis of recent events in Libya and
Syria, seem less probable following Western politicians new aversion to
military involvement in other countries’ internal affairs. The final figure
on the scale of defence spending cutbacks at this stage remains uncer-
tain. This is because the effect of lobbying of politicians by the military
and the defence industry is difficult to predict.
Excessive expenditure on defence has been exacerbated in some
countries because, despite numerous claims over the years that military
procurement has been overhauled, there remain numerous examples
of wasteful purchasing decisions by the military and their civilian
administrators. The other problem is that of forecasting the influence
on Western military planners of the speed and scale of China’s political
aspirations and how these will determine the behaviour of its military
forces. Some military planners in the West now perceive China as a
threat potentially as great as USSR during the Cold War. Should this
view be widely accepted, or China’s military forces become overtly
aggressive towards their neighbours, there may be a return to signifi-
cantly higher military spending in some Western democracies.
Education
The advent of the welfare state, when governments became the domi-
nant funding source of their nations’ educational systems led to politi-
cians and their advisors introducing educational reforms long before
the arrival of NPM. These reforms tended to focus upon using the
educational system to achieve social change. This resulted in policies
concerned with greater social equality and seeking to avoid children
being adversely impacted by exposure to the notion of ‘failure’. These
aims have involved such initiatives in the UK as introducing compre-
hensive schools in order to abolish a tiered delivery system based around
children’s different intellectual abilities. Unfortunately, politicians and
their advisors are now confronted with the problem that reforms seeking
to achieve social equality appear to have resulted in a general decline in
children’s educational standards in many Western democracies.
Since the advent of NPM, many politicians and their advisors have
assumed that educational effectiveness can be assessed using KPIs, such
as creating league tables to compare schools’ performance in national

examinations. President Bush in the USA, for example signed into law
‘No Child Left Behind’ legislation. This provides the basis for allocating
funding in direct relation to a school’s examination results. The appar-
ent consequence has been an increased emphasis on teaching children
how to pass examinations, with less attention given to actually provid-
ing an effective education (Anon., 2011). A similar distortion has also
emerged in the UK, where successive governments’ belief in the use of
examination league tables to measure standards has, in some schools,
caused a move away from developing the intellectual capabilities of a
diverse student body. Instead, educational resources and teachers’ time
in the classroom is now being spent working towards achieving higher
pass rates in national tests and examinations.
In the last 20 years, the educational reform debate has shifted towards
including adequate supply of knowledge workers, and considering the
role of schools in providing an education appropriate for their stu-
dents’ entry into the workplace. Although some educational experts
criticise this move on the grounds that meeting the needs of employers
is redirecting resources away from the personal development of each
individual child, there has been a growing acceptance for this area of
educational reform. To raise the vocational capabilities of students,
there has already been a move towards decentralisation of education in
some countries. This is perceived as necessary to permit schools to tai-
lor educational provision to more effectively meet local needs (Anon.,
1995). A priority of NPM has been to create quasi-markets to stimulate
competition between schools. Many politicians and their advisors
believe this reform will raise educational standards because parents
will be offered greater choice over the education they desire for their
children, through the promotion of different types of schools made
available to students.
The degree to which these various reforms have been effective
remains unproven. In the UK, for example, successive governments
relied upon statistics showing more students passing national examina-
tions as the basis for claiming a continued improvement in educational
standards. The evidence suggests that the overall standard of perform-
ance in examinations is increasing, although no improvements have
yet become apparent for low achievers. As noted by West and Pennell
(1997), the extent to which these achievements can be attributed to
reforms that increased choice and diversity is debatable. There is lit-
tle evidence that lower achievers are being assisted or that increased
expenditure on schools in socially deprived areas is having any real
positive impact. It has also become apparent that some school heads in
the UK are suggesting that certain students avoid examinations in sub-
jects such as mathematics and science and instead take ‘easier subjects’
such as media studies or current affairs. What most students appear not
to have been told is that many employers and most UK universities con-
sider passes in softer subjects as irrelevant in terms of their assessment
of a student’s educational achievements.
The other major problem facing schools is the number of children
who come from disadvantaged backgrounds. The view among some
politicians is that teachers’ primary role is to act as frontline social
workers and, in partnership with other professional agencies, quali-
fied social workers can resolve the social problems exhibited by their
students both in the classroom and when out in wider society (Murphy
and Adams, 1998). This orientation is illustrated in Dahir’s (2004) article
promoting the use of counsellors in American schools. She describes
their role as preparing all students to ‘become well-educated and con-
tributing members of an ever-changing and complex society’. Teachers
in some countries are also finding that some parents think they are
more qualified than teachers to define the educational needs of their
children. This perspective is illustrated by Osborne (2005, p.309), who
stated that:
the presumption in a free society must surely be that parents are in

most things the best judges of the type of education their children
should receive… There is an implied arrogance in the positive-
externality characterization of public education… that parents, for
example, have mostly mercenary goals for their children and will
underemphasize the skills needed to be proper citizens.
In some countries, teachers face intense criticism that their actions,

which are aimed at instilling order and discipline in the classroom,
are perceived as racist or failing to recognise their students’ human
rights. In some cases, these accusations are upheld by local government
administrators whose powers are such that many teachers feel they no
longer have any authority in the classroom. A resultant recent outcome
is the support by some reformers for schools permitted to act independ-
ently of local bureaucrats. This is reflected by the expansion of chartist
schools in the USA and the number of institutions applying to become
‘free schools’ in the UK.
Overall, it seems that the effectiveness of educational reform in many
Western democracies remains highly questionable. This is despite the
fact that, over a decade ago, observers such as Murphy and Adams
(1998, p.444) commented that:
Conflicts over the definition of educational problems and solutions,

benefits and burdens, promise an unstable long-term reform agenda.
New policy solutions layered onto existing ones complicate educa-
tion’s structures. Incentives to change are weak.
Murphy and Adams posited that one of the causes underlying the fail-
ure of reforms is the tendency of politicians to justify their proposals by
using rhetoric such as ‘diversity’ and ‘equality’ to hide their real inten-
tions. Examples of such language are provided by Lam (2001) who, in
supporting the need for reform, stated that ‘economic rationalism as the
hegemonic cornerstone of educational changes aspires to guarantee the
quality of human resources in preparation for the new economic world’.
In their analysis of documents from Canada, New Zealand and the UK,
Levin and Young (2000) perceived that both liberals and neoliberals
often use the same language to justify legislation, even though their
actual motivations may be very different. The authors also noted that
many governments appear to have failed to exhibit any real understand-
ing of the consequences of their reforms in terms of the actual impact
on schools, teachers or students. Similar conclusions were reached by
Sandberg et al. (2002) concerning educational reforms in Norway. From
their analysis of government documents, they concluded that political
leaders and their senior advisors sought to selectively pick data from
evaluations of educational performance which were favourable to their
perspectives and ignored any evidence which might suggest that a
reform was failing to achieve stated aims.
In recent years, in many countries, teachers have probably faced more
government-inspired reforms than any other employee group within
the public sector. Many have become exhausted and disillusioned with
the unrelenting pace of change being required of them (McCormick and
Ayres, 2009; Reichman and Artzi, 2009). Teachers’ ability to object to
this situation has been reduced in some countries by national or local
government cutbacks which have made many teachers redundant. This
has caused those still in work to suspect that questioning the validity
of the latest reform increases their chances of being labelled as trouble-
makers and increasing the probability of redundancy. Teachers’ ability
to express doubts over reforms is further curtailed because many school
heads have reached their current position by always supporting the
latest reform. Even in those schools where the head and teachers share
concerns over the effectiveness of government policy, raising objections

also runs the risk of annoying the local government managers who
control the allocation of budgets to the schools in their area (Bjork and
Blasé, 2009).
Healthcare
OECD data (from the Organisation for Economic Co-operation and

Development) indicates that the USA spends 15 per cent of total GDP
on healthcare. This compares with just over 11 per cent in France and
Germany, 8.4 per cent in the UK and an average across all OECD coun-
tries of 8.9 per cent of GDP. Unlike most other Western democracies, the
main burden of healthcare expenditure in the USA falls upon private
citizens and their employers, mainly through payments to the health
insurance industry. The primary causes of this huge expenditure in all
Western democracies are the combined effects of population ageing
and the high costs of scientific breakthroughs in medical treatments.
Whether healthcare is funded privately or via the welfare state, the
shared problem is the inability of nations to meet the rising costs of
healthcare.
This is not a new situation: governments have been concerned about
how to fund their nation’s healthcare systems for many years and have
sought to introduce reforms that could reduce or stabilise provision
costs. To date, however, such reforms have met little success (Bartlett,
2009). Governments attempting healthcare reform find that this is a
very complex sector. Furthermore, in those countries where medical
services are mainly provided by the state, mention of reform can gen-
erate emotive responses by members of the public who are concerned
about the privatisation of services.
Inside the healthcare sector, doctors usually wish to retain total con-
trol of all medical decisions. These professional values often result in
negative and strongly articulated objections in response to suggestions
that certain tasks could be delegated to lower cost staff, such as nurses
or technicians. The same response can be expected when administrators
suggest that certain medical treatments should be avoided or restricted
because of their high costs (Van Achterberg et al., 2009). Further sub-
divisions of status influence the power of specific types of doctors.
Surgeons, for example, may wish to be perceived as being at the peak of
the medical profession. As a consequence, they have the ability to use
their status to retain control over resources even where assessments of
outcomes clearly suggest that more cost-effective alternative solutions
exist. For example, surgeons may insist on purchasing new diagnostic

equipment to treat a relatively rare medical condition despite the fact
that the same funds invested in public health campaigns may offer
more favourable cost/benefit outcomes (Fairchild et al., 2010). In the
UK, Lord Crisp, a former chief executive of the NHS, argued in the
House of Lords that Britain needs fewer hospitals and senior consult-
ants. In his view, population ageing and the consequent increase in
long-term illnesses need to be treated at home or in the community
rather than on expensive hospital wards. Further cost savings could
be achieved if nurses carry out many of the tasks currently performed
by hospital consultants. Lord Crisp acknowledged that such radical
changes are difficult, due the vested interests of hospital managers and
clinicians who have gained power and money under the current health-
care system (Beckford, 2011).
Another problem in some Western democracies is that spending vast
sums of public sector funds on medical services has led to the emergence
of a large bureaucracy to administer these funds and assess whether they
have been spent wisely. Although successive governments have sought
to reduce the size of this administrative overhead by restructuring or
creating quasi-markets to inject some competition into the healthcare
sector, there is little evidence that these reforms have led to more effec-
tive and efficient administration of service provision.
Where the state is heavily involved in the funding of healthcare,
Simonet (2010) concluded that the direction and focus of reforms has
tended to be very similar. The common aim has been cost reduction
by emphasis on enhanced effectiveness and efficiency. A significant
obstacle has often been the resistance of the medical profession, linked
with governments’ inability to shift the values of these professional
groups. Governments have typically relied upon restricting budgets
to persuade the medical profession to seek ways of optimising their
use of increasingly scarce resources. In those cases where such actions
are not perceived as achieving the desired affect, contractor customers
or healthcare insurers rely upon direct interventions, such as defining
what drugs can be prescribed and what treatments are permissible.
Politicians have tended to use specific words and phrases to stress
the need for equity and equality in the provision of healthcare. For
example, in the UK one health minister focused on reforms being
designed to ensure that the NHS fulfils the principles of ‘fairness, effi-
ciency, effectiveness, responsiveness, integration and accountability’. As
noted by Glick (1999), however, the increasing necessity to cap or even
reduce spending levels has resulted in equity and equality becoming
more difficult to achieve. Providers are being forced to resort to various

forms of rationing in order to maximise the number of patients that
can be treated within their already over-stretched budgets. This need
for rationing is expected to increase in the future, leaving the medical
profession in the unenviable position of having to make treatment deci-
sions based on the length and quality of life that can be offered to one
patient versus another.
Prospects for reform
Given the track record of politicians over recent years, the probability
that they will be prepared to make decisions that might risk their re-
election prospects or to attempt to assess the long-term implications of
their proposed actions remains extremely low. If so, then the inevitable
conclusion is that, although governments may reduce the total size of
public sector budgets, it seems unlikely that politicians will provide the
strength of leadership necessary to deliver genuine reform.
In view of this conclusion, there appears to remain just two possible
forces for achieving reform. The first is the general public, if a sufficient
proportion of the electorate share a common purpose to become a force
for change. Where this occurs, unified action may force politicians to
change their behaviour or risk being replaced at the next election by
people perceived as being more in tune with prevailing public opinion.
It is necessary to recognise, however, that it is relatively rare for elector-
ates to provide a source of public sector reform that leads to a funda-
mental shift in societal values. This is because, in today’s society, the
majority of the population only seeks to influence fundamental change
where they perceive it to be of economic value to themselves or their
immediate family.
The other source of reform lies within the PSOs responsible for the
provision of services. This is critically reliant upon a fundamental
change in the behaviour of the individuals fulfilling leadership roles
within PSOs. The current orientation of many leaders is towards achiev-
ing career advancement without regard for the needs of others. This
involves accepting without question any new edict from government,
because this will both assist in maximising their personal income and
also increase the probability of being promoted into an even higher
paid job in the public sector. Hence, Western democracies’ only real
hope for reform is that somehow there emerges a new generation of PSO
leaders whose motivation is based upon the traditional values of public
sector employees: genuinely wanting to serve the general public to the
best of their abilities and being able to exhibit the competences neces-
sary to optimise the task environment of their employees. Only once
this has occurred can PSOs achieve the congruence between employees,
management and overall organisational values that is a vital precursor
for the creation of a public sector where delivered services are of the
highest feasible quality and internal processes reflect the highest pos-
sible levels of effectiveness and efficiency.
Once the process of value congruence is in progress, the other critical
leadership issue is to ensure a dominant and clear focus upon inno-
vation in improving service delivery and internal service provision
processes. This is necessary because, without innovation, the ability of
PSOs to optimise service provision in the face of financial constraint
will prove impossible. In healthcare, for example, exploitation of the
human gene in the diagnosis and customisation of treatment is neces-
sary in order to reduce the cost of treating cancer patients. In education,
innovation based upon the exploitation of e-based information delivery
can ensure that more students have access to a high-quality learning
experience. Across vast swathes of administrative activities at a national
and local level, cost reductions can only be achieved by the exploitation
of IT, ongoing advances in mobile communication devices and concepts
such as cloud computing (Chaston, 2011).
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Index
4Ps, 213 benefit innovation, 227

benevolence, 23, 33
accountability, 252 Beveridge, W., 1
achievement orientation, 125 Blair, T., 57, 64, 288
active-passives, 63 blogs, 74
active-positives, 63 bonuses, 266
adaptive strategy, 147 box ticking, 6, 190
administrative staff, 115 British Petroleum (BP), 136
advancement, 121 broadcast media, 78
advertising, 78 Brown, G., 64–65
affective autonomy, 33 budget stuffing, 239
agency theory 130 budget, 237
alienation, 124 Bundaberg Hospital Australia, 145–146
alliance stakeholders, 133 bureaucracy, 90, 97
ambiguity, 203 bureaucratic leaders, 113
American Civil War, 69 bureaucrats, 4
American Declaration of Bush, G., 71
Independence, 45 business definitions, 160
American dream, 70 business process re-engineering (BPR),
American media, 82 273
annual budget, 237 business unionism, 290
anxiety, 205
Arab countries, 34–35 Cameron, D., 60
Arab Spring, 36, 283 Campaign for Nuclear Disarmament
assertiveness, 31 (CND), 48
assurance-focused performance, 267 capacity, 38, 251
attitude of indifference, 143 capitalism, 3
audience awareness, 80 career, 115
Australian universities, 269 cash for questions, 57
Austrian School of Economics, 13 Catholic Church, 44
authenticity, 100 celebrities, 78
authoritarian regimes, 54 censorship, 71
autocratic leadership, 92, 258 central banks, 10–11
autocratic regimes, 72, 75 Chancellor of the Exchequer, 65
change agent, 182
Baby Boomers, 24 change management, 143
balanced scorecard, 135 character, 63
Bank of England, 11 charisma, 100
banking crisis, 10 China, 28, 79, 285, 293
banking industry, 10–11, China, 79
Beaverbrook, Lord, 62, 73 Christianity, 101
behaviour traits, 144 Churchill, W., 62
benefactors, 160 cinema, 70
303
304 Index
civic values, 52 cost/benefit outcomes, 298

civil servants, 53, 255 Coulson, A., 113
civil service, 15 countercyclical public investment, 2
Clinton, B., 58, 288 critical thinkers, 144
code of ethics, 127 cross-organisational integration, 249
Cold War, 70 cultural norms, 143
collaboration, 102, 122 cultural values, 25
collaborative capability, 251 culture shift, 273
collaborative relationships, 249 culture, 31
collateralised debt obligations customer clusters, 221
(CDOs), 11 customer expectations, 173
collective bargaining, 291 customer orientation, 5, 233
collective individualisation, 291 customer participation, 38
collective responsibility, 167 customer relations, 221
collectivism, 34 customer value, 249
colonisation, 27 cynicism, 92
communication problems, 39 cynics, 144
communication systems, 37
communist countries, 70 Daily Mail, 69, 73
community policing, 103 debt-to-GDP ratio, 10
community PSO, 184 decentralisation, 182
compatibility, 124 decision-making authority, 243
competence, 15, 100 decision-making, 90, 146, 180
competition, 219 defence spending, 292–293
competitive advantage, 219, 230 defensive silence, 180
conflicting beliefs, 39 delegated decision-making, 273
conflicting values, 163 Delphi, 196
conformity, 22 demand management, 38
Confucianism, 28 democracy, 48
congruence, 137, 233 democratic society, 45–46, 48
conscience, 128 democratisation, 46
consensus-based decision making, 159 Depression Generation, 24
conservation, 32 deregulation, 10
consumer borrowing, 11 Design School, 155
consumer satisfaction, 39 development innovation, 227
consumerism, 78 differential pricing, 38
contractor customer, 136, 156 differential pricing, 5
contractor–provider relationship, 187 differentiation, 219
contributive silence, 180 discrimination, 206
co-operation, 122 Disney Corporation, 78
core activities, 157 dissent, 44
core competences, 231 divided PSO, 184
core responsibilities, 150 double-loop learning, 240
core values, 140 downsizing, 182
corporate PSO, 184 Drucker, P., 167
corporate values, 141 Duke of Edinburgh, 75
corruption scandals, 81
cost savings, 249 ECB, 10, 12, 174
cost leadership, 219 Ecclestone, B., 58
Index 305
economic downturn, 12 European Union (EU), 284

economic growth, 284 evangelists, 144
economics, 26 expressive values, 147
economy, 3 external environment, 154, 264
Education Acts, 47 external influence, 184–185
education, 26, 105–106, 293–296 external stakeholders, 105, 173
educational effectiveness, 293 external values gaps, 185
educational institution, 159 extrinsic outcomes, 120
educational provision, 262
educational reforms, 106 failed outcomes, 264
educational standards, 262 fairness,124
effectiveness innovation, 227 feasibility, 242
effectiveness, 3 federal healthcare reforms, 278
efficiency, 3 Federal Reserve, 10
efficiency innovation, 227 feminine orientation, 30
egalitarian, 34 financial constraint, 236
egalitarian commitment, 34 financial savings, 253
egocentric, 110 flexi-working, 177
Eisenhower, D., 63 Ford, H., 62
election promises, 53 Fox Broadcasting, 74
emergent change, 226 Foxconn, 111
emotion, 23 France, 82
employee attitudes, 124, 142 Francis Inquiry, 84
employee behaviour, 109–110 freedom of expression, 71
employee inputs, 179–180 Freedom of Information Acts, 82
employee motives, 114 freedom of speech, 48, 71
employee perceptions, 119 French Revolution, 45
employee performance, 119 Friedman, M., 2
employee silence, 179 frontline staff, 243
employee values, 123 full employment, 287
employee–employer alienation, 124 future orientation, 31
empowerment, 92, 273
end values, 95 Gandhi, M., 62
energy prices, 285 gap analysis discussion, 237
entrepreneurial firms, 231 gender egalitarianism, 32
entrepreneurial orientation, 14 Generation X, 25
entrepreneurship, 223–225 Generation Y, 25
Environment Agency, 270 Generation Z, 25
Environmental Protection Agency, 270 generational values, 24
equality, 34–35, 92 generative conversations, 167
equality of access, 208 Gillard, J., 60
ethical tolerance, 128 Glass-Steagall Act, 10
ethical values, 95, 112 GlaxoSmithKline, 138
ethnocentric, 25 Global Commission on Drug Policy,
EU Commissioners, 287 288
EU countries, 3 global perspective, 63
European Court of Justice, 209 GLOBE project, 31
European Employment Strategy (EES), Gorbachev, M., 292
287 governance, 187
306 Index
government debt, 10 information flows, 111

government expenditure, 7 in-group collectivism, 32
grand inspiration, 161 innovation, 13, 224, 246, 300
Great Depression, 1, 173, 205, 286 innovative employees, 113
greater autonomy, 90 innovative organisations, 168
Greece, 12, 118 innovativeness, 125
Greek public sector, 118 inseparability, 37
gross domestic product (GDP), 1, 3, 9 insinuations, 83
guiding beliefs, 162 institutional collectivism, 31
instrumental values, 147
healthcare expenditure, 297 intangibility, 36
healthcare rationing, 207 integrity, 52, 142
healthcare reform, 297–299 intellectual autonomy, 33
healthcare scandals, 83–84 interdepartmental conflicts, 239
healthcare sector, 166 internal stakeholders,133
healthcare values, 201–202 internal communication, 111
hedonism, 22, 33 internal value influence, 181
hierarchical structures, 97, 236 International Monetary Fund (IMF),
hierarchy, 34 174
higher education, 7–9, 167 internet, 70
higher-level learning style, 240 inter-organisational integration, 251
Hinduism, 29 interpretive strategy, 147
Hofstede, G., 29 intrinsic motivations, 116
Hollywood, 70 intrinsic outcomes, 120
honesty, 142 intuition, 23
honeymoon period, 64 Islam, 34–35, 101
house prices, 11 Italian public sector, 180
human capital, 111
human resource management (HRM), job satisfaction, 114, 118, 120, 181
145 job values, 116
human rights, 205–206
Human Rights Act, 209 Kennedy, J.F., 82
humane orientation, 32 key performance indicators (KPIs),
Hurst, R., 73 6–8, 59, 267–268
hygiene factors, 114 Keynes, J.M., 2, 283
Keynesian economics, 2
IBM, 13 kinship, 26
IKEA, 233–234 knowledge asset management, 245
IMF, 12 knowledge sharing, 175
immigration, 27 knowledge workers, 244
inalienable rights, 209
increased flexibility, 182 Labour Party, 86, 206, 288
India, 28 leaders, 61
individualism, 30, 34, 122 leadership, 91–92, 180
Industrial Revolution, 45, 46, 92 leadership failure, 259–260
ineffective leadership, 93 leadership flaws, 93–94
infallibility, 259 leadership role, 91, 299
inflation, 2, 284 leadership style, 94, 104, 175,
influence stakeholders, 133 leadership style, 94
Index 307
leadership values, 95 Microsoft, 230

League of Nations, 288 Mid Staffordshire NHS, 84
league tables, 294 Middle Ages, 44
Learning School, 155 Middle East, 75
learning style, 240 middle managers, 143, 182–184
learning system, 241 military cutbacks, 292
left-wing parties, 48 military-industrial complex, 293
left-wing politicians, 174 Mintzberg, H., 155, 225
legalisation of drugs, 289 misrepresentation, 83
Levin, K., 204 mission, 157–159, 218
Lewinsky, M., 8, 58 mission content, 161
linear sequential strategic planning, mission memorability, 159–160
147, 153, 168 mission statement, 157–158
literacy, 68 modal values, 95
Lloyd George, D., 62 monarch, 44
lobbying, 293 monetarism, 2
local authorities, 16 Montgomery, Sir B., 98
local government networks, 254 moral behaviour, 95
long-term orientation, 31 moral standards, 77–78
Los Angeles Police Department motivation, 114
(LAPD), 85, 139 motivator factors, 114
low inflation, 11 Murdoch, R., 74
low interest, 11
lower-level learning style, 240 narcissism, 259
national austerity, 90
Major, J., 57 national culture, 117–118
managerial self-interest, 170 national educational policies, 262
managerialism, 3 National Enquirer, 77
managers, 91 National Health Service (NHS), 7,
managing services, 36–37 190–191, 267
manifesto, 49 National Performance Review (NPR),
market forces, 4, 287 148, 272–274
masculinity, 30 need to know attitude, 117
mass communication, 69 neoliberalism, 206
mass consumerism, 283 network, 276–277
mass media, 68 network failure, 278–279
materialistic, 111 New Deal, 49–50
Matrix Churchill, 57 New Public Governance (NPG), 277
Mayo Clinic, 138 New Public Management (NPM), 3–6,
McDonald’s, 137 89, 110, 147
media, 54 new services, 246
media coverage, 79 New Zealand, 207
media values, 79 News Corporation, 74
mediator, 83 News of the World, 74
Members European Parliament news value, 80
(MEPs), 287 newspapers, 68
mergers, 274–275 newsworthiness, 80
merger mania, 275 Nixon, R., 58
Metropolitan Police, 113 normative ethics, 128
308 Index
Northcliffe, Lord, 69 performance indicators, 160

Norwegian hospitals, 167 performance measurements, 4
Norwegian newspapers, 79 performance orientation, 31
not-for-profit sector, 120–121 performance related pay (PRP), 53,
nuclear disarmament, 48 266
performance targets, 90
Obama, B., 60, 208 perishability, 37
open communication, 120 personal goals, 116
openness, 32 personal values, 22–23, 109, 116, 182,
operational policies, 104 personality traits, 61
optimising performance, 136 Person-Organisation Fit (POF),
Oregon Health Plan, 208 123–125
Organisation for Economic Peru, 72–73
Co-operation and Development phone hacking, 74, 113
(OECD), 7, 297 place, 36
organisational change, 204 planned change, 226
organisational commitment, 127–128 planning complexities, 156–157
organisational conflict, 204 pluralistic culture, 242
Organisational Culture Assessment police, 103
Instrument (OCAI), 194 police corruption, 84–86
organisational culture, 14, 116, 92, police leaders, 258
146 political leadership, 59
organisational development, 216 political motivation theory, 52
organisational environment, 125 political philosophies, 257
organisational goals, 157 political scandals, 54–55
organisational learning, 205, 240 political values, 51–52, 174
organisational purpose, 157 politicians, 4, 48, 10, 15, 52, 90,
organisational restructuring, 272 186–188, 206, 284–285
organisational structure, 175, 243 politics, 27
organisational values, 18, 135, Politkovskaya, A., 81
138–139, 141, 178, 228 population ageing, 174
outsourcing, 239 Porter, M., 219
positioning, 219
parochialism, 25 power, 53
participant values, 197 power asymmetry, 250
participation, 92 power distance, 29
participative decision making, 102 Pre-Depression Generation, 24
participative management, 102–103 press barons, 74
passive-positives, 63 press freedom, 71
patient charters, 209 prevailing values, 168
Patient Protection and Affordable Princess of Wales, 76
Care Act (PPACA), 278 private sector employees, 115
penny dreadfuls, 68 privatisation, 51, 206, 284, 290, 297
pensions, 10 proactive organisations, 164
pension obligations, 17 proactivity, 225
pension provision, 174 problem avoidance, 263
people, 37 process models, 156
perceptions, 23 productive debt, 2
perestroika, 292 productivity, 125
Index 309
professional standards, 145 renewable energy, 286

professionals, 115 research assessment, 7–9
project outcomes, 262 resource based view (RBV), 154,
promotion, 121 229–230
proposed budget, 237 resources, 90
pro-social silence, 180 resource constraints, 166
prospects for reform, 298–300 respect, 142
Protestant Christianity, 28 responsibility, 100, 252
protestant work ethic (PWE), 27–29, right-wing parties, 49
78 right-wing politicians, 174
psychological contracts, 119–120 rising unemployment, 284
public broadcasting, 69 Rokeach Value System, 22
public criticism, 188 Roosevelt, F.D., 49–50
public enquiry, 81 Roosevelt, T., 63
Public Health Acts, 47 Rothermere, Lord, 73
public opinion, 73 rule-based process, 194, 236
public sector career, 115
public sector deficit, 12 salaries, 116
public sector deficit, 2 satisfying benefactors, 161
public sector employees, 115 scandals, 83
public sector entrepreneurship, 224 sceptics, 144
public sector job cuts, 291 Schumpeter, J., 13
public sector networks, 253–254 self-centred silence, 180
public sector organisations (PSOs), 3 Self-Determination Theory (SDT), 122
public sector ownership, 1 self-direction, 22
public sector reform, 286 self-enhancement, 32
public sector spending, 2 self-identity, 122
public sector spending, 284–285 self-image, 122
public sector strategic planning, 156 self-interests, 52
purchaser–provider model, 207 self-managed teams, 236
self-transcendence, 32
Qu’ran, 35 senior management, 182
quality standards, 40 senior management capability, 96
quantitative easing, 11 senior management salaries, 106–107
quasi-rights, 209 senior management, 182
Queen, 75 served customer, 156
service alienation, 38–39
radio, 69 service collaboration, 252–253
recession, 2, 13 service design, 249
recruitment and selection, 119 service excellence, 247
referral stakeholders, 133 service gaps, 39–41
reform, 52, 18 service integration, 250–251
refreezing, 204 service modification, 38
relationship excellence, 220 service output, 89
relationship marketing, 165 service performance, 220–221
relevance, 262 service processes, 246
religion, 26 service provision space map, 223
religious beliefs, 39, 55 service quality, 39–40, 112, 125
religious faith, 101 service response times, 186
310 Index
service users, 166 strategic service options, 227

services marketing theory, 165 strategic values, 162
SERVQUAL, 34, 41, 177–178 strategy definition, 225
Shar’ia law, 35 strategy statement, 218
shared leadership, 102 strategy, 14
shareholder value, 130 Strauss-Kahn, D., 55
short-term orientation, 31 strikes, 290
single-loop learning, 240 strong culture PSO, 184
situation analysis, 153 strong leadership, 257
slavery, 282 structural unemployment, 10
Slim, B., 99 student fees, 169
social change, 47–48 subordinates, 104
social contract, 287 sub-prime mortgages, 11
social inclusion, 49 suitability, 242
social networks, 75 supplier stakeholders, 133
social power, 22 supply chain optimisation, 248
Social Security Agency (SSA), 272–274 support activities, 238
social significance, 80 sustainability, 262
social welfare, 46 Sweden, 290
socially disadvantaged, 10 SWOT, 154
societal values, 282, 285
sociocentric, 110 tabloids, 78
socio-demographic backgrounds, 100 task delegation, 239
soft media, 70 task specialisation, 175
Spanish Socialist Party, 56 teachers’ role 295–296
spin doctors, 54 teaching unions, 106
spiritual principles, 101 teamwork, 112, 124
staff retention, 127 television, 70
stakeholder intentions, 132 Thatcher, M., 4, 51, 290
stakeholder analysis, 132 The News of the World, 113
stakeholder demands, 134 The Third Way, 288
stakeholder groups, 133 theory of business, 167
stakeholder groups, 90 top-down decision-making, 148
stakeholder needs, 134 traditional values, 147
stakeholder philosophy, 135 transactional excellence, 220
stakeholder power, 131 transactional leaders, 61–62, 106
Stakeholder Strategy Matrix, 132 transactional leadership, 94, 97
stakeholder theory, 131 transformational leader, 61–62, 105,
stakeholder threat or opportunity, 132 106
stakeholder types, 131 transformational leadership, 94, 97
strategic alignment, 244 transition, 204
strategic failure, 265–266 transparency, 125
strategic fit assessment matrix, 232 troubled leadership, 189–190
strategic fit, 229–231 trust, 186
strategic gaps, 246–248 turnaround leader, 188
strategic options, 222 Twitter, 75
strategic planning, 147, 153–154,
strategic planning, 153–154 UK media, 82
strategic process model, 168 Ukraine, 81
Index 311
uncertainty avoidance, 30 values-based strategic management,

understanding employees, 174–176 170
unemployment, 2 values-driven approach, 134
unfreezing, 204 variability, 37
unions, 2, 50, 290 Vietnam war, 48
United Nations, 244–245 vision, 100, 162–164
universal rules, 170 vision statement, 140, 162–163
universalism, 1, 23 vision-centred planning, 169
universities, 7–9, 169
university sector, 106, 166 wage solidarity, 290
untouched professionals, 144 Wall Street Crash, 49
urbanisation, 46 Wallace, N., 113
US Civil Aeronautics Board, 150 Walter Reed Hospital, 84
war on terror, 292
value chain performance, 147 Washington Post, 84
value congruence, 173, 184 weak signals, 243
value gaps, 177 Weber, C., 27
value performance excellence, 221 Weberian bureaucracy, 109
value schisms, 165–166 Weberian bureaucracy, 97
value shifts, 17–18, 122, 148–149, 205 welfare benefits, 284
value-added, 147 welfare provision, 284
values, 14–16, 109 welfare reform, 165
values benchmark, 196 welfare services, 1, 174
values clarification, 199–200 welfare state, 3, 283
values development priority matrix, white collar fraud, 86
210 WikiLeaks, 74
values gap, 187 Wilberforce, W., 282,
values influencers, 178 women’s rights, 35
values positioning, 196–197 workplace disengagement, 179
values repositioning, 201 wrongdoing, 81

Public Sector Reformation Values Driven Solutions To Fiscal Constraint

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List of Tables and Figures vi

1 Towards the Inevitable 1

10.1 Comparative review of process 199

1.1 Organisational values and sources of influence 18

In the 1990s, in order to retain electoral support, many Western govern-

The performance of any organisation depends on its guidance by an

entitled Capitalism and Freedom. He sought to demonstrate the abuses

New Public Management

In the 1980s, the growing pressure on politicians in nations such as the

effective way of improving the efficiency and effectiveness of service

and education) where privatisation was not an option, politicians, sup-

Public sector managers are sometimes prepared to manipulate events

KPIs in higher education

audit culture and managerialism have created an environment

The performance assessment indicator which has possibly received

to sustaining a knowledge ethos. Heald and Geaughan (1994), in their

teaching by those university managers who are willing to believe

perhaps we would be better served, in whatever country we reside,

From problem to crisis

Reserve and the European Central Bank (ECB). As a consequence, by the

were pleased with the apparent effectiveness of this new approach.

promotions. These actions can risk permanently damaging the financial

When choices are guided by benevolence, creativity, and an ethic of

hog roasts and champagne receptions. In addition, £500,000 was

There is little question that the irresponsible, possibly immoral, activities

PSO VALUES Leadership

Private sector suppliers The media

Figure 1.1 Organisational values and sources of influence

variables which can, at times, pre-empt or require fundamental changes

(1) Hedonism reflected by a comfortable, stress-free life.

(7) Benevolence reflected by being forgiving, helpful, loving, honest,

It is important that PSOs understand the existence of personal values

to use this knowledge to reinforce their existing perceptions about the

(1) The Pre-Depression Generation, born before 1930, experienced

(2) The Depression Generation, born between 1930 and1945, were

We tend to rely upon our own cultural values as an unconscious ref-

in order to avoid parochial and ethnocentric mindsets that damage

The Protestant ethic

more ascetic sects of Protestant Christianity (Calvinists, Baptists and

In the case of Hinduism, he concluded that the concept of karma

Geert Hofstede (1983) undertook one of the earliest large-scale research

(1) Power distance

(2) Uncertainty avoidance

(5) Long-term/short-term orientation

(1) Culture: shared motives, values, beliefs, identities and interpreta-

(6) Gender egalitarianism: the extent to which an organisation or a

Criticisms of Hofstede’s methodology point out that his study focused

(1) from conservation through to openness to change;

Within these two dimensions, he identified the following cultural

(1) Powerr in terms of social status and prestige, control or dominance

Schwartz applied multi-dimensional scaling to use these 10 variables as

(1) Conservatism: a society that emphasises close-knit harmonious rela-

(5) Mastery: a society that emphasises active mastery of the social

Research using Schwartz’s cultural dimensions suggests that value con-

Furthermore, the emergence of Islamist organisations in recent years

Some Arab countries already accept there is a need to provide

The first major obstacle confronting the PSO seeking to understand

(2) People who are involved in working with customer–organisation

A second characteristic of services is inseparability, which describes the

Case aims: To illustrate how a lack of understanding of value differences

result in conflicting beliefs and attitudes emerging between the