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New Public Management

The term public management denotes the applied side of public administration with emphasis on the man-
agement of government business or public affairs with specific objectives, specific accountability, perfor-
mance measurements and community orientation. It includes an emphasis on the use of modern manage-
ment tools and techniques, rigorous cost benefit analysis, private participations adaptability and flexibility,
social orientation, besides enhancing efficiency, economy and effectiveness.
According to Garson and Overman, public management is not scientific management or administra-
tive science, though it is still heavily influenced by them. Public management is an inter-disciplinary study
of generic aspects of public administration that captures the tensions between the rational-instrumental
orientations on one hand and political policy concerns on the other. New public management (NPM) has
become a very popular concept because of its appeal as an attractive solution to the problems of big and
inefficient government.1
During the last decade of the 20th century, there has been a remarkable change in the role of govern-
ment in different societies. The World Bank Report (1992) and emergence of a new paradigm, NPM, in
public administration have added a new dimension to the concept of governance.2
The advocates of NPM propose that government employees form a special group of managers. For
transaction-cost reasons, politicians cannot handle all the variants of contracts that NPM requires. Gov-
ernment needs experts who can negotiate, settle and execute the myriad contracts that are forthcoming
under the new governmental mechanism replacing the traditional tools of public administration. The spe-
cial group of managers—that is Political Managers—is technically addressed as Chief Executive Officers.
The term NPM was coined by Christopher Hood in 1991 and used in his paper ‘a public management
for all seasons’ published in Public Administration (Vol. 69 Issue-I). This new phase in governance reflects
the insertion of management perspective into public organisation.

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 New Public Management 303

N PM : CONCEPT AND M EANING

NPM refers to adoption of new values of governance to establish greater efficiency, legitimacy and cred-
ibility of the system. It emphasises the need to redefine relations between the providers of services and the
beneficiaries. It advocates efficiency, economy and effectiveness along with flexibility and responsiveness in
administration. For this it requires structural changes from rigid, hierarchic, rule-bound bureaucratic form
of administration to flexible, sensitive, market based form of public management.
NPM has three constructive legacies for the field of public administration:
(a) A stronger emphasis on performance motivated administration and inclusion of performance
oriented institutional arrangements, structural forms and managerial doctrines;
(b) An international dialogue on and a stronger comparative dimension to the study of state design
and administrative reform; and
(c) The integrated use of economic, sociological and other advanced conceptual models.
NPM is result-oriented and objective focused. It aims at 3 Es—efficiency, economy and effectiveness. It
emphasises on performance appraisal, managerial incentives, output targets, innovation, responsiveness,
competence, accountability and market orientation.
NPM aims to achieve a great deal of structural adjustments and a new type of state intervention to
seek cooperation and help from community organisations and empowerment of citizens. Broadly, NPM
aims at entrepreneurial role of public organisations with a market-based public administration resulting in
effectiveness and economy in the functioning of public organisations.
The main approach upon which the NPM doctrine has been built is related to the business/private
sector. Thus, researchers have developed a more demanding approach towards public organisations assum-
ing that they can perform their duties better than they used to in the past by changing the management
structure and internal organisational cultural strategies.

COMPONENTS OF N EW PUBLIC M ANAGEMENT

Stress on Performance (3Es)
The first and foremost thrust of NPM is improvement in the performance of administration. It stresses
the 3Es: efficiency, economy and effectiveness. Having basic stress on the values of efficiency and economy
some authors have labelled the NPM as Neo-Taylorism. In this regard, it may be pointed out that the term
public management itself is considered ‘better’ by some who are of the opinion that it means better tools
and techniques, well developed and trained public managers and so on.

Flexibility and Autonomy

The ingredients included in the list under NPM also include flexibility and autonomy towards the new
recipe for better performance or good governance. The advocates of NPM emphasises freeing-up the rules
and giving public ‘managers’ greater flexibility and autonomy as the key factor in improving public sector
management. It stresses giving a free hand to the public managers as their counterparts in private sector
may have.

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 304 Public Administration: Theory and Practice

Total Quality Management (TQM)

TQM is a philosophy of administration, a set of principles and a series of quantitative techniques that are
designed to continuously improve and if necessary, transform the processes of the organisation from top
to bottom so that customers are fully satisfied with organisational products, performance, procedures and
people. TQM could be a very effective management tool in refocusing government’s mission as servants
of the citizenry. This can be achieved by concentrating the resources of public administration on the
governmental processes that can be enhanced to deliver higher quality services by stressing the prevention
of problems, and by helping public administrations understand that most problems result from faulty
systems, not faulty people.

Client Orientation
The advocates of NPM lay stress upon a kind of public management oriented to the needs of the people
or clients. The client focus is, thus, one of the basic components of NPM.
A major theme associated with improving performance is the development of a client focus or service
quality initiatives in the public sector. It aims at improving performance in service delivery (timeliness,
accuracy, etc.) as well as providing services which meet people’s needs. It involves consultation with clients
what they want and aspects of services they particularly value. The long term implications of this simple
but powerful concept may be significant in terms of the type of decisions which may in the future be made
by clients as opposed to elected officials or public servants. Developing customer service has involved a
major change in the mind-set in many public sector organisations and all the difficulties in staff motivation
and organisation this entails.

Devolution
The adherents of NPM are of the view that in order to achieve 3Es, flexibility, autonomy and client ori-
entation, there is an urgent need for devolution. Devolution has a number of related elements as given by
David Shand, such as:
(a) devolution of responsibilities to other levels of government;
(b) devolution from the centre to operating departments, including the setting up of autonomous
agencies; and
(c) devolution with organisations.
In the latter two cases, a significant feature has been the removal of unnecessary prescriptive rules and
regulations. Devolution is based on the view that decisions made closer to their actual points of impact and
therefore with greater knowledge of likely results are likely to be better decisions.

Cost and Size Reductions

NPM is all for de-bureaucratisation and large-scale cutting down of size and costs. There is no place for
self-aggrandizing bureaucracies and ever growing administrative machinery. The NPM is against the over-
administered government with huge bureaucracy which is busy in the collection of revenue and remains
busy with itself—aloof from people.

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 New Public Management 305

Performance Contracting
The concept of performance contracting is to a large extent, the other side of the autonomy coin. It
involves both an increased emphasis on performance and the development of new accountability instru-
ments. While not normally a legal agreement a performance contract involves mutual undertaking. As
such, it may modify old, hierarchical relationships and involve sanctions and rewards and other incentives
of both, a personal and institutional nature which is new in a public sector environment. It puts pressure
on the performance measurement systems with all the limitations and the attendant possibilities of game
playing.

Privatisation and Contracting System

Privatisation may refer to governments selling off commercial enterprises that have been state monopolies.
In some other form privatisation is the government’s use of private sector to implement public policies
and improve the content and implementation of public programmes. It covers quite a bit of terrain and it
is meant to, from the contracting by governments with private sectors for provision of goods and services,
to hiring consultants to working with non-profit organisations in delivery of government services, to the
creation and management of government corporations. Contracting out as opposed to using governmental
personnel permits the government to experiment with policies and new delivery systems. Privatising per-
mits the government to hire specialists and people of unusual talent without bothering about recruitment,
training or status.

The People Dimension

Clearly, the NPM is not just a set of technical measures. It has a ‘peoples’ dimension. In organisational
terms, it implies flatter structures and greater priority on operational units, and broader or less specialised
job specifications. It has put greater emphasis on general management or supervisory skill as opposed to
technical one, as represented by the now common concept of senior executive services (SES).

Accountability and Transparency

Last but not the least, NPM carries an effective system of accountability of public agencies or public
managers. It seeks to ensure an inbuilt and practical mechanism of accountability and answerability.
It stresses performance measurement/performance appraisal or strict quality control. NPM stresses
upon substantive accountability and not just substandard accountability by way of routine reports like
ACRs.

FEATURES OF NPM
The following ten principles advocated by Osborne and Gaebler in their book Reinventing Government,
can be a roadmap in designing a government on the broad principles of New Public Management:3
(a) Catalytic government: The government should also concentrate on catalyzing the public sector,
private sector and voluntary /non-governmental sector towards resolution of societal problems and not
just on providing services.

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 306 Public Administration: Theory and Practice

(b) Community-owned government: The government should strengthen and empower the citizens,
families, and communities to solve their own problems. Hence, the government should take out various
services from the control of bureaucracy.
(c) Competitive government: The government should inject competition among different providers of
goods and services by rewarding efficiency and economy. This increases performance and reduces cost.
(d) Mission-driven government: The government should be driven by its goal and not by its rules
and regulations. In other words, it involves transforming rule-oriented government into goal-oriented
government.
(e) Result-oriented government: The government should find outcomes (results) by encouraging tar-
get achievement and mission-directed efforts. It should measure the performance of its agencies mainly
in terms of outcomes and not inputs.
(f ) Customer-driven government: The government should regard the clients as customers. It should
meet and work towards customers and not bureaucracy. It involves offering them choices, surveying
their attitudes, making services convenient and allowing them to make suggestions.
(g) Enterprising government: The government should emphasis on earning money rather than spend-
ing. It should put its energy into resource mobilisation by using fees, savings, enterprise funds and so
on.
(h) Anticipatory government: The government should identify and prevent problems rather than cure
them after they occur. Thus, the government should prevent the needs from arising in the first place
and not just deliver services to meet ends.
(i) Decentralised government: The government should decentralise authority, that is, disperse author-
ity from higher to lower levels. It involves a shift in working pattern from hierarchical control to par-
ticipatory management and teamwork.
(j) Market-oriented government: The government should opt for market mechanism rather than
bureaucratic mechanism. It should achieve goals not only by control and command but also by restruc-
turing market.

C RITICAL EVALUATION
Many of the concepts, paradigms and assumption of the traditional public administration are repudiated
and rejected by public management. NPM accepts market as the model of government and idealises the
values and techniques of private administration. This makes NPM open to criticism:
(a) NPM fails to take account of the real politic of government. The core of a modern government lies
in its observance of the rule of the law, not market-driven mechanisms.
(b) NPM, however, must not be confused with New Public Administration (NPA). NPA of the 1960s
emphasises the positive face of public administration including public service while NPM discourages
career bureaucracy: it promotes bureaucrat-bashing, and at best assumes that bureaucrats are good
people trapped in bad system.

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 New Public Management 307

(c) NPM stands for an uncritical acceptance of even the negative features of private management. It
shows complete ignorance of the attributes which are the distinguishing marks of public administration
and shows complete insensitivity to the concept of public interest, the hallmark of public administra-
tion. It cares little for administrative ethics in running public affairs. It shows complete unawareness of
the attributes which are required for running public affairs.
(d) NPM tends to overlook the fact that the major problems in public administration are ultimately
due to political analysis. It oversimplifies public administration offering in the processes over. Simplified
solutions to problems which are complex and intricate in nature.
(e) NPM is also criticised for distancing the political executive from the implementation aspects of
public administration. Under NPM, political executives are to lose control over the implementation of
their policy as a result of managerial reforms. So as to resolve the problems loss of central over policy
implementation raised by managerial reforms put in place under NPM.
(f ) The trend towards NPM observed in public administration is not without criticism. The influx of
private sector language must not neglect the values inherent in public administration. NPM propounds
an alternative to the state-in the form of the market. NPM boldly recommends privatisation and all that
it implies. It recommends growing application of management techniques.

S UGGESTIVE M EASURES
Matching the Role of the State to its Capability
In general the state should do what it is capable of. But diluting the state role cannot be the end of the
reform story. For human welfare to be advanced the state’s capability—defined as the ability to undertake
and promote collective actions efficiently, must be increased. The capability of state could be raised by
reinvigorating public institutions.

Steps Needed to Reinvigorate Public institution

(a) Establishing a foundation of law: The first and foremost requirement in India is rule-based com-
pliance. All the law and rules should be enforced without any distinctions in terms of wealth or power.
This requires that the rules should be clear and transparent and they should be enforced impartially,
effectively and quickly through an efficient judicial system. Legislating is usually easier compared to fair
enforcement and implementation.
(b) Maintaining undistorted policy environment: For government’s credibility the predictability
of rules and policies and the consistency with which they are applied are very important factors in
attracting private investment. Weak and arbitrary state institutes often compound the problem with
unpredictable and inconsistent behaviour.
(c) Giving people a voice: Greater information and transparency are vital for informed public debate
for increasing popular trust and confidence in the state. Users need to be involved in planning and
supervision. There are clear evidences that government programmes work better when they seek the
participation of potential user.

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 308 Public Administration: Theory and Practice

(d) Subjecting the State to more competition: The government can improve their capability and
effectiveness by introducing much greater competition in variety of areas in hiring and promotion, in
policy making and the way services are to be delivered.
(e) Boosting competition within the civil service: The recruitment in civil service should be based on
merit, not favouritism and there should be a merit-based promotion system.
(f ) Strengthening watchdog institutions: For government reforms to succeed, it is necessary that
watchdog institutions like the Judiciary, Press, Comptroller and Auditor General Institutions of Lokpal
and Lokayukta are properly strengthened so they can ensure proper vigil on the government service
delivery.
(g) Bringing accountability through transparency: Most of the government departments lack
accountability due to non-transparent way of working. It is necessary that the Right to information
Act be so implemented strictly so the citizens have right to access information in all the public offices.
(h) Effective Regulations: Well-designed regulatory system can help societies influence market out-
come for public ends. Regulation can protect consumers, workers and the environment. It can fos-
ter competition and innovation while constraining the abuse of monopoly power. Due to regulatory
reforms initiated in the 1980s, Chile’s telecommunication industry has enjoyed sustained private
investment increasing service quality and reducing prices.
(i) Sequencing reforms: All the reforms should not be initiatied at one go. In place of this we should
proceed with caution. Giving public managers more flexibility may increase arbitrariness and cor-
ruption with no commensurate improvement in performance. Hence step-by-step reforms should be
undertaken.
(j) Strengthening database: For performance monitoring and evaluation correct data and manage-
ment information system is essential.
(k) Combating corruption: A major thrust should be to reduce the opportunity for corruption by
cutting back on discretionary authority. Policies that lower controls on trade remove entry barriers for
private industry, privatise state firms in a way that ensure competition—all of these will fight corrup-
tion. The renowned expert klitgart has rightly said that corruption is equal to monopoly plus discretion
minus accountability and transparency. Hence we need to cut monopoly and discretion and increase
accountability and transparency and discretion and increased accountability and transparency.
(l) Strengthening democratic decentralisation: We have strengthened local bodies in true spirit
of 73rd and 74th Constitutional Amendment Acts to enable them to work as institutions of self-
government.

CONCLUSION
It can be concluded that customer focus, autonomy and performance contracting appear to be promot-
ing a new spirit of innovation in public service managers. Clearly, the NPM is not just a set of technical
measures; it has a ‘people’ dimension. Under the NPM, public sector decision-making structures are so
designed as to let managers manage. Indeed, the NPM has exposed the over-protected ‘bureaucracy’ to

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 New Public Management 309

models of management, which, if carefully adopted, can bring about improvement in classical style of pub-
lic administration. Thus, the influence of NPM and reinventing government has been quite significant.
The extent of this influence can be seen in the emergence and acceptance of several new terms in public
administration literature and practice which have a prominent place in the agenda of public sector reform-
ers, who are in favour of good governance. The policies of developed and developing countries are being
increasingly influenced by NPM and reinventing of government prescriptions. One of the direct outcomes
of the impact of NPM and reinventing government initiatives is that the role of public administration has
been propelled to undergo significant transformation in many developed and developing countries. Con-
sequently, responsibilities of public administration as well those of the executive branch of the government
are being confined to facilitating, leading and catalysing changes to achieve more with limited financial
resources and fewer personnel.

REFERENCES

1. David Garson and Sam Overman, 1983, Public Management Research in the United States, New York: Prae-
ger Publishers, p.3
2. David Shand, 1998, ‘New Management: Challenges and Issues in International Perspective’, Indian Journal
of Public Administration, July-September, pp. 714-21.
3. David Osborne and Ted Gaebler, 1992, Reinventing Government: How the Extrepreneurial Spirit Is Trans-
forming the Public Sectior, New York: Addition-Wesley, p. 12

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