The term new public management was coined by scholars from UK and Australia (Hood 1991 and Hood and Jackson 1991), who were working in the in the areas of public administration. Now, the origin of this new term was to propose a new point of view towards the organizational design in the public sector, however after a decade, the meaning of this term in discussions and debates became many.
Some scholars choose to define it as the introduction of new institutional economics to public management and some used it to refer to pattern changes in policy making. Before we make an effort to further understand the various aspects of New Public Management, let us see how it is different from the traditional public administration.
The new public management which emerged in the 1980s represented an attempt to make the public sector more businesslike and to improve the efficiency of the Government borrowed ideas and management models from the private sector. It emphasized the centrality of citizens who were the recipient of the services or customers to the public sector.
New public management system also proposed a more decentralized control of resources and exploring other service delivery models to achieve better results, including a quasi-market structure where public and private service providers competed with each other in an attempt to provide better and faster services. [For e.g. In UK the purchase and provision of healthcare was split up between National Health Services or NHS and Government funded GP fund holders, this increased efficiency as the hospitals now needed to provide low cost procedures to win both patients and funds.)
The core themes for the New Public Management were:
- A strong focus on financial control, value for money and increasing efficiency
- A command and control mode of functioning, identifying and setting targets and continuance monitoring of performance, handing over the power to the senior management
- Introducing audits at both financial and professional levels, using transparent means to review performances, setting benchmarks, using protocols to ameliorate professional behavior
- Greater customer orientation and responsiveness and increasing the scope of roles played by non public sector providers
- Deregulating the labor market, replacing collective agreements to individual rewards packages at senior levels combined with short term contracts
- Discouraging the self regulatory power of the professionals and handing over the power from individuals to management
- Encouraging more entrepreneurial management than beurocracy with high retrospective accountability requirements upwards
- Introducing new forms of corporate governance, introducing a board model of functioning and concentrating the power to the strategic core of the organization
With changing times newer aspects were included in the NPM model mentioned above as well and what the scholars term as NPM model 2 was brought in. The critical aspects of this new model were:
- Introduction of a more elaborate and evolved quasi-market system
- Creation of more fragmented or loosely contracted public sector organizations at the local level setting in a change from management of hierarchy to management of contract
- Distinguishing between the small strategic core and the large organizational periphery, market testing and contracting out the non strategic functions
- Delayering and downsizing
- Introduction of new managerial concepts like Management by Influence, creating network for of organizations, creating strategic alliances between the organizations
- Moving away from standardized service forms to more flexible and varied service forms
Now, as more and more work was done in the areas of Human Resources and Relations and popular texts which stressed on the need of excellence, the importance of organizational culture, values, vision and the concept of Learning Organization introduced by Peter Senge (1990) influenced the new public management as well and therefore suitable changed were also suggested in the theory by the scholars.
- In a bottom up form of organization- Organizational development and learning was gaining importance. Organizational culture was seen as a glue which holds the organization together, judging the performance by results etc were the new point of views
- In the top down form of organization- Securing changes in organizational culture was cited as important, clarifying and projecting the vision and leadership from top to down was asked for, private sector emerged as a role model for the neo style public sector, training, corporate logos, communication strategies, assertive HR and all the other aspects that are characteristic jargon of private sector were encouraged to be adopted
So, basically the new public management was a radical movement to change not just the way a public sector functions but also the entire perception about it.
