Agency

The Idea of Agency

Researching the agencification of the (public service) world

Paper for the American Political Studies Association Conference,

Washington DC, August 2000.

Colin Talbot, Christopher Pollitt, Karen Bathgate, Janice Caulfield, Adrian

Reilly and Amanda Smullen
The Public Agencies International Research (PAIR) Project Team
Universities of Glamorgan, Pontypridd (Wales) and Erasmus University
Rotterdam (Netherlands)
Project Directors
Prof. Colin Talbot
Business School
University of Glamorgan
Pontypridd
Wales, UK
CF37 1DL
+44 1443 482310
+44 1443 482380 (fax)
ctalbot@glam.ac.uk
Professor Christopher Pollitt
M8-043
Faculty of Social Sciences
Erasmus University Rotterdam
Burg. Oudlaan 50
3062PA Rotterdam
Netherlands
+31 10 408 2134 (phone)
+31 10 408 9099 (fax)
Pollitt@fsw.eur.nl

(apsa1/18-7-00)
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Agency

The Idea of Agency

Researching the agencification of the (public service) world

Agencies - something for everyone?

The idea of agency has long tradition in sociology, economics and history,
all in different senses. We are exploring it here in yet another context the
idea of creating autonomous, or semi-autonomous, agencies within the
public sector, in order to improve, in some way, how government works.
The notion of agencification has been seen in many jurisdictions as a key
tool for unbundling the bureaucracy and creating more flexible,
performance oriented, public organisations. This is deemed necessary for a
wide range of political, policy and administrative reasons.
Politically agencification has been seen as a method of revitalising the
legitimacy of public institutions, especially public services, in the eyes of an
increasingly sceptical or apathetic citizenry. More flexible, responsive,
customer-friendly public services are seen as vital to maintaining or
recreating popular support for publicly funded services. Agencies have been
seen as one method for creating such flexibility and responsiveness.
Agencies may have another political purpose. Placing a function at arms
length may be seen as a necessary step towards lessening party political
influences over activities which it is wanted to depoliticise. Such functions
might, for example, include the appointment of certain types of public official
or the provision of a public broadcasting service.
In policy terms agencification has been seen as a way of rationalising; of
specifying more clearly the goals and means of policy delivery and of
creating more strategic tools for policy-making. By creating clearly tasked
agencies for each major area of policy/service delivery the (allocative)
efficiency of the system will be improved.
In administrative or managerial terms, agencification has been seen as a key
tool for delivering both of the above plus internal (technical) efficiency
improvements. Clogged-up bureaucracies, bogged down in red tape and
undisciplined by market forces can be revitalised and re-energised by being
reorganised into focussed, performance orientated, more easily managed
units. Managers can be freed-up to manage, workers can be empowered

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and a new customer-orientated culture can be created in autonomised

organisational units with clear remits and freedoms to deliver. Moreover,
these units and their managements can be more easily held to account
(rendered transparent) and made responsible for their actions, overcoming
the diffusion of responsibility and accountability that is inevitable in complex
bureaucratic systems.
This paper explores what has been meant by agencification. It lays out
some preliminary theoretical, conceptual and methodological issues raised in
defining and investigating agencies from a comparative, international
perspective. Finally - and more speculatively - it suggests some hypotheses
concerning the contextual and technical pre-requisites for agencies to
achieve success (at least in terms of their ostensible goals). These
hypotheses can be tested by the ongoing research in which we, and others,
are engaged.

The scope of agencification

Agencification appears to have spread relatively rapidly and widely.
Initiatives which have usually been lumped together as agencification
include the Next Steps programme in the UK (Jenkins, Caines et al.
1988; Goldsworthy 1991; Greer 1994), the contractualisation of ministries
in New Zealand (Boston et al. 1996), Special Operating Agencies (SOAs)
in Canada, performance-based organisations (PBOs) in the USA, the
creation of organisations like Centrelink and the National Oceans Office in
Australia, the agentschappen initiative in the Netherlands (Ministerie
Financien, 1997; van Thiel 2000), the introduction of Independent
Administrative Corporations (IACs) in Japan (James, 1999), and so on.
These initiatives share some common features and above all an extensively
common (though differently nuanced) rhetorical story about the purpose
and supposed benefits of agencies. Moreover, international agencies such
as the World Bank have been strongly promoting agencification
programmes in developing countries (e.g. Jamaica, Tanzania) and in
transitional economies (e.g. Latvia).
Of course, in some jurisdictions such as Finland, Sweden and the United
States the idea of agencies may at first sight appear to be nothing new. All
these countries have had agencies as a central part of their national public
administrations for a very long time. Even in these countries however the
ideas, surrounding agencification are having some impact. The PBO
initiative in the US federal public service has been partly attributed, for
example, to lessons learnt from the UKs Next Steps agency creation

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programme. In Finland the mid 1990s witnessed a reconsideration of the

role of agencies and a consequent slimming down and debureaucratisation
of their activities (Ministry of Finance, 1997). In Sweden change has not
been dramatic, but since the mid 1980s fiscal and other pressures have led
to a number of measures to streamline or corporatise agencies, and to
subject them to a more tightly-drawn results-oriented regime.
A quick analysis of these various reforms reveals some similarities - but also
many differences in starting points, trajectories and results. We will now
attempt to map out both the common denominators and the varying
numerators (or sometimes it seems more like common numerators and
varying denominators!).

Whats in a name?
We need to be careful to avoid assuming that an agency is something
new, distinctive or constant simply because that label has now been stuck
on a particular public sector organisation. The project manager of the UKs
Next Steps initiative, early in the programme, emphasised that he was not
interested in badge re-engineering i.e. simply changing the etiquette on
bureaucratic bottles whose contents remained essentially the same
(Treasury and Civil Service Committee 1988). At the other end of the
scale, perhaps, one can think of the Finnish example, where their agencies
(which might be better translated as national boards) underwent wholesale
downsizing and re-tasking during the 1990s, but still retained the same
generic name as before.
In fact the range of organisations which have been termed agencies (either
in mothertongue English or in translation) is huge. The seems to be little
overall rhyme or reason to the award of the title. In the midst of such
terminological variety (to put it generously) or (less charitably) confusion
we face a typical academic dilemma. Either we can take an existing termin-use and try to define it closely, or we can invent a new, clearly-specified
term of our own. In the first case academics are frequently accused of nitpicking or terminological authoritarianism (who are you professors to tell us
what we can call an agency and what we cant?). In the second case the
standard criticism is of obfuscation (why invent a new word to describe
something for which we already have a perfectly good word in use?). We
have chosen to undergo the first kind of criticism (authoritarianism), partly
because we want our writings to remain as accessible as possible to
practitioners, who already use the word agency in many different settings.

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However, our use of the term will be somewhat restricted - or focused - as

we will now explain.
We define agency, in part, by exclusion. We exclude, for example, state
owned enterprises whose primary existence is within the market (albeit
sometimes with subsidies) rather than in public services or regulation. Thus
we will not be referring to state-owned companies such as the Finnish Post
Office or the Dutch Railways or the French electricity company as
agencies. These are organisations which take the form of joint stock
companies, even if the stock may be wholly-owned by the state. In the
main they operate under private law. By the same token we will certainly
exclude former nationalised industries which have now been fully privatised
(e.g. electricity and gas supply in the UK, the national airline in New
Zealand, telecommunications companies in several countries).
Similarly we exclude social, charitable and voluntary organisations even
where their primary funding comes from the state. Some of these
organisations are referred to as agencies in, for example, the Netherlands or
Sweden. But they are not staffed by public servants, do not appear as part
of the state budget, are not directly accountable to executive politicians and
are not usually founded in public law. They are primarily of civil society
rather than the state.
For purely practical (rather than theoretical) reasons, we exclude subnational agencies. If we started looking at these types of bodies at state (in
federal systems) or local government levels the issue would become too
extensive and complex for us to cope.
All of which still leaves a lot of territory to explore. Even within a mediumsized state such as the UK it is easy to find hundreds of organisations which
meet our main selection criteria. According to our definitional strategy, to
be an agency, an organisation should be:
at arms length (or further) from the main hierarchical spine of central
ministries/departments of state
carrying out public tasks (service provision, regulation, adjudication,
certification) at a national level
core staffed by public servants (not necessarily civil servants)
financed (in principle) by the state budget (in practice some are financed
up to 100% from their own revenues, but even here the state remains
liable for their financial condition)
subject to at least some public/administrative law procedures (i.e. they
are not predominantly or entirely private law bodies)

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It is soon apparent that there are many species of agencies inhabiting the
particular ecological niche defined by the above criteria. There are big ones
and small ones; there are service providers and regulators; there are highly
expert bodies and generalist administrative bodies; there are some with very
high autonomy and others with much greater dependency on a particular
ministry or superior organisation. As already mentioned, legal provisions
vary enormously from country to country (e.g. in France and Portugal
agencies are usually separate legal persons, but in Sweden agencies
normally remain within the legal person of the state). In short, there is
easily enough variety to prompt many interesting questions and
comparisons.
One significant distinction that seems to recur within the agency family is that
between quasi-autonomous agencies within departments or the civil
service proper (e.g. Next Steps agencies in the UK; many federal agencies
in the USA) and those outside departments or the civil service (e.g. Non
Departmental Public Bodies - NDPBs - in the UK; ZBOs in the
Netherlands - van Thiel 2000; most Swedish agencies). We will regard
both as agencies, so long as they meet most or all of the five tests indicated
above.
A further terminological issue arises from the fact that, in much public
administration literature, these outside department agencies have been
termed Quasi-Non-Governmental-Agencies - quangos. [Occasionally this
term has even been applied to inside department units]. This is a title we
will avoid. For a variety of reasons, we find it particularly unhelpful. First, it
is long-winded. Second, the non-governmental part of the title is
especially confusing. Some quangos are definitely of the government (see,
e.g. Pliatsky, 1992). But, third, and more seriously, the notion of
governmental is in any case a difficult one to use in comparative analysis.
On the whole the state is the dominant concept in continental Europe and
the government is the dominant concept in the USA, the UK and
Australasia. The two are not equivalent, and translation of the one into the
other is not easy. So we would rather avoid the whole problem. We
admire those who have tried to tackle it (e.g. Greve, Flinders and van Thiel,
1999) but we notice that what they end up with is a terminological net with
mesh so fine that it catches almost every kind of organisation except (on the
one hand) core ministries and (on the other) commercial companies which
have never been publically-owned. Our own trawling fleet cannot handle
such a huge, and hugely various, haul - hence the exclusions mentioned
above. Furthermore we tend to doubt whether any useful generalisations
can be made about such an extremely diverse set of creatures.

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Agency Ideas Map

As already indicated, the ideas behind agencification are a rather complex
structure of arguments about politics, policy and administrative solutions to
perceived problems of democratic accountability, allocative efficiency and
technical efficiency in public organisations. However, the name agency and
the ideas associated with agencification often sounds relatively simple - and
this is of course a key part of their appeal. We have therefore a seeming
paradox an apparently simple (and appealing) notion of agencification
that is actually, when examined more closely, a very complex bundle of
ideas.
We have sought to simplify this situation by setting out what is essential in
the agency idea, and what is secondary or ancillary. We therefore propose
a conceptual map for the process of agencification which starts from two
core ideas. These are, first, structural separation and, second, performance
contracting (the inverted commas being used to indicate that we mean
contract-like rather than only those arrangements which qualify as legal
contracts which are actionable in the courts). From these two primary
dimensions one can work out to a whole host of subsidiary ideas
associated, though not necessarily exclusively, with the idea of
agencification. The full map is laid out below (Figure 1).

Figure 1 Agencification Ideas Map

1. Structural Disaggregation
1.1. Task Specification
1.2. Task Specialisation
1.3. Unit Accountability
1.3.1. Chief Officer Accountability
1.4. Managerial Autonomy
1.4.1. Financial Flexibility
1.4.2. Personnel Flexibility
1.4.3. Organisational Flexibility
2. Performance Contracting
2.1. Achievement/Resource Contract
2.2. Performance Reporting
2.2.1. Performance Accountability

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2.2.1.1.
Performance Audit
2.3. Performance Improvement
2.3.1. Improved Economy
2.3.2. Improved Efficiency
2.3.3. Improved Effectiveness
2.3.3.1.
Improved Outputs
2.3.3.2.
Improved Quality of Service
2.3.3.3.
Improved Outcomes
2.4. Performance Budgeting
2.4.1. Improved Policy-making
2.5. Performance Management
2.5.1. Improved Strategic Management

It should be stressed that we are not suggesting that all, or even most, of
these ideas appear always and everywhere that an agency programme is
instigated. On the contrary, our initial research leads us to believe that the
agency bottle has been filled with rather diverse combinations of these
ingredients, at different times and in different places. Nor are we suggesting
that this is an exhaustive list. We are sure that there will be other arguments
we have not yet discovered. Nor are we suggesting that some of these ideas
only appear with agencification some of them have clearly surfaced
without agencification. However, where initiatives on any of the lines
suggested above have occurred alongside agency initiatives the two have
usually become rapidly entwined.
A further point to stress is that what we are mapping the co-ordinates of
here is the recent surge of popularity for agencification. We are not
suggesting that this map also fits historically much earlier phases of agency
creation. Thus, for example, we doubt whether our map is of much use in
understanding the appearance of the first Swedish agencies, three centuries
ago, or even the origins of some of the US federal agencies. It might,
however, help us to understand the reforms of Swedish central government
which have taken place since the mid 1980s, and the recent PBO initiatives
in Washington.
Finally, we should acknowledge that, in many ways, what is most interesting
is the detailed rationale which connects, on the one hand, structural
disaggregation and performance contracting with, on the other, improved
performance and all the various benefits attributed to agencies. This set of
causal links is not, however, the main subject of this paper, although the
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there is a brief treatment in the section on Two Core Notions (following).

Another paper from the PAIR research programme deals more directly with
the issue of assumed causation (Pollitt and Talbot, 1999). Here we are
more focused on what than why?

Subsiduary themes
Figure 1 lists a total of four sub-dimensions of structural disaggregation, and
five sub-dimensions of performance contractiing, some of which have their
own sub-sub divisions. Each of these may form the ingredient in a
programme of agencification. Thus, to take just one example, agencies
may be given financial flexibility (not having to observe all the strict rules of
the main state budget) but little or no personnel flexibility (the agency still
has to hire its staff according to central civil service regulations on grading,
pay and conditions). Quite frequently one finds agencification taking place
in a series of stages, with one kind of flexibility being given, then extended
or added to by another. As trust in the new arrangements builds up - and
as management skills are developed - an agency gains more room for
manoeuvre. But matters can move the other way - agencies can suffer a
curbing of their autonomy, especially if some scandal or accident has been
attributed to them possessing too much freedom.
Although our research will collect evidence about each of the elements listed
in Figure 1, we will not attempt to discuss all of these in this paper. Instead
we will concentrate on the two big ideas - structural disaggregation and
performance contracting.

Two Core Notions

We therefore argue that there are two core ideas associated most strongly
with the recent fashion for agencification (i) structural disaggregation and
(ii) performance contracting.
The first, structural disaggregation, is the idea of breaking-up large scale
ministerial-type organisations into core departments and separate
agencies - unbundling the bureaucracy as some have called it. This is
described variously as a purchaser-provider split or as a
policy/operations or policy/implementation division of labour. In
essence, it is a form of functional specialisation. In some cases - most
notably Finland and Sweden - structural separation came first - there never

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was a phase of big, unbundled ministries, and disaggeregation, of a kind,

has long been the norm.
Various assumed logics support the process of structural disaggregation or
separation. One argument is simply that disaggregation from a multipurpose ministry to a single or few-purposes agency gives focus to the task
at hand, and that that, in turn, tends to raise expertise, quality and efficiency
(this is, in effect an argument in favour of specialisation). Another argument
is that disaggregation increases transparency, makes public accountability
easier, and therefore assists principals (legislatures, the parent ministry) in
maintaining pressure for improvement. A third argument is that, by
distancing the function from those volatile political processes which pervade
central departments, the probability of developing high quality management
will be increased.
The second core idea, performance contracting, relates to the
relationships established between the purchaser/provider or
policy/operations structures. It suggests that a formal or quasi-contract is
established which will define what the agency will do - in return for
receiving a stated level of resources. There are other elements of the
contract, which we will deal with below, but the essence is supposed to
be about delivery and resources. Contracts and quasi-contracts are one of
the central tools of performance management (OECD, 1997).
The logics of performance contracting are as various as the logics of
disaggregation. A central argument is that a contractual or quasi-contractual
format permits the principal vigorously to embed a results-oriented focus,
supplanting, perhaps, a traditional bureaucratic emphasis on input controls
and procedural correctness. Results should therefore be specified in
terms of outputs or even outcomes, not inputs or processes. An additional
argument, drawn from institutional economics, is that a well-designed
contract can minimize forseeable problems in the principal-agent
relationship. Further, a results-focused contract allows agency management
the maximum discretion as to means. As long as the required results are
achieved, agency managers are free to innovate, since they are largely or
wholly spared from the rigidities which still characterise many central civil
service budgetary and HRM regimes. Finally, contractualisation, like
structural disaggregation, is held to assist public accountability. Ideally,
legislatures and parent ministries (and citizens themselves) should be able to
look at what key targets were set and immediately see the extent to which
these were achieved (for an example, see Chancellor of the Duchy of
Lancaster, 1997).

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The two core notions immediately present us with four possibilities: (i)
situations where there are unified ministries and no performance contracting;
(ii) where there are unified ministries but performance contracts exist; (iii)
where there is a ministry/agency split but no performance contracts; and
finally (iv), where both structural disaggregation and performance contracts
exist.

Figure 2 Models of Agencification

No performance
contract
Performance
contracting

Unified ministries
(i)

Disaggregated
(iii)

(ii)

(iv)

Different initiatives fall into different cells.

Category (i) is a default category. It would include the large ministerial
departments in countries with Westminster type systems and ContinentalEuropean/Weberian systems prior to any agencification programmes: e.g.
in the UK, the Netherlands, New Zealand and Canada, before their
respective reforms.
Category (ii) is rarer, but would include attempts to introduce internal
performance contracting systems such as the UKs Financial Management
Initiative in the early 1980s. Also in the UK, the internal changes
introduced within the Inland Revenue and Customs & Excise departments,
which were said to be working along Next Steps lines from the early
1990s, were more about internal performance contracting than structural
change. In France one might cite the example of the programme to create
centres de responsabilite after Prime Minister Rocards circular of
February 1990 (Pollitt and Bouckaert, 2000, pp227-231; Trosa, 1995).
Category (iii) includes those countries where disaggregated agencies have
existed for many years e.g. the US federal agencies; Finland, Sweden
but where performance contracting has only appeared more recently. It
also includes some agencification initiatives that have focussed more on
structural change and done little on the performance front e.g. the early
stages of the wave of ZBO (self-standing government organisations)
during the 1980s.

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Category (iv) includes those reforms which have been aimed at creating
agency arrangements which embrace both arms length separation and
performance contracting e.g. the PBOs initiative in the USA, the UKs
Next Steps programme.

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Trajectories of Change: Caveats and Courses

Figure 2 requires careful exposition. First, it may be read as implying that
movement in the direction of box (iv) agencification and performance
contracting - is inevitable, or that it should always be construed as
progress. We do not intend it to be read in that way. By saying that the
structural disaggregation and performance contracting dimensions are
central to the latest fashion for agencification we are merely classifying what
we suggest are the key elements in an idea whose time has come. Like
many administrative doctrines, it could also swing out of fashion again
(Hood and Jackson, 1991; Hood, 1998). There is no inevitability implied.
We are aware that some jurisdictions have actually taken leaps forward
and subsequently steps backwards with respect to performance
contracting - e.g. New Zealand - or to structural disaggregation, e.g.
Denmark, or the Netherlands. In Finland the agency reforms of the mid
1990s in some cases involved taking agency functions back into central
ministries - as was the case in agriculture, for example. This particular
example could be represented as a move from cell iii) to cell i). In Sweden
the reforms of the 1990s included some amalgamation of agencies - a form
of structural aggregation, though at arms length from the ministries. Even in
the UK there is circumstantial evidence that, under the Labour
administration since 1997, some agencies have been drawn rather closer to
ministers again (Gains, 1999).
As for the idea that agencies represent progress, we agree with the many
authors who have commented that the empirical support for the equation
agencies = better performance is as yet wholly inadequate (see, e.g. ter
Bogt, 1999; Pollitt, 2000a; Talbot, 1996; van Thiel, 2000). Furthermore,
in some countries agencies have been seen as relatively undemocratic
structures which require closer steering by elected politicians - this idea was
strongly present in the Finnish agency reforms of the mid 1990s and the
Dutch assertion of the primacy of politics after some severe criticisms of
the lack of accountability of ZBOs at about the same time (e.g. Algemene
Rekenkamer, 1995)
A second possible misinterpretation would be to see the boundaries
between the boxes as absolutely binary and categorical. In fact we would
prefer to conceive the two dimensions as continua rather than quanta.
Performance contracting, for example, can begin in a gentle way, with a
few key targets, or it can develop into an elaborate and comprehensive
scheme with many dimensions of measurement and with resource

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allocations, performance bonuses and many other sticks and carrots being
directly linked to the achievement of quantified targets.
A third, partial, reservation concerns the universality of the two key
dimensions/themes. As comparativists, we have tried to find dimensions
which are general enough to be applicable in many countries yet specific
enough to help point towards the significance of concrete changes. Yet we
are aware that no dimensions could be entirely free of their cultural origins,
i.e. absolutely equally and straightforwardly applicable to all jurisdictions. In
our case disaggregation and performance contracting both carry some
history. The concept of disaggregation really only makes full sense in
those countries which have experienced large, multi-functional bureaucratic
organisations. Happily for us, this includes most of Europe, North America
and Australasia. However, it does not fit Finland and - even more Sweden quite so well, because in those countries ministries were always
small or modest in size, and structural separation has been a feature of the
machinery of government throughout modern times. So in the Nordic states
recent agency reforms have been more concerned with the performance
dimension than with the principle of structural separation.
The second core idea, performance contracting, is nowadays readily
understood in NW Europe, North America and Australasia, but is still a
new and unfamilar idea in, for example, some Mediterranean and central
European states where, for different historical reasons,
public
administration is still conceived of primarily as an activity of applying the
law, or even as a means of obtaining certain benefits, rather than as a
business of trying to achieve a publically-specified set of outputs or
outcomes.
Despite these elaborations, we would maintain that our two core dimensions
are significantly more internationally portable than, say, classifications based
on legal status, on functional purposes, or on simple nomenclature.
What, then, does the matrix in Figure 2 do? We intend it to be no more
than a set of co-ordinates on which certain courses of development within
the public sector can be plotted and further dissected. Within any given
jurisdiction, functions and staff can be shifted, according to the beliefs and
policies of the day, in any direction across the two by two matrix of Figure
2. In practice, over the last 15 to 20 years many OECD countries have in
some way moved from left to right and from top to bottom (Pollitt and
Bouckaert, 2000, chapter 5).
However, these trajectories have
nevertheless differed, one from another in their starting points, timing, speed,
depth, specific mixture of institutional forms and highest priority objectives

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(ibid.). In some countries, but by no means all, there has been a strong shift
into agencies of a type which occupy cell iv). This particular movement has
probably been most pronounced in New Zealand (Boston et al, 1996), the
UK (OToole and Jordan, 1995), Canada (Aucoin, 1996; Prince, 2000)
and the Netherlands (Ministerie Financien, 1998). It has also been visited
upon the developing world and the transitional states of central Europe by
international agencies such as the World Bank, the IMF and
SIGMA/OECD (Polidano, 2000).

Getting to agency - what are the pre-requisites?

For many practitioners - and perhaps most citizens - the most important
question about agencies is, do they work?. As we have already indicated,
the jury is still out on this. Our own research may help to give a better
comparative picture of how agencies are managed, what kind of data on
performance they produce, and how it is used. But we do not have to wait
until current research yields its fruits before developing a few hypotheses.
There are already a number of very useful case studies and summaries in
existence which, taken together, are richly suggestive (e.g. Aucoin, 1996;
ter Bogt, 1999; Boston, 1996; Gains, 1999; Polidano, 2000; Prince,
2000). Drawing on these sources - and our own preliminary work - we
can begin to sketch some likely possibilities. In conclusion, therefore, we
can offer some hypotheses for testing. These are statements about factors
which, prima facie, seem likely either to assist or to undermine
organisational life in Figure 2, cell iv). The general hypothesis would
therefore be that the more of these positive factors (and the fewer negative
ones) were in place, the more probable it would be that a structurally
disaggregated, performance contracted organisation could survive and
prosper and avoid major organisational pathologies.
Structural hypotheses

Continuing structural separation and/or new structural

disaggregation work more easily in political systems already
characterised by relatively high trust and imbued with the habit of
consensual negotiation. [It is probably no accident that Finland and
Sweden have for long been content to sustain large agency sectors, or
that the Dutch were able rapidly to set up many new ZBOs during the
1980s and agentschappen during the 1990s.]

In political systems characterised by either a high degree of

adversarialism and/or a low degree of trust among political elites,

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fresh structural disaggregation will require particularly careful

design, including measures legally to insure their autonomy.
Agencies will probably need statutory protection (both from politicians
and from pressure groups - see, e.g. Wilson, 1994). They will also
need a period of time to bed in and prove themselves to be genuinely
non party political (Polidano, 2000).

Structural disaggregation is a multi-dimensional attribute (see Figure 1).

The presumed benefits of agencification will diminish the more
restricted and mono-dimensional is the disaggregation. For
example, giving an agency greater financial flexibility but still subjecting it
to the full weight of central personnel regulations and legalistic decision
procedures is unlikely to generate a transformation in productivity and
quality (Aucoin, 1996; Trosa, 1995).

Structural disaggregation affects both the agency and the parent body
from which disaggregation has taken place. Sooner or later the
parent will be obliged to consider how its own role has changed.
In the cases of, e.g. Finland, the Netherlands and the UK we can see
that this may be quite a long drawn-out process, at times painful.
Legislatures may also have difficulty in adjusting to new relationships.

Agencification does not remove the need for political accountability, and
therefore for mechanisms for political control (if it did, then privatisation
might be a more appropriate option than agencification). Agencies still
perform public tasks, employ public servants and either spend the
taxpayers money and/or have their financial liabilities covered by the
state. Occasional conflicts of interest between political leaders and
top agency management are normal. However, if these become
both public and recurrent, mutual trust is destroyed. In those
circumstances the conditions for successful agencification on the
model of cell iv) in Figure 2 are also lost. [Indeed the future of the
top management, or of the agency itself may well be at immediate risk.]
The likelihood of such conflicts is, of course, increased in the low
trust/high adversarialist contexts referred to above, although they also
occur, more sporadically, in more high trust/consensual regimes.

Structural disaggregation alone is unlikely to produce a rapid change in

the productivity or outlook of an organisation. Specialisation plus
autonomy is an inadequate recipe for performance change
because, by itself, it does little to change the motivational
incentives or the organisational culture. It simply gives the staff
more room to go on doing what they were doing before (rather like the

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privatisation of a nationalised monopoly when it is not accompanied by

any measures to enhance competition). Hence moving from cell i) to
cell iii) (in terms of Figure 2) may produce more pathology than
productivity.
Performance contracting hypotheses

Similarly, performance contracting is likely to work less well in

the absence of parallel structural disaggregation. To be told to
meet a new set of output targets will have less impact in situations where
staff are still part of a larger, multi-purpose bureaucracy which is
simultaneously continuing to make all its traditional demands for
meticulous input control, procedural correctness, political
responsiveness, etc (Wilson, 1994).

Like structural disaggregation, performance contracting is multidimensional (Figure 1). Therefore, as with disaggregation, the
benefits of cell iv) agencification will be most visible when the
performance orientation is pervasive throughout the agencys
procedures, not merely present for one or two isolated aspects.
Contracts/quasi contracts which refer only to efficiency measures will
put quality at risk. Contracts which specify outputs but are silent about
outcomes will risk output fixation (Pollitt, 2000b). Agencies which are
trying to become more performance-oriented but which are externally
audited in a narrow, traditional manner (rather than by performance
auditors) will experience frustration. A balanced scorecard of
performance measures may take some time to build up (Talbot, 1999).

The significance of a contract/quasi contract will vary with the

degree of underlying functional interdependence in the parentagency relationship. For example, a low-profile, highly expert agency
which can meet its own expenditure needs from charging may have little
need of its parent. Or a parent ministry may be able to obtain the
same service which an agency provides from other sources (e.g. if there
is an agency proviidng IT advice). We hypothesize that these highly
assymetric relationships will be the most unstable. If either partner
doesnt really need the other, then a quasi-contract alone will not suffice
to bind them together in the longer term (Gains, 1999).

Some functions are inherently more difficult to specify in contractual

terms than others. For example, the outputs of a school are less easy to
capture in a contract than the outputs of a vehicle registration agency,
and the outputs of a counselling agency for HIV sufferers may be even

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more difficult than for a school. Where the desired ouputs and
outcomes of a function are thus difficult to define, we may expect either
budgetary controls and/or other process controls (e.g. procedural
standards) to be tighter than for more definable functions. In a nutshell,
where output monitoring is difficult, we hypothesize tighter control
of processes, or even inputs (for a more elaborate discussions of these
issues, see Wilson, 1989; Pollitt 2000b).

Some functions are - or become - more politically sensitive than others.

In a number of countries, for example, immigration control is an agency
function and is also a focus for intense political debate. The issue of
drivers licenses or the checking of weights and measures are not
usually so controversial. Where political interest is high we
hypothesize that the informal, extra-contractual relationship
between agency and parent will become both more intense and
more important relative to the issues captured within the contract
(Bovens and Plug, 1999; Gains, 1999). [The fact that the first director
of the UK prison service had met all his key performance targets did
not prevent the minister from sacking him when some politically
inconvenient prison escapes occurred.] Intense political interest in an
activity does not necessarily obliterate the case for cell iv) -type
agencification, but it usually weakens it.

Our research
The Public Agencies International Research Team (PAIR) are using the
foregoing analytical framework in the conduct of a series of overlapping
studies of agencies. Some of the above hypotheses are among those under
investigation.
Sponsored by the UK Economic and Social Research Council (ESRC),
and by Erasmus University Rotterdam, we are looking at 16 agencies in
four countries. We have chosen two countries with recent agency-creation
programmes - the Netherlands and the United Kingdom - and two that
have long used the agency form - Finland and Sweden. The main focus of
this study is the variation in approaches to performance management within
agencies of similar functions in different countries.
The UK Department for International Development (DfID) have
commissioned further work in two developing countries where substantial
agency creation programmes have taken place - Jamaica and Tanzania. In
addition DfID and the World Bank are supporting a study of Latvia, a

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transitional state where another large-scale agency creation programme has

taken place. Finally, we are co-operating with the Canadian Treasury
Board and the Canadian Center for Management Development (CCMD)
on a parallel study of the Canadian experience.
The designs, timescales and detailed methodologies of these various studies
differ somewhat, one from another. Nevertheless, there is a significant
cumulative element, and we intend to collect comparable core data on
agencies in each of the eight countries. This will give us detailed information
on about 30 agencies. Our contact data is given on the title sheet of this
paper, and we welcome communications from scholars and practitioners
who share our interests.

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