New Public Management

‘Steering not Rowing’

“Run government like a business”

From red tape to results: Creating a

Government that Works better and Costs less

Hood and Jackson coined the term NPM

 1-New Public Management
• A management philosophy used by governments
to modernize the public sector.

• A broad and very complex term used to describe

the wave of public sector reforms throughout the
world since the 1980s.

• The main hypothesis in the NPM-reform

movement is that
– introducing market orientation in the public sector will
lead to greater cost-efficiency for governments.
 NPM
• from traditional public administration to public
management.

• Key elements include various forms of decentralizing

– Management functions
– Fiscal Operations
– HR management
• increasing use of markets and competition in the provision
of public services

• Increasing emphasis on performance, outputs and

customer orientation.
 NPM
• NPM- techniques and practices are drawn
mainly from the private sector.

• NPM reforms have been driven by a

combination of economic, social, political
and technological factors.

• Countries facing economic and fiscal

crises, which triggered the quest for
efficiency.
 NPM
• In the case of developing countries, reforms
in public administration and management
have been driven more by external pressures
and have taken place in the context of
structural adjustment programmes, include
lending conditionalities and the increasing
emphasis on good governance.

Hood and Jackson coined the term NPM

 NPM Features and Practices
1. Result Oriented Govt (Mission Driven Govt.)
– Goal Setting
– Focus on results and not on conforming to procedures.
– It measures the performance of public agencies focussing on
outcomes, not on inputs
– It is motivated by goals , not by rules and regulations

2. Market-like competition- Government must promote

competition among service- providers through;
– Out sourcing or contracting out
– Competition and end to monopolies
– Reorganizing public corporations on private best business
practices.
– Introducing corporate governance systems
– Preferring market mechanisms to bureaucratic mechanisms
 NPM… features
3. Treating public as customers and not as ‘cases’
– Citizens interacting with public organizations are
consumers/customers of those organizations
– It re- defines its clients as customers and offers them
choices
4. Government should be deregulated
• unnecessary approvals, certificates, NOC, legal rights
and franchise rights should me minimize
• Little bureaucratic procedures and rules

5. Decentralization
– It must decentralize authority and promote
participative management
6. The less the government the better it is.
– It must empower citizens by pushing
control out of the bureaucracy into the
community

7. Introducing public-private partnerships

8.Empowering the employees and

promoting team work.
 NPM… features
9. Introduce innovation and technology in
administration
3S: Small, Smart, and Swift Organization units

10. Financial management, improved accounting,

expenditure controls-budget cuts

11. Accountability for performance

– performance auditing or Value –for- Money Auditing

12. Democracy and enhanced citizen participation

 Analysis
NPM: Internal Component & External Component
Internal Component: External Reform:
Organizational Reforms Capital Market System &
Procedural and Working Reforms Democratic system
HRM Reforms
• emphasis on performance management; HRM Reforms
– more devolved personnel management
– performance-related pay;
• more responsiveness to users and other customers in
public services;
• greater decentralization of authority and responsibility
from central to lower levels of government;
• the use of market-type mechanisms, such as internal
markets, user charges, vouchers, franchising and
contracting out;
• privatization of market-oriented public enterprises.
• Democracy
Bureaucracy
1. Centralized
– Power concentration at
higher levels
2. Rule-bound: Decide ‘cases’
3. Public interest
4. Monopolistic in operations
5. Strict subordination and
discipline
6. Rigid
7. Resist change and
innovation- Transactional
NPM
1. Decentralized
2. Competitive business units
– Follow market trends and
customers preferences
3. Customer interest
4. Employee empowerment
5. Performance based
incentives
6. Flexible
7. Innovative organizations-
Modern technology is
used- Transformational
 NPM -----Analysis
• The NPM has presented itself as an alternative
to the traditional “bureaucratic” way of
conducting the public’s “business.”
• The NPM holds that government should
engage in only those activities that cannot be
privatized or contracted out.
• Market mechanisms should be employed
wherever possible so that citizens will have
choices among service delivery options.
 NPM Analysis
• the New Public Management suggests that public managers
“steer rather than row,”

• That they move toward becoming monitors of policy

implementation or purchasers of services rather than being
directly involved in service delivery itself.

• In NPM, there seems theoretical commitments to such ideas as

public choice theory and agency theory.

• In general, NPM uses economic models in the design and

implementation of public policy
• “Those who steer the boat have far more
power over its destination than those who
row it.”

• Governments with their preoccupation with

rules and hierarchical chains of command,
no longer work very well.
 NPM in Pakistan
• Structural Adjustment Agenda of the IFIs
– financial assistance was linked to a wide range of
structural, financial and governance reforms.
• The areas covered under governance reforms
were;
– civil service,
– tax administration,
– financial management,
– procurement and
– devolution.
 IMF & WB-Structural Adjustment Agenda
The Agenda focuses on;
• Macroeconomic Interventions
– Inflation Control
– Interest Rates Increase
– Broadening Tax Base and Tax Net through Revenue Reforms
• Expenditure Control Measures
– Admin Cost
– Subsidies
– Losses
– Business Cost
– Privatization
• Governance Reforms
• CSS-23 Q7. New Public Management has been hailed as the dominant paradigm for public
service (20) in the last two decades. In your opinion, how viable is NPM for developing
countries taking into account the distinct and complex environment of public sector
organizations in such countries?

• CSS-22
– Compare and contrast Scientific Management with Bureaucratic Administration, and Principles of
Admin.

• CSS-21
– Q. No. 6. Discuss “Hawthorne Effects”, undertaken by George Elton Mayo in the development of
Human Relations School of thought, and its subsequent implications for the administrative
behavior. (20)

• CSS-20.
– Q. No. 2. Compare and Contrast the Bureaucratic Model with New Public Management (NPM).
Do you think NPM is relevant to developing countries like Pakistan? Support your argument with
key indicators.

• CSS-18
– Q. No. 8. Write a comprehensive note on any TWO of the following: (10 each) (a) Scientific
Management (b) Human Relation Approach (c) Theory X and Y of Motivation
17
• CSS-2012 `
• Q. 3. Explain the basic theme and theoretical bases of the ‘New Public
Management’. What are the different mechanisms, that have used in
pursuing NPM goals by the governments in different parts of the World,
especially in Pak
• CSS-2011
• Q.8. Write short notes on any FOUR of the following: (a) E-government in
Pakistan (b) Judicial activism (c) F. Taylor’s “Scientific Management
Theory” (d) Theory X and Theory Y (e) New Public Management Concepts.
• CSS-2010
• Q.4. Compare and contrast the Bureaucratic Model with New Public
Management (NPM). Do you think NPM has replaced the bureaucratic
approach to public administration? Support your views with examples
from Pakistan