Public management strategies responding to dynamic market changes

¶ … Public Management

The dynamic changes which impacted the world up to the 21st century have materialized in a series of outcomes. Within the business community for instance, managers are required to develop and implement strategies which increase the firms' competitive levels, which increase operational efficiency, which better serve the needs of the customers or which better allocate the resources, to create cost efficiencies. While the general conception is that these requirements impact solely the private sector, it has to be noted that similar demands have become more common within the public sector. In other words, the governmental and not for profit agencies strive to reduce their operational costs while maximizing their results, they strive to hire and retain the best staff members and they intend to best serve the needs of the various stakeholder categories. Given this context, public managers develop and implement a series of strategic approaches, organized under the generic name of public management.

2. Importance of Hierarchies, Markets and Networks for Public Management

At a global level, the general trend is that of developing the federal structures and their service offering so that they better answer the changing needs of the populations. And the changing needs of the stakeholders -- employees, general public, citizens, employees in the private sector, entrepreneurs and so on -- are determined by the modifying elements within the markets. For instance, the penetration of foreign companies into the domestic market generates the need for enhanced legislation regulating the activities of foreign players.

Another example is constituted by the evolving role of the staff members within the private sector. Large scale employment has been obvious during the Industrial Revolution, moment in which the work was not regulated. In time however, legislations were developed to forbid the utilization of children as workforce, to limit the access of women to dangerous jobs or to force employers to grant the employees the ability to rest. Today, the legislation is more complex than ever and it includes elements such as equal opportunities, human rights or disabilitation acts.

In this setting of changing market features, it becomes obvious why and how the characteristics of the market impact and change the practices of public management. But the markets also play another role within the implementation of public management. They constitute a benchmark in terms of efficient operations. The market, represented by the private agencies, is focused on profits maximizations. In order to achieve it, it will develop and implement strategies of efficient resource allocation, stakeholder satisfaction and cost reduction. These strategies, alongside with others, offer the public sector a good example of how to operate in a means that leads to the desired results.

The modifications which occur at federal level due to the modifications within the market impact directly the hierarchies and the networks within the public system. They for instance generate the need for a horizontally implemented structure, rather than the traditional vertical structure, in which the agencies and the individuals were set in strict hierarchies. The new public system reduces the need and the utility of high dominant structures and generates as such mutations in the hierarchies and the networks.

Yyvone Fortin and Hugo van Hassel (2000) explain: "Markets, hierarchies and networks represent key organizing principles in the way public services and provided […], though organizations invariably display a mix of these three principles […]. New public management seeks to alter this mix by introducing markets into government. Public services are increasingly organized along market principles with the introduction of contracts and competition […]. Consequently new public management represents an attack on bureaucratic and professional models of service provision based upon the respective principles of hierarchies and network that were traditionally dominant in government […]."

The authors offer the example of the police force, which was traditionally organized in military like hierarchies and command chains. Today however, with the gradual introduction of new public management tools and concepts, as well as given the changing features and role of the markets, the police are turning away from their traditional structures and are emerging as a new entity, constructed on the principles of policing by contract. As a parenthesis, government by contract is understood as a process by which federal services are offered based on a contract, rather than a hierarchy. A particularity of this government by contract has been constituted by the outsourcing of several federal processes -- generally IT&C related ones -- to tertiary parties outside the government, and even outside the United States (Freeman and Minow, 2009).

The role of the market within the new public management is systematically increasing. From the point where the marketplace stimulated the public sector to better allocate its resources, it has now come to a position from which it is able to support the development of the people and the economy. Probably a more relevant example in this sense is the introduction of market principles and concepts in the administration of the public utilities. The governments in several states have decided to privatize part of their private utilities companies. In most cases, the results have materialized in a higher quality of the products and services, generally explicable through the fact that the new leaders of the utilities companies were dedicated to their particular field and they were 100 per cent committed to the respective company, whereas the government, the previous leader, had to joggle multiple tasks at the same time.

Another example of a positive result has been the emergence of some other utilities companies. With the introduction of market principles within the utilities sector, numerous barriers were lifted and the market could be penetrated by other players as well. This eventually materialized in an increased competition, which forced the purveyors to implement lower retail prices and to increase the quality of their offering. The telephones industry constitutes a relevant example. The increased competition generated the main effect of improved offering to the population, but also the socio-economic effect of creating more employment opportunities, and as such reducing the problem of unemployment. Additionally, it creates savings to the state budget, which is no longer required to administrate the utilities companies, and can as such redirect the respective resources in efforts which improve the social and economic status of the country (Davies, Wright and Price).

In terms of the hierarchy, this is also able to generate adjacent effects upon the federal agencies. In a traditional context of vertically integrated workplaces, the public servants are subjected to their direct supervisor. In other words, their professional formation and future is directly interconnected with the hierarchy (Organization for Economic Co-Operation and Development, 2004). This brings about increased levels of stress. In a context in which public management is no longer constructed on strict vertical hierarchies, a new and more relaxed working environment is created. In this new setting, the public servant is better supported and motivated to complete his tasks at superior levels of quality. Overall, the performances of the public agencies thrive when the traditional hierarchies are readjusted.

In time, the hierarchies are likely to be replaced with internal structures based on networks. These networks will have equal rights and powers within the federal agencies; they will lead to the creation of organization like structures, managed in accordance with efficiency and results criteria. The occurrence and role of networks within the public sector is generally pegged to the reduction of the hierarchical structures. In other words, the integration of market concepts within the public sector materializes in the introduction of network structures, which in turn leads to the reduction of vertical hierarchies. "Networks are seen as complements to markets, and hierarchies as governing structures for authoritively allocating resources, exercising control and co-ordination" (Salminen, 2003).

4. Convergence towards a Similar Public Management Model

In a context of increasingly popular new public sector management, a question is being posed relative to the future applicability of the reform. The opinions within the specialized literature vary, just as do the opinions relative to the up to day measurable impacts of the reform. But in general, opinions regarding each and every individual topic differ. The view of the individual is often based on the personal experiences it has had with the new public sector management, his own system of thinking as well as the materials to which he has been subjected.

As a personal opinion, this reader tends to believe that most countries on the globe will, sooner or later, converge to the new public sector management reform and system. The main reason supporting this view is given by the rapid pace of development characterizing the modern society. For instance:

The growing forces of globalization and market liberalization have allowed for economic agents to transcend boundaries and set operations in foreign locations -- this situation creates a necessity for modern legislation which can only be achieved through a reform of the public management sector.

The private sector has comprehended the importance of the staff members. They now cherish the employees as the most valuable organizational asset. And while this is important in all organizations, it is even more pivotal within service providing companies. In a context in which major differences occur in the treatment of the private and the public employees, the latter category is expected to decrease its performances and to seek employment within the private sector. As such, federal institutions do not afford to not reform their systems.

A third reason is derived from the field of information technology and communications. This domain has, in the recent years, set a rapid speed of development. It is now necessary that all public and private institutions use the latest technological applications in order to be able to keep up with the changes in the society.

In such a context, it becomes not only advisable to reshape the public sector so that it becomes better able to answer the emergent requirements, but such a decision is imperative. Federal agencies do not afford to not modernize their sector.

A final argument in support of the previously mentioned belief is given by the incremental popularity of the electronic government. It is retrieved from the broader idea of electronic governance, which sees the efficient implementation of technologies within the public sector.

The concepts and tool of the electronic government were implemented as early and the 1990s decade, but most of the results were only observable during the 2000s. For three consecutive decades prior to the electronic government, the populations had been gradually losing trust in the federal institutions. Yet, as electronic governance took shape, the people began to once again trust the state.

Now, as the globe still struggles with the internationalized economic crisis, a question is being posed relative to the future of electronic government, as a component of the measures aimed to reform the public sector management. The national responses has been conflicting, with some countries reducing their e-government efforts to reallocate the resources, while others increased their efforts to enhance the electronic government. This second category of countries is the one which stands the most chances of sooner overcoming the crisis, developing and implementing the most adequate strategies and policies, and regaining the trust of the people, all to sit at the basis of the countries' economic and social reconstruction (Organization for Economic Co-Operation and Development, 2009). Following this line of thoughts then, it is safe to assume that, at one point in the future, all countries will converge towards a similar model of public sector management.

5. Conclusions

The contemporaneous community forces the individual and the group to face numerous challenges. Examples of such challenges include the incremental need to better serve the needs of the various stakeholder categories, to protect the environment or to motivate the teams. The economic agents recognized that the best means to addressing these new complexities was to develop and implement strategies focused on operational efficiency, work ethics and dynamics, profit maximization, efficient resource allocation, personnel training and motivation and so on. Gradually, the lessons have been learnt by the federal agencies, which began to implement these concepts at the level of public sector management.

The decision generates mutations in the composition of the public sector mix. In this order of ideas, the principles of the market are being introduced within the public sector to increase its performances and its competitiveness. However, as the market principles are being integrated into the administration, the hierarchical structures are being gradually removed. In exchange, they are being replaced with more informal networks. Today, most public sector agencies continue to function based on hierarchies, but networks are becoming more popular.

Given the current global status, as well as the lessons learnt from countries which already implemented the new public sector management concepts, the belief is that, at one point or the other, the future will bring about a convergence of the countries towards a public sector management model drawn from market principles. For now, the scope remains the overcoming of the crisis.

References:

Bhatnagar, S.C., 2004, E-government from vision to implementation: a practical guide with case studies, SAGE, ISBN 0761932593

Boston, J., 2001, The challenge of evaluating systemic change: the case of public management reform in New Zealand, Learning from International Public Management Reform, Vol. 11

Davies, L., Wright, K., Price, C.W., Experience of Privatization, Regulation and Competition: Lessons for Governments, Economics and Social Research Council, ISSN 1745-9648

Fortin, Y., van Hassel, H., 2000, Contracting in the new public management: from economics to law and citizenship, IOS Press, ISBN 158603037X

Freeman, J., Minow, M., 2009, Government by contract: outsourcing and American democracy, Harvard University Press, ISBN 067403208X

Lee, DH, 2007, e-Government and digital city in Korea, Information and Communications University, Korea

Salminen, A., 2003, Governing networks: EGPA yearbook, IOS Press, ISBN 1586033212

Scott, G., 2001, Public management reforms and lessons from experience in New Zealand, The World Bank Research Observer, February Edition

2010, The financial and economic crisis -- Impact on e-government in OECD countries, Organization of Economic Co-Operation and Development, http://www.oecd.org/dataoecd/57/57/44089570.pdf last accessed on March 30, 2010

July 2004, Public Sector Modernization: Modernizing Public Employment, Organization of Economic Co-Operation and Development