New Public Management
The paper will introduce and define the principles of New Public Management (NPM), outline the aim of the Ministry of Defence (MOD) and show the relationship between these principles and current working practices within the MOD. By doing this it will become clear as to what extent NPM is applicable within MOD. It has been claimed that NPM is nothing short of ‘a cultural revolution’ (Yeatman,1990) yet there have been numerous studies into NPM and many differing views on what it really means and indeed different views as to the extent of its success.
What is New Public Management?
Nowadays, modern governments must act with great responsiveness as both the general public and industry alike now demand a more personalised, efficient and faster service (Kearney, 2004). NPM was originally introduced to improve both efficiency and responsiveness to these changing political needs and it is clear that all factors taken from the PESTEL framework (Political, Economic, Sociocultural, Technological, Environmental, Legal) have a significant influence on their decision-making (Johnson, Scholes et al, 2005a). The core philosophy that underpins NPM is that of setting and monitoring output and outcome targets and identifying individuals responsible for their success or failure. Blair clarified this further, saying ‘A
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‘The top priority was a change in attitude towards performance. I wanted to see more action and fewer words. Too much attention was paid to whether or not the right procedures had been followed rather than to what had been achieved. It was an attitude born of years of painful experience. When things went wrong and inquiries were conducted, the survivors were those who had followed the rule book and created their own alibis.’ (Pollitt, 2003 cited Lewis, 1997).
One must define the principles of NPM in order to correctly evaluate the question. There are many differing definitions of these principles, but analysis shows that Isaac-Henry’s is probably the most concise: ‘decentralization, desegregation, competition and markets, efficiency strategies, reduction in size of units, emphasis on proper (private) management practices, consumer orientation and performance (output) measurements.’ (Isaac-Henry, 1993)
However, NPM can be more clearly defined for the purpose of further analysis and its principles are summarized by the eight points below (Pollitt, 2003):
These principles above can be grouped together because in essence they both establish ‘what service is achieved, rather than how it is achieved’ and the measurement of this service. These principles are fundamental to success and have been successfully implemented into the MOD already by use of the Balanced Scorecard.
The Defence management Board identified that a robust performance management regime was key to long-term success (MOD, 2004). As a result of this they developed and introduced the Balanced Scorecard; a concept originally created by Drs Robert S Kaplan and David P Norton. This has since been refined and developed and now has thirteen strategic objectives and twenty-five associated performance measures and has also led to the creation of the MOD strategy map.
Source: Managing Organisational Performance in the (United Kingdom) Ministry of Defence, 2004. Figure 3 represents the developing MOD Balanced Scorecard objectives. The success of this Balanced Scorecard approach, albeit still developing and improving has been summed up as follows: “The Balanced Scorecard is one of the most important management initiatives we have adopted,” observes Sir Kevin Tebbit, Permanent Under Secretary of State, Ministry of Defence, and Chairman of the Defence Management Board.
“Seen in the context of our wider programme to modernize Defence and improve our performance, it is a means of clarifying our aims, improving our plans, and reducing the reporting burden-provided we get the measures right. The task should not be underestimated, but for us it has now become a way of life. It ensures that we all share a common understanding-from the top Board through major Commands to the Operational Units-of what we want to achieve, and the individual contribution we all have to make.”
Balanced scorecards help to relate performance assessments to strategy and help develop processes that are crucial for longer-term success (Johnson, Scholes et al, 2005b).
Efficiency here can be taken in its most literal form and in line with the latest PSA the MOD is already committed to deliver 21/2 per cent output efficiencies per annum. It is widely recognised that the DPA and DLO are the areas where most efficiencies can be made, primarily by taking forward Smart Acquisition (MOD, 2002b). Additionally Resource Accounting and Budgeting (RAB) has been gradually introduced to the MOD allowing the MOD to focus more clearly on its key cost drivers (MOD, 2003c).
It is clear that military capability can only be enhanced through the use of strong and effective management of defence. It is also absolutely clear that the MOD has embraced all of the key principles of NPM in their entirety but it is the continuance of this programme that will achieve the culture change required for added success. As with any organisation the proof of success is measured by results, but these, within an organisation as large and diverse as the MOD can be difficult to evaluate.
To evaluate something effectively there must be a mechanism to make before and after comparisons; again something that may not be achievable now within the MOD (Pollitt, 2003). It is however, not the success or failure of NPM that is being argued, it is simply whether or not these principles can be applied to the MOD. I would argue not only that they could be applied to the MOD but also that all of the currently defined principles are being applied to the MOD now and most are working. I would conclude that the principles of NPM are fully applicable to the MOD.
Ascher, Kate, 1987, The Politics of Privatisation: Contracting out Public Services, St. Martin’s Press, New York. Blair, Tony, 2002, Article for Renewal Edition 10.2, The Independent, 20 May 2002. Hatfield, Richard, 2005, MOD Personnel Director, Focus, Issue 185, Page 2, February 2005. Helfried Bauer, 2004, Contribution to Exploratory Meeting, Public Management in Austrian Government, February 2004. Heseltine, Michael, 1984, MINIS and the Central Organisation for Defence, Defence Open Government Document 84/03, Ministry of Defence, London. March 1984.