Public Sector Reform - Whenever it comes to the nuts and bolts of government

All countries worldwide have a very important factor in common: a core public service coupled with a special set of employment laws. Even the conventional style of a government is not fundamentally flawed; it has its purpose as being a one-shop comprehensive service provider. Such traditional roles typically come to bear in times of social or economic crisis, fiscal stress or extreme political changes, but lose its impetus as soon as times normalize.

Practical experience shows that all over the world the phenomenon called Public Sector Reform (PSR) with the results of New Public Management (NPM) will come out at some point in time.

Then the impetus for change emanates from many different sources which places strain on governments adapting to new situations, new capabilities and new relationships between citizens and governments. The public becomes increasingly worried about the standard of the services they receive and the choices available to them.

Like any other structure changes over time, we rightfully expect an evolution in the public sector. Is that good or bad? Well, it depends…

Since I have done a substantial number of these Public Sector Reform projects and I am following the discussions and developments since several years, I have learned many lessons:

1. The public service is special in its organisational, financial and social regulations.

Often instruments or concepts from the private sector are followed without regard for the context and/or the comprehension of the inherent constraints and weakness of such instruments when applied to the public sector.

Comprehending the characteristics of the public administration system is helpful before attempting to reform it: Modernising government structure requires a comprehension of the nature and dynamics of the public administration system as a whole and how it operates as part of society reflecting its unique history, culture and institutional structure.

2. Adopting a whole-of-government approach to public sector reform is necessary.

As said before understanding the public administration system is significant, nevertheless it takes a whole-of-government approach to reform - in other words, it is essential to recognize and view both public administration and governance structures as piece of an interconnected whole. Government functions in a unified structural environment under a common law, and its performance is determined by the relationship of various players. Thus, in order to be effective, the general structure must be set as modifications in part of the system definitely will have an impact on others.

3. A number of different approaches to Public Sector Reform do exist, all afflicted with different degrees of social acceptability.

Structural Reforms are one set of measures

Structural NPM reform mechanisms involve splitting up a public organization through horizontal or vertical specialization while a vertical change induces a trend towards alot more autonomous departments, agencies and state-owned enterprises.

The horizontal reform element increases the specialty of organisational units, i.e. just about every unit deals only with ownership, regulation, purchasing or internal administration and so on.
However, remember the whole-of-government method: a mixture of these vertical and horizontal reform measures could lead to structural fragmentation and rather a reformed chaos.

Changing the organization of service provision is another measure

One idea is that if services cannot be enhanced in the public sector, somebody else must provide them. This motion contains a certain degree of reasoning, in particular when it comes to providing strictly operational services like utilities, transport or e.g. public works. The public service has the obligation to ensure that these services are presented; typically it does not say anywhere that the public service must physically do all of them. Large scale, business-like functions typically belong into the hand of the private sector, simply because public structures and regulations are typically prohibitive to cost effective services delivery. Through measures like marketization, competition and privatization many governments have not only removed themselves from commercial service delivery, but have also withdrawn from its ownership.

This results in a significantly changed mode of government interventions. Has this made the public service smaller? In reality not, but the focus has changed from service provision to regulatory functions like - pollution, health, safety, corporate governance, environmental protection, data matching, protection of minorities, global terrorism, credit control, commercial law, consumer protection, product labelling, consumption taxes, means testing, illegal migration, control of the internet, and so on. At the same time, through technological improvements, government's capability to accumulate information in these areas has also improved substantially.

Even though the outsourcing of operational services makes sense in principle, one has to be extremely careful taking shortcuts to efficiency increases. In the particular projects I did through the years I have found more than once that the individual - clearly ring-fenced - services can equally and efficiently be provided by the public service.

This brings me to the third significant reform measure:

Search for excellence

These measures incorporate a degree a relaxation or change of the present public service guidelines with the delegation of authority and autonomy. Three mainstream models are applied and have different results and consequences.

One model states “let the managers manage” which allows for active, visible, discretionary control of the organization by people who are free to manage; specific standards of performance; a higher emphasis on output control combined with private sector type management techniques.

The second model “makes managers manage” and uses incentives to further particular decision-making behaviour. It implies elevated exposure to competition, contract management and market orientation (contracting out, purchaser-provider models).

A third kind of NPM reform model, joins to the two mentioned above, involves performance management, cost-cutting and budgetary discipline. The increased use of formal performance indicators represents an attempt to quantify the functions of public organizations more thoroughly, while ex post scrutiny and auditing are ways of joining and evaluating goals and actual results. The underlying principle is that good results are incentivized with pay and promotions while stagnation results in falling behind.

Summary and Quintessence

Coming from a Continental European background where the public service structure is not really as accommodating as in some other places; it can be prohibitively pricey to adjust the service conditions of public servants, let alone contemplating to outsource their particular functions or to retrench somebody. It is do-able, but the degree of motivation necessary is high.

Therefore often the combined performance management is utilized first to assess that any corrective measures are justified and at the same time avoiding haphazard activism. With the proper vision, a thorough understanding of the public sector and the correct performance measuring tools, it scrutinises first

• Internal performance and ways to increase efficiency, then
• Corrective structural and/or organisational measures, before looking at
• Outsourcing of underperforming sectors, as the last resort.

History and statistics indicate that a bottom-up strategy is socially far more acceptable and not necessarily less effective. It may take a bit longer, but proves to be more sustainable.

Personally I've done numerous “Public Sector Reform”-projects at a time when ERP-Systems were not as sophisticated as they are these days. I put in quite some time in the interim to design and implement ERP-Systems for both the private and the public sector. Since public sector reform receives a restored emphasis nowadays I combine two areas, i.e. what kind of information does the public sector need within the framework of New Public Management and also exactly what can ERP-Systems provide in support of it. If you like to drop me a line to exchange some thoughts: www.habenicht.co.za.