MANAGERIALISM AND PERFORMANCE MANAGEMENT

Reported by J. B. Nangpuhan II (MPA Student, Chonnam National University) for the class (Organizations and Society) of Prof. H. G. Kim on Nov. 22, 2010.

 

SUMMARY[1]

Keynote: Socrates Discovers Universal Management

Socrates (469BC-399BC). In ancient Greece, Socrates was busy establishing the intellectual foundations of modern educational testing when he discovered that “the unexamined life is not worth living.” Still, he found time to argue for the universality of management, that a successful business leader could be an equally effective general. Universal or generic management refers to management practices that are equally applicable in the public, private, and non-profit sectors. The underlying doctrine holds that a properly trained manager will be effective in any type of organization, whether public or private, whether in service or manufacturing.
This concept of Socrates was illustrated to his dialogue with a soldier named Nicomachides when the former promoted the latter to general. To sum up their dialogue, Socrates tells the brave soldier that a leader who “knows what he needs, and is able to provide it, [can] be a good president, whether he have a direction of a chorus, a family, a city, or an army.” Socrates emphasized the similarities of all good leaders whether in public or in private institutions. He argued that “the conduct of private affairs differs from that of public concerns only in magnitude; in other respects they are similar.” He concluded that “those who conduct public business make use of men not at all differing in nature from those whom the managers of private affairs employ; and those who know how to employ them conduct either public or private affairs judiciously, while those who do not know will err in the management of both.” 

Plato (428BC-348BC). However, the student of Socrates, Plato – considered to be the first political scientist argued that only an elite of philosopher kings or “guardians” had the political wisdom necessary to govern; he would not have been an equal opportunity employer. In essence, Plato’s elitism is a call for professionalism – a challenge to his contemporaries who thought that no training or aptitude was necessary to manage public affairs.

 

Aristotle (384BC-322BC). In his Politics, Aristotle, student of Plato, wrote of the division of labor, departmentalization, centralization, decentralization, and delegation of authority. He considered the state as a natural development because “man is by nature a political animal.” He argued that the state was even more important than family because, while a family exist for comfort, the state can be a vehicle for glory and the good life. Perhaps Aristotle’s most famous analytical construct is his classification of the three basic forms of government: kingship, aristocracy, and polity (majority rule). However, sometimes governing was being exaggerated; where kingship often degenerated into tyranny, aristocracy into oligarchy, and polity or constitutional system into democracy. Overall, Aristotle favored a mixed constitution – one in which all citizens “rule and are ruled by turn,” where no class monopolizes power and a large middle class provides stability – here comes the emphasis on citizen participation. Aristotle said that “man is an administrative animal” because states do not get very far politically or militarily unless they also develop administratively.

 

Managerialism

In the 1960s and 1970s there was a vast expansion in the intellectual development and technical capabilities of public administration. New budgeting techniques – from PPBS to zero-based budgeting – meant that political executives and legislators could better see, if not better control, where money was spent. However, in the 1980s, there was a decline in the public service – declining budgets, declining productivity, declining quality services, and the declining reputation of the public service itself. This decline led to the existence of a new doctrine – managerialism.

Managerialism is a term referring to the economic and bureaucratic elites that run an industrial society. James Burnham (1941) said that the world was in transition “from the type of society which we have called capitalist or bourgeois to a type of society which we shall call managerial.” In the 1980s managerialism, now a well-established sociological “ism,” took on new connotations. When Margaret Thatcher began her 11-year stint as British prime minister in 1979, she immediately sought to refocus the civil service from policy toward management. She tried to force the bureaucracy to be more responsive to the needs of its customers. Managerialism, entrepreneurial management that goes beyond participative management to unleash the creative abilities of public managers at all levels, became the prevailing public sector doctrine. The managers are present to revitalize the public service by slaying the dragons of self-serving unions and inefficient bureaucrats.

 

A New Managerial Revolution

The core theme of managerialism is management rights – giving managers enough room to maneuver so that they can accomplish their goals. This additional managerial room is necessarily taken from the rank and file. Thus managerialism is quite comfortable with authoritarian management styles and a new version of scientific management – except the search for the “one best way” has been updated to the constant installation of the latest in behavioral and mechanistic technologies. In an effort to gain maximum control of personnel costs and minimal problems with introducing labor-savings technologies, managerialism seeks to contract out to the private sector as much of the public business as it can. The techniques of administrative improvement advocated by managerialsm, such as management audits and program evaluations, are comparatively old so these are being reinvirgorated by a new doctrine or guiding philosophy.

 

Policy Entrepreneurs

Modern public managers are expected to be policy entrepreneurs who forcefully develop, argue, and sell creative solutions to vexing problems. The French revolutionaries of 1789 chanted, “Liberty, Equality, Fraternity,” but today’s administrative chant, also of French etymological origin is reengineering, empowerment, and entrepreneurialism.

 

I.        Reengineering

Reengineering is an old-fashioned reorganization with a college education. Reorganization calls for changes in the administrative structure that do not require fundamental constitutional change. Reorganizations are undertaken for the purpose of departmental consolidation, executive office expansion, budgetary reform, and personnel administration primarily to: (1) promote bureaucratic responsiveness to central executive control; and (2) to simplify or professionalize administrative affairs.

Becoming a Reengineer

Reengineering is as much a mental discipline and a philosophy as it is a process. The reengineer’s primary skill is an ability to look at things such as work processes and organizational structures with new eyes. Reengineering is a radical change strategy, not an incremental “grass-roots” employee involvement approach. While there are various paths to reengineering, they all usually include the following three steps:

1.       Process mapping: the flowcharting of how an organization presently delivers its services and products as a process. This emphasis on process is why reengineering is often called “process reengineering.”

2.       Customer assessments: the evaluation of the organization’s customer’s needs, both presently and in the future, by means of focus groups, surveys, and meetings with consumers of the organization’s products and services.

3.       Process visioning: a total rethinking of how the work processes ought to function, keeping in mind the latest available technology.

The key to successful reengineering efforts is the ability to challenge the assumptions underlying the current system. Some barriers to reengineering include bureaucratic turf concerns, employee resistance to change, lack of incentives, and general skepticism. But with strategic commitment from top management, these barriers can be overcome. As an example; in Charlottesville, Virginia, USA reengineered their process for issuing new business licenses to take less than half-hour instead of two days.

 

II.      Empowerment

Power is the fuel of organizational life. Although it is easy for managers to get the traditional authoritarian powers of domination that allow them to control and punish subordinates, it is far more difficult to obtain the power needed for positive accomplishment – by empowering others. By empowering others, leaders actually acquire more “productive power” – the power truly needed to accomplish organizational goals. Managers who cannot delegate, who will not trust or empower subordinates, become less and less powerful, and correspondingly more and more incompetent as they increasingly seek to hoard power.

 

Empowering Teams

Some approaches to solve “productivity problems” involve employee involvement and participative management. These team-based approaches provide individuals with opportunities for personal and professional growth and self-expression and job satisfaction. Organizations that permit empowerment do not need multiple levels of supervisors to coordinate, control, and monitor production.

 

III.    Entrepreneurialism

The last and potentially most powerful element of the revolutionary credo is entrepreneurialism. This calls for managers to be transformational leaders who strive to change organizational culture. Each must develop a new vision for the organization – and then convert that vision into reality. Entrepreneurial vision cannot and should not be limited to the top. At every organizational level managers need vision and dreams, need the ability to assess the situation and plan for a better future. Those who cannot do this, are by definition incompetent.

Too many organizations become infatuated with every new management fad and slick-talking consultant that comes along. They buy books for their managers, send them to training programs, and then expect them to manage by MBO, OD, ZBB, QC, TQM, etc. But applying all these approaches would lead to incompetence if taken into extremes. It is perhaps better to apply the scientific management of Frederick Taylor premised upon the notion that there was “one best way” of accomplishing any given task. It is also better to note that every worker comes with a brain and only an incompetent organization wastes or ignores this resource.

 

Toward a Competitive Public Administration

As the guru of managerialism Christopher Polllitt has argued, “Managerialism is the ‘acceptable face’ of new-right theory concerning the state… [It] provides a label under which private sector disciplines can be introduced to the public services, political control can be strengthened, budgets trimmed, professional autonomy reduced, public service unions weakened, and a quasi-competitive framework erected to flush out the ‘natural’ inefficiencies of bureaucracy.”

Practically all the managerialists’ goals can be achieved by what has come to be known as competitive public management. Self-standing bureaucratic components such as building-maintenance staffs or trash-collection operations are being forced to compete in price with private sector contractors that are ready and willing to put the jobs in question into the private sector. This Darwinian atmosphere of the “survival of the cheapest” is indeed introducing private sector discipline, strengthening political control, trimming budgets, and curtailing unionism and professionalism. What was once right wing is now mainstream. In the United States this is often referred to as the “reinventing government” movement after the book of that same title by David Osborne and Ted Gaebler.

However, there are also some setbacks in managerialism/genericism. One is the control of manufacturing corporations and products by skilled managers in finance which when taken extreme will eventually lead to sales crisis. Indeed, there is now talk of what economist Robert Samuelson call the “death of managerialism,” the death of the notion that a manager with an MBA degree “should be able to manage any enterprise, anywhere, anytime.”

 

The New Public Management

As a doctrine, managerialism continues to evolve, its essence having been distilled under the label “the new public management,” which, according to Christopher Pollitt, has four main aspects:

1.       A much bolder and larger-scale use of marketlike mechanisms for those parts of the public sector that could not be transferred directly into private ownership (quasi-markets)

2.       Intensified organizational and spatial decentralization of the management and production of services

3.       A constant rhetorical emphasis on the need to improve service “quality”

4.       An equally relentless insistence that greater attention be given to the wishes of the individual service user/”consumer”

 

This new public management is ambitious. There is no “new public management.” No government has formally sanctioned a group of practices with that title. Doctrines come and go, but public administration is always and inherently progressive. Managerialism, the new public management, and the reinventing government movements are just the latest landmarks on the yellow brick road of progressivism. All these reforms are like Macbeth’s “poor player that struts and frets his hour upon the stage and then is heard no more.” All this new stuff is just the reaffirmation of the progressive doctrine. There can be no end to the doctrine of public administration; there is only continuous doctrinal reform.

 

What is Performance Management?

Performance management is what leaders do, it is the primary responsibility of an organizational leader. The difference of performance management to mere management is the emphasis on systematic integration which includes comprehensive control, audit, and evaluation of all aspects of organizational performance. The components of performance management are the following:

1.       The specification of clear and measurable organizational objective (i.e., management by objective), the essence of strategic management;

2.       The systematic use of performance indicators, measures of organizational performance, to assess organizational output;

3.       The application of the performance appraisal of individual employees to assist in harmonizing their efforts and focusing them toward organizational objectives;

4.       The use of performance incentives, such as performance pay to reward exceptional personal efforts toward organizational goals;

5.       The linking of human and financial resource allocation to an annual management or budget cycle; and

6.       Regular review at the end of each planning cycle of the extent to which goals have been achieved and the reasons for performance that is better or worse than planned.

 

The Politics of Performance Management

Performance management begins with a plan. Planning is neither straightforward nor linear. Planning never occurs in a vacuum; it is an inherently political process. In the public sector, plans often begin out of political necessity. The citizens literally vote for the plans espoused by elected political executives in their campaign promises. For example, Jimmy Carter promised, if elected president, to implement zero-based budgeting which he was successful to do it but was abolish by his successor.

The most comprehensive adoption of performance management by the U.S. government to date has been the Government Performance and Results Act of 1993, also known as “Results Act” – it seeks to link resource allocations and results; improve program performance; provide better information for congressional policymaking; force agencies to specify their missions, objectives, and strategies; and require them to advise Congress on just how they’ve gone about this.

 

Management Control

Management information and control systems are instituted in public agencies for two primary reasons: (1) to allow administrators to find out what is going on in an organization (and in the environment as the result of an agency’s activities) and thereby to manage the activities of others; and (2) to respond to the need to report (to be accountable) to external groups. Control systems are employed to see whether plans are being executed as intended, to monitor goal-oriented behavior, and to make corrections when behavior or results veer from planned goals. Thus, the most essential task of a manager – indeed, the “function of the executive,” as organization theorist Chester I. Barnard asserted – is to maintain the “dynamic equilibrium” between the needs of the organization and the needs of its employees.

 

Productivity Improvement

Greater productivity is the ultimate aim of all performance management efforts. Productivity is a measured relationship between the quantity (and quality) of results produced and the quantity of resources required for the production of goods or services. It is a measure of the work efficiency of an individual, a work unit, or a whole organization.

 

A.      Productivity Measurement

Measuring the productivity of any jurisdiction, organization, program, or individual is particularly problematic in the public sector because of the problem of defining outputs and of quantifying measures of efficiency, effectiveness, and impact. Organizations that provide public services often have multiple and sometimes intangible outputs. The eternal problem is that in some areas, when government produces a service, the labor that goes into it cannot be measured as to impact and evaluated as to quality as if it were a manufactured product. Thus it is easy to measure and even improve government productivity when factory-like operations lend themselves to engineered work measurement standards. But service workers such as police officers, social workers, and grade school guidance counselors do not always create a product that is directly measurable except by broad social indicators.

 

B.      Barriers to Productivity Improvement

The barriers to increased public employee productivity are legion. The public sector productivity problem also ties directly into the privatization debate. But according to the researches of George W. Downs and Patrick D. Larkey, comparisons between public sector and private sector should not be made in the first place. Public sector organizations are not willing to do productivity measurements. The reason is because there are far too many system “disincentives” built into productivity measurement – from fears of having budgets cut, personnel levels trimmed, or other penalties for producing above-budgeted levels to the serious measurement problems that are inherently biased against public sector goods and products. Because it traditionally has been so difficult for government organizations to find funds to invest in productivity improvement efforts (especially new technology), many jurisdictions have created “innovation funds” to finance such ventures. For example, both the Internal Revenue service and the state of Florida use this approach.

 

C.      Total Quality Management (TQM)

Comprehensive productivity improvement movements can be traced back to W. Edwards Deming (Professor of New York University) and his trip to Japan in 1950 wherein he was invited by Japanese executives to teach them his approach to statistical quality control. In 1954, Joseph Duran followed Deming in Japan and emphasized “management” part of “quality.” Then Armand V. Feigenbaum followed Juran with his “total quality control” (TQC), a management approach that required all employees to participate in quality improvement activities – from the chair of the board to hourly workers. By 1975, Japan had developed into the world leader in quality and productivity. In contrast, “quality teachings” were mostly ignored in the United States until 1980s.

Deming noted 4-point guide to TQM which was paraphrased by Shafritz, et.al., for would-be quality managers:

1.       Create constancy of purpose for improvement of product and service. (A long-term focus is thus essential.)

2.       Adopt the new philosophy. (Be prepared for a total transformation.)

3.       Cease dependence on mass inspections. (Quality must be built in; defects must be prevented rather than detected.)

4.       End the practice of awarding the business on the basis of price tag alone. (Low bids lead to low quality. Long-term relationships must be established with single suppliers.)

5.       Improve constantly and forever the system of production and service. (Continuous improvement becomes a philosophy, not just a goal.)

6.       Institute training. (Training at all organizational levels is necessary, not an option.)

7.       Adopt and institute leadership. (Managers must lead, not supervise.)

8.       Drive out fear. (All employees must feel secure enough to express ideas and ask questions.)

9.       Break down barriers between staff areas. (Work in organizations is inherently teamwork.)

10.   Eliminate slogans, exhortations, and targets for the workforce. (Problems are caused by the system, not by individuals. Posters and slogans tend to create resentment.)

11.   Eliminate numerical quotas for the workforce and numerical goals for people in management. (Production quotas yield defective products; replace work standards with intelligent leadership.)

12.   Remove barriers that rob people of pride of workmanship. (The individual performance appraisal is a barrier, not an aid, to productivity.)

13.   Encourage education and self-improvement for everyone. (Education never ends – for anybody at any level of the organization.)

14.   Take action to accomplish the transformation. (Both top management and employee commitment is essential.)

 

However, Deming warned of 7 deadly diseases and 16 obstacles that tended to inhibit or altogether prevent such transformation. TQM is further hampered by an emphasis on short-term profits (in the private sector) or short-term “looking good” results (in the public sector). The whole thrust of TQM is to change the organizational culture to one that values long-term, long lasting effectiveness.

 

D.      It’s the Customer, Stupid!

Bill Clinton’s 1992 presidential campaign headquarters had what became a famous sign on its wall: “It’s the economy, stupid!” Similarly, all public managers might as well keep a sign on their walls that reads “It’s the customer, stupid!” The customer is government’s new focus. And governments at all levels would be “stupid” to forget it. A customer service orientation is inherently part of the workplace quality movement. In line with TQM theory, it means not just good service in the present but a constant striving for continuously better service. Below are 8 principles listed by National Performance Review (1993) to govern the provision of customer service:

1.       Survey customers frequently to find out what kind and quality of service they want.

2.       Post standards and results measured against them.

3.       Benchmark performance against “the best in business.”

4.       Provide choices in both source of service and delivery means.

5.       Make information, services, and complaint systems easily accessible.

6.       Handle inquiries and deliver services with courtesy.

7.       Provide pleasant surroundings for customers.

8.       Provide redress for poor services.

 

The only thing really new here is that the public sector has picked up a word more traditionally used in private business: customer. So the public is now the customer. And a customer service orientation means that all activities are focused on pleasing the customer. That has always been known by the best businesses, and governments are increasingly becoming aware of it.

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[1] Reference: Shafritz, J. M., Russell, E. W., Borick, C. P. (2009). Introducing Public Administration (6^th Edition). United States: Pearson Education, Inc. 310-339