Third EditionThird Edition

Dr. Wasim Al-Habil.Dr. Wasim Al-Habil.

Chapter 7 . . . . . . . . . . . . . . . . . . . . . . Chapter 7 . . . . . . . . . . . . . . . . . . . . . . Managerialism and Performance Managerialism and Performance ManagementManagement

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Chapter SevenChapter Seven

Managerialism and Managerialism and Performance ManagementPerformance Management

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Key TopicsKey Topics

Definition of Managerialism Definition of Managerialism Definition of ReingineeringDefinition of Reingineering New Public ManagementNew Public Management Performance ManagementPerformance Management Total Quality ManagementTotal Quality Management

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Managerialism is “an Managerialism is “an

entrepreneurial approach to public entrepreneurial approach to public

management that emphasizes management that emphasizes

management rights and a management rights and a

reinvigorated scientific reinvigorated scientific

managementmanagement”.”.

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Beginning of ManagerialismBeginning of Managerialism

In 1960s and 1970s, there was a vast expansion in the In 1960s and 1970s, there was a vast expansion in the intellectual development and technical capabilities of PA. intellectual development and technical capabilities of PA. Organizations are created to serve human ends.Organizations are created to serve human ends.

““Managerialism” as term has long been used by sociologists Managerialism” as term has long been used by sociologists with reference to the economic and bureaucratic elites that run with reference to the economic and bureaucratic elites that run the industrial society.the industrial society.

James Burnham in his 1941 James Burnham in his 1941 The Managerial RevolutionThe Managerial Revolution announced that the world has in transition from capitalist or announced that the world has in transition from capitalist or bourgeois to a type of society which we shall call “Managerial” bourgeois to a type of society which we shall call “Managerial” in this chapter. in this chapter.

Now managerialism refers to efforts to force the bureaucracy to Now managerialism refers to efforts to force the bureaucracy to be more responsive to the needs of its customers.be more responsive to the needs of its customers.

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Deterioration of PADeterioration of PA

1980s became a period of decline in the 1980s became a period of decline in the public service. public service.

Decline included budgets, productivity, Decline included budgets, productivity, quality of services, and reputation of quality of services, and reputation of public services itself.public services itself.

Managerialism came as trail of remedy Managerialism came as trail of remedy to deal with all the different kinds of to deal with all the different kinds of declining.declining.

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Types of PA BudgetsTypes of PA Budgets

Planning, programming, budgeting systems (PPBS):Planning, programming, budgeting systems (PPBS): It is a It is a budgeting process that requires agency directors to identify budgeting process that requires agency directors to identify program objectives, to develop methods of measuring program objectives, to develop methods of measuring program output, to calculate total program costs over the program output, to calculate total program costs over the long run, to prepare detailed multiyear program and financial long run, to prepare detailed multiyear program and financial plans, and to analyze the costs and benefits of alternative plans, and to analyze the costs and benefits of alternative program design.program design.

Zero-based Budgeting:Zero-based Budgeting: A budgeting process that is, first and A budgeting process that is, first and foremost, a rejection of the incremental decision making foremost, a rejection of the incremental decision making model of budgeting. It demands a re-justification of the entire model of budgeting. It demands a re-justification of the entire budget submission (from ground zero).budget submission (from ground zero).

Incremental Budgeting:Incremental Budgeting: It essentially respects the outcomes It essentially respects the outcomes of previous budgetary decisions (referred to as the budget of previous budgetary decisions (referred to as the budget base) and focuses examination on the margin of change from base) and focuses examination on the margin of change from year to year. year to year.

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Major Aspects of ManagerialismMajor Aspects of Managerialism

There are three aspects of managerialism:There are three aspects of managerialism:

1.1. Reengineering:Reengineering: It takes reorganization beyond its It takes reorganization beyond its traditional focus by seeking to totally rethink and traditional focus by seeking to totally rethink and refocus how programs are managed and to take refocus how programs are managed and to take maximum advantage of new technology.maximum advantage of new technology.

2.2. Empowerment:Empowerment: It reflects the paradox that It reflects the paradox that managers can often make themselves more managers can often make themselves more powerful by giving power away.powerful by giving power away.

3.3. Entrepreneurialism:Entrepreneurialism: It calls for managers to be It calls for managers to be transformational leaders who strive to change transformational leaders who strive to change organizational culture to develop a new vision for organizational culture to develop a new vision for the organization and then convert that vision into the organization and then convert that vision into reality.reality.

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ReengineeringReengineering

Reengineering:Reengineering: It is the fundamental It is the fundamental rethinking and redesign of rethinking and redesign of organizational process to achieve organizational process to achieve significant improvements in critical significant improvements in critical measures of performance, such as costs measures of performance, such as costs or quality of services.or quality of services.

Reengineergin aims to:Reengineergin aims to:1.1. Promote bureaucratic responsiveness to Promote bureaucratic responsiveness to

central executive control.central executive control.2.2. To professionalize administrative affairs.To professionalize administrative affairs.

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Reengineering As Opposed To Incremental Reengineering As Opposed To Incremental ChangeChange

The Message of Reengineering is that all large The Message of Reengineering is that all large organization must undertake a radical reinvention of organization must undertake a radical reinvention of what they do, how they do it, and how they are what they do, how they do it, and how they are structured.structured.

Reengineering has no room for incremental Reengineering has no room for incremental improvement – for small and cautious steps.improvement – for small and cautious steps.

It is the fundamental rethinking and radical design of It is the fundamental rethinking and radical design of business process to achieve dramatic improvements in business process to achieve dramatic improvements in critical contemporary measures of performance, such critical contemporary measures of performance, such as cost, quality, service, and speed.as cost, quality, service, and speed.

Reengineering is the search for new models for Reengineering is the search for new models for organizing work.organizing work.

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Becoming ReengineerBecoming Reengineer

Reengineering is as much a mental discipline and a Reengineering is as much a mental discipline and a philosophy as it is a process.philosophy as it is a process.

Reengineering includes three steps:Reengineering includes three steps:

1.1. Process Mapping:Process Mapping: The flow charting of how an The flow charting of how an organization presently delivers its services and products organization presently delivers its services and products as a process.as a process.

2.2. Customer Assessment:Customer Assessment: The evaluation of the The evaluation of the organization’s customers’ needs, both presently and in organization’s customers’ needs, both presently and in the future, by means of focus groups, surveys, and the future, by means of focus groups, surveys, and meetings with consumers of the organization’s products meetings with consumers of the organization’s products and services.and services.

3.3. Process Visioning:Process Visioning: A total rethinking of how the work A total rethinking of how the work processes ought to function, keeping in mind the latest processes ought to function, keeping in mind the latest available technology. available technology.

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EmpowermentEmpowerment

Empowerment:Empowerment: It means giving a person or It means giving a person or organization the formal authority to do organization the formal authority to do something.something.

By empowering others, leaders actually acquire By empowering others, leaders actually acquire more “productive power” – the power truly more “productive power” – the power truly needed to accomplish organizational goals.needed to accomplish organizational goals.

Managers who cannot delegate, who will not Managers who cannot delegate, who will not trust or empower subordinates, become less trust or empower subordinates, become less and less powerful, and correspondingly more and less powerful, and correspondingly more and more incompetent, as they increasingly and more incompetent, as they increasingly seek to hoard power. seek to hoard power.

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The Self-Directed Work TeamThe Self-Directed Work Team

Self-directed work team:Self-directed work team: A work group that will accept responsibility A work group that will accept responsibility for their processes and products – as well as the behavior of other for their processes and products – as well as the behavior of other group members.group members.

Self-directed work team differ in several “revolutionary” way from Self-directed work team differ in several “revolutionary” way from conventional work groups:conventional work groups:

1.1. Fewer job categories:Fewer job categories: Each member of a self-directed work team Each member of a self-directed work team performs multiple tasks.performs multiple tasks.

2.2. Authority:Authority: Because self-directed teams handle tasks that historically Because self-directed teams handle tasks that historically have been the purview of management, the teams need adequate have been the purview of management, the teams need adequate authority.authority.

3.3. Reward System:Reward System: If self-directed teams are to produce their potential If self-directed teams are to produce their potential benefits, the organization needs to reward individual behaviors that benefits, the organization needs to reward individual behaviors that promote team flexibility. promote team flexibility.

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EntrepreneurialismEntrepreneurialism

Entrepreneurialism calls for managers to be Entrepreneurialism calls for managers to be transformational leaders who strive to change transformational leaders who strive to change organizational culture. organizational culture.

Each must develop a new vision for the Each must develop a new vision for the organization and then convert that vision into organization and then convert that vision into reality.reality.

Entrepreneur vision should not be limited to the Entrepreneur vision should not be limited to the

top; at every organizational level managers top; at every organizational level managers need vision and dreams, need the ability to need vision and dreams, need the ability to assess the situation and plan for a better future. assess the situation and plan for a better future.

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EntrepreneurialismEntrepreneurialism

Entrepreneurialism calls for:Entrepreneurialism calls for:

Management By Objectives (MBO):Management By Objectives (MBO): An approach to managing, the An approach to managing, the hallmark of which is a mutual setting – by both organizational hallmark of which is a mutual setting – by both organizational subordinate and superior – of measurable goals to be accomplished subordinate and superior – of measurable goals to be accomplished by an individual or a team over a set period of time.by an individual or a team over a set period of time.

Organizational Development (OD):Organizational Development (OD): A process for increasing an A process for increasing an organization’s effectiveness. As a process it has no value bias, yet it organization’s effectiveness. As a process it has no value bias, yet it is usually associated with the idea of maximum effectiveness is to be is usually associated with the idea of maximum effectiveness is to be found by integrating an individual’s desire for personal growth with found by integrating an individual’s desire for personal growth with organizational goals.organizational goals.

Quality Circle (QC):Quality Circle (QC): Small groups of employees working in the same Small groups of employees working in the same organizational unit who, with the approval of management, organizational unit who, with the approval of management, voluntarily meet on a regular basis to identify and solve problems voluntarily meet on a regular basis to identify and solve problems that directly affect their work.that directly affect their work.

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The New Public Management The New Public Management (NPM)(NPM)

The concepts of New Public Management (NPM) emerged in The concepts of New Public Management (NPM) emerged in PA in the mid 1980s, it stressed dealing with citizens as PA in the mid 1980s, it stressed dealing with citizens as “customers.”“customers.”

NPM is a theory of governance that is heavily influenced by NPM is a theory of governance that is heavily influenced by

market theory and economic decision-making, public choice, market theory and economic decision-making, public choice, principal agent theory and transaction cost economics in principal agent theory and transaction cost economics in particular (Hood, 1991; Kaboolian, 1998), rather than civic particular (Hood, 1991; Kaboolian, 1998), rather than civic choices. choices.

NPM and the ‘Reinventing movement” turn the citizen into a NPM and the ‘Reinventing movement” turn the citizen into a customer, the public is removed and distanced from customer, the public is removed and distanced from administration and in its place are free market principles. administration and in its place are free market principles.

Both these “theories” believe in entrepreneurship as Both these “theories” believe in entrepreneurship as proposed solution for government problems; entrepreneurs proposed solution for government problems; entrepreneurs will use resources to maximize productivity and will use resources to maximize productivity and effectiveness. effectiveness.

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The New Public Management The New Public Management (NPM)(NPM)

NPM shifts the notion of public service NPM shifts the notion of public service to customer satisfaction. to customer satisfaction.

Christopher Pollitt has four main Christopher Pollitt has four main aspects of NPM:aspects of NPM:

1.1. Market like mechanismMarket like mechanism2.2. DecentralizationDecentralization3.3. Improvement of service qualityImprovement of service quality4.4. Pursuing the wishes of the individual Pursuing the wishes of the individual

service user/customer.service user/customer.

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NPM & Osborne and GaeblerNPM & Osborne and Gaebler

The early 90’s were marked with the The early 90’s were marked with the effort to reinvent government; effort to reinvent government; President Clinton’s effort to use President Clinton’s effort to use Osborne and Gaebler’s “Reinventing Osborne and Gaebler’s “Reinventing Government” (1993) to transform Government” (1993) to transform government into an enterprise. government into an enterprise.

The goal was to bring government out The goal was to bring government out of that “sluggish” state and end self-of that “sluggish” state and end self-serving bureaucracy (Shafritz & Hyde, serving bureaucracy (Shafritz & Hyde, 1997, pg. 475). 1997, pg. 475).

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10 Principles of Osborne and 10 Principles of Osborne and GaeblerGaebler

Osborne and Gaebler’s (1992) Osborne and Gaebler’s (1992) Reinventing Government: Reinventing Government: How the Entrepreneurial Spirit Is Transforming the Public How the Entrepreneurial Spirit Is Transforming the Public SectorSector introduced 10 principles for a massive government introduced 10 principles for a massive government reform.reform.

The 10 principles:The 10 principles:1.1. steering rather than rowing,steering rather than rowing,2.2. empowering rather than servingempowering rather than serving3.3. injecting competition into service deliveryinjecting competition into service delivery4.4. transforming rule-driven organizations (result-oriented transforming rule-driven organizations (result-oriented

government)government)5.5. finding outcomes not inputsfinding outcomes not inputs6.6. meeting the needs of the customer not the bureaucracymeeting the needs of the customer not the bureaucracy7.7. earning rather than spendingearning rather than spending8.8. preventing rather than curingpreventing rather than curing9.9. from hierarchy to participation and teamworkfrom hierarchy to participation and teamwork10.10. and market-oriented government. and market-oriented government.

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Performance ManagementPerformance Management

Performance Management:Performance Management: It is, the primary It is, the primary responsibility of the organizational leader, the responsibility of the organizational leader, the systematic integration of an organization’s systematic integration of an organization’s efforts to achieve its objectives. efforts to achieve its objectives.

It includes the comprehensive control, audit, It includes the comprehensive control, audit, and evaluation of all aspects of organizational and evaluation of all aspects of organizational performance. performance.

Closely associated with this is the concept of Closely associated with this is the concept of contracting, because individual or contracting, because individual or organizational goals are often embodied in organizational goals are often embodied in quasi commercial contracts. quasi commercial contracts.

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Productivity and Performance Productivity and Performance ManagementManagement

Productivity:Productivity: A measured relationship between A measured relationship between the quantity and quality of results produced and the quantity and quality of results produced and the quantity of resources required for production.the quantity of resources required for production.

Productivity is, in sense, a measure of the work Productivity is, in sense, a measure of the work efficiency of an individual, a work unit, or a whole efficiency of an individual, a work unit, or a whole organization.organization.

Measuring productivity of an organization, Measuring productivity of an organization, program, or individual is particularly problematic program, or individual is particularly problematic in the public sector because of the problem of in the public sector because of the problem of defining outputs and of quantifying measures of defining outputs and of quantifying measures of efficiency, effectiveness, and impact. efficiency, effectiveness, and impact.

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Components of Performance Components of Performance ManagementManagement

Components of performance management include:Components of performance management include:

1.1. The specification of clear and measurable The specification of clear and measurable organizational objectives.organizational objectives.

2.2. The systematic use of performance indicators to assess The systematic use of performance indicators to assess organizational output.organizational output.

3.3. The application of the performance appraisal of The application of the performance appraisal of individual employees.individual employees.

4.4. The use of performance incentives.The use of performance incentives.5.5. The linking of human and financial resource allocation The linking of human and financial resource allocation

to an annual management or budget cycle.to an annual management or budget cycle.6.6. Regular review at the end of each planning cycle of the Regular review at the end of each planning cycle of the

extent to which goals have been achieved.extent to which goals have been achieved.

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Total Quality Management (TQM)Total Quality Management (TQM)

Total Quality Management:Total Quality Management: A new A new phrase for quality control in its most phrase for quality control in its most expanded sense of a total and expanded sense of a total and continuing concern for quality in the continuing concern for quality in the production of good and services. production of good and services.

It is a process to ensure that all aspects It is a process to ensure that all aspects of an organization are performing at an of an organization are performing at an optimal level.optimal level.

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Total Quality Management (TQM)Total Quality Management (TQM)

Edward Deming provides 14-point guide:Edward Deming provides 14-point guide:

1.1. Create constancy of purpose for improvementCreate constancy of purpose for improvement2.2. Adopt the new philosophy.Adopt the new philosophy.3.3. Cease dependence on mass inspection.Cease dependence on mass inspection.4.4. End the practice of awarding business on the basis of price alone.End the practice of awarding business on the basis of price alone.5.5. Improve constantly and forever the system of production and service.Improve constantly and forever the system of production and service.6.6. Institute training.Institute training.7.7. Adopt and institute leadership.Adopt and institute leadership.8.8. Drive out fear.Drive out fear.9.9. Break down barriers between staff areas.Break down barriers between staff areas.10.10. Encourage education and self-improvement.Encourage education and self-improvement.11.11. Take action to accomplish the transformation.Take action to accomplish the transformation.12.12. Eliminate slogans, exhortations and targets for the workforce.Eliminate slogans, exhortations and targets for the workforce.13.13. Eliminate numerical quotas for the workforce.Eliminate numerical quotas for the workforce.14.14. Remove barriers that rob people of pride of workmanship.Remove barriers that rob people of pride of workmanship.

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