public scrutiny

New Public Management

NPM redirects here. For other uses, see NPM (disambiguation)

New Public Management is a management philosophy used by governments since the 1980s to modernise the public sector. New Public management is a broad and very complex term used to describe the wave of public sector reforms throughout the world since the 1980s. The main hypothesis in the NPM-reform wave is that more market orientation in the public sector will lead to greater cost-efficiency for governments, without having negative side effects on other objectives and considerations.

Differences from private sector

Jonathan Boston (1996), one of the early writers of NPM, identified several ways in which public organisations differ from the private sector:

degree of market exposure--reliance on appropriations
legal, formal constraints--courts, legislature, hierarchy
subject to political influences
coerciveness--many state activities unavoidable, monopolistic
breadth of impact
subject to public scrutiny
complexity of objectives, evaluation and decision criteria
authority relations and the role of managers
organisational performance
incentives and incentive structures
personal characteristics of employees

Boston also identifies that reform tends to ignore these differences (see J. Boston, J. Martin, J. Pallot, and P. Walsh, Public Management: The New Zealand Model. Auckland: Oxford University Press, 1996).

Later Developments

Some modern authors define NPM as a combination of splitting large bureaucracies into smaller, more fragmented ones, competition between different public agencies, and between public agencies and private firms and incentivization on more economic lines (see Dunleavy, Margetts et al, 2006). Defined in this way NPM was an intellectual force in public management outside the USA from the early 1980s to the early 2000s.

NPM, compared to other public management theories, is more oriented towards outcomes and efficiency through better management of public budget. It is considered to be achieved by applying competition, as it is known in the private sector, to organizations in the public sector, emphasizing economic and leadership principles. New public management addresses beneficiaries of public services much like customers, and conversely citizens as shareholders.

Controversy

Some authors say NPM has peaked and is now in decline. [see Hughes, Owen 2003 Public Management and Administration: An Introduction, 3rd ed. Bassingstoke. UK: Palgrave] Critics like Dunleavy et al. (2006) now proclaim that NPM is 'dead' and argue that the cutting edge of change has moved on to digital era governance focusing on reintegrating concerns into government control, holistic (or joined-up) government and digitalization (exploiting the Web and digital storage and communication within government).

Privatisation of government seems prominent still however in Australia, Scandinavia, Eastern Europe, and various Asian and Middle Eastern countries.