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Handbook of Public Administration Edited by B. Guy Peters & Jon Pierre © SAGE Publications London Thousand Oaks © New Delhi MB Editorial mangement and Genera troduction © B. Guy eters snd fon Pierre 2003 Section I Intoduction © Fl G, Rainey 2003, Chapter 1 © Laurence E, Lyn, Jr 2003 Chapter 2 © Carolyn. Heirich 2003 Chapter 3 © John M. Bryson 2003, ‘Section 2 Introduction © Patricia W- Ingraham 2003 CChepter 4 © Michael Ketua and James Pemy 2008 Chapter 5 © Sally Coleman Selden 2003 (Chapter 6 © Targen Grannegaard Christensen 2003 (Chapter 7 © James RThowrpson 2003 Chapter 8 © John Hatin 2003 Section 3 Inteduction © Tom Christensen 2003 Chapter 9© Morten Egeberg 003 Chapter 10 © Jean-Claude Thoenig 2003 Chapter 11 © Jack H. Knot and Thomas H Hammond 2003 Chapter 121 Karen M. Hult 2003, Section 4 Intoduction © Jos CN, Rasdscelders 2003, Chapter 13 © Lary. Luton 2003, Chapter 14 © Fabio Rugge 2003 Chapter 15 © James Warner Bjorkman 2003, Section $ Introduction and Chapter 16 © Soren ‘C- Winter 2003, ‘Chapter 17 © Peter 3, May 2003 Chapter 18 © Laurence J O'Toole, 2003 (Chapter 19 © MarciaK. Meyers and Susan Vorsanger 2003 Section 6 Intoducton © Gavin Drewry 2003 Chapter 20 0 Jacques Ziler 2003 Chapter 21 © Paul Crig 2003 (Chapter 22 © David Feldman 2003, ‘Section 7 introduction © Nicole de Monticher 2003 Chapter 23 © Gary: Brymer 2003, First published 2002 Chapter 24 © Lue Rovban 2003 ‘Chapter 25 © Pere Lascoumes and Patrick Le Galés 200 Seaton fatoduction and Chapter 26.0 Bo Rothstein 200 Chapter 27° Lots R: Wise 2003, ‘Chapter 28 © Steven Rathgeb Smith 2003 Capt 29 © Helen Margets 2003, Section 9 Introduction © Frans KM. van Nispen 2003, Chapter 30 © ohn L, Mikeselt 2008, Chapter 31 © Mark Hallerberg 2003 Chapter 32 © Rita M. Hilton snd Philip G. Joyce 2003 Chapter 33 © Leonaad Kok 2003 Section 10 Introduction © Eavatd C. Page 2003 Chapter 34 © Marleen Brans 2003, ‘Chapter 35 © DionysisG. Dimitrakopoulos and Argyris G Passas 2003, Chapter 36 © Mastin Lodge 2003 Section 1! Inireduction apd Chapter 37.© Theo ‘AL. Toonen 2003 Chapter 38 © Elke Later 2003 Chapter 39 © A... Vereen 2003, Section 12 Inroduction © Goran Hyden 2003, Chapter 40 © Dele Olown 2003, Chapter 41 © OF. Dwivedi 2003 Chapter 42 © Joege Nef 2003 Chapter 43 © Atala Agh 2003 Section 13 Intoduetion © Pl G. Thomas 2003 Chapter 44 © Robert Gregory 2003 Chapter 45 © LindsdeLcon 2003 Chapter 46 © Kevin P. Kearns 2003 Section 14 Introduction © Matin Printer 2003 Chapter 47 © Helimst Wollman 2003, Chapter 48 © Beryl A. 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Li B42 Panchsheel Enclave Post Box 4109 ‘New Delhi 110.017 India British Library Cataloguing in Publication da CENTRUL ‘DE * © Seto nr ap see ‘catalogue record for hs bok i available from the Briih Library ISBN 0 7619 72242 Library of Congress Control Number 2002 109398 Typeset by CAM Digitals Pot Ld Printed in Great Britain by The Cromwell Pres Ld, Trowbridge, Wiltshire Contents List of contributors x Preface xv Introduction: The Role of Public Administrati B. Guy Peters and Jon Pierre n in Governing 1 SECTION | PUBLIC MANAGEMENT: OLD AND NEW uw Introduction Hal G. Rainey u 1 Public Management 4 Laurence E. Lynn, Jr 2. Measuring Public Sector Performance and Effectiveness 25 Carolyn J. Heinrich 3. Strategic Planning and Management 38 John M. Bryson SECTION 2 HUMAN RESOURCE MANAG W. Ingraham 49 MENT rT) Introduction Pa 4 Comparative Performance Pay 53 Michael Katula and James L. Perry 5 Innovations and Global Trends in Human Resource Management Practices a Sally Coleman Selden 6 Pay and Perquisites for Government Executives n Jorgen Gronnegaard Christensen 7 Labor-Management Relations and Partnerships: ‘Were They Reinvented? 84 James R. Thompson 8 Leadership and the Senior Service from a Comparative Perspective 98 John Halligan SECTION 3 ORGANIZATION THEORY AND PUBLIC ADMINISTRATION 109 Introduction Tom Christensen 109 9 How Bureaucratic Structure Matters: An Organizational Perspective 116 Morten Egeberg mB w HANDBOOK OF PUBLIC ADMINISTRATION 10 Institutional Theories and Public Institutions: Traditions and Appropriateness 127 Jean-Claude Thoenig 11 Formal Theory and Public Administration 138 Jack H. Knott and Thomas H. Hammond 12 Environmental Perspectives on Public Institutions 149 Karen M. Hult “TION 4 ADMINISTRATIVE HISTORY 161 Introduction Jos C.N. Raadschelders 161 13 Administrative State and Society: A Case Study of the United States of America 169 Larry S. Luton 14 Administrative Traditions in Western Europe 177 Fabio Rugge 15 South Asian and Western Administrative Experience: ‘The Past in the Present 192 James Warner Bjérkman SECTION $ IMPLEMENTATION 205 Introduction Sgren C. Winter 205 16 Implementation Perspectives: Status and Reconsideration 212 Soren C. Winter 17 Policy Design and Implementation 223 Peter J. May 18 Interorganizational Relations in Implementation 234 Laurence J. O'Toole, Jr 19 Street-Level Bureaucrats and the Implementation of Public Policy 245 Marcia K. Meyers and Susan Vorsanger SECTION 6 LAW AND ADMINISTRATION 287 Introduction Gavin Drewry 257 20 The Continental System of Administrative Legality 260 Jacques Ziller 21 Administrative Law in the Anglo-American Tradition 269 Paul Craig 22 The Limits of Law: Can Laws Regulate Public Administration? 29 David Feldman vi HANDBOOK OF PUBLIC ADMINISTRATION 35 International Organizations and Domestic Administrative Reform Dionyssis G. Dimitrakopoulos and Argyris G. Passas 36 Administrative Patterns and National Politics Martin Lodge SECTION IL ADMINISTRATIVE REFORM Introduction Theo A.J. Toonen 37 Administrative Reform: Analytics Theo A.J. Toonen 39 Public Administra A.J.G. Verheijen SECTION 12 PUBLIC ADMINISTRATION IN DEVELOPING AND TRANSITIONAL SOCIETIES, Introduction Goran Hyden 40 The Crisis in African Public Administration Dele Olowu 41 Challenges of Culture and Governance in Asian Public Administration OP. Dwivedi 42 Public Administration and Public Sector Reform in Latin America Jorge Nef 43° Public Administration in Central and Eastern Europe Attila Agh ‘TION 13 ACCOUNTABILITY Introduction Paul G. Thomas 44° Accountability in Modern Government Robert Gregory 45 On Acting Responsibly in a Disorderly Worl Individual Ethies and Administrative Responsibility Linda deLeon 46 Accountability in a Seamless Economy Kevin P. Kearns 440 451 465 465 467 478 489 499 499 503 514 536 549 549 587 569 581 List of Contributors Ait Ag is Profesor of Public Adminstration, Budapest Unversity of Economie and Pub Administration, Hungary James Warner Bjrkman is Professor of Public Policy and Administration, Institute of Social Guudies. The Hague, The Netherlands, and Professor of Administration ed Development, Leiden University, The Netherlands Marleen Brans is Lecturer in Public Management Institute, Catholic University of Leuven, Belgium E207 C: Bryner is Director ofthe Natural Resources Law Center, School of Law, University of Colorado at Denver, USA John M. Bryson is Professor of Planning and Public Afairs, Hubert H Humphrey Institute of Public Affairs, University of Minnesota, USA Jorgen Gronnegaard Christensen is Professor of Public Administration, Department of Political Science, University of Aarhus, Denmark Zom Christensen is Professor of Public Administration and Organization Theory, Department of Political Science, University of Oslo, Norway Paul Crai 's Professor in English Law, Department of Law, University of Oxford, UK binds deLeon is Associate Professor Graduate School of Public Affairs, University of Colorado, Denver, USA Dionyssis G. Dimitrakopoutos is Lecturer in Politics, School of Politics and Sociology, Birkbeck College, University of London, UK Savin Drowry i Professor of Public Administration and Director of the Centre for Political Studies, Department of Social and Political Science, Royal Holloway University of London, UK (O-P Dwivedi is University Professor Emeritus in Political Seience, University of Guelph, Canada Morten Egeberg is a Professor at the Department of Poltical Science and Director of the ARENA Program, University of Oslo, Norway David Feldman isthe Legal Adviter tothe Joint Committee on Human Rights in he UK Parliament Robert Gregory is Associate Professor of Public Policy and Administration, School of Government, Victoria University of Wellington, New Zealand CONTRIBUTORS Mark Hallerberg is Assistant Professor of Political Science, Department of Political Science, University of Pittsburgh, USA John Halligan is Professor of Public Administration, School of Management and Policy, University of Canberra, Australia ‘Thomas H. Hammond is Professor, Department of Political Science, Michigan State University, USA Carolyn J. Heinrich is Assistant Professor of Public Policy, Department of Public Policy, University of North Carolina, USA Rita M. Hileon is Senior Economist in the Office of the Vice-President for Environmentally and Socially Sustainable Development, The World Bank. Karen M. Hult is Professor, Department of Political Science, Virginia Polytechnic Institute and State University, USA, Goran Hyden is Distinguished Professor, Department of Political Science, University of Florida, USA, Patricia W. Ingraham is Distinguished Professor of Public Administration, The Maxwell School of Citizenship and Public Affairs, Syracuse University, USA Philip G. Joyce is Associate Professor of Public Administration, Schoo! of Business and Public Management, The George Washington University, USA Michael Katula is a doctoral candidate, Schoo! of Public and Environmental Affairs, Indiana University, Bloomington, USA. Kevin P. Kearns is Associate Professor, Graduate Schoo! of Public and International Affairs, University of Pittsburgh, USA Jack H. Knott is Professor of Public Policy and Director of the Institute of Government and Public Affairs (IGPA), University of Illinois, USA Leonard Kok is Deputy Permanent Secretary at the Ministry of justice, The Hague, Netherlands jerre Lascoumes is Director of Scientific Research at CEVIPOF (CNRS and IEP Paris) and Associate Professor of Sociology and Politics, Institut d'Etudes Politiques, Paris, France Patrick Le Galés is CNRS Senior Research Fellow at CEVIPOF and Associate Professor of Sociology and Politis, Institut d'Etudes Politiques, Paris, France Martin Lodge is Lecturer in Political Science and Public Policy, Department of Government, London School of Economics and Political Science, UK. a HANDBOOK OF PUBLIC ADMINISTRATION Elke Loffler is Senior Research Associate, School of Strategy and International Business, Bristol Business School, UK Larry S. Luton is Professor of Public Administration, Graduate Program of Public ‘Administration, Eastern Washington University, USA Laurence E. Lynn, Jr is George Bush Chair and Professor of Public Afairs, George Bush School ‘of Government and Public Service, Texas A&M University, USA, Helen Margetts is Professor of Political Science and Director of the School of Public Policy, University College London, UK Peter J. May is Professor of Political Science, Center for American Politics and Public Policy University of Washington, Seattle, USA Marcia K. Meyers is Associate Professor, School of Social Work, University of Washington, Seattle, USA, John L. Mikesell is Professor of Public Finance and Policy Analysis, Schoo! of Public and Environmental Affairs, Indiana University, Bloomington, USA. Nicole de Montricher is Research Scholar at CERSA (CNRS and Paris 2) and Associate Professor of Comparative Administration, University of Paris 2, France Jorge Nef is Professor; Department of Rural Extension Studies, University of Guelph, Canada Dele Olowu is Convenor, Public Policy and Administration, Institute of Social Studies, The Hague, The Netherlands Laurence J. O'Toole, Jr is Golembiewski Professor and Head, Department of Public ‘Administration and Policy, School of Public and International Affairs, University of Georgia, USA Edward C. Page is the Sidney and Beatrice Webb Professor of Public Policy, London School of Economies and Political Science, UK Martin Painter is Professor, Discipline of Government and International Relations, City University of Hong Kong, Hong Kong Argyris G. Passas is Assistant Professor, Department of Law, Panteion University of Social and Political Science, Athens, Greece James L. Perry is Chancellors Professor and Associate Dean for the Indianapolis Programs, School of Public and Environmental Affairs, Indiana University, USA B. Guy Peters is Professor, Department of Political Science, University of Pittsburgh, Pennsylvania, USA, CONTRIBUTORS x Jon Pierre is Professor, Department of Political Science, University of Gothenburg, Sweden Jos C.N. Raadschelders is Professor of Public Administration and Henry Bellmon Chair of Public Service, Department of Political Science, University of Oklahoma, USA Beryl A. Radin is Professor, School of Public Affairs, University of Baltimore, USA Hal G. Rainey is the Alumni Foundation Distinguished Professor, School of Public and Incernational Affairs, University of Georgia, USA Bo Rothstei Goteborg Uni is August Rohss Professor of Political Science, Department of Political Science, sity, Sweden Luc Rouban is Director of Scientific Research at CEVIPOF (CNRS and IEP Paris) and Institut d'Etudes Politiques, Paris, France Fabio Rugge is Professor of Administrative History, Department of Political Science, University G of Pavia, Italy Sally Coleman Seldon is Associate Professor of Management, School of Business and Economics at Lynchburg College, USA Andy Smith is a Research Fellow, Fondation nationale des sciences politiques, CERVL research centre, Sciences-Po Bordeaux, France Steven Rathgeb Smith is Associate Professor, Daniel J. Evans School of Public Affairs, University of Washington, Seattle, USA Jean-Claude Thoenig is Senior Research Fellow, Groupe d'Analyse des Politiques Publiques, CNRS and Ecole Normale Superieure de Cachan, Paris, and Professor of Sociology, INSEAD, France Paul G. Thomas is Duff Roblin Professor of Government, St John’s College, University of Manitoba, Canada, James R. Thompson is Assistant Professor of Public Administration, College of Planning and Public Affairs, University of Illinois, Chicago, USA, Theo A,J.Toonen is Professor of Public Administration, Leiden University, The Netherlands Frans KM. van Nispen is Associate Professor of Public Administration, Faculty of Social Sciences, Erasmus University of Rotterdam, The Netherlands AJ.G. Verheljen is Senior Public Sector Management Specialist, Poverty Reduction and Economic Management Network, The World Bank, Washington, DC ‘Susan Vorsanger is Lecturer, School of Social Work, Columbia University, New York, USA hn nw HANDBOOK OF PUBLIC ADMINISTRATION Seren C. Winter is Research Professor, Danish National institute of Social Research, Copenhagen, Denmark ols R. Wise is Professor of Policy and Administration, School of Public and Environmental ‘ASfars, Indiana University, Bloomington, USA Helleout Wollman is Emeritus Professor of Public Administration, Institute of Socal Sciences, Humbolde University, Germany Jacques Ziller is Professor of Comparative Public Law, Department of Law, European Universicy Institute, Florence, Italy i Preface ‘The publication of this volume reflects the culmination of a great deal of effort by a large number of people. The work of the authors and the section editors is obvious, but much of the work although less apparent is no less important. As editors we would like to express our gratitude to a number of individuals who were important in helping us to complete the project and to produce a book which we believe will make a major contri- bution to both the academic study and the practice of public administration. ‘The first person we should thank is Lucy Robinson at Sage. We had not thought of undertaking the project ourselves, but when Lucy proposed the Handbook we were suf- ficiently audacious, or foolhardy, to accept that challenge. After we began the process Lucy and her colleagues, including but not limited to Vanessa Harwood and David ‘Mainwaring, have been a delight to work with, They have been generous with useful pro- fessional advice, yet allowed us the freedom to develop the project in the way we thought best. They were also patient and supportive when some parts of the manuscript were not ready as soon as they might be. We look forward to a long publishing relationship with this team at Sage. We also want (o thank the members of our Editorial Advisory Board: Professor Geert Bouackaert, Catholic University of Leuven, Belgium Professor Hans-Ulrich Derlien, University of Bamberg, Germany Professor H. George Frederickson, University of Indiana, USA Professor John Halligan, University of Canberra, Australia Professor Christopher Hood, All Souls College, University of Oxford, United Kingdom Professor Jose Luis Mendez, El Colegio de Mexico, Mexico Professor Akira Nakamura, Meiji University, Japan Professor Donald Savoie, University of Moncton, Canada This group of distinguished scholars assisted us with the design of the project, with the selection of the section editors and authors, and with the assessment of the chapters when submitted. We are indebted to them for their time and efforts. Sheryn Peters and Monika Pierre responded to our enthusiasm for this project with a mixture of amusement and concern. They represent what makes it all worthwhile, whether they take us birdwatching or put us in a boat and head up the coast. We should also thank the staff at the Gold Wing lounge at the Frankfurt Intemational Airport for providing refuge and time to reflect on public administration and related issues. Finally, somewhat unusually, we want to thank each other. This has been a coopera- ‘ive and collaborative effort, and each of us has been able to pick up the slack at times when the other has been overwhelmed by other tasks, or family commitments, or life in ‘general. This has been an academic partnership that continues to work well, and further continues to be a great deal of fun. We hope the readers will gain as much enjoyment in absorbing this product as we have had in creating it BGP OJP Introductio! The Role of Public Administration in Governing B. Guy Peters and Jon Pierre Enter the bureaucrat, the true leader of the Republic. (Genator Palpadine, Star Wars, Epleode 1) ‘This Handbook represents an attempt to address the major issues in, and perspectives on, public ‘administration. The Handbook isan international treatment of this subject, with scholars drawa fiom a wide range of countries and intellectual traditions. Further, although the large majority of the participants in the project are academics, the artompt has been made also to confront issues of practice, and the relevance of academic research to the day-to-day problems of making gover ‘ment programs perform as they are designed to. Public administration is an area of substantial academic activity, but its also the focus of impor- tant practical work, and public servants have a ‘wealth of experience that is important for under standing public administration. No single volume could hope to cover in any comprehensive manner the full range of concems about public adminis- tration, but we have, we believe, illuminated the crucial issues and also provided a starting point for those readers who wish to pursue this field of inquiry and practice more thoroughly WHY ADMINISTRATION MATTERS ‘The most important premise of this Handbook is that public administration matters. There is a tendency among the public, and even among scholars ofthe public sector, 0 equate politics and ‘government with dramatic events such as elec tions, or with the visible conflicts between poit- ‘cians that shape major policy developments. Those activities are indeed important for governing, but there is a massive amount of activity involved in translating laws and decrees made by politicians into action, and in delivering public programs to citizens. That wotk is often less visible, but is ‘cial for making things happen in government. Legislatures and political executives may pass all the laws they wish, but unless those laws are administered effectively by the public bureau cracy, litle or nothing will actually happen. The bureaucracy! is often the favorite target for news- paper leader writes and for politicians, but without administrators litle would happen in government. Public administrators comprise the bulk of government employment and activity. In the United Kingdom the central government in London has 650 members of the House of ‘Commons, a few hundred members ofthe House of Lords, a few hundred political appointees in the executive departments, a few thousand judges, but several hundred thousand public ‘administrators. In addition, there are several hundred thousand public employees in local authorities and the devolved governments of Scotland and Wales. The majority of the emplo- yees of government are not the paper-pushers ‘one usually associates with public administration bt rather are responsible for delivering public services to the public, Many public admini- strators in central governments are responsible for providing services, but on average local and provincial public servants are even more so. ‘The principal activity of public administration is implementing laws, but there are also a range of other important activities carried on in these public organizations. One is that bureaucracies ‘make policy, and in essence make law. The laws passed by legislatures are often general, and require elaboration by administrators (Kerwin, 1999; Page, 2000). The secondary legislation prepared by the bureaucracy nat only makes the ‘meaning of the laws clearer but it permits the application ofthe expertise ofthe career admini- strators to policy. This style of making policy ‘may raise questions of democratic accountabil- ity, butit almost certainly also makes the policies eee eS 2 HANDBOOK OF PUBLIC ADMINISTRATION being implemented more technically appropriate for the circumstances, as well as making them ‘more flexible. Although even less visible than their rule-making activities, bureaucracies also are important adjudicators. In addition to writing secondary legislation, ‘administrators also influence policy by advising the politicians formally responsible for making law. Political leaders may have numerous talents but most politicians do not have extensive expert knowledge about the policies for which they are responsible, Therefore, they require assistance in writing aws and setting policy. The senior public bureaucracy has traditionally had @ major role in providing their ministers with the needed advice and information (see Plowden, 1984), ‘That role for public administration is, however, under attack as politicians become more distrust, ful of bureaucrats and want advice from theis own politically committed advisors (Peters and Pierre, 2001). In addition, the reforms of the public Sector that have been implemented over the past several decades have stressed the role of the senior public administrator as a manager rather than as a poliey advisor, and that has altered the career incentives of senior public managers, We said above that the work of public admin- istration may be less visible than that of other aspects of government, yet atthe same time itis ‘he major point of contact between citizens and the State. The average citizen will encounter the Postal clerk, the tax collector and the policeman ‘much more frequently than their elected repre ‘sentatives, This Contact between state and society ‘has two important consequences for government One is thatthe implementation of laws by the lowest echelons of the public service defines What the laws actually mean for citizens. The laws of a country are what is implemented, and lower echelon employees ~ policemen, social workers, teachers, etc. ~ often have substantial discretion over how implementation occurs and who actually gets what from goverment, ‘The second impact of the lower echelons of ‘government is that these face-to-face interactions often define what government is for citizens, ‘How am I treated by government? Is government fair, efficient and humane or is it the arbitrary ‘and bureaucratic (in the pejorative sense of the term) structure that it is often alleged to be? The bureaucracy is therefore important in creating an image of govemment in the popular mind. The ‘good news is that evidence about these interac, tions tends to be rather positive. Citizens in a number of countries report that most of their interactions with government are positive. The bad news, however, is that many of those same citizens still have a generally negative view of Bovernment and of the bureaucracy. PUBLIC ADMINISTRATION AND. THE SURROUNDING SOCIETY Throughout this Handbook, contributors are ‘maintaining the perspective of the public admin. {stration as embedded in the surrounding society While this might appear to be a rather obvious point of departure, the approach emphasizes Something often forgotten; that the’ public ‘administration is an explication of the collective interest and that its legitimacy to a significant extent hinges on its ability to play a part in the Pursuit of those interests. Much of the recent debate on new public management and markets based models of public service delivery, just to give an example, has tended to portray the public bureaucracy as a generic structure. Ironically, however, introducing market-based solutions i bublic service production has significant effects (on the relationship between the public admini- stration and the surrounding society, as we will argue below. Furthetmore, emphasizing the embedded nature of the public administration helps us understand the rationale for creating links between civil society and the public administration, or more ‘generally, links with the state. The governance Perspective on the public bureaucracy highlights those links because they are elements of a broader strategy for service production and delivery that is ‘pen to a range of means of generating service, By including societal actors in service delivery the bureaucracy enhances its capacity to act and to ‘do ‘ore for less", as the Gore Report put it. Finally, the society-centered perspective on the public administration portrays the public ‘bureaucracy asa potential target for group poli eal pressure. The public administration controls vast resources, and operates frequently at an increasing distance from elected officals, and is also @ major source of regulation, All this eon. tributes to making it atactive to a wide variety of societal groups, ranging fiom trade unions and employers” association to local environmental Protection groups and neighborhood organiza. tions. An understanding of the exchanges between the public bureaucracy and its external environ, ‘ment is critical to an analysis of the bureaueracy im a wider sense. Politics, administration and society In order to understand how the public bureau: cracy relates to society, we need to generate a broader picture of public-private exchanges in society. The triangular relationships ‘between politics, administration and society are, needless too will working more closely with subnational governments, or with quasi autonomous organizations that are nominally connected to ‘ministerial authority but which may be designed to act more on their own, ‘Asstrong bureaucracy in a weak state? Bert Rockman has observed that ‘If one distin- iguishes between outlays on the one hand and petsonnel and organizational structure on the biher, it may be that the future holds a sizeable public sector, but one that will have less govern- iment? (Rockmnan, (998: 38). If the new public management reform paradigm continues to dominate the orientation of administrative reform we may soon find ourselves with a hollow administrative structure processing huge trans- fers but with service provision increasingly conducted under the auspices of market actors, Rockman argues. We have already discussed the changing channels of exchange between the public bureaucracy and its extemal environment fas well as the overarching objectives of the administrative reform that has been conducted during the late 1980s and 1990s. Rockman is probably too optimistic (or perhaps pessimistic) about the extent to which Administrative reform can shrink public employ- ‘ment and the public bureaucracy. We argued carlier that much of our contacts with the state is not with elected representatives but with front staff of the public bureaucracy like police officers, tax collectors, nurses or social workers. ‘There may be some decrease in the number of such personnel but these functions cannot be automated, Instead, the cutbacks in public employment have been conducted either by trans- ferring entire functions from the state 10 the market, for example railway, telecommunications, and postal services. The public sector remains a fairly labor-intensive sector, not least because of the nature ofthe services it delivers ‘What is at stake here isthe relationship between strength and external orientation, Not least in an historical perspective, the notion of a ‘strong bureaucracy" frequently invoked an image of a self-serving and self-referential bureaucracy. A. more contemporary definition of @ strong bureaucracy is one which swiftly can deliver a wide variety of public services, adapted to the needs of the individual. Furthermore, a strong bureaucracy is characterized by the rule of law. The law-governed nature of the public adminis- twation is a safeguard against clientalism, corrup- tion and favoritism. Arguably, there is a potential contradiction between the service-delivery ROLE OF PUBLIC ADMINISTRATION IN GOVERNING. s aspect and the law-governed nature of the bureaucracy. The point here is that a public bureaucracy will most likely never be able to compete with private-sector companies in terms of flexibility and service but, as we will argue later in this chapter, that is hardly surprising given that public administration was designed primarily according to other objectives. ‘The strength of the public administration is nearly always a mirror-image of the strength of the state. Internal strength is critical to the public bureaucracy’s ability 0 fulfil its role in society regardless of the degree to which the state encroaches society. Also, a strong public bureau- cracy is critical to sustain core democratic values like equality, legal security and equal treatment. For these reasons, a strong bureaucracy in 1 weak state need not be an arrangement that cannot be sustained in the longer term, MANAGING INTHE PUBLIC SECTOR We dealt above with one crucial aspect of public administration — its link with society and the political system. We now shift our attention more tothe internal dynamics of these organiza tions (or aggregations of organization), and espe~ cially with their management. The reform of public administration over the past several decades has concentrated on the managerial aspects of government, attempting to make government more efficient, effective and eco- nomical, These three Es have driven a massive change in the public sector, much of it focusing ‘on the role ofthe market as an exemplar for good ‘management, Goodbye to hierarchies? Much of the administrative reform that has been implemented has been a series of attacks against the hierarchical structure of the public adminis- tration. Hierarchies, the dominant argument ‘goes, are rigid and slow, unable to change, inefficient and fail to draw on the professional ‘expertise inside the organization, Furthermore, hierarchical structures are said to be unable to relate effectively to clients and cannot provide ccustomer-attuned services to the public. How valid is this critique, what alternatives are there to hierarchies, and what values and norms are associated with this type of organization? In addressing these questions ~ and the future of 6 HANDBOOK oF PUBI hierarchies in the public administration more in ‘general - we first need to discuss the strengths of hierarchies, given the expectation placed on the Public bureaucracy. From that perspective, we can proceed to discuss the extent to which the preferred role of the public administration has changed and how these developments impact on the organizational structure of the bureaucracy. Th most countries, the public bureaucracy found its organizational form at a time when the primary rol ofthese organizations was the imple- ‘mentation of law. Public service production of the scale we know it today did not exist; it is to a very large extent a feature of the latter half ‘of the twentieth century. Hierarchy thus early on became the preferred organizational model as it isan efficient instrument for the implementation of law, a process where values such as uniformity, accountability and predictability are essential The initial growth of the public sector service production did not significantly challenge the hierarchical structure ofthe public bureaucracy These services were rather uniform in character with little or no flexibility or “eustomer-atuning”, fo quote a contemporary concept. Given the limited and one-way exchange between the Public bureaucracy and its clients, hierarchies ould prevail. Instead, it was the massive attack ‘on the public sector during the 1980s and 1990s which presented a major threat tothe hierarchical structures in the public sector. Hierarchies could not sustain the accumulated challenges from within in the form of drastic budget cutbacks and from clients expecting a higher degree of fle bility, Thus, structure in and of itself became an issue in the administrative reform of the 1990s (Peters, 2001); ifthe hierarchical nature of public organizations was replaced by some form of flat and flexible organization which accorded greater autonomy to the front-line staff many of the problems of lacking legitimacy and inefficiency would be resolved, erties argued. It would be incorrect to argue that the critique Concerning the inertia and rigidity in the public bureaucracy is without justification. In’ some ways, however, that is not the issue. Public ‘organizations were never designed to maximize on efficiency, flexibility and customer fiiendli- ness but rather to ensure a uniform and unbiased implementation of the law, Thus, fo some extent the critique during the past couple of decades has ‘employed an irrelevant yardstick for its assess. ‘ment of public organizations. Moreover, this critique sees only one side of the modern bureau. racy ~the service-producing side and disregards the other side, the exercise and implementation of law. That having been sai, it is clear that some relaxation of hierarchy and structure has become ee IC ADMINISTRATION critical to the public sector and, indeed, such organizational change is already taking place in most countries. Does this mean the farewell to hierarchies? As we have pointed out in a different context, hierarchies have more to offer as instruments of ‘governance than is often recognized (Pierre and Peters, 2000). Ironically, some of the problems frequently associated with more flexible and ‘market-like public organizations, such as account ability and a poor responsiveness to the political echelons of goverment, are often argued to be among the stronger aspects of the hierarchical ‘model. The challenge in the longer term for the architects of government therefore is to design ‘organizations that combine the efficiency and service capacity of decentralized organizations with the uniform and legalistic nature of hierar. chical organizations, 's marketization the answer? ‘The same arguments that denigrate the role of hierarchies emphasize the importance of markets 4 an alternative to more traditional forms of organization and management in the public sector, The assumption is that if government ‘were to use the principles of the market, both in the design of individual programs and in the intemal management of government programs, then goverment will do its job much better, Advocates of the market argue that adopting market principles will make government more efficient, and could reduce the costs of public sector programs to taxpayers. Although the market has become @ popular exemplar for reforming the publie sector there are also a number of critics of the market, Pethaps most fundamentally the public sector should not have efficiency as its fundamental value, but rather should be concerned with effec- tiveness and accountability, Relatedly, market ‘mechanisms may reduce the accountability of public programs by emphasizing internal ‘management rather than relationships with the remainder of the political system. Finally, much ‘of what the public sector does is not amenable to ‘market provision, or they might never have been put into goverment inthe frst place, and hence attempting to apply market principles may be mildly absurd. Although an unthinking accep. tance of the market isnot likely to produce all the benefits promised, there are certainly things to be gained by using some of these techniques. As ‘with so many things in the public sector, the real trick may be in finding the balance between different approaches, ROLE OF PUBLIC ADMINISTRATION IN GOVERNING 7 The less politics the better? ‘There are several circumstances suggesting that the involvement of elected officials in adminis- tration is not conducive to maximum perfor ‘mance of the administrative system, The most important argument against too much involve- ‘ment by politicians in public sector management is that it means not taking management very seri- cously, or at least not as seriously as electoral considerations. Running large-scale operations, public or private, requires managerial skills and there is nothing in elected office that in and of itself guarantees that the person elected holds those skills. Indeed, the careers of most elected officials rarely involve managing an organiza sion of any significant size. Part of the mantra of administrative reform inthe past several decades hhas been to “et the managers manage” and that has been in part a claim for a stronger role for public administrators in the governing process. Clarifying what separates the roles of elected officials and organizational managers in public administration is important (Peters, 1987; Peters and Pierre, 2001). Career officials are expected to provide continuity, expertise and loyalty. Elected officals are expected to provide legit ‘macy, political judgment, and policy guidance. ‘Bureaucrats are sometimes accused of attempting. to monopolize policymaking through their expertise, and their control of the procedures of government, while politicians are accused of micro-management and attempting to politicize the day-to-day management of organizations and personnel. Certainly public administration ‘cannot ignore their nominal political ‘masters’ but they must also be sure to maintain their own rightful position in governing. APPROACHES TO PUBLIC ADMINISTRATION We have already pointed out that public admin- istration stands at the intersection of theory and practice. Within this field of study there have from time to time been heated debates over the relative weights that should be assigned to those ‘wo ways of approaching the field. The prac tioners have seen academics as hopelessly wound up in theoretical debates that had litle or nothing to do with actually making a program run suc- cessfully. Academics, on the other hand, have seen practitioners as hopelessly mired in “man- hhole counting’ and incapable of seeing the larger issues that affect their practice. ‘As well a standing at the interaction of theory and practice, public administration also stands at the intersection of a number of academic éisci- pines, as well as having a distinctive literature of its own, Leaving aside for the time being the literature that canbe labeled “purely" public administration, political science, economics, sociology, psychology, law, management, and philosophy, and probably others, have had some influence on the study of public administration, Political science has probably had the longest relationship with public administration, given the importance of the bureaucracy for governing and the fundamental concem in democratic countries about means of holding the bureau- racy accountable to elected officials, That having been said, however, law has been the foundation of public administration in much of continental Burope. More recently, economics and manage- ‘ment science have come to play a dominant role in thinking about public administration, as reforms of the public sector have tended to rely upon procedures found in the private sector. While theory and practice, and an aray of aca- demic disciplines contend for control over the study of public administration, the fundamental point that should be emphasized is tha all of these perspectives bring something with them that helps to illuminate administration in the public sector. Political science has emphasized the role ‘of public administration as a component of the process of governing, and has, along with law, also emphasized the importance of enforcing the accountability of the bureaucracy, while philo- sophy has emphasized the need for an ethical framework for public administrators, Economics has pointed to the ole of public administration in taxing and spending decisions, as wel as providing 4 theoretical frame through which to understand bureaucracy (Niskanen, 1971; Breton, 1996) Sociology has brought a long tradition of orgaai zational theory, as well as a concer for the link- age of state and society (Rothstein, 1996), Administrative reforms ofthe past several decades have placed a substantial emphasis on the simi- larites of public and private management and there has been a good deal of borrowing from business management to transform government. WHAT'S SO SPECIAL ABOUT THE PUBLIC SECTOR? ‘The reader will have noticed by this time that hie or she has opened a rather large book contain- ing thousands of words. What about public an 8 HANDBOOK OF PUBLIC ADMINISTRATION administration merits this attention, especially ‘when most citizens appear as happy 0 avoid their own bureaucracy? And could both this attention have been lavished on more general ‘questions of management, not just on administra- tion in the public sector? What indeed is so spe- cial about this area of inquiry and, perhaps more importantly, what is so special about this area of human activity? To some extent the answers to those far from simple questions should be evident fom the ‘material already discussed in this introduction. ‘Most fundamentally, public administration is central to the provess of governing society, no ‘matter what form that governance may take. Without their public administration legistatures ccould make all the laws they wished but unless they were extraordinarily lucky, and the popula- tion was extraordinarily cooperative, nothing would actually happen” In Bagehot’s termino- logy, the public bureaucracy is much of the effective part of government, and itis erucial for providing the services that the public expect from their governments. ‘The absence of public administration is an extremely unlikely occurrence, and the more rel- evant question is what happens for governing when public administration is not effective, or efficient, or ethical. The various forms of failure of administration each has its own negative consequences for government and society. Almost certainly an unethical and parasitic administration is the worst form of failu especially in a government that aspires to be democratic and legitimate (see Chapman, 2000) Honesty and accountability are crucial for build- ing a government that is respected by the public, and may even be central to building an efficient and effective government. A government that is perceived as equitable and fair builds trust which in tum can make government more effective. Losses of effectiveness are also important as governments increasingly are being judged by their capacity to deliver, and the contemporary emphasis on performance management provides quantitative indications of how well govern ‘ments are doing their jobs (Bouckaert and Pollitt, 2003). Despite all the emphasis in the New Public Management, efficiency may be the least important value for the public sector, especially im the eyes of the public. They may mind much ‘more that services are delivered, and that they are delivered in an accountable and humane manner, than they care about the cost per unit of service delivered, This does not mean that public admin- istrators should not care about efficiency, but only that this is not necessarily the dominant value that it has been made to be. ORGANIZATION OF THE HANDBOOK ‘The remainder of the Handbook is organized in fourteen sections, each having been shaped and edited by a Section Editor. Those editors have ‘each added an Introduction to their section, dis- ccussing its contents and relating it to general themes that run throughout the volume. These fourteen sections represent the principal dimen- sions of the literature within public administra- tion, attempting to cover both traditional themes a well as mote contemporary managerialist approaches to administration, NOTES 1 Bureaucracy soften a werd of opprobrum, but we are using i herein a more neural mae, meaning the formal adinstracvestrvtues inthe publi sector. 2 The degree of autonomy enjoyed by the public bureau racy in traditional patems of govering is often exaggerated, but dere has been a macked shit in the involvement ofthe peivate sector. 3. A conservative American politician once commented that he should ike i if Congress were placed on a ‘ruse ship and bad t put allt laws into bores to float back to land. Only the nw in those bores that ere found would go into eee. Without public admin stato, governing might bes good deal ike that REFERENCES Bouckaer, G, and Polit, C. (2003) Public Management Reform: A Comparative Analysis, 2nd edn. Oxford Oxford University Press. Breton, A. (1996) Competitive Government: An Economie Theory of Poliacs and Public Finance. Cambridge: Cambridge University Press. Chapman, RA. (2000) Ethice nthe Public Service forthe ‘New Millennium. Aldershot: Ashgate, Hood, C.(1998) The Arto the State: Culture, Rhetoric and Public Management. Oxford: Oxford University Pres, Kerwin, © (1995) Rulemaking. Washington, DC: CQ Pres. Niskanen, W. (1971) Bureaucracy and Representative Government. Chicago: Aldine/Adherton Page, EC (2000) Government by the Numbers. Oxford Har. Petes, BG. (1987) "Poltcians end Bureaucrats in the Politics of Policy-making', in J-E. Lane, (ed), Bureaucracy and Puble Choice. Londo: Sage Peters, BG. (2001) The Funre of Governing, 2od edn. Lavrenee: University Press of Kansas, Peters, BG. and Pier, J. (2000) “Citizens Versus the ‘New Public Manager: The Problem of Mutual Empowerment, Adminstration and Society, 32: 9-28, Te ROLE OF PUBLIC ADMINISTRATION IN GOVERNING , Peters, B.G. and Pie, J (2001) Poltcians, Bureaucrats “and Administrative Reform, London: Rosledge Pine, J. and Peters, B.G, (2000) Governance, Poles ‘andthe State. Basingstoke: Palgrave Plonden, W. (1984) Ministers ond Mondarins. London Royal lnaitue of Public Administration ‘Rockin, B.A (1998) ‘The Changing Role ofthe State’ in BOG, Peters and DLJ. Savoie (eds), Toking Stock dssessing, Public Sector Reforms Monteesl and Kingston: McGill Queen's University res. pp. 20-44, Rothstein, B. (1996) The Social Democratic State: The ‘Swedish Model and the Burcaucratte Problent of Social Reform. Pasta: Unser of Patsbrah Savoie. DJ. (1994) Reagan, Thatcher, Mulroney: In Search oA New Bureaucracy Pitsburg: University of Pirsburgh res Stein, 1G. (2002) The Cult of Eficeney. Toronto ‘Ananasi Press Section 1 PUBLIC MANAGEMENT: OLD AND NEW Introduction Hal G. Rainey In the past two decades. in nations around the world, the topic of public management has taken on an inereased significance in the theory and practice of public administration ‘One might wonder what this development is all about, since public management and public ‘administration sound synonymous. just whatit is all about is what this first section of the book is largely about. For people in public administration as scholars and as practicing managers and professionals, this new interest in public management ~ or renewed interest, as we shall see — has major implications. Scholars note that this worldwide movement involves increased emphasis on certain patterns and reforms in the management of government agencies and programs. One major implication involves the widespread perception that government needs to give more attention to achieving effective management, often through the adoption of management procedures oF arrangements resembling those of business firms. Kettl (2000), for example, observes that the international movement towards ‘public management, including variants of it called “new public management, involves a number of common themes in many nations. These include increasing the productivity of govern- ment activities, using economic market or rmarket-like strategies, enhancing attention to citizens as service recipients, decentralizing responsibilities to local governments and to front-line managers, and sharpening accountability for results by focusing more on ‘outputs and outcomes than on processes and structures. In addition to these developments in reform and practice, academics have pon- dered the implications of a public manage- ment emphasis for research and intellectual development. Some scholars in public admin- istration employed the public management rubric in expressing their conviction that their field needs a richer base of theory and empiri- ‘al research on management skills, responsi- bilities and procedures akin to that available in the academic fields of business management and organizational analysis (for example, Perry and Kraemer, 1983).They pointed to the need for more research on how people in manage- rent positions in government can carry out their responsibilities and effectively operate their agencies and programs. In related fields such as political science and public policy studies, the prevailing assumption appeared to be that management matters do not matter ‘much — that managerial activities by middle and upper-level ‘bureaucrats’ in. government simply do not play a significant role in the political system and public policy processes. Sull other academics in prestigious schools of Public affairs at leading universities also sought to develop the topic of public management, __ 2 HANDBOOK OF PUBLIC ADMINISTRATION and expressed less concern with the field of public administration than with developing a body of knowledge to support high-level exec- utive leadership in government (Lynn, 1996), ‘The chapters in this section elaborate and respond to this movement in several ways. Laurence Lynn's chapter provides a rich description of the evolution of the topic of public management and of major current issues in its continuing development. He describes how the major public administration scholars early in the twentieth century con- cerned themselves with the role of ‘manage- ment’ in the field, often emphasizing its importance in relation to other foci, such as the legal context of administration. He describes how scholars have differentiated between administration and management, and between management in the public and private sectors. This leads him to consider several perspectives on public management: as a structure of governance, a formalization of managerial discretion intended to enable government to effect the will of the people’, as a croft or set of skils applied by public man- agers and as an institution embodying legit- mate values and constitutional constraints €© which public managers adhere. Lynn also analyzes recent developments, such as a tendency for some scholars to so heavily ‘emphasize the craft perspective that they lose sight of the others. Ultimately he argues that the main challenge involves maintaining appropriate emphasis on all three of these Perspectives simultaneously. Carolyn Heinrich then describes and assesses developments in one of the major trends in public management around the ‘world, an increasing emphasis on performance measurement for public organizations and programs. Here again, as she describes, this topic has a classic character, with experts and scholars attending to it ina variety of ways for a very long time. Heinrich provides a histori- cal overview of many of the conceptions and systems of performance measurement that hhave emerged and evolved since the nine- teenth century. In addition, however, she points to new developments in the recent ‘upsurge of emphasis on performance mea- surement, such as its increasing scope, sophis- tication and visibility, as well as certain common themes across nations such as an increase in formal reporting requirements involving comparisons of performance mea- sures to pre-established performance goals and standards. Heinrich goes on to discuss ‘major current issues in performance measure- ment such as the challenges involved in speci- {ying and measuring goals, due to such factors as the conflicting values and priorities for many public programs and agencies, and the ‘multiple actors and levels invoWed in them. With emphasis on the need to provide public ‘managers with information about how their decisions and actions affect performance, she also discusses prospects for addressing such challenges and provides numerous examples ‘of recent models and methods of perfor- ‘mance measurement. ‘As we come to John Bryson’: chapter, Lynn has told us that one major reason for increas- ing interest in public management arises from concern with enhancing the skills and prac- ‘ces that public managers can use proactively to increase program and agency performance and to contribute effectively to governance Heinrich has added valuable description and analysis of one ofthe most important challenges in the pursuit of performance its conception and measurement. Another of the most important challenges concerns formulation of purposes and of plans for pursuing them, ‘through strategic planning and management. ‘As Bryson tell us these priorities are becom- ing a way of life for public organizations around the globe’. Bryson, whose book Strategic Planning for Public and Nonprofit Organizations is almost certainly the most widely used and cited book on the topic, pro- vides a highly authoritative description and analysis of strategic planning and management, of strategic management systems and models, and of current trends in thought and practice fof the topic, such as increasing pursuit of speed, inclusion of diverse interests and groups, and systems thinking, ‘Obviously, the analysis of public manage- ment and its relation to public administration derives its value not from the parsing of these two rubrics, but from the more fundamental issues involved. As these chapters show, these issues include the institutional and structural context of public management, and the roles, bee INTRODUCTION b responsibilities, skills and practices it involves. ‘These three authoritative chapters provide description, conceptualization and analysis of lear value to those who think, research and ‘write about public administration, as well as to those charged with carrying out in practice its vital responsibilities. REFERENCES Ket, Donald F 2000) The Glob Pubic Management Reveiton’A Report othe Transfirmetion of Governance \Wathingzan, DC: Bookings Inetiuion, Lynn, Laurence E, Jr (1996) Publ Manogement 0 Art ‘Science, and Pofsion. Chatham, Nj Chatham House Perry.james Land Kraemer. Kenneth Lede (1983) Pub ‘Management: Pb and Private Perspectives Palo Ato CACMayld Public Management Laurence E. Lynn, Jr [life liked to organize, to contend, to ‘administer; he could make people work his will, believe in him, march before him and justify him, This was the art, as they said, of managing (Henry James, The Portrait ofa Lady) [Public management ... is a world of settled institutions designed to allow imperfect people to use flawed proce- dures to cope with insoluble problems. James Q. Wilson (Bureaucracy: What Government Agencies Do and Why They Do I) Public management is the subject of a rapidly growing literature that is international in scope ‘and multifarious in content.' The common sense of public management is relatively straight- forward. Good public managers, whatever their particular positions or responsibilities, are men ‘and women with the temperament and skills to organize, motivate and direct the actions of others in and out of government toward the creation and achievement of goals that warrant the use of public authority. Few public laws and Policies are self-executing, and, in their formula tion, all might benefit from managerial insight and experience. Under virtually any political philosophy or regime, then, the achievement of ood government requires the responsible and competent use of public authority by a govern- ‘ment’s managers. ‘Common sense obscures issues that have been at the heart of public management from its inception as a field of study and practice, how- ‘ever. What if the goals to be achieved and their possible costs and consequences are unclear or in conflict? What if public managers are given insufficient authority, resources and tools to organize, motivate and monitor the efforts needed to accomplish those purposes for which they are responsible? How does effective ‘management compare in importance to good Policy design, rational organization, adequate Fesources, effective monitoring and the approba- tion of affected publics? What is effective man- agerial practice and how does it vary across the ‘many contexts in which public management is practiced? How might effective public manage- ‘ment be enabled by legislators, executives and judicial authorities, and how might particular managerial reforms or strategies affect govern- mental performance? The objective of public management scholar- ship isto provide theoretical and empirical foun: dations for addressing both the above questions and the myriad specific questions that atise in ‘organizing and carrying out managerial responsi- bilities in government departments, bureaux and offices: means-ends rationality; the role of Political-legal constraints; appropriate levels of discretion and resources; ex ante versus ex post controls over administration; accountability to the public; criteria for evaluating administration; and administrative reform. The purpose of this chapter is to provide an overview of the field that is concemed with these issues, twill be useful atthe outset to introduce di tinctions that are fundamental to the perspective Of this chapter. Public administration's classic ‘American literature understood management to be the responsible and lawful exercise of discre- tion by public administrators. In this view, public ‘management isa structure of governance (Scott, 1998), that is, @ constitutionally appropriate formalization of managerial discretion intended to enable government to effect the will of the people. In contrast, recent literature has tended to (neers PUBLIC MANAGEMENT 5 view public management as a erat, that i as skilled practice by individuals performing m: agerial roles. To the extent thet public managers practice their craft responsibly, that is, that they Fespect constitutional restraints and’ routinely evince values that are widely held to be legiti- mate and appropriate (rather than narrowly partisan or self regarding), then public manage- ment becomes even more: an instituion of constitutional governance (Weimer, 1995). Public management as an institution ‘observes ‘rules of practice, that is, de facto restraints on ot guides to behavior, that ensure their legit macy within @ constitutional, or de jue, regime. Properly understood, then, public management is structure, eraft_and institution: ‘management’, ‘manager’ and ‘responsible practice’ In the initial sections of this chapter, two issues that define the scope of public manage ment a5 a field of scholarship and practice are discussed: the relationship between ‘public administration’ and ‘public management’ and the similarities and differences between ‘public management’ and ‘private management’. With these discussions as background, public manage- ‘ment as structure, as craft and as institution are «explored in detail inthe following three sections. ‘There follows in the penultimate section a con- sideration of public management as it relates to the concept of governance, a discussion which brings into focus the enduring challenges of public management in theory and practice. Summary observations conclude the chapter. MANAGEMENT AND ADMINISTRATION When we talk of ‘public management’ or of ‘public administration’, are we talking of the same subject or of different subjects? Arguments (o the effect that management and administration ae fundamentally different have a long history in American literature, although the distinction ‘often seems arbitrary Many such arguments relegate management to subordinate, specialized for even stigmatized status with the result that the structural and institutional aspects of public ‘management that are vital to understanding its significance 10 constitutional governance are overlooked Numerous early commentaries either view the two terms as synonymous or regard management 8s the more general concept.’ In public adminis- tration’s first textbook, published in 1926, Leonard D. White, rebuking the notion that public law is the proper foundation of public administration, argued that “The study of admin- istration should start from the base of manage ‘ment rather than the foundation of law’ (White, 1926: vii) According to Henri Fayol (1930), ‘It is important not to confuse adminisration with ‘management. To tanage ... is to conduct {an organization] toward the best possible use of all the resources at its disposal... [i.e,] to ensure the smooth working ofthe... essential functions. ‘Administration is only one of these functions’ (quoted in Wren, 1979: 232), In Roscoe C. Martin’s view, by 1940, ‘administration was equated with management’, although, he noted, there was comparatively litle talk about the “nature ofthe erat’ (Martin, 1965: 8) Paul Van Riper (1990), in assaying mid- to late-nineteenth century antecedents to Woodrow Wilson's 1887, says: ‘Note .. that the words administration and ‘management have been treated here a8 synony- mous" (p. 8). Dwight Waldo observed, ‘Perhaps as much as any other one thing, the “manage- ment” movement has molded the outlook of those to whom public administration isan inde- pendent inquiry or definable discipline™ (Waldo, 1984: 12), Yet many public administration scholars have held that, of the two concepts, administration is original ‘and primary, public management is novel and subordinate or specialized. ‘Public management as a special focus of modem public administration is new,” say Perry and Kraemer (1983), a view echoed by Rainey (1990: 157) “In the past two decades, the topic of public man- agement has come forcefully onto the agenda of those interested in governmental administration,” perhaps, he suggests, because of the growing unpopularity of government. In their Public Management: The Essential Readings, Ort, Hyde and Shaffitz (1991) argue that “Public manage- tment is a major segment of the broader field of public administration ... Public management focuses on public administration as a profession and on the public manager as a practitioner of that profession’ (p. 1). Such viewpoints seem to represent a reaction to the opportunistic appropriation of the term public management in the 1970s and 1980s by the newly formed graduate schools of public policy at Harvard University, the University of California, Princeton University and elsewhere.* ‘According to Joel Fleishman, the policy schools’ focus on public management originated with Mark Moore's efforts to ‘refocus political and ‘organizational analysis into prescriptive subject ‘matte, with a point of view that is decidedly strategic’ (1990: 743). Donald Stokes observed that ‘[Slwategic politcal thinking sets off the Bhan 6 HANDBOOK OF PUBLIC ADMINISTRATION public manager who is able to move an agency from one who plays a custodial role ... [T]he strategic manager sees the small openings pre- sented by the ageney’s routine to induce change toward an identified goal, step-by-step..." (1986: 55), By 1984, Moore summarized the ‘emerging state of the public management at ‘Our conception of publi management” ads responsi bil for goal seing and political management to the teadtonal espensibiliies of public administration, ur conception of publi management ads some quin ‘essential executive function suchas sting purpose, ‘maintaining credibility with overseers, marshaling suthovty and resources, nd positioning one's organ ‘zation in a given polities environment as cenraleom- ponents of pubic managers jb. (Moore, 1984 2,3) In Moore's view, the gist of public management is ‘conceiving and implementing public policies that realize the potential of a given political and institutional setting” (1984: 3), potential he later termed ‘public value’ (Moore, 1995). Thus Moore's view was new, that i, « departure from traditional conceptions of administration, in that it appeared to disavow interest in the settings for public management and to emphasize its ‘behavioral and psychological aspects, ‘The newer behavioral approach to public ‘management has tended to become more action- oriented and prescriptive. As such it says both ‘more and less about public management than traditional conceptions. Briefly, the older view is that public management is the responsible exer- cise of administrative discretion. The newer con- ‘ception adds to this what Roscoe Martin called “the craft perspective’ that is, a concer for deci- sions, actions and outcomes, and for the political skill needed to perform effectively in specific ‘managerial roles. However, by emphasizing the strategic political role of public managers within given political and institutional settings, the newer conception is concerned more with the immediate, pragmatic concerns of managers at executive levels of governmental organizations ‘As Robert Behn has put it, ‘any emphasis on the perspective of practicing public managers will have a short run focus’ (Behn, 1991). A lower priority is placed on the manager's role in devel- ‘ping institutional capacity and in adhering to durable democratic values ~ that is, to public ‘management as an institution — and on manage- ‘ment at middle and lower levels of administration. Precision concerning the distinction between ‘administration and management is of more than ‘antiquarian interest Because the concept of public management as the responsible exercise of discretion is at least implied by the intellectual evelopment of public administration as a field, public administration's literature is also literature of public management. Together, the older and more recent, craft-oriented literatures provide foundations for the structural, craft and instiu- tional aspects ofthe subject. These three aspects, because they emphasize that practice must con. form to constitutional structures and values, supply an analytic framework for evaluating particular public management reform proposals and developments, whether they be those of the Brownlow Report, the New Public Administra- tion, the Blacksburg Manifesto, the US Govern- ‘ment Performance and Results’Act, the Clinton ‘Administration's National Performance Review, of the New Public Management. Of all suet proposals, we wish to understand ther structural, craft and institutional implications in order t0 determine whether they befit constitutional requirements, One particular argument for distinguishing betwen administration and management deserves further scrutiny, however. “Those who define Public administration in managerial terms," argues David Rosenbloom, ‘tend to minimize the distinctions between public and private admini- stration’ (1998: 16), The term administration, in this view, conveys respect for the constitutional and political foundations of governance in @ way thatthe term management does not. PUBLIC AND PRIVATE MANAGEMENT How alike or unalike are managing in the public and private sectors? Can and should government be more business-like? Is management generic? To the extent that public and private manage- ‘ment involve similar temperaments, skills and techniques, then the extensive body of ideas and practices relating to corporate success ean be applied to the problems of public management, ‘and the public sector can in principle draw on the large poo! of private sector managers to meet its ‘own managerial needs, To the extent that, from structural or craft perspectives, they are different, then the public sector must have access 10 sources of knowledge, techniques and skills suited tits unique character, ‘This isue was addreseed with authority atthe dawn of public administration as a profession. Frank J. Goodnow argued in 1893, “[ij transact- ing its business [the government's] object is not usually the acquisition of gain but the further- ance of the welfare of the community. This is ‘the great distinction between public and private i PUBLIC MANAGEMENT " ‘pusiness’ ({1893]1902: 10). At a more subtle fevel, Goodnow argued that “the grant to the ministration of ... enormous discretionary powers" means that “there has ... been a con Frnuous attempt on the part of the people to control the discretion of the administration in the exercise of the sovereign powers ofthe state” {{1893]1902: 10,11), In 1926, Leonard D. White fidded the consideration that the principle of consistency ~ today, we say equity ~ governs public administration to an extent not observed fh business. administration (White, 1926; of. Stamp, 1923) ‘The basic elements of the argument that public and private management are fundamentally tmalike in all important respects are: (1) that the public interest differs from private interests, {Q) that public officials, because they exercise the sovereign power of the state, are necessarily accountable to democratic values rather than to ny particular group or material interest, and {G) thatthe constitution requires equal treatment of persons and rules out the kind of selectivity that is essential to sustaining profitability ‘Moreover, the extent ofthe differences between the two sectors has been well documented empiri- cally (Rainey, 1997). Some will argue nonetheless that an enumera- tion of such differences is misleading because it fbscures important similarities. ‘All organiza- tions are public,” argues Barry Bozeman (1987), by which he ‘means thet all organizations, ‘whether governmental, for-profit, or nonprofit, are affected to at least some degree by political authority. Thus, he argues, ‘{plublic managers fan be found in most every type of organization’ because public managers are not limited to government employees but encompass “persons ‘who manage publieness” (p. 146) in any sector. However, one might also argue the converse, that all organizations are ‘private’ to the extent that they are responsible for tasks that are per- formed by experts who are governed by profes sional or technocratc authority rather than by stakeholder interests. These tasks were first recognized by Goodnow (1900: 85) as “the semi- scientific, quasi-judicial, and quasi-business for commercial” functions of administration, although as Don Price later warned, ‘the expert may come to believe that his science justifies exceeding his authority’ (1959: 492), a pervasive danger in all organizations requiring specialized expertise The distinction between public and private management, then, is arguably definitive from structural, craft and institutional perspectives. ‘The two sectors are constituted to serve different kinds of societal interests, and distinctive kinds of skills and values are appropriate to serving these different interests. The distinctions may be blurred or absent, however, when analyzing par- ticular managerial responsibilities, functions and tasks in particular organizations. The implication ‘of this argument is that lesson drawing and knowledge transfer across sectors is likely ia.be_ useful and should never be rejectskii 406108 cal grounds. PUBLIC MANAGEMENT™”: AS STRUCTURE ‘As already noted, the earliest conception of public management was as a structure of gover- nance, that is, a formal means for constraining and overseeing the exercise of state authority by public managers. From a structural perspective, public management involves two interrelated elements: lawful delegation of authority and extemal control over the exercise of delegated authority. The design of arrangements that bal- lance these elements constitutes the paradigmatic problem of publie management viewed as astruc- ture of governance (Bertelli and Lynn, 2001), ‘Overcoming the reluctance of legislatures and courts to delegate authority to unelected bureau crats constituted the first challenge to establish- ing public management as a structure of ‘govemance. As carly as 1893, Goodnow asserted that “A large discretion must be given to the administrative authorities to adapt many general rules of law to the wants of the people’ ([1893) 1902; 28), He noted further that ‘while the main duty of the executive isto execute the will ofthe legislature as expressed in statutes, .. there is a realm of action in which the executive authority possesses large discretion, and that it looks for its authority not to the legislature but to the consti- tution’ ({1893]1902: 33). John Dickinson asked (1927 156), “if... we.» imply that the main purpose [of administrative agencies} ... is to adjudicate according to rules, will we not have abandoned the characteristic and special advan- tage of a system of administrative justice, which consists in a union of legislative, executive, and judicial functions in the same body to secure ‘romptness of action, and the freedom to arrive at decisions based on policy?” Discretion must be controlled, however, and thus a second challenge arose: ensuring adequate legislative, judicial and public oversight of public management. As legal scholar Emest Freund put it, [iJnereased administrative powers call for increased safeguards against their abuses, 6 HANDBOOK OF PUBLIC ADMINISTRATION and as fong as there is the possibility of official certor, partiality or excess of zeal, the protection of private right is as important an object as the effectuation of some governmental policy” (quoted by White, 1926). Leonard D. White explored the problem of ‘control of the adminis- tration’ at length in his 1926 textbook. “The problem,” he argued, ‘has gradually developed {nto that of finding means to ensure thatthe acts ‘of administrative officers shall be consistent not only with the law but equally with the purposes and temper of the mass of citizens” (1926: 419). In Paul Appleby’s later view, “[plethaps there is ro single problem in public administration of moment equal to the reconciliation of the increasing dependence upon experts with an enduring democratic reality” (1952: 148). Delegation and oversight by legislatures and deference 0 administrators by courts are now accepted features of constitutional governance Striking the right balance between capacity and control remains a controversial aspect of public ‘management, however, and failure to do so often defeats efforts to achieve public management reform, As Kett! has expressed it (1997), tensions continue to exist between ‘making managers ‘manage’, that is, imposing substantial ex ante and ex post controls over managerial discretion, and “leting managers manage’, that is, holding public managers accountable fo their performance rather than for their compliance with formal rules and procedures. These two strategies, Kettl notes, ‘require culture shifts in opposite direc- tions” (1997, p. 449), a reality not always fully appreciated by advocates of public management reform, PUBLIC MANAGEMENT AS CRAFT In recent decades, increasing emphasis has been placed on public management as a craft practiced by specific individuals in specific managerial roles. An intellectual development of seminal importance to this movement was the appearance ‘in 1938 of Chester Barnard's The Functions of ‘the Executive (1968), which laid the groundwork for new perspectives, including that of Herbert ‘Simon, on managerial responsibilty. As Frederick Mosher interpreted him, Barnard ‘defined ‘administrative responsibilty as primarily a moral question or, more specifically, as the resolution of competing and conflicting codes, legal, tech- nical, personal, professional, and organizational, in the reaching of individual decisions’ (Mosher, 1968: 210). Bamard clearly influenced John Millett, whose 1954 book, Management in the Public Service, constitutes an early example of the craft Perspective: The challenge to any administrator is to overcome obstacles, to understand and master problems, t0 use imagination and insight in devising new goals of public serviee. No able adminisrator can be content to Be simply a good caretaker He sesks rater to review the ends of organize effort and to advance the goals of administrative endeavor toward better public service (1954: 401) Millet! goes on in a manner prefiguring later ‘ideas from the policy schools: In a democratic society this questing isnot guided solely by the administrator's ovm personal sense of esreble socal ends, The administrator must convince others aswell He must work with terest groups, with legislators, with chief executives, and withthe persoa- tel of his own ageney to convince them all thet «par ticular line of policy or program i desible (p40) ‘The newer literature within the craft perspec- tive is based, by and large, on the careful study ‘and analysis’ of particular cases of managerial experience.’ As Graham Allison noted in @ seminal article, ‘The effort to develop public ‘management asa field of knowledge should start from problems faced by practicing public managers" (Allison, 1979: 38). The focus of such study is on what managers did or should do in specific settings. A more critical view saw this enterprise as representing an ‘ongoing effort to create a new “myth” for public management by emphasizing a political and activist orienta tion ~ heroes and entrepreneurs became the stock and trade of its case studies’ at the expense of institutions (Dobel, 1992: 147). Among the humerous examples of this perspective, Heymann's The Politics of Public Management (1987), Reich’s Public Management in a Democratic Society (1990), Behn's Leadership Counts (1991) and Moore's Creating Public Value (1995) are representative Anxious to inspire public officials with the ‘conviction that ‘management counts’ and with an ‘entrepreneurial, proactive spirit, the craft ltera- ture emanating from the public policy schools tumed heavily to prescription (Lynn, 1996). The best of this literature ~ for example, Light's Sustaining Innovation (1998) and Bardach’s Getting Agencies to Work Together (1998) — represents a thoughtful appreciation of the exis- tential challenges of public management and an attempt to deduce best practices from closely observed successful stories. Other contributions ~ such as Cohen and Bimicke's The New Effective a PUBLIC MANAGEMENT 9 Public Manager (1995) and Haass's The ‘Bureaucratic Entrepreneur (1999) ~ ate expli- citly didactic and feature numerous prescriptions ‘and principles based on the experiences and reflections of effective practitioners. ‘Within this genre, many craft-oriented public management scholars have assumed away the structural elements of public management, con- cerning themselves with the temperamental and psychological aspects of management, This approach leads to a highly reductive view of public management that hearkens back to an earlier preoccupation with leadership taits and ‘managerial personalities. Thus, successful man- agers are characterized as enterprising or entre- pfeneurial, disposed to take risks, purposeful, imaginative and intuitive, and inclined to act Others emphasize simple, generic processes establishing and reiterating clear goals, managing by walking around — or adhering to unexception- able principles ~ develop and focus on a narrow agenda, look for opportunities to act and the like. Says Behn: “Most management concepts are simple, and, to have any impact these simple ‘management ideas must be expressible in some pithy phrase’ (1988: 651). After citing five unex- ceptionable principles for achieving influence as ‘manager, Haass asserts: “Being effective is that simple ~ and that complicated’ (1994: 230), The oversimplifications of its proponents should not discredit the importance of eraft as an clement of public management, however, at least in principle. Beyond structural considerations are the behavioral and intellectual challenges that any good manager must take into account, ‘There are, as well, what Barnard called the “non-logical” aspects that give rise to timely reactions, intuitive insights and, ultimately, good Judgment. From a craft perspective, some public ‘managers are better than others. Though there hhas been relatively little rigorous empirical research on managerial contributions to govern- mental performance (Lynn et al, 2001), it is reasonable to assume that public management will be only as effective as public managers are masters of their era PUBLIC MANAGEMENT AS INSTITUTION How, and on behalf of what values, should public managers practice their craft? The answer {0 this uestion bears directly on the issue, discussed above, of the feasibility of “leting managers ‘manage’ and the consequences of doing so for constitutional governance he ‘The appropriateness of intrinsic or self-control by public managers has been a recurring issue since the Friedrich-Finer debate of 1940 (Finer, 1940; Friedrich, 1940). Against Finer's view that public managers should be subject to minute leg- islative conttol, Friedrich countered that the best ‘means for ensuring that management is respon- sive 10 the polity is the professionalism of the ‘manager. More substantively, Rohr has argued that ‘[aldministrators should use their discre- tionary power in order to maintain the constitu- ‘ional balance of powers in support of individual rights’ (1986: 181). Denhardt has urged that public managers commit themselves to “values that relate to the concept of freedom, justice, and the public interest” (1993: 20), Wanisley insists that “the only possible source of governing impe= tuses that might keep our complex. politcal system from either a dangerous concentration of power on the one hand, or impotence or self: destruction, on the other, is @ public admini- stration with the necessary professionalism, dedication, self-esteem, and legitimacy to act as the constitutional center of gravity’ (1990: 26) In asserting that public managers ‘must resist, thwart, oF refuse to implement policy that runs counter to the founding documents or to American regime values’, George Frederickson ‘comes tantalizingly close to enuncating a doc- ‘rine of administrative nullification (Frederickson, 1997: 229), The notion that public management should be a self-regulated institution evokes the concept of responsibility, another paradigmatic value in traditional public administration. Woodrow Wilson observed that ‘[there is no danger in power, if only it be not irresponsible’ (1887: 213). ‘Morstein Marx argued, ‘[t]he heart of administrative responsiblity is @ unified concep- tion of duty, molded by ideological and pro- fessional precepts’ (1940: 251). To Frederick Mosher, ‘[responsibilty may well be the most {important word in all the vocabulary of adminis- tration, public and private” (1968: 7), adding later that responsibility ‘would seem to me to be the first requisite of a democratic state" (1992: 201), How should responsible public management be defined? Rohr, Denhardt, Wamsley and others tend to define it in terms of adherence 10 a liberal political philosophy. Mosher (1968) distinguished between objective responsibility, of answerability for one’s actions, a structural perspective, and subjective responsibility, which is akin to identification, loyalty and conscience, a craft perspective. More specifically, Bertelli ‘and Lynn (2001) identify in the classic literature of public administration four distinct and demon- sirable qualities ~ accountability, judgment, » HANDBOOK OF PUBLIC ADMINISTRATION balance and rationality ~ which, they argue, constitute a precept of managerial responsibiiy ihat. when observed in managerial practice, Justfies judicial deference when agencies are Sefendants in tigation and qualifies asa gencal fom of responsibility. The logic ofthis precent 15 a follows, Accountability has been defined in general ferms as ‘those methods, procedures, and forcce that determine what values will be reflected ie ‘ministrative decision’ (Simon et al, 1950 313), Accountability is complicated inthe United States by the fact that all three branches of government compete for control of publ gement. Despite this competition, ‘no onc {branch}, nor al three jointly, provide the [pubhis manager] with the totality ofthe value premises {hat enter into his [sie] decision” (p. $39), "The EPonsible public manager is not, however, a ffee agent empowered to act on the basis of whing ot ideology: ‘{menagement guided by [the value of responsible performance] abhors the ides of acbitrary authority present in its own wisdone ad recognizes the reality of external direction ond constraint” (Millett, 1954: 403), After all extemal direction is taken into account, however, public managers still “have Considerable freedom to decide matters on ihe basis of their own ethical promptings’ (Simos etal, 1950: $39). Thus no combination of mech. {nisms for enforcing administrative responsibil, ity can extinguish the clement of judgment from Public management. What kind’ of managerial Judgment fulfills a precept of managerial ves, Ponsbiity? Schuyler B. Wallace argued the, apart from “the primary purpose of Congress in establishing the unit’, good judgment makes preference to some ideal purpose more compre: hensive than that of Congress” (1941: 89) ‘The fotion of idealism is an unacceptably oper ended standard for judgment, however, becoare Sood judgement is balance. Public managers argues Morstein Marx, should “give catshal though to the legislative balance of power the snunciated or anticipated preferences of! the chief executive, and the probabilities of public ‘eactions. Ideally, politcal and administrative {hinking should blend into a joint process" (1950, 102), The act of striking a balance is termed politcal process of adjustment among inter: (1969: 188). Thus public managers must siek balance among competing interest, polit philosophies and interpretations of fact, The agenda of public management, say Ott Hyde Shaft, is “balancing political, economia, Social concerns for equity, justice, and fan as well a5 integrating perspectives for better “the public good” in complex, highly dive: competitive, and inequitable environmen (1991: xvi). A second characteristic of good judgment rationality. Marshall Dimock conceptuslie managerial discretion as “the liberty to dee: between altematives' (1936: 46). To be respo sible, judgment concerning the merits of alter tive sttategies or ations, whether devised by Public manager or by other stakeholders, shou spe to be logical or rational as well ag polit cally balanced. A rational ation is one for hic the relationship between the goals andthe mene {er achieving them in the mind of the manage Sorresponds to the relationship between gral tent of reason’, or “the imesolvable tensicg between the demands of rationality and ne Practical possibilities’ (Rescher, 1998: 169). The Get that the public managers cannot anticipate Gt galeulate all consequences following. froma their actions, however, does not vitiate the argu ‘het for intentional rationality in menagenent decisions. The institutional perspective on public man- agement might be summarized as follows, the Structures of the administrative state constitns it appropriate framework for achieving balance between a jurisdiction's need for administrative ‘capacity to pursue public purposes and elteea Control of that capacity (Lynn, 2001). When ‘managerial craft practiced within this framework, 's guided by @ sense of responsibilty, pubis ‘management becomes a primary institution for preserving the balance between the state's capa, City to effect the public interest and the citizen's ower to hold office holders accountable. The ‘issue was perhaps best stated by Goodnons {Djeate legisttion and judicial control over its exe ‘ution are not sufcieat to produce harmony bere the goverunental body, which expresses the wil of the ste, and the governmental authority, which exccuee that will... The executive offices may ot may not ee ee PUBLIC MANAGEMENT a enforce the law a i was intended by the legsatre, Sadia officers in exercising conto over such exec tive officers may oF may not take the same view of the tow asd he legisla, No provision is tus made in fhe governmental organization for securing harmony tetwoen the expression andthe execution ofthe will of the ste. The people, the ulimate sovereign in 2 popu far government. must. bave a cont over the ofiers eho execute thet wil a wll as overthose who express it 1900:97-8) ‘As carly as 1900, then, the contemporary problem of balancing the competing values of Hemocratic institutions, including the institution of public management, was clearly in view. PUBLIC MANAGEMENT [AND GOVERNANCE Public management performs its institutional role when public managers conform to lawful constraints, manage responsibly within them, fand respond creatively to opportunities for policy making and structural reform, But public management is not the only institution that preserves balance in a constitutional regime. The capacity to effect the public interest, as Goodnow foresaw, does not reside solely in the executive agencies of government, nor does the ‘maintenance of control reside solely with legis- latures and courts. Capacity and control, and the balance between them, depend upon the actions of executives, legislatures, judicial institutions and citizens acting in their many capacities. A term for this complex reality is ‘governance’ From a public management perspective, gover- ‘ance may usefully be defined as regimes of laws, rules, judicial decisions and administrative practices that constrain, prescribe and enable the exercise of public authority on behalf of the public interest (Lynn et al.,2001)-* ‘The broader issue for any self-governing juris- diction, then, is distributing power among lawful ‘organizations and institutions so as to establish a governance regime that ensures a satisfactory balance among competing interests and values. Achieving that balancing is the stuff of partisan politics and, as such, is infused with group inter ests (Pollitt and Bouckaert, 2000). The task of political actors, argues Terry Moe, is “to find and institute a governance structure that can protect public organizations from control by opponents’ (Moe, 1995: 125), However, as Moe has put it, “[a] bureaucracy that is structurally unsuited for effective action is precisely the kind of bureau- racy that interest groups and_ politicians routinely and deliberately create’ (1995: 328) ‘As James Q. Wilson notes, referring to ‘America’s constitutional separation of powers, “{uJhe governments of the United States were not designed to be efficient or powerful, but t0 be tolerable and malleable’ (Wilson, 1989: 376). Therein lies the continuing challenge to public management as an institution. As a result of regime restraints and the politics they authorize, the public manager may have to deal with inade- quate resources, unreasonable or unrealistic workload or reporting requirements, inconsistent fuidance, or missions defined so as to be viru ally unachievable. While the consequences for public manage- iment of the way governance is organized are ultimately relevant to virtually every regulation, policy and program, these consequences are Giscussed most explicitly during debates over ‘administrative reform proposals intended to improve the performance of government as a ‘whole. In the United States beginning in the early 1990s, reforms provoking a discourse on fovernance have included the enactment of the Government Performance and Results Act and the Clinton administration's efforts to implement the National Performance Review. Interna- tionally, these issues have arisen under the rubric ‘of the New Public Management in its many national expressions. To the extent that they are actually implemented, which is often in doubt, these kinds of reforms, intended variously to increase the use of performance measurement in resource allocation, to empower public ‘employees to engage in continuous improvement in public programs and operations, and to mobi lize the theoretical advantages of markets to induce greater efficiency, all have major impli cations for public management as an institution Pollitt, 2000). Such implications may remain inadequately defined, however, both because they are obscured by partisan claims during the debate lover the reform proposals and because widely accepted standards for evaluating such claims ae for the most part lacking. Greater clarity con- ceming the nature of public management as structure, craft and institution, a purpose of this chapter, might, as suggested earlier, prove help ful in facilitating such evaluations. For example, traditional conceptions of public management discussed throughout this chapter incorporate far more respect forthe difficulties of harmonizing law, polities, citizens and democratic values than do customer oriented managerialism or populist- oriented civic philosophies that, in promoting ‘employee, community and citizen empower ment, ignore the inevitability of the kind of 2 HANDBOOK OF PUBLIC ADMINISTRATION factionalism and partisanship fully foreseen by the authors of The Federalist. Many managerial reforms barely acknowledge or actually deni- grate the constitutional role of legislatures, courts and elected executives and the need to anticipate political competition. Proposed reforms of Bovernance which do not exhibit respect for a nation’s basic institutions should be regarded with profound suspicion CONCLUSION Notwithstanding the vagaries of politics, public ‘management as an institution and public man- agers as individuals must attempt to do the best they can under difficult, if not impossible cit- cumstances, even when ‘that means doing litle ‘more than ‘muddling through’ or “coping” (Lindblom, 1959; Wilson, 1989). Doing the best that they can is unquestionably a matter of erat, which can benefit from training and practice based on the study and analysis of particular cases. IL ig also, and maybe even primarily, @ matter of instiutionalized, and internalized, values, of public managers being self-consciously guided by a precept of managerial responsibility. Though the particular character of structure, craft and institution varies across organizations, levels of government and countries with different legal and political traditions, a strong argument can be made for the general relevance of these concepts to effective public management and to successful administrative reform, In the final analysis, public management is also a matter of common sense. Governments authorize imperfect people to use flawed proce- dures to cope with insoluble problems. The results of their efforts are remarkably effective sven the exigencies of their roles. Responsible Public management is indispensable to sound ‘governance NOTES 1 As defined inthis chapter, public management vanes ‘across counties with different legal an politcal rad- ‘ions. Public management literature offering a compar stive perspective includes Peters (1996), Kicker (1997), Ket (2000), Polit and Bouckaert (2000) and Christensen and Lageid (2001) For a survey and analysis of various definitions of pubic management ‘om a European perspective, se Polit nd Bouckaert (2000: pp. 8-10) 2. The Orford English Dictionary provides no bate for itingushing berween ‘administeation’ snd “manage ‘ment. The definition of ech refers othe ober. 2 Bary Karl (1987) notes that “flor Amerisan reformers, the tem “administration” served to focus a kind of pragmatic atention on the governing process “The term became part of en elite reform vocabulary” 2m, 4 "The study of administration from the point of view of management. White suid, "bogan with he bureaus of ‘municipal research and was frst systematically forma Tate inthe 19205" (White, 1926: vi). Am accurate understanding of public administrations intellectual history requires the disentanging of those influences originating in problems of municipal administration, ferle ground foe aplication of an apoial scenic management’, and those originating in problems of ‘ational administration, where iesnes concerning leg fslaive delegton, joicial deference snd managerial sccountability were mote prominent. 5 AS argued in Lyan (1996), public administration Scholars would have Been justified in claiming that thei fel hod ‘owned the subject of public ¢ nage- rent for decades. AS evidence, in adition tO the ‘tations inthe tox, the joural of the Intemational Cty Management Association took the tile Public Management in 1927. In 1940 a volume edited by Fritz Morten Marx was tiled Public Management in he New Democracy (Morstein Mare, 1940). John Millet’ 1954 book Managing inthe Public Service hits a strikingly contemporary note (Mile, 1954), ‘A 1955 ‘lasic" in public administation is Catheryn Seekler- Hudson's "Basic Concepts in the Study of Public Maragerent”(Shatitz and Hyde, 1982) 6 Wis of paricular imeres inthe United States because the combination of the contatonsl seperation of powers and common law tradition establishes the ower of precedent which, in the case of public ‘management, iso be found ints wadtonal literature. 7 Amore extensive review of this litre in Lyn (1996: 55-88). According to Polit and Bouckaert (2000), the terms ‘sterng’, “guidance” and ‘managerilsm’ are pre fered to governance’ outside the United States (for an exception, sce van Heffe, Kickert and Thomassen 2000). The complex intersationships associated with such terms have alzo been desribed by Polit and Bouckaert and others in terms of sn inpuoutput model REFERENCES Allison, Graham T., Je (1979) “Public and Private ‘Management: Are They Fundamentally Alike in All Unimportant Respect", Proceedings for the Public Management Research Conference, 19-20 Novermbr. ‘Washington, DC: Office of Personnel Management, p.27-38 Appleby, Paul (1952) Morality and Adminisation in Democratic Government. New York: Greenwood Press. ‘Aron, Raymond (1898) Main Currents in Sociological Though, Vol. 2. New Brunswick, NI: Transaction Books PUBLIC MANAGEMENT 2 ardach, Bugene (1998) Gating Agencies to Work “ogeher: The Practice and Theory of Managerial Cafimarship. Washington, DC: Brookings Insiaion. Berar, Chester (1968) The Functions othe Executive “Cambri, MA: Harvard University ress. Beha, Rober D. (1988) Managing by Groping Along’ “Journal of Policy Analysis and Management, 80). 6-0 ‘peas, Rober D. 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(ts), Refousding Public Adminisoation. Newbury Pa, CA: Sage, Weimer, David L, (1995) “Institutional design: an overview’, in David L, Weimer (ed), Isiutional Design. Boston, MA: Kluwer Academic Publishers, White, Leonaed D. (1926) Inroduction 10 the Study of Public Adminsiration, New York: Msetrillan, Wilson, James Q. (1989) Bureaucracy What Government ‘Agencies Do and Why They Do It New York: Basic Books. Wilson, Woodrow (1889) ‘The Study of Administration’ Political Science Quarter, | (2197-222. Wren, Daniel (1979) The Evolution of Management Thought, 204 edn. New York: Wiley. 2 Measuring Public Sector Performance and Effectiveness Carolyn J. Heinrich In Beyond Machiavelli Policy Analysis Comes of Age, Beryl Radin (2000a: 168) observes: ‘If there is a single theme that characterizes the public sector in the 1990s, itis the demand for performance. A mantra has emerged in this decade, heard at all levels of government, that calls for documentation of performance and explicit outcomes of government action.” Responding to increasing demands for perfor: mance documentation, governments inthe United States, Canads,’ Western Europe, New Zealand, Australia and in countries in’ Asi ‘Affica and Latin America have made perfor- ‘mance measurement a core component of public management reforms (Behn, 2001; Kettl and Difulio, 1995; Pollitt and Bouckzert, 2000), While the broad objectives of these reforms to promote more ‘effective, efficient, and respon. sive government’ are the same as those of reforms introduced more than @ century ago, ‘What is new are the increasing scope, sophistica- tion and external visibility of performance mea- surement activities, impelled by legislative requirements aimed at holding governments accountable for outcomes (Gore, 1993: xxii; Pollitt and Bouckaert, 2000). The ramifications of reform initiatives that mandate formal, out- comes-based performance measurement in Public programs are being debated by public ‘management scholars and practitioners, with dis- course extending from the ‘New Public Management’ (NPM) reforms to local level performance contracts that aim to “use market fiers to old the public sector accountable lian, 1998: 191; Leegreid, 2000; Radin, 20006) “es Accountability to legislative bodies, taxpayers and program stakeholders ~ is a primary goal of public sector performance measurement. In The ‘International Eneyelopedia of Public Policy and ‘Administration, Romzek and Dulnick (1998: 6) define accountability a “a relationship in which an individual or ageney is held to answer for performance that involves some delegation of Authority to act’. By this definition, accountabil- ity compels some measure or appraisal of perfor. mance, particularly of those individuals and agencies with the authority to act on behalf of the public. A historical review of public sector performance measurement shows thatthe major- ity of initiatives have focused on holding agencies or executive administrators accountable for financial performance or efficiency. Behn (2001) describes ‘accountability for finances" as 4 ‘rules, procedures and standards’ form of accountability. The NPM. and other recent reform initiatives, which ostensibly differ from earlier approaches in their promotion of ‘eustomer service’ focus, ‘market-driven manage- ment’, and accountability for ‘results, are also sill concerned with ‘saving money" and “produc tive and allocatonal efficiencies" (or a govern- ment hat ‘costs less’) (Kaboolian, 1998; Polit, and Bouckaert, 2000; Terry, 1998) If, however the legacy of public management reform is likely o be a ‘stronger emphasis on performance-motivated administration’ that advances the art of public management, as Lyan (1998: 232) suggests, then public sector per- formance measurement has to involve more than accounting for finances and ‘answering for performance’. As John Kamensky (1993: 395) | % HANDBOOK OF PUBLIC ADMINISTRATION exhorts, “there have been enough paperwork exercises in government”. We need to develop ‘measures that will inform and be used by public ‘managers, not only ‘accountability holders” such as legislators and oversight agencies, to guide them in improving service quality and results ‘This begs the question: What informetion is most useful for public managers striving to improve government performance? For example, under the US Government Performance and Results ‘Act (GPRA) or the United Kingdom's Next Steps, how do public managers use the informa- tion from annual program performance reports that compare measured performance with perfor. mance goals? Simply knowing that they have achieved or failed to achieve target objectives of standards is not likely to aid public managers in lunderstanding why performance is atthe level it is or how managers can effect change, As Hatry (1999: 6) observes: ‘A major purpose of perfor. ‘mance measurement is to raise questions’ it seldom, if ever, provides answers by itself as to what should be done.” The types of questions public managers can answer depend critically on the types of perfor. ‘mance information thet are collected. Kamensky (1993) and Hatry (1999), for example, distin- Buish among categories of performance informa: tion that include: (1) input information (for example, resourees and staf); (2) process infor: mation (such as workload and job complexity), G) efficiency information (such as productivity and unit costs); (4) outputs (products and ser- Vices delivered}; (5) outcomes (in relation to intermediate or ‘end goals), including quality assessment; and (6) impact information. In an ideal performance measurement system, the full range of information ~ from inputs to outcomes OF impacts ~ would be used by public managers in a logical flow, linking performance monitor. ing (of ongoing processes, efficieney and out- Puts) to performance evaluation (of program outcomes and/or impacts) to performance man- ‘agement; tha is, using performance information to guide program planning and improve future performance (Osborne etal, 1995). Supported by public management reforms and aided by advances in information technology, some performance measurement activities are progressing toward this ideal, providing public ‘managers with more information about how and the extent to which programs are contributing to ‘outcomes or impacts (Abramson and Kamensky, 2001). This chapter focuses largely on these ‘state-of-the-art’ performance measurement approaches, although a broader range of perfor- ‘mance measurement activities and processes are also discussed. In the following section, an interdisciplinary review of public sector performance measurement approaches is pre- sented, integrated witha discussion of literatures ‘on performance measurement and management! organizational effectiveness. The ‘state of the at’ is described next, including challenges and prospects for improving performance measue- ‘ment systems and increasing their usefulness to public managers at all levels of government. The ‘concluding section summarizes major points and discusses the prospects for continuing advances in public sector performance measurement. A CHRONOLOGICAL REVIEW (OF LITERATURES AND SYSTEMS OF PERFORMANCE MEASUREMENT ‘An interdisciplinary review of historical and ‘contemporary conceptions of performance mea- surement highlights the diversity in disciplinary Perspectives and approaches to this subject. Human resource management scholars, for ‘example, trace the origins of performance mea. surement to the development of employee rating forms based on psychological traits by industrial psychologists in the 1800s (Scou et al, 1941). ‘The US Federal Civil Service has used these types of performance ratings, narrowly focused 6 individual performance, since at least the late 1800s (Murphy and Cleveland, 1995), ‘A more generic view of public sector per- formance measurement, also originating in the late 1800s, can be traced to scholars and experts who called for the government to become more tational and efficient like the private sector. This perspective emerged early in the writings of Woodrow Wilson (1887), who proposed a new ‘scientific’ or mote “business-like” approach to administration, and was later elaborated by ‘members of the ‘scientific management” move- ‘ment in the early 1900s, Scientific management Promoted the careful analysis of workers? tasks ‘and work arrangements, with the objective of maximizing efficiency’ by “planning [work] procedures according toa technical logic, seting Standards, and exercising controls to’ ensure conformity with standards’ (Taylor, 1911; ‘Thompson, 1967: $). The 1910 Taft Commission ‘on Economy and Efficiency, one of the first of a series of major US commissions aimed at improving the executive management and per- formance of government, was significantly influ- enced by scientific management ideas. Shades of the rational and technical logie of scientific man- ‘agement are also evident in recent performance er MEASURING PUBLIC SECTOR PERFORMANCE » measurement initiatives such as GPRA, Next Steps and Taiwan's Research, Development and Evaluation Commission, which require agencies to develop strategic plans for achieving specific, (quantitatively measurable goals and annual performance reports that compare actual perfor- hance with performance goals or standards By the 1930s, scholats of “administrative management’, such as Gulick and Unwick (1937), were shifting pubic discussion from the ricro-level design of efficient work tasks and procedures to the structure of large administa- five systems. The writings of administrative ranagement influenced major government feform proposals, including the repor by the 1936-7 Brownlow’ Committee on Administrative Management. Like scientific management, these reforms centered on improving government eff- ciency, yt the Brownlow Committee report also made & point to distinguish administrative man- ‘agement from scientfie management, declaring the ‘administrative efficiency is not merely a tnater of paper clips, time clock, and standard- ized economies of motion .. fou] must be built into the structure of government just as itis built into piece of machinery" (1937: 16). The struc- tural reforms proposed by the committee called for the delegation of power within hierarchical structures to managers with ‘administrative expertise’. As Feldman and Khademian (2000: 152) observe, ‘that expertise would be exercised within rales, regulations, and administrative structures established by politcal overseers and top managers. Performance measurement 2c ites of the administrative management era primarily involved auditing of inpus and outputs and fiscal accountability at department ~ of higher ~ organization levels where contol was centralized and. administrative decisions were checked (Rosenbloom, 1986). ‘At the same time, the organization theorist Chester Bamard (1938), in a watershed work that diverged from the administrative management perspective, was urging greater atention to the integral role of incentives in organizations (for example, money, status, power, autonomy) and the ‘Social character’ of cooperative systems Barnard suggested that individuals’ social inter- actions and awareness of ther reatve positions ina ‘hierarchy of rewards" would be more influ- ential motivators of performance than cleat channels of hierarchical authority and rule-based processes for producing outputs (Pieffer, 1990) Into the 1940s and following the ‘Second World War, however, Barnard's ideas about the importance ‘of social relations and incentives in formal organizations were still having litle appreciable influence on government performance management, Instead, ongoing coneems about the size and efficiency of goverament le to two more major commissions the First (1947-49) and Second (1953-55) Hoover Commissions — to “promote economy, efficiency, and improved service in the transaction ofthe public busines. loover Commission Repor, 1949: xii). The Commissions’ reviews of the organizational siructure and performance of the US executive branch reflected former President Hoover's beliefs, adhering to some principles of scientific ‘management, that ‘management research techni cians’ should advise policy and executive agency Gecisions (Moe, 1982). The series of manage- ‘ment reforms that followed included the 1960s Planning, Programming, Budgeting System (PPBS), which featured a ‘systems analysis approsch to central planning, objective analysis of programs based on research and evaluation, and multi-year plans and budgets, Central govemments in other countries such as The Netherlands (with its Government Accounts Act of 1976) readily adopted the PPBS or perfor- mance budgeting approach and continue perfor- ‘mance budgeting activites in some form today. Also gaining recognition at this time, the Management by Objectives (MBO) approach, advanced by Drucker (1954) and later adopted by the Nixon administration, departed from administrative and scientific management approaches by prodding performance measure- rent systems to involve both organizaion- and individual-level performance measures. The MBO approach, sil in use in many public and private organizations, aimed to link organiza- tional planning for financial, technical and strategic performance goals with employee actions and objectives though their input in pa. ticipatory processes, feedback from management and financial rewards allocated on the basis of ‘measured organizational progress. Unlike the top-down, rules-based focus of administrative management, which social-psychologists hed criticized by for its “mechanical view” of indi- viduals, MBO sought to coordinate objectives at top and lower organizational levels and to give explicit consideration o employees’ understand ing of goals and rewards for improving perfor. mance (Campbell eta, 1970). Stil, while attractive to government reformers at frst, the limitations of PPBS, MBO and simi- lar systems such as Zero-Base Budgeting (ZBB) that required managers to narrowly define and 1measure progress toward financial echnical and strategie performance goals became more evi- dent overtime. Thompson (1967: 4-6) described these types of performance measurement systems as “closed-system” strategies. In a closed or 8 HANDBOOK OF PUBLIC ADMINISTRATION rational model system, there ate a relatively small number of variables for managers to control, and they can reliably predict their relationships. Goals and production tasks are known, organizational objectives are verifiable, resources are available and employees are responsive to incentives (that is, self-interest dominates) (Simon, 1957). As a result, they are more likely to be effective when managers are able to achieve clarity, consensus and consis- tency about organizational goals such as eco- homie performance or efficiency in service delivery. MBO-type approaches to performance ‘measurement are mote commonly used today by local governments, where budgetary account ability and service efficiency are focal public priorities (Rivenbark, 2001), As dissatisfaction ‘with these rational model approaches to performance evaluation was growing, organization and management theories Were evolving toward more open, adaptive system models that assumed, instead of closure, “that a system contains more variables than we can ‘comprehend at one time, or that some variables are subject to influences we cannot control or predict” (Thompson, 1967: 6). Thompson (1967) cited the study of “informal organization’ as an example of fan open-system approach, and referring to ‘Bamard’s (1938) work, described variables such as cliques, social controls based on informal norms and status that influence the performance and ‘survival’ of organizations. These open-system and contingency theories ~ that relate organizational structures and functioning 10 their contexts or environments ~ broadened the array of variables viewed as important in managing organizational performance and measuring the contributions of public managers to organization outcomes. Pethaps the most prominent example of a ‘more open, adaptive system approach to perfor- ‘mance analysis that emerged at this time was W, Edwards Deming’s Total Quality Management (TQM) system. Deming (1986) challenged the ‘narrow, simple-minded” focus of rational ‘man- ‘agement by the numbers, management by MBO" approaches on bottom-line cost and efficiency targets and urged managers to instead strive for and measure quality (Kelly, 1998: 202; Walton, 1986), Quality-focused (TQM) systems feature long-term commitment by top managers to con- tinuous quality improvement, full involvement by employees at all organizational levels and a shared ‘vision’ of quality, a customer orientation and the ‘systematic collection and analysis of data’ that are expected to indicate where poten- tial for quality improvement lies (Halachmi, 1995: 266). Acknowledging the challenges of assessing quality, that is, the higher level of knowledge and information that is required to evaluate and manage performance in terms of ‘quality and the importance of factors outside the control of employees, Deming strongly advocated the use of statistical analysis to understand the causal influence of systemic and situational/ environmental factors on performatice. The influence of TOM ideas and their focus on 4uality or results, in conjunction with the dectine of systems more narrowly aimed at increasing outputs and efficiency such as PPBS, were accel- crating the advance of public sector performance ‘measurement toward outcomes-based measure- ‘ment systems. In the early 1980s, for example, under the Reagan administration's New Federalism, the US Job Training Partnership Act (ITPA) introduced a performance measurement system that has been described as a “pioneer” ‘of outcomes-based performance management (Bamow, 2000).' The JTPA perfor.uance Teasurement system was distinct in its focus on program outcomes (for example, job placements and trainee earnings) rather than outputs (the ‘number of persons trained), the use of budgetary incentives for managers based on outcomes and the linking of performance measures across federal, state and local governments. It also incorporated the use of regression models with Performance data to statistically adjust perfor ‘mance standards for local population characteris- tics and economic conditions ‘Another example of a public sector perfor- ‘ance management system that was working to infuse quality management principles and ‘moving toward a focus on results, or ‘value for money’ (VFM), was the United Kingdom's Financial Management Initiative (FMI) of 1983, ‘As Osbome et al (1995: 20) explain, VFM was assessed by measuring ‘economy, efficiency and effectiveness’, but with ‘an explicit concem with ‘organizational structures and processes likely to ead to the “three Es’; of ‘management™ as ‘opposed to ‘administration’ asthe task of senior staff in the publi sector, and of decentralization, especially of budget holding, as an integral dimension of organizational design’. Both Reagan's and Thatcher’ initiatives incorporated at least three of the four public management reform principles that were emerging in the ‘reinventing goverment’ and NPM reforms of the 1990s: (1) measure results, 2) put the cus- tomer in the driver's seat, (3) introduce a market orientation and (4) decentralize (Gore, 1993). This light probing of the history of perfor mance measurement and public management reforms shows the progression of public sector i MEASURING PUBLIC SECTOR PERFORMANCE » performance measurement away from a more fational or technical focus on work procedures and process efficiency and a top-down, hierarchical approach to accountability for organization {inputs and outputs, and toward more participatory, multi-level systems that consider a broader range of factors affecting performance while ‘maintaining an explicit focus on the outcomes oF results of programs. Barbara Romzek (1998) has more generally described these emerging approaches to performance measurement as sy5- tems of professional accountability. Professional accountability, as Romzek (1998; 204) explains, defers to the discretion of managers ‘as they ‘work within broad parameters, rather than on close seruiny to ensure compliance with detailed rules and organizational directives". The broad parameters in public sector performance measure ment systems ofthe twenty-first century are out- comes, and a central challenge for public ‘managers is to effectively use the different types of information obtained through performance measurement activities to better understand the link between their own actions and these ‘more broadly defined organizational goals and outcomes. ‘THE STATE OF THE ART IN PERFORMANCE MEASUREMENT: ‘CHALLENGES AND PROSPECTS As the introduction and preceding review sug- gest, there are some important commonalities across local and national boundaries among, evolving public sector performance measure: ment systems. The more prominent features include: 1 performance measures focused on quality, ‘outcomes or results; 2 formal report requirements for comparing actual performance with performance goals or standards; 3 multiple levels of performance accountability in decentralized programs; and 4 market-oriented provisions such as financial/ ‘budgetary incentives for performance, as in the JTPA program, and plans to use perfor- ‘mance information to promote continuous improvement and increased citizen (‘cus- tomer’) satisfaction Itis also clear, however, that public managers are still struggling with how to make the ‘state-of- the-art” systems work. Challenges One challenge public managers confront in broadening performance measures beyond more straightforward, bottom-line targets (Guch as efficiency) toa focus on outcomes are problems in reaching consensus ~ at all levels of org Zation and management — on clearly defined, verifiable public objectives. Ina review of agency performance plans the US Government Accounting Office (US GAO, 1999: 6) sated ‘hat ‘mission fragmentation and program overlap ate widespread across the federal government” Sometimes the multiplicity or fragmentation of goals are inherent in originating legislation, mak: ing it more dificult for public managers to get. staff and stakeholders to think about how their diverse activities are related to a common out come. The JTPA legislation, for example, stated that programs should serve “those who can benefit from, and are most in need of employ- ment and training services. Heckman and Smith (1995) established empirically the tradeoft between these equity and efficiency goals in JTPA programs, showing that targeting those ‘most in need (the bottom 20 per cent of the skill distribution) significantly lowered the value-added gains from program participation ‘Behn (2001) contends that public managers can ‘jump this hoop’ and avoid goal coaflicts by choosing vague, uncontroversial, inconsequen tial, or easily attainable goals effectively repudi- sing the requirement). In Lindlom’s (1959. 576) clasic work on “the science of muddling through’, he notes that ‘much of organization theory argues the vires of common values and agreed organizational objectives’, but when administrators cannot agree on values or objec- tives, the preservation ofa diversity of views and ffogmented decision making, where some pars of the organization provide a check on others, is an acceptable strategy for managing complex Policies and problems. ‘Agencies’ choices for performance objectives have important implications, however, for the complex task of determining, quantitative mea- sures of performance goals. If objectives are broadly of vaguely defined, or if multiple goals are in confit, it will be more challenging to specify accurate and informative measures. For example, the US Department of Veterans’ Affairs Veterans Health Administration defined its goa to “improve the health status of veterans’ and identified performance measures of cast reductions pr patient andthe numberof patients served to evaluate progress (US GAO, 1999: 23) The disparities between this health quality goal do 20 HANDBOOK OF PUBLIC ADMINISTRATION and the inpuvefficiency performance measures used are glaring. Alternatively, Anne Khademian (1995) concluded in her study of the US Federal Deposit Insurance Corporation (FDIC) that a clear mandate about organizational objectives, that is, the solvency of the Bank Insurance Fund, and an explicit measure of organizational perfor mance toward that objective, were important motivators and guides for agency professionals ‘and managers who facilitated key changes to lead the agency out of crisis In the case of the FDIC, the measure of the Bank Insurance Fund’s solvency was directly related to the central organizational goal of protecting the health of banks; as Khademian (1995: 19) explains, ‘to the extent that failures can be prevented through effective examination and supervision, the fund will remain sound’, In their discussion of performance outcome measures, Gormley and Weimer (1999: 9) point ‘out that “direct measures of outcomes require no relational theories as they are operationalizations of conceptualized values’. As measures become ‘more distant from outcomes, associated through hypothesized relationships and proxy ot scalar variables (for example, test scores for school performance, mortality rates for health care services), verification becomes more complex and the degree of uncertainty in performance analysis increases, ‘An additional challenge for public managers is that performance requirements may contribute to what Bouckaert (1993: 403) deseribes as the “time-shortening disease’, which ‘makes the organization focus on the short instead of on the intermediate or long run’. Agency executives report that itis especially difficult to wanslate their long-term missions or strategic goals into ‘annual performance goals and to predict the level of results that might be achieved over a shorter term (US GAO, 1997a; Cabinet Office, 1998) John Ahearne, a former high-ranking official in the energy field, described GPRA’s performance requirements as disastrous for the US Depart- ment of Energy's nuclear waste clean-up pro- sgrams, as they can shift managers" attention to short-term goals that will likely impede progress toward longer-term clean-up and environmental Ihealth objectives (decades into the future). If shorter-term performance objectives and their measures are strongly correlated with longer-term program goals and impacts, public ‘managers might avoid this dilemma, Research on public programs suggests, however, that one is likely to err in assuming a positive correlation between short-term measures and long-term organizational performance. In theit studies of federal job training programs, Heckman and ‘Smith (1995) and Barnow (2000) showed that short-term performance measures of partici- ants’ employment rates and camings levels following program discharge were at best weakly (and sometimes negatively) related to longer {erm employment and earnings impacts est ‘mated using experimental data. Burghardt and Schochet (2001) of the US National Job Corps Study compared impact estimates from an experimental study of education and earings ‘outcomes across Job Corps centers rated as hhigh-, medium- and low-performers by the Job Comps performance measurement system and found that the Job Corps performance measure- ‘ment system failed to distinguish between more and less effective centers. In addition, studies of school effectiveness have found that some teach- ets respond to performance requirements based fon student test scores by ‘teaching to the test, with likely negative implications for students* longer-term educational success (Gormely and Weimer, 1999; Koretz, 1999). At least one US GAO report (19976) has sug- gested supplementing performance data with Impact evaluation studies to obtain a more precise understanding of program effects and to verify (or disprove) relationships between shor- term measures and long-term goals. The National ITPA and Job Corps Studies are examples of these types of evaluations. A primary advantage of experimental impact evaluations is their potential to identify causal linkages and the “unique contribution’ that an organization makes to outcomes (Hatry, 1999; Bloom et al., 2001). A disadvantage is that multi-site experiments are frequently costly and potentially disruptive to program operations, While they are unlikely to ‘enerate the timely, regular feedback that public ‘managers require to produce performance reports and make adjustments (in budget allocations, service strategies, management practices ete.) 10 improve performance, they do provide an impor- tant check on the performance measurement systems routinely used (as in the ease of the Job (Comps program.) ‘A final issue or challenge embedded in this discussion is the level of accountability and analysis in performance measurement systems. In organization science and public administra tion literatures, a conventional view distin- gushes ‘top-down’ and ‘bottom-up’ approaches to performance accountability. The government of New Zealand, for example, only holds off cials atthe top (policy making) level accountable for program outcomes, exempting public man- fgets and personnel in operating departments from performance requirements (Hatry, 1999), Bottom-up approaches, alternatively, focus on a MEASURING PUBLIC SECTOR PERFORMANCE a formance management activities originating ta lower level that have emergent properties at higher levels. TQM, for example, has been fesoribed as a bottom-up approach to improving organizational performance, where individual ‘TOM training, work behaviors and social inter- actions combine ata lower level and emerge over time to influence organizational outcomes. The fact is, however, that in a majority of organiza- tions, performance analysis is likely occurring at ‘more than one level of organization. As DeNist (2000: 121) explains, performance measurement { “both a multilevel and a cross-level pheno- ‘enon’; either explicitly (as in the JTPA perfor- ‘mance measurement system) or informally, public managers at multiple levels of organiza- tion measure performance, and activities and responses atone level are likely to have effects at ther levels. Bouckaert (1993: 38) deseribes this asa “top-down and bottom-up interaction’. He fargues that the more the bottom and middle management are involved in performance ‘measurement activities, the greater their commit: ‘ment to them, "The challenge for public managers and researchers is to ascertain and understand the effects, multi-level and cross-level, planned and ‘unintended, occurring in performance measure- iment systems. In studies of the implementation ‘of GPRA, for example, Radin (2000a) and Mintzberg (1996) conclude that rather than freeing public managers to focus on results, the performance requirements have increased adtnini- sirative constraints, elevated conflict among ‘multiple levels of program management, and ‘engendered distrust between agencies and legis- lators about gaming of measures. In their study fof the ITPA program, Courty and Marschke (1997) showed empirically how some local program managers chose to ‘game’ the federal performance standards in order to increase their agencies’ measured performance in ways inde- pendent of actual performance. Given the limited or indirect influence that public managers com- ‘monly have on organizational outcomes and the difficulties of separating out effects of multiple layers of policy and management, managers’ desire to manipulate performance measures in ways that will improve their measured but not factual performance is understandable, if not acceptable, Prospects ‘A central theme of ths chapter is that rather than. simply documenting performance outcomes, public sector performance measurement activities ‘and research should help public managers to understand how their own policy and manage- ment decisions are linked to outcomes and the systemic and situational factors that might con- slrain or intervene in these relationships to affect performance. Along these lines, Laurence E. Lynn, Jr (1998: 236), deliberating the legacy’ of the New Public Management, urged a “theory- based research agenda’ that addresses questions about how and to what extent institutions, lead- crship and management influence government performance or ‘the creation of effective, accountable democratic states’. Rainey and Steinbauer (1999) reviewed the literature on government effectiveness and also called for a ‘more theoretical approach to research on govern- ‘ment performance, in particular, theories linking the organization, ‘management, resources and ‘external stakeholders of agencies to their effec~ tiveness. As Bouckaert (1993) implores, ‘perfor- ‘mance measures have to contribute to the ‘maintenance orto the development ofthe organi~ zation itself", The theoretical ‘building blocks” for this undertaking exist, the corresponding challenge is to integrate the intellectual contti~ butions of multiple disciplines in an analytical framework that will produce, on an_ ongoing basis, useful information and insights for public managers. Context, process and level of analysis: ‘A major concern about performance account ability, public managers profess, is that their responsibility is not commensurate with their authority (Mintzberg, 1996). As Lynn, Heinrich and Hill (2001) note, public policies and programs are being administered through increasingly complex, decentralized governance structures, including’ networks, collaborations ‘and partnerships among public, nonprofit and for-profit organizations. In accounting for per- formance across “diverse and dispersed’ admin- istrative entities and service units, many of which may operate in varying social, political, and fiscal contexts, public managers need to achieve a tenable balance between demands for analytical rigor and accuracy in performance ‘measurement and political and practical limita- tions on what is feasible to measure in complex governing systems. Furthermore, if results are publicized and agencies are rewarded or penal- zed for performance, then performance. stan- dards have to take into account the ability of agencies or managers to effect change and Contribute to improved outcomes or program value-added. 2 HANDBOOK OF PUBLIC ADMINISTRATION One strategy promoted in some public management reform circles is to adopt a narrower focus on a single, relatively straightforward ‘measure of performance such as a scalar measure of clientcitizen satisfaction. Described as bottom-up accountability’, holding govern- iments accountable to citizens (voters) is seen as “replicating the virtues of the marketplace’ (Gormley and Weimer, 1999: 198). This approach assumes that public managers ean ignore context and fevels and also assumes that citizens are suf: ficiently informed to provide reliable feedback Research on the determinants of citizens’ att tudes and their evaluations of public activities and services, however, shows “considerable ambivalence and volatility in their preferences? and ‘inconsistent evaluations of services and taxes’, reflecting their own conflicting attitudes, values and perspectives (Beck et al,, 1990: 71-2). Thus, public managers are not likely to get a clear picture of whether or not government performance is improving simply by tracking Citizen satisfaction ratings. At another extreme, scholars might collabo- rate with public managers to construct and apply ‘multidisciptinary, theory-based models of organi- zational performance that fully account for all Potential interrelationships within and between ‘organizations, employee and clienveitizen char- acteristics, and intervening political and environ- ‘mental factors. For example, sociologists and social-psychologists identify contextual factors such as organizational complexity, coordination, climate, culture and values, competition among ‘or within functional units, and individual mem- ber characteristics, cognitive and social behav- its that affect performance (Marcoulides and Heck, 1993; Murphy and Cleveland, 1995) Political scientists highlight the influence of legislative mandates and coalitions, bureaucratic discretion and control, politcal ideology and values, and other dynamics of political processes. Economists focus on the role of infor- mation asymmetries, transaction costs, monetary incentives and competition, among other variables affecting public sector performance management (Dixit, 1999). In formulating a model to evaluate performance, including a broad range of variables at multipte levels of government organization or structure, one would confront many obvious conceptual and methodological challenges, In view of these formidable challenges, public administration’management scholars, along with public managers, have been striving to elucidate ‘ constructive ‘middle ground’ for public sector performance measurement, While there is no singular strategy or archetype that all. public ‘managers might adapt and use, there are a number of well-aniculated theoretical and analytica models that executive administrators might drav upon in developing more effective systems fo ‘measuring and managing government perfor mance. The differing capabilities and needs fo collecting and analyzing performance dat among government agencies performing differ ent functions at different levels of governmen also has implications forthe strategy or approacl to performance measurement they might use ‘The models discussed below explicitly conside context, process, levels of analysis and the dat: available to public managers in measurin, performance and evaluating the relationship © ‘management to outcomes, ‘Models for public sector performance ‘measurement and their opplication Hatty (1999) presents @ ‘log! a1 model’ o “relevant factors’ in a performance measuremen system — one that links inputs, activities, output: ‘and outcomes ~ and describes the relationship: among these different types of performance information. His very simple model does no formally identify the influence of context o: environmental factors nor the relationshi among performance measures across differen levels of government or analysis, However, he calls for public managers to obtain ‘explanatory information’ along with their performance data from qualitative assessments by program persor- nel to in-depth program evaluations that produce statistically reliable information ~ to interpret the ‘data and identify problems and possible manage. ment or organizational responses, In their ‘revised rationalist model of perfor mance assessment’ that acknowledges the “bounded rationality” of public managers, polit: cal interests and other contextual and catalytic influences, Osborne et al. (1995) incorporate the same basic elements as Hatry’s model bu develop a more complex, formal model or frame: work for understanding the role and influence of Hatry's ‘explanatory’ factors. Like Hatry’s ‘model, their framework depicts the types anc purposes of different performance monitoring, ‘measurement activities and performance indica: tors and data required for measures.” They alse identify different levels and frequency of moni ‘oring/measurement in public programs and combine the different types of performance information with three fevels of measurement - the projectteam level, program level and strate- gic (local or national senior management) level ~ to construct a multidimensional ‘matrix framework’ for assessing performance that MEASURING PUBLIC SECTOR PERFORMANCE 2 recognizes different types of monitoring! ‘Measurement will occur at different levels. In plying their model in a study of the British Pein Programme of the Rural Development ‘Commission, they recounted the dearth of infor~ ‘gation for all types of monitoring and measures iit the challenges of integrating performance esessment practices at multiple levels into @ ‘holistic framework of performance manage- ment’ (Osbome et al, 1995: 30). The main ‘Saength of their model for public managers lies eis use for conceptually organizing and plan- ring # system of performance data collection. Tin an approach that moves closer toward pro- mm evaluation in explaining performance, ‘Mead (forthcoming) describes ‘performance analysis’ asa strategy that aims ‘to relate the practices of programs to measures of perfor fnance’. The performance studies be sets forth as exemplars involve statistical modeling to associ- te program features with performance out. comes, while controlling for demographics, economic conditions and other contextual factors. Mead urges researchers to use field inter- views with program administrators to gain an in-depth understanding of how programs operate and t0 guide the development of hypotheses for Statistical analysis. Public managers who possess this information would need to develop opera- tional definitions and measures of administrative practices, organizational capacity and other program-level variables that could be monitored fod used in statistical analysis. In Mead’s generally conceptualized statistical model for evaluating performance, the dependent variable isa program- Tevel performance indicator. His approach is probably best regarded, as he describes it, as @ uantitative process ‘research methodology applied at a specifi level of analysis.” ‘Mead’s approach to statistically modeling the processes and practices of programs and their ‘elationship to performance measures is taken & step further in @ multi-level, organizing frame- work for performance analysis advanced by Lynn, Heinrich and Hill (2001). Their frame- ‘work delineates a hierarchy of relationships (across multiple levels of govemment) among: legislative and political choice (that is, responsi- bilities for implementing public law), governance structures, management strategies, core tech- nologies and organizational functions, outcomes and client) citizen assessments. Heinrich and Lynn (2000) describe a number of applications of this framework ~ in studies of public school performance, welfare and job-training program ‘outcomes, and health care services outcomes ‘that use @ multilevel statistical modeling strategy to identify causal relationships within and across hicrarchical levels of government and in a broader environmental context, while recognizing, the potential influence of unmeasured factors on performance analysis findings. Bloom, Hill and Riccio (2001), for example, recently completed @ ‘multi-level re-analysis of data from the multi-site Job Opportunities and Basie Skills (]OBS) evalu: ation, In analyzing the effects of program ‘management, services, economic environment ‘and client characteristics on the earings of ‘welfare-to-work clients across local offices, they Found that management choices and practices related to goals client-staff interfaces and service strategies had substantive, statistically significant effects on client outcomes and impacts. ‘Some public managers and scholars interested in following a more advanced analytical and statistical approach to performance analysis right be constrained by the data requirements and costs associated with data collection and analysis, The best data typically available to public managers for ongoing. performance ‘analyses are administrative data that are regu- larly and consistently collected in support of an organization's functions. Administrative data commonly include detailed information about Clients of public programs, their progression through program services and outcomes, and the ‘marginal costs of collecting data across multiple programs, sites or fiscal years are generally low. Goerge (1999) notes that nearly every Federal and state program in the United States now has a database for administrative and performance ‘management. Recent studies that compare the use of experi mental data (for estimating program impacts) with regularly collected administrative data on program operations and outcomes generate encouraging findings for public managers about the potential for using administrative data in pe formance management (Hill, 2001; Heinrich, 2002). Hill and Fleinrich both find that relying on ‘administrative data to gencrate information about how to improve program performance is not likely to misdirect managers away from pro- ‘gram impact goals, although particular estimates of the magnitude of outcomes may differ from those of the sizeof impacts. If governments with ‘administrative data systems are able to incorpo- rate data fields that describe management poli cies and processes across sites or local service locations, public managers might more effee- tively use administrative and performance data to understand the effects of different policies and approaches to managing and delivering govern- ‘ment services. "The analytical models highlighted here, and their applications in measuring and managing 4 HANDBOOK OF PUBLIC ADMINISTRATION public sector performance, are clearly moving foward more in-depth investigations of how out- comes are produced. As Hatry (1999: 8) explains, ‘performance measurement can be con- sidered a field of program evaluation’, where program evaluations ‘not only examine a pro- ‘grams outcomes but also identify the whys, including the extent to which the program actu. ally caused the outcomes’. As the time and costs involved in these performance measurement! evaluation approaches continue to decline with advances in information technology, their recog- nition as viable strategies for improving the qual- ity and usefulness of performance information available to public managers (and the resulting performance outcomes) is likely to grow. CONCLUSION Distinct from the 1990s public sector theme calling for documentation of explicit government ‘outcomes, this chapter elaborates another theme, calling for performance management that goes beyond documentation of outcomes. It advocates the collection and use of performance informa- tion that will aid public managers in understand ing how their decisions and actions are linked to outcomes, and what environmental or contextual factors might limit or increase their effectiveness as managers ‘The historical review of performance measure ‘ment and organizational effectiveness literatures showed that scholars and managers have long recognized the influence of a range of organiza- tional, individual-level and contextual factors on organizational performance. Until recently, the analytical challenges of separating out the role and effects of policy and management from other factors were beyond the technical capabilites of performance analysis. With advances in data collection and storage, theory and statistical ‘modeling, and computing capacity, we have an obligation to increase our understanding of the contributions public managers can make to organizational performance and what realistic ‘expectations for results are, given the context and environment in which they operate. ‘The examples of models for performance mea- surement described in this chapter suggest an ambitious path for future research and perfor- ‘mance measurement activities, while also recog nizing that the differing functions, levels, capabilities, resources and objectives of govern ‘ment organizations will influence the strategy or approach to performance measurement they use Where resources for performance are fewer, initial goals for using performance data may hhave to be modest, following an approach like that outlined by Hatry (1999). In North Carolina, for example, local governments cooperate in data collection activities that allow for the production of comparative measures of service efficiency and fiscal performance. Local government offi- cials then participate in dialogues that encourage the sharing and discussion of information about ‘explanatory factors’ — management practices, service processes. and local environment and Population characteristics ~ to help them to Understand differences or disparities in observed performance. While there is no formal modeling of relationships between possible explanatory variables and performance measures, the project has established a support structure forthe types of discussions that may continue to advance the use of performance data across sites and in a broader management context. As Rivenbark (2001: v) comments, "The cities and Lounties that participate in the North Carolina project do not endure the challenges of data collection, clean- ing, and reporting simply to produce a report ‘They participate with the belief that performance ‘measurement and benchmarking are the catalysts to service or process improvement.” The importance of work that has been done in the 1990s, in the context of public management reforms, to advance the use of government administrative data and to link these data across programs of to other databases with economic! nvironmental/contextual data (for example, local labor market information data) should not bbe underestimated. A recent University of California data study, involving twenty-six US States and nine social service program areas, identified over 100 examples where administra. tive databases had been linked across programs or levels to facilitate multi-site and/or multilevel analyses of program dynamics and performance (UC Data, 1999) In their discussion of organiza- tional ‘report cards,’ Gormley and Weimer (1999) describe & number of other examples of national, state and local government organiza- tions that collect data regularly and ‘transform’ them into information that can be interpreted by external audiences and used to assess and improve performance, At the same time, this chapter also addressed some of the continuing challenges and tradeofts in performance measurement between: compre- hensive or broadly defined goals and precision of ‘measures; short-term, measurable objectives and long-term program goals; and more simple, direct approaches to documenting and under: standing performance outcomes versus more MEASURING PUBLIC SECTOR PERFORMANCE 35 complex statistical strategies for performance analysis that aim to identify performance drivers or the causal influences of systemic and environ- ‘mental factors on performance. Public managers and scholars will have to decide how to continue balancing these tradeoffs, guided by the perfor- ‘mance management questions they are address- ‘ng, the data available to them and their capacity for analyzing data. In the face ofthese chatlenges and complexities, we, as a public, also need to acknowledge that some quantitative performance ‘measures will be indicators at best and not highly accurate or informative measures of a program's ‘value or effectiveness, Our ‘demands for perfor ‘mance’ documentation should focus more on ‘what public managers can lear about how to improve performance and less on the precise ‘measurement of performance levels or *bottom- line" outcomes. NOTES 1 Because ofthe comparatively fog tenure of outcomes: tasedstanardsin the JTPA program and its istinctively vanced use of statistical analysis in determining performance ratings, | raw additional examples from the ITPA performance standards experince trcughost this chapter. 2 Among the pes of performance monitoring. and ‘measures, Osborne et include: ‘context monitoring’ (Gg, of changing socioeconomic and institutional factor; ee type of inpuprocesssssessment(srat- my, “progress” and “activity” monitoring): "impact Imessures, both quantitative and qualitative that eval ste performance “aginst te highest level objectives sn trgts'; and ‘catalytic monitoring’ of inluences lipacts on the wider serice deliveny sytem, other fgsoces or people (Osborne eta, 1995: 27) 3 Mead applies his "performance analysis approschin2 study of welfare reform outcomes in Wisconsin REFERENCES. ‘Abramson, Mark A. and Kamensky, John M. 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The chapter is in five parts, The first part presents the basic elements of strategic planning, including its attention tothe environment, stake- holders, mission, mandates, strategic issues and strategies. Strategic planning is the basic build ing block of strategic management, which is described in the second part. The basic appro- aches to insttutionalizing strategic management strategic planning systems are presented next in 4 section on strategic planning systems. In the fourth section current trends in strategic planning ‘and management are discussed. Finally, a number ‘of conelusions are presented, STRATEGIC PLANNING! Strategie planning may be defined as ‘a dis plined effort to produce fundamental decisions ‘and actions that shape and guide what an organi- zation (or other entity) is, what it does, and why it does it? (Bryson, 1995: 4-5). While many authors have suggested generic strategic plan- ning processes (for example, Nutt and Backof, 1992; Bryson, 1995; Eden and Ackermann, planning is not a single thing, but is instead a set ‘of concepts, procedures and tools that must be tailored carefully to situations if desirable out- comes are fo be achieved (Bryson and Roering, 1996; Christensen, 1999; Mintzberg etal, 1998). Poister and Strib (1999), ina review summariz- ing the field of strategic planning and manage- ‘ment, assert that stratewic planning, ‘+ Is concemed with identifying and responding to the most fundamental issues facing an ‘organization ‘Addresses the subjective question of purpose ‘and the often competing values that influence rission and strategies + Emphasizes the importance of external trends and forces as they are likely to affect the ‘organization and its mission ‘+ Attempts to be politically realistic by taking into account the concems and preferences of internal, and especially external, stakeholders ‘+ Relies heavily on the active involvement of senior level managers, and sometimes elected officials, assisted by staff support where needed ‘+ Requires the candid conftontation of critical issues by key participants in order to build commitment to plans. ‘+ Isaction-oriented and stresses the importance ‘of developing plans for implementing strate- aes, and ‘+ Focuses om implementing decisions now in ‘order to position the organization favorably forthe future, : Strategic planning for organizations has devel- ‘oped primarily in the private sector. This history bo STRATEGIC PLANNING AND MANAGEMENT » tas been amply documented by others (Eden and ‘Ackermann, 1998). Inthe pst twenty years, how ver public and nonprofituse of static planning fas skyrocketed, This experience, anda growing body of literature, have indicated that strategic planning approaches either developed in the private sector, orelse strongly influenced by them, fan help public organizations, as well as com: munities or other entities, dea! ineffective ways ‘with their dramatically changing environments inthe United States, for example, a substantial msjorty of municipal and state governments, and sm overwhelming majority of federal agencies and onprofit organization, make use of strategic planing, Strategic planning has been applied ‘rincipally to public and nonprofit organizations, but applications to communities have increased substantially as well (Poster and Sueid, 1994; Berman and West, 1998), Other nations ~ and particularly OECD counties ~ also make use to varying degrees of strategic planning concept, procedures and tools for public and nonprofit orga- {izations and communities (for example, Osborne anu Plastik, 1997; Faludi and Salet, 2000) ‘When done well, strategic planning offers a umber of benefits. Advocates usualy pint to four ‘main potential benefits. Te fist is the promotion af strategic thought and action. The second is inproved decision making, while the thied is ‘enhanced organizational responsiveness and inproved performance. Finally, strategie planning can direcly benefit the organizations people by helping them beter perform their roles, meet their responsibilities and enhance teamwork and exper- tise. There is no guarantee, however, that these ‘benefits will be achieved. For one thing, strategic planning is simply a set of concepts, procedures and tools that must be applied wisely to specific situations. For another, even when they are applied wisely, there is no guarantee of succes ‘Beyond that, strategic planning is not always advisable, particularly for an organization facing an immediate eisis (although every crisis should bbe managed strategically), or when the organiza- tion lacks the skills, resources, or commitment by key decision makers to produce @ good plan. Such situations embody what may be called ‘the paradox of strategic planning’ it s most needed ‘where it is least likey to work, and last needed where itis most likely 0 work (Bryson and Roering, 1988). Ttis important to highlight what strategic plan- ning isnot. Strategie planning isnot a substitute for strategic thinking and acting. It may help people do that, but used uawisely may hinder strategic thinking and acting, Strategic planning is not a substitute for leadership. Atleast some key actors must be committed othe processor it is bound to fail, Said differently, strategic planning is best seen as a leadership tool, where leadership is broadly conceived to include more than top positional leaders. Strategie planning also is not a substitute for an organizational or community strategy. Strategies have numerous sources, both planned and unplanned. Strategic planning is likely to result ina statement of organi- ational or community intentions, but what is realized in practice will be some combination of What ig intended with what emerges along the way (Mintaberg et al, 1998). Finally, strategic planning is not synonymous with what is called ‘comprehensive planning for communities in the US, or has been called séructure planning in Europe. There may be litle difference if the agency doing the comprehensive or structure planning is tied directly to governmental deci- sion makers. However, in practice, there may be three significant differences (Bryson, 2000). First, the plans often are prepared to meet legal requirements and must be formulated according 0 a legally prescribed process with legally prescribed content. As legal instruments, these plans have an important influence. On the ‘other hand, the plans’ typical rigidity can conflict with the political process with which public officials must cope. Strategic plans therefore ‘can provide a bridge from legally required and relatively rigid policy statements to actual deci- sions and operations. Second, comprehensive or structure plans usually are limited to less than a government's full agenda of roles and responsibilities. For that reason, they are of less use to key decision makers than strategic planning, which can embrace all of| 1 govemment’s actual and potential roles before deciding why, where, when and how to act. Third, as Kaufman and Jacobs (1987) argue, strategic planning on behalf of a community is more action-oriented, more broadly participa tory, more emphatic about the need to under stand the community's strengths and weaknesses as well as the opportunities and threats it faces, and more attentive to intereommunity competi tive behavior. Strategic planning thus typically is ‘more comprehensive than comprehensive plan- ning or structure planning, while at the same time producing a more limited action focus. STRATEGIC MANAGEMENT ‘Stategic planning also is typically distinguished from strategic management. Strategic planning is the comerstone of strategic management, but the latter is a far more encompassing. process, “ HANDBOOK OF PUBLIC ADMINISTRATION “concemed with managing an organization in a strategic manner on a continuing basis’ (Poister and Streib, 1999: 310). Strategic management links strategic planning and implementation by adding ongoing atention to budgeting, to perfor- mance measurement, management and evalua- tion, and to feedback relationships among these elements Poster and Streib (1999) present a framework for thinking about strategic management as a process, The framework incorporates seven elements: values, mission, and vision; strategic planning; results-oriented budgeting; performance ‘management; strategic measurement; assessment Of the intemal and extemal environment; and feedback relationships among these elements ‘These elements will be discussed briefly in turn Values, mission and vision are seen asa central organizing force for strategic manage- ment efforts, If consensus can be achieved on these elements among key stakeholders, the creation and operation ofa strategic management system will be far easier than it would be other- wise. If consensus is not possible, then the system no doubt will be looser and less inte- grated. In fact, because consensus on values, mission and vision is difficult to achieve in ‘many ~ perhaps most ~ circumstances, tightly integrated strategic management systems. are ‘ot particularly common, and probably should not be pursued in most situations, Strategic planning can be used to help organi- zations articulate their values, mission and visions and to develop strategic initiatives to realize them in practice, The initiatives must be resourced properly if they are to be implemented effectively. Results-oriented budgeting is one answer to this challenge and is rapidly gaining currency throughout the world, Such an approach begins with the organization's strategic agenda, specifies expected outputs or outcomes for each strategy, program, project, or activity, and then links funding to these elements. This sort of bud- ‘geting process can be used to gamer adequate resources for specific strategic initiatives and to provide incentives to organizational members and other stakeholders to support the strategic agenda. Performance management involves strategies ‘and mechanisms for assigning responsibility for strategic initiatives to specific units and individ- uals and holding them accountable for results, For example, management by objectives (MBO) systems are widely used for this purpose. Balanced Scorecard (BSC) approaches are gaining attention globally as another method for translating values, mission and vision into measurable and manageable organizational performance. BSC approaches try to ‘balance’ attention to financial outcomes with attention to ‘outcomes focused on stakeholders’ or customers” ‘concerns, crucial internal process, and the learning and growth of the organization and its employees (Kaplan and Norton, 1992, 1993; Kaplan, 1998; Poister and Streib, 1999), Strategic measurement involves the identi- fication and tracking of valid measures of the ‘organization's performance as it attempts to achieve its strategic objectives. Attending 0 these measures helps chart progress and success, assess whether budget allocations are appropriate and figure out what to do next, Unfortunately, development of valid and politically support i measures can be very difficult for public organi- zations and often represents an Achilles heel for Strategic management systems (Ammons, 1995; Innes, 1996, 1998). ‘These various elements must be pursued in a context of ongoing internal and extemal moni- toring, assessment and engagement with key stakeholders or they are unlikely to result in wise or politically realistic information, decisions and actions. Adequate feedback across the various system elements is needed for effective leaming, adaptation and leadership to occur. The job certainly is not easy and success is hardly guaranteed. Nonetheless, in the United States and many OECD countries, in particular, Powerful forces are prompting public organiza, tions to ty, if not to fully embrace, strategic ‘management approaches, These forces include growing demands for public accountability, Increased legislative oversight, fiscal conser” vatism, and professional attention to leadership, improved performance and customer service ‘The idea of ‘managing for results” is a rallying Point for public management scholars and practi- Wioners. As Poister and Strib (1999: 323) assert, {Ho} public agencies of any size and compleity, it ' imposible to manage for results without a well developed capacity for strategic management. Indeed, fon a macro level, stategie management with its emphasis on developing and implementing 2 strategic agenda, is synonymous with managing for resus While treatment of more specific tol, such a strategic planning, performance measurement, qulity improve ent, work process reengineering, and resulte-based boudgeting, has been more prevalent in the public ‘doinistration iteratre, sategic management 16 the etal integrative process which aves th rgaiztion 8 sease of direction and assures a concerted effort to scheve stratepic goals and objectives, Although the implementation of strategic ‘management has its difficulties, the success of this innovation inthe United States, in particular, ll STRATEGIC PLANNING AND MANAGEMENT a js a marked improvement over previous related efforts (for example, Planning, Programming, and Budgeting Systems, and Zero-Based Budgeting) Cleatly, there appears to be something quite dif ferent about the current situation. Perhaps it is the cumulative experience of prior reform efforts tbat has led to greater understanding of how to pursue results-oriented management. Perhaps it Fran embrace of the rhetoric of business, the fanguage of customer service and the ideas of Total Quality Management, along with polit cians’ and professionals’ pursuit of downsizing, feengineering and reinvention (Fesler and Ket, 1996: 68-87). Pechaps itis the rise ofa ‘result oriented” discourse, as in Osbome and Gaebler’s best-selling Reinventing Government (1992), Vice President Al Gore's The Gore Report on Reinventing Government (1993), Moore's Creating Public Value (1995), or Osborne and Plastrik's Banishing Bureaucracy (1997) Perhaps itis the rise of @ new cadre of political leaders and professional managers who feel free to challenge old shibboleths and homilies about the way things are now and always will be. Whatever the causes, managing for results and public strategic management appear to be ‘embedded in US public administration practice ina way they have not before. STRATEGIC MANAGEMENT SYSTEMS? Experience suggests that itis relatively easy to get a small group of people ~ say, five to a few hundred ~ through a strategic planning process. What is more difficult is to embed strategic thought and action throughout an organization, interorganizational network, or community (that is, small and large cities, counties, regions, or states), Strategic management systems are one ‘means of inducing and linking strategic thinking and acting throughout an organization ot other entity, The systems are meant to promote strate- Bie thought and action in appropriate places at appropriate times, and to control ot guide the Way strategies are implemented Because organizational strategies typically remain fairly table for long periods of time and then change rather abruptly (Mintzberg, 1994), these systems are usually more focused on strategy implementation than on strategy formula- tion. The systems are thus mostly organizational mechanisms or arrangements for strategically managing the implementation of agreed-upon strategies. Said somewhat differently, these systems are themselves a kind of organizational (Gr interorganizational, or community) strategy for implementing policies and plans. TAL the same time, the systems do usually ‘embody procedures and occasions for routinely reassessing strategies. Il is during the reassess- tment process that new strategies tend to be “found” or “formulated. These strategies typi- cally are present in nascent or emergent form already in the organization, The strategy reassessment process simply raises them 10 prominence in an incremental, or otherwise non-disruptive fashion. The ‘new” strategies that these systems produce are thus mainly variations on existing themes, rather than new themes. The really big changes, when they occur, usualy are either induced from outside via new mandates, new leadership, or drastic environmental changes, or else represent the cumulative minor organiza- tional adjustments t persistent environmental pressutes ~ changes in degree — that lead to changes in kind (Bryson and Crosby, 1992; Mintzberg, 1994; Bryson, 1995) While its often important to create and main- tain a strategic management system, itis also important to. guard against the tendency such systems have of driving out wise strategic thought and action ~ precisely those phenomena that strategic planning and management (at their best) promote. An important guideline therefore should be that whenever any strategie manage- tment system (or strategic planning process) threatens to drive out wise strategic thought and action, effors should be made to change the system (or process) and get back to promoting effective stategic thought and action “There appear to be five main types of strategic management systems in the United States and ‘other OECD countries, although every strategic management system that I have seen appears to be a hybrid ofthe five types. The types’ there- fore reer to dominant tendencies. The types are the layered or stacked units of management model, strategic issues management models, contract models, portfolio management models and goal or ‘benchmark’ models. Each will be discussed briefly in tum. ‘The purpose of the layered or stacked units of ‘management model is t effectively link inside and outside environments through development and implementation of an integrated set of state- gies across levels and functions of the organ tion (Boschken, 1988; Poster and Sie, 1999) ‘Often the model is applied through pubic appli- cation ofthe classic, private~ sector, oxporate- style ‘goals down ~ plans up' two-cycle strategic, planning process In the fist eyele, there is a “eotiom up" development of strategic plans ne 2 HANDBOOK OF PUBLIC ADMINISTRATION, within a framework of goals, objectives and other guidance established at the top, followed by review and reconciliation at each succeeding, Tevel. In the second cycle, operating plans are developed to implement the strategic plans. In each cycle efforts are made to explicitly, logi- cally and persuasively relate levels, functions ‘and. inside and outside environments. The process is repeated each year within the general framework established by the organization's ‘grand or umbrella strategies. Every three to five years these overarching strategies are reviewed land modified based on experience, changing conditions and the emergence of new strategies that were not necessarily planned in advance. In the United States, the Government Performance and Results Act of 1993 (Public Law 103-62) has been an ambitious attempt to establish a sort of layered or stacked units of management system for each Federal agency and for the Executive Branch as a whole. It is precisely this sort of system that is most prone to driving out strategic thought and action, ‘That occurs when the system is underpinned by a belief that the future actually can be predicted accurately, is too detached from the messiness of ‘operational reality and is characterized by exces- sive centralization of power and formality (Roberts, 1993; Mintzberg, 1994; Roberts and ‘Wargo, 1994), Such systems are very likely to be blind-sided by events that cannot be predicted and wreak havoc on existing strategies and plans. ‘The systems therefore must be used with extreme caution, since they can take on a life oftheir own, ‘promote incremental change when major change is needed and serve only the interests of the Teaders, managers and planners who wish to resist ~ not promote ~ major change. Strategie issues management systems are the ‘most common form of insttutionalized strategic ‘management system in public organizations. ‘These systems do not attempt to integrate strate- gies across levels and functions to the extent that layered or stacked units of management approaches do. The reason is that most of the issues are on different time frames, involve Gifferent constituencies and politics, and do not need to be considered in the light of all other igsues. As a result, issues are not managed comprehensively as a set, but instead are dealt with one by one within an overarching frame- ‘work of organizational mission and strategic oals or objectives. While each issue is managed relatively separately, it is of course necessary to make sure choices in one issue area do not cause ‘rouble in other issue areas, ‘While many public organizations have several task forees in operation at any one time, fewer £0 the nest step to design and use a strategic issues management system. They do not establish an overall framework of organizational mission, goals or policy objectives, systematically seek fut issues to address, or make sure their various ‘ssues-management activities add up to increased organizational effectiveness. Organizational leaders and managers thus should consider estab- lishing a strategic issues management system, keeping in mind thatthe resulting centralization of certain key decisions at the top is likely to raw the attention and resistance of those who do ‘ot want to see power concentrated in that way or who dislike the resulting decisions ‘The contract model is becoming an increas- ingly popular approach to institutionalizing strategic planning and management (Osbome ‘and Plasrik, 1997). Its the basic model fr organi- zing the National Health Service in the United Kingdom, where area boards assess health needs for their geographic area and then contract with various providers for the delivery of desired services, The contract model also is employed for much of the planning and delivery of many publicly financed services in the United States ‘via either public or nonprofit service providers. ‘And the model is used to institutionalize strategic planning and management in US school districts utilizing site-based management. In this model, there is a ‘center’ that estab- lishes strategic objectives for the jurisdiction or organization as a whole, negotiates contracts with individual units of management, monitors performance and ensures the integrity of the system. The contract between the center and a unit outlines the unit's expected performance, indicates the resources it will receive from the center, lists other support the unit can expect from the center and describes a review and re-negotiation sequence. Within the framework and Tegal strictures of the contract, general ‘managers of individual units and their staffs are free t0 do whatever they think is necessary or desirable to ensure adequate performance. The approach allows both the center and the indivi Performance > Appraisal of performance >» Reward decision’ Performance pay plans are essentially instruments that are used to tle worker or work unit motiva- tion, effort and performance to compensation, Pay-for-performance schemes are grounded in expectancy theory (Milkovich and Wigdor, 1991; 4 Comparative Performance Pay Michael Katula and James L. Perry OECD, 1993). Expectancy theory postulates that levels of effort and performance are linked with levels of compensation (Vroom, 1964; Lawler, 1973), Rational choice is integral to the theory (Lawler, 2000). In short, a manager can achieve the desited level of effort and performance from an employee through formulating a worthy reward, usually monetary in nature, Individual decision makers will evaluate the worth of that reward and gauge their effort accordingly. Assuming that individual employees are rational decision makers, the trick for management is to offer rewards that will lead tothe desired level of ‘output by workers ‘Theories of goal setting also come into play in the conceptualization of performance pay plans Goal setting theory states that employee perfor- mance is likely to improve when employees believe that the goals are attainable (Locke, 1968; Locke and Latham, 1990). Again, this theory ‘considers the individual to be rational. Employees are able to discern between goals that are attain- able and those that are beyond accomplish ‘ment at a given level of effort. Although the expectancy and goal setting theoretical founda- tions of performance pay are elegant and straightforward, the practice of implementing actual plans has proven more complicated, We will discuss these problems at greater length in later sections of this chapter. We first discuss ‘different types of performance pay. ‘TYPES OF PERFORMANCE PAY PLANS Pay-for-performance schemes can take several forms. These forms ae perhaps best examined in ua HANDBOOK OF PUBLIC ADMINISTRATION. Level of performance Inia Group ‘Add to base je. o Contribution rere pln Saal group incentives fobae — Noradied «= TY Salary to tase Proce rates Pro sharing ‘Commissions Gainsaring Bonuses Bonuses the two-by-two matrix established by Milkovich and Wigdor (1991). We have reproduced their matrix in Figure 4.1 as a frame forthe following discussion, Milkovich and Wigdor categorize the elements of the matrix based on individual versus group level of performance and whether or not the incen. tive compensation is added to an employee's base salary. The individual or group nature ofthe plan is important Performance pay that links indivi- duals rather than groups to work-related goals ‘may be viewed by employees as being easier to accomplish when goals and appraisals are con- sidered to be fair (Milkovich and Wigdor, 1991) In such plans, at least at the theoretical level, perceived or actual collective action dilemmas become less of a problem for individual emplo- yees. The way plans are tied to base salary may ‘also have serious repercussions for performance. Lawler (2000) states that plans utilizing bonuses may have a more positive motivational effect on employees, as the reward granting process becomes flexible over time. When pay is tacked fon base salaries, the implication is that emplo- yyees may have less to strive for in terms of gain- ing rewards. We introduce the various plans below, noting that some of our discussion comes from literature tha primarily analyzes the private sector. Cell (a): Merit plans Merit plans, which tie individual base salaries to pay, are perhaps the most common type of public sector pay-for-performance plan in practice today and have been widely used within the United States. The beginning of the merit pay movement in the public sector can be traced to the Civil Service Reform Act of 1978 (CSRA), which marked a significant change in the way that public sector employees were paid. The CSRA attempted to make public employees ‘more accountable and also to move away from the previous system of virtually automatic step pay increases (Perry, 1992), Cell (b): Piece rates, commissions and bonuses {In piove rate systems compensation is determined based upon the amount of output that an employee generates (Mitchell et al, 1990), Discussions of piece rate systems begin with Frederick Taylor (1911) and the scientific management move- ‘ment, Taylor observed both the way that workers performed their tasks and how they were compensated, which often involved perverse incentive structures. In his fieldwork, Taylor liscovered that workers who were compensated under piece rate plans were often more produc- tive than their counterparts, However, piece rate systems often engender problems between labor and management and have become less popular in the post Second World War era (Risher and Fay, 1997), As Miller points out (1992), the trust and credible commitment necessary for a successful piece rate system are often difficult tw achieve, Cell (c): Profit sharing, gainsharing and bonuses Profit sharing and gainsharing plans are similar in several ways. For example, both types of plans tie pay to group-level performance. In addition, both gainsharing and profit sharing plans work by redistributing earings. Profit sharing plans begin by establishing a level of earings for a Particular time frame. Profits that exceed this base level are redistributed to eligible employees ‘within the organization (Lawler, 2000), Gainsharing allows employees to benefit from «redistribution of profits resulting from improved a