Private Sector Approach to Public Sector Management - Research Paper Example

Private Sector Approach to Public Sector Management 2008 Introduction It has for long been accepted that human capital is the most important element of all services, particularly public services. Although many services like transport, health, education, telecommunication, utilities, post, police and fire-fighting may be provided by both the private and the public sector, the role of the public sector is deemed crucial in most countries since these services are the basis of the well-being and development of a population. In many countries, these services have been the domain for the public sector. However, since the 1970s and the 1980s, growing budget deficits and fund crunch with the government have resulted in these services being opened up to the private sector, as part of the structural adjustment programs of privatization. As a result, public services have now been thrown open to competition from the private sector for similar services putting pressure on the human capital. Besides, there is a growing demand in many countries that the public services increase transparency and efficiency, resulting in a greater focus on human resource management in public services. The International Labor Organization (ILO) passed a resolution in 1998 that in the particular context of structural adjustment and transition towards an industrial society, education and training are “an essential element in a virtuous circle consisting of training and skill development, higher work motivation, higher productivity, continuous adjustment of enterprises and workers to change, higher employment and increased incomes and well-being”. Specifically in the public services, reforms in human resource management should take place under a tripartite framework of the government, social partners and community groups. Human resource has further become crucial in emerging and backward economies where poverty alleviation and sustainable development are critical. In this paper, I will analyze the framework of human resource management techniques and some alternate tools that have gained currency in public sector management in recent times. In developed economies, the New Public Management Movement has aimed at making public services decentralized and empowering individuals at every level down the hierarchy. In developing economies, on the other hand, human resource management has concentrated in raising technical skills and professional qualifications. Methodology For the purpose of the study, I have chosen Jamaican Family Planning Association (FAMPLAN), affiliated to the International Planned Parenthood Federation (IPPF), the pioneering non-governmental organization in Jamaica. Headquartered at the St. Ann parish, FAMPLAN distributes contraceptives as well as provide clinical family planning services like vasectomies and tubal ligations and counseling for reproductive health and HIV/STD protection as well as other healthcare services like tests for diabetes and hypertension, which has a serious impact on reproductive health. It also has literacy and youth uplift projects to empower the distressed and uneducated youth of Jamaicans to have a better life. Despite targeting the youth from less privileged families and innovative programs like the male clinic and the adolescent clinic, FAMPLAN has been experiencing lower client visits over the years. The concern for the FAMPLAN management is increasing client visits without incurring more costs since the organization is crunched for funds. It is my hypothesis that transformation of the working of the voluntary organizations have reduced the operational flexibility of human service agencies like FAMPLAN. Literature review In a globalized economy, the role of the government has undergone significant changes. As a result, the 21st century public sector employees require a different set of skills and core competencies than they required earlier. Governments across the world are undergoing different types of changes – some trying to develop from the scratch, some attempting industrialization from predominantly agricultural economies, some reorganization the government and public sector machinery while some others suffering civil strife and political instability. In each type of countries, there are typical problems and bottlenecks that governments face. With the global economy making a transition towards higher industrialization, and individualism, there is a crucial change in the demographic pattern. Particularly as a result of migration and greater attractiveness of the private sector, there is a shortage of public service workers, especially the skilled and qualified workers. Mass migration from developing countries makes it a challenge to retain qualified personnel in the public sector. The problem, however, is not typical of any particular type of country, It has been found that migration of educated people is high from rich OECD countries with small populations as well as countries like Angola and Mozambique that are torn with civil strife. This becomes all the more critical in countries that are plagued with poverty, HIV/AIDS and structural adjustment of the economy. Particular countries have typical problems, like the ageing of the bureaucracy in China (United Nations). With modernization of economies, governments face the challenge of adapting to new technologies that are used in the private sector. These precisely require improvements in administrative structures, financial management, managerial capacities and technologies. For each of them, human resource management is crucial. In most cases, governments and the bureaucracies realize the shortfalls too late, resulting in what is known as “public sector failure”. Short term cures, then, come in the form of increased remuneration of officials, that tend to improve the prestige of public sector employment. Merit-based appointments, too, improve the quality and integrity of the bureaucracy but not necessarily the quality of services. The United Nations advocate a number of steps to improve the quality of human resource management in the public services: 1) “Strategem specialists”, by which public service personnel should be specialists and not generalists. Then, instead of being a reactive force, the bureaucracy will be empowered to take an active part in energizing the service; 2) Merit appointment, the most important way by which the efficiency of the service can be improved; 3) raising remuneration, that would motivate officials as well as increase their integrity; 4) performance management that should be a central focus of government managers; 5) outsourcing some services could result in cost savings but should be undertaken carefully such that it does not result in corruption; 6) decentralization of powers may motivate officials down the hierarchy but should be employed carefully; 7) the leadership should “walk the talk” by motivating the personnel strongly. While the public sector faces the challenge of adapting new ways of administration in the global economy, there is a shift in the role of the state and the public sector in the domain of the civil society. There is an increasing demand in the world over towards a freer economic environment and reduced role of the state. However, most economists consider that it is to public good that the government continues to have a role in some sectors. It is an increasing challenge to make the public service machinery more efficient to meet the demands of the civic society and at the same time to increase the participatory role of other stakeholders (United Nations, 2005). The sphere of the public sector has been witnessing a major shift in the last two decades. Specifically, it has been seen that the public sector has a greater role in intangible services, like for instance information or providing venture capital sharing than in the tangible services like road construction or mass production as earlier (United Nations, 2005). Since the nature of public service has changed, employees in these organizations need to be more creative and idea-centric rather than be focused on implementations. The New Public Management Movement came into vogue in administration research in the advanced world in the 1990s. The basic theme of the reform movement was based on greater decentralization and incorporation of market forces in public services that extended to the lowest levels, that is, to the hierarchy of the municipalities. The movement was rooted in the drive towards excellence in the face of globalization in the world political economy, following examples from the private sector. It was noted that excellence in an organization could be achieved through decentralization of authority, de-layering of hierarchies and introducing a spirit of competition among workers and managers (Peters, 1992 cited in Robinson, 2003). The model, already in great favor in the private sector, was advocated for the public sector by Osborne and Gaebler (1992, cited in Robinson, 2003), who said that the government had to be ‘catalytic’ and ‘steering rather than rowing’ in an administration that empowered lower levels of the hierarchy such that federal employees could become more innovative in the operation strategies. The New Public Management movement, which began in the United States under the name, Reinventing Administration, and adopted as the organization principle of the Clinton Administration, soon spread to other countries like the United Kingdom, Australia and New Zealand. In the backdrop of the economic recession in the 1980s, the movement was heralded in a bid to reduce costs and make the administration more efficient. However, critics of the movement feared the loss of control and accountability that the decentralized would result in. Box et al (2001) argue that the New Public Management movement that is fashioned on the private sector goes against the basic principles of democracy, that is, those of self-determination and the connection between the citizen and the community. Typically, the scholars argue, America has adopted classical liberal democracy, which is defined by the citizens electing their representatives to act on behalf of their constituencies. This type of democracy is essentially rooted in individualism and capitalist forces and issues of social justice and inequality are tackled when they take crisis proportions. But, such efficiency considerations are pegged on economic parameters rather on social welfare ones since the new movement does not differentiate between the role of the government – in providing social welfare and public goods – and the role of the marketplace. The result has been the focus on efficiency and cost cutting through establishing market mechanisms, separating buyers and sellers of goods and services, establishing separate agencies that function like business enterprises, decentralizing management authority, introducing performance-linked incentives, tenured civil services, contracting out services and customer-oriented services. The principle of market forces leading the administration essentially resolves in the people taking the role of customers of administrative services. This is not the principle of democracy in which people have shared interests in the administration rather than simply beneficiaries of services. In practical terms, the New Public Management movement involves the following, as articulated by Bauer (2004): result-oriented, customer-driven, decentralized and competitive government. However, the results of the achieving the desired results from the policies have been varied between countries. The tendency of putting the market on the pedestal has meant that in a capitalist society, particularly in the United States, the movement has resulted in public managers paying more attention to performance-based indicators rather than on face-to-face interactions with citizens (Box et al, 2001). There is an increasing demand on the public services to engage into a social dialogue, that is, sharing of relevant information, consultation and negotiation between the government, employers and workers. This necessitates freedom of expression, open and transparent information-sharing and strong social partnership. Besides, a legal and institutional framework should support employment rights and responsibilities. However, for an efficient social dialogue, the public services should have adequate funding, accounting practices that follow modern management principles and the right to information and transparency between the public, private and voluntary sectors. Public services are a peoples-centric sector, including those whom they serve as well as the employee. As the ILO recommends, the quality of public services would improve if 1) the sector has a properly-remunerated well-trained professional cadre of employees, 2) there is better access to information, 3) good governance is improved, 4) accessibility and affordability of services are increased, 5) employees and communities are equally guaranteed of safety, 6) stakeholders are more capable (ILO). The ILO recommends that employees of public services should have collective bargaining power to defend their rights. However, certain segments of public services may necessitate neutrality and limited restrictions. The workers’ right to organize may be governed by individual countries’ laws, particular in services like military installations, fire-fighting, police, etc. The right to strike may not be all-encompassing and may exclude essential services. The organization powers may be different across levels of employees in the public service. Senior-level decision making employees may be debarred from collective organizations right away. A trade union that consists of majority of workers may enjoy preferential bargaining rights. Performance appraisal in the public sector is as important as it is in the private sector. In most front-running companies, performance appraisal is now used to motivate a culture change in the organization, resulting from a shift from the best-effort culture to a result-driven one. The public sector organizations across the world have taken a lead in such a culture change (Grote, 2000). Performance appraisals are keys to communicating the organizations’ mission and vision to the employees. There are various ways that organizations use performance appraisal for the purpose of increasing efficiency. For example, Air Force Research Laboratory in Dayton, Ohion, that has developed a model of best practices, assumes, to begin with, that all employees are competent. The appraisal system then fits the employees’ contribution with the job roles rather than to improve the quality of their performance. Wages are determined by the employees’ compatibility with the role rather than their individual capabilities. If their performance is seen to be less than satisfactory, employees are migrated to other departments that might be more suited for them. “Core competencies” are defined not only for the organization but also departments and employees. Minnesota Department of Transportation found the performance appraisal as a tool to communicate the core competencies of the organization with the employees. The organization developed, in 1998, a sophisticated performance appraisal tool to integrate Leadership, Learning and Strategic Systems Thinking, Quality Management, Organizational Knowledge, Technical Knowledge and People Management and appraised each individual against a benchmark (Grote, 2000). Although some progress is noticeable in the administration in some countries like New Zealand, it has not been substantially proved that the New Public Management Movement has strategically changed the direction of public administration in any country. In particular, in the aftermath of the terrorist attacks on September 11, 2001, the idea of decentralization of civil administration has come under question. In the United States, the reforms were begun locally since the federal system in this country is the most decentralized in the world hence not much could be changed on that front (Box et al, 2001). Australian government administration has become less rigid and the management authority of the bureaucracy less hierarchical. However, beyond the administrative responsibilities, the movement has not had any real effect on the civil life of the people or their involvement or accountability in the political sphere. Lynn (1998) questions the basic principle of applying microeconomic logic of the market on public administration. For example, the market is understood to operate in a regulated environment of the legal framework in which there is interaction of the buyer and the seller. The equilibrium in such a market is affected through information flows, organization structures and the regulatory framework. However, the government is assigned the role of the regulation, in assigning and monitoring contracts, providing essential services and public goods that are essentially outside the realm of the market. The United Nations, in its World Public Sector Report (2005) found that despite some efficiency improvement through public sector reforms, there has not been a substantial effect of the new movement. It warns that outsourcing of public service can end up being a liability than an advantage. Especially in developing countries, there are many local problems that cannot be solved through market mechanisms, as the policy aims to. Findings The weak points of FAMPLAN have been identified as insensitive and prejudiced staff, negative social perception regarding accessing family planning services, particularly by the adolescents and lack of infrastructure. FAMPLAN cannot expand geographical spread for lack of funds, neither can it initiate education campaigns on the mass media. There is a strong need for improving the quality of services, sensitizing and training of the staff, developing youth-friendly communication campaigns and integrating other youth facilities with family planning services. FAMPLAN helped set up the national family planning program and continues to supplement to the government system by providing sexual and reproductive health information and education, offering services in peripheral communities outside the scope of the national program and providing voluntary sterilization. However, the outreach program of FAMPLAN, like other non-governmental organizations (NGOs), has been critically dependent on donor-funds. Despite its pioneering role, FAMPLAN has been experiencing lower client visits during the recent past. Especially, adolescent client visits are falling. The experiment with special adolescent clinics, too, failed since there is a perception that adolescents go to there either for abortions or to treat for HIV/STD. The male clinic conducted weekly, on the other hand, has been more successful after integrating with other services for diabetes, hypertension and prostrate cancer (Hardee, 1998). FAMPLAN is affiliated to the International Planned Parenthood Federation (IPPF), from which it gets 27% of its annual budget. The remaining funds are received from international donors (31.97%), clinical sales and services (23.13%), donations and rent fees (10.12%) and other sources (7.76%). The IPPF does not stipulate prices of clinical services offered. The costs are generally lower than that charged by private doctors but more than government health centers, which provide services are free of cost. FAMPLAN organizes fundraising programs – St. Ann Committee Raffle, Easter Bun Sales and Jumble Sale – once or more a year, depending upon the number of items available for the Jumble Sale. Overall, FAMPLAN has a balanced budget. Sometimes, the charges for various services at the clinic cover the costs of provisions but this is usually an exception and not a rule1. Even while recognizing the urgent need for expanding the outreach program, FAMPLAN does not have the financial resources to organize large-scale communication activities like through the mass media, more mobile clinics, etc. It does not have any government funding. Although the donors do not interfere in the actual functioning, there are broad guidelines that FAMPLAN has to follow and cannot deviate too much to devise its own strategy. FAMPLAN is also constrained in its human resources. Family planning services become ineffective if the service providers at the delivery points are not adequately trained. Availability of trained reproductive health counselors is grossly inadequate in Jamaica, especially since training programs have virtually ended with the completion of the World Bank funded project in 1998 (Hardee, 1998). The need for training is amply proved with the success of the integration of STD prevention counseling with family planning services over 1993 to 1996 that was followed by extensive participatory training among service providers who had to break their mental barriers with STD patients (Hardee, 1998). Reproductive health services all over the world face the same problem of prejudice among the staff (USAID, 2005). FAMPLAN now needs to go to the next stage of development by which the stigma associated with adolescent family planning services may be overcome. For this, it needs to utilize all its resources to train the manpower. Conclusion and Recommendation With globalization and more countries experiencing privatization programs and transition towards industrialization, competition with the private sector and shortage of skilled manpower in the public services have made innovative human resource management in public sector organizations key to success. Different forms of management techniques have been tried across countries, like decentralization of decision-making, outsourcing of some activities, social dialogue and performance appraisal as a critical tool for communication. No individual tool, however, has been found to be uniquely relevant for all types of administrations. There is the need for continuous innovation in human resource management in public services to upgrade the employee and service qualities. This is true for FAMPLAN as it is for most voluntary organizations. FAMPLAN is dependent on funding from IPPF and other international donors and face severe budget constraint although it is unable to develop its own policies. In order to reach out to a large section of young people in Jamaica, FAMPLAN should adopt an inclusive program in which the adolescents themselves play an important role so that there is a sense of belonging and motivation. It is not sufficient for the healthcare system to be entirely market-oriented. A participatory model may be developed with minimum investment and maximum outcome. For such a model, all stakeholders need to participate in the system. The clinics may increase the participatory role of the youth in their functioning through focus groups, increasing clinic space for the youth as well as redecorating the clinics with a youth-friendly approach, provide more services for teenage pregnancy and sensitization of the staff to the needs of the youth. For the participatory model to succeed, consensus-building among the various stakeholders is essential. The participatory model has been found to be effective in increasing empowerment and accountability of the youth. Community-based participatory model is all the more effective since community knowledge about reproductive health issues has long term linkages on general awareness of the youth. Adolescents themselves are then more likely to increase the knowledge base regarding various issues of sexual relations. The participatory model empowers the youth to make strategic decisions regarding their own health, demand accountability from service providers and in general the social structure and gender norms in sexual relations (World Bank, 2004). This, rather than market-based model, caters to social services like health services much more effectively in a developing country. References Box, Richard C et al (2001). New Public Management and Substantive Democracy. Public Administration Review. September/ October. Vol 61. No5 Bauer, Helfried (2004). Public Management in Austrian Government. Contribution to Exploratory Meeting. 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