Reflection Paper No.

1
PA-201A
Submitted by: Rogelio Vicente Juan O. Morales

Is NPM Still Relevant?

In his article appearing in the World Bank website entitled, The New Public
Management (NPM) and its Legacy1, Nick Manning has boldly proclaimed,
“NPM is a slippery label.”

At the time it was promoted back in the 1980s, the philosophy promised to
bring better results to governments who applied it. There was a sentiment
that the public sector needed reforms, most especially in its delivery of
services. NPM emerged giving emphasis to government as a steerer in
society, not just a mere rower.

The main principle behind it was the use of a market oriented approach in
running government, which means running government based on business-
oriented principles. As such any of the tools applied in government were
largely borrowed from the private sector. NPM sought to improve ways
governments delivered its services, to be as efficient as its private sector
counterpart.

Central to this philosophy is the emphasis in serving the customer and that
government’s task is to continuously find ways to improve services. This has
caused the adoption of market-oriented innovations in public sector life:
business process reengineering, decentralized control, and developing
public-private partnerships. The main intent of NPM is for governments to
become efficient in serving and responding to the needs of society.

Manning, a senior public management specialist for the World Bank, explains
the beginnings of NPM in parliamentary democracies that have strong
executive powers, a centralized government, and little administrative law. In
this context, contracts for service outcomes can be forged down along the
hierarchy to an entity or agent who has the relatively unchallenged authority
to deliver the desired results.

1
A condensed version of his work entitled, “The Legacy of New Public Management in
Developing Countries,” International Review of Administrative Sciences (Jun 2001).
Further into Manning’s article he posits his answers to three critical
questions about NPM: Has the NPM won? Did it work? Why has the impact in
less developed nations been so modest? For the first question, his answer is
no. While NPM has made its mark, it is not in the way as it was predicted to
become of universal significance. As of the time Manning’s article was
published in 2001, many hierarchical bureaucracies in less developed
countries remain dominant.

The second question Manning posed is whether NPM worked. He cites the
work of Batley2 when he studied governments in South Asia, Sub-Saharan
Africa, and South America. He asserted that the effect of NPM reforms were
mixed, at best with some improvements in efficiency and mixed effects on
equity. Manning further cited Polidano’s conclusion that evidence on NPM’s
impact is “perplexingly equivocal.”3

In the final part of Manning’s article, he explains why the impact in less
developed nations has been so modest. One reason Manning offers implies
that receivers of government services have become desensitized or cynical
of their providers, hence performance expectations are not that high.

A second reason is the strong influence of old public disciplines prevailing in

the sector. Budgets play a vital role wherein it is assumed that participation
to reforms is a function of how budgets are implemented. The failure to give
flesh to certain policy issuances has caused different interpretations without
any real effort to fix them.

A third reason Manning gives is that under any circumstances, impacts of

NPM to developing countries are simply marginal. Even in some developed
countries, the improvements as a result of NPM reforms could not be
precisely demonstrated.

NPM was first applied in the United Kingdom during the time of Prime
Minister Margaret Thatcher. Then the trend expanded to Australia and New
Zealand and other developed countries including the United States. While it
was mentioned that among developed countries the levels of impact

2
Batley, R. 1999. “The Role of Government in Adjusting Economies: An Overview of
Findings.” International Development Department, University of Birmingham, Birmingham,
Alabama.
3
Polidano, C. 1999. “The New Public Management in Developing Countries.” Institute for
Development Policy and Management, University of Manchester, Manchester.
achieved are not uniform, it therefore reinforces the notion that among
developing countries NPM’s impacts fell short of expectations. The reason is
already obvious and was stated earlier: that NPM had its beginnings in
parliamentary democracies that have strong executive powers, a centralized
government, and little administrative law.

On a broader sense, the results gained by the private sector cannot readily
be achieved in the public sector by using private sector tools. Structurally,
both sectors are different. But this is not to say that the Philippines have not
adopted the NPM mantra. As early as the presidency of Fidel V. Ramos, the
need to institute reforms had been echoed. This era started the fashionable
formulation of vision and mission statements among government agencies.

As in any environment, the introduction of change will encounter some

amount of resistance, due mainly because of the lack of understanding,
wrong application of the NPM tool, and the willingness or resolve to make
such changes happen. In my experience with government during this
decade, our mission and vision statement was formulated exclusively by top
management without contribution for its employees, which goes against the
spirit of formulating mission and vision statements. It lacked wider
participation for it to get support.

Then during President Gloria Macapagal-Arroyo’s time, she issued

Administrative Order No 161 and Executive Order No. 605 to institutionalize
Government Quality Management Program. Among the results desired is for
agencies to conform to the ISO 9001:2000 (minimum) standard. This is a
welcome development to many agencies but only those who have taken the
effort to be open-minded and see its usefulness are few, and they are most
likely not to be found among the ranks.

There are tremendous benefits in sub-contracting or outsourcing some of

government’s activities. Other than the small administrative-level contracts,
many agencies for example are outsourcing information systems
management functions. Sadly enough some are dangerously treading the
fine line between delegation and abdication, and the accountabilities
involved have blurred, giving an indication of the lack of understanding of
NPM’s true intent.

This is simply an indication of the prevailing public sector ethos, that resisted
and thus stunted NPM’s benefits amongst developing countries. For NPM to
work to a desired level, a country’s sociocultural profile must not be
overlooked, it’s capacity to adapt and act, or readiness to embrace and
commit must be analyzed. Silo thinking is still endemic among front line
service government agencies. This indicates the need for continued
awareness and enrichment among the ranks in the public service sector.

NPM, compared to other public management theories, is more oriented

towards outcomes and efficiency through better management of public
budget4. But in the local setting, budgets (or the processes involved in them)
can have their own problems. They may not be in sync with the NPM-
orientation of an agency, and the purse holders might not have a deeper
understanding of their roles in the NPM effort.

In the main, the principles, tools, and empirical knowledge given to us by

NPM are definitely and will always be of value. They are still relevant and
applicable in certain situations of public sector management, and at all
levels. NPM is not outdated. But NPM is also not applicable to all government
agencies/offices. Some agencies are front-line service organizations where
they interact directly with customers. In this agency type, NPM tools will be
very useful. But then, even in non-front-line agencies, NPM tools will find
usefulness. These are in certain functional divisions of the agency where it
fulfills a service to co-workers/employees who may be viewed as internal
customers.

The key to successful application of NPM is in adapting it to the local context

and preparing stakeholders through capacity building activities. Capacity
building in itself involves many dimensions: at one axis it translates to the
individual, the organization and society as a whole, while at the other axis it
specifically concerns on their capability to commit and engage; adapt and
self-renew; relate and attract; balance diversity and coherence; carry out
technical, service delivery, and logistical tasks.5 This could entail a long
process but with sustained efforts and effective leadership, NPM can bring
beneficial results. After all, NPM has been around the public sector landscape
for more than 20 years now.

4
Aristovnik, Aleksander & Seljak, Janko, 2009. "Performance budgeting: selected
international experiences and some lessons for Slovenia," MPRA Paper 15499, University
Library of Munich, Germany.
5
Heather Base and Peter Morgan, Apr 2008. “Capacity Change and Performance,” European
Center for Development Policy Management.
Despite NPM’s lackluster performance more particularly with developing
countries, Manning’s article said nothing of it about not bringing any gains.
For its shortcomings, they should be viewed as a sort of debriefing; an
assessment of what worked, what did not, and what lessons can be derived
for the next contingency or opportunity to improving service delivery in the
public sector. For Manning, the bottom line is that although NPM did not
come near to meeting its expectations, the failures and the debate over
what they mean have created new possibilities.6

6
Dator, J.A., Pratt, R., Seo, Y. (2006). “Fairness, Globalization, and Public Institutions: East
Asia and Beyond.” University of Hawai’I Press, Hawai’I USA.