Policy Futures in Education, Volume 3, Number 1, 2005

New Public Management and Education

SOWARIBI TOLOFARI

ABSTRACT Public administration has always been under constant review. Such reviews
were mostly parochial, incremental, initiated or driven by low-key staff and often ended as
fads. From the end of the 1970s to the 1990s, however, governments around the world were
engaged in widespread and sustained reforms of their public administration. These reforms
were born out of economic recession, but also had political and social drivers. They were
initiated by the political apex and fuelled by New Right ideology. Collectively, these reforms
came to be termed New Public Management (NPM). NPM is characterised by marketisation,
privatisation, managerialism, performance measurement and accountability. This
employment of corporate attitudes in public administration is grounded on certain theories,
mainly public choice, transaction cost analysis and principalagent theory. As with every
other sector, the education service was also reformed. In this field the major signs of NPM
are the local management of schools on managerialist principles and the heightened
influence of stakeholders in the daily life of the school, while the collegiality of academia is
diminished. At the higher education level, institutions are tending towards full-fledged
corporate organisations delivering enterprise education. This article discusses NPM in detail,
tracing its origins, considering the theories and examining its principal characteristics, and
then takes a critical look at its implications for education.
Introduction
The public administration reforms from the late 1970s have led to a revolutionary change not only
in the manner of delivery of social services and accounting for government expenditures, but also
in the structures of governance. These reforms towards marketisation, or the application of
business management theories and practices in public service administration, came to be called, in
professional parlance, the New Public Management (NPM).
NPM is often mentioned together with governance. Some writers, Jo Ann Ewalt, for instance,
explain that governance is about the overarching structure of government and the setting up of
overall strategy, while NPM is the operational aspect of the new type of public administration
(Ewalt, 2001). Many authors and researchers use both terms interchangeably.
This article examines the impact of NPM on the delivery of the education service. The article is
organised in two sections. The first section considers the concept of NPM, attempting to trace its
origins, examining its main theories and looking at its key characteristics. The second part looks at
the impact of NPM on education, especially the political ideology behind it, changes in
organisational structures and the emphasis on performance.
NPM is generally viewed as a global phenomenon, as it spread quickly from the countries
where it is said to have originated to other parts of the globe, influencing government policies both
in developed and developing countries. In consideration of this, the article will not limit itself to
any one country or region in drawing examples to demonstrate the effect of NPM. Also,
concerning its impact on education, there will be no limitation to either tertiary or secondary
education.

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The Origins of the New Public Management
The origins of NPM may be considered in terms of time (When did it start?) and in terms of where
and who (In which country did it start and whose idea was it?). There is little convergence in the
literature on either issue.
On the time aspect, Kiiza (2000), for instance, posits that:
Even if one argued that managerialism constitutes a fundamental review of conventional
public service delivery, one would still concede that the new paradigm is not the first. It is a
third wave of radical reforms of running the business of modern states.
Kiiza then dates the first wave, which occurred in Britain, to as far back as the second half of the
nineteenth century, and the second wave, called progressivism, is said to have occurred in the
USA in the 1930s. The Industrial Revolution was the driver for these administrative revolutions,
since it changed the way business was done, and this was benchmarked by the public sector.
This rather historic dating of the new radical change to governance processes could be
understood in the light of reform being a continuous process. As Kiiza (2000) puts it: Indeed, the
history of public governance is a history of continuous administrative change. Ferlie et al (1996)
explain this when they state that reform of public administration had been going on long before the
advent of NPM in the 1980s. These reforms were, however, usually incremental and often vanished
as fads. NPM reforms, though, took on a new form due to two concepts: radical shock (the
replacement of a relatively stable state of affairs with a new, different and also stable state) and
persistent political will, usually via an attempt to impose a significantly different ideology (p. 35).
Cohen & Eimicke (1998), tracing trends in US government ethics in the twentieth century,
locate NPM within the period 1971-87. For them, the era ended just when others say it was
beginning. The majority of the literature (Nikos, 2000; Bovaird & Lffler, 2001; McTavish, 2003;
Fusarelli & Johnson, 2004) situates the origin of NPM at the end of the 1970s or the middle of the
1980s. Ferlie et al (1996, p. 3) note that: the post-1979 UK experience is dominated by a series of
reforms initiatives apparent across a number of different settings, driven from the top and
sustained over a long time period. These changes became more apparent in the 1980s and were
not only structural, but also impacted processes and roles. They were, in effect, all-permeating.
Many writers have the view that NPM emanated from the USA and Britain. Lynn (2003, p. 1),
for example, posits that:
The contemporary study of public management has its origins in the 1970s: in America, in
the curriculum and research of the new policy schools ... in Europe, in efficiency-driven
managerial reforms originating in Great Britain and New Zealand.
This view appears, however, to be mooted, or might refer to the leadership role of these countries
in the formulation of the corpus of concepts that came to be collectively called NPM. But this is to
be expected, since these countries have had a strong tradition of the capitalist concepts from which
NPM has borrowed generously. Nonetheless, considering the drivers of the drastic reforms to
public management, the more popular view is that from the late 1970s, and to the present day, a
remarkable revolution swept most countries of the world ... it seems that not only in Europe but
all around the world public administration is being changed or reinvented (Nikos, 2000, p. 39).
Bovaird & Lffler (2001) also note that due to budget deficits in the early 1980s, there were
government reforms in many parts of the world. These views may themselves becloud two
points: first, that the reforms in many countries of the world were merely adoptions of what had
begun elsewhere, and second, that in some cases, especially in Africa and Latin America,
governance and NPM reforms were imposed by external forces, notably the International
Monetary Fund and the World Bank.
A discussion of the origins of NPM cannot be concluded without an examination of the
background to the reforms. Indeed, this may make the imperative of the reforms more
understandable.
The motives for the development of NPM reforms can be broadly packaged into five categories:
the economic, the political, the social, the intellectual and the technological. These categories have
a somewhat symbiotic relationship, in that the requirement to correct one situation requires the
enhancement of another.

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Economic Drivers
Larbi (1999, p. iv) avers that the common feature of countries going down the NPM route has
been the experience of economic and fiscal crises, which triggered the quest for efficiency and for
ways to cut the cost of delivering public services. Stated differently, as Bovaird & Lffler (2001) do,
NPM was born out of economic recession.
During the 1970s many countries, from New Zealand to the USA, were grappling with public
debts, fiscal problems and high rates of unemployment. There was worldwide economic slowdown
(Boston et al, 1996; Ferlie et al, 1996; Cohen & Eimicke, 1998). In the United Kingdom there was
stagflation, the British disease of the 1960s and 1970s. Hoggert (1994, p. 45) observes that:
whilst all of the developed capitalist economies may be going through a prolonged wave of
crisis and relative stagnation, within the UK this conjuntural crisis simply compounded the
organic crisis of British capitalism which has been under way for several decades.
Cohen & Eimicke (1998) narrate that this period in the USA was a tumultuous time. They explain
that: Americas post-war celebration of prosperity, suburbanization, two cars in every garage and
the heyday of rock and roll was rapidly eroding.
A similar situation was the case in Japan. Cases of huge financial losses in the public sector as a
result of corruption and mismanagement by bureaucrats as well as loose mechanisms for
accountability were coming to light. In her paper on Japans public administration reforms,
Yamamoto (2003, p. 12) gives a brief example of this:
The problems caused by officials at the Ministry of Finance were known to the public in the
mid-1990s: these included the injection of huge amounts of public money to underwrite bad
loans made by private finance companies in the housing sector (jusen), the suppression of
information from the US Federal Reserve Board (FRB) regarding $11billion losses at the
New York branch of Deiwa Bank caused by a single bond dealer, and several bribery
scandals ... Furthermore, Japan had been experiencing a severe economic downturn since
the beginning of the 1990s; as a result, the government was facing a large financial deficit and
by 1995 the ratio of government bonds to GDP had reached nearly 45%.
Larbi describes the economic and fiscal situation that was the harbinger of NPM reforms in Africa
and Latin America. He records that many African and Latin American countries suffered
unsustainable rates on international financial markets, high inflation, low levels of savings and
investments, and shortages of basic consumer goods (Larbi, 1999, p. 6). It should be noted,
however, that in these cases external pressures from so-called donors and lenders initiated the
reforms. Kiiza (2000) accounts for the effect of this difference by saying that available comparative
evidence shows both a handsome and an ugly face of the reforms:
The handsome face of managerialism appears in the developed countries where the review
of Weberian public administration has been done deliberately in search of excellence. The
ugly face appears in the developing countries, particularly in sub-Saharan Africa, where
managerialism has been religiously spread by the IMF/World Bank fraternity. (Original
emphasis)
Political Drivers
The public administration reforms based on radical shock and driven by top-down persistent
political will were not, as Ferlie et al (1996, p. 4) point out, socially neutral, but reflect the rise of
some constituencies and fall of others. In effect, as the balance of power shifted during the 1980s so
a new political economy of the public sector emerged. The political drivers of NPM are generally
highlighted as well as the economic ones. Mainly, they involved the rejuvenation of the political
Right the New Right which gained election victories both in the USA (Reagan in 1978) and the
United Kingdom (Thatcher in 1979). But it must be quickly pointed out here that in the case of
New Zealand, it was a Labour government that drove through the revolutionary reforms. And that
both the Democratic government (Clinton) that succeeded that of Reagan and Bush, and the
Labour government (Blair) that succeeded that of Thatcher and Major continued to pursue these
New-Right policies. Boston et al (1996, p. 6) record this New-Right influence on reforms as a

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general ideological shift to the Right and consequent preference for a smaller public sector and a
more extensive reliance on market mechanisms.
The economic crisis in the developed economies gave the New Right a basis to challenge
vehemently the welfare state in Britain, Canada, the USA, etc. The neo-liberals could attack the
extent of the involvement of government in the economy and the cost to the taxpayer: they
questioned the ability of government to get the economy out of the woods with its bureaucracy,
monopolies, bad management, non-accountability, and where the consumer had no voice. The
philosophy, and solution, of the neo-liberal thinkers was that only market mechanisms,
privatisation and choice for both consumers and producers could bring about the discipline,
efficiency and accountability that could ameliorate the situation (Ferlie et al, 1996; Larbi, 1999).
Ferlie et al (1996, p. 11) state that the Conservatives under Thatcher diagnosed the public sector
as bloated, wasteful, over-bureaucratic and underperforming. This was also the thinking of the
intellectuals behind Reagan in the USA, as well as in other countries such as Australia and New
Zealand. As well, in all these countries and in all others that joined NPM reform train,
marketisation was the solution proffered by the gurus. They advocated that government should be
run more like a business, lean and mean. They argued that the market is an effective allocator of
resources, an efficient co-ordinating mechanism, a rational decision-making process and, in
addition, encourages resourcefulness and enterprise (Larbi, 1999, p. 3).
Another point to make about the political drivers for NPM is that they were top-down. Most of
the extant literature notes that the sustained political backing for the reforms came from the very
top. Ferlie et al (1996, p. 11) write that the recurrent institutional reforms were led from the top of
the political system in a way which would not have been conceivable in the 1970s. That they were
top-down and sustained would explain both why they were all-permeating and revolutionary in
character, as opposed to the parochial and incremental reforms of previous decades that were
limited in scope. Indeed, Boston et al (1996, p. 364), concluding their study of the New Zealand
model, advise that:
For successful implementation, major reforms require a high level of political support,
ideally of a multi-party nature. Additionally, rapid implementation will be much easier
where key officials accept the need for change and endorse the main reform initiatives.
Social Drivers
There are also social factors that have given impetus to the drastic reforms in public administration.
Social factors involve the relationship between the people and their governments; or between
delegated and elected officials and electors. It bears repeating here that all these factors political,
economic and social feed each other. Lynn (2003, p. 20) puts it nicely when he states that even if
the enthusiasm for and implementation of NPM differ in different countries, there are still
universals, even when there is no consensus on what they are:
If there is a transcendent issue, it is the relationship between bureaucracy and democracy,
between administration and the people, between managerial responsibility, on the one hand,
and popular sovereignty and the rule of law on the other.
This social factor is even more succinctly articulated by Aucoin & Neintzman (2000, p. 46, cited in
Lynn, 2003, p. 21):
All governments must now govern in a context where there are greater demands for
accountability for performance on the part of a better educated and less deferential citizenry,
more assertive and well-organised interest groups and social movements, and more
aggressive and intrusive mass media operating in a highly competitive information-seeking
and processing environment.
One of the arguments of the New Right was the lack of openness on the part of governments; the
ordinary man hardly knew how the government functioned. There was no involvement of the
citizen in the processes that involved him as a service user, and there was no choice or voice. In the
case of the USA, for instance, Cohen & Eimicke (1998) claim that societal upheavals, such as
assassinations of public figures, protests against wars and the lack of economic opportunities for

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blacks and other ethnic minorities, served to undermine the American publics faith in its
government that [had been] nurtured and deepened by the professionalism and discipline in the
public administration sector up to 1971. Cohen & Eimicke argue that the political upheavals
challenged the basic institutions of American democracy to their very core and raised the question:
could our government still provide the mechanism through which we could govern ourselves
fairly and peacefully? The proponents of NPM thus believed that politicians, elected and
appointed, were the primary threat to ethical government, and thus decentralisation, community
control, and maximum feasible public participation in government decision making were stressed.
Even in New Zealand, NPM reform process took in its stride and strengthened the community rule
and treaty rights of the Maori, attempting to equate their social and political status to that of the
majority whites and facilitating opportunities for them (Boston et al, 1996). Everywhere, the bettereducated, less-deferential citizenry was demanding rights for different groups, demanding greater
insight and participation.
Apart from taking cognisance of the new breed of citizenry and its new sets of expectations,
Bovaird & Lffler (2001) also present the element of demographic changes in the countries of the
Organization for Economic Cooperation and Development as an additional factor for reforms. In
these countries, the aging population has impacted demand for social services, the employment
base and the need for taxes to sustain expense imbalance caused by a falling taxpayer population
and a rising retiree population.
Intellectual Drivers
The development of theory in NPM and the documentation of practice and processes are still
ongoing. Both aspects demand intellectual input. But intellectual work had preceded even the
beginning of the reforms, for the guiding principles, the operational structures and the coordination
processes have roots in intellectual work. Ferlie et al (1996, p. 9) testify to this:
The 1980s certainly witnessed the importation of a number of management techniques new
to the public sector, but behind these surface manifestations of change lies the rise of new
sets of key managerial ideas and beliefs.
The emergence of the broad new public management movement can hence be seen as an
example of a more general process whereby bodies of managerial thought rise and fall. Such
bodies of thought contain both descriptive and narrative (perhaps ideological) elements.
They may be linked to social constituencies, either management practitioners or
management intellectuals.
Cohen & Eimicke (1998) also state that a group of public administration theorists and
practitioners responded to the dire economic situation and helplessness of government by
publishing an edition of related papers setting out the philosophy and proposed agenda of a New
Public Administration. Lynn (2003, pp. 16-19) narrates that following the economic and fiscal
crisis in the USA and the need for new solutions:
Scholars of an activist, reformist orientation responded to political demands for better
management with ideas that had a specific managerial focus, perhaps the first time that the
field was so clearly focused on managers and strategies rather than on organisations as units
of analysis.
He goes on to mention that scholars in Europe also were tinkering with ideas about a paradigm
shift in public administration. As NPM rapidly spread throughout all regions of the world, the
scholars tried to catch up with the development and academics began creating new international
forums for professional discourse on the subject in the 1990s.
Technology
Technology has also been a driver of NPM. At least two ways can be discerned in which the
advancement in information and computing technology (ICT) could have given impetus to
NPM. One way is the rapid spread of the philosophy and processes of NPM around the world. Such

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rapid sharing of information and comparison, even convergence (some say), could not have been
possible in a period without ICT. The second way is that ICT has enabled coordination among
loosely connected networks or devolved, decentralised entities. This view is supported by Larbi
(1999, p. 5), who writes that:
the literature on public management reforms also points to the development and availability
of information technology as providing the necessary tools and structures to make workable
management reforms in the public sector. For example, refined information systems are
pivotal to the principle of decentralization through the creation of executive agencies. In
order to decentralize and, at the same time, have greater accountability, it is important to
have confidence in reported performance information.
On the part of the citizen, elector or customer, the availability of ICT is empowering in that it gives
the public quicker and broader insight into what the government does, or the choices that are
available and the ability to compare as a customer.
Principal Theories
A perusal of the literature shows that while most writers have extensively written about the
characteristics and applications of NPM, many have only made a passing mention of the key
theories on which it is based. However, a detailed discourse of these can be found in Boston et al
(1996) and, to a lesser degree, in Ferlie et al (1996). On this matter the literature has also referred to
the works of other key theorists in the field such as Pollitt, Hood, Aucion, Kettl, Olsen, Barzelay,
Osborne & Gaebler, etc.
While the development of the theoretical framework can be said to be still ongoing, it has been
posited that NPM is a revival of the old managerialist ethos, reminiscent of Taylors scientific
management, which has been greatly influenced by such doctrines as homo economicus and new
institutional economics (Boston et al, 1996; Ferlie et al, 1996; Cohen & Eimicke, 1998; Larbi, 1999;
Yamamoto, 2003). Yamamoto (2003, p. 6) puts all this together and writes that: thus NPM unites
the new institutional economics and managerialism from business management thought. She
opines that it is the conflation of the elements of contract in the new organisational economics,
such as performance measurement and the introduction of competition, and management by
objective borrowed from business administration.
Boston et al (1996) are of the opinion that the principal theoretical bases for the new
management reforms are public choice theory, principalagent theory and transaction cost
economics. To these three, Ferlie et al (1996) add microeconomic theory and the new economic
sociology.
Public Choice Theory
According to Boston et al (1996), the central tenet of public choice theory is that man is a rational
being, acting or desiring to act autonomously, and seeking to satisfy his personal best interest; in
short, homo economicus. In public administration terms, this would mean that services have to be
targeted or varied (choice), and that the taxpayer would demand value for his money (more for
less) and accountability. One of the thrusts of this theory is that the uniform treatment of the
citizenry has led to an ever widening bureaucracy as government tries to do everything. Further, in
the view of Larbi (1999, p. 6), adherents of this theory criticise the poor reward system of the public
service, which promotes ineffective performance, giving rise to waste of resources and an in-built
tendency for expenditure to grow and for delivery to take precedence over productivity. Since
there have been inadequate discipline and control or accountability mechanisms, government
agencies oversupply collective goods because of budget maximization behaviour. The reform
needs were, therefore, diagnosed as the need for efficiency and efficacy, with an automatic
discipline mechanism the market just like in business. The solution was, consequently, the
adoption of business-sector management processes in the public arena.

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Transaction Cost Economics
This theory attempts to take care of the need to do more with less of public resources, especially
budget allocations. Central to the theory is that alternative methods, and attendant costs, for
carrying out projects or delivery of services are examined for their merits, usually judged by the
cost (Boston et al, 1996; Ferlie et al, 1996). The question of efficiency is still the crux here. It is easy
to understand, then, that this comparison examines not only the total project cost, but also every
stage of it planning, adapting, and the evaluation of the finished task under each of the options.
According to Ferlie et al (1996), a key issue taken up in the literature is the merits of proceeding
through the market open competition, or in-house execution of the project. Transaction cost
economics, therefore, examines also the opportunity costs, i.e. the cost of not using the alternative.
Ferlie et al (1996, p. 69) describe transaction cost theory as a rich, sophisticated, and influential
attempt to link imaginative forms of economic analysis with other disciplines such as contract law
and organisation theory. The need for such linkage would be to ensure, as much as possible, that
all factors are examined and that the choice made represents the best possible option.
Boston et al (1996, pp. 21-22) identify two types of transaction costs: ex ante and ex post. They
define ex ante transaction costs as those arising from efforts made to hinder transaction failures
arising from asset specificity or opportunism. Ex ante costs also include the costs of drafting,
negotiating and safeguarding a contract. On the other hand, the authors describe ex post
transaction costs as those incurred to make adjustments to contracts or bonding to ensure that
contractual obligations are met. The safeguards against opportunism and contract abandonment
arise from the assumption within the transaction cost theory, as Ferlie et al (1996, p. 70) point out,
that mans natural state is opportunism rather than trust.
PrincipalAgent Theory
Agency theory, or agencification as Yamamoto (2003, p. 17) also calls it, explains the reform
method within the government that is designed to create, within the public sector, autonomous or
semi-autonomous organisations in which the implementation function is separated from the
policy-making function. Simply put, agencificaton is the separation of the provider and user of
public services. Basically, the recipients of public services are the government (which usually also
provides them) and the public. The intention of agencification is to demarcate the two roles.
This is done by creating a contractual relationship between the two parties, the principal and
the agent. The principal is the party requiring a service or goods, and the agent is the party
supplying the service or goods. The principal pays the agent. The agent is expected (or is assumed)
to have expertise and to be able, hopefully, to provide the service at a price lower than it would
cost if the principal were to provide it personally. In the public sector, the government at any
level becomes the principal contracting to buy public services from the agent. The agent could be
an external body or a semi-autonomous organ that is part of the public sector. Yamamoto (2003)
says that in Britain, the Thatcher government, out of fear of the reaction of labour unions, retained
the agencies as part of the government; whereas in Japan, Independent Administration Institutions
were established to execute the policies. Most often, anyway, it is a combination of the two
options.
The relationship between the principal and the agent is usually rooted in a contract. Such a
contract could be implicit, obligational or relational, depending on how much mutual trust exists
between the parties (Boston et al, 1996). The aim of the principalagent theory would thus be to
provide an intellectual and legal framework for working out the most satisfactory way of
negotiating, specifying, and monitoring contracts so as to minimise the likelihood of violations
resulting from opportunism on the part of the agent (e.g. due to shirking, deception, cheating and
collusion) (Boston et al, 1996, p. 18). As is the usual nature of contractual relationships, rewards
accrue to the agent, but there may also be penalties for breach of contract. Since the principal may
not have all the information necessary to make the best selection, safeguards may be taken in the
form of bonding or the stipulation of penalties for non-performance.

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Microeconomic Theory
What is understood of the microeconomic theory is that it describes the interaction of producers
and consumers in the marketplace. In public service terms, that would mean providers and users of
social services and how they behave in the quasi-market, one of the major applications of the new
managerial business principles. The view of Ferlie et al (1996) is that the quasi-market may very
likely not be a perfect market in the real economic sense, so that there may only be periodic
competition. But even so, pressure is exerted on service providers, e.g. school authorities, and they
must respond to the demands of the users or their proxies, e.g. parents of school children or school
governing boards. In the quasi-market, they go on to claim:
behaviour is seen as determined crudely by a mix of information regarding product price and
quality and a new structure of incentives rather than shaped by a mixture of strategic choice,
government and professional regulations, social norms, or historic interpersonal networks.
(Ferlie et al, 1996, p. 69)
Microeconomic theory, advancing a neo-liberal agenda, focuses attention on efficiency, individual
benefits and remuneration determined by the forces of the market. It ignores the internal processes
of the organisation and the sections of the public that are at a disadvantage to compete in the
market that government regulations and social norms are intended to protect.
The New Economic Sociology
The analytical basis of this theory is the concept of social relations between service providers and
users, agents and principals, or buyers and sellers. Ferlie et al (1996, p. 70) provide the insight that
such social relations as trust ... reputation and obligation are seen as central to the understanding
of how markets really work. The authors explain that the common view of the market comprising
active sellers and passive buyers within a closed market distorts the true picture of the market.
They argue that corporate buyers (or a government buying services from an agency or private
company) might interact in a complex way, especially over time, with the service providers,
establishing a relationship exhibiting commitment, trust, as well as conflict. Within the same
market, such a relationship may also develop between buyers or amongst sellers. The result could
be the identification of common values, leading to a few well-established service providers and
users binding themselves into long-lasting commitments, which probably exclude others. Buying
decisions would be made on soft data (e.g. trust) as well as hard information, with the result that
reputation is a key intangible asset on which providers trade (Ferlie et al, p. 71).
Main Characteristics
A good place to start a discussion of the characteristics of NPM might be to use the words of
Manning (2000) to explain what NPM is:
Generally it is used to describe a management culture that emphasises the centrality of the
citizen or customer, as well as accountability for results. It also suggests structural or
organisational choices that promote decentralised control through a variety of alternative
service delivery mechanisms, including quasi-markets with public and private service
providers competing for resources from policy makers and donors.
It comes through that the basic desire is to do away with the rigidity and tediousness of
bureaucracy. This calls for a new paradigm in the administration of public services. This new
paradigm must be able to fuse both the tenets of the market and the norms of the public sector.
Nikos (2000, p. 40) explains how this is successfully done: Business logic is the dominant one which
underlies in our days the core values of administration culture (efficiency, effectiveness, quality)
without replacing the traditional values of legality, impartiality and equality.
Against this background, the literature is replete with a huge variety of the characteristics of
NPM. There is little doubt that this is the result of the widespread use of NPM reforms around the
world, coupled with the fact that there must be varying adaptations of its tenets to suit local
environments. The characteristics relate to organisational leadership, policy and strategy, people

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management, resource management, processes, measurements of objective and subjective results,
values and ethics of the organisation, and the functioning of government at local level (Boston et al,
1996; Larbi, 1999; Bovaird & Lffler, 2001; Ewalt, 2001; Yamamoto, 2003).
The key characteristics of NPM include the following:
1. Large-scale privatisation, corporatisation and commercialisation (Boston et al, 1996; Ferlie et al,
1996), by which government disengaged from the trading aspects of its commitments that could
best be left to the private sector, or run autonomously by agencies like private sector businesses.
2. Processes of managerialism and marketisation (Boston et al, 1996; Ferlie et al, 1996; Larbi, 1999;
Yamamoto, 2003) heralding business sector management style, wherein top public managers
can exercise a great amount of discretionary power, exhibiting and using such tools as mission
statements, development plans, labour contracts and performance agreements.
3. A shift from maintenance management to change management (Ferlie et al, 1996). Public sector
managers are no longer carrying out small-scale, localised, incremental reforms aimed at
maintaining standards, but are becoming transformational change managers.
4. Parsimony (Boston et al, 1996; Ferlie et al, 1996; Larbi, 1999; Yamamoto, 2003): cutting costs
and applying only the least necessary amount of resources with the aim of achieving the
maximum utility possible. This is the most basic characteristic of all reform programmes, and is
nowadays ideology-neutral.
5. A shift from input controls to output and outcome controls (Boston et al, 1996; Yamamoto,
2003). Resources are allocated on the basis of a fair assessment of the satisfactory outcome; the
result must justify the expense, irrespective of the process.
6. The creation of quasi-markets and greater competition (Boston et al, 1996; Ferlie et al, 1996;
Larbi, 1999; Yamamoto, 2003); attempts to make the provision and quality of services customerdriven, and more contracting and outsourcing to stimulate contestability in service delivery.
7. Devolution/decentralisation (Boston et al, 1996; Larbi, 1999), involving the delegation or
spreading of management authority, organisational unbunding and the institution of new forms
of governance structures, e.g. boards of governors or chief executives.
8. Disaggregation (Larbi, 1999; Yamamoto, 2003), involving detaching policy formulation from
policy execution. A strategic core dedicates itself to policy making while a peripheral group of
managers implements the policies.
9. Tighter performance specification (Boston et al, 1996), which is manifested in widespread
employment of contracts between principals and agents that specify in detail their respective
obligations, the use of performance indicators and league tables, etc.
NPM and Education
In the second part of this article, the consideration is of the application of NPM principles in
education. As has been stated in the introduction, this will not be confined to how NPM has been
applied either in universities or secondary schools, but in both. Here, the focus will be on the
political ideological background to the application of business principles in the administration of
education, managerialism in educational institutions and performativity, which appears to be
particularly salient in education.
Political Ideological Background
Education is one of the major public services, along with health care and law and order, etc. As
such, the general reform of public administration has a clear imprint here. It is thus easy to infer
that the same political ideologies and pressures as in other spheres account for the reforms in
education from the late 1970s, not only in England and Scotland, New Zealand and Australia, but
also in other parts of the world.
Arnott (2000) gives an account of the political forces that came into play in the United Kingdom.
Mainly, she explains, the Conservative government wanted to break the power of education
professionals, who they saw as serving their own interests. The Conservatives wanted central
government to play a more active role in how schools were managed, no longer satisfying itself

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with legislating policy and providing resources after consultation with the professionals. This new
view was to change the manner of cooperation that had existed since 1945, whereby:
the central government in consultation with education professionals would enact legislation
and provide resourcing; local authorities would be responsible for implementing legislation
whilst ensuring local needs were met; and the teaching professionals would be responsible
for curriculum and assessment. (Arnott, 2000, p. 53)
As Grace (1994, p. 126) writes: The New-Right challenge of the 1980s has been to argue that
education is not a public good but a commodity in the marketplace and that this commodity would
be delivered more efficiently and effectively in [by] market forces. In order to assure the
consumer of the quality of the product, according to Morris (1994, p. 23), [a]ttainment targets
were introduced and pupils were to be tested at [various stages] ... There was thus a standard
product available in the education marketplace and a control system intended to guide the
parent-consumer towards those schools which delivered a quality product the matter of choice.
Even in education, the changes were in pursuit of a New Right agenda (McTavish, 2003). The
neo-liberals and neoconservatives saw education professionals in the civil service as more
interested in maintaining their professional positions than in delivering an effective national
education. They sought to free schools from bureaucracy, mainly by weakening the power of
central bargaining and introducing market-based practices (Fusarelli & Johnson, 2004). The neoliberals wanted competition, choice, efficiency and accountability. The neoconservatives wanted
education to reflect British traditional values. They advocated for a national curriculum.
Furthermore, for the New Right, education should not be a right of citizenship; only those who
truly desire education should go for it. Market mechanisms should determine demand and supply.
As Lubienski (cited in Fusarelli & Johnson, 2004, p. 120) put it, they were seeking to redefine
education from one of public good to that of a private good; that is, education should be seen not
as a social service but as a commodity.
The objective and mechanisms were the same the introduction of managerialism, i.e. to
manage education instead of administering education. Management would be devolved to schools
and education professionals would have less influence. Alternatives would be provided through
publicprivate partnerships, and parents and businesses would have power. As the institutions took
over the powers for planning, budgeting and resources allocation from the Local Education
Authorities (LEAs), heads and teachers would be held accountable for quality, which would be
measured and inspected using numerous instruments and organs.
Mangerialism in Education
One act easily and significantly gives an indication of managerialism in education. At the school
level it is the local management of schools (in England) or devolved school management (in
Scotland). This involves, according to Raab (2000, p. 19), changes in the exercise of power and
leadership within schools and the relationship of schools to the wider system of management and
control. This has, for example, seen the introduction of school governing boards modelled on the
private sector and having far wider powers than previously. However, unlike the private sector,
they must contain representatives of stakeholders. Only the head teacher is an executive member
(Ferlie et al, 1996).
Principally, devolved management of schools involves the transfer to schools from the local
authority of powers over budget, appointments, personnel and planning; the sharing of powers
amongst all stakeholders (head teacher, teachers, parents, governors and the neighbouring
community); competition for pupils; and public accountability (Ferlie et al, 1996; Raab, 2000).
At the level of higher education, managerialism is flagged by a new kind of executive power,
characterised by a will to manage and, in some respects, a freedom to act greater than was once the
case (Marginson & Considine, 2000, p. 9). Here also, decisions about allocation of resources that
were once made by regional or national governments are made by the university; the university is
under pressure to raise the level of non-state incomes and this has led to greater adoption of
business methods and the creation of quasi-markets (Ferlie et al, 1996; Marginson & Considine,
2000). Again, as in the case of schools, institutions of higher education are required to be more
accountable. Duke (2002, p. 30) sees a contradiction here. As he puts it: individual university

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managements are required to be more tightly controlling and accountable, yet to foster
entrepreneurialism to bridge the widening funding gap and move the non-government funding
ratio ever higher. Universities are becoming more entrepreneurial in order to raise their own funds
because of dwindling state financing, yet the state still sees universities as representing a big chunk
of public expenditure and demands parsimony and output measurement. So, while autonomy
should give freedom to act, this is not so. The case in reality is rather that there is greater
bureaucratic control.
NPM has led to structural changes both at the school level and in institutions of higher
education. Ferlie et al (1996), Arnott (2000) and Raab (2000) outline the structural changes in
schools in England and Scotland as follows:
Roles and relationships have changed. This has occurred both within the school and between the
school and its environment. For instance, management has become more hierarchical and staff
participation in decision making in the devolved management of schools is dependent on the
head teachers style of leadership. However, statutory powers have been given to parents to be
involved in the decision-making process. The school now must engage more with all
stakeholders.
Pattern of governance. The power structure has changed, including the strategies and mechanisms
of control. Schools themselves now exercise most powers, including planning and budgeting,
resource allocation, hiring and firing, as well as evaluation and monitoring. The LEA, divested of
the pwers of direct control, only offers services in enabling capacity to the management of the
school. In Scotland, authority lies with the schools head teacher, while in England it is the
governing body that wields authority over these matters. Arnott (2000, p. 17) writes that: There
was perhaps a greater tendency for heads in Scottish schools to inform their boards rather than
actively consult with them or indeed to seek their direct involvement.
Pattern of accountability. Accountability to parents and other community stakeholders is
emphasised. Teachers are also to be accountable to each other.
The flow of resources. The number of pupils a school has on its roll determines directly the size of
its budget. Schools must therefore play in the quasi-market to attract pupils in competition with
other schools. Arnott (2000) writes, however, that in reality there is no active competition for
pupils.
The educational and other values that underpin schooling. There is obviously a divergence between
the social and cultural values of schooling and managerialism. The impact of managerialism is
that the emphasis on performance and output measures and resource management has
diminished the traditional collegiality within the teaching profession.
Head teachers roles. The head teacher is now more of a manager, in the business style, than a
teacher that leads a group of teaching professionals. The head teacher must acquire new skills in
finance, budgeting, etc., and spend more time on managing performance and the outward image
of the school.
Ferlie et al (1996), Marginson & Considine (2000) and Duke (2002) highlight the changes that have
been made to the governance of higher education, which include:
A new kind of executive power and structural innovations. The new executive system has facilitated a
shift away from traditional academic collegiality to more independent vice-chancellors acting in
the manner of company chief executives. Structural innovations have been introduced that aid
the operation of the executive system, creating selective mechanisms for participation,
consultation and internal market research. The result is that established institutions such as
senates and councils are now more peripheral than or on the same level of importance as vicechancellors advisory committees and shadow structures in helping the university to make
decisions.
New methods of devolution. Devolution is seen here to strengthen the central control of the
executive. While faculties, schools and departments have budgetary autonomy, they disburse
funds within the framework of institutional plans and targets, and may be partially responsible
for generating baseline incomes, e.g. through the admission of a minimum number of fee-paying
students.
A decline in academic disciplines in governance. The authors explain this as the executive character
of the university having diminished the collegial culture. Previously, the decision-making

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apparatuses were structured so that the disciplines had influence in the decision process. This is
now seen by the executive managers and outside policy makers as a hindrance to managerialism,
where decisions have to be made quickly, in executive style, without having to pass through
several remit instances.
Expanded periphery. In line with entrepreneurialism, other expert areas have sprouted in the
university to manage knowledge transfer, intellectual property, relations with industry, alumni,
fundraising and continuing education. Research centres are created and dissolved as needed,
because research is geared toward short-term returns and in favour of the disciplines whose
products have the greatest commercial potential.
Inclusion and social engineering. Universities must inculcate the concept of widening access for
minorities, socially and economically disadvantaged groups and the physically challenged. There
are also those who are advanced in age taking advantage of lifelong learning opportunities. The
cost of exclusion is an expensive public burden. New Labour advocates educational inclusion as
a means to empowerment, independence and social responsibility for the marginalised. The
university is expected to be a key participant in this attempt at social engineering.
Changes in delivery methods. The universitys traditional role as an institution of higher education
no longer follows the traditional method of having students on campus. With the use of new
delivery systems, e.g. ICT, distance learning has become a major method of learning.
Universities also give recognition and accreditation to learning achieved outside the university,
including work-based learning, and advanced standing is given for work done elsewhere. In
some cases, curricula are customised to suit students needs.
Enhanced flexibility of personnel. There is greater dependence, according to Marginson &
Considine (2000), on formulae, incentives, targets and plans than on legislation by senates or
deliberations of academic boards.
Reputation management. In the same way that private sector companies create and maintain their
public images through professional public relations and publicity, universities and other
educational institutions must create and enhance a reputation that the institution and its
members present to the outside. In the quasi-market environment, a good reputation, especially
for the quality of research and teaching and service to students, is a major weapon of
competition.
The imperative for these structural changes is the pressure to earn higher levels of non-state
incomes. The result is a quasi-student-market, where some courses are run, e.g. Master of Business
Administration, because they are self-financing, and there is a drive for overseas students mainly
because of the high tuition fees that can be charged.
Universities and schools compete on the quality of the education they offer. This quality is
defined, according to Marginson & Considine (2000, p. 4) less from traditional public sector and
political cultures, and more from the private sector and culture of economic consumption. In
relation to this, the meaning and value of research has changed ... Research income is a valued
status indicator, driving management behaviour at all levels (Duke, 2002, p. 28).
Performativity
Peters (2004) defines performativity in education as the combination of enforced standards and
accountability (e.g. national tests, school inspections), devolution and diversity (different types of
schools running core curriculum programmes and specialising in some areas of their choice),
flexibility of employment (for teaching professionals at different levels), greater choice (wider
variety of schools and the consumer having real power to choose) and managerialism. In other
words, performativity is the concept that the efficacious use of allocated resources is the
determinant measure of true value. This is akin to the business focus on shareholders worth, or
the neo-liberal expectation of more for less. In effect, perform or disappear; performance is the
raison dtre of educational institutions, so that the school leaders job is to manage performance.
Devolution and diversity, and flexibility of personnel major components of performativity
ought to signify independence of action, or a high degree of laissez- faire. Yet Marginson &
Considine (2000, p. 9) talk of new methods of devolution, a kind of devolution that is a key
mechanism of the new executive power, a part of centralized control and not its antithesis. The

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authors go on to say that in the entrepreneurial university, the new techniques of governance have
been directed towards the exercise of better control of output, and the containment of difference
(p. 249), which would seem to neutralise the flexibility that personnel have.
In this environment there are many organs and methods of control. These methods include, but
are not limited to, a new emphasis on appraisal, performance judged by output and output-related
pay (Reeves et al, 2002). Firstly, educational institutions are still dependent mainly on basic grants
for their income. As Raab (2000, p. 28) argues, a school may only be as autonomous and collegiate
as it is allowed to be by the organs of the state that establish, finance and regulate it. Furthermore,
the size of the basic grant is tied to the extent to which each university meets its admissions quotas
(determined outside the institution). At the secondary school level, it is dependent on the pupil
population, which can now be more influenced by the power of parents to choose, or withdraw,
their children. Another way financial allocation can be used as a control instrument is in the
contestable funds for universities. These are, to some extent, like rewards for previous
performativity: we measure your performance to see that you have performed well in order to give
you the resources to perform well.
Arnott (2000) writes that while curricular reform in Scotland leading to the introduction of the
National Certificate and the 5-14 Programme was more consensual and allowed a great deal of
professional autonomy, in England the national curriculum gave teachers only limited control over
curricular issues. The idea of a national curriculum also corrodes the independence of the selfmanaging school. As Ferlie et al (1996, p. 103) point out, the national curriculum:
specifies common standards and a core curriculum which affects the total system of school
management. It curtails the autonomy of headteachers, limiting variation in what is learnt at
a particular age and what children should have achieved as they pass from one stage to the
next.
There are also various kinds of tests to measure performance. The achievement of pupils in these
tests is a reflection of how effective teaching and learning at the particular school has been. In
England there is the standard assessment task, for example, and in Scotland the national test. Test
results are published in England as school league tables and, while there is no central collection of
results in Scotland, the media publishes them anyway, as league tables.
Schools are also now required to prepare school improvement plans. Such plans will detail the
schemes and projects as well as methods for improving performance and raising attainment during
the coming year. The plans must also indicate what would constitute attainment for each scheme.
In Scotland there are also the performance indicators, published by Her Majestys Inspectorate of
Education (HMIe), by which teachers measure their performance, for which they will be
accountable to inspectors.
In addition, schools are now compelled to publish information on a range of performance
indicators such as examination results, costs, truancy rates and the destination of pupils leaving the
school (Arnott, 2000; Reeves et al, 2002).
There is also direct monitoring through inspections. Her Majestys Inspectorate of Education
(HMIe) has responsibility for this in Scotland. HMIe evaluates performance and attainment levels
in teaching and learning against the central governments performance indicators. In England it is
the Office for Standards in Education (Ofsted) which has the equivalent responsibility.
Conclusion
From the end of the 1970s to the 1990s governments around the world were engaged in
widespread and sustained reforms of their public administration. These reforms started in the USA
and the United Kingdom, where the Republican and Conservative governments that came to
power championed the New Right campaigns for reforms. In New Zealand, however, where the
most acclaimed reforms took place, the political force behind them was a Labour government, i.e.
a leftist power. The reforms immediately aroused academic interest and research was carried out
and theories developed. Perhaps to facilitate academic discourse, the reforms collectively came to
be called the new public management (NPM).
The major driving force behind the reforms was economic stagnation in many countries. The
New Right blamed this economic stagnation seen in huge national debts, balance of payment

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problems, high rates of unemployment, underperforming industries, etc. on the excessive scope
of governments engagement in business, mediocrity in administrative performance and the lack of
accountability, among other things. In addition, there was also new intellectual thinking
developing on how public services should be organised and delivered. This was probably because
the populace in various countries were now better educated and more sophisticated in their
thinking, tastes and demands.
If only one element is to be pointed out as characterising the reforms, it would be
marketisation. The administration of public services was now benchmarked against private
business power should be exercised by those who give the service; the consumer should have
choice; the reason to exist should be determined by how well the organisation performs; there
should be measures of performance and public accountability. These characteristics were based on
certain theories: mainly public choice, transaction cost economics and principalagent theory.
As with every other sector, the education sector was also reformed. In this field, the major signs
of NPM are the local management of schools along managerial lines, the choice and powers given
to parents and governors, and the greater participation of the neighbouring community in the life
of a school, while the collegiality of academia is diminished. There is, of course, also the focus on
performance, which is measured and monitored. Performativity, focused on outcome
measurement, now appears to be the key concern of school leaders and LEAs.
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SOWARIBI TOLOFARI is completing his MPhil in Educational Studies at Glasgow University,

United Kingdom. His particular interest is Higher Education Management. He completed his MBA
at Hull University in 1998. His interests also cover politics and issues of Third World development.
Tolofari has worked for many years both in the private and public sectors in Nigeria, Britain and
Sweden. His writings include Exploitation and Instability in Nigeria: the Orkar Coup in perspective
(Lagos: Press Alliance Network, 2004); Invandrares politiska inflytande arbetsmarknaden (The
policy influence of immigrants labour market), in A. Kakhee & M. Johansson (Eds) (2002)
Berattelser om invandrares inflytande i Orebro stadspolitik (Orebro: Orebro universitets bibliotek); and
Democracy: a culture of misrepresentation (online; available at: http://news. biafrani.eriaworld.
com/archive/2OO3/mar/31/2l2. html. Email: sotolos@yahoo.com

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