New Public Management in Public Sector Organizatio

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New Public Management in public sector organizations: the dark side of

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Article in Public Administration · July 2009

DOI: 10.1111/j.1467-9299.2009.01766.x
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doi: 10.1111/j.1467-9299.2009.01766.x
NEW PUBLIC MANAGEMENT IN PUBLIC SECTOR

ORGANIZATIONS: THE DARK SIDES OF
MANAGERIALISTIC ‘ENLIGHTENMENT’
THOMAS DIEFENBACH
For many years the proponents of New Public Management (NPM) have promised to improve
public services by making public sector organizations much more ‘business-like’. There have been
many investigations and empirical studies about the nature of NPM as well as its impact on
organizations. However, most of these studies concentrate only on some elements of NPM and
provide interesting, but often anecdotal, evidence and insights. Perhaps exactly because of the
large amount of extremely revealing and telling empirical studies, there is, therefore, a lack of
a systematic identification and understanding of the nature of NPM and its overall relevance.
This paper contributes to a systematic identification and understanding of the concept of NPM as
well as its multi-dimensional impact on public sector organizations. First, the paper aims at (re-)
constructing a comprehensive taxonomy of NPM’s main assumptions and core elements. Secondly,
the paper tries to provide a more comprehensive and meta-analytical analysis of primarily the
negative consequences of NPM-strategies for public sector organizations as well as the people
working in them.
INTRODUCTION
‘New Public Management’ (NPM) was introduced to public sector organizations in the
late 1970s (Wilenski 1988, p. 213; Pollitt 1990, p. vii; Cohen et al. 1999, p. 477; Clarke and
Clegg 1999; Dent and Barry 2004, p. 7; Adcroft and Willis 2005, p. 389). The movement
is both radical and total in its scope as well as in its intensity, as the following list
demonstrates:
It has been introduced to all public service sectors: government and governmental
organizations, regional and local government, higher education institutions, health
services, the criminal justice system, police forces, the legal profession, and
professional service organizations (see, for example, McAuley et al. 2000, p. 89;
Kirkpatrick et al. 2005).
It is an increasingly global phenomenon (see Kirkpatrick et al. 2005, p. 13). It can
be found in industrialized Western nations such as the UK and continental Europe,
the USA and Canada, Australia and New Zealand (see Mascarenhas 1993; Pina and
Torres 2003; Torres 2004); it can also be found in other industrialized and developing
countries in Asia and Africa (see Haque 1999; Sarker 2005; Lee and Haque 2006).
In Anglo-Saxon and European countries at least, it has been supported by all major
political parties, for example, by Republicans and Democrats, and by Conservatives
and Labour governments (see Hood 1991, p. 6; Newman 1998, p. 234; Protherough
and Pick 2002, pp. 19–27).
As Stephen Page has said, NPM seems to be capable of being used ‘in virtually any
political setting, geographic region, or policy area’ (Page 2005, p. 714). The number of
empirical studies concerning the introduction of NPM in public sector organizations is
virtually uncountable. However, although (or because) these reports reveal interesting
Thomas Diefenbach is a Lecturer in Management at Strathclyde Business School, University of Strathclyde.
Public Administration Vol. 87, No. 4, 2009 (892–909)

© 2009 The Author. Journal compilation © 2009 Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ,
UK and 350 Main Street, Malden, MA 02148, USA.
PUBLIC SECTOR ORGANIZATIONS AND NPM 893
data and insights, they provide relatively brief descriptions of NPM and its basic
assumptions and core elements (see, for example, Pollitt 1990, pp. 2, 83; Hood 1991,
pp. 4–5; Hoggett 1996, pp. 9, 20; OECD 1997, pp. 86–7; Cohen et al. 1999, pp. 477–8; Haque
1999, p. 471; McAuley et al. 2000, p. 89; Parker and Bradley 2000, p. 131; Pollitt 2000,
p. 183; Deem 2001, p. 12; Hellawell and Hancock 2001, p. 191; Sanderson 2001, pp. 300,
303; Vickers and Kouzmin 2001, pp. 109–10; James 2003, pp. 99–100; Butterfield et al. 2004,
p. 396; Ruane 2004, p. 130; Torres 2004, pp. 99–100; Apple 2005, p. 11; Deem and Brehony
2005, p. 220; Kirkpatrick et al. 2005, p. 112). Despite – or perhaps because of – the large
number of empirical studies it is less clear what New Public Management is really
about. Although there might be different versions of NPM because of cultural, legal, and
political differences (Pollitt 1990, pp. 96–7), there is a lack of attempts to systematically
and comprehensively identify the assumptions and core elements of the general concept
of NPM. In this sense, the objectives of this paper are twofold:
1. To provide a systematic identification of NPM’s basic assumptions and core
elements;
2. To analyse its major, primarily negative implications and consequences for public
sector organizations.
Since this paper is mainly about its implementation in public sector organizations, NPM
will be identified and analysed within management- and organization studies discourses –
particularly from the perspective of Critical Management Studies (for example, Alvesson
and Willmott 1992; Walsh and Weber 2002) and organizational politics (for example,
Burns 1961; Mintzberg 1985; Pettigrew 1992).
In all, five major areas were identified and NPM’s core elements organized and analysed
accordingly as follows:
1. Business environment and strategic objectives;
2. Organizational structures and processes;
3. Performance management and measurement systems;
4. Management and managers;
5. Employees and corporate culture.
THE CONCEPT OF NEW PUBLIC MANAGEMENT: IMPLICATIONS AND

CONSEQUENCES FOR PUBLIC SECTOR ORGANIZATIONS
NPM is a set of assumptions and value statements about how public sector organizations
should be designed, organized, managed and how, in a quasi-business manner, they
should function. The basic idea of NPM is to make public sector organizations – and
the people working in them! – much more ‘business-like’ and ‘market-oriented’, that is,
performance-, cost-, efficiency- and audit-oriented (see, for example, Cohen et al. 1999,
pp. 477–8; McAuley et al. 2000, p. 89; Spencer-Matthews 2001; Deem 2001, pp. 10–13;
Vickers and Kouzmin 2001, p. 109–10; Gruening 2001; Kezar and Eckel 2002; Shattock
2003; Newton 2003; Deem 2004; Deem and Brehony 2005). Table 1 provides an overview
of NPM’s basic assumptions and core elements.
Business environment and strategic objectives

NPM’s justification is based first on a particular view of the business environment and a
corresponding vision. In the opinion of the proponents of NPM public sector organizations
face increased pressure and competition because of a much more challenging and

© 2009 The Author. Journal compilation © 2009 Blackwell Publishing Ltd.
894 THOMAS DIEFENBACH
TABLE 1 Basic assumptions and core elements of New Public Management
Area Element
1. Business environment – assumption of strong external pressure, of a much more challenging and
and strategic objectives changing business environment
– conclusion that there is a need for a new strategy and that there is no
alternative for the organization but to change according to larger trends
and forces
– market-orientation: commodification of services under the slogan of ‘value
for money’
– stakeholder-orientation: meeting the objectives and policies of strong and
influential external stakeholders
– customer-orientation: service delivery from a customer’s perspective
– increased organizational efficiency, effectiveness, and productivity defined
and measured in technological terms
– cost-reduction, downsizing, competitive tendering, outsourcing, privatiza-
tion of services
2. Organizational – decentralization and re-organization of organizational units, more flexible
structures and processes structures, less hierarchy
– concentration on processes, that is, intensification of internal cross-
boundary collaboration, faster decision-making processes and putting
things into action
– standardization and formalization of strategic and operational management
through widely accepted management concepts
3. Performance – systematic, regular and comprehensive capturing, measurement, monitor-
management and ing and assessment of crucial aspects of organizational and individual
measurement systems performance through explicit targets, standards, performance indicators,
measurement and control systems
– positive consequences for the people working with and under such systems
such as increased efficiency, productivity and quality, higher performance
and motivation
4. Management and – establishment of a ‘management culture’: management is defined as a
managers separate and distinct organizational function, creation of (new types of)
managerial posts and positions, emphasizing the primacy of management
compared to all other activities and competencies
– ‘managers’ are defined as the only group and individuals who carry out
managerial functions
5. Employees and – empowerment and subsidiarity, staff are expected to develop ‘business-
corporate culture like’, if not entrepreneurial, attitudes
– idea of leadership and a new corporate culture
changing business environment (Ellis 1998, p. 231; Newton 2003, p. 428). This trend is
portrayed as part of larger, epochal developments – globalization and neo-liberalism.
This is held to mean that public sector organizations must be changed to fit to ‘the
new spirit of capitalism’ (Chiapello and Fairclough 2002, p. 186). Hence, the primary
objective of NPM is to give public sector organizations a new orientation and, in so
doing, change the way they operate. Three strategic outside-orientations are widely
mentioned: market-orientation (commodification of services under the slogan of ‘value
for money’); stakeholder-orientation (meeting the objectives and policies particular of
strong and influential external stakeholders); and customer-orientation (service delivery
from a customer’s perspective). In terms of inside-orientation, two strategic objectives in
particular are mentioned time and again within NPM-discourses: ‘increased efficiency,

effectiveness and productivity’ (defined and measured in functional and technological

terms), and ‘cost-effectiveness’ (which usually means cost-reduction, including measures
such as downsizing, competitive tendering, outsourcing, and the privatization of services).
However, what look at first glance to be convincing ideas turn out to be quite
questionable endeavors. In order to justify the concept, the proponents of NPM refer
not only to developments allegedly identified in the environment, they are also keen to
portray them as natural forces at work as well as the natural order of things (Jacques
1996, p. 146). In other words, whether someone likes or doesn’t like what is going on in
the environment; it is inevitable, irresistible, and irreversible (see Steger 2005, pp. 35–6).
Public sector organizations ‘must’ change in order to fit to the ever-changing business
environment; they must ‘accept that they need to cope with the reality of change in
order to be successful’ (Karp 2005, p. 88). And, crucially, they can only change in the
way NPM and its proponents think is right. NPM is a ‘historical inevitability’. Such
uncompromising views remind of Margaret Thatcher’s once famous ‘TINA-principle’ –
‘There is no alternative!’ (Diefenbach 2007, p. 129). However, in the realm of social actions,
institutions and society, there is no such thing as ‘inevitability’. Organizations as well as
human beings ‘always’ have a choice. Only ideologies refer to ‘the laws of nature’ that
one can neither change nor resist.
To be clear: a greater awareness of developments in the environment and a greater
responsiveness to such developments might help to improve the work of public sector
organizations. A market-orientation can help to fit services better to requirements; a
stakeholder-orientation can contribute to higher levels of accountability; and a customer-
orientation might improve the quality of services. But NPM’s strategic orientations are
simply too narrowly defined and are based on too artificially and narrowly designed
concepts of measurement and accountability. Because of many empirical studies that
have been carried out, it has become quite clear exactly what serious damage the five
strategic orientations and objectives can inflict upon public sector organizations and the
services they provide.
Part of a wider epochal societal trend – the ‘colonisation or economisation of the
lifeworld’ (Habermas, Fromm) – is indeed the increased market-orientation of public
sector organizations, the ‘ethical change in governance from the traditional principle of
public welfare to the commercial norm of value-for-money’ (Haque 1999, p. 469). Literally
everything is, or has to be, valued, appreciated and judged primarily according to its
(factual or theoretically found) ‘market value’. In this sense, NPM simply follows and
contributes to the ‘commodification of services’ (Adcroft and Willis 2005, p. 386) and
‘the commodification of every part of life’ (Protherough and Pick 2002, pp. 156–7). In so
doing it strongly goes against the ideas that public services are ‘universal entitlements
and should be provided regardless of the gravity of need, cost or ability to pay’, the
ethos of ‘provision of services on the basis of need rather than on the basis of ability to
pay’ (Kirkpatrick et al. 2005, p. 46). While creating new value along the lines of abstract
quantification and monetarization at the same time, it ignores, reduces, damages or even
destroys many other values; the traditional public service ethos and its commitment
to impartiality, social equality, integrity, equity and communitarian values, a care for
the qualitative dimensions and the uniqueness of each individual and individual case,
the socio-philosophical ideas of citizenship, representation, neutrality, welfare and social
justice (Hoggett 1996, p. 14; Haque 1999, pp. 448–69; Kirkpatrick et al. 2005, pp. 3, 48;
Brookfield 2005, p. 165). It is the de-valuation of public goods and services, of ethical

principles of public governance, of ethical values, and of a public sector ethos at such a
large scale that it has, indeed, historical dimensions.
The same consequences come with the second orientation, the stakeholder-orientation.
Although the original concept identifies a whole range of internal and external
stakeholders and suggests addressing their interests equally, based on ethical values,
a ’business-like’ management of stakeholder interests (see, for example, Johnson et al.
2006, pp. 181–2) differs quite significantly. It concentrates on meeting the targets and
requirements only of strong and influential external stakeholders who have a vested
interest in the organization (for example, the government or funding bodies). At the
same time, less powerful and influential stakeholders – usually the (poorer) citizens and
community the organization should serve – get little or even no attention.
Customer-orientation is also quite problematic. It can be mere lip-service without
any real meaning (for example, when universities call their students or hospitals their
patients ‘customers’). In these cases it doesn’t do too much harm and is simply ridiculous.
However, the idea of a consumer of public services can also be meant seriously. In this
case, as it is understood, it is used in sharp contrast to the idea of citizen. The latter is seen
more as a conscious and politically active member of the state and community, interested
in public affairs, the welfare of the whole and others (Gabriel 1999, p. 404). Public sector
organizations, therefore, would have to do much more in order to address the multi-
dimensional expectations of ‘the citizen’. In sharp contrast, the consumer simply demands
the prompt delivery of a specific service for his own needs. And whereas the citizen could
make his claims on the basis of broad philosophical values, the customer, again, can
make his claim only on the basis of a narrowly defined ‘supply/demand-concept’ and the
strength of his own position within this setting. As Haque says, the:
normative change from the democratic value of citizenship to the market criterion of
customer satisfaction, [. . .] has shifted its attention away from the needs and concerns
of common citizens to the demands and interests of affluent customers, especially the
local business elites and foreign investors. (Haque 1999, p. 469)
A mixed picture also emerges concerning NPM’s inside-oriented strategic objective,
to increase efficiency and enable organizations to provide services as efficiently and
productively as possible (Pollitt 1990, p. 84). On the one hand, there is evidence that
‘[m]odern management techniques have improved public administration in many ways.
There is now much greater consciousness of costs and choices, and many public functions
are run more efficiently’ (Freiberg 2005, p. 31). The shift from input controls to output
controls (see, for example, Hoggett 1996, p. 21; Wilenski 1988, p. 216) was also quite
helpful. On the other hand, researchers such as Pollitt (2000, p. 192) point out ‘that
efficiency gains may be achieved at the cost of other, less desirable effects’. However,
positive efficiency effects, if any, are often concentrated on a few areas and measured
in rather quantitative and technical dimensions. Indeed, the whole idea of efficiency
and measurement devalues any qualitative values and aspects (as we will see in the
discussion below). Hence, because of a widespread efficiency- and measurement-fever,
many services actually get worse: the overall performance of public sector organizations
does not increase (Carson et al. 1999, p. 329; Staw and Epstein 2000; Butterfield et al. 2004,
p. 413) - on the contrary, it decreases.
Finally, NPM’s objective of a greater cost awareness – which very often simply means
cost reduction, downsizing, competitive tendering, outsourcing, and privatization of
services – produces contradictory results. On the one hand, there is evidence of greater

cost consciousness in the public services (Pollitt 1990, p. 84). Nonetheless, when comparing
all costs and benefits, it becomes less clear what exactly the ‘bottom line’ is (Considine 1990,
p. 172). Staw and Epstein 2000, for example, found no empirical evidence that popular
management techniques (such as TQM) effect organizational financial performance.
James (2005, p. 334) found ‘high costs in running the regulatory regimes’, out-performing
intended cost-reductions and savings. According to Considine, there is:
mounting evidence that many of the new techniques are seriously deficient. . . . A
number of the techniques involve expensive restructures which actually increase costs
in the short term and, in many cases of successful attempts at cost-saving, damage has
been done to the organization’s capacity to maintain quality service and to innovate.
As a consequence, a number of the problems of the old bureaucratic order persist and
several new maladies have emerged’. (Considine 1990, p. 166)
In a word, cost-orientation very much comes down to reduction in costs, services, and
quality, to a concentration on ‘cash cows’ and to a deletion of activities that are not
profit-making.
All in all, the market-, stakeholder- and customer-, as well as efficiency- and cost-
orientation, have dramatically changed the very understanding of public services. It is
increasingly about ‘products’ designed to the specifications of powerful stakeholders and
offered to affluent customers who are willing and able to pay for them within narrowly
defined settings of factual or artificially created market-mechanisms. The public sector
has lost its administrative neutrality (Gawthrop 1999, p. 427). To quote David Marquand
(cited in Apple 2005, p. 18):
The language of buyer and seller, producer and consumer, does not belong in the
public domain; nor do the relationships which that language implies. Doctors and
nurses do not ‘sell’ medical services; students are not ‘customers’ of their teachers;
policemen and policewomen do not ‘produce’ public order. The attempt to force
these relationships into a market model undermines the service ethic, degrades the
institutions that embody it and robs the notion of common citizenship of part of its
meaning.
Already at the level of strategic objectives NPM can barely deliver what it promises. NPM,
with its strategic orientations and objectives, does not serve ‘the public’ but artificially
creates markets and parallel universes of vision statements and performance reports. It is
simply alien to the public sector and to the idea of public service.
Organizational structures and processes

NPM is not only about new strategic orientations and objectives of public sector
organizations but also about changes of their internal structures and processes. According
to its proponents, one of the primary organizational objectives is decentralization in
order to achieve more flexible structures and less hierarchy. This is accompanied by
a concentration on processes, particularly intensification of internal cross-boundary
collaboration, faster decision-making processes and the realization of projects. Thirdly,
these attempts shall be supported by standardization and formalization of strategic and
operational management through widely accepted management concepts such as scenario
planning, SWOT-analysis, business and unit plans, and the like. Again, there might be
good reasons for change. This is particularly the case if one – rightly or wrongly – thinks
about ‘old’ public sector organizations as over-formalized, slow, compartmentalized

(‘silo-mentality’) and inefficient red-tape-producing bureaucracies. According to such a

position, many organizational structures and processes could be improved dramatically.
The change initiative would produce positive outcomes such as faster decision making,
reduced compartmentalization and internal barriers; intensification and improvement of
internal communication and cross-boundary collaboration; faster delivery of products
and services.
However, although this looks good on paper, it seems, like many other concepts and
‘grand plans’, too good to be true; indeed, the reality is very different to the official agenda.
Change management initiatives on the basis of NPM often lead to de-centralization only
in a few areas – usually those areas and tasks which are either operational, of secondary
importance, or unpopular (Pollitt 1990, pp. 55–7). At the same time, shifts towards the
creation of operationally decentralized units are accompanied by ‘simultaneous attempt[s]
to increase centralized control over strategy and policy’ (Hoggett 1996, p. 9). There is
widespread empirical evidence for the fact that ‘contemporary managerial strategies
try to create new forms of centralization‘ (Courpasson 2000, p. 157) – particularly of
all activities which are crucial for the organization as a whole (for example, strategy,
policy, planning, setting of strategic objectives, financial and performance targets, budget,
standards, performance measurement and management information systems) (see, for
example, Pollitt 1990, pp. 115–16; Considine 1990, p. 169; Hellawell and Hancock 2001,
p. 192; Sanderson 2001, p. 300; Diefenbach 2005). De-centralization leads to centralization,
hardened structures (between the centre and the periphery), and more hierarchy. In short,
it is about concentration and centralization of power (Courpasson 2000, pp. 156–7).
The same paradoxical outcomes occur when one looks at attempts to trim down
standards and procedures, structures and processes. Despite many well-meant attempts,
NPM generates even more of the curses it claims to fight. There is widespread evidence
for ‘swelling tides of bureaucracy’ (Protherough and Pick 2002, p. vii) because of new
NPM structures and processes. As a direct result, they leave less and less time for frontline
staff to do those tasks which serve citizens and community directly (Butterfield et al. 2005,
p. 335). Hoggett (1996, pp. 27–8) has given quite a colorful description:
excessive formalization has proved to be organizationally dysfunctional, creating new
layers of bureaucracy engaged in contract specification and monitoring, quality control,
inspection, audit and review and diverting the energies of professional staff away from
service and program delivery into a regime of form-filling, report writing and procedure
following which is arguably even more extensive than that which existed during the
former bureaucratic era.
The work of Kirkpatrick et al. (2005, p. 115) supports these findings. According to them
‘[n]umerous studies reveal how social workers now devote an increasing proportion
to their time to administrative tasks associated with completing forms and recording
information’ and they criticize ‘the growing burden of red tape’ (p. 175). There is increasing
evidence for greater formalization and bureaucratic routines (see, for example, Hoggett
1996, p. 23).
By referring to three crucial organizational aspects – centralization, formalization
and bureaucratization – this discussion could again provide evidence that NPM’s real
outcomes are quite in contrast to its original claims and objectives. There might be some
improvements in the reduction of compartmentalization and internal barriers, in the
intensification of internal communication and cross-boundary collaboration, as well as
in making decision-making processes more efficient. However, at the same time, these

are more than neutralized by an increase in bureaucracy, formal requirements, and more
complex relations between the centre and periphery which all lead to an increasingly
misallocation of time and resources (see, for example, Hoggett 1996, pp. 27–8; Protherough
and Pick 2002, p. vii).
Performance management and measurement systems

It is usual for strategic objectives and organizational structures and processes to be
accompanied by some kind of performance management and measurement system.
Bureaucratic forms and systems of control and monitoring in public sector organizations
have always existed. However, particularly with the introduction of NPM, a whole
range of additional systems and processes of auditing, control, regulation, assessment,
inspection and evaluation were introduced – for example, industry and quality standards,
‘best practice-concepts’, benchmarking, league tables, customer feedback mechanisms,
Balanced Scorecard and other management information systems, audit and control
systems, inspections, quality assessments, performance reviews, staff appraisal and
other systems. People nowadays live and work under ‘constant performance evaluation‘
(Kärreman and Alvesson 2004, p. 157). Performance management and measurement
systems always have both a political (that is, ideology, interests, power) and a technological
dimension. Because of space limitations we will concentrate only on the latter. In the
technological dimension, two aspects are perhaps most relevant. One is the methodological
dimension, that is, which aspects are measured and in which way. The other is the
psychological dimension, that is, the consequences for the people working with and
under such systems.
In theory, there seems to be good reasons for introducing NPM-related performance
management and measurement systems into public sector organizations. To systemati-
cally, regularly and comprehensively capture, measure, monitor and assess crucial aspects
of organizational and individual performance will lead to positive consequences such
as increased efficiency, productivity and quality, higher performance and motivation. In
addition, because of explicit targets, standards, performance indicators, measurement,
and control systems, management can be based on ‘facts’ and have a rational basis.
Hence, chances increase to hold people accountable and to reduce ‘illegitimate privileges‘
(Courpasson 2000, p. 153). Overall, such systems seem to be much fairer and just than
‘old’ systems of either no performance measurement at all, bureaucratic systems, or ‘old
boys-’ (and ‘old girls-’) networks.
However, there seems to be serious problems with the whole idea. First, there are the
methodological problems: despite serious attempts to develop multi-dimensional systems
which capture many more aspects than do financial or technical ones, performance
measurement is still limited both in the breadth and depth of its approach. Even with
the most elaborate performance measurement systems, only some intangible assets, core
capabilities or value drivers can be quantified and measured by ‘hard’ indicators. Despite
the modern design of such systems, they fall back on the prioritization of extremely
orthodox measures such as efficiency and productivity, costs and technical performance
(Pollitt 1990, p. 138; Kirkpatrick et al. 2005, p. 67). Managerial performance measurement
systems are concerned only to capture and measure particular aspects and results
(measurable outputs), which are relevant only for the particular strategic orientations
and objectives chosen (market orientation), which correspond only with a particular
understanding of performance, efficiency, productivity, and accountability (quantitative

absolute and relative results), and which can and should be managed, achieved, and
controlled only in particular ways (that is, top-down and linear).
The narrowness of these parameters leads to further negative effects – especially for
those aspects which are not quantifiable (Wilenski 1988, p. 218). Whether automatically
ignored by the system or deliberately neglected by the proponents of NPM, most of
the intangible assets and traditional values are not captured by the performance radar.
Examples of these include many aspects of human, social and organizational capital (that
is, skills and knowledge, forms of co-operation, knowledge sharing and development),
fairness, dignity, equality, justice, quality of life, security, freedom, representation,
participation, commitment, trust, creativity, communities of practice, internal co-operation
and (informal) knowledge sharing, innovation, social impact or usefulness of initiatives
(Wilenski 1988, p. 218; Pollitt 1990, pp. 60, 138; Diefenbach 2004; Michael 2005, p. 105;
Kirkpatrick et al. 2005, p. 67). All these, and similar aspects and values are seriously
threatened by NPM and may have already been damaged quite dramatically (Pollitt 2000,
p. 195). They are devaluated and discredited, portrayed as being unimportant, only of
instrumental use, ignored, or treated as constraints and obstacles that organizations have
to overcome.
All in all, in an era of (ever increasing) number-orientation and measurement it does
not really come as a surprise that NPM lays so much stress on performance measurement
and the implementation of performance measurement systems throughout the whole
organization. However, with such attempts, NPM seems to have been overstated. As in
the heydays of Taylor’s Scientific Management (Taylor 1967 [1911]), there now seems
to be kind of a ‘measurement-fever’. Hoggett (1996, p. 22) came to the conclusion that
‘the majority of public sector organizations in the UK today appear to be overwhelmed
by forms of performance monitoring’. Literally everything shall be measured, that can
be measured and what is seen as relevant for managerialistic objectives. In terms of
performance measurement and quantitative data, this means: (1) set the agenda; (2) decide
the objectives; (3) define what is relevant; (4) define what is not relevant; and (5) shape
how people (have to) think and act accordingly. This ‘measure mania’ brings far-reaching
negative consequences to public sector organizations, the people who work in them and
the services that are being provided (see, for example, Butterfield et al. 2005).
Whatever the technical and methodological problems of the system happens to be,
the system’s consequences are perhaps of even greater importance with regard to their
role in shaping people’s attitudes and behavior (Hoggett 1996, p. 20). Performance
measurement and management systems have primarily ‘pedagogic’ functions. They
define the frameworks people think and act within, what they are striving for, how
they are being evaluated, and how they behave and even what they become (Kärreman
and Alvesson 2004, p. 169). Hence, probably the most important ‘pedagogical’ roles
of performance management and measurement systems are guidance and control –
paternalistic guidance, top-down control by managers (Kirkpatrick et al. 2005, pp. 68,
91,161) and even control of control (Sanderson 2001, pp. 301, 305). Such control systems
and procedures are in direct line from the very direct managerial control that operated in
the early days of capitalism. This includes technological control along the assembly line
and elaborated bureaucratic control systems up to and including today’s sophisticated
electronic performance management and performance measurement systems (Jermier
1998, p. 246), forming an ‘electronic panopticon’ (Rothschild and Ollilainen 1999, p. 605)
on top of the traditional systems still in use. It represents the imprisonment of employees

to which NPM simply adds another set of methods. The means may change, the purpose
remains the same.
In a practical sense for most staff, the whole range of NPM measurement systems
simply mean additional work and a decline in efficiency and effectiveness. According to
Hoggett (1996, p. 28):
creating new layers of bureaucracy engaged in contract specification and monitoring,
quality control, inspection, audit and review and diverting the energies of professional
staff away from service and program delivery into a regime of form-filling, report
writing and procedure following which is arguably even more extensive than that
which existed during the former bureaucratic era.
In addition, Butterfield et al. (2005, p. 339) provide empirical evidence:
that the introduction of a performance culture in the police service has actually made the
dysfunctional effects of bureaucracy (over-caution, ritualistic rule-bound behaviour,
delay, procrastination, abnegation of responsibility and distorted communication)
much worse.
But it is not a one-way street. On the one hand, performance management and
measurement systems can become dominant and can even develop ‘a life of their
own’. Zaleznik puts it like this:
The control systems in corporations are universal in design, language, and use. They
exist apart from the language of products, markets, and manufacturing methods. They
are so powerful in framing problems and perceptions that they can easily take on a
reality they do not deserve. It is astonishing to observe the reality ascribed to these
reports and the numbers on them. (Zaleznik 1989, p. 106)
On the other hand, as with any technical, social or any other system or institution, people
learn very fast to play the game. ‘Clearly, many individuals and groups have become
highly adept at impression management whilst others have become equally skilled in the
art of performing to target, even though this may run counter to the need to do the right
job’ (Hoggett 1996, p. 24). People learn how to deliver the information required by ‘the
system’, how to cope and deal with objectives, deadlines, and indicators, how to give the
right impression, and how to manipulate the system (see, for example, Zaleznik 1989,
p. 105; Butterfield et al. 2004, p. 412; Butterfield et al. 2005, p. 338). Although this might be
interpreted as subversive, it is in fact exactly what the initiators and implementers of such
systems want – that people function, that is think and act within the boundaries set by
the system.
All in all, it can be concluded that, despite all the impressive designs and mountains
of data gathered and generated, performance management and measurement systems do
not deliver what the proponents of NPM have promised. On the contrary, most of the
systems actually make things worse on the ground where the real work takes place while
at the same time give different, if not to say false, impressions at the abstract level of
generated and aggregated data.
Management and managers

In addition to the introduction of new strategic objectives to public sector organizations, the
re-organization of their organizational structures and processes, and the implementation
of a performance measurement regime, NPM is very much about the establishment

of management. It is about emphasizing the primacy of management above all other

activities and the primacy of managers above all other groups of people. According
to this view, managerial concepts and methods, skills and competences, knowledge
and expertise are portrayed as superior, as more important than any other concept,
professional competencies and credentials. In this sense, NPM is yet another reflection of,
and fits perfectly into, ‘the age of management’. It is:
deeply rooted in the managerial functionalist paradigm. As such, it presumes the
legitimacy of established managerial priorities and is dedicated to identifying more
effective and efficient means for their realization. (Levy et al. 2001, p. 1)
NPM is a typical orthodox strategic management concept and, hence, shares the same
weaknesses.
Shrivastava (1986, p. 371) has given us a vivid explanation of the root causes:
The limitations and biases of strategic management are traceable to the narrow
instrumental conceptions of organization and strategy. Organization are viewed as
neutral, rational, technical, instrumental systems designed to convert inputs into
outputs, and strategy is conceived as the determination of ends and the selection of
means for achieving ends.
Although the managerial/instrumental view already causes many problems for private
sector organizations, it turns into a nightmare for public sector organizations. This is
largely due to the fact that the latter organizations are based much more on values, ethical
and professional concepts and have to address many more issues than the former. Any
functionalistic understanding of management or organizations within the public service
sector does not only fall short but causes serious damage to values and concepts such
as ‘care’, ‘duty’, ‘self-management’, and other professional concepts of organization and
work conduct which has been developed over centuries. For example, Kirkpatrick et al.
(2005, p. 3) rightly criticize ‘the way in which professional work is steadily being colonised
by management ideology and subject to more rational modes of top down control and
surveillance’.
There are different groups of people who benefit from the introduction and
dissemination of NPM and similar managerial concepts, but one particular group probably
benefits the most - ‘the new breed of all-purpose ‘‘managers’’’ (Protherough and Pick
2002, p. 16). According to Deem and Brehony, the primary interest of managers is ‘a
concern with the primacy of management in organisations and with the importance of
management for management’s sake‘ (Deem and Brehony 2005, p. 222). It is this ‘equation
of management with managers’ (Grey 1999, p. 567) which draws a line in the sand
distinguishing between ‘those who work and those who plan, organize, coordinate, and
control work‘ (Kärreman and Alvesson 2004, p. 150). The idea of ‘the manager’ offers
managers any opportunity to strengthen their position – in ideological as well as in
practical terms. This is the real reason why so many senior and middle managers in the
public sector are so much in favor of managerial concepts such as NPM; it increases the
social status of managers and provides the managers with an ideological basis for their
claim that public sector organizations shall and must be managed by managers (Deem
and Brehony 2005, p. 221). Hence, what is officially portrayed as a functional analysis is,
in fact, pure ideology which serves and advances the sectional interests of a specific group
(Burnham 1941, p. 25; Shrivastava 1986, p. 364).

In addition, like many ruling classes or powerful groups of individuals, managers

(examples include CEOs and hedge-fund managers) are first and foremost concerned
with their individual status and influence, their aspirations and future prospects. There
is empirical evidence to suggest that strategic change initiatives are being used by
many managers primarily for their individual ambitions and tactical advantages within
organizational politics, for the advancement of their own interests and career prospects,
as well as in higher salaries or increases in their market-value (Diefenbach 2005).
Discourses about organizational change are to a large part about the exercise of power and
(centralized) control (Hoggett 1996, p. 23; Freiberg 2005, pp. 19–20). Saunders (2006, p. 14)
has observed ‘that our universities have been converted into political arenas in which
this new generation of managers not merely compete and negotiate with one another for
resources but also exercise powers their predecessors never had’. He has also portrayed
an extremely telling picture about the new breed of public sector managers (Saunders
2006, p. 14).
For those who are neither dedicated teachers nor keen researchers, it is as if Moses
had parted the Red Sea. Managerialism has created for such academics the means
whereby they might not merely survive but thrive. Their entire way of life consists
of mission statements, position papers and reviews of one sort or another; committee
meetings, interviews and corridor discussions; phone calls, e-mails and memoranda
amongst themselves; interstate conferences with other departmental heads and deans;
graduation, prize and other ceremonies. Alliances are formed, favours are asked, deals
are made, debts are owed, careers are advanced.
If these managerial games caused consequences only for and within the group of
managers concerned we could easily remain unconcerned. However, managers’ decisions
do have an extremely large impact on the organization and the people who work there.
Many modern managers may have broad managerial experience but lack professional
experience. Often, they do not have a professional background at all. And if professionals
themselves have made the ‘career-step’ into management then it is primarily because they
have set aside their professional worldviews and values, and have adapted themselves
to managerial attitudes, rhetoric and ideology. Either way, there is acknowledged to
be widespread lack of knowledge and interpersonal incompetence among managerial
ranks, and often a total lack of understanding (or ignorance) of the work and problems
of frontline staff. Their strategies and reports look good on paper and their rhetoric
can be of utmost eloquence. But what is acknowledged to be the extremely low level
of management in many public sector organizations can have devastating effects of the
quality of the services provided and on the people delivering these services – as we will
see in the section that follows.
Employees and corporate culture

The understandings of management and the role of managers in public sector
organizations have massive impact on employees and the corporate culture. NPM
claims to use modern Human Resource Management concepts and makes the case for
empowerment and subsidiarity. Staff are expected to develop ‘business-like’, pro-active,
if not entrepreneurial attitudes. Secondly, the idea of leadership and a new corporate
culture puts the final touch on the new type of public sector organization as portrayed by
the NPM concept.

But, again, the reality looks very different. Quite often the introduction of NPM regimes
leads to additional workload, primarily because of ‘even greater obligations for routine
administration, monitoring and communication’ (Butterfield et al. 2005, p. 338). There is
empirical evidence of rising levels of stress (Kirkpatrick et al. 2005, p. 176) because NPM
creates much more challenging ‘internal’ environments and working conditions (Newton
2003, p. 434). Many employees see senior management talk about new management
and strategic change initiatives simply as lip service (Pollitt 1990, p. 85). They become
disillusioned and cynical because ‘for many staff the talk of a shared organizational
mission, commitment to quality and customer responsiveness flies in the face of their
experience of increased class sizes, inadequate nursing cover, disappearing job security,
voluntary and compulsory redundancies, etc.’ (Hoggett 1996, p. 23). There is ‘widespread
demoralization of those working in the public services, and a deep resentment and
suspicion of the way they are being treated’ (Pollitt 1990, p. 178). Kirkpatrick et al. come
to the conclusion that: ‘Efforts to induce change have now lasted more than two decades,
and the human and the financial costs have been large. One might point for example
to the stultifying effect of new management systems for controlling and monitoring
practice (. . .). Also of concern is the trend towards work intensification in many areas,
rising levels of stress, staff demoralization and employee turnover (. . .). In the long run,
these and other developments may undermine the quality of services, producing a ‘‘high
output/low commitment public sector workforce’’’ (2005, p. 5). In many public sector
organizations staff morale is at rock bottom and the deterioration of working conditions
because of the introduction of new managerial methods has reached epidemic scales and
people are simply fed-up to follow ‘pro-actively’ yet another change initiative.
It might sound paradoxical, but stressed and de-motivated, ‘unable’ and/or ‘unwilling’
employees fit quite well into the ideological framework of NPM. Such aspects underline the
necessity of more policies and procedures, of more systematic performance measurement
and appraisal, of more monitoring and advising, of more ‘leadership’ and ‘motivation’ –
for the whole arsenal of managerial concepts and methods. People seem either unable
or unwilling to adapt to the new order and it is therefore the responsibility of managers
to improve people’s change capabilities (Karp 2005, p. 88). People’s resistance and
dissatisfaction is seen by the proponents of NPM and managerialistic change management
simply as another reason and justification for yet another change initiative – and for the
roles they play. All that is needed to make the new concepts work, is more leadership and
guidance, management and control – if properly guided and managed employees can
understand and fit into the new regime. ‘Rubbishing the workforce as short-sighted and
self-interested enables managers to secure and sustain their position and prerogative as the
sole trustees and defenders of ‘‘business objectives’’ who, according to their self-serving
rhetoric, are not ‘‘self-interested’’’ (Willmott 1997, p. 1353). NPM-oriented managers
want employees to function as they function. For example, Saunders (2006, p. 17) draws
attention to the fact that ‘[t]he typical university in today’s Australia wants staff who
do what they are told rather than those who think independently or might behave in
an eccentric or idiosyncratic way. ‘‘Collegiality’’ is lauded in theory but cronyism and
conformity, even moral cowardice and sycophancy, are rewarded in practice’. In this
sense, ‘business-like’ leadership and management are defined and understood as the
extremely hierarchical and paternalistic concepts of leaders who are knowledgeable,
insightful and skilful – and their relations to those who are not, or who oppose the new
agenda, and who therefore need ‘guidance’. In a word, NPM seems to be less about
empowerment and more about the infantilization of employees.

To sum up: NPM changes the corporate culture and working conditions within public
sector organizations much more and in a much more negative sense than its proponents
claim. Empirical findings repeatedly and consistently show that NPM’s impact on
employees and corporate culture of public sector organizations comprises a whole range of
negative psycho-sociological and organizational effects, such as: increase in occupational
stress, illness, low morale, decline in job satisfaction and motivation, alienation, fear,
resentment, the distorting intellectual effects of writing for audit, a competitive, adversarial
and punitive ethos, as well as wasteful, stressful, over-bureaucratic, and expensive audit
procedures, increased tensions, more distrust between people, forms of symbolic violence
and institutional bullying, a rougher working climate, an invisible net of managerial
power and domination (see, for example, Hoggett 1996, p. 24; Parker and Bradley 2000,
p. 126; Morley 2005, pp. 86–7; Diefenbach 2005; Saunders 2006, p. 9).
CONCLUSIONS
Many of the concepts of NPM (or parts of it) may well have been introduced for good
reasons. Its initial ideas may stem from a critique of paternalism, the nanny state and the
dependency culture (Newman 1998, p. 234), from a strong disappointment with the scope,
quality, and efficiency of the services provided by public sector organizations (Pollitt 1990,
p. 138; Kirkpatrick et al. 2005, p. 53), and from quite understandable hopes that public
services can be provided appropriately and efficiently. Whether politically motivated
(either by the New Right or New Labour), or based on economic/business theories
(for example, neo-liberalism, public choice theory, US-American strategic and change
management concepts), the introduction of NPM in public sector organizations has also
led to quite a few improvements – particularly when one compares NPM public sector
organizations with the waste and inefficiency of some ‘traditional’ types of administration
and bureaucracy.
However, as demonstrated in this paper, there are even more reasons to criticize the
concept of NPM. Firstly, it can be criticized because of its many inconsistencies, one might
even say hypocrisies. For example, on the one hand it aims to institutionalize the idea
of change as an organizational capability (‘change for the sake of change’). On the other
hand, it also strives for standardization and formalization of strategic and operational
management. Centralization (of activities crucial for the organization as a whole, for
example, strategy, policy, budget, standards, or information systems) is introduced at the
same time as decentralization. More management layers are created in parallel to claims
about less hierarchy. New regulations accompany plans for deregulation. The principles
of empowerment and subsidiarity are announced while at the same time more hierarchical
structures and taylorized processes and formalized surveillance- and control-systems are
being implemented. Employees are expected to develop ‘business-like’, pro-active, if not
entrepreneurial, attitudes. At the same time, employees’ tasks, attitudes and performances
are systematically defined, closely monitored, regularly appraised and tightly controlled
by a new breed of managers.
But, as demonstrated above, NPM is not just an inconsistent and poorly defined
theoretical concept. It has very real implications and consequences for public sector
organizations and the people working there:
1. A limited understanding of organizational orientations (such as a ‘business-like’
market-, stakeholder- and customer-orientation), narrow concepts of efficiency and
productivity, effectiveness and cost reduction have superseded traditional values

(such as public welfare-, community-, and needs-orientation, or public service ethos)

(Haque 1999, p. 468). The scope and quality of public services are therefore reduced,
in some areas quite dramatically (James 2003, p. 101).
2. Attempts to improve organizational structures and processes often lead to further
increases in bureaucratization, formalization and centralization.
3. Performance measurement and management systems have serious methodological
and strategic problems. They concentrate on quantifiable, narrow, often inadequate
indicators and contribute to a further ignorance, devaluation, or even destruction of
many intangible assets and traditional values. In practical terms, they often simply
add to an increase in workload and psychological pressures.
4. Management is established as a strong ideology dominating any other professional
orientation. Managers are the major beneficiaries of the introduction of NPM and
simply see it as a fantastic opportunity to further increase their power and control,
influence and personal advantages.
5. The great majority of employees suffer because of greater workload and stress,
declining motivation and work satisfaction, tighter regimes of management, advice,
measurement, control, and supervision. In many organizations NPM has lead to
a deterioration of the corporate culture, traditional work ethos and non-functional
values.
In sharp contrast to the claims made by its proponents, NPM has serious negative
consequences and these by far outnumber the positive outcomes. Despite all the
‘buzzwords’ and promises, it has become clear that this managerialistic approach
raises more and more questions and problems for public sector organizations and
the people working for them (Carson et al. 1999, p. 329). At the same time, these negative
developments, many of which are caused by NPM, are being used by many managers to
introduce even more managerial methods, and, in so doing, to establish and to further
secure their own positions and interests. Once this vicious circle of causing problems and
introducing so-called cures is started there can be only one result; long-term and sustained
damage to an organization’s services, performance, and corporate culture. NPM ‘is in
sharp opposition to the traditional democratic values of public administration, such as
political democracy, public ethics and security of life and property’ (Skålén 2004, p. 251). It
is a ‘sinister new orthodoxy’ (Protherough and Pick 2002, p. vii), a so-called business-like
strategy that bulldozes traditional values and ideas, convictions and attitudes that do not
fit the NPM concept.
There seems to be little awareness amongst the proponents of new public management
that strategic and change management approaches that seem to happen ‘according to
the management books’ do not cope with problems but they themselves are the problem!
The impact of managerialism on and the consequences for organizations, people, and
societies might be even worse than those we can already see (Diefenbach 2005, p. 135;
original italics)
At present we are witnessing the devaluation, if not to say destruction, of public goods
and services as well as of the public service ethos at a global scale (Maesschalck 2004,
p. 467; Apple 2005, p. 15; Kirkpatrick et al. 2005, p. 41).
On top of this, NPM represents a movement, an ideology, particularly of advantage for
those who are its fiercest proponents and uncritical followers. Career-oriented managers
in particular have a vested interest in concepts such as NPM because these regimes

serve the interests of the ruling groups and strengthen their position and influence quite
dramatically. With the development and introduction of NPM during the last 30 years
‘a new ‘‘hierarchy of legitimation’’ has emerged in which discourses of ‘‘managerialism
and business’’ are now hegemonic’ (Kirkpatrick et al. 2005, p. 3). NPM, and similar
managerial concepts, are simply contrary to the interests of the public as well as to the
interests of the large majority of people working in the public sector. It is high time to,
as Christopher Hood says, ‘question the assumption made in the policy literature that
change was necessary to modernize’ public services or that it is ‘broadly beneficent and
to be welcomed’ (Hood 1998, p. 196, cited in Kirkpatrick et al. 2005, p. 4). It is high time
to call a halt and look for alternatives. What can we do; what should we do? Instead of
outlining the whole program of Critical Management Studies and alternative concepts for
public services I will simply conclude by quoting Haque (1999, p. 471). He provided what
is still one of the best suggestions for how we can begin to tackle this problem:
In order to address this emerging theoretical challenge, it is essential to revive and
reinforce the ethical discourse in the field. More specifically, there is a need for critical
rethinking with regard to the current use of business ethics (competition, efficiency,
value-for-money, consumerism, partnership, managerialism) in public governance that
is supposed to be guided largely by public norms (citizenship, welfare, representation,
accountability, equality). Such a critical rethinking has become more essential today
to deconstruct and neutralize the overwhelming dominance of market ideology over
public affairs . . ., to examine the relevance of business norms, and to articulate a set of
ethical standards appropriate for the public service.
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Date received 11 February 2007. Date accepted 19 August 2007.

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New Public Management in public sector organizations: the dark side of

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NEW PUBLIC MANAGEMENT IN PUBLIC SECTOR

Thomas Diefenbach is a Lecturer in Management at Strathclyde Business School, University of Strathclyde.

Public Administration Vol. 87, No. 4, 2009 (892–909)

THE CONCEPT OF NEW PUBLIC MANAGEMENT: IMPLICATIONS AND

Business environment and strategic objectives

Public Administration Vol. 87, No. 4, 2009 (892–909)

TABLE 1 Basic assumptions and core elements of New Public Management

Public Administration Vol. 87, No. 4, 2009 (892–909)

effectiveness and productivity’ (defined and measured in functional and technological

Public Administration Vol. 87, No. 4, 2009 (892–909)

Public Administration Vol. 87, No. 4, 2009 (892–909)

Organizational structures and processes

Public Administration Vol. 87, No. 4, 2009 (892–909)

(‘silo-mentality’) and inefficient red-tape-producing bureaucracies. According to such a

Public Administration Vol. 87, No. 4, 2009 (892–909)

Performance management and measurement systems

Public Administration Vol. 87, No. 4, 2009 (892–909)

Public Administration Vol. 87, No. 4, 2009 (892–909)

Management and managers

Public Administration Vol. 87, No. 4, 2009 (892–909)

of management. It is about emphasizing the primacy of management above all other

Public Administration Vol. 87, No. 4, 2009 (892–909)

In addition, like many ruling classes or powerful groups of individuals, managers

Employees and corporate culture

Public Administration Vol. 87, No. 4, 2009 (892–909)

Public Administration Vol. 87, No. 4, 2009 (892–909)

Public Administration Vol. 87, No. 4, 2009 (892–909)

(such as public welfare-, community-, and needs-orientation, or public service ethos)

Public Administration Vol. 87, No. 4, 2009 (892–909)

Public Administration Vol. 87, No. 4, 2009 (892–909)

Public Administration Vol. 87, No. 4, 2009 (892–909)

Date received 11 February 2007. Date accepted 19 August 2007.

Public Administration Vol. 87, No. 4, 2009 (892–909)

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