metadata: authors: 0: author: Mccourt,Willy
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docna: 0: docna: Models of public service reform : a
            problem-solving approach
docty: Policy Research Working Paper
subtopic: Decentralization,Public Sector Administrative & Civil
            Service Reform,Customs and Trade,Inequality,Crime and Society,Democratic Government,Public Sector Administrative and Civil
            Service Reform,De Facto Governments
teratopic: Public Sector Development,Governance
abstracts: cdata!: This paper identifies six models of
            public service reform that have been practiced in developing
            countries over the past half-century. It critically reviews
            their implementation, discussing them as attempted solutions
            to problems that have arisen in the policy process in
            different countries. The models are: public administration;
            decentralization; pay and employment reform; New Public
            Management; integrity and corruption reforms; and
            "bottom-up" reforms. The paper seeks an
            explanation for their disappointing performance in the
            political economy of reform, with an emphasis on how
            learning from failure can be the paradoxical foundation of
            future success.
repnme: repnme: Models of public service reform : a
            problem-solving approach
display_title: Models of public service reform : a
            problem-solving approach
listing_relative_url: /research/2013/04/17649169/models-public-service-reform-problem-solving-approach
topicv3: Poverty m1326687 695,Administrative Decentralization m1327015 726,Public Administration m1327723 723,Crime m1439217 3041,Human Resource Management m1504248 2598
publishtoextweb_dt: 2013-01-01T00:00:00Z
historic_topic: Public Sector Development,Governance
no_of_pages: 32
author_keys: 0: author_key: 435641
model_extractions: WPS6428 Policy Research Working Paper 6428 Models of Public Service Reform A Problem-Solving Approach _Willy McCourt_ The World Bank East Asia and the Pacific Region Poverty Reduction and Economic Management Unit April 2013
Policy Research Working Paper 6428

# **Abstract**

This paper identifies six models of public service reform that have been practiced in developing countries over the past half-century. It critically reviews their implementation, discussing them as attempted solutions to problems that have arisen in the policy process in different countries. The models are: public administration; decentralization; pay and employment reform; New Public Management; integrity and corruption reforms; and “bottom-up” reforms. The paper seeks an explanation for their disappointing performance in the political economy of reform, with an emphasis on how learning from failure can be the paradoxical foundation of future success.

This paper is a product of the Poverty Reduction and Economic Management Unit, East Asia and the Pacific Region. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank. org. The author may be contacted at wmccourt@worldbank.org.

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team
# **Models of Public Service Reform: A Problem-Solving Approach**

Willy McCourt<sup>1</sup> <mark>Poverty Reduction and Economic Management Network Public Sector Board</mark>

## **JEL Codes: H11, H83, I18, I28**

_Acknowledgements_ : This paper has benefitted greatly from comments by Naaz Barma, Nick Manning and Gary Reid.

> 1 Senior public sector specialist (East Asia and Pacific), World Bank
# **Contents**

|1.|Introduction: Facing up to Failure ................................................................................................... 1|
|---|---|
|2.|Public Service Reform as Administrative Problem-Solving ............................................................ 1|
|3.|‘Weberian’ Public Administration and Capacity Building .............................................................. 3|
||Capacity-Building ............................................................................................................................ 4|
|4.|Decentralization and Central-Local Relations ................................................................................. 5|
||Political Decentralization and HR ................................................................................................... 5|
||Administrative Decentralization and HR ......................................................................................... 6|
||Distribution of Functions ................................................................................................................. 6|
||Balancing National and Local Interests ........................................................................................... 7|
|5.|New Public Management (NPM) ..................................................................................................... 7|
||Improving Performance ................................................................................................................... 8|
||Developing Competition ................................................................................................................ 10|
||Providing Responsive Service ....................................................................................................... 10|
||The Appropriateness of NPM ........................................................................................................ 11|
|6.|Bottom-Up Reforms....................................................................................................................... 12|
|7.|Moving Beyond Failure: Evidence and Explanations .................................................................... 14|
||The Meta-Level: Politics ................................................................................................................ 16|
||The Macro-Level: Institutions ....................................................................................................... 19|
|8.|Conclusion: From Failure to Success? ........................................................................................... 20|

# **Tables**

|Table 1: Public Service Reform Problems and Approaches ......................................................................... 2|
|---|
|Table 2: Responsibility for HR in Government Agencies ............................................................................ 6|
|Table 3: Progress on Malaysia’s National Key Result Areas ....................................................................... 9|
|Table 4: Public Service Reform and Levels of Governance ....................................................................... 15|
|Table 5: Factors Associated with Reform Success ..................................................................................... 16|
|Table 6: Problems Encountered in World Bank Public Service Reform Operations .................................. 17|

# **Boxes**

|Box 1. Political Decentralization and HR in Indonesia and Uganda ............................................................ 5|
|---|
|Box 2. Citizen’s Charters in India ............................................................................................................... 11|
|Box 3. ‘Short-Route’ Accountability in India and Brazil ........................................................................... 13|
|Box 4. Performance-Related Pay in Mauritius and Malaysia ..................................................................... 16|
|Box 5. Using Politics to Craft Reform ........................................................................................................ 18|
|Box 6. The Public Service Legal Framework in Tanzania ......................................................................... 19|
# **1. Introduction: Facing Up to Failure**

When Apollo declared through his Oracle at Delphi that no one was wiser than Socrates, what the god was trying to get across (at least according to Socrates himself, who declined to take the compliment at face value) was that ‘The wisest of you men is he who has realised, like Socrates, that in respect of wisdom he is really worthless’ (Plato, 1969: 52). To say that what we know about public service reform is ‘worthless’ would be an exaggeration. But a confession of our relative ignorance may still be the beginning of wisdom. As I shall discuss later on, the most robust evidence that we have of reform outcomes, in the shape of World Bank project evaluation reports, has been consistently disappointing over more than a decade. As recently as 2010, an internal Bank paper carried the title, _Why do Bank-supported public service reform efforts have such a poor track record?_ A confession will be fruitful if it helps us to frame the problem that faces us in a way that stimulates readers to propose approaches that stand a better chance of success than the ones we have been following up to now. That is what this paper tries to do.

# **2. Public Service Reform as Administrative Problem-Solving**

In this paper I review and analyze the experience of public service reform in developing countries. I define public service reform as ‘interventions that affect the organization, performance and working conditions of employees paid from central, provincial or state government budgets.’<sup>i</sup> I take a problemsolving approach, viewing the different reform interventions as ways of dealing with the problem situation as different national governments have defined it. I have borrowed ‘problem situation’ from Karl Popper (1989: 129).<sup>ii</sup> Popper argues that at any given point in the history of science, there is an agenda which arises from problems which current theories have created or failed to solve: ‘You pick up, and try to continue, a line of inquiry which has the whole background of the earlier development of science behind it.’ Similarly, it seems to us that at any given point in the development of public administration in a particular country, there is an agenda of problems which the previous experience of reform has created, and which confronts the most perceptive national policy-makers and other stakeholders.<sup>iii</sup> I am not alone in adopting a problem-driven approach. I follow Fritz _et al._ (2009). Andrews (2013) has developed an alternative and more elaborate problem-solving model in parallel with this paper. My paper, I suggest, augments theirs in one respect. Readers will be familiar with the saying that ‘If the only tool you have is a hammer, then every problem becomes a nail.’ Identifying a problem, or problem situation, is not an end in itself. We must propose a solution. And when we do so, at least in the experience of the present writer, we tend to fall back on the tools in our reform toolbox; all too often, reform problems do get treated as ‘nails.’ If we are serious about respecting the specific priorities of developing country policymakers, then we need a variety of tools. In this sense, the models that are reviewed in this paper are offered as a reform toolbox.

In this paper I will emphasize problems as they are defined by the national (and sub-national) governments to which we referred above. It is their preoccupations and not development agencies’, nor domestic public society’s for that matter, which will be at the center of my analysis. Certainly, much domestic policy-making in our globalized world is informed by international policy models and by the experience of governments elsewhere that are regarded as role models. Likewise, civil society has risen to prominence in our models of governance. But my thinking is unapologetically state-centered on democratic principle: most governments these days are elected by their people, other actors are not.

1
My state-centeredness also has a pragmatic justification. Even in low-income countries, it is governments which have their hands on the most powerful levers of deliberate social and economic change (McCourt, 2011). Moreover, as we shall see later, governments only reform when they want to: donors and reform advocates can take the horse to water, but they can’t make it drink (Nunberg, 1999).

And so I view reform as having its origin in problems which policymakers pose to themselves, or which circumstances thrust upon them.<sup>iv</sup> Abstracting from the practice of developing country governments over recent decades, I identify six major problems; and I list six families of reform which I regard as attempted solutions.

**Table 1: Public Service Reform Problems and Approaches**

|**Problem**|**Approach**|**Main Action Period**|
|---|---|---|
|1. How can we put government on an orderly<br>and efficient footing?|‘Weberian’ public administration<br>and capacity-building|Post-independence period<br>in south Asia and sub-<br>Saharan Africa|
|2. How can we get government closer to the<br>grassroots?|Decentralization<sup>~~v~~</sup>|1970s to present|
|3. How can we make government more<br>affordable?|Pay and employment reform|1980s and 1990s|
|4. How can we make government perform<br>better and deliver on our keyobjectives?|New Public Management|1990s to present|
|5. How can we make government more<br>honest?|Integrity<br>and<br>anti-corruption<br>reforms|1990s to present|
|6. How can we make government more<br>responsive to citizens?|‘Bottom-up’ reforms|Late 1990s to present|

My stance aligns us unequivocally with those who prioritize context over ‘best practice’. I pay respect to successful reform models; we can all learn from them. But they must be understood in terms of the environment in which they have arisen; or, in the language I am using in this paper, in terms of the ‘problem situation’ as particular policymakers have perceived it. I reject the tendency of some international reform brokers to treat reform models as ‘widgets’ (Joshi and Houtzager, 2012) which can be transferred unaltered without regard to the environments that they are transferred from and to. I will emphasize that point throughout this paper.

Emphasizing context means recognizing that ‘vice may be virtue uprooted,’ in the words of the AngloWelsh poet David Jones (1974: 56) – and possibly vice-versa! It follows that I will not express a preference for any of the approaches listed in Table 1. I hope instead to provide enough detail for readers to decide what they have to offer in terms of the ‘problem situation’ in readers’ own countries or the countries with which they are concerned.

In addition to its logical appeal, my simple problem-solving approach provides a convenient structure for this paper. It should not be taken too literally. When faced with a list like ours, some policy-makers will say, ‘I want it all!’ Governments do frequently try to solve more than one of these problems at the same time, and use a mixture of approaches as they do so. In the late 1990s, the new democratic government in South Africa was trying to make government more responsive and more affordable at the same time, with its flagship ‘Batho Pele’ (People First) reforms, aimed at creating and improving public services, coinciding with its ‘Ghostbusters’ and other initiatives aimed at reducing the public service headcount, especially in the former ‘homelands’ such as the Transkei whose payrolls had been padded by the former apartheid government.

2
My warning against a literal reading also applies to what historians call the ‘periodization’ of the third column in my table. Governments did not suddenly discover honesty in the 1990s, and particular governments (such as Morocco’s) started pay and employment reform for the first time only in the 2000s. However, there have been periods when particular questions have dwelt on policymakers’ minds. Public policy issues arise in the order they do partly because external shocks like the oil price rises of the 1970s foist them on policy-makers’ attention. But they also arise as reactions to the _unintended consequences_ of the previous generation of reforms (here again I follow Popper, for whom managing unintended consequences was the essence of public policy).<sup>vi</sup> The bureaucratization that was the unintended consequence of Weberian public administration created the need for decentralization. The expansion of state capacity had the unintended consequence of creating a fiscal burden which pay and employment reform was framed to relieve.

Thus context has a temporal as well as a spatial dimension. An administration’s ‘problem situation’ is dynamic. By solving one problem we always create another.

Moreover, just as my grouping of public service reform approaches in terms of policy problems provides a convenient structure for the paper, so my periodization gives us a convenient order in which to address the approaches.

I lack space to deal with all six of the approaches. I shall discuss Approaches One, Two, Four and Six in turn. (For Approach Three, see McCourt, 2001b; and Lindauer and Nunberg, 1994; for Five, see Klitgaard, 1988.)

# **3. ‘Weberian’ Public Administration and Capacity Building**

I will deal with this briefly, since many readers are already familiar with it.

The public administration model in developing countries is essentially the classic Weberian model of bureaucracy harnessed to the needs of the developmental state. The German sociologist Max Weber located its origins, for both the public and private sectors, in the growth and complexity of the tasks of modern organizations; and also in democratization, which created an expectation that citizens, and members of an organization, would be treated equally. The main features of the model are:

- A separation between politics and elected politicians on the one hand and administration and appointed administrators on the other

- Administration is continuous, predictable and rule-governed

- Administrators are appointed on the basis of qualifications, and are trained professionals

- There is a functional division of labor, and a hierarchy of tasks and people

- Resources belong to the organization, not to the individuals who work in it

- Public servants serve public rather than private interests (Minogue, 2001)

In practical terms, administrations that follow the Weberian model – and almost all do pay at least lip service – begin by putting in place a system of rules. Where staffing is concerned, we can expect to find a compendium of posts, arranged in a hierarchy according to rank, with statements of the duties expected of each post (in some countries this is called a ‘scheme of service’). There will be clear guidelines about how the posts should be advertised and filled, how pay grades are determined, and so on. The rules and guidelines will be overseen by central agencies such as the finance ministry and the public service commission or similar body. There will be similar rules for the control of government spending, overseen by the relevant central body, such as a procurement agency (Schick, 1998).

3
Administration tends to be highly centralized: the model posits an unbroken hierarchical chain from the top (in the capital) to the bottom (in the remotest outpost of government). The tendency is to focus on _inputs_ , in the sense of the efficient management of resources rather than _outputs_ in the sense of the goods and services that the resources are used to produce, let alone _outcomes_ in the sense of the social and economic results that derive from the outputs.

Bureaucracy has of course a bad name in the popular imagination. However, a study commissioned by the World Bank in the run-up to its 1997 _World Development Report_ found a close statistical connection between public bureaucracy and economic growth. Their data suggested that merit-based recruitment was the most important bureaucratic element, followed by promotion from within and career stability for public servants (Evans and Rauch, 1999; Rauch and Evans, 2000). Further support for meritocracy came from a more detailed study of personnel management in the Kyrgyz and Slovak republics and in Romania. It highlighted the importance of sound administrative procedures underpinning merit, very much as outlined here (Anderson _et al._ , 2003). So we have recent evidence that Weber’s century-old insight was basically sound: the bureaucratic model was indeed the efficient successor to patrimonial regimes which had centered on the personal and arbitrary power of an absolute ruler.

But there are a number of pre-conditions which may need to be in place for the model to produce the results that Weber anticipated. I will mention two. The first is a culture in which rules are respected and followed. (This point has been emphasized by Schick. I expand on it later in this paper.) A second condition is that the Weberian rules should not be undermined by patronage pressures. Weber did not anticipate that bureaucracy and patrimonialism would become fused in the hybrid of ‘neopatrimonialism’, where state resources are diverted for patronage purposes such as securing support in an election. This neopatrimonial hybrid is widespread, having been identified in modern times in places as far apart as Greece, and Chicago in the United States (Clapham, 1982).

As the state developed, it was perhaps inevitable that there would be an attempt to use its growing resources in the same way that ‘traditional’ patrons used private resources: to co-opt supporters and ensure their loyalty (McCourt, 2007). But the neopatrimonial twist was that patronage operated by a single, visible patron mutated into patronage operated by political parties and other broad groupings, often organized on a national scale. With many individuals implicated at different levels, this stubborn neopatrimonial bush with its complex root system could be even harder to eradicate than its relatively simple patrimonial predecessor. Much recent reform effort has been devoted, either explicitly or implicitly, to the task of eradication. The reforms of the Public Service Commission in Sri Lanka and Swaziland, which I discuss in Box 6 below, are examples.

# **Capacity Building**

A distinctive feature of public administration in developing countries is that unlike industrialized countries, where capacity evolved gradually, developing countries have put in place crash programs of capacity-building following independence and, more recently, armed conflict and state collapse. The programs have centered on staff training and development. The assumption is that public administration is deficient because public administrators lack skills which can be readily imparted through training. The training and visit system for agriculture extension workers was a typical example. In the context of a fixed program of field visits overseen by their supervisors, extension workers received frequent one-day training sessions to impart the three or four most important agricultural recommendations that they should pass on to farmers in the following few weeks.

There is no doubt that capacity affects performance, as even politically-orientated studies such as Nelson’s (1990) recognize. But we have learned that capacity-building is rarely effective in an 4
organizational vacuum. For example, capacity-building at the individual level usually takes place on training courses, away from the workplace. Learning designs need to make a bridge from training to the ‘action environment’ of work - its organizational culture, management practices and communication networks - in the form of action plans, supervisor involvement and post-training review arrangements (Grindle and Hilderbrand, 1995; McCourt and Sola, 1999).

# **4. Decentralization and Central-Local Relations**

There are two major kinds of decentralization. _Political decentralization_ refers to the delegation of public administration to an autonomous lower level, typically with its own democratic mandate. Such a delegation usually entails a delegation of functions and staff, so it carries a major HR implication. _Administrative decentralization_ , sometimes also called ‘deconcentration’ (or ‘managerial devolution’ in the industrialized country literature), takes two forms. The first is _territorial,_ where workload in connection with a given geographical area is shifted from the center to offices in that area. The second form, which I will focus on, is _functional_ , where authority is delegated to a lower level in the administrative hierarchy (Turner and Hulme, 1997).

I will deal with political decentralization and administrative decentralization in turn. Decentralization is a topic which has a literature of its own. I will focus on one of its aspects: its effect on human resource management. I will also deal with an issue which is very relevant to HR: the distribution of HR functions across the central agencies of government.

## **Political Decentralization and HR**

As Evans (2003) notes in her review of decentralization and HR in eight developing and transitional countries, political decentralization is a global trend, pursued for reasons which include the principle of subsidiarity (decisions should be made as close as possible to the people affected by them) and the specific circumstances of countries recovering from public war. But the movement of authority in decentralization is not exclusively away from the center, as Box 1 shows.

## **Box 1. Political Decentralization and HR in Indonesia and Uganda**

Following the end of President Suharto’s highly centralized rule in Indonesia, two decentralization laws were passed which led to the election of provincial and district assemblies in 2001 and, almost immediately after, the transfer of 2.1 million public servants to the provinces and districts. Law No. 22 gave the local governments authority to hire and manage their employees. But it also indicated in article 75 that HRM policy would still be determined by the center. Moreover, since Law 43/1999 on the public service made no distinction between sub-national and central public servants, and since the Public Service Commission which the law envisaged had still not been set up a full decade later, the prevailing centralized system of personnel management remained almost entirely untouched by decentralization, despite the radical changes affecting other aspects of government. A further revised Law 32/2004 on Local Governance merely reaffirmed the central government’s authority to manage local government employees across a wide range of HRM activities.

In Uganda, decentralization took place through the Local Governments (Resistance Councils) Statute in 1993, which assigned specific responsibilities to Councils and supported the decentralization of HR through establishing district Service Commissions (on an analogy with the national Public Service Commissions which I discuss later). Evans (2003) considered that they offered potential for merit-based recruitment and reducing nepotism.

However, Francis and James’ (2003: 334) field study found that ‘given the conditional nature of most transfers from the center, (the local councils are) devoid of real resources to control.’ Moreover, although there had been a real decentralization of HR authority (the Service Commissions did operate autonomously), many public servants would 5
have preferred it to be recentralized, because they felt vulnerable to undue pressure or even victimization from the local politicians who were now their bosses.

_Sources:_ Evans (2003); Francis and James (2003); Turner _et al._ (2009).

We can discern a pattern in the above examples, and in other countries such as India and Mexico which Evans reports on: decentralization of decision-making to locally elected bodies, but with the scope to make independent decisions severely constrained by continuing central control of money and of the legal and procedural frameworks within which staffing (and other) decisions are made; and by a concern among public employees that there should be a level playing field across all the local bodies.

# **Administrative Decentralization and HR**

Even where there is no question of political decentralization of a particular service such as education or policing, we see the same global trend towards pushing decisions, including HR decisions, down the public administrative hierarchy. As we shall see in the next section, delegation is one of the three management imperatives driving the so-called New Public Management model. Yet just as with political decentralization, the reality on the ground is of a strong continuing central input in staffing decisions at lower levels. Generally speaking, public service management remains highly centralized in developing countries. Most HR decisions were taken centrally in five out of seven countries in Africa and Asia studied by McCourt (2006), and in one of the other two they were delegated only as far as the top level in line ministries.

There are good, bad and interesting reasons for this pattern. The good reason is that governments have mostly decided that they can control the pervasive patronage pressures more easily from a single central point rather than a multitude of local decision points. That is why Nepal’s government in the 1990s was wise to resist a donor proposal, made at the high tide of the New Public Management (see Section 5 below), to delegate HR decisions to its line ministries (McCourt, 2001a). The bad reason is that central bureaucracies are loath to surrender power, even over trivial matters. McCourt cites two examples of this in his 2006 study: central permission was needed in Mauritius to change the walking allowance paid to forest guards; and, in Tanzania, to change the design of official forms. The interesting reason is that there may be a cultural preference for central management, as in Malaysia, a country whose tendency to manage from the top down has deep historical roots. Patronage pressures are mostly kept under control there, but line ministry HR staff have still tended to be happy for the center to make their decisions for them.<sup>vii</sup>

# **Distribution of Functions**

When reformers discuss where to put responsibility for human resource management in the structure of government, a major element in many public service reform programs, they often do so in terms of how much authority the center should have relative to line departments and agencies. But governments also need to decide on the appropriate division of responsibility between the central departments and agencies themselves. In many of the countries that have not devolved responsibility to line ministries and agencies (see below), the respective roles of government ministries look broadly like this.

**Table 2: Responsibility for HR in Government Agencies**<sup>**viii**</sup>

|**Agency**|**Functions**|
|---|---|
|Office of the Prime Minister/President|overall government policy|
|Ministry of Finance|pay and pensions|
|Ministry for the Public Service|deployment and conditions of service|
|Public Service Commission|appointment, promotion, transfer and discipline|

6
|Public Service Tribunal|Administrative appeals and redress|
|---|---|
|National Administrative Staff College|training and development|
|Line ministries|Day-to-daystaff management|

The position is further complicated in countries where public servants are organized into cadres or _corps_ , each with its own parent ministry (for example, the engineering _corps_ ).

An advantage of this allocation is that it separates executive and scrutiny functions. For example, public servants will appreciate having a forum for their appeals against management decisions which is outside their ministries’ line management structure. But it is easy to see how such a structure represents the ‘balkanization’ of human resource management from a strategic point of view, and a recipe for conflict between the different agencies. In the structural adjustment era when many governments were trying to reduce staff numbers, Ministries for the Public Service were often seen by their Finance counterparts as a Trojan horse inside government, acting as an informal public servants’ trade union to frustrate the aims of reform (Corkery and Land, 1996).

In theory, the remedy is simple: bring as many of the strategic functions together as possible in a single strategic agency. A few governments, such as South Africa’s, have moved in that direction, while leaving day-to-day management in the hands of their line ministries. But we should recognize this attractive remedy for what it is: centralization by another name.

## **Balancing National and Local Interests**

The pattern I have identified in this section is a continual rebalancing of central and local roles, in terms of both political and administrative decentralization. Indonesia’s experience is typical: decentralization of staffing authority, but in the context of a tight national staff management framework. This reflects a fact that we need to grasp: decision-makers at both national and local levels have their own legitimacy. National decision-makers have an interest in restraining national public expenditure. Arguably they also have a legitimate interest in equity of treatment across every region (where HR is concerned, this may translate into an interest in ensuring uniform treatment of public servants in every part of the country, including protection against local victimization). Local decision-makers have their legitimate interest in service provision and staffing deployment that reflects local needs.

In this respect, the ‘decentralization’ label is unhelpful, because it leads us to assume that the movement of authority is or should always be downwards and outwards, and that any movement in the other direction is regressive. But in order to balance the national and local interests, we can expect movement in both directions at different times. Thus decentralization in practice means a continual negotiation between national and local levels - and also, in the case of ‘horizontal allocation’, between the different central agencies - about the scope of decision-making and the framework of laws and regulations which governs it. Thus ‘central-local relations’ is a better label than ‘decentralization’ for what governments have been doing in this area.

# **5. New Public Management (NPM)**

In terms of the ‘periodization’ outlined in Table 1, NPM is the reform model which succeeded the public administration model. Of course there was continuity as well as change in the succession. The OECD’s (1995) review of public management developments, published at the high tide of NPM, includes initiatives to improve management of HR, something that the Weberian model also emphasizes in its own way. The essential change, however, was from the public administration doctrine of regular, predictable and rule-governed behavior to behavior that was driven by performance. The public administration doctrine tends to assume that if a sound framework of rules is put in place and public servants are 7
persuaded to adhere, adequate performance will follow. But the governments that went down the NPM road were setting their sights on better rather than adequate performance. Moreover, continuing pressure to restrain public expenditure meant that better performance could be bought only up to a point, and although the stimulus of competition was introduced (as we shall see), it became clear that there were limits, intrinsic or political as the case may be, to its use. Thus the application of management techniques became the formula deployed to square the circle of government that worked better while costing no more, or not much more (Pollitt, 1993).

NPM in practice has been driven by four management imperatives: delegation, performance, competition and responsiveness to clients. Delegation has had two aspects. First, there is the hiving off of responsibilities to the private sector through privatization, especially of industries which had previously been nationalized; and the consequent emergence of elaborate frameworks for regulating them in the public interest. Second, there is the devolution of management authority to lower levels in the public sector hierarchy.

Privatization and regulation are outside the scope of this paper, and we have already dealt with ‘devolving authority’ in the section above on administrative decentralization. I shall now discuss the remaining two imperatives: improving performance and providing responsive service.

# **Improving Performance**

The NPM approach to ensuring performance hinges on the formulation and measurement of performance indicators. In the early days of NPM, such indicators usually addressed the internal operations of individual agencies. In a typical example, Denmark’s national library undertook to increase productivity by 10 percent, increase the number of transactions by 2.5 percent annually and put purchases prior to 1979 on computer, all by the end of 1996 (OECD, 1995: 35). Subsequently, the technology of monitoring performance has grown sophisticated, with performance management indicators that are outcome- rather than output- or input-based (different from the Weberian model in this respect), and which generate elaborate performance data. Performance management is also widely practiced by international development agencies: in a sense, the Millennium Development Goals are performance management on a global scale (Goldsmith, 2011).

Public administration as a rule leans lightly on theoretical support. But advocates of performance indicators can point to plentiful evidence for their value from organizational psychology. Locke _et al._ , surveying numerous relevant studies, characterize goal-setting theory, whose essential claim is that setting goals improves performance, as ‘among the most scientifically valid and useful theories in organizational science’ (1991: 370). Not just any old goal, though: research shows that goals should be specific and challenging. Those who have to reach them should be committed to doing so, and should receive support and encouragement, and feedback on their performance, as they work towards them (Locke and Latham, 1990).

Malaysia is perhaps the most elaborate example of performance management in the public sector among developing countries. Its National Key Result Areas are the numerical indicators for the Governance Transformation Programme which was the Barisan Nasional government’s response to its poor performance in the 2008 election, when the Opposition tapped public anxieties on crime, corruption and the economy. (So it is an intensely political initiative: see below on the political dimension of public service reform.) 8
# **Table 3: Progress on Malaysia’s National Key Result Areas**

|**2010 Target**|**2012 Target**|**Reported Progress in 2010**<sup>**ix**</sup>|
|---|---|---|
|**REDUCING CRIME**|||
|20% reduction of street crimes|5% annual reduction in overall<br>reported crime|street crime down 37%<br>overall reported crime down 16%|
|**CORRUPTION**|||
|Malaysia’s CPI score at 4.9<br>(from 4.5)||CPI 2010 score 4.4|
|37% approving Government<br>efforts on corruption in TI<br>Global survey (from 28%)<br>Average audit findings per<br>ministry at 10.6 annually<br>(from 11.2)||48% approving government efforts in<br>TI Global survey|
|**IMPROVING STUDENT OU**|**TCOMES**||
|Pre-school enrolments at 72%<br>(from 67%)|Pre-school enrolments at 87%<br>All children having basic literacy and<br>numeracyskills at end ofyear three|72.42% enrolment|
|**POVERTY**|||
|Poverty incidence at 2.8%||(13,471 households removed from|
|(from 3.6%)||poverty)|
|Hardcore poverty at 0% (from<br>0.72%)||Hardcore poverty at 0%|
|**RURAL INFRASTRUCTURE**|||
|Peninsula: 91.4% living within<br>5km of a paved road (from<br>91%)|close to 100% ditto||
|16,000 new/restored houses<br>for rural/hardcore poor<br>_24-hour electricity access:_<br>Peninsula: 99.6% (from 99%)<br>Sabah: 81% (from 77%);<br>Sarawak: 73% (from 67%)<br>_Access to clean/treated water:_<br>Sarawak: 62 % (from 57%);<br>Sabah: 59% (from 57%)|<br>additional 34,000 houses ditto||
||90% ditto<br>90% ditto||
|**URBAN PUBLIC TRANSPOR **|**T**||
|13% using public transport in<br>Klang valley between 0700-<br>0900 (from 10-12%)<br>75% living within 400 meters|25% ditto|17% usage|
|of public transport route (from<br>63%)|||

_Sources_ :

1. TARGETS: Government Transformation Programme Roadmap (January 2010).

2. PROGRESS: <u>http://www.pemandu.gov.my/gtp/, accessed February 8 2011.</u> 9
In January 2011 the Malaysian government assembled an international panel to review its progress. It included an Australian public service commissioner, an IMF Resident Representative and a co-founder of Transparency International. They were fulsome: ‘a great success;’ ‘impressive;’ ‘extraordinary’ (PEMANDU, 2011: 199, 200, 202). However, reservations should be entered. First, there are holes in the data, as Table 3 shows. Second, apart from the possibility of a Hawthorne effect<sup>x</sup> , given that Malaysia’s initiative was still in its early stages when I wrote, there is the scope for gaming which is inherent in performance management. Agencies have an incentive to perform sub-optimally (a ‘threshold effect’), fearful that if they exceed the initial targets, the bar will be set higher next time round (a ‘ratchet effect’). They also have an incentive to manipulate the performance data (Bevan and Hood, 2006). There is no evidence that any of this has occurred in Malaysia, but the theoretical concern is reflected in the international panel’s report, which recommended that the statistics should be audited ‘to preserve authenticity and validity’ (PEMANDU, 2011: 206).

# **Developing Competition**

The impression of a traditional bureaucracy where, to invoke the celebrated NPM distinction, both ‘steerers’ and ‘rowers’ were exclusively fully paid-up public servants is misleading. A proportion of public work was always contracted out to the private and voluntary sectors, not only in fringe areas like the placing of newspaper advertisements, but also strategic capital projects for the construction of motorways, buildings and so on. In Germany the application of the subsidiarity principle made this inevitable (Reichard, 1997). The difference which NPM makes is to remove bureaucrats’ discretion, making contracting out obligatory, and thereby increasing its scope and extent.

Contracts awarded competitively are, in a sense, performance indicators ‘with teeth’. A weakness of purely internal ‘service level agreements’ based on performance indicators is the lack of effective sanctions if the agreement is broken, since the internal supplier knows that the internal customer has nowhere else to go (Greer, 1994). By contrast, a contracting régime uses competition or the threat of competition to enhance performance at three stages: in the initial bidding for the contract, in monitoring compliance and in re-bidding at the end of the contract period. In this way, as one sympathetic account from New Zealand maintains, provision becomes results driven, transparency and accountability are ensured and – not least – responsiveness to voice increases because customer feedback really matters. In New Zealand, consequently, delivery of local authority services by external providers jumped from 22 to 48 percent of provision between 1989 and 1994 (Boston et al., 1996).

# **Providing Responsive Service**

With its emphasis on management techniques as a spur to performance, NPM operates from the top down, which militates against responsiveness. The oddity of managing service performance over the heads of its beneficiaries has been compensated for through devices like ‘citizen’s charters’ which set out minimum standards of service that clients can expect, based on principles such as:

- _quality_ — improving the quality of services

- _choice_ — wherever possible

- _standards_ — specify what to expect and how to act if standards are not met

- _value_ — for the taxpayers’ money

- _accountability_ — individuals and organizations

- _transparency_ — rules/procedures/schemes/grievances

They have been introduced in many countries, including India.

10
# **Box 2. Citizen’s Charters in India**

Citizen’s charters were introduced in 1997 in the context of an ‘Action Plan for Effective and Responsive Government.’ By 2001, 68 citizen’s charters had been formulated by central government agencies, and 318 at subnational level. They were posted on government websites and were open to public scrutiny. A pilot ‘exemplary implementation’ exercise had been carried out in three national banks.

Some reservations about the initiative surfaced in evaluations:

- The initiative was seen as coming from the top, with minimal consultation.

- The employees affected received little training or orientation

- Staff transfers disrupted implementation in some cases

- The charter concept was not properly understood by clients

- Some charter service norms were either too lax or too tight<sup>xi</sup>

_Source:_ Sharma and Agnihotri (2001).

The reservations echo findings from the UK, where the charter movement began. The UK Citizen's Charters were a flagship initiative of Prime Minister John Major, yet only 16 out of 1,000 people polled there in the mid-1990s at its height were both familiar with a Charter and satisfied with it (O’Conghaile, 1996). The criticism arose that lip-service was being paid to citizens’ views, and that the charters reflected the priorities of managers, not citizens (Clarke and Newman, 1997).

The involvement of non-state providers is probably of greater significance than ‘managerialist’ initiatives such as citizen’s charters. In this paper we are not interested in stand-alone service provision, whether by NGOs, for-profit providers or donors, even though in some countries there are areas such as water and sanitation where private provision predominates, but in services that are contracted by or actively aligned with state service provision. Experience here has been mixed yet again, and probably more negative than positive. An early study of contracting for clinical and ancillary services in the health sector found problems created by the limited capacity of slow-moving, rule-ridden bureaucracies to perform even very basic functions such as paying contractors in a timely manner (Bennett and Mills, 1998). A more recent comprehensive survey echoed that finding, and noted that formal policy dialogue between government and non-state providers was often imperfect and unrepresentative, especially in fragile settings, and sometimes unduly dominated by the provider side (Batley and Mcloughlin, 2009).

# **The Appropriateness of NPM**

NPM has been described as ‘truly a global paradigm’ (Borins, 1997: 65) whose spread is impeded only by bureaucratic isolationism (Thompson, 1997: 13). However, the contributors to a comprehensive review in 2001 found that its incidence in developing countries was limited (McCourt and Minogue, 2001), and that picture has probably not changed a great deal in the last decade. The problem-solving approach that I have taken in this paper suggests an explanation. If NPM is essentially a response to the problem of improving performance and delivering on a government’s objectives, then a prior condition for its application must be that government makes improving performance a priority.

Whether performance is or even ought to be a priority was the subject of a debate over the application of the New Zealand version of NPM (New Zealand was a market leader in the early days of NPM). Bale and Dale (1998), as advocates, argued that the New Zealand reforms were relevant to developing countries because they were developed from a broad, system-wide perspective that focused on the causes, not the symptoms, of dysfunctionality, and because having specified the performance standards that the center expected, the reforms devolved to line agencies the management authority that they would need to meet the standards. However, they conceded that some stringent conditions were also necessary: a 11
politically neutral, competent public service; little corruption or nepotism; a functioning legal code and political market; and a competent private sector.

Answering Bale and Dale’s case, Schick (1998) argued that Bale and Dale were taking for granted the earlier stage of New Zealand’s bureaucratic development where a framework of rules and a culture of following them had been implanted. By contrast, he went on, developing country public administration was typically informal, with local managers having virtual impunity to override formal procedures. Deliberately weakening those procedures, which were weak in the first place, in the interests of giving managers ‘the right to manage’ would fatally exacerbate the very problems which NPM wanted to solve.

In terms of the problem-solving framework which I have adopted in this paper, Schick’s objection is that NPM is a First World solution to the First World problem of improving public sector performance, something that industrialized country governments have the luxury of doing because by deploying the Weberian model much earlier in their history, they have already solved the problem of how to put government on an orderly and efficient footing. Developing countries should follow the same sequence, in Schick’s view: walk before they try to run. (This echoes _WDR 2004_ ’s two-stage model of reform.) Not for the first time in this paper, we see the importance of tailoring reform to the context in which it is taking place.

# **6. Bottom-Up Reforms**

I am going to discuss this model in some detail, because it is less well known among public management specialists. Indeed some public management specialists may not consider it as a model of public service reform at all. The fact that I am dealing with it at greater length does not mean that I prefer it. My emphasis on context and problem-solving means that any predilection we might have for one or other of the reform models which I discuss in this paper is neither here nor there.

All the models we have reviewed so far share an assumption: that when it comes to setting priorities for public management, public managers should be in the driver’s seat. Reform should come from the top down – just as it did with India’s citizen’s charters and Malaysia’s National Key Result Areas. Indeed a great deal of reform effort has gone into ensuring that managers _are_ in the driver’s seat, insulated from clientelistic pressures from society and politicians.

That view has changed dramatically. We can see Peter Evans’ _Embedded Autonomy_ as the first crack in the monolith. Examining the politics of the East Asian developmental state, he accepted that state officials’ effectiveness there was indeed related to a certain aloofness which they maintained in the face of societal pressures. However, at the same time they participated in a dense network of ties between state agencies and the private sector in the area of economic development, and public society in the area of public service delivery. Evans labeled this distinctive relationship ‘embedded autonomy.’ Examples of the state playing what he called a ‘midwife’ role included Korea persuading its _chaebol_ industrialists to diversify from consumer electronics into informatics products (Evans, 1995: 174).

Evans’ view posited a fruitful tension between autonomy and embeddedness. Implicitly, however, the tension was to be resolved on the public officials’ terms. The bureaucrats stayed in the driver’s seat, even if they now had industrialists and civil society sharing the passenger seat next to them. If anything, Evans’ finding of a positive relationship between state bureaucracy and economic growth which fed into _WDR 1997_ ensconced the bureaucrats even more firmly (Evans and Rauch, 1997).

But, arriving just a little after Evans’ seminal work, a new fashion for participation was to put civil society in the driving seat, even if the change was seen more in the development discourse than in the 12
actual practice of most state agencies. And just as the World Bank had been in the forefront of the topdown public service reform efforts, it also played a leadership role with the new bottom-up approach.

By ‘bottom-up’ I mean state programs where priorities come directly from citizens, placing public officials in a responsive or even passive posture. The relevant mechanism is what Hirschman (1970) called ‘voice’. Samuel Paul (1992) while still a World Bank official was perhaps the first to propose it in the recent development literature as an alternative to top-down control.

While voice in the shape of citizen participation in governance goes back at least as far as Athenian direct democracy, its current ascendancy in development dates from James Wolfensohn’s restoration of poverty to the center of the World Bank’s mission in the late 1990s. The landmark _Voices of the Poor_ report, with a foreword co-written by Wolfensohn, found that public agencies were among the most important but also the least effective institutions in poor people’s lives. The Report called for ‘organized communities that can participate in devolved authority structures and keep local governments accountable’ (Narayan _et al._ , 2000: 283; see also Figures 10.1 and 10.2).

It was this aspect of the Report which went on to make a distinctive – and controversial - contribution to _WDR 2000/01_ . _WDR 2000/01_ advocated ‘empowerment’ of poor communities, including through participation in public services, and making public agencies directly accountable to the public via the media, the courts and advocacy by public society organizations. It also departed abruptly from the public administration doctrine of accountability with the assertion that ‘the quality of public service is reduced when public officials are held accountable more to their hierarchical superiors than to the people they serve.’ The new doctrine was amplified by _WDR 2004_ . The argument now was that elections are an inadequate way for citizens to control what state agencies do in their name: ‘Given the weaknesses in the ‘long route’ of accountability (i.e. classic vertical accountability), service outcomes can be improved by strengthening the ‘short route’ - by increasing the client’s power over providers.’ In making this argument, World Bank authors were mindful of innovations in developing countries where officials’ direct accountability to their clients has been institutionalized. The Indian experience with citizen report cards and the Brazilian experiment in participatory budgeting, both celebrated in _WDR 2004_ , are innovations which illustrate both the strength and one or two weaknesses of the new accountability doctrine.

# **Box 3. ‘Short-Route’ Accountability in India and Brazil**

A ‘citizen report card’ survey in Bengaluru (Bangalore) in Karnataka state in 1993, initiated by Samuel Paul (admirably putting his money where his mouth was), identified an abysmal satisfaction rating of 9% with municipal services. Following press coverage and action by the state government, satisfaction increased across two subsequent surveys to 48% in 2003. The World Bank evaluated the initiative positively (Ravindra, 2004), and the evidence that ‘voice’ was improving services, just as the new doctrine had said it would, stimulated replications in countries as far apart as Ethiopia, the Philippines and the Ukraine.

However, Paul himself was more cautious than his admirers. He concedes that service quality started to improve in the context of a wider urban reform program introduced by the Congress party state government which came to power in 1999. In fact the program was wound up in 2004 by an incoming state Chief Minister who believed that its urban bias had lost the Congress party votes. The Report Card initiative was not repeated after the 2004 election in Karnataka. Paul’s initiative suffered from the perception that it served a sectional (urban) interest.<sup>xii</sup> It was certainly providing direct accountability to citizens. But the accountability was only to one group of citizens, urban dwellers, and was perceived to be at the expense of rural dwellers.

The participatory budgeting experiment in Porto Alegre, Brazil draws on a strong history of social movements, and on the neighborhood associations and other participatory procedures introduced when the Workers’ Party took 13
control of the municipality in 1991. By 2000, at least 20,000 residents were taking part in the participatory processes, which covered the full range of municipal budgets from road-building to health care. Review meetings in municipal districts took place at least twice a month, attended by around 50 people on average. However, Porto Alegre’s budget experiment has accounted for only a modest proportion of the municipal budget: officials still hold most of the purse-strings.

_Sources_ : Baiocchi (2003); Paul (undated); Teivanien (2002).

There have been problems elsewhere too: an optimistic report of an attempted replication of Porto Alegre in El Salvador admits that participatory budgeting had fallen into disuse in 60% of the locations where it had been attempted; and emerging evidence from Africa is also disappointing (Bland, 2011; Booth, 2011; Gaventa and McGee, 2010). Moreover, ‘If one considers the legislature to be an important organ of democratic institutionality, it may seem problematic that the local legislature tends to have its powers diminished by the participatory budget planning’ (Teivanien, 2002: 629).

The difficulties with accountability that bottom-up initiatives inadvertently create (‘unintended consequences’ again!) echo criticisms which we have mostly forgotten in development circles that followed the wave of participation experiments in countries like Libya, Tanzania and Yugoslavia in the 1960s and 1970s, not to mention industrialized countries like the UK and the US (Pagano and Rowthorn, 1996; Richardson, 1983; Wolfe, 1970).

Finally, it is important to draw a distinction here between public administration functions. The ‘voice’ approach is most promising for functions such as service provision, regulation and revenue collection where there is a clear interface with citizens, and therefore a citizen constituency for reform. However, it is less promising for overall policy formulation and ‘back office’ functions such as human resource management which are less visible to citizens. Kessy and McCourt (2010) found that school meetings in Tanzania were better attended than any other participatory forum: citizens care a great deal more about their children's education than about abstruse questions of governance. (This may be why one UK party leader was mocked in the 1997 general election when he put the creation of an independent central bank at the center of his party’s program. His technocratic proposal duly failed to galvanize voters.) For the back-office functions, top-down management reform is probably the only way to proceed.

So there are questions of appropriateness with the bottom-up reforms, just as there have been with the top-down ones. It is ironic that advocates of bottom-up approaches to reform have been slower than their top-down counterparts to recognize the problems we have just discussed, even though their favored initiatives have been concentrated in middle-income countries, especially in Latin America, and implemented in idiosyncratic ways.

That indifference to context, mixed with the powerful support of international development agencies, has prompted a concern in an article which is sympathetic to the reforms that the voice-based reforms might be ‘ground, pasteurized and converted into new appendages of conditionality’. Santos (1998: 507) was prescient: ‘process conditionality’ in the form of a requirement for governments to consult public society has become integral to the design of Poverty Reduction Strategy Papers (PRSPs), the lending vehicle that replaced structural adjustment loans, with initiatives like Porto Alegre and Bengaluru held up as models (World Bank, 2004a). Despite criticisms that what was being promoted was not so much ownership as ‘donorship’ (Cramer _et al._ , 2006; Dijkstra, 2002), the model has spread to other development agencies like DFID and UNDP.

# **7. Moving Beyond Failure: Evidence and Explanations**

I turn now to the evidence of failure which I touched on at the start of the paper. Since I will rely on World Bank project evaluation reports, we should recognize that World Bank projects are a skewed 14
sample in two ways. First, the World Bank operates mostly in low- and middle-income countries where reform is difficult, as we all know. Second, the Bank is a bank, and its projects reflect its preoccupation with affordability and, consequently, with pay and employment reform among the range of approaches that I listed in Table 1.

Having said that, the best evidence of reform outcomes is in reports by the Bank’s own Independent Evaluation Group (IEG). The first report found that that only 33% of the public service reform projects completed between 1980 and 1997 had been rated as satisfactory (IEG, 1999). Reviewing overlapping evidence slightly earlier, Nunberg (1997) found that the success rate was lower than for Bank projects as a whole. When IEG (2008: xiii) revisited the topic nine years later, it found that public sector performance had usually improved in the wake of projects in public financial management and tax administration, but not with civil service reform (and also anti-corruption). At the same time, public sector governance as a whole was rated joint eighth among the Bank’s twelve project sectors in terms of project success, and its success rate was found to have declined over the previous five years more sharply than all but one of the other eleven sectors (IEG, 2008: 83). Public service reform and anti-corruption were dragging down the rest of the Bank’s public sector reform portfolio.<sup>xiii</sup> I am going to cast the net widely as we move from evaluation to explanation. It makes sense to supplement explanations of the specific outcomes of public service reform with explanations of the progress of reform programs in general, especially since over the last quarter-century public service reform programs have often been implemented in the context of wider structural adjustment programs and Poverty Reduction Strategy Papers.

We will discuss the different explanations in terms of Hyden’s model of governance.

**Table 4: Public Service Reform and Levels of Governance**

|**Level **|**Activity**|**Concept**|
|---|---|---|
|**Meta**|Politics|Governance|
|**Macro**|Institutions|Institutional development|
|**Meso**|Policy and strategy|Policymaking and strategic management|
|**Micro**|Implementation|Operational management|

_Source_ : adapted from Hyden _et al._ (2005: 17).

Hyden’s model implies that outcomes can be affected by factors at any of the four governance levels. The way the levels interact is complicated. The higher levels are logically prior, of course, since in principle (for example) public policy arises through the political process. In practice, however, a particular reform may start almost anywhere in the governance system. Citizen’s charters may have been a flagship initiative of John Major’s government in the UK, but they were initiated in an almost casual way by a group of senior but not top public servants in a central government department.

I shall confine myself to the meta- and macro-levels in Hyden _et al._ ’s model: politics and institutions. The way that reforms are affected by factors of policy design and implementation is well discussed elsewhere. The influence of politics and institutions is less well understood, and it operates subtly, helping to explain why reforms which look similar at the operational level in two different countries may have completely different trajectories.

The experience of Mauritius and Malaysia with performance-related pay (PRP) is instructive here. Of course PRP is controversial. We lack clear evidence that it reliably improves performance even among industrialized country private companies. But the contrast between these two countries’ experience with 15
essentially the same HR reform helps us to understand why policy implementation has been described as ‘the continuation of politics by other means’ (Bardach, 1977: 85).

# **Box 4. Performance-Related Pay in Mauritius and Malaysia**

Mauritius and Malaysia, middle-income countries on opposite sides of the Indian Ocean, both have relatively efficient public services, and both have been experimenting with PRP linked to staff performance management and appraisal since the late 1980s. Malaysia’s experiment endured for more than two decades. At the time of writing in 2011, a counterpart scheme had still failed to get off the ground in Mauritius, despite Mauritius having started to experiment in 1987, five years before Malaysia. Political differences between the two countries explain the different outcomes.

Mauritius has had coalition government ever since independence, but in an unstable form. That has lessened the power of the executive to drive through PRP in the face of public servants’ resistance. Such resistance is not unique to Mauritius, of course, but in Mauritius it has an ethnic dimension. A central official who had a leading role in the appraisal experiments attributed its failure to the fact that _‘Different communities are sensitive – “Mauritian specificity’’.’_ Moreover, the pervasiveness of political patronage in public administration led a public service union official to comment that _‘Mauritius isn’t ready (for PRP). Now we are coming to election time. Politicians will interfere.’_ In 2011, the government was still attempting to introduce PRP and the union was still opposing, with a union official insisting that ‘A public servant cannot be penalised to the salary ceiling (sic) even if his performance is below expectation.’ Malaysia has a strong and highly centralized state executive, with essentially the same coalition in power since independence in 1957. Prime Minister Mahathir Mohamad threw his weight behind appraisal and PRP, chairing all ten meetings of the committee which designed the scheme which was implemented in 1992. He brushed aside fears that giving managers power over their subordinates’ salaries would worsen tensions between public servants who were members of the three main ethnic groups, the Chinese, Indians and Malays. When later on the public servants’ union CUEPACS transmitted the concerns of its members that favoritism had duly ensued, the scheme was not abandoned, but modified in 2004 to introduce a quasi-examination procedure (again this was Mahathir’s personal <u>preference) which partly replaced the manager’s individual assessment.</u> _Source_ : Independent (2011); McCourt (2006).

# **The Meta-Level: Politics**

Over the last twenty years, the most interesting work on public service reform, and on public sector reform generally, has been done on the interaction between reform models and the underlying political economy. Tables 5 and 6 summarize some of the key findings. Table 5 is a digest of five analytical studies; Table 6 draws on World Bank evaluation reports on the success of the Bank’s civil service reform efforts.

**Table 5: Factors Associated with Reform Success**

|**Study**|**Sample**|**Factors Identified**|
|---|---|---|
|Nelson (1990: 335-<br>344)|12 countries|•<br>Evolving economic trends<br>•<br>Administrative capacity, notably a united economic team<br>•<br>Executive authority|
|Johnson and Wasty<br>(1993)|81 World Bank<br>programs in 38<br>countries|•<br>‘Ownership’, with ‘expression of political will by top<br>leadership’ as most important component|
|Levy (1993)|8 countries|•<br>Administrative load imposed by reform<br>•<br>Political constraints|
|Williamson (1994)|11 countries|•<br>Coherent economic team<br>•<br>Strong political base|

16
|||•<br>Visionaryleadership|
|---|---|---|
|Campos and|7 countries|•<br>‘Reform readiness’ (ratio of expected gains to costs in reform|
|Esfahani (2000)||proposal)|
|||•<br>Trust between government and entrepreneurs|
|||•<br>Political turnover|

_Source_ : McCourt (2003).

There is a variety of factors here, but political constraints are a thread running through all five studies (such constraints are implicit in Campos and Esfahani’s notion of ‘reform readiness’).

That pattern is quite consistent with the frequency of problems in the implementation of World Bank public service reform projects in the mid-1990s, as identified in World Bank internal evaluation reports:

**Table 6: Problems Encountered in World Bank Civil Service Reform Operations**

|**Problem **|**Frequency in Evaluation Reports**|
|---|---|
|Administrative capacity and financing|21%|
|<br>Domestic reform consensus|17%|
|Project design|17%|
|<br>Government commitment and ownership|15%|
|<br>Overall political and economic crisis|13%|
|<br>Type of lending instrument|5%|
|<br>Supervision or staff continuity|4%|
|<br>Donor co-ordination|4%|
|Bank and countrydialogue|3%|
|_Source:_Nunberg (1997: Figure 13)||

Three of the nine problems listed in Table 6 have a major political dimension: domestic reform consensus, government commitment and ownership and overall political and economic crisis. Moreover, they are among the most frequently occurring problems.

It is consistent with those findings that several studies have found that the key determinants of commitment to reform are internal: ‘domestic policies set the basic parameters of government efforts’, while external support ‘emerges as a sometimes necessary, but far from sufficient, condition for implementation’ (Nelson, 1990: 344; 347). The World Bank’s (1998) _Assessing Aid_ report, despite being devoted to making the case for aid, similarly notes that ‘the lending cum conditionality process works well only when local polities have decided, largely on their own, possibly with outside technical help, to address their reform needs’. ‘Successful reform,’ it concludes, ‘Depends primarily on a country’s institutional and political characteristics’ (World Bank, 1998: 52, 53).

I would like to ask readers to dwell for a moment on the _Assessing Aid_ insight. It has often been assumed that reforms have been driven by donor pressure (perhaps not so surprising when one considers the ubiquity of donor intervention, especially in the structural adjustment era). This underlines Nunberg’s rueful observation, quoted at the start of this paper, that government is a horse that can be brought to water but not made to drink.

Development agencies were quick to grasp the significance of the political economy studies. In 1999, for instance, James Wolfensohn (1999: 9) declared that ‘It is clear to all of us that ownership is essential. Countries must be in the driver’s seat and set the course. They must determine goals and the phasing, timing and sequencing of programs.’ 17
We have been much slower to agree on the practical implications of that recognition. One view is that only minor adjustments to the existing recipe are needed. Nunberg (1997) argued that the content of pay and employment reforms was broadly correct, and also politically feasible. Only the process was faulty: reform should be deeper (in the sense of the depth of cuts on payroll spending), broader (it should take place in a larger public administration context) and longer (unrolling over a longer period than the typical aid project timetable).

More recently, however, there have been arguments that something more radical is needed. Should reform advocates adjust their reform proposals to the prevailing political economy, so that the issue is reframed as one of political feasibility rather than commitment, even if that means watering down the reform? In this paper I have anticipated that approach by outlining six reform models and arguing that they can be selected to suit the problem situation - in this context, the political economy – of a given country. Or (a different approach) should reform advocates concentrate instead on giving policymakers incentives to implement the ‘correct’ reform, even if the reform is politically demanding?

Taking the second approach, the Swedish and UK governments and the World Bank have invested in political economy studies which focus on what drives reform in individual countries (Dahl-Østergaard _et al._ , 2005). These studies have pointed to generic factors like technical capacity, insulation from societal interests and building incentives for politicians to embark on reform; and country-specific factors like the importance of public society and the media in the case of Zambia (Duncan _et al._ , 2003; Robinson, 2007). The political factors can have a bearing on specific models of reform. Grindle (2006) has shown how capacity-building, for example, can be intimately affected by political preferences and calendars.

Practitioners have sometimes complained that the political economy studies are academic, and fail to specify what policymakers should do differently. Two studies by the author of this paper respond to this criticism.

# **Box 5. Using Politics to Craft Reform**

The failure of public service reform in Swaziland up to 2003 was rooted in Swaziland’s unusual political system, in which the king and the chiefs had effective power. Prospects for reform therefore depended either on fundamental political change, or on engaging with the rulers’ fear that reform represented a threat to their interests. Since the former appeared unlikely at the time of the study, it was argued that reformers should concentrate on persuading the traditional rulers to distinguish between their fundamental interest in the continuation of the existing system and their contingent interest in perpetuating a system of patron-client relations in the allocation of government jobs; public service reform did not have to be the thin end of a wedge. A litmus test that they had been persuaded, and that their commitment to reform was genuine, would be their willingness to restore the independence of the Public Service Board, the body responsible for public service appointments and promotions. Subsequently, the new Constitution introduced in July 2005<sup>xiv</sup> established the Public Service Commission on an ‘independent and impartial’ footing.

Sri Lanka’s experience has much in common with Swaziland’s. The outcome of public service reform under a World Bank structural adjustment program was that there were 10 percent more public service employees in 1992 than in 1989, and twice as many government ministries. By the turn of the century, major donors had withdrawn in despair. Yet as in Swaziland, this was the point where, left to its own devices, the government pushed through a constitutional amendment in 2001 which restored the independence of the Public Service Commission (PSC). This was much more of a feat than in Swaziland’s semi-absolute monarchy, since it required a two-thirds majority in Parliament, and it was in the face of Sri Lanka’s deep-seated political patronage. Despite that, this was one occasion where legislative turkeys did actually vote for Christmas.

_Sources:_ McCourt (2003); McCourt (2007); TISL (2011).

18
We should realize that such legal initiatives can be subverted in practice. However, we can see the dogged resistance to reform over whole decades in both Sri Lanka and Swaziland (one senior Swazi official predicted at the time of McCourt’s 2003 study that the government would never restore the PSC’s autonomy) as a back-handed but sincere compliment to the efficacy of formal changes such as these.

As with liberty, however, the price of public service reform is eternal vigilance. So it is reassuring in a way to find the Sri Lankan branch of _Transparency International_ and others expressing fears of late that the government elected in 2010 was reverting to the old practices of political interference, which its immediate predecessors had managed to foreswear. Institutional reforms such as those in Box 6 are not a sufficient condition in order to guarantee fairness and efficiency. But the earlier experience of blatantly flawed dispensations in Sri Lanka and Swaziland shows that they are at least a necessary one.

What can we conclude from this discussion of the political economy of public service reform? It is that in the first place, public service reform is not an exclusively technical matter, to be decided by officials. Nor is it entirely a question of administrative capacity. Instead, it is intimately affected by the political context in which it is attempted.

The rather dismal inference that many students of reform have drawn from the political economy studies is that public service reform is the proverbial can of worms. It is true that greater sensitivity to ‘reform readiness’ would have ruled out many reform initiatives. But the more positive inference I prefer to draw is the one suggested by the Swaziland and Sri Lanka examples in Box 5: that sensitivity to politics may open up a window of reform opportunity that has been closed up to now.

# **The Macro-Level: Institutions**<sup>xv</sup>

My Swaziland and Sri Lanka examples have enabled us to kill two birds with one stone, because in illustrating the importance of politics for reform trajectories, they also introduce the importance of institutions. A distinctive feature of public service reform, and of public administration in the context of development activities as a whole, is that it is profoundly shaped by its institutional framework. Moreover, the institutions which govern and regulate the public service are even more important in developing countries than they are in industrialized countries.

This applies very much to the civil and public service commissions in Commonwealth countries, whose Swazi and Sri Lankan manifestations we have just discussed, and their equivalents elsewhere. It is a truism among organization scholars that organizations get the behaviors they reward. If public servants, and potential public servants, see that appointments and promotions are decided by a body which is insulated and committed to excellence, they will have an incentive to study harder for the degree examinations which will equip them for entry, and work harder in the postings that will earn them their promotion.

In this context, when I say ‘institutions’, I also mean ‘laws’. Tanzania’s legal framework for public staff management illustrates this.

# **Box 6. The Public Service Legal Framework in Tanzania**

Although the most distinctive period of Tanzania’s governance history is the _Ujamaa_ (‘self-help’) period after 1965 which turned the country into a one-party state and politicized the public service, power has always been concentrated in the office of the President - before, during and after _Ujamaa_ . The 1989 Civil Service Act<sup>xvi</sup> , enacted in the _Ujamaa_ period but still in force at the time of writing, states that ‘(any) delegation ... shall not preclude the President from himself exercising any function which is the subject of any delegation or authorization.’ Moreover, 19
‘whether the President validly performed any function conferred on him ... shall not be inquired into by or in any court.’ The Constitution, and both primary and secondary legislation enacted over several decades, give the President immense direct powers, with few procedural checks on how he exercises them. Restoring the independence of the Public Service Commission (CSC) would require not just a constitutional amendment, as in Sri Lanka, but the revision or repeal of many separate but interlocking, and sometimes obscure, laws and procedures. As a consequence, Tanzania’s CSC had even less autonomy than its Sri Lankan and Swazi counterparts used to have, and senior public servants have precarious job security. A senior official remarked that ‘the President changes the top officers in the service in a similar way as (sic) he changes attire.’ _Source_ : Bana and McCourt (2006).

One can easily imagine the reluctance of senior Tanzanian officials to embark on a strategic initiative when they hold office at the President’s whim. ‘Strategic’ actions are intrinsically long-term, and officials would be foolish to expect to be around long enough to see them through. Tanzania’s staff management dispensation illustrates the way that the institutional, including legal and procedural, framework can create perverse as well as positive incentives for public servants.

# **8. Conclusion: From Failure to Success?**

‘Almost none (of the many identified factors affecting commitment to economic reform) seems to have a uniform effect across countries . . . Reform outcomes depend on complex combinations of a variety of factors.’ (Campos and Esfahani, 2000: 222) ‘Incomplete and even quite ambiguous explanations are about the most we should expect. This is not an area in which clear-cut, high-probability causal models can be developed - far from it.’ (Whitehead, 1990: 1145) ‘Answers must be invented for each country individually.’ (Nelson, 1990: 361) In the light of the confession of failure at the start of this paper, citing these quotations may look like gratuitous self-flagellation. However, they take on a more positive hue when we place them in the light of the problem-solving approach that I have proposed in this paper. Seen in that perspective, the suggestion arises that where the approaches failed, it was not because of their intrinsic deficiency, but because they were responses to problems which arose in one setting, but which did not arise in another.

We had a vivid example of this just as I was completing this paper. Under its new President, Dr Jim Kim, the World Bank has developed an interest in a so-called ‘science of delivery’. This has led in turn to an interest in initiatives such as Malaysia’s National Key Result Areas, because of the dramatic improvement in service outcomes which those initiatives have engendered. However, such initiatives presuppose that a government has made service delivery improvement a key objective, as Malaysia’s has done. Evidence is emerging – unfortunately but, from the perspective that we have taken in this paper, predictably - that where an approach like Malaysia’s has been attempted in countries which do not share that objective in any real sense, it has failed.

This example does seem to support the argument on which this paper is based, namely that we should begin by specifying the problem we are trying to solve, and only then move on to selecting an approach which will solve the problem, or at least help to solve it.

In this way, I hope that my review of models of public service reform and their trajectories suggests a way forward which readers will be able to pursue. Very different from public management specialists in industrialized countries, specialists in public management in development are frequently economists, with 20
a learned preference for sharp-edged solutions. Yet such solutions are even less on offer in developing countries than they are elsewhere.

Let us make an analogy here with the practice of medicine. There are medical doctors who choose to practice in poor countries because of the challenge they offer to their professional judgment and improvisational skills, not to mention their humanitarian commitment: German Nobel Prize winner Albert Schweitzer is the classic example. Moreover, and very interestingly, we have seen the development of ‘problem-based learning’ among Medical Schools, to the extent that some of those schools have made medical problem-solving the center around which their students’ entire medical education revolves (Barrows, 1996).

Thus I hope that among my readers there are a few who will be stimulated rather than daunted by the sheer intricacy of the challenges I have touched upon in this paper. Perhaps the adoption of a problembased approach will help them to see a way forward with tackling those challenges; and perhaps in so doing, the failure of the present generation of reformers to which the writer of this paper belongs will be the paradoxical foundation for the success of a new generation.

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