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Discuss the theoretical bases for the New Public Management (NPM) model and evaluate whether it is better than the traditional public administration model to manage the public sector. Support your position with real-life examples.

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Introduction

PUAD A322F Name: Lam Fung Student ID: 10476789 Question No.: 2 Question 2: Discuss the theoretical bases for the New Public Management (NPM) model and evaluate whether it is better than the traditional public administration model to manage the public sector. Support your position with real-life examples. There are various differences in the traditional public administration model and New Public Management model to manage the public sector. In order to determine which of these two models is better, it is worth to discuss the theoretical bases for the NPM model and then compare the major differences between these two models. According to Hughes, there are two major principles of NPM: (1) it is market-based; (2) it aims to move away from bureaucracy as an organizing principle. The first principle consists of three theoretical bases namely public choice theory, principal-agent theory and transaction cost theory, while the second principle is private management. In the market-based principle, public choice theory refers to the economic theory that applied to the bureaucracy that all human behavior is dominated by self-interest. There is an assumption that individuals are rational who always seek the biggest possible benefits and the least costs in their decisions, while discourage from certain activities if they get loss and attracted towards certain activities if they get rewards. ...read more.

Middle

The traditional public administration which focuses on passive and rule following that bureaucracy is no longer appropriate. Instead, the new public management of business principles to the public sector mainly focuses on efficiency; goals achieving and active become up to date. First, NPM is focuses on active professional management but not just monitoring operations in previous. Senior managers are expected to manage their colleagues and designate the organization's goals, mission and objectives, which could provide long term strategies in order to enhance efficiency and effectiveness of the organization. Second, managers are just following the routine works but lack of goal achieving. Instead, they have to take the role to achieve specific goal by establishing clear objective, setting explicit standards and requires measuring the performance. Thus incentive reward and penalties should be inter-related to their performance for effectiveness and efficiency. Third, output control is of greater significance than processing, thus financial management should be improved that the budgets need to reflect what is to be delivered and use of resources should be right to the goals that have to be achieved. Fourth, flexibility in organization like disaggregation of large organization into small entities could facilitate control and management. ...read more.

Conclusion

As traditional model of public administration lacks efficiency under contemporary conditions while there is still criticisms and limitations of NPM, it is better to solve problems in a specific way that is to select some items from the NPM menu to fill in the shortfall of the traditional model. Reference: 1. PUAD notes: New Public Management. 2. Kaboolian, L., 1998. The new public management: Challenging the boundaries of the management vs. administration debate. Public Admin. Rev., 58: 189-193. 3. Khademian, A.M., 1998. What do we want public managers to be: Comparing reforms. Public Admin. Rev., 58: 269-273. 4. Maor, M., 1999. The paradox of managerialism. Public Admin. Rev., 59: 5-18. 5. Savoie, D.J., 2002. What is Wrong with the new Public Management. In: Public Management: Critical Perspectives, Osborne, S.P. (Ed.). Routledge, London, pp: 263-272. 6. Singh, A., 2003. Questioning the new public management. Public Admin. Rev., 63: 116-119. 7. Barberis, P., 1998. The new public management and a new accountability. Public Admin, 76: 451-470. 8. Doig, A., 1997. The privatisation of the property services agency: Risk and vulnerability in contract-related fraud and corruption. Public Policy Admin., 12: 6-27. 9. Enhanced Productivity Programme EPP (2005) Available at http://www.eu.gov.hk/english/history/history_epp/history_epp.html (Accessed: 08 September 2005) 10. Head of Efficiency Unit Talks about Public Sector Reform (2005) Available at http://www.eu.gov.hk/english/psr/issues/issue01/issue01_features.html (Accessed: 08 September 2005) ...read more.

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