The paper will introduce and define the principles of New Public Management (NPM), outline the aim of the Ministry of Defence (MOD) and show the relationship between these principles and current working practices within the MOD. By doing this it will bec

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Introduction

The paper will introduce and define the principles of New Public Management (NPM), outline the aim of the Ministry of Defence (MOD) and show the relationship between these principles and current working practices within the MOD. By doing this it will become clear as to what extent NPM is applicable within MOD. It has been claimed that NPM is nothing short of ‘a cultural revolution’ (Yeatman,1990) yet there have been numerous studies into NPM and many differing views on what it really means and indeed different views as to the extent of its success.

What is New Public Management?

Nowadays, modern governments must act with great responsiveness as both the general public and industry alike now demand a more personalised, efficient and faster service (Kearney, 2004). NPM was originally introduced to improve both efficiency and responsiveness to these changing political needs and it is clear that all factors taken from the PESTEL framework (Political, Economic, Sociocultural, Technological, Environmental, Legal) have a significant influence on their decision-making (Johnson, Scholes et al, 2005a). The core philosophy that underpins NPM is that of setting and monitoring output and outcome targets and identifying individuals responsible for their success or failure. Blair clarified this further, saying ‘A clear focus on outcomes allows us to give freedoms back to public service workers - if a service can be accountable for what it achieves, we need worry far less about how it achieves it. Accountability for outcomes allows us to give freedom over means.’ (Blair, 2002). Quite simply, it is about getting things done better. Although focuses on outcomes are not NPM in its entirety, they are a key factor and have required a cultural change in order to introduce them; the old culture being aptly summarised by Derek Lewis:

‘The top priority was a change in attitude towards performance. I wanted to see more action and fewer words. Too much attention was paid to whether or not the right procedures had been followed rather than to what had been achieved. It was an attitude born of years of painful experience. When things went wrong and inquiries were conducted, the survivors were those who had followed the rule book and created their own alibis.’ (Pollitt, 2003 cited Lewis, 1997).

One must define the principles of NPM in order to correctly evaluate the question. There are many differing definitions of these principles, but analysis shows that Isaac-Henry’s is probably the most concise:

‘decentralization, desegregation, competition and markets, efficiency strategies, reduction in size of units, emphasis on proper (private) management practices, consumer orientation and performance (output) measurements.’ (Isaac-Henry, 1993)

However, NPM can be more clearly defined for the purpose of further analysis and its principles are summarized by the eight points below (Pollitt, 2003):

Management Systems move towards outcomes and outputs.
Shift towards measurement and quantification.
More specialized, 'lean' and 'flat' and autonomous organisation.
Sub contracting of non-core business activities.
Wider deployment of market mechanisms.
More emphasis on service quality and a consumer orientation.
Broadening and blurring of relationships between public and private sectors.
Shift towards efficiency and individualism.

The aim of the Ministry of Defence

The UK Governments Defence Aims are outlined in the MOD Public Service Agreement 2005-06 to 2007-08:

‘To deliver security for the people of the United Kingdom and the Overseas Territories by defending them, including against terrorism; and to act as a force for good by strengthening international peace and stability.’

This is a preview of the whole essay

The aim of the Ministry of Defence

The UK Governments Defence Aims are outlined in the MOD Public Service Agreement 2005-06 to 2007-08:

It must be accepted that such is the extent of this aim it presents the MOD with a monumental task requiring careful management if it is to meet this challenge at all, let alone in a cost effective manner. It has been recognised that it will only be possible to achieve this by reforming and modernising the way in which the Ministry of Defence does business. It must rethink the way it manages and organises its support to the front line to enable it to deliver military capability more effectively and with increasingly tighter budgetary constraints (cheaper) (MOD, 2002a). This alone, given the increased demands on our already stretched military forces represents a huge challenge and one that this paper will show that the MOD is ‘attempting’ to meet.

The complex way in which the MOD is configured can be shown in Figure 1 which clearly shows the way in which many functional strands are brought together in order to provide the UK’s defence capability at the ‘sharp end’:

Figure 1: Departmental Business Model

Source: Developing Security in a Changing World. Supporting Essays, Essay 6, Defence Management. (December 2003).

This complex approach to NPM is summarized in Figure 2, (Bauer 2004) and gives an indication of how NPM is in use within the MOD:

Management tools include: Service Delivery Agreements, identifying cost drivers through analysis of business processes, managing risk (use of risk registers), performance management through the Defence Balanced Scorecard, Smart Acquisition.

New organizational principles (increased transparency to industry, reaction to technological developments, Defence Change Programme).

Culture change (including a different approach to errors).

Philosophy of control (change to outcome based performance measurements, PSAs).

Source: Helfried Bauer, Contribution to Exploratory Meeting, Public Management in Austrian Government, Febuary 2004.

Why do we need to concern ourselves with ‘Management’ within the MOD?

Once any conflict begins the time for concerns over NPM or indeed any forms of modern management systems is past. Effective management is the key to coordinating all elements of our defence capability in order to be at the highest state of preparedness at the onset of hostilities. It has been argued that ‘management is militarily, ethically and politically important for defence’ (Taylor, 2004) and it is essential that the MOD openly pursues ‘value for money’ in all areas of operations yet still deliver the required capability:

‘This determination to get the best possible value for money for defence is a key part of our responsibilities, and the best possible reassurance to the public, who bear the cost of defence – of our proper and wise stewardship of the resources provided.’ (Heseltine, 1984)

Relationship between the principles of NPM and the MOD

Management Systems move towards outcomes and outputs.
Shift towards measurement and quantification.

These principles above can be grouped together because in essence they both establish ‘what service is achieved, rather than how it is achieved’ and the measurement of this service. These principles are fundamental to success and have been successfully implemented into the MOD already by use of the Balanced Scorecard.

The Defence management Board identified that a robust performance management regime was key to long-term success (MOD, 2004). As a result of this they developed and introduced the Balanced Scorecard; a concept originally created by Drs Robert S Kaplan and David P Norton. This has since been refined and developed and now has thirteen strategic objectives and twenty-five associated performance measures and has also led to the creation of the MOD strategy map.

Source: Managing Organisational Performance in the (United Kingdom) Ministry of Defence, 2004.

Figure 3 represents the developing MOD Balanced Scorecard objectives. The success of this Balanced Scorecard approach, albeit still developing and improving has been summed up as follows:

“The Balanced Scorecard is one of the most important management initiatives we have adopted,” observes Sir Kevin Tebbit, Permanent Under Secretary of State, Ministry of Defence, and Chairman of the Defence Management Board. “Seen in the context of our wider programme to modernize Defence and improve our performance, it is a means of clarifying our aims, improving our plans, and reducing the reporting burden—provided we get the measures right. The task should not be underestimated, but for us it has now become a way of life. It ensures that we all share a common understanding—from the top Board through major Commands to the Operational Units—of what we want to achieve, and the individual contribution we all have to make.”

Balanced scorecards help to relate performance assessments to strategy and help develop processes that are crucial for longer-term success (Johnson, Scholes et al, 2005b).

More specialized, 'lean' and 'flat' and autonomous organisation.

This can be further clarified as the creation of programmes for separating out certain functions or activities and placing them in ‘arms length’ specialist agencies rather than carrying them within the main body of a ministry (Pollitt and Talbot, 2003). The MOD has achieved much progress here by the creation of agencies such as the Defence Procurement Agency (DPA), the Army Base Repair Organisation (ABRO) etc. In fact the MOD, in line with the Strategic Defence Review (SDR), has now created forty-four defence agencies (plus two candidate agencies) in its drive to become a leaner organisation. In addition the MOD is to cut over 11,000 Civil Service jobs over the next 3 years in its efforts to do things better and more efficiently in order to maximise investment in the front line (Hatfield, 2005).

Sub contracting of non-core business activities.

The sub contracting of non-core business activities is already seen as key within industry and even if existing units continue to carry out the work, it will now have to do so under a set of carefully specified contractual conditions (Lane, 2000). This has happened throughout the MOD and examples of this range from the contracting out of all mess services to more recent contracts such as the provision of infrastructure support services in support of the British Forces Iraq.

Broadening and blurring of relationships between public and private sectors.

The Public Private Partnerships (PPP)/Private Finance Initiatives (PFI) are crucial for the government to deliver cost effective services. The MOD has embraced the use of PPP & PFI initiatives and has recently created an office to evaluate and oversee all Private Finance Initiatives called the Private Finance Unit. This is seen as a very encouraging move although there are still concerns that this could add more officialdom to an already unwieldy system (Mulholland, 2005).

Wider deployment of market mechanisms.

The MOD has systematically used competitive tendering since it was made mandatory by central government during the 1990s (Ascher, 1987). Since that time it has been claimed that the MOD has used ‘competition for competition’s sake’ (Kinkaid, 2002) and to some extent it still does. It is the cultural change (or slow pace of it) that has been responsible for this failing as the strategic direction is quite clear.

‘The answer to the first question, is competition necessary, I say that it remains my preferred method. It is not the only method. If I cannot have competition, I would rather have the ships and get them by some other way.’ (Walmsley, 2001).

More emphasis on service quality and a consumer orientation.

The introduction of the Defence Change programme is fundamental to the MOD‘s commitment to improving efficiency and service delivery and it is through this that it will drive continuous improvement forward (MOD, 2003a). Within defence, the aim is to maximise investment in operational capability and it is through this that the MOD intends to deliver the Departmental objectives in the Public Service Agreement – the more operational capability delivered using the resources allocated, the better. The Department has already displayed an extensive range of initiatives, many of which have addressed those features widely acknowledged as key to improving performance and hence delivery (MOD, 2003b).

Shift towards efficiency and individualism.

Efficiency here can be taken in its most literal form and in line with the latest PSA the MOD is already committed to deliver 2½ per cent output efficiencies per annum. It is widely recognised that the DPA and DLO are the areas where most efficiencies can be made, primarily by taking forward Smart Acquisition (MOD, 2002b). Additionally Resource Accounting and Budgeting (RAB) has been gradually introduced to the MOD allowing the MOD to focus more clearly on its key cost drivers (MOD, 2003c).

Conclusion

It is clear that military capability can only be enhanced through the use of strong and effective management of defence. It is also absolutely clear that the MOD has embraced all of the key principles of NPM in their entirety but it is the continuance of this programme that will achieve the culture change required for added success. As with any organisation the proof of success is measured by results, but these, within an organisation as large and diverse as the MOD can be difficult to evaluate. To evaluate something effectively there must be a mechanism to make before and after comparisons; again something that may not be achievable now within the MOD (Pollitt, 2003). It is however, not the success or failure of NPM that is being argued, it is simply whether or not these principles can be applied to the MOD. I would argue not only that they could be applied to the MOD but also that all of the currently defined principles are being applied to the MOD now and most are working.

I would conclude that the principles of NPM are fully applicable to the MOD.

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