Frank Litton on policy-making, the civil service and the malaise of Ireland's democracy.

Public Sector Modernisation: Bad and Good News

The bad news is that the reforming ambitions of the Department of Public Expenditure and Reform are ill-judged and unrealisable. An Institute of Public Administration (IPA) report (Boyle 2013) compels this conclusion. The good news is that the makings of a more realistic model are available. Evidence from a National Economic and Social Council (NESC) report (NESC 2012) point a better way forward.

Introduction

I suppose that I am one of the very few who are excited by public sector reform, finding it topic of immense interest. All human life is there, or at least, all the abiding problems of politics. I do hope that I am one of many who, whatever about its interest, recognise its importance. ‘What is faith without good works?’ The state does need effective administration. We all suffer when the civil service stumbles. This ‘many’ should be grateful to Dr Richard Boyle and his colleagues in the Institute of Public Administration (IPA) for their contributions to the efforts to modernize the public sector. They made a contribution in 2011 with a succinct account of what needed doing. (Boyle and MacCarthaigh 2011). Dr Boyle has just published a report on the progress made on that agenda (Boyle 2013).

The report is free of the blight of bullet points/power point slides that deaden thought and kill argument. Clear sentences combine in succinct paragraphs to tell us far we have advanced, or not. Dr Boyle’s understanding of what is happening in Ireland is matched by his knowledge of the progress of reforms in other States. Apposite examples from their efforts illuminate the problems we face. Dr Boyle is a master of tact. He does not criticise. He does not chide. He does not challenge. Nonetheless, his balanced, nuanced account could move those less restrained, or even tempered, to do all three.

Direction and control: the bureaucratic ambition

All the particular efforts to improve the public service share the same backstory. One theme dominates its plot – direction and control. It could be called the ‘Bureaucratic Ambition’. The advantages of strong direction and control are obvious, the cost of its absence can be high. To take just one example from the report, money could be saved if different branches of the public service shared services (financial management, human resource management, procurement). They do not. The centre is weak. The roles of the various bodies are not analysed. They have not been reformed to improve the links among them. Strategic priorities have not been set (p13). Thanks to the history of the practice and theory of management, the difficulties of imposing direction and exercising control are also well known. The clearest path was laid down by F.W. Taylor when he demonstrated how the careful scripting and monitoring of tasks ensures that the right things are done in the right way at the right time at minimum cost. This ‘standardisation of work practices’ is the essence of bureaucracy. It is the basis of the hierarchy through which the centre brings activities into line with its aims. It produced one the modern world’s most successful innovations – machine bureaucracy.

The efforts to make the public service more bureaucratic that began in 1967 with the Public Service Organization Review Group report (The Devlin Report) continue. The progress has not been spectacular. One might have thought that the crisis would have focused minds and efforts. Not so, as the report shows. So little progress in such a long time should surely raise, at least, a slight suspicion that the ambition is ill-judged and unrealisable. The report provides evidence that this is so.

Agencies and the limits of bureaucracy

Bureaucracy works best when the centre can agree on aims and priorities that it can pursue with well-understood technologies. Absent either, or both, conditions and there will be trouble. Consider another example from the report. The number of agencies (aka state-sponsored bodies) proliferated in the good times. Their number and governance are now important issues. The report tells us little progress has been made in resolving these (p14). Some attempts have been made to rationalize them. Proposals have been made to reduce their numbers with poorly thought out amalgamations. This episode is revealing. The reasons why we have so many agencies and why their reform is difficult point to the limitations of the bureaucratic ambition to direct and control.

A department’s portfolio of policies changes. With every new policy comes the question of its implementation. If the department does not have the expertise, an agency that can attract it, if necessary outside normal HR constraints, is an attractive option. The policy’s relationship to the department’s aims is just as relevant. Assigning a policy to an agency distances it from the Minister who is no longer directly accountable for its every action. This has, at least, two benefits. It allows the minister deflect criticism from aggrieved interest groups. It also allows the agency assert its freedom from political influence. Thanks to its status as an agency it can be ‘functionally representative’. A department has many aims and a particular policy’s contribution can be lost among them. Establishing an agency is one way in which the Minister can signal the importance of the policy and the seriousness of his intent to solve the problems that it addresses.

The multiplication of agencies does make the control of costs more difficult. It does make it more difficult to achieve coherence among a department’s aims. When politicians unite to demand a ‘bonfire of the agencies’ they recognise a real problem. They also demonstrate an inexcusable ignorance of its nature. Surely, well-paid, full-time politicians who claim commitment to the public interest should have some minimal understanding of public administration? Perhaps, I am unfair. Their commitment is not to the public interest per se but to (re) presenting versions of that interest that chime with the views of their constituents. Whatever the case, their indifference and ignorance is a major obstacle to reform.

If the politicians rationalizing bonfire is not a solution, what is? The bureaucratic model finds it in the divisionalized form. This emerged as a solution to problems brought by the successes of bureaucracy. The directors atop the hierarchy of a large bureaucracy were certainly in charge but how far were they in control? The levers of power were in their hands but what could these move? The standardisation of work allows the elaboration of long linkages among tasks. The complexity of the interdependencies that these generate must be respected. The impact of a change to A on B,C,D,E… must be assessed with reference to the plans that standardise the work. Adapting the plans to bring the organization into a new, and perhaps, more profitable environment is a big deal. Assessments of interests or changes in strategy are difficult. The easier option is to accommodate the plans to changes in the existing environment. The virtues of bureaucracy derive from this inflexibility. In a changing world, this same inflexibility can be a mortal danger. The divisionalized form promised to maintain the benefits of bureaucracy while allowing great flexibility.

The bureaucratic organization was to be divided into parts which were then re-combined to give the apex greater direction and control. The units that produced the goods and services were organized as divisions. The apex, with the help of a small HQ staff, set targets for each division. The managers of the divisions were responsible for the operations that were to reach these targets. The apex was now free to identify the organization’s interests in a changing world and adjust its strategy.

Following this logic, to solve the agency problem, treat agencies as divisions. Let departments set clear targets for them and assess their performance in achieving them. There is, however, a problem. The divisionalized form is a form of bureaucracy and the same conditions required for bureaucracy are required for it: clear aims and priorities, well-understood technologies. But as we have seen, we have so many agencies precisely because a department’s circumstances resist bureaucratic logics. We cannot expect our problems with agencies to be solved by that logic. Dr Boyle’s report that little or no progress has been made in implementing versions of this solution should not surprise us. It is difficult to see how they could work.

Bureaucracy, values and ideas of the good

New scripts, new systems and procedures introduce new demands. Have public servants the capacities for their altered roles and the motivations to take them on? The report picks out leadership as an important capacity. It advocates ‘transitional or value-based leadership’. ‘Performance’ we are told ‘is enhanced when an employee’s values match organizational goals, values and culture’ (p20). It is hard to disagree with this emphasis on values. In a changing world we do need ‘a moral compass’. There is, however, a problem. This compass does not provide bearings in a bureaucracy. Bureaucracy is an achievement of the modern world. The distinction between ‘facts’ and ‘values’ that frame this world are central to its successes. The routines through which we live our lives can be unpacked as aims, purposes, and interests. We orientate ourselves with aims, seek purposes to achieve them, and have an interest in acquiring the resources to pursue them. Bureaucracy engages with our interests, not our aims and purposes. These are bundled together and labelled values. Values are subjective and so beyond rational discussion. That is the preserve of the world of facts. What can be discussed rationally are the plans and the techniques that produce them and that they prescribe. Interests can be calculated and the strategies to pursue them rationally assessed. Bureaucracy’s achievement is its ability to link people together in complex interdependencies on the basis of their interests, not shared aims and purposes. By excluding these, the apex of a bureaucracy attains a measure of direction and control not otherwise attainable.

Consider what is lost and gained by bundling aims and purposes together as values. The reality of moral reflection is attenuated, if not lost altogether. A parent of teenage children agonises over his responsibility for the well-being of aged mother. How should he balance this responsibility with what he owes his wife, his children? How far should he expect them to contribute to her care? How far should he encourage them? Allow them? It is hard to see how far this commonplace story is illuminated by reference to values. It is illuminated by considering the goods that are involved: the rewards intrinsic to family life, to a good marriage, and the flourishing of children on the verge of adulthood. These goods are, of course, subjective. What else could they be? While they are enjoyed and aspired to by a subject, as that subject pursues them he is brought out of himself to find, assess, and balance facts. His understanding of the aims and purposes at stake changes and develops.

While talk of values is little use for those within the story, it is useful, perhaps even indispensable, in our dealings with strangers, While we do not want to participate in their stories, or have them act in ours, we may want to sell them something or calculate how far their interests conflict, or overlap, with ours. Knowledge of their values helps guide our actions. The managers in a bureaucracy are right to be concerned with how far the values of their workers might advance or retard their interests and those of the organization. The logic of bureaucracy gives them little scope to act as leaders who engage with their workers ‘ideas of the good’.

Ministers and senior civil servants

Carl Schmitt had the interesting idea that we can identify, at the heart of any endeavour, one key decision that reveals its nature. His interest was politics and the State and he, famously, argued that their key decision was ‘Friend or Foe’. What is the decision that brings us to the heart of the business of the civil service? Senior civil servants must make decisions – is it effective? Efficient? Legal? Equitable? Because we live in a democracy these are all subservient to the question ‘Will the minister go along with it?’ The relationship in which it is posed and answered is crucial. And as I argued in my first and sixth posts, it is an increasingly troubled one.
In their 2011 report Boyle and MacCarthaigh recommended ‘further clarifications of the relationship between ministers and senior civil servants, special advisers and programme managers’ and ‘the strengthening of the ability of public servants to speak truth to power’. What progress has been made since? ‘The Government Reform Unit in DPER is developing a policy paper…’ (p32). The presumption is that clarification must take a contractual forms. Contracts do not unite individuals in pursuit of shared aims and purposes. They protect and advance the interests of those who have different aims and purposes and who, nonetheless, find it expedient to cooperate. We remain within the bureaucratic frame with its ambition for centralised direction and control.

Boyle drawing on his knowledge of efforts elsewhere cautions ‘a more contractual style of accountability, whilst it can be helpful in determining who is responsible for what, cannot be overly-contractual in nature’ (p33). One pities the staff in the DPER’s Government Reform Unit as they attempt to square the circle, or devise a contract that is not ‘overly contractual’. They should abandon the task and seek instead an understanding of the aims and purposes that the relationship should serve in a transformed democracy (see posts 2 and 7). Is this possible? For it to happen, ministers must engage with the issues, abstracting themselves momentarily from the ‘match’ and attending to the ‘game’ and the difficulties that it is in. This is unlikely. The group is caught between a rock and a hard place.

Change management

In 2011, Boyle and MacCarthaigh pointed to the need ‘for greater expertise in change management across the system. It is vital managers have the capacity to lead change, led people and build coalitions of support for change’ (p27).What progress has been made? ‘Change management is still seen as an area in need of further improvement across the system.’ (p27). Of course change is helped along by a capacity for change management. This, however, is of little avail in the absence of a plausible proposals based on sound theory. Should we blame a manger who fails to lead his staff down a blind alley? Or quietly praise his staff for their good sense in not following him? Or him, for putting the slides with their bullet points at the back of the draw? What appears as a lack of capacity is far more likely further evidence for the futility of the bureaucratic ambition.

On a positive note: sound theory

When things are going well, the theories embedded in action can be taken for granted and practitioners can devote themselves to their routines and their power struggles without any attention to the academics and their efforts to understand them. When things start to go wrong, reflection cannot be avoided and theories start to matter. The limited range of ideas upon which the modernization programme draws is dispiriting. The divisionalized form played a central role in the successes of industrial capitalism. Much money was made any many thrived as a consequence of its strengths. Although it dominated management education for many years, management theorists from the 1960s onwards identified its weaknesses and the conditions in which its mode of direction and control did not work. Towards the end of the 20th century, the strategic environment of business changed. Advantage no longer lay in the efficient and effective production of goods and services, success went to firms that could develop and package technological innovations while orchestrating their production in networks of suppliers. The firm that delivers your e-book, tablet or smart phone has a very different structure from the vast integrated structures that took in raw materials and one end to deliver motor cars at the other. The ‘network’ became the important form of organization; getting its direction and control correct, the strategic imperative. The characteristics of the public service are much closer to those appropriate for a network than they are to those amenable to the divisionalized form. It really is perverse that, in the 21st century, the ‘modernizers’ bypass current theories for ideas that held sway in the 1950s. The positive note to strike is that there are theories relevant to the problems of the public sector that could provide plausible plans of reform. (See further reading)

Because the relationship between ministers and senior civil servants is pivotal, the modernizers have go beyond the management literature and study the political environment. Again, a positive note can be struck. There are excellent studies that analyse the democratic project and how it is coping with changing times. (See further reading)

On an even more positive note – evidence of improvement

The centre’s dogged holding on to flawed ideas is disheartening. There have been failures, big and small. There are problems of direction, control and coordination. Reform is needed. That is clear. There has been progress made in improving the quality of public services. That this is not mentioned in the report is disheartening. One supposes that it was ignored because it was not made under the aegis of the DPER and because it was not consistent with its bureaucratic ambitions. The progress is reported and analysed in a NESC report. I mentioned this in the previous post as a promising example of the reflexivity our democracy needs. In this post, I draw attention to it for the light that it throws on problems of direction and control.

This report details five failures in the delivery of public services – in policing, education, disability services, residential and homecare for the elderly, and end-of-life care. Each can be seen as a failure of direction and control; each a case for standard setting, and performance monitoring. In each case regulations were introduced and improvements followed. No single regulatory model was deployed. Each area worked out its own path to improvement. NESC sought to find out what lessons could be learnt from the diverse experiences. The results are published in Achieving Quality in Ireland’s Human Services – A Synthesis Report. The report deserves a post on its own. Suffice for my purposes here to show how it illustrates the limitations of the centralising, bureaucratic ambition.

The first impulse when things go wrong and the Minister is pilloried is to remove, or reduce, discretion, and monitor performance more closely. Workers are instructed in greater detail how to reach more specific targets. Or, at least, that is the plan. It does not always work. A classic first year text in organizational analysis (Perrow 1971) explains why. The tasks set for a worker can be analysed in terms of stimuli-responses. A worker is expected to identify the correct responses to the stimuli presented to him in the course of his work. Two variables describe the salient features of a task: variety, referring to the number of different stimuli and unanalysability, the difficulty in deciding on the correct response. The greater the variety and unanalysability of the tasks, the more implausible the plan. The tasks of teachers, guards and nurses are, at least, moderately high on each dimension. The best that can happen when the plan is imposed in such circumstances is that it becomes an exercise in box ticking, which, while it may interrupt or slow down the work, does not interfere with it. The worst that can happen is that the plan succeeds. Then, the execution of the plan becomes the task, fulfilling the routines and meeting the targets, its purpose. A rigid ruler is applied to an indented edge and the true measure of the task is lost.

Bad though this maybe, surely, it is better than no regulation or control? Certainly, failures in the delivery of public services tell us that we need these. What the NESC study shows is that the best regulatory schemes are those that do not supplant the purposes of a task but assist in its achievement. They become both a stimulant for and a contribution to, the reflexivity that should accompany all tasks. They bring failures to notice, help explain why they occurred, and how they can be avoided.

Regulation as a learning process proceeds at two levels. It pushes an organization to assess and improve its performance. It also transforms the task of the centre that oversees the organization. It should ensure that regulatory schemes function properly. It should inform its strategy with the knowledge of what is happening on the ground generated by the process. The NESC report tells us that the benefits at level 1 are clearly seen. Those at level 2 are yet to be realised. I think it obvious that we are likely to lose these unless the centre adjusts its management style to support of level 1.

Conclusion

The NESC model is quite different from the bureaucratic idealism of the DPER. The latter seeks direction and control through the manipulation of incentives. Given the right performance measures and adequate monitoring, public servants will direct themselves to their organizations’ aims. The problem is the ‘right performance measures and adequate monitoring’ are not given. They have to be found and the DPER has no methodology for how they might be found in the various and complex tasks of the public service. The NESC study in showing how they can be found provides an altogether more realistic picture of the public service. We should be built on this to provide a new framework, or back story, for the much needed and long delayed modernisation of the public service. In our dire circumstances to persist with a framework that has failed here, and elsewhere, is irresponsible.

References

Boyle, R (2013) Fit for Purpose? Progress Report on Public sector Reform. Dublin: IPA

Boyle, R and MacCarthaigh, M (2011) Fit for purpose? Challenges for Irish Public Administration and Priorities for Public Service Reform. State of the Public Sector Research Paper No. 4 Dublin: Institute of Public Administration. 

NESC (2012) Achieving Quality in Ireland’s Human Services- a Synthesis Report Dublin: NESC

Perrow, C (1971) Organizational Analysis: A Sociological View London: Tavistock.

Further reading – pointers to a new framework

The classic article that drew attention to the importance of networks as a form of organization is Walter F. Powell ‘Neither market nor Hierarchy: Network Forms of Organization’ in Organizational Behaviour vol 12 1990 pages 295-336. For an Irish discussion see John A Murray ‘Networks and organizing: a puzzled resolved’ Chapter 11 in F.Litton, T, Farmar & F.Scott-Lennon Ideas at Work Dublin: A&A Farmar 2006. The same volume contains an excellent summary of contingency theory which identifies the strengths and weaknesses of bureaucracy in comparison with other organizational forms: G. MacKechnie ‘The evolution of the contingency theory of organization’. The concept of network plays a central role in my ‘The civil service: a defence?’ in J.Dunne, A. Ingram & F.Litton Questioning Ireland Dublin: IPA 2000.

No effort to modernize the public service can ignore the political environment. Pierre Rosanvallon has made major contributions to our understanding of the democratic project, its complex past and present dilemmas. Two books are especially relevant. Counter-democracy: Politics in an age of Mistrust Cambridge: Cambridge University Press 2008 and the book discussed in the previous post Democratic Legitimacy. Impartiality. Reflexivity. Proximity. Princeton & Oxford: Princeton University Press 2011. For a stimulating discussion of where the dynamics inherent in democracy are bringing us see Steven Bilakovics Democracy without Politics. Cambridge, Mass. & London, England: Harvard University Press 2012. For an historical perspective that helps identify how our political landscape has changed see Bernard Manin The Principles of Representative Government.Cambridge: Cambridge University Press 1997. While Manin focuses on representative institutions, Philip Bobbitt analyses the forces changing the character of western state from the 15th century in The Shield of Achilles; war, peace and the course of history. New York: Alfred A. Knopf 2002.

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  • The study of public sector reform is indeed a niche hobby Frank, even though it is difficult to find anybody opposed to its practice! There is as usual a lot of food for thought here, although you are perhaps underplaying the wider political and economic environment which is determining the current reform agenda and the prioritisation of reforms. This is of course not an Irish story – austerity-driven reforms across the OECD are occurring so quickly and with such variety that it is tricky to make an assessment of their trajectory (or direction as you put it), the theories underpinning them, or their common content (though I’m sure you have views on this!). Of interest is the manner in which traditional public service concerns about co-ordination, standardisation and control are to be combined with contemporary concerns over efficiency and public service innovation. Principles and values of ‘old’ public administration are re-discovered in this process as you suggest. On accountability, the shortcomings of the current system are well-rehearsed, and you are right to sympathise with the officials charged with finding a solution to these problems and anticipating the consequences of a new accountability regime (contractual or otherwise). What civil servants and Ministers are to be reasonably held accountable for, and the forum for doing this, inevitably brings up the issue of the capacity and quality of parliamentary committees, and the rules of engagement for investigating the allocation of responsibility. More accountability does not mean better accountability of course. But you might consider a separate blog on this issue?

    (Incidentally, to complete the link in relation to the very interesting work of the NESC you point to, from memory some of the Council’s ideas on capacity and implementation (from its 2010 report on ‘Re-finding Success in Europe: The Challenge for Irish Institutions and Policy’ fed into the original ‘Fit for Purpose’ document. Perhaps there is more agreement on the way forward than is recognised.)

    Muiris

    • franklitton

      Thanks Muiris. Of course you are correct. It is after all the Department of PUBLIC EXPENDITURE and reform. In these difficult times cutting public expenditure dominates the agenda. Talk of ‘modernisation’ is the ‘bullshit’ or flag-waving to help the medicine go down. Still it is hard not to be depressed by the tattered condition of the flag. Problems abound, the design for democracy creeks; what I find difficult to understand is why these are supposed to be problems with accountability.