An interview with Richard Norman
Interview by: Alistair Craven
Dr Richard Norman of Victoria University, Wellington, specializes in researching lessons from New Zealand's experience of 'reinventing' its public sector systems.
During 2003, he published a book 'Obedient Servants? - Management Freedoms and Accountabilities in the New Zealand Public Sector','which summarizes findings from his PhD study on this topic. He is also director of two annual seminars focusing on public sector reform issues, conducted in Wellington for the Commonwealth Secretariat.
Earlier research has included a case study about financial management reform and studies of twelve public service functions, including the delivery of weather forecasting, foreign affairs, the collection of court-imposed fines, delivery of scientific services, defence and the review of school education. He is currently developing a series of case studies for the Australia New Zealand School of Government for a project supported by the Commonwealth Secretariat and New Zealand State Services Commission.
In your opinion, what are the biggest challenges facing public sector managers in New Zealand?
The major issue is how to achieve more effective collaboration across organizations which were created in the late 1980s and 1990s to deliver narrowly specified outputs. Before 1984, New Zealand had a unified public service, with personnel policies made centrally by a small number of employing authorities. Authority to hire staff and manage finances was then delegated to more than 200 employing authorities. Along with the efficiency and innovation that this structural change fostered has come fragmentation of effort, leading to citizens experiencing different approaches from a number of agencies.
The Labour-led coalition government, in power since 1999, has sought to emphasize collaboration rather than competition. It legislated for this with a 2004 Public Management Act, which extends the power of the State Services Commission to monitor ethical standards and employment contracts across most of Central Government - which in New Zealand accounts for 90 per cent of public sector activity. (Local Government is rates funded and focuses largely on land based services).
One of your co-authored papers examines performance management in New Zealand's public sector. In your opinion, are public bodies investing enough time and expertise into performance management systems?
Accountability for performance has been a major theme in the New Zealand system, with Chief Executives of the core public service employed on five year contracts, subject to annual performance reviews and feedback from Ministers and a range of stakeholders. Chief Executives for agencies are responsible to their boards. Generally, up to ten per cent of remuneration is dependent on performance. Financial results and progress against targets are monitored by the Audit Office, the Treasury and the State Services Commission. For some sub-contracted services, such as scientific research and health, delivery agencies are monitored by agencies responsible for funding and policy.
New Zealand has probably gone overboard with its emphasis on accountability, having invested significantly in the early 1990s to create effective financial reporting systems, and an auditable system for performance targets. Concerns that this form of accountability has led to a preoccupation with narrowly defined outputs has led to recent emphasis on outcomes, and the introduction of a new 'strategic intent' framework for corporate planning. As an alternative to accounting-based control, considerably more time and money has been invested in training and education with the intention of re-establishing a sense of identity and purpose among career public servants.
How do you rate, overall, the performance of New Zealand's public systems and services in comparison with the approach taken in, say, the United States?
New Zealand, along with other Parliamentary systems, benefits considerably from having its executive and legislative functions contained within a single elected body, the House of Representatives. New Zealand's system is less complicated than other Commonwealth countries through having only a single tier Parliament. This system is considerably less complicated than that in the United States, with its separation of powers. The governing party can set expectations for performance through strategic plans and the annual budget cycle, and can influence - but not directly manage - the performance of Chief Executives. New Zealand has maintained a neutrally competent public service through the means of a central personnel authority, the State Services Commission, which appoints chief executives for a majority of government agencies and monitors their performance.
Career public servants in New Zealand can aspire to strategic roles which in the United States system are generally reserved for political appointees. That's a major obstacle in the way of improving performance in American public organizations - why would the most talented and ambitious graduates want to enter public sector employment when faced with such a ceiling on their potential achievement?
Change is often a widely debated topic in the field of management. What notable changes have you observed in New Zealand's public sector over the last decade?
The period of major change for New Zealand was between 1985 and 1993 when virtually every government organization was restructured in keeping with the 'New Public Management' philosophy of the period, which introduced private sector methods of financial and personnel management and strategic planning to all government organizations. Such change continued with throughout the 1990s, reaching a peak in 1997 with more than half of the core public service organizations undergoing reorganization. Change fatigue followed, with the Government elected in 1999 being far less ready to adopt structural change as its first option.
"Career public servants in New Zealand can aspire to strategic roles which in the United States system are generally reserved for political appointees. That's a major obstacle in the way of improving performance in American public organizations - why would the most talented and ambitious graduates want to enter public sector employment when faced with such a ceiling on their potential achievement?"
A different form of change has occurred since 1999, with incremental restructuring, in most cases bringing policy and delivery functions back within a single organization. Change intended to achieve clarity of purpose has been followed by change intended to achieve more effective cross-organizational solutions. The other major recent change is a reinvestment in capability, an issue which came to be of major concern to the State Services Commission from the late 1990s, as it faced a shortage of applicants for Chief Executive roles. The break-up of large organizations was a reduction in the range of experiences open to career public servants. Major effort is now going into cross organization training and education, encouraging secondments, and Masters level study with the Australia and New Zealand School of Government, founded in 2003 to address similar issues in both Australia and New Zealand.
In 1997 you authored a paper about the motivation of public sector servants. What were your key findings in this area?
Variety and challenge are the major motivators for second level public service managers, with the opportunity to lead and exercise power being stronger for Chief Executives.
What American researcher Robert Denhardt terms 'the pursuit of significance' is a useful way of expressing the drive of dedicated public servants to make a difference. Such motivation is a vital counterweight to the negativity that often arises in the fishbowl of oppositional politics, where a single politically embarrassing error can undermine years of constructive work.
What are your thoughts on the introduction of performance-related pay in public service management?
In the late 1980s this was seen almost as a magic solution for public sector performance. By the late 1990s, bonuses were receiving news headlines around the theme of 'pigs with their snouts in the trough'. Establishing meaningful indicators on which to base pay for performance is difficult enough in the private sector, as numerous scandals internationally have revealed. In reality, public sector performance pay in New Zealand has effectively been restricted to 'pay at risk' for Chief Executives, and then the amount at risk is about ten per cent of the total. Pay for performance systems throughout an organization can consume more executive time than the value they create, creating staff discontent over relatively small pay differentials. While much talked about and tested fifteen years ago, pay for performance is now given little prominence.
As an authority on the practice of international public management, are there any "universal truths" or words of wisdom you can offer to public sector managers reading this interview?
The only universal truth is that public sector managers must wrestle with intellectually difficult issues and be able to tolerate ambiguity.
I explored these issues in the book 'Obedient Servants? Management Freedoms and Accountabilities in the New Zealand Public Sector.' From interviewing 90 public servants, I concluded that the private sector-style performance management systems introduced in the late 1980s created a series of dilemmas or paradoxes for public managers. For instance, being clear about objectives is a classic principle of private sector management. In the public sector however, objectives are frequently not clear because they are subject to a range of political interpretations. Holding people accountable for results seems to be an unexceptional principle until one examines the unintended consequences that can arise when people follow accountabilities too narrowly.
There is perhaps one other universal truth about public management - that simplistic exhortations of the 'seven easy steps' variety can be seriously misleading. Simple lists of exhortations - seven easy steps to effectiveness as a public manager - misrepresent the nature of the role. The major challenge for any public manager is to have a diverse toolkit of concepts with which to analyze and make sense of the competing forces that shape his or her work.
Finally, what article or book has had the most profound effect on your professional outlook, and why?
As someone who took up a university role after 20 years in a variety of other work, I've found considerable value in a book with a title which at first sight sounds sleep inducing. The book is 'Administrative Argument', by Christopher Hood and Michael Jackson, Dartmouth Publishing Co, Aldershot, 1991.
During Thatcher's public sector reforms in Britain, the authors assembled historical and philosophical arguments about the 'what, who and how' questions of how best to organize public services. The result is 99 'doctrines', a number chosen to represent the variety of possible fashions of administration rather than a finite number. For each doctrine, there is invariably a set of arguments about why its opposite might be more appropriate. For instance, equally strong arguments can be made for centralizing and decentralizing an organization. The book provides a framework for thinking about fads and fashions of reform, and a source of argument to challenge those who get caught in a cycle of reform for the sake of appearing to do something.
To find out more about Richard Norman, please visit his website.