Experiencing new public management: employee reaction to flexible work practices and performance management

Abstract

Performance measurement in the public sector has been problematic compared to the private sector. This is due to the absence of a readily identifiable and measurable single goal. Notwithstanding, better performance and the measurement of it significantly underpins the ‘New Public Management’ (NPM) philosophy, which has been widely adopted in various forms throughout much of the English-speaking western world. NPM, although amorphous and variously defined, represents broadly a descriptive approach to the adoption of private sector management, reporting and accounting methods in the public sector. The 1980s saw the beginnings of purposeful change in realigning the public sector with NPM philosophies. Hood's (1991) identification of the manifestations of NPM, the 'steering not rowing' metaphor from Osborne and Gaebler’s (1992) Reinventing Government, and support for NPM through the Thatcher administration and in the Clinton election campaign, gave form to theory, and provided a catch-all for innovation and change more generally occurring (Dunleavy and Hood, 1994; Denhardt and Denhardt, 2000). \n \nThe themes of NPM became firmly established within the Australian public sector through the National Competition Policy (Hilmer, 1993). This policy was agreed to by all state governments in Australia stipulating that 'all business should be subject to the market unless it constitutes core operations; micro-economic reform; a push for efficiency and effectiveness in the provision of services; and efforts to provide greater choice and more holistic services for clients' (in Chalmers and Davis, 2001: 80). The public sector in Australia therefore adopted various NPM practices including the implementation of hands-on professional management, explicit standards and measures of performance and a stress on private sector styles of management practice (Hood, 1991). \n \nContemporaneous to the implementation of most aspects of NPM in Australia, the industrial relations system was subjected to increasing decentralisation. A system of enterprise level bargaining largely replaced a central system of national and state awards. The objectives of the new industrial relations system were to address productivity improvements at workplace level. In 1994 the enterprise bargaining framework was implemented in the public sector to provide the institutional means to organise workplace arrangements in which pay rises were linked to increased efficiency and productivity. This provided the impetus and the environment necessary for the implementation of performance measurement, performance management and more flexible work arrangements. \n \nThis paper considers the impact of the implementation of performance management and flexible work practices on quality of work and staff morale within a large public sector agency in the state of Queensland. A review of the public sector and industrial relations environment in Australia is conducted that demonstrates how the institutional arrangements were conducive to the implementation of NPM philosophies. A case study is then presented wherein a survey of innovative HRM practices implementation was administered to a sample of approximately 170 work groups in the participating agency. This was followed three months later by a climate survey of all staff (n=4,300). Detailed analysis using structural equation modelling showed that flexible work practices were particularly important to job satisfaction, quality of work life and stress; incentive practices were positively related to morale; and work design practices were not uniquely related to the outcome variables selected. Concurrently, qualitative data was gathered through a series of interviews and focus groups and analysed in regard to staff's perceptions and experiences of flexible work practices and performance management. \n

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