Public Sector Reform

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    • 00:10

      NORMAN FLYNN: Hello, my name is Norman Flynn.And I am the Director of the Center for the Financialand Management Studies at the School of Oriental and AfricanStudies, University of London.I'm going to talk about public sector reform, whichis the process of changing the way peoplework in the public sector and the waythe state relates to the citizens.And in my experience, public sector reform

    • 00:31

      NORMAN FLYNN [continued]: happens in four phases.There's a basics phase, which is about tidying things up, makingsure people are working properly and so on.And then, there's what's known as the second generationreforms, which is a more elaborate process of changingthe way organizations are managed,the way people are hired, the way people are promoted,

    • 00:52

      NORMAN FLYNN [continued]: and the way people are paid.And then, there's what's become known as the third generation,a phrase which was coined by John Halligan from Australia,where public services try to become moreresponsive to the citizens, try to become morefocused on performance and outcomes,

    • 01:12

      NORMAN FLYNN [continued]: and make themselves a little bit more like businesses.Of course, since the financial crisis in 2007, 2008, 2009,there's been a fourth phase of changes,where governments have responded to retrenchment,have responded to shortage of cash and a needto reduce overdrafts or deficits of governments.

    • 01:37

      NORMAN FLYNN [continued]: And this has brought a whole new set of changesto the public sector.So I'd just like to talk through each of those phases in turn.So the first phase, the basic public sector reform,is partly about making sure that people are doing the job

    • 01:60

      NORMAN FLYNN [continued]: that they were hired to do.This may sound very simple, but quite often, people's jobdescriptions get out of date.They're asked do things which they were neverhired to do in the first place.And secondly, we find, around the world,that people are appointed to positionsin the public sector for which they have no qualifications.It used to be quite common even in the British Civil Service

    • 02:22

      NORMAN FLYNN [continued]: that the qualification for entering the civil servicewas a degree from Oxford or Cambridge,and no further training required.So part of the basics reforms was to try and fit peopleinto jobs which they actually had the skills for.And secondly, when governments do this basic reform,

    • 02:46

      NORMAN FLYNN [continued]: they increase the amount of trainingthat people have to do.So they identify the skill set required,and they train people to do the job they've been hired to do.Now, you may think that government should alreadyhave done this basics type reform,but this is not the case.We find, for example, that the British government, even

    • 03:08

      NORMAN FLYNN [continued]: in 2014, was very pleased to say that finally it had appointedpeople to the position of AccountingOfficer in departments who actually hadsome training in accounting.And so, it's taken them over 20 yearsto do this pretty basic change.

    • 03:31

      NORMAN FLYNN [continued]: The second phase is trying to improve the managementprocess in various, slightly more sophisticated waysthan simply asking people to do the job they're paid for.It includes things like introducing performancemeasurement and performance management, so thatrather than simply hiring people to occupy a position,

    • 03:52

      NORMAN FLYNN [continued]: they are hired to perform to a standard whichis set by their management, and ultimately,set by the government.This may include performance relatedpay where, in the British civil service,for example, almost all pay systems nowhave an element of performance related pay in them.

    • 04:15

      NORMAN FLYNN [continued]: And another element of the second generation reformsis about gender equality.It's been a very large part of many governments' agendasto bring about gender equality not justin terms of who is hired and who is promotedwithin the public service, but gender equality in terms

    • 04:35

      NORMAN FLYNN [continued]: of service delivery, making sure that women and men getthe same access to services, such as educationhealth, social care, and so on.Now, this second generation reformincluded what became known in some circlesas new public management.

    • 04:56

      NORMAN FLYNN [continued]: And new public management had two themes to it.The first was the introduction, or extension,of markets in the public sector whereby private companies wereinvited to tender for the right to deliver public services.And now, in the UK, for example, roughly 30%

    • 05:18

      NORMAN FLYNN [continued]: of expenditure by government is actuallyspent with the private sector acquiring goodsand or services from the private sector.The second theme of the so-called new public managementwas introducing an ugly term, managerialism,where managers were asked to manage

    • 05:39

      NORMAN FLYNN [continued]: rather than simply occupy positions or administerthe law.This was less of a problem in the United Kingdom'scivil service than in some European countries,where in Germany, for example, civil servants are protectedby the Constitution and their position isdefined in the Constitution and their task is simply

    • 06:01

      NORMAN FLYNN [continued]: to enact laws.In the United Kingdom, it was rather easierto introduce managerialism, by which they meant improvingperformance not necessarily through performancerelated pay, but by giving peoplea lot more discretion about the resources that they controlled,

    • 06:23

      NORMAN FLYNN [continued]: including spending on equipment, spending on services,and of course, spending on staff.So people were asked to rearrangethe inputs they were given in ways that improved the outcomesor the performance of their section,or their school, or their department, or their unit.

    • 06:50

      NORMAN FLYNN [continued]: Now, this set of reforms, known as the second generationreforms, created certain problems, one of whichwas that people were very narrowlyfocused on the particular tasks they were doingand the performance targets that they were given.The second was that the management, or managerialism,

    • 07:12

      NORMAN FLYNN [continued]: took people's attention away from policy issues.And so, civil servants especially,and local government officers, and health service managerswere focused on a narrow range of targetsand a narrow delivery of service, and focused awayfrom the big policy issues, such as community care,

    • 07:32

      NORMAN FLYNN [continued]: such as the overall performance of the education system,such as the collaboration between local authoritiesand health authorities in care in the community.So there came a third generation of reforms,which was designed, if you like, to solve the problems caused

    • 07:55

      NORMAN FLYNN [continued]: by the second generation reforms.And these were started not in the United Kingdomas it happens, but mainly in Australia and NewZealand, which had been ahead of the curveto some extent on the second generation performance reforms.The third generation reforms included such thingsas joining up departments and services again

    • 08:20

      NORMAN FLYNN [continued]: to compensate for the fragmentation that had beencaused by the focus on targets.And in Australia, for example, ministersstarted to take portfolios, which did notinclude running departments, especially at state level,such as Queensland and New South Wales.Ministers were left in charge of policies

    • 08:43

      NORMAN FLYNN [continued]: rather than trying to run departments.Another aspect of the third generation reformswas that departments themselves were more focusedon results or outcomes than focused on narrow servicedelivery.And the whole management process switchedfrom efficiency targets, which where targets about how cheaply

    • 09:06

      NORMAN FLYNN [continued]: you could generate an output, such as a child educatedin a class, a patient treated in a hospital,and more focused on outcomes or results,so the health of the nation, the skills and attributesof children as they emerge from the school system

    • 09:28

      NORMAN FLYNN [continued]: rather than simply their exam results.And this outcome orientation requireda strengthening of the policy process itself,so that people wrote policies not for primary schools,or for primary health care, but for the educational outcomes

    • 09:49

      NORMAN FLYNN [continued]: of people as they worked their way through the school system,or the health outcomes as people workedtheir way through their lives.And this led to a focus on, for example in health care,on prevention rather than cure.Now, this process of focusing on outcomesredirected people's attention towards the customer,

    • 10:12

      NORMAN FLYNN [continued]: towards the citizen, and towards the people receivingpublic services rather than the civil servants,and professionals, and others delivering public services.One implication of these third generation reformsis that people required a whole different set of skills.

    • 10:33

      NORMAN FLYNN [continued]: If you're focusing on the outcome for the citizen,then you're not focused on your department.You're focused on everybody who needsto contribute towards solving that citizen's problem,or helping them solve their own problem.And this started to require, firstof all, networking skills, so that peoplecould talk to each other.Police could talk to social workers.

    • 10:54

      NORMAN FLYNN [continued]: Social workers could talk to health professionals and so on.But combined with the second generation reformsof contracting out and using private sectorand voluntary sector to provide services,it also required skills of commissioning and procurement.And so, civil servants, who had traditionally

    • 11:14

      NORMAN FLYNN [continued]: been required to work according to a set of rulesin a hierarchy, were suddenly askedto work with people outside their organizationin a variety of ways, either collaborating with them,or commissioning them, and making surethat they worked according to the contractsthat they had set.And this led to a whole new set of training and development

    • 11:35

      NORMAN FLYNN [continued]: for public servants all around the world.Now, the third generation reformswere reasonably well entrenched when the financial crisisstruck in 2007, 2008.And governments all around the worldstarted to cut expenditure on public services

    • 11:56

      NORMAN FLYNN [continued]: and incurred huge deficits bailing outthe banks, which then required to becut in the subsequent years.After the financial crisis, I guesswe have what could be called the fourth generationreforms in response to retrenchmentand cuts in expenditure.In the early days, this was a relatively simple task

    • 12:19

      NORMAN FLYNN [continued]: of what became known as salami slicing of budgets, wherepeople took budgets and took 3%, 4%, 5%, up to 10%off their budget in subsequent financial years.But over time, this was insufficient to actually reducethe deficits.So as well as increasing taxes, which most governments did

    • 12:43

      NORMAN FLYNN [continued]: during 2010, 2011, and 2012, governmentswere faced with the problem of actually stoppingdoing some of the things that governments previously did.So instead of trying to increase efficiency, whichthe second and third generation reforms had been about,the fourth generation reforms were actuallyabout trying to get to the core of what governments

    • 13:06

      NORMAN FLYNN [continued]: need to do and avoid doing what were the nonessential services.And this is why, around the world,we've seen cuts in things like library services,where these are not statutory requirements,and in any case technology is changingand governments are saying, why should the public sectorbe running libraries?In my borough in London, the councillors

    • 13:27

      NORMAN FLYNN [continued]: decided that public toilets are no longer an essential.We are very upset about this.The Camden Council had the first women's public toiletin the world.And it's now going to be 20 pencea time to visit this toilet.The other main element of the fourth generation reformsas a result of the financial crisis

    • 13:47

      NORMAN FLYNN [continued]: is an acceleration in outsourcing.And in the United Kingdom, for example, from 2010,2011 onwards, the amount of outsourcinghas increased by about 5% per annum.And so, governments are relying on the use of competitionand reduction in the pay of people deliveringpublic services, those people who

    • 14:10

      NORMAN FLYNN [continued]: are working for the outsourcing companies,to get the same amount of servicefor a much smaller amount of public expenditure.They think that outsourcing will increase efficiencyin the sense of cutting the unit cost of public services.Another element, as well as outsourcing,

    • 14:33

      NORMAN FLYNN [continued]: which particularly local authorities are doing,is realizing that if they share certain services,such as the services of the personnel department,human resources department, or the finance department,or even the chief executive's department,they can make savings.So London boroughs, for example, aresharing some of these services among two, three,

    • 14:55

      NORMAN FLYNN [continued]: or more boroughs.And we're finding not only are people sharing the activities,but sharing the outsourcing.And so, a group of boroughs will be outsourcingto the same company, for example, the task of collectingcouncil tax.

    • 15:16

      NORMAN FLYNN [continued]: We've been talking about public sectorreform in four phases, the basics, the second generationreforms, which were about improving efficiency,the third generation reforms, which were about improvingpolicymaking and effectiveness and outcomes,and the fourth generation reforms, which

    • 15:37

      NORMAN FLYNN [continued]: were a response to the financial crisis.Now, it's important to remember that none of these phasesactually stop.Even basics, such as getting the job descriptions right,making sure that people are qualified for the workthat they do, continues through second, third,and fourth phases.So governments are still faced with the problem

    • 15:58

      NORMAN FLYNN [continued]: of getting the right skills, hiring the right people to dothe job, even though you may havethought that the basics were solved 10 or 20 years ago.Even the last generation reforms,in response to the financial crisis,contains some elements, as we've seen, of,for example, contracting out or outsourcing,

    • 16:21

      NORMAN FLYNN [continued]: which was really part of the second generation reforms.So don't imagine that each phase is a self-contained phase whichgoes away and gets replaced by the next one.In practice, each four of these phasesare going on at the same time.And who knows?If we ever get back to a balanced budget

    • 16:43

      NORMAN FLYNN [continued]: and we stop having to make cuts in public expenditure,maybe there will be a fifth phase,which is curing the problems causedby the fourth phase of cuts becauseof the financial crisis.Let's hope so.

Public Sector Reform

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Abstract

Professor Norman Flynn discusses the four phases of public sector reform. The first phase focuses on workplace efficiency. The second moves into management and performance. The third emphasizes outcomes. The fourth arose from the financial crisis of 2007-2009, and it sees governments restructuring to reduce costs and services.

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Public Sector Reform

Professor Norman Flynn discusses the four phases of public sector reform. The first phase focuses on workplace efficiency. The second moves into management and performance. The third emphasizes outcomes. The fourth arose from the financial crisis of 2007-2009, and it sees governments restructuring to reduce costs and services.

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