26 February, 2011

Citizenry vs Customer Centric Approach in Public Management

(This paper was made as a response to a case called 'The busted DMV')

Dear Mr. Chief Minister,

I would like to thank you for your trust by reappointing me as the Director of Division of Motor Vehicle (DMV) of the ACT. I understand that my greatest challenge is to please all stakeholders and citizens of the DMV. The immediate concern that I have to deal is the various complain from different stakeholders; for example: the length of queue line and the unpleasant officers on handling the angers of our customers and citizens. These have been attracting media attentions and led to some political issues.

My assessment concludes that one important weakness at the moment is the quality of our communication to our stakeholders. We have been good so far with technological innovations such as information technology and credit card payment which have been running well. Although they were useful for customers, they did not entirely resolve the problems. Our core work, however, is human-to-human interactions which require different kind of innovation.

The key issue here is how we identify our stakeholders and define their values. The weakness in communication will never resolved unless we understand to whom and for what we should interact. Similarly, we will never make everybody happy except we know who they are and what would make them fulfilled.

Stakeholders are those outside of but are affecting or can affect the organization (Freeman 1991, p. 5). A public organization, such as the DMV, must deal with different kinds of stakeholders with 'very different statuses in terms of their moral right to make claims' (Moore 1994, pp. 300-301). A failure on understanding the DMV stakeholders would lead to a mishandling. For example, those who supposed to be the highest status to make claims—i.e. either because they sacrifice their liberty and privacy for government/public or because they have authority to make the claims—become the least to be listened. This may induce some ethical issues.

In the quest of maximising values, any organizations must satisfy the interests of its stakeholders (Jensen 2000). But for public organizations 'safeguarding interests' is not enough, they must 'adding values' actively (Alford & O'Flynn 2009, p. 176).

In short, understanding stakeholders is a key to be able to deliver values for stakeholders and citizens. But there are many kinds of them with different kind of preferences. The ability to distinguish them in creating values is crucial for improving the DMV's performance.

In response to the key issue, there are two alternative solutions:

Option-1: The DMV must focus to customer. I should perceive 'customer' as citizens the DMV encounters as its business end (Moore 1995, p. 37). Therefore, the motorists are the customer. In more precisely, they are our ‘client’ because they are ‘paying customers’ (Alford 2002, p. 340).

I will start by doing a client survey to understand the motorists’ preference of what things they would value. The survey should cover information on client’s current perception to the DMV’s performance, and what things should be achieved or done for improvement. I will also ask our clients to compare the DMV’s performance with other similar organization in other states or country. This is called ‘two-dimensional survey’ to benchmark our performance with respect to our “competitor” (Jablonski 1992, p. 113).

The understanding on the DMV’s clients that gained from the survey will be used to redefine our strategy. The strategy should cover vision statement and goal, policy, and operational plan which includes communication plan (Allison 1982, p. 17; Jablonski 1992, pp. 75-83). The strategy must guarantee the achievement of client satisfaction. The change in strategy should lead to the adjustment of the internal organizational components. This should include, when necessarily, the changes in organization structure (units and positions), procedure, and staffing (Allison 1982, p. 17). I will reassess our business processes to find out how we can make it shorter and simpler but still able to achieve our clients’ desires. That would change our working procedures which may lead to a modification of units and positions. I will review the staffing to ensure that all job descriptions and the staff capability support our clients’ expectation and to make it in line with the new organization structure. These changes should shorten the processing time to cut the lengths of the queue line. The improved staffing and provision of needed trainings will create capable staffs to handle the angers' clients. Parallelly, I will review our financial plan to secure the implementation of the new strategy and the changes in the internal organizational components. Finally, I will figure out if I need more authority and budget from the ACT government.

Although this option looks likely will lead us to have better client satisfaction, I will rely on you to resolve any bottleneck I may find such as need for more authority and fund.

Option-2: The DMV must focus to the citizenry. The fundamental difference with the first option, in terms of actions, is on redefining the strategy and managing the external constituency. Instead of doing client survey, I will do an integrated stakeholder communication. This should include citizens who do not need any DMV’s products and services. That is because government, particularly public manager, must help stakeholders and citizens at large to define and produce values (Moore 2000, p. 190). But the values must be in the form of 'shared values', rather than an aggregation of individual self-interests (Denhardt & Denhardt 2000, p. 555).

In the communication with all motorists in the ACT, I should understand how they can be more motivated to register their motor vehicles and making—or renew—their license in timely manner beside the fact that they are obliged to do so by law. It is also important to understand how they can cooperate better by being well-prepared for the required paperwork and payments before coming to the DMV office. Customers in public sectors are often clients and obligatees at the same time where we need their support not only for their compliance but also for their cooperation (Alford 2002, p. 341). In addition, the complaint-handling system must be improved to be more proactive and transparent.

I will talk to the Police Department to make them aware that their enforcement function is very important for the DMV. The motorists would have more motivation to comply their obligation on registering their vehicles and updating their license if the Police Department enforce the rules properly. I must advocate that to be the value of the Police Department. In social exchange theory, the coercion transaction—such as what happened in the DMV—will be more effective when the punishment administered contingently and consistently (Molm 1997, p. 269).

Tax payers, politicians and media are also important stakeholders to be engaged with. For example, if the only solution to improve the satisfaction required more resources and authority, instead of relying on you, I will take a role to convince them to provide support. For example, citizens may need to sacrifice their liberty more by bestowing their private money for taxes. Alternatively, I would ask for legitimacy from politicians, citizens and media to increase the payment rate of our service to be charged to our clients. This is my role, as a public manager, to mediate the collaborative efforts to achieve the shared values (Denhardt & Denhardt 2000, p. 555).

All of these efforts—on improving the management of external constituency to gain more supports and legitimacies from more stakeholders other than clients—will help to redesign the DMV's strategy and reshaping the internal component of the organization. The actions to do should be similar to the option-1, the difference is that the basis of the redesigning strategy and reshaping the internal organizational components should not based only on the clients' aspiration, rather according to different stakeholders and citizens at large as elaborated earlier.

Although this approach would be more successful due to the better civically engagement (Putnam 1995, p. 66), this will increase the potential of organizational instability due to the wider exposes to the outsiders.

Assessing the two solution options by applying the following criteria: (a) political equality, and (b) time-wise, option-2 is the most plausible solution.

The DMV, as a government organization, must not only provide private value to its customer but also public value to the citizens (Alford 2002, p. 340). The client-focus approach will create private value only. Moreover, public organizations must create both instrumental and intrinsic values (Moore and Braga 2004, p. 4). The instrumental value is more meaningful for citizens. For example, Although citizens without motor vehicles do not served directly by the DMV, they still expect the DMV acts justly to its customers. Citizens do not only concern to their self-interest but also to the ‘concern for the whole’ (Denhardt & Denhardt 2000, p. 552). Customer-oriented approach applied by government may lead to increased political inequality (Fountain 2001, p. 54); that is because the clients are the only to be served (as external constituency) while other stakeholders are mistreated. Option-2 could create a better political equality because the DMV will engage more stakeholders in defining and creating the shared-values.

Option-2 is more possible to resolve the DMV's problem within one year period. The citizenry-focus would attract more cooperation from the clients. They will be well-prepared as they come to the DMV office, for example. That could happened not only because they aware that they are obligatees but also because the DMV communicate better to clients and citizens (which includes motorists who have not become the DMV's client yet). Other stakeholders, such as the general citizens, media, and politicians, would be more fulfilled—at least for some instrumental values—because they engaged on defining values to be created by the DMV.

In conclusion, by applying option-2, we will make the stakeholders and citizens fulfilled through the improvement of our communications and other operational capabilities and a better management on external constituencies.

Sincerely yours, Ade Cahyat

References

Alford, J 2002, 'Defining the client in the public sector: a social-exchange perspective', Public Administration Review, vol. 62, no. 3, pp. 337-346.

Alford, J & O'Flynn, J 2009, 'Making sense of public value: concepts, critiques and emergent
meanings', International Journal of Public Administration, vol. 32, no. 3, pp. 171-191.

Allison, G 1982, 'Public and private management: are they fundamentally alike in all unimportant respects?', in FS Lane (ed.), Current issues in public administration, St. Martin's Press, New York, pp. 13-33.

Denhardt, RB & Denhardt, JV 2000, 'The new public service: serving rather than steering', Public Administration Review, vol. 60, no. 6, pp. 549-559.

Fountain, J 2001, 'Paradoxes of public sector customer service', Governance, vol. 14, no. 1, pp. 55-73.

Freeman, RE 1992, Business ethics: the state of the art, Oxford University Press, New York.

Jablonski, JR 1992, Implementing TQM: competing in the Nineties through total quality management, 2nd ed., Pfeiffer, Amsterdam.

Jensen, M 2000, 'Value maximization and stakeholder theory', HBS Working Knowledge, viewed 21 February 2011,

.

Molm, LD 1997, Coercive power in social exchange, Cambridge UniversityPress, Cambridge, UK.

Moore, MH 2000, “Managing for value: organizational strategy in for-profit, nonprofit, and governmental organizations.” Nonprofit and Voluntary Sector Quarterly, vol. 29, no. 1, pp. 183-204.

——1995, Creating Public Value: Strategic Management in Government, Harvard University Press, Cambridge, Mass.

——1994, “Public value as the focus of strategy.” Australian Journal of Public Administration, vol. 53, no. 3, pp. 296-303.

Moore, MH & Braga, A 2004, “Police performance measurement: a normative framework.” Criminal Justice Ethics, vol. 23, no. 1, pp. 3-19.

Putnam, R 1995, “Bowling alone: America's declining social capital.” Journal of Democracy, vol. 6, no. 1, pp. 65-78.

18 February, 2011

New Public Management vs Public Value Management

(This paper was made as a response to a case called 'The education of the police police commissioner')

Introduction

The most obvious result to be expected from a police department is to have a reduced number of crimes. That was also what expected by the President to Mayerbeer who appointed to become the new Chief Executive Officer (CEO) of the National Police Force (NPF) in 1997. In addition, the new country's constitution demanded for improvement of political accountability of the NPF and to make it subject to government and civilian oversight.
Mayerbeer brought his knowledge and experiences from his previous assignment in a brewery company called NAB which was moving to be the second largest brewery in the world. The new assignment was a great challenge for him, not only because he came from private sector but also because the NPF was in a transition of a major organizational reforms. Unfortunately, at the end of his term in office, he was end up with a failure. Number of serious crime was significantly increased. But the most shocking one is that he even failed to improve the operational capacity of the NPF. Many police stations were running with insufficient facilities and resources such as pen and papers and patrol cars. Operational capacity is something that Mayerbeer should have as his strength as a former CEO of a success big company.


Critical issue

The critical issue of the failure of the NPF under Mayerbeer's leadership is a lack of public sector management and leadership approach.

The public administration has been evolved from the ancient kingdoms with increasing demand for reorganizations following the changes on jurisdiction, functions, and political civilization which led to the transformation from the kingship to the traditional model of government administration in the 19th century (Caiden 1982, pp. 7-11). In the early 1980s, the bureaucracy reform began and developing what we now know as New Public Management (NPM) (Hughes 2003, pp. 2-4). Among of major characteristics of the NPM are performance based and customer-centred (Stoker 2006, p. 50; Borins 2002, p. 191).

Over the last decade or so, the NPM has been under serious attack from many scholars. Jouke de Vries concludes that NPM, although not really dead, is in trouble (2010, p. 5).
The latest, and still developing, idea on public management and leadership is public value management (PVM). One major characteristic is that the PVM encourage more public organizations and managers to get exposed to political marketplace (Moore 1994, p. 297). The aim is to maintain support and legitimacy which would help to create public value directly as well as indirectly through the improvement of the public organization operational capability (Moore 1995, pp. 22-23). Another difference is that under the PVM public manager required to be more adaptive in terms of determining the means to achieve the broader ends of public organization; that is public value (O'Flynn 2007, p. 360-363).

The pressure to public organizations to be more effective and efficient has been increasing in line with the growing of public sectors size and better quality of democracy. But at the same time people have bad perceptions on public bureaucracies such as red-tape seeker, unpleasant officials, poor service and corrupt practices (Caiden 1991, p. 74). By contrast, the private sector performance is considered to be better than public sector (Vigoda-Gadot & Kapu 2005, p. 261).


Alternative solutions

Option-1: Apply the NPM model

Mayerbeer should focus on the NPF's customers. The most obvious ‘customers’ for a police department such as the NPF are those who seek for the police assistance (Moore & Braga 2004, p. 6). He would talk to elected politicians but only to the senior ones, included the President as his boss, to help him to set the NPF’s performance targets. In order to make the targets easy to be measured, he must prefer to have outputs rather than outcomes .
Mayerbeer should concentrate on management to achieve his performance target with the available resources and authority permitted by the elected politicians. He must concern on things outside of his organization, but it should be limited to their customers, competitors and things that would shift their customer’s value in the future time (Moore 1995, p. 65-7)
Mayerbeer should charge some of the NPF’s products which are excludable, such as the driver license, to his customers. This must provide the NPF economic profit and help the NPF to get financial surplus.
He must ensure all standard procedures and expenditure plans are set to achieve the performance target. Flexibility might be possible to some extent but certainly not to anticipate the change in the political environment. All managers under him must be committed to cost-efficiency. Therefore, the structure of the organization must be slim as much as it can.
Although this approach could produce a neat strategic plan, it would lead the NPF to create things valueless to the public. Moreover, there is no guarantee at all that all activities will be implemented and all outputs will be achieved. Without sufficient political support and legitimacy, the NPF would suffer with limited resources.

Option-2: Apply the PVM model

Mayebeer must manage the NPF to provide values to the citizens of his nation. He should not limit his work in internal component of his organization, rather to expose himself to the political context of his organization. He must continuously interact not only with politicians in different levels but also with citizens from different interest groups. The interaction aims to understand what things citizens would value most—both for individual desires and political aspiration—which the NPF could or should achieve, and also to gain supports and authority for the NPF to act on behalf of the nation.
Mayerbeer must concern on performance targets of the NPF, but they must be on outcome level which meaningful for citizens. The performance target must be subject to change according to the changing environment.
Mayerbeer must define carefully who the customers, clients, subjects and different kind of stakeholders of the NPF . He should not work for citizens who seek for the NPF assistance only, but also with those who have obligations to contribute to the creation of a safe environment as well as to understand the political aspiration of the general citizens. He thus set a stakeholder management strategy to maintain an effective network to to achieve citizens' desired values.
When necessary, Mayerbeer should be able to convince citizens to pay more taxes and advocate politicians to provide more resources and authority if he believes that what currently available do not sufficient to create public values in the most efficient way the NPF could do. He must be able to make citizens understand that they still would get higher value compare to the money they should pay for taxes. It is also important to ask support from citizens to be able to sacrifice some part of their liberty and privacy for the achievement of public value.
In regard to a the driver license service, as an example, he should concerns more on the objective to have a safe traffic environment rather than number of driver licenses they produce and amount of money they collect. Therefore, he should make sure that the driver licence service works effectively which should assure that all people with the license will most likely behave well on the roads. Time to spend of license processing is important, but that is not the ultimate objective. There is no point of the NPF to produce a license for every 15 minutes, for example, if most of the drivers with license drive crazy on the roads.
Although the interactions with citizens and political actors are more intensive in this approach, the possibility of the NPF lost its way is still there. This option requires more flexibility in planning and performance targets. Therefore, without capable managers on applying an adaptive management approach, the NPF would go everywhere and will not achieve public values.


Proposal

By applying the following criteria: (a) possibilities to meet public expectation; (b) resiliency on dealing with democracy and management at the same time, option-2 is more plausible to make the NPF works better.
The first criterion is important because the aim of public management is to meet public expectation. As a public organization, the NPF acts on behalf of public, consuming public resources, and the benefits or the losses they made would directly affect public (Rainey 1991, p. 24). Option-1 may achieve their performance targets, but it does not necessarily meet public expectation. That is because in option-1, the NPF would work mostly on its own way without continuously consulting to its stakeholders. By contrast, option-2 would have more possibilities to be in line with citizens’ aspiration because the NPF maintain the network to achieve the public expectation. The network would not only help the NPF work on the right direction but also to help the NPF to strengthen its operational capacity.
The second criterion is crucial and unique to public management. And it is particularly important because the NPF was on the process of a major organizational reforms which involve different interest groups included ethnicity. In order to achieve its objective, public management must be succeeded on dealing with both democracy and management at the same time. Option-1 tends to work very minimal in politic. This could make the NPF either as a victim of politicians (if the NPF weaker than the politicians) or take control the politicians for its own interests. Option-2 would make the democracy and management go hand in hand through maintaining the stakeholder network to achieve public values and strengthening the operational capacity of the NPF. In short, option-2 would make the NPF more effective and efficient.

References

Alford, J & O'Flynn, J 2009, 'Making sense of public value: concepts, critiques and emergent
meanings', International Journal of Public Administration, vol. 32, no. 3, pp. 171-191.

Borins, S 2002, 'New public management, North American style', in K. McLaughilin, S.P. Osborne, & E. Ferlie (eds), New Public Management: Current Trends and Future Prospects, Routledge, London, pp. 181-194.

Caiden, GE 1982, Public administration, Palisades Publishers, Pacific Palisades, Calif.

—— 1991, Administrative reform comes of age, W. de Gruyter, Berlin, New York.
Hughes, OE 2003, Public management and administration: an introduction, Palgrave, New York.

Mintzberg, H 1996, 'Managing government, governing management-balancing the private and public sectors', Harvard Business Review, vol. 74, no. 3, pp. 75-83.

Moore, MH 1995, Creating public value: strategic management in government, Harvard University Press, Cambridge, Mass.

—— 1994, 'Public value as the focus of strategy', Australian Journal of Public Administration, vol. 53, no. 3, pp. 296-303.

Moore, MH & Braga, AA 2004, 'Police performance measurement: a normative framework', Criminal Justice Ethics, vol. 23, no. 1, pp. 3-19.

O'Flynn, J 2007, 'From new public management to public value: paradigmatic change and managerial implications', Australian Journal of Public Administration, vol. 66, no. 3, pp. 353-366.

Rainey, HG 1991, Understanding and managing public organizations, Jossey-Bass, San Francisco.

Stoker, G 2006, 'Public value management', The American Review of Public Administration, vol. 36, no. 1, pp. 41 -57.

Vigoda-Gadot, E & Kapun, D 2005, 'Perceptions of politics and perceived performance in public and private organisations: a test of one model across two sectors', Policy and Politics, vol. 33, no. 2, pp. 251-276.

de Vries, J 2010, 'Is new public management really dead?', OECD Journal on Budgeting, vol. 2010, no. 1, pp. 1-5.