The introduction of free market principles and practices into the public sector. These reforms are designed to make public utilities more efficient, economical and effective in carrying out their business, whilst remaining accountable to government (and not to the rent seeking interests of bureaucrats). Sometimes abbreviated as NPM.

Bureaucratic models of governance emphasise roles, responsibilities and rules. Safe and stable, but there is no incentive for anybody to use their own initiative. Therefore work flows are suffocated as low level staff members rely on a tiers of middle managers to obtain decisions.

Instead NPM empowers staff members to make decisions, guided by a set of over-arching corporate values. Rules are not spelt out to employees, but rather a vague set of expectations and model behaviours are provided. That corny poster by the photocopier showing a triumphant rock climber is not there as eye candy; it is there to encourage you to re-engineer the invoice allocation process the way you think it should run. NPM believes in making managers manage, rather than checking if lower-grade schmoes have breached the rules in some way.

One corporate value that invariably appears at the top of the list concerns customer satisfaction. Everything the organisation does should directly or indirectly serve the needs of the customer. Otherwise the organisation has no need to exist. Thus NPM organisations are typically measured according to how well they improve the well-fare of their customers (eg: literacy rates), rather than simply count outputs (eg: amount of classtime provided).

NPM is not about privatisation necessarily. However it believes in breaking down large organisations into separate, autonomous, self-funding units who compete for business (just like in the real world). If a private company can do a job better than any work unit within your organisation, then it ought not be done in-house. Non-profit organisations that have streetwise exposure to delivering services, such as churches, the Red Cross, Salvation Army etc might also be engaged by the government on contract.

One principle designed to enforce accountability is the purchaser-provider split - separating the organisation that wants the work done (such as the government ministry) and the public utility providing the serice. Contract law is then used to determine who is responsible to do what at what level of quality. The purchaser is left to get involved with strategy and forward thinking, leaving the provider to worry about day to day problems.

NPM came in around the 1990s, particuarly in Britain and later in New Zealand, Australia and the United States. The IMF encourages developing nations to adopt NPM if they are not going to privatise lock, stock and barrel - Chile and Slovenia are examples. NPM organisations include telecommunication companies, gas works and even prisons.

Log in or register to write something here or to contact authors.