New Public Management

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New public management (NPM) is an approach to running public service organizations that is used in government and public service institutions and agencies, at both sub-national and national levels. The term was first introduced by academics in the UK and Australia^{[1][full citation needed]} to describe approaches that were developed during the 1980s as part of an effort to make the public service more "businesslike" and to improve its efficiency by using private sector management models.

As with the private sector, which focuses on customer service, NPM reforms often focused on the "centrality of citizens who were the recipient of the services or customers to the public sector".^[2] NPM reformers experimented with using decentralized service delivery models, to give local agencies more freedom in how they delivered programs or services. In some cases, NPM reforms that used e-government consolidated a program or service to a central location to reduce costs. Some governments tried using quasi-market structures, so that the public sector would have to compete against the private sector (notably in the UK, in health care).^[2] Key themes in NPM were "financial control, value for money, increasing efficiency ..., identifying and setting targets and continuance monitoring of performance, handing over ... power to the senior management" executives. Performance was assessed with audits, benchmarks and performance evaluations. Some NPM reforms used private sector companies to deliver what were formerly public services.^[2]

NPM advocates in some countries worked to remove "collective agreements [in favour of] ... individual rewards packages at senior levels combined with short term contracts" and introduce private sector-style corporate governance, including using a Board of Directors approach to strategic guidance for public organizations.^[2] While NPM approaches have been used in many countries around the world, NPM is particularly associated with the most industrialized OECD nations such as the United Kingdom, Australia and the United States of America. NPM advocates focus on using approaches from the private sector – the corporate or business world–which can be successfully applied in the public sector and in a public administration context. NPM approaches have been used to reform the public sector, its policies and its programs. NPM advocates claim that it is a more efficient and effective means of attaining the same outcome.

In NPM, citizens are viewed as "customers" and public servants are viewed as public managers. NPM tries to realign the relationship between public service managers and their political superiors by making a parallel relationship between the two. Under NPM, public managers have incentive-based motivation such as pay-for-performance, and clear performance targets are often set, which are assessed by using performance evaluations. As well, managers in an NPM paradigm may have greater discretion and freedom as to how they go about achieving the goals set for them. This NPM approach is contrasted with the traditional public administration model, in which institutional decision-making, policy-making and public service delivery is guided by regulations, legislation and administrative procedures.

NPM reforms use approaches such as disaggregation, customer satisfaction initiatives, customer service efforts, applying an entrepreneurial spirit to public service, and introducing innovations. The NPM system allows "the expert manager to have a greater discretion".^[3][4] "Public Managers under the New Public Management reforms can provide a range of choices from which customers can choose, including the right to opt out of the service delivery system completely".^[5]