Resensi Theories of Public Management

5
Theories of Public Management
Introduction: Developments in Public Management Theory

Although changing tastes have had some influence on all fields of theory
and ap-plication, no approach to public administration has been more subject
to the fads of the day than management. The birth of the modern field
coincided with the popularity of the scientific management of Frederick W.
Taylor, the application of time-and-motion studies to public activities, and
the relentless search for the one best way. Like the “Total Quality
Management” of the s and today’s logic of continuous improvement,
scientific management was borrowed from business administration early in
the twentieth century and applied to public administration and government.
Through time, in government much of what was understood to be scientific
management separated itself from the more general subject of management, par-
ticularly the management of the staff functions, budgeting, and personnel, and
became the taproot of the modern field of operations research. Half engineering
and half business administration, operations research is a highly successful
appli-cation of mathematics and computing power to classic business
management is-sues such as scheduling, pricing, quality control, efficiency in
production processes, and the delivery, warehousing, and inventory of products.
Operations research is equally important in the public sector, particularly in
public organiza-tions for which such techniques are useful: the planning and
development of weapons systems; highway and transportation systems; water
and waste manage-ment systems; nuclear-power-generating systems; air traffic
control systems; and large-scale data management tasks such as the tax returns
and records of the In-ternal Revenue Service and the management of the Social
Security, Medicare, and Medicaid systems.
In contemporary theory, the applications of operations research theory is most
often found in settings described as tightly coupled systems in which machines,
97
98 The Public Administration Theory Primer
equipment, or technology is coupled with human management. The

theoretical literature on high-reliability systems, covered in Chapter , is also
often an appli-cation of operations research and concepts of scientific
management (LaPorte and Consolini ).
Of the early features of American public administration—a merit-based civil
service, the separation of administration from politics, the “principles” of admin-
istration, administration as part of executive government, and the application of
scientific management—it can be plausibly argued that both the theory and the
logic of scientific management have been the most influential and enduring. Sci-
entific management theory and logic are so persuasive in many important parts
of government and the public sector that they are simply assumed, understood,
and therefore usually invisible to the ordinary citizen; they are evident only
when a system built on such theory and logic breaks down. When an airplane
falls out of the sky, a child dies of e-coli bacteria, or a soldier dies from
“friendly fire,” the citizens and their elected leaders “see” complex public
systems built and operated on the assumptions of scientific management. When
the people “see” an airplane fall out of the sky, they often fail to see that at : P.M.
on any workday afternoon in the United States, more than , people are hurtling
safely through the skies at five hundred miles per hour. By any reckoning, this is
a scientific man-agement miracle combining technology, private enterprise, and
government con-trol and management. Yet all agree that as air travel increases,
these systems must be made even safer (Perrow ; Frederickson and LaPorte ).
However one describes it—the one best way, Total Quality Management
(TQM), the high-performance organization, or continuous improvement—the
legacy of scientific management is ubiquitous.
In the early years of modern self-conscious public administration, scientific
management theory and application were most often found in the field of public
works, then a close cousin of public administration. Indeed, until the s the American
Society of Public Administrators, the American Public Works Associa-tion, and the
International City/County Management Association (ICMA) shared the same
headquarters building on the campus of the University of Chicago. Leonard White’s
original text ( ) contains a chapter on public works admin-istration, and many of the
early ICMA publications had to do with public works. Gradually, the two fields
drifted apart, engineers identifying with public works and comfortable with scientific
management techniques, public administrators identifying with the staff functions of
government, such as budgeting and per-sonnel administration and seemingly more
interested in the arts of management. In the academy and in the literature—textbooks
and journals—public works and public administration, with just a few exceptions,
are now almost entirely separate (Felbinger and Whitehead a, b). In practice,
however, every county has a department of public works; every county has extensive
data management sys-tems for property assessment; every state has elaborate social
service data man-
Theories of Public Management 99
agement systems as well as highway and other transportation systems; and

the na-tional government has engineering and systems operations research
specialists of many types. In practice, then, scientific management is still
very much a part of public administration.
Scientific management theory, in its original Taylorist sense and its modern
TQM sense, is generally in the family of decision theory. The purposes and
char-acteristics of decision theory are essentially problem definition and
problem solv-ing—how to control air traffic, how to operate an efficient sanitary
sewer and treatment system. Sophisticated decision theoretic models deal with
goal ambi-guity, resource limitations, incomplete information, and satisficing.
We cover these topics in Chapter . Management theory may have elements of
problem solving, but it is ordinarily understood to have to do with the study and
description of di-recting ongoing routine activities in purposeful organizations.
With the separation of public works from public administration and Herbert
Simon’s assault on “the principles” in the s, and the emphasis on policy analy-
sis and policymaking in the s and s, the subject of management lost ca-chet and
fell off the public administration radar screen. A few blips lingered. In the s and
s, there was some interest in generic administration, meaning essentially that
management is management wherever practiced; several generic schools of
business and public administration were established on the strength of this logic
(Cornell, California at Irvine, California at Riverside, Ohio State, Mis-souri at
Columbia and Kansas City, Brigham Young University, Yale) (Litchfield ).
Most generic schools have now been discontinued or have evolved small
separate and essentially autonomous departments of public administration in
large business schools. The generic schools had virtually no effect on actual
public ad-ministration practices or theories.
The s and s saw some interest—particularly in the New Public Ad-
ministration—in theories of democratic administration, including flat
hierarchies, worker self-management, project management, matrix
organizations, and the elimination of competition as an incentive for work
(Marini ; Frederickson ). These theories have had some effect on practices and
are commonly found in contemporary “good public management” models.
The social equity theory found in the New Public Administration of the s and
s has also had a long shelf life. It came along at a time of high concern for
fairness in the workplace, equal employment opportunities, affirmative action,
and comparable worth. Many of these concepts became statutory, organizations
and procedure to adopt these values appeared, and social equity is now widely
practiced. In their assessment of the effects of the social equity aspects in New
Public Administration, Jay Shafritz and E. W. Russell ( ) write this:
From the s to the present day [public administration scholars] have pro-duced an
endless stream of conference papers and scholarly articles urging public
administrators to show a greater sensitivity to the forces of change, the needs of

clients, and the problem of social equity in service delivery. This has had a positive
effect in that now the ethical and equitable treatment of citizens by administrators
is at the forefront of concerns in public agencies. Reinforced by changing public
attitudes, the reinventing government movement and civil rights laws, the new
public administration has triumphed after a quarter century. Now it is unthink-able
(as well as illegal), for example, to deny someone welfare benefits because of their
race or a job opportunity because of their sex. Social equity today does not have to
be so much fought for by young radicals as administrated by managers of all ages.
(,)
From the s through the s, with the exception of a continuing interest in

budgeting and personnel staff functions, the arguments of the New Public Ad-
ministration, and a brief interest in “management by objective,” academic public
administration had little to say regarding management in the practice of public
administration. Beginning in the mid- s, the subject of management returned to
public administration with a vengeance, in theory and in practice.
It being understood that the most rigorous applications of management
theory in public administration are found in operations research and public
works, and that these applications are best described as decision-theoretic,
we now turn to modern theories of public management. Unlike decision
theory, these theories are not primarily problem solving, but are instead
descriptive of management be-havior or function as prescriptive guides for
management improvement in the on-going routine work of organizations.
It is common in public administration theory to combine the subjects of man-
agement and organization and to treat them either as linked or as the same thing.
This custom has led to some conceptual and theoretical confusion. For example,
decentralization is often described as a management phenomenon, although it is
generally agreed that many, if not most, aspects of centralization and decentral-
ization are organizational or structural phenomena. To reduce this confusion and
to sharpen the theoretical point, we have unbundled management and organiza-
tion theory and treat them separately. Public management is taken to mean the
formal and informal processes of guiding human interaction toward public orga-
nizational objectives. The units of analysis are processes of interaction between
managers and workers and the effects of management behavior on workers and
work outcomes. The purpose of this chapter is to describe and evaluate theory,
either empirically or deductively derived, that accounts for or explains public
man-agement behavior.
Theories of public organization, by contrast, have to do with the design and
evolution of the structural arrangements for the conduct of public administration
and with descriptions or theories of the behavior of organizations as the unit of
analysis. Although separating management and organization for conceptual and

theoretical refinement has its advantages, we do not contend here that manage-
ment and organization are distinct in an empirical sense. They are not. Manage-
ment almost always occurs in the context of organization, and organization is
seldom effective without management. Therefore, in the closing chapter, man-
agement and organization are bundled back together, as they are in the empirical
world, and theories of their relationship are presented.
The following discussion describes theories of public management in four
cat-egories. First, and most important, is traditional public management
theory, thrust forward. Second is the current popularity of leadership as
public management. Third is the theory derived from the longer-standing
practice of conducting public management by contract. Fourth are theories
of governance that explain impor-tant features of public management.
Traditional Management Theory Thrust Forward

Traditional management theory has its origins with Frederick W. Taylor and his
influential The Principles of Scientific Management, which was published originally
in and is still in print ( ). His subject was business, particularly the shop. His purpose
was to move from rules of thumb, customs and traditions, and ad hoc approaches to
business management toward a body of scientific principles. His principles were
based on precise measurements of work processes, as well as outcomes; on the
scientific selection of workers; on the optimal placement of workers in describable
work roles; on the division and sequencing of work processes to enhance
productivity; and on the cooperation of workers in achieving the organizational
objective. The application of these principles, Taylor believed, would lead managers
and workers to the one best way.
As business innovations often do, these concepts soon colonized government.
They became a central part of the Progressive Era and the movement to reform
government, and they were highly influential in the development of civil service
systems in government at all levels. The widespread use of tests for hiring and
promotion, position descriptions, and employee evaluations are all reflections of
scientific management. Indeed, one could argue that modern-day testing gener-
ally—for progress in school, for admission to universities and graduate schools,
and for professional standing in law, medicine, accounting, teaching, and so
forth—are also contemporary manifestations of the logic of scientific manage-
ment. The desire for certitude, to measure precisely and thus order and
categorize the world properly and thereby make sense of it, is doubtless as
strong today as it was at the nadir of scientific management.
Luther Gulick ( ), one of the founders of modern public administration,
embraced the orthodoxy of scientific management, applied it to government, and
introduced the most famous mnemonic in the field—POSDCORB, which

rep-resents his theory of the seven major functions of management:
• Planning
• Organizing
• Staffing
• Directing
• Coordinating
• Reporting
• Budgeting
Until the mid- to late s, any treatment of management in public admin-istration

was essentially an elaboration of POSDCORB. Often combined with an essentially
scalar, or hierarchical, theory of organization, these principles of management had a
kind of commonsense quality that was appealing to practicing public administrators
as well as to those studying the field or preparing for prac-tice. Early criticisms of
the principles said they were top-down, they were essen-tially prescriptive, and they
underemphasized natural forms of cooperation—but they formed the core of the
field. From the s to the s, important mod-ifications and adaptations were made to the
principles of scientific management. Chester Barnard ( ) identified and set out the
acceptance theory of authority, which argues that authority does not depend as much
on persons of authority or on persons having authority as it depends on the
willingness of others to accept or comply with directions or commands. In classic
theory, it was argued that pol-icy, instructions, guidance, and authority flowed down
the hierarchy, and com-munication (what we would now call feedback) flowed up.
Barnard demonstrated that considerable power accumulated at the base of the
hierarchy, and that theories of effective management needed to be modified to
account for the culture of work in an organization, the preferences and attitudes of
the workers, and the extent to which there was agreement between workers’ needs
and interests and management policy and direction. He described the “functions of
the executive” as having less to do with the formal principles of administration and
more to do with securing workers’ cooperation through effective communication,
through workers’ partic-ipation in production decisions, and through a demonstrated
concern for workers’ interests. In a sense, then, authority is delegated upward rather
than directed downward.
Another modification to the principles of scientific management came as the

result of the Hawthorne studies. These describe the Hawthorne effect, which ex-
plains worker productivity as a function of observers’ attention rather than phys-ical
or contextual factors. Subsequent interpretations of the Hawthorne effect suggest
that mere attention by observers is too simplistic, and that workers saw in
the experiments altered forms of supervision that they preferred and that
caused productivity to increase (Greenwood and Wrege ). The Hawthorne
experi-ments and the work of Barnard introduced a human relations
approach that for-ever changed management theory. Classical principles of
scientific management and formal hierarchical structure were challenged by
the human relations school of management theory, a body of theory
particularly influenced by Douglas Mc-Gregor ( ). McGregor’s Theory X
and Theory Y represented an especially im-portant change in management
theory. Here are the competing assumptions of Theory X and Theory Y:
theory x assumptions
. The average person dislikes work and will try to avoid it.
. Most people need to be coerced, controlled, directed, and threatened
with punishment to get them to work toward organizational goals.
. The average person wants to be directed, shuns responsibility, has little
am-bition, and seeks security above all.
theory y assumptions
. Most people do not inherently dislike work; the physical effort and the
men-tal effort involved are as natural as play or rest.
. People will exercise self-direction and self-control to reach goals to
which they are committed; external control and the threat of
punishment are not the only means for ensuring effort toward goals.
. Commitment to goals is a function of the rewards available,
particularly re-wards that satisfy esteem and self-actualization needs.
. When conditions are favorable, the average person learns not only to
accept but also to seek responsibility.
. Many people have the capacity to exercise a high degree of creativity
and innovation in solving organizational problems.
. The intellectual potential of most individuals is only partially used in
most organizations.
Following these assumptions, Theory X managers emphasize elaborate controls

and oversight, and they motivate by economic incentives. Theory Y managers seek
to integrate individual and organizational goals and to emphasize latitude in per-
forming tasks; they seek to make work interesting and thereby encourage creativity.
It is important to point out that the work of Chester Barnard, the
Hawthorne experiments, and McGregor was behavioral, which is to say that
it was based on field research. The earlier work of Taylor and others, though
it was called scientific management, was less a result of nonsystematic
observations and more a result of deductive logic.
One important and different approach to management theory in the evolution of

public administration is the sociology of Max Weber ( ), who founded the formal
study of the large-scale complex organizations he labeled “bureaucracy.” Al-though
he did his work in the late nineteenth and early twentieth centuries, it was not
generally available to Americans until after World War II. Weber’s purpose was to
describe the salient characteristics of enduring large-scale organizations, which he
labeled “ideal types,” ideal meaning commonly found or generally characteristic. He
was particularly interested in rationality, or collective goal-oriented behavior, as in
the rational organization. He was opposed to the class distinctions character-istic of
Europe in the early twentieth century and to the resulting nepotism and spoils. He
argued that rational bureaucracy practices a specialization of labor. Jobs are broken
down into routine, well-defined tasks so that workers can perfect those tasks and so
that job applicants can be tested in specialized areas to meet formal qualifications.
He described the formal rules, procedures, and record-keeping char-acteristics of
bureaucracies as well as their scalar, or hierarchic, characteristics. The bureaucracy,
he argued, is impersonal and rational because individual selection and promotion are
strictly on the basis of merit, scientifically determined.
Weber’s bureaucracy was more popular with academics than with practitioners,
and it is a theory of management only in the sense that it describes what he iden-
tified as characteristics commonly found in large and complex organizations that
have endured. The critique of Weber’s work is well established. The ideal type bu-
reaucracy tends to inertia, resists change, is mechanistic rather than humanistic, and
is subject to goal displacement and to trained incapacity. Bureaucracy, in the present
day, has become the object of a political derision that blames the problems of
government on the people and organizations that operate public programs. And
bureaucracy is an equally popular whipping boy for scholars and consultants who
seek to make public programs more effective. Despite all this criticism, Weber is
acknowledged to have developed one of the most empirically accurate and uni-versal
descriptions of the large-scale complex organization in its time, a description that is
often accurate even today.
No criticism of the principles of public administration was so devastating as
Simon’s critique ( )—dismissing them as proverbs. He demonstrated that the
principles of public administration were contradictory, had little ability to be
gen-eralized as theory, and were fuzzy and imprecise. In the place of the
principles of management, which he found theoretically wanting, he developed
what has be-come decision theory. This theory has had a profound influence on
public ad-ministration, most of it good. But the obliteration of the principles of
management as a straw man was not essential to the presentation of decision
the-ory and to its eventual importance. The principles of management were
obliter-ated, nevertheless—at least in the theoretical sense.
From the late s through the mid- s, little serious theoretical work was
done on management in public administration. The subject gradually
disappeared in the texts as well as in the pages of the Public Administration
Review. The irony is, of course, that management continued to be the core of
public administration practice. It is no wonder that during this period there
was a growing distance be-tween public administration scholarship and
theory and public administration practice.
During this period, fortunately, a strong interest in management theory in so-
ciology, social psychology, and business administration continued. Much of this
work was in the so-called middle-range theories, particularly group theory, role
theory, and communications theory. More recently, this past decade has seen a
re-birth in interest in management in public administration, with the prolific
work of those involved with the Texas Education Excellence Project. The
contributions of this literature are reviewed later.
Further, a revitalization of scientific management has started, with new empir-ical
attention to Simon’s critique of Gulick’s POSDCORB-derived management
principles. Kenneth Meier and John Bohte ( ) offer and test a theory that links span
of control (the number of subordinates managed by a single supervisor) to
bureaucratic performance. Interestingly, Meier and Bohte conclude that both Simon
and Gulick were right. Simon’s critique that there is no single correct span of control
was supported, but so was Gulick’s principle that smaller spans of con-trol are
preferable when the authority has more information and skill than the subordinates.
Meier and Bohte ( ) followed this study with another that ex-amined diversification
of function, stability, and space, which Gulick viewed as the three important
determinants of span of control. Gulick’s hypotheses were supported, but Meier and
Bohte found that span of control needs to be thought of within the context of
organizational hierarchy: What matters for span of control at one level of an
organization may not matter at another. This research suggests that the insights and
utility of Gulick’s management principles are far from over.
Group Theory
Theories of groups are primarily theories of organization rather than theories of
management, but group theory has important implications for public manage-ment.
Most of these implications have to do with contrasting approaches to man-agerial
control. In classic management theory, control is exercised by policy, rules,
regulations, and oversight. In group theory, the effective group will develop shared
goals and values, norms of behavior, customs, and traditions (Homans ; Shaw ).
Effective management in the context of group theory nurtures, cultivates, and
supports group goals and norms that are compatible with and supportive of
table . comparing traditional

and group theories of management controls
Characteristics Managerial Controls Group Controls
Means of control Policy, rules, regulation, Shared goals, values, and

and oversight traditions
Sources of control Mainly external mechanisms Mainly internal motivation
Position design Narrow subtasks; doing rather Whole task; doing and
than thinking thinking
Definition of duties Fixed Flexible, contingent
Accountability Usually individual Often in the group
Structure Tall; top-down Flat; mutual layered influence
Power Emphasis on legitimate Emphasis on relevant

authority information and expertise
Responsibility Performing individual tasks Performance of work unit or

group
Rewards Extrinsic Intrinsic
Innovation Less likely More likely
Employee reaction to Compliance Commitment

management
institutional purposes and missions. Table . is a comparison of traditional

forms of managerial controls and forms of control based on group theory.
Most aspects of group theory are now embedded in the public management
literature, and many public managers seek to develop the kinds of group goals,
motivation, and commitments that support public institutional goals. John Di-
Iulio Jr.’s research ( ) on the characteristics and management of the Federal

Bureau of Prisons (BOP) demonstrates the power of group theory in public ad-
ministration. In attempting to account for the behavior of BOP employees, Di-
Iulio found principal-agent theory and rational choice theory weak. He turned to
a version of group theory sometimes called the strong-culture organization,
mixed with theories of leadership, to explain employee behavior:
Rational choice theories of bureaucracy are neither illuminating nor helpful. In

effect, rational choice theorists of bureaucracy are half-baked Barnardians. With
[Chester] Barnard, they understand that organizations are devices for fostering and
sustaining cooperation among self-interested individuals who have disparate
beliefs, dissimilar motivations, and conflicting goals. With him, they recognize
that the individual is always the basic factor in organization, that the “functions of
the executive” are to induce self-interested workers to cooperate in ways that
foster, rather than frustrate, achievement of organizational goals, and that money
and other tangible goodies are often potent inducements.
But the rational choice theorists miss the other half of Barnard—and no
small part of human nature to boot. They discount the importance of what
Barnard termed the “moral factor.” . . . More broadly, they discount the
tug of social sen-timents and relegate the efficacy of moral motivations to
a limbo of lesser behav-ioral reality.
In sum, rational choice theorists of bureaucracy underestimate the propensity of
people to redefine their self-interest in terms of the preferences of leaders they
respect, the well-being of co-workers they care about, and the survival and repu-
tation of organizations they labor for. It may well be true that under most condi-
tions, most bureaucrats, especially within government, follow narrow definitions
of self-interest. But that is neither the whole story nor the most important part of
the story of what public servants—corrections officers, fire fighters, police offi-
cers, public health workers, social workers, and others—do on a day-to-day basis.
Even in the bowels of government agencies, there is more self-sacrifice, and less
self-interest, than rational choice theory allows. For the principled agents of the
BOP and other government bureaucracies Americans can and should be proud and
thankful. ( , – )
Role Theory
Social psychologists tend to define all human organizations as role systems. In ob-
serving organizations in action, we see that what are actually organized are the acts
of individuals in particular positions or offices. In role theory, each office or position
is understood to be relational; that is, each office is defined in its relationship to
others and to the organization as a whole, and often to the organization’s purposes.
Persons in roles exhibit essential persisting features of behavior, such as the

be-havior of school superintendents, prison wardens, or data entry workers.
Role the-orists observe and measure the persisting patterns of behavior of
persons in common roles; they especially study the relations between
persons in particular roles, both inside and outside the organization. Each
officeholder performs in a role set, a contextual set of relationships with
others who hold particular role ex-pectations toward the officeholder.
Perhaps the best-known study in role theory was in the public sector, a study
of school superintendents (Gross, Mason, and McEachern ). Persons and groups
in the superintendents’ role set include other internal roles such as teachers,
principals, and members of the school board, as well as significant external
roles, such as parents, parent-teacher organizations, business groups and leaders,
social and fraternal groups, the state office of education, and so forth. School
superin-tendents behave according to perceived role expectations; in the best of
circum-stances, superintendents’ perceived role expectations will be accurate
and compatible so that they will know what others expect of them and perceive a
gen-eral agreement in the role expectations of others. Regrettably, this rarely
happens, and superintendents are caught, or perceive themselves caught, in
competing role expectations, described in role theory as cognitive dissonance.
Role theorists have consistently demonstrated that role occupants, such as
school superintendents, tend to misperceive the role expectations of others.
Or-dinarily, this misperception exaggerates the strength, duration, and
specificity of the positions of others and results in excessive managerial
caution and organiza-tional inertia.
Of course, real observable role conflict does occur. When the school
superin-tendents experience genuine unresolvable role conflict regarding
hiring, promo-tion, salaries, and budget matters, they tend to have low job
satisfaction and will probably change jobs. One key to success is the ability
of some school superin-tendents not to exaggerate the expectations of others
and to find compromises that reduce conflict.
Higher levels of management tend to be associated with multiple roles,
and sometimes role overload. Managers, however, tend to find greater job
satisfaction as roles increase. The more roles a manager takes on, the greater
the tendency to seek generalized, overall solutions, programmed solutions,
one-size-fits-all answers. The greater the number of roles, the greater the
tendency to use authority and sanctions and to search for one generalizable
efficiency—often a short-term effi-ciency at that.
Henry Mintzberg ( ) used the concept of roles to identify the three primary
managerial roles, a set of categories now widely used in management theory for
business but equally applicable to management in public administration. Managers
in their interpersonal roles can act as figureheads performing primarily symbolic
duties, as leaders building relationships with subordinates, or as liaisons emphasiz-

ing contacts at the edges of the organization. In their informational roles, managers
act as monitors seeking useful information, as disseminators transmitting informa-
tion internally, or as spokespersons transmitting information outside the organi-
zation. In their managerial roles, managers are as entrepreneurs initiating and
encouraging innovation, as disturbance handlers, as resource allocators, or as ne-
gotiators. Based on personal characteristics and the needs of organizations at par-
ticular points of time, managers take on combinations of these role characteristics.
There are now three excellent public administration descriptions of several of
these role combinations: Mark H. Moore’s Creating Public Value: Strategic Man-
agement in Government ( ); John M. Bryson and Barbara Crosby’s Leadership for
the Common Good: Tackling Public Problems in a Shared-Power World ( ); and
Barry Bozeman and Jeffrey D. Straussman’s Public Management Strategies:
Guidelines for Managerial Effectiveness ( ). Each develops for the public sector
several of the same theories Mintzberg developed for business.
Communication Theory
Much of what is understood to be public management depends upon effective
communication. Communication theory is a mix of cybernetics, linguistics, and
social psychology. The language of communication theory resembles the language
of systems theory: inputs, throughputs, outputs, feedback loops, entropy, ho-
meostasis. Although communication is always individual or singular, communi-
cation theorists tend to regard the work group or the organization as their unit of
analysis, and in doing so, they anthropomorphize the organization. Anthropo-
morphic thought promotes organizational guessing, organizational memory, or-
ganizational consciousness, organizational culture, organizational will, and,
especially, organizational learning—all of which are based upon communication.
This logic is particularly helpful in building a management theory of communi-
cation, now a considerable body of knowledge (Garnett ).
The theory of communication found in public administration argues that most
downward communication, or communication with subordinates, emphasizes task
directives and organizational policy and procedures. The communication of agency
mission and performance is often neglected, the result being low morale,
preoccupation with routine tasks, and indifference to agency performance (Gar-nett
). Public managers overestimate the power of communication through memoranda,
e-mail, telephone, and other such channels, and they underestimate the power of
direct communications through or by managerial action. The use of internal models
of effectiveness or examples of organizational success is an ef-fective means of
organizational learning. Effective communication occurs when managers establish
work standards through collective means and provide feedback
on performance as measured against agreed-upon standards. Keeping

channels clear for upward communication is a staple in communication
theory, as is the importance of redundant, multiple, and overlapping
communication channels downward, upward, and laterally (Garnett ).
Effective communication with other agencies and with agency publics is an
enduring feature of managerial communication theory. Communication between
organizations is most often associated with shared professional training perspec-
tives and with regular training. In a metropolitan area, city public works
directors, chiefs of police, fire chiefs, and city administrators often communicate
both for-mally and informally with their counterparts; indeed, lateral
communication net-works are often robust and enduring. It is sometimes said
that a city public works director will spend more time communicating with other
city public works di-rectors in a metropolitan area than with other agency heads
in his or her own city government (Frederickson a). Lateral communication and
coordination in complex organizations are aided by assigning key people to so-
called lynchpin re-sponsibilities (Likert , ).
Communication with external publics ordinarily involves segmenting publics and
specifically designed procedures for communicating agency positions, per-formance,
services, and so forth. Agency communication with an interest group would differ
from its communication with a legislative body or committee, or an individual
member of that body, for example. Effective agency communication with publics
has as much to do with receiving as with sending signals, most agen-cies being much
better at the latter than the former. Incoming messages are often highly filtered,
agency managers receiving bits and pieces of information but often not
understanding the full substance or meaning of signals sent by publics. Selec-tive
listening is a persistent problem in public organizations (Garnett ).
Evolution of Management Theory

The most significant progress in management theory from the s through the s
was in developing and testing middle-range theories such as group, role, and
communication theories. Most of this work has been in the study of business
management rather than public management and has now fully migrated to
our literature. The middle-range theories, particularly group, role, and com-
munication theory, are now the guts of management theory in business and
public administration.
The text by Simon, Donald Smithburg, and Victor Thompson published
in was far ahead of its competition, then and now, mostly because it used
middle-range theory generously. For a generation, this text was the source of
most faculty lectures on theories of management in the public sector (Simon
). Most of the texts written in the s, s, and s treat budgeting and per-
sonnel staff functions as if they were management, and most do not include
a sep-arate treatment of management theory, let alone the middle-range
theories that contribute to it.
The most complete treatment of middle-range theories in public administra-
tion is found in the now-out-of-print Administrative Organization by John
Pfiffner and Frank P. Sherwood ( ). In it, the authors set out the formal structures
of public organizations and then use the concept of overlays to describe how
organi-zations actually behave and managers actually function. Overlays
describe modi-fying processes and conditions and how they influence behavior
and outcomes. A public organization is, for example, understood to have an
important “group over-lay” that should inform managers of group behavior;
indeed, an effective manager should have a rudimentary theory of groups to help
with management decisions and action. There are also role overlays,
communication overlays, problem-solving overlays, and, most important, power
overlays. Pfiffner and Sherwood’s book stands as the most complete midcentury
treatment of management theory in pub-lic administration. That it was in print
only from to is evidence of the general lack of interest in the subject of
management in the scholarly public ad-ministration of that era.
The good news is that management theory is back. We start with this
question: After fifty years, has the positivist decision-theory founded by Simon
met the promise of a body of empirically verified theory? Christopher Hood and
Michael Jackson ( ) argue that the results disappoint on three counts. First, the
old principles of management—Simon’s proverbs—persist and even flourish.
Second, there is no commonly accepted or agreed-upon theory or paradigm of
manage-ment in public administration based on decision theory. Third, the
positivist ad-ministrative science of decision theory appears to have had little
effect on the day-to-day practices of public management, and the language,
arguments, and influence of the principles of management in public
organizations remain sur-prisingly “proverbial.” “It seems that Simon’s attack
on the proverbial approach to administration might never have existed, for all
the practical influence it has had on administrative argument” ( , ).
Building on his earlier “science of muddling through” critique of decision the-
ory, Charles Lindblom, with David K. Cohen ( ), found that “professional social
inquiry” such as decision-science seldom influences either public policy or public
administration. Instead, an interactive process of argument, debate, the use of
ordinary knowledge, and a form of social or organizational learning is not only a
more commonly found form of social problem solving; it is also safer and less
inclined to large-scale risk or error. Along the same lines, Giandomenico Ma-jone, in
his brilliant Evidence, Argument, and Persuasion in the Policy Process ( ),
demonstrates that the skills of policy analysis and the capacity to engage in public
problem solving are forms of a dialectic not unlike the arguments or debates of
generally informed participants. This dialectic is less like the authoritative

findings of a scientist and more like the debate or argument of lawyers.
Finally, as a research methodology and an epistemology, positivism is now
less universally accepted than it was at midcentury. In part, this is because it has
not lived up to its promise. More importantly, positivism, particularly the logical
pos-itivism that distinguished between values and facts, often failed to account
for values, norms, and traditional political philosophy, and sometimes didn’t
even ac-knowledge them. Nevertheless, positivism and the canons of social
science methodology and epistemology tend to dominate academic perspectives
regarding management theory in public administration. In the practices of public
adminis-tration, however, positivism is less influential.
As a way to distinguish between public management principles that are scien-
tifically verifiable and principles that are simply understood and accepted, Hood
and Jackson suggest that the principles are better understood as doctrines; and as
doctrines, they are powerfully influential in both debating and carrying out
policy. These doctrines, following Hood and Jackson, have six recurring
features: ( ) They are ubiquitous, found wherever there are organizations; ( )
they are based on “soft data” and “soft logic,” often lacking key elements and
assumptions; ( ) they are a constantly shifting “received view” or “received
wisdom,” having more to do with metaphor, rhetoric, packaging, and
presentation and less to do with objectively or conclusively demonstrating the
scientific superiority of one view over another; ( ) they are often contradictory; (
) they are unstable, the changing fads and fashions of taste makers; and ( ) they
tend to rotate—old ideas dressed in new clothes ( , – ).
Unlike scientifically verifiable principles, these doctrines are accepted for rea-
sons best explained not by hard data but by the analytic techniques associated with
rhetoric. In rhetoric, one persuades or influences another by developing a linguistic
solution to a problem, or by “naming” the problem in a way that elicits general
agreement about a course of action. The use of metaphor is key because all
institutions are so-called cognitive paradigms grounded in shared understand-ings
and meanings. One thinks of the deeply contentious contemporary debate over
abortion in the United States. During his candidacy for president, Bill Clin-ton
stated, “I am personally against abortion. Abortion is, however, the law of the land,
but it should be safe, and rare.” By repeating that statement, he seemed to find a
center position acceptable to most, though not to those at the extremes.
Rhetoric requires the generous use of ambiguity, the crafting of general posi-tions
that can be favorably viewed from a wide spectrum of public positions. Po-sitions
must be aligned with the general or greater good. Arguments are selective, which
means that evidence supporting the arguments is used, whereas contrary evidence is
not. For rhetoric to be successful, those who listen to it or witness it must be willing
to suspend disbelief, just as one does when watching good theater (Hood and
Jackson ). A doctrine such as “a government that works better
and costs less” has a powerful rhetorical appeal, is a “solution” that matches
con-temporary values, is ambiguous, is supported by selected best practices,
is identi-fied with the greater good, and, it being evident that costing less is
at best unlikely, requires one to suspend disbelief.
The problem, of course, is that a theory of management in public administra-
tion built on such an epistemology is decidedly out of phase with ordinary defi-
nitions of science. The “doctrines of management” model tested by the logic of
rhetoric is at once postmodern and retrograde, an up-to-date version of
Aristotle’s description ( ) of linguistic solutions to social problems. From the
perspective of those who actually practice policymaking and public
administration, the logic of the doctrines of management is a close theoretical
approximation of reality— certainly much closer than theories of rational choice
or decisionmaking—but the latter have a much greater cachet in the academy.
The doctrines of administration can be described this way (this is a
considerably adapted, much simplified and condensed version of doctrines
found in Hood and Jackson [ , – ]):
. Doctrines of scale
a. Large, intermediate, small
b. Centralized, decentralized
. Doctrines of service provision (how organized and managed)
a. Direct governmental service
b. Contracting out
c. Privatization
. Doctrines of service provision (citizen or client choices)
a. Compel both costs and benefits
b. Allow choices of either costs or benefits
. Doctrines of specialization
a. By characteristics of work
b. By characteristics of clientele
c. By location
d. By process
e. By purpose
. Doctrines of Control
a. By input—budget, staff size
b. By process
c. By competition
d. By standards of professional practice
e. By outputs
f. By outcomes
g. By direct political control
h. By direct administrative control
. Doctrines of discretion
a. By law and regulation
b. By professional latitude
c. By deregulation
d. By risk taking
. Doctrines of employment
a. Selected and promoted by merit
b. Selected by representation of groups
c. Selected by technical skills
d. Selected by administration skills
e. Selected by cultural skills
. Doctrines of leadership
a. Direct political leadership
b. Direct administrative leadership
c. Neutral competence/professional expertise
d. Entrepreneurshipl/advocacy .
Doctrines of purpose
a. Carry out the law
b. Maintain orderly and reliable
institutions c. Facilitate change
d. Add value
Another way to think about the doctrines of public management is to turn

to the enduring questions of management: Under what circumstances are
neutral competence and professional expertise more important than political
responsive-ness? What, on the other hand, are the circumstances under
which political re-sponsiveness is more important than neutral competence
and professional expertise? What are the technological, geographic, and
managerial issues that de-termine whether an organization should centralize
or decentralize? What ought to be the criteria or standards for appointment
and promotion in public employ-ment? How much discretion should be
allowed to street-level bureaucrats and their managers? These, and similar
questions, summarized previously as doctrines, were addressed by the early
principles and the contemporary doctrines. The ques-tions are essentially the
same, but the answers are very different. Table . com-pares the answers to
these questions found in traditional and contemporary principles.
The influential modern literature on management in public administration
powerfully illustrates how the principles are reemerging. Virtually all of it uses
the logic of rhetoric, selective case-based empirical “evidence,” and a kind of
mission-ary zeal (Graham and Hays ; Rainey and Steinbauer ; Osborne and Gae-
bler ; Barzelay ; Cohen and Eimicke ). Very often missionaries,
table . comparisons of traditional and contemporary

principles of management in public administration
Doctrine Traditional Principles Contemporary Principles
Scale Large—centralized Small—decentralized

Service Provision Direct government service Contract out
Compel costs and benefits Choices in costs and benefits
Specialization By characteristics of work By characteristics of clientele
By work processes and By location
purpose
Control By professional practice By competition
standards
By inputs (budgets, staff By outcomes
size) By administrative
By outputs, processes
By administration
Discretion By laws, regulations By deregulation
By professional latitude By risk taking
Employment By merit, affirmative action, Same
technical skill
Leadership Based on neutral competence Based on entrepreneurial
Professional expertise advocating
Purpose To carry out the law To facilitate change
To manage orderly and To create public value
reliable institutions
not to mention politicians, consultants, and academics, find their work easier
if there is a devil, an evil empire, or a straw man. In public management
theory, the devil is BUREAUCRACY. Preferred doctrines of public
management are suggested as ways to “banish bureaucracy or to reinvent
government: how the entrepreneurial spirit is transforming the public sector
from schoolhouse to state-house, city hall to the Pentagon” (Osborne and
Gaebler ). These doctrines are argued, just as the principles were eighty
years ago, on the observation of so-called best practices rather than on
replicable social science (Osborne and Gaebler ; Cohen and Eimicke ).
Nevertheless, the modern principles of entre-preneurial public management
are now nearly a hegemony in the practices of public administration.
These doctrines have been given, or have taken, the name New Public Man-
agement (NPM) and are sometimes referred to as the “new managerialism.” They
have a particularly strong base in Western Europe, Australia, and New Zealand,
as well as in the United States. The Organization for Economic Co-operation
and Development is a particularly strong advocate of the New Public
Management and encourages countries to adopt its principles. Although there is
an extensive scholarly critique of NPM, it is a safe generalization that its
principles have been widely accepted in the modern practice of public
administration (Frederickson b). Whether the application of these principles is
better government, and particularly better government for whom, is subject to
debate. No doubt the ap-plication of the early principles of management did
result in cleaner, more effi-cient, and more professional government. But with
that has come larger and more expensive government.
NPM is presently very influential in the practices of public administration. In a
postmodern and rhetorical sense, the New Public Management can be explained and
understood as presently acceptable doctrines of management. But the canons of
social science demand a more precise identification of variables, more precision in
the suggested association between variables, greater precision in measurement, and a
greater replication of findings. Research using these techniques indicates that NPM
principles can result in a selective and short-run increase in efficiency; are negatively
associated with fairness, equity, or justice; seldom reduce costs; and have produced
numerous innovative ways to accomplish public or collective pur-poses (Berry,
Chackerian, and Wechsler ; DiIulio, Garvey, and Kettl ).
A particularly pointed empirical critique of NPM comes from Kenneth Meier
and Laurence O’Toole ( ), who base their inferences on an extensive series of
studies on public management produced by those involved with the Texas Edu-
cation Excellence Project, which has recently been subsumed into the more en-
compassing Project for Equity, Representation, and Governance. The sum of
this work allowed Meier and O’Toole to evaluate ten “proverbs” of NPM
against the evidence from the project. Specifically, they find the following:
. Contracting out is often not done for reasons of performance and

efficiency, but rather to get rid of problems.
. Lean and delayered organizations are vulnerable to external stress,
such as budget cuts or other emergencies.
. Good management is not necessarily good for everyone. The
distributional consequences of management can affect some clientele
more than others. If equity is a concern, this is a troubling finding.
. Organizations that are stable can perform well and adapt to changes in
their environment, and managerial flexibility is not a necessary
component of change.
. Organizations are not at the mercy of their political environments. Deci-
sions to network are choices rather than functions of the environment. Fur-
ther, organizations need not even match their environment; networking

can be effective in a hierarchical environment, and hierarchy can help
in a net-worked environment.
. Change-oriented managers are not necessarily better than conservative
man-agers. Change-oriented management works best only when the
political en-vironment is stable. When the environment is less stable, a
more conservative approach is more effective.
. Skilled management can overcome some of the failures of political
actors. When political institutions fail to represent citizens, agencies
with skilled managers can still be successful.
. Rather than good managers making all the difference, they make some
dif-ference. Managers cannot do everything, and even though good
manage-ment matters, it can not be the “solvent for a wide range of
economic and social ills” (Pollitt , ).
. There is not necessarily a pattern to follow that will produce good
manage-ment. Good managers consider their skills and the needs of
their organiza-tions, and then make decisions about what to do.
. Good managers do not necessarily have to choose between competing
goals. They take advantage of positive spillovers, and use training and
in-centives to simultaneously achieve goals that are normally thought
to require tradeoffs.
Meier and O’Toole are not simply pointing out the limits of NPM; their ar-
gument is that to advance public management theory—and certainly to improve
management practices—we need sustained, rigorous, empirical research.
Improv-ing the study of public management requires hard data rather than the
repackaging of principles into doctrines and their sale under a new acronym.
Leadership as Public Management

The most interesting aspect of management’s resurgence in public administration is
the prominence of leadership as an energizing and legitimating idea. The sources of
contemporary literature on leadership in public administration are found in the
schools of public policy or policy study. Most were established in the s at many of
America’s most prestigious universities, in several replacing or subsum-ing existing
graduate programs in public administration. Together they formed the American
Association for Policy Analysis, later changed to the American As-sociation for
Policy Analysis and Management, and established the Journal of Policy Analysis
and Management, now in its sixteenth year. One part of the agreed-upon or
understood methodology was the case study, preferably with participant ob-
servation, designed to escape “the dead hand of social science.” Policy analysis,
particularly the tools of microeconomics, was the second acceptable form of

methodology. The approach is interdisciplinary, following Lasswell’s
description of the policy sciences.
In the early years, the scholarship emanating from the schools of policy study
mostly consisted of cases and policy analysis, the most famous being Graham
Al-lison’s description ( ) of high policymaking as bureaucratic politics in the
Cuban missile crisis. In the Allison perspective, bureaucratic politics means the
mingling of outside informed experts, agency or departmental officials, and po-
litical (usually appointed rather than elected) officials to solve problems.
Bureau-cratic politics came to be a preferred way to theorize about the role of
public managers in making policy, certainly preferable to theorizing about the
day-to-day management of a bureau or an office. Bureaucrats, in high policy, are
under-stood to be leaders, a very legitimating perspective.
Over time, the leadership approach to management has grown and is now
in full flower. Leadership is among the leading topics in the hundreds of
cases in the heavily used Kennedy School of Government Case Program.
The study of man-agement in the policy schools has come to be the study of
what leaders do, rather than the study of management theories, in either the
original or the contemporary form.
Robert D. Behn ( ) describes leadership as the key to improved perform-ance
in the Massachusetts Welfare, Training, and Employment Program. The qual-ity
of education in elementary schools can be found in leadership (Meier, Wrinkle,
and Polinard ). What determines the quality of a prison? Leadership (DiIulio ).
In the Terry L. Cooper and N. Dale Wright ( ) collection, the leg-endary role of
Robert Moses and Austin Tobin in the development of the New York Port
Authority is explored. The collection also contains impressive studies of
William Ruckelshous (Dobel); Elmer Staats (Frederickson); C. Everett Koop
(Bowman); Elsa Porter (Radin); Marie Ragghiaonti (Hejka-Ekins); Beverly
Myers (Stivers); George Marshall and J. Edgar Hoover (Hart and Hart); and
George P. Hartzog (Sherwood). Even Daryl Gates, the sheriff of Los Angeles
County before the Rodney King incident in , is presented as a leader (Moore ).
Distinctions between leadership and management are sometimes found, the
most famous being the Warren Bennis couplet “The manager does things right;
the leader does the right thing” ( , ). Bennis argues that there is too much
management and not enough leadership, particularly in American business.
Ronald Heifetz ( ) uses group theory and communication theory to formulate a
particularly perceptive argument that leadership is helping groups and organi-
zations do “adaptive work” and that it is particularly difficult to do that from po-
sitions of authority. There is not much convincing evidence that there is an
important distinction between leadership and management, aside from labeling
some things as leadership and therefore important, and other things as manage-
ment and therefore less important.
In the bigger picture, the emphasis on leadership in public administration has

doubtless been influenced by the general resurgence in the study of leadership in
many fields and disciplines. The two best treatments of public management as
leadership are Mark H. Moore’s Creating Public Value: Strategic Management
in Government ( ) and Heifitz’s Leadership Without Easy Answers ( ). Neither of
them relies on the principles of management, although Moore references much
of the NPM literature. The characteristic or quality of leadership that Moore
iden-tifies after reviewing many of the case studies in the Harvard collection is
a certain kind of consciousness: [leaders] are imaginative, purposeful, enterprising,

and calculating. They focus on increasing the value of the organizations that lead
to the broader society. In search of value, their minds range freely across the con-
crete circumstances of today seeking opportunities for tomorrow. Based on the
potential they see, they calculate what to do: how to define their purposes, engage
their political overseers and coproducers, and guide their organizations’ operation.
Then, most remarkable of all, they go ahead and do what their calculations suggest
they should. ( , )
These findings are a kind of leadership version of the best practices research
found in the NPM literature, and like that research, they are grounded in direct
observations that describe or account for singular events that are difficult to
repli-cate. This is theory built on soft, qualitative findings, difficult to replicate
and equally difficult as a body of knowledge or data from which one might draw
de-fensible findings or conclusions. This research is unquestionably a series of
fairly clear snapshots of what has happened and how it happened in individual
cases, recognizing the biases of the camera operator.
Perhaps a better way to view this framework is taken from cultural anthropol-
ogy, where it is assumed, first, that “reality” is a social construction rather than
an objective thing or phenomenon that is the same for all observers; and, second,
that organizations are a system of socially constructed and cognitively ordered
meanings (Lynn ; Boisot ; Weick ). This form of knowledge is tacit, understood,
often unspoken, but generally shared and accepted; it is also under-stood to be
inherently vague, ambiguous, and uncertain, but is nevertheless often an
important guide for behavior. “Codified knowledge, in contrast, is more im-
personal, associated less with proper socialization or experience than with skill
in abstract thinking or linear reasoning” (Lynn , ).
Laurence E. Lynn Jr. makes informative observations on this form of
manage-rial theory:
Some types of knowledge are easier to come by, because they are more linear and
impersonal than others. Considerations of deference and trust do not intrude. We
may call such knowledge “scientific” or “technocratic.” Uncodified, undiffused
knowledge, e.g., the tacit, intuitive knowledge of a wise and experienced

manager who communicates primarily in face-to-face forums and by the
example of be-havior, is difficult to master in any conventional sense
because considerations other than the literal and the logical are involved.
We may call such difficult-to-acquire mastery “artistic.”
For codified, technocratic knowledge, the university course, the supervised
workshop, and the problem set or other formal assignment, all emphasizing indi-
vidual goal achievement, may be the most efficient approaches to learning. For
tacit, artistic knowledge, mentorship, apprenticeship, and internship tending to-
ward socialization—and perhaps prolonged on-the-job experience—are likely to
be the most efficient ways to promote learning. Where both types of knowledge, or
their subtle integration, are required for success, vicarious experience in simu-lated
work situations featuring both social and intellectual demands—for example, case
discussions requiring the application of a mix of analytic frameworks—may be the
appropriate approach to learning. ( , )
Managing by Contract
The contracting-out phenomenon goes by several names—government by
proxy (Kettl b); third-party government (Smith and Lipsky ; Salamon );
hollow government; the hollow state (Milward , ; Milward and Provan a);
shadow government and the contracting regime (Kettl ; Egger ). Contracting
out is also a theory of the control of bureaucracy and of organization theory.
Here we will deal only with contemporary government contracting as a
theory of management.
Contracting out is a key feature of the contemporary doctrines of management in
public administration. Since the mid- s, a steadily increasing percentage of public
activities has been carried out “indirectly” by contractors and for virtually every
conceivable government function (Kettl b). Most theories of manage-ment assume a
contained or bounded institution with managerial responsibilities for directing the
day-to-day internal functioning of the organization as well as re-sponsibility for
conducting boundary transactions that link the organization to other organizations
and to its publics. The work of public administrators is in-creasingly not this kind of
management; it is, instead, the management of con-tracts. Virtually all the capital
functions of state and local governments have always been done by contract,
primarily with architectural firms; building contractors; bridge builders; highway
construction and maintenance firms; sewer, sanitation, water works, and systems
companies; and dam builders. The US Defense Depart-ment has always contracted
for airplanes, ships, tanks, guns, and war technology. Most of the work of the
National Aeronautics and Space Administration and the
Department of Energy is done by contract. It is estimated that one-sixth of

total federal spending (including entitlement) has gone to contractors
(Milward ); this amount, as shown by federal spending figures, has been
more than matched during the s. The federal government has many more
civilian employees on the “contract” payroll than on the actual civilian
payroll (Frederickson b). It has been shown that cuts in the federal
workforce can result in an increase in the contract payroll (Light ).
With this background, we turn to issues of management theory, and ask
these questions: Can government by contract be properly considered a form
of man-agement? What would be the salient feature of a management theory
that assumed work is being done by contract?
Can government by contract be thought of as a form of public management? The
answer is yes. Contract management is, however, different from traditional
management in many significant ways and therefore requires a somewhat different
theory. It is fashionable to use principal-agent theory to explain the contracting
regime as an organizational scheme, and the theory is useful for that purpose. But
principal-agent theory offers little to management theory, particularly when com-
pared with traditional theory, which is based on the direct study of managerial
behavior and managerial options in contract circumstances. The “findings” based on
these observations would include those discussed in the following paragraphs.
First, the oldest and still one of the largest forms of contracting out is for capital
construction and repair and maintenance purposes, particularly at the state and local
levels of government. To be effective, such contracts must be highly precise
regarding the quality of materials and workmanship, schedule, and the like. Con-
tractors are ordinarily held to very tight specifications. The contracting govern-ment,
particularly for large-scale contracts, ordinarily has an on-site project manager who
often has czarlike powers and who carefully watches to see that the contractor
complies with specifications. The contracting firm is usually organized and managed
in the so-called project management style, which brings together several skills and
technologies. Large contracting firms almost always use a matrix organizational
form showing established skill-based departments that assign work-ers to projects
(Davis and Laurence ). The critical point in the contract is the link between the
government’s project manager (principal) and the firm’s proj-ect manager (agent).
To be effective, a combination of extensive technological knowledge, trust, and
toughness must be evident (Donahue ).
One of the best studies of contracting and privatization concludes that con-
tracting works best when ( ) what needs to be done can be clearly and precisely
described for purposes of contract negotiation and compliance; ( ) desired out-
comes can readily and easily be measured or identified; ( ) penalties are imposed
for noncompliance with the contract; and ( ) contractors may be discontinued or
changed (Donahue ). Contracting for the construction and maintenance
of buildings, highways, bridges, and other capital facilities tends to meet these
criteria. As long as the four criteria are met, principal-agent theory can
adequately explain management by contract. The reason for our skepticism
about the value of principal-agent theory here is that these criteria are rarely met.
The key theoretical points here are the differences between a continuing per-
manent hierarchy and a contract. In the former, motivation, worker acceptance
of directives, group behavior, role differentiation, and managerial style are all
crit-ically important. In the latter, these requirements are exported to the
contracting firm, leaving government management to entail contract monitoring
and over-sight. In capital contracting for discrete projects, there are usually
many qualified bidders, or, put another way, a genuine market and a capacity on
the part of the government to get the best product at the best price (Rehfuss ).
Because of cost controls on government, fewer and fewer public employees
be-come responsible for more and more contracts. This situation reduces
contract management to paper shuffling and auditing (Kettl b; Rehfuss ; Cigler ;
DeHoog ). State and local governments have diminished the capacity for
contract management and oversight and are gradually being hollowed out. The
problem, then, is not the theory of management by contract so much as it is the
application of the New Public Management concepts, and particularly con-
tracting out, without providing for effective contract management.
Second, contracts for large-scale weapons systems, for airplanes, for space
proj-ects, and for research and development are another matter. Ordinarily, only
a few qualified bidders are available, and it is in the government’s interest to
underwrite in some form the capabilities of the limited number of potential
contractors. The idea of a market, therefore, is less applicable in this form of
contracting because there is little competition. It is often difficult to know in
advance the final cost of a contract. The government may specify a preferred
result or outcome in a given period but fail to know precisely how that outcome
will be achieved. It is possible to know in advance how to build a building or a
bridge. It is possible to “know” that ways can be found to cure diseases, clean up
toxic dumps, and destroy in-coming missiles; but because we do not know how
to do these things, governments contract with technically qualified organizations
to attempt to find answers. This form of contracting is riskier and the results less
predictable than contracting for capital projects.
The project management approach is the most commonly used theory of man-
agement for contracts of this sort (Cleary and Henry ). But as Donald F. Kettl ( b)
puts it, very often the government is not a “smart buyer.” The ca-pacity to be a smart
buyer depends on the quality of the market. If the market has genuine competition,
as happens when construction companies bid for capital projects, the government
may have the capacity to be a smart buyer. When it is clear what the government
wants and can easily determine the quality of those
goods or services, the government can be a smart buyer. But when these
conditions fail to materialize, as often happens, the government is faced with
so-called market imperfections. Kettl, who bases his results on his splendid
study of government contracting, sets out the following hypotheses about
what happens when market imperfections increase:
. Interdependence among buyers (government) and sellers (contractors)

in-creases.
. Boundaries between public and private are blurred, making it difficult
to know what functions or activities are governmental or public.
. The problem of absorbing uncertainties increases.
. Buyers and sellers become more highly coupled, making their interests
in-distinguishable.
. Conflicts of interest on the part of contractors reduce the quality and
quan-tity of information they supply government.
. Internal organizational cultures become more important than market
in-centives.
. Organizational capacity for learning declines and the likelihood of
instability increases. ( b, – )
For management theory, it appears that by contracting out, governments

export some management issues, such as the day-to-day direction of activities,
contacts with clients or customers, the organization of work, and the supervision
and mo-tivation of workers. Contracting redefines administrative discretion by
delegating it to buyers. And contracting appears to decrease public management
responsi-bility for orderly and reliable institutions and increase the long-range
probability of instability. For management objectives, contracting does save
money, but not primarily because of improved management. Contractors save
money through greater flexibility with workers, including lower pay, fewer
benefits, and more part-time work (Kettl b).
Third, the social services have seen the most rapid growth in contracting, esti-
mated to have grown from percent to over percent in the s (Chi, Dev-lin, and
Masterman ), and includes daycare centers, mental health services, foster care, drug
and alcohol rehabilitation, adoption services, elderly services, job training,
community development, Medicaid, and others. Contracting for social services
moved from the periphery to the center of the welfare state when states were given
greater latitude in service delivery and eligibility standards as part of welfare reform
(National Commission for Employment Policy ). Most social services contracts are
not put out for bid but are negotiated with one, usually con-tinuing, provider.
Contractors seldom change because the market is limited. Goals are hard to define,
making it difficult to measure outcomes or performance. Rather
than a market or a government monopoly, the contracting of social services

is best understood as a negotiated network. The management doctrines and
skills re-quired to be effective in negotiated networks are treated in the next
section on governance.
Nonprofit organizations are usually the contract agencies for social services.
Compared to government hierarchies, nonprofits employ fewer professionals, re-
cruit more volunteers, and hire more part-time and nonpermanent workers at
lower salaries and benefits (Smith and Lipsky ). The top professionals in these
nonprofit organizations have considerably higher incomes, however, than their
counterparts in government hierarchies (Herzlinger and Krasker ). These
professionals tend to find nonprofit settings particularly attractive because
oppor-tunities for wider discretion and greater commitment are more plentiful
there than in government hierarchies (Majone ).
To counter the trend to deprofessionalize, governments have increasingly re-
quired contractors to employ qualified professionals, obtain the appropriate li-
censes, and be able to withstand facilities inspections and audits (Smith and Lipsky
). Still, most contracting social service agencies keep costs down by depro-
fessionalizing. Steven Smith and Michael Lipsky claim that “the restrictions on
professional practice in all types of nonprofit agencies receiving government funds
combined with low wages, job insecurity, and intractable social problems have made
nonprofit agencies in general less attractive work environments for human service
workers. Loyalty to the agency fades when there is no advantage to working in one
place rather than another” ( , ). As a result, workers in nonprofit social service
organizations have shown declining morale (Smith and Lipsky ).
Smith and Lipsky describe the tasks of nonprofit social service managers in
several ways. First, there is the problem of cash flow. Governments are notoriously
slow, feeble, and unpredictable in making reimbursements for services already
rendered, seldom a problem in a government hierarchy. Second, nonprofit social
service organizations usually have a board of directors that sets policy and hires the
top executives. These boards may stay at the policy level and simply direct the way
of the organization; but they may also be meddling micromanagers. Third,
renegotiating the contract and bidding for new contracts are a nonprofit way of life.
Fourth, governments contract out to hold down costs and to increase flexi-bility;
nonprofits are constantly reconfiguring their structures, processes, and pay-rolls to
squeeze out those savings and remain competitive bidders. Fifth, the “dance of
contract renewal” is often protracted and political, requiring managers to devote
large amounts of time to survival activities. In summary, compared to the hierar-
chical government social service director, the nonprofit manager is more con-cerned
with survival, cash flow, and the politics of a board of directors. This nonprofit
manager is almost always very entrepreneurial and shows a high toler-ance for the
tensions of contract renewal; this manager also enjoys much greater
latitude in the management of the nonprofit organization than does the

hierar-chical government manager.
After an extensive study of four nonprofit mental health service providers under
government contract, Keith Provan and H. Brinton Milward ( ) determined that a
stable and continuing relationship with government funders contributed to higher
performance. Network management was more effective when it was centralized and
monopolistic. Resource-rich governments and their contractors were more effective
than resource-starved governments. Finally, direct funding to a stable, centralized,
monopolistic provider proved the most effective.
Having described these and other differences between contract management and
ordinary public management, we close this section with a brief consideration of how
government can be an effective and smart buyer. Following Kettl ( b), it is essential
to recognize that contract management is a growing and important form of public
management. It has made for smaller government in the sense of there being fewer
employees. But it has not made government a smart buyer. In-deed, a smart-buying
government must have a somewhat different kind of bu-reaucracy, one with many
more frontline bureaucrats trained, hired, and rewarded to do contract management.
Midlevel bureaucrats must be trained in a contract-theoretic form of management.
Elected officials, consultants, and academics should lower the rhetoric that has done
so much to establish the NPM hegemony and the contract regime. Governments
should avoid contracting for core government func-tions. Governments as well as
public administration scholars and practitioners should recognize that the application
of market methods in the public sector raises important new issues of governance,
the subject to which we now turn.
Governance
Although governance is the subject of Chapter , here we take up several impor-tant
implications of governance for management theory. The implications for gov-
ernance of management by contract have only recently begun to be explored.
Milward and Provan ( a) showed that as of the effect of contracting on citizens’
perceptions of the legitimacy of the government had not been addressed, nor had
questions of how to govern networks. Although our knowledge has de-veloped over
the intervening years, the questions still remain. The answers will almost certainly
center on how networks are managed, since the hollow state’s main task is to
“arrange networks rather than to carry out the traditional task of government, which
is to manage hierarchies” (Milward and Provan a, ).
Note that this implies a need for theories of management to incorporate net-
works and contract management into our understanding of public administration.
Our skepticism of the ability of principle-agency theory to adequately explain
management by contract is now more clear: A hollow state is not engaged in that
type of relationship. Indeed, as demonstrated by David Van Slyke ( ), agency

theory assumptions need to be relaxed per Kathleen Eisenhardt’s suggestion to
ac-count for the contextual elements of the relationship, such as the length of
time the parties have been in contact and the level of conflict, in order to
accurately explain contracting relationships. By comparing agency theory with
stewardship theory as proposed by James H. Davis, Lex Donaldson, and F.
David Schoorman ( ), Van Slyke shows that contracting relationships can
change over time, as trust replaces some of the need for monitoring.
Relationships that start out with an emphasis on control, per agency theory, can
change to ones based on goal con-vergence. However, he also shows that there
is room for the development of a hy-brid approach that combines agency theory
with stewardship, since reputation can be developed in a steward relationship,
but then used as a reward to promote goal alignment, per agency theory.
One result of contracting that is important for governance is the increased in-
fluence of organized interests on agency decisionmaking (Kelleher and Yackee ).
Simply put, contracts open a new way for organized interests to lobby pub-lic
managers, which Christine Kelleher and Susan Webb Yackee identify as a “con-tract
pathway.” This pathway has implications for governance, since the pathway raises
the issue of trade-offs between equity and responsiveness (Wilson ). Kelleher and
Yackee also point out that contractors may be viewed in two ways: positively as
partners or negatively as special interests. These concerns about gov-ernance and
politics surrounding contracting—as opposed to just market effi-ciency—indicate
broader factors at play beyond what is predicted by NPM. Amir Hefetz and Mildred
Warner ( ) show that managers understand the impor-tance of monitoring, but also
see the need for responsiveness. Importantly, they point out that agencies also
contract back in as a way of carrying out their duties of providing quality service in a
responsive manner.
Contracting may also have perverse effects on policy outcomes. Janice Dias and
Steven Maynard-Moody ( ) show that the firm monitoring structures often present in
contracts can create conflicts between management and workers, and distort the
incentives for behavior on the part of the contractor. Emphasis on short-term
production over long-term goals, or on maximizing output while min-imizing costs,
can create policy failure, since contracts such as these simply ignore the importance
of public management. The key here is that a focus on establishing a principal-agent
relationship, traditionally understood to be necessary for suc-cessful contracting, can
actually come at the expense of success, rather than en-hancing it. Clearly, the
usefulness of agency theory and New Public Management approaches is being
increasingly questioned. We can conclude that, even though management by contract
is not new and is here to stay, we are only just beginning to fully understand its
implications for governance.
Our discussion on contracting out described the changed functions of the

public manager in a contract regime. Contracting, however described, weakens a
manager’s capacity to manage directly by delegating management. In the
abstract and theo-retical sense, those who support contracting argue that
contracting out should allow managers to focus on goal setting, performance
standards, and policy framing— referred to in the popular literature as
steering—and leave the contractor to do the rowing (Osborne and Gaebler ). But
the evidence appears to run in the other direction. Contracting appears to export
not only the details of day-to-day government work but also much of the
capacity to direct or to control policy (Pe-ters ; Rhodes ). Several approaches to
effective contract management have already been set out. Nevertheless, insofar
as contracting out is part of the governance perspective, it is difficult to escape
the conclusion that contracting may result in short-run savings and efficiencies
as well as reduce the capacity of public managers to manage.
In addition, of course, is the matter of accountability. All systems of proxy
management decrease the clarity of accountability. In tranquil times, this may not be
a problem; but when there is a crisis, a lack of clear accountability in a contract or a
chain of contracts and subcontracts is often the subject of political inquiry.
Conclusions
At its origins and for the first fifty years of the field, management was at the core of
public administration. Because management is what most public administration
professionals do, theories of management fundamentally informed the practices of
public administration. But at about midcentury, American public administra-tion
scholars lost interest in management theory and turned to theories of rational choice
and decisionmaking, loosening much of the early close connection between theory
and practice. During this period, the field of business administration, as well as
social scientists in the so-called middle-range theories (group theory, role theory,
communication theory), was busy developing management theory. Then, starting in
the mid- s, the study of management in the public sector began to reappear, although
in new theoretical clothing and speaking a new language.
One form of this theory, principal-agent theory, has been of particular interest to
scholars seeking to build knowledge of organizational and managerial behavior in
the public sector. Principal-agent theory has made an important contribution to our
understanding of the political control of bureaucracy, the subject of Chapter ; has
generally demonstrated that political principals do control administrative agents; and
has added to our knowledge of some of the nuances of political control and
administrative responsiveness. But principal-agent theory appears to be less useful as
a basis for management theory in the public sector.
A second contemporary form of management theory in public administration is

the so-called New Public Management, or the new managerialism. Like earlier
reforms, it is partly imported from business management. Some of the business
management theories of the s and s colonized public administration, such as
management by objective and Total Quality Management. And the work of the
middle-range theories has been widely adopted in the reemergence of man-agement
theories in public administration. And like earlier reforms, the NPM has often been
the work of consultants, journalists, and politicians rather than the work of scholars.
The primary reason for this is methodological and theoretical.
Among scholars, the emphasis is upon building theory and the body of
knowl-edge. This requires the formal identification of variables, some
precision in their measurement, a formal articulation concerning the
relationships between vari-ables, field-testing of those relationships, and the
replication of findings. Little of the work associated with the New Public
Management would satisfy the canons of social science.
Many management theorists in the newer schools of public policy represent an
important exception among scholars. One of their arguments was that their
scholarship should contribute directly to solving public problems and to ensuring
better government management, and that this scholarship should not be held down
by the “dead hand of social science.” Their work tends to consist of obser-vation-
based case studies, inductive logic, and a kind of informed presentation of
suggestions for either policy improvement or better management. It is often said that
“this may be good management, but it is not very good science.” Put another way,
modern concepts of public management work in practice, but not in theory.
There is little doubt that the NPM has reconnected theory to practice. At all levels
of government, public managers are reinventing government, reengineering
government, attempting to be entrepreneurial, attempting to better serve their
customers, attempting to be more innovative, attempting to take risks, and at-
tempting to add value. Although it may not be good science, at least in the posi-tivist
conception of social science, the New Public Management is influential. It has
replaced the old principles of public administration with a new set of princi-ples, or
doctrines. These are the doctrines of contracting out, decentralizing, grant-ing
greater discretion to managers, increasing citizen or customer choices, deregulating,
organizing so that there is competition, and determining effective-ness according to
outcome measurement. In applying these doctrines, the public manager must be a
leader and an entrepreneur and must practice governance. But this
leader/entrepreneur is still a bureaucrat. The irony is, therefore, that, although the
New Public Management would banish bureaucracy, in fact it replaces bad
bureaucracy with good bureaucracy by calling the latter something else!
Hood and Jackson, as well as Majone, suggest that the theory of New Public
Management is best understood not as positivist social science but as the logic of
rhetoric. This logic views the organization, the agency, or the government bureau as a “cognitive paradigm” of shared
meanings and agreed-upon understandings. Organizations are moved or changed by adjustments in meanings and
understand-ings, usually brought about by changing patterns of rhetoric. In management the-ory, the New Public
Management doctrines are the contemporary “winning arguments” concerning how to manage government agencies.
These winning ar-guments have more to do with received wisdom, with shifting metaphors, and with presentation and
packaging than with objective, scientifically verifiable evidence.
Finally, in the contemporary theory of management in public administration, three particularly
important concepts/metaphors dominate: leadership, contract-ing out, and governance. The modern
emphasis is upon strong, heroic, muscular leaders rather than neutrally competent technocrats. But
assertive administrative leadership in a political world always presented dangers, both to the logic of dem-
ocratic self-government and to long-run bureaucratic effectiveness. The modern emphasis is on contracting
rather than on direct government service. But contracts are often ill managed, and serious questions of
accountability persist. Governance is the modern theory of network management and has a considerable
empirical warrant.
The theory of management that was part of the inception of public adminis-tration made important
contributions to improving the effectiveness and honesty of government in the United States. Only time will tell
if contemporary manage-ment theory will have as lasting and profound an effect.

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5

Theories of Public Management

Introduction: Developments in Public Management Theory

equipment, or technology is coupled with human management. The

agement systems as well as highway and other transportation systems; and

administrators to show a greater sensitivity to the forces of change, the needs of

From the s through the s, with the exception of a continuing interest in

analysis. Although separating management and organization for conceptual and

Traditional Management Theory Thrust Forward

introduced the most famous mnemonic in the field—POSDCORB, which

Until the mid- to late s, any treatment of management in public admin-istration

Another modification to the principles of scientific management came as the

Following these assumptions, Theory X managers emphasize elaborate controls

One important and different approach to management theory in the evolution of

table . comparing traditional

Means of control Policy, rules, regulation, Shared goals, values, and

Sources of control Mainly external mechanisms Mainly internal motivation

Definition of duties Fixed Flexible, contingent

Accountability Usually individual Often in the group

Structure Tall; top-down Flat; mutual layered influence

Power Emphasis on legitimate Emphasis on relevant

Responsibility Performing individual tasks Performance of work unit or

Rewards Extrinsic Intrinsic

Innovation Less likely More likely

Employee reaction to Compliance Commitment

institutional purposes and missions. Table . is a comparison of traditional

Iulio Jr.’s research ( ) on the characteristics and management of the Federal

Rational choice theories of bureaucracy are neither illuminating nor helpful. In

Persons in roles exhibit essential persisting features of behavior, such as the

duties, as leaders building relationships with subordinates, or as liaisons emphasiz-

on performance as measured against agreed-upon standards. Keeping

Evolution of Management Theory

generally informed participants. This dialectic is less like the authoritative

Another way to think about the doctrines of public management is to turn

table . comparisons of traditional and contemporary

Scale Large—centralized Small—decentralized

. Contracting out is often not done for reasons of performance and

ther, organizations need not even match their environment; networking

Leadership as Public Management

particularly the tools of microeconomics, was the second acceptable form of

In the bigger picture, the emphasis on leadership in public administration has

a certain kind of consciousness: [leaders] are imaginative, purposeful, enterprising,

knowledge, e.g., the tacit, intuitive knowledge of a wise and experienced

Department of Energy is done by contract. It is estimated that one-sixth of

. Interdependence among buyers (government) and sellers (contractors)

For management theory, it appears that by contracting out, governments

than a market or a government monopoly, the contracting of social services

latitude in the management of the nonprofit organization than does the

type of relationship. Indeed, as demonstrated by David Van Slyke ( ), agency

Our discussion on contracting out described the changed functions of the

A second contemporary form of management theory in public administration is

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