Implementing performance management in Brunei: a case study of public sector reform

By

Thuraya Farhana Haji Said

This thesis is submitted to the University of Surrey in fulfilment of the requirements for the degree of Doctor of Philosophy in the Surrey Business School

Surrey Business School

University of Surrey

November 2015

STATEMENT OF ORIGINALITY

The following submission for the award of Doctor of Philosophy at the University of Surrey is entirely my own work and has not been previously submitted to this or any other institution for this or any other academic award. Any ideas, data, images or text resulting from the work of others have been acknowledged and fully referenced.

ACKNOWLEDGEMENT

In the name of Allah, the Most Gracious and the Most Merciful.

All praise to Allah for all His blessing and guidance throughout the development of this thesis.

The journey of realising this thesis has been inspiring and yet always a challenging one. It would not have been possible without the guidance and the help of many individuals who in one way or another contributed and extended their valuable assistance in the preparation and completion of this thesis.

I owe particular thanks to both of my supervisors, Dr Paul Tosey and Dr Alexandra Bristow, for their selfless and unfailing support and persistent help, without which this study would not have been completed. Thank you for not giving up on me.

Also my thanks go to my earlier supervisors, Dr Sam Warren and Dr Nick Rummens, for all the insights they shared at the beginning of the course that helped me build a foundation from which to start on the development of this thesis.

My deepest appreciation goes to the government officials and staff of the Ministries and Departments of Negara Brunei Darussalam for generously taking time out of their working hours to accommodate the research of this thesis; their openness and willingness to be interviewed and their assistance in providing valuable information proved their positive attitudes towards the betterment of academia and the process of government in our country.

My sincerest gratitude goes to the government of His Majesty the Sultan and Yang Di-Pertuan of Negara Brunei Darussalam, without whom I would never have the chance to pursue my ambition, for granting me the Brunei Government’s Scholarship to undertake this PhD program.

Not forgetting, thank you my dear colleagues and friends in Guildford and Brunei Darussalam, who have supported and encouraged me, for your kind words and prayers.

Last but not least, thank you to my beloved parents, and sisters, for their unconditional love that always gave me the strength to go on each time I negotiated the many obstacles encountered throughout the undertaking of this thesis which I dedicate to my father, Haji Said, and my mother, Hajah Dyg Asiah. Thank you for your unshakable belief in me and for your prayers.

ABSTRACT

This study examines the implementation of performance management (PM) in the Brunei public sector within the context of debates about new public management, bureaucracy and post-bureaucracy. Although Brunei opted for such reform to modernise and improve its public-sector performance, in the literature there appear to be differences between the rhetoric and realities of adopting PM and this brings into question the extent to which the sector is moving towards post-bureaucracy.

This study draws on institutional theory as its theoretical lens. In order to address questions intended to explain the ways in which PM has been used as part of Brunei public sector reform, a qualitative approach was adopted. Five government ministries and departments where PM tools, such as strategic plans, balanced scorecards and performance indicators, had been implemented since the government introduced the National Strategic Alignment Programme in 2003 were selected as case organisations. Eighty interviews and informal observations were conducted and then analysed using a thematic approach to provide insights into how the implementation of PM was experienced and perceived by participants involved in the process. Through cross-case analysis, this study evaluated the responses to PM that are specific to the Brunei context, showing the influence of institutional factors such as national culture or existing institutions. As an outcome of the empirical analysis, a theoretical framework emerged which explains the difference between the rhetoric and reality of the post-bureaucratic context of reform and illuminates the intertwining of change and stability. In particular, concepts of institutional entrepreneurship/work, path dependency and translation from institutional theory that take into account the role of human agency in change processes, or the paradox of embedded agency, were drawn on in the development of the framework. This study thus makes a contribution to institutional theory.

The findings show that, despite there being strategic acquiescence to PM in the case organisations, they were not deeply affected by the practice which led to PM appearing rhetorical, mainly in order to gain legitimacy. Instead, the findings show evidence of decoupling of PM from existing institutions and practices and also a translation of the PM practice which led to strategic resistance to PM and institutional maintenance of bureaucracy. PM in the Brunei public sector was mainly influenced by path-dependency factors and this in turn influenced the translation of PM by embedded actors resulting in PM being shaped according to existing cultural norms. For instance, there was a persistence of bureaucratic culture that caused interviewees to frame PM in terms of compliance to hierarchical authority rather than as a means of improving performance, in contrast to the ideas of post-bureaucracy. This shows that the influence of existing practice was stronger than the influence of the principles of PM. Therefore, this study provides insights into the roles of change and stability in the PM implementation process leading to institutional maintenance in Brunei, as well as insights into the existence of the contradictions between the rhetoric and realities of post-bureaucratic reform.

TABLE OF CONTENT

2STATEMENT OF ORIGINALITY

3ACKNOWLEDGEMENT

4ABSTRACT

LIST OF TABLES…………………………………………………………………..8

10LIST OF FIGURES

11ABBREVIATION

12CHAPTER ONE: INTRODUCTION

121.1 Introduction

121.2 Background of the research

161.3 Theoretical lens

181.4 Research methodology

201.5 The organisation of the thesis

23CHAPTER TWO: LITERATURE REVIEW

232.1 Introduction

232.2 The new public management movement

2.2.1 Definitions and characteristics of NPM……………………………...25

272.2.2 Bureaucracy to post-bureaucracy: structural changes

332.2.3 Bureaucracy to post-bureaucracy: cultural changes

352.3 Performance management and overview

372.3.1 Theories about performance management

402.3.2 Problems of performance management in the public sector

432.4 Critical perspectives on NPM

2.4.1 Rhetoric and reality in post-bureaucratic contexts of reform………47

562.5 Summary

59CHAPTER THREE: THEORETICAL LENS

593.1 Introduction

593.2 Institutional theory and performance management

653.3 The institutional work perspective

3.3.1 Types of institutional worker - the paradox of embedded agency..67

693.3.2 The mobilisation of resources

743.4 Historical institutionalism

3.4.1 Path dependency and increasing return (or self-producing)……... 76

803.5 The perspective of translation

3.5.1 Legitimacy……………………………………………………………....83

3.5.2 Strategic responses…………………………………………………....86

923.6 Summary

94CHAPTER FOUR: RESEARCH METHODOLOGY

954.1 Introduction

964.2 Research paradigms

994.3 Research approach

1024.4 Research methodology

1034.4.1 Research strategy

1064.4.2 Case study selection: the rationale for the choice of the case organisations

1094.5 Sampling strategy: non-probability purposive sampling

1114.5.1 Sample size and criteria

1134.6 Qualitative research methods for data collection

1144.6.1 Main primary data source: semi-structured interviews

1164.6.2 Additional primary data source: non-participant observation

1184.6.3 Secondary Data Sources: Documentary and archival research

1194.6.4 Data collection process: Research Access and Ethical Consideration

1224.7 Qualitative Data Analysis

1224.7.1 Preparation of qualitative data for analysis

1234.7.2 Data analysis

1254.8 Research validity and reliability

1304.9 Summary

132CHAPTER 5: OVERVIEW OF BRUNEI PUBLIC ADMINISTRATION

1325.1 Introduction

1335.2 Background of Brunei

1375.3 The introduction of performance management in Brunei administration

1425.4 Policies affecting the introduction of performance management

1435.4.1 Human resource management (HRM) reforms

1485.4.2 Budget and financial accountability process

1515.5 Summary

153CHAPTER SIX: MINISTRY OF DEFENCE

1536.1 Introduction

1536.2 Introduction of performance management to the MOD

1596.3 The relevance of hierarchical authority

1676.4 The influence of structural barriers

1736.5 The impact of inadequate training

1796.6 Summary

181CHAPTER SEVEN: MINISTRY OF HEALTH

1817.1 Introduction

1817.2 Attempts to implement performance management in the MOH

1867.3 The influence of organisational culture

1947.4 The influence of existing structural arrangements on PM priorities

1967.5 The impact of lack of reward and autonomy on PM

2027.6 The influence of lack of capability

2067.7 Summary

208CHAPTER EIGHT: MINISTRY OF COMMUNICATIONS

8.1 Introduction………………………………………………………………..208

2088.2 Implementing performance management in the MOC

2148.3 The influence of the hierarchical power on PM

2188.4 The influence of existing budgeting practice on PM implementation

2228.5 The influence of existing HR policies on PM implementation

2278.6 The effect of conflict of interest resulting from lack of competence

2298.7 Summary

231CHAPTER NINE: PUBLIC SERVICES DEPARTMENT

2319.1. Introduction

2319.2 The implementation of PM in the PSD

2379.3 The influence of the hierarchical authority

2409.4 The impact of manpower constraint on the implementation of PM

2449.5 The influence of the existing practices and rules and regulations on PM

2489.6 The impact of level of competency on PM

2529.7 The influence of lack of incentive on PM

2549.8 Summary

256CHAPTER TEN: MANAGEMENT SERVICES DEPARTMENT

25610.1 Introduction

25610.2 Introduction of performance management

26310.3 The influence of existing ‘modus operandi’ on the PM

26710.4 The influence of lack of manpower on PM

26810.5 The influence of existing policies on PM

27210.6 The effect of limited knowledge or training on PM

27310.7 Summary

275CHAPTER ELEVEN: DISCUSSION OF FINDINGS

27511.1 Introduction

27611.2 The tension between the rhetoric of PM and the reality of bureaucratic resistance in the case organisations

28011.2.1 First theme: The strategic acquiescence to PM and post-bureaucracy rhetoric in order for the case organisations to gain legitimacy

11.2.1.1 Variation of timing of conforming to the rhetoric of PM between the case organisations…………………………………………………..280

11.2.1.2 Variation of organisational model for conforming to the rhetoric of PM between the case organisations………………………………..282

28611.2.2 Second theme: The strategic resistance to PM and institutional persistence of bureaucracy

11.2.2.1 The obedience to hierarchical authority was more influential than the influence of PM…………………………………………………287

11.2.2.2 The influence of existing practice was stronger than the influence of the principles of PM on organisational behaviour and action………………………………………………………………………291

11.2.2.3 There was greater emphasis on formal appraisal criteria than on performance influence the implementation of PM………………...299

11.2.2.4 The effect of inadequate technical capacity on PM implementation…………..…………………………………………….…302

11.3 The intertwinement of institutional change and stability………..……305

30911.4 Summary

311CHAPTER TWELVE: CONCLUSIONS

31112.1 Introduction

31112.2 Summary of main findings

31312.2.1 Research question 1: To what extent is PM institutionalised in the Brunei public sector in terms of any change to the structure and culture of the case organisations?

31412.2.2 Research question 2: To what extent did the case organisations integrate PM into their organisational and individual activities?

31612.2.3 Research question 3: to what extent is PM seen as legitimate by the individuals involved in terms of the provision of better strategic and operational practice?

31812.3 Conclusion of the thesis

32012.4 Theoretical contribution

32212.4.1 Understanding the paradox of embedded agency in institutional work using the notion of path dependency

32512.4.2 Understanding path dependency influences translation

12.4.3 Understanding decoupling as a process of translation328

33012.5 Empirical contributions

33012.5.1 Examination of NPM in a new empirical setting

33112.5.2 Addition of interpretive study to understand the implementation of PM in Brunei as the NPM approach

33212.5.3 Employment of institutional theory to understand PM in Brunei

12.6 Implications for practice333

33512.7 Limitations of the research and recommendations for future research

REFERENCES341

APPENDIX 1359

APPENDIX 2.……………………………………………………………………. 361

APPENDIX 3362

APPENDIX 4365

APPENDIX 5366

APPENDIX 6368

APPENDIX 7377

APPENDIX 8.…..…………………………………………………………………378

APPENDIX 9379

APPENDIX 10 ……………………………………………………………………382

APPENDIX 11383

LIST OF TABLES

Table 2.1: Core features of NPM according to different authors’ views…….. 25

31Table 2.2: Governance types – procedural vs corporate

36Table 2.3: Performance appraisal compared with performance management

42Table 2.4: Types of deviant behaviours and their causes

45Table 2.5: Contrasting traditional public administration with new public

48Table 2.6: Several examples of rhetoric and reality in human resource

88Table 3.1: Strategic responses to institutional processes

96Table 4.1: Ontology, epistemology, methodology and method

107Table 4.2: Date when PM first implemented in each case organisation (from earliest to most recent implementation)

112Table 4.3: Sample size for each case organisation in this study

126Table 4.4: Traditional criteria for judging research compared with some alternatives proposed for qualitative social research

136Table 5.1: Program improvements that have been introduced

144Table 5.2: Personnel: Divisions, salary scales and types of qualification

146Table 5.3: Difference between the bonus rate in 1992 (still in use) and 2000 (revoked)

222Table 8.1: Corporatisation targets – legal preparation

281Table 11.1: Timing of PM implementation: comparison between case studies of the implementation of PM at the time of empirical study

282Table 11.2: Different organisational archetypes of performance management across the case organisations

284Table 11.3: The position of office/unit of strategic management

293Table 11.4: Process of performance management

296Table 11.5: The size of the office of strategic management

306Table 11.6: Common practice of decoupling across the case organisations.

LIST OF FIGURES

Figure 2.1: The generalised MBO Process39

44Figure 2.2: Range of diverse response from different countries on NPM

54Figure 2.3: Aspects of culture have an impact on all stages of the performance management cycle

77Figure 3.1 Illustration of the Path Dependency

87Figure 3.2: Variation in institutionalisation of PM: consolidation vs Decoupling and centralisation and decentralisation

90Figure 3.3: Understanding the concept of decoupling or loose coupling and its consequences

104Figure 4.1: Using case studies as an approach for conducting research

106Figure 4.2: The case study approach of this research

114Figure 4.3: Research Instruments for collection of data

119Figure 4.4: Several key principles in research ethics

130Figure 4.5: Measures to ensure the quality of the research design

133Figure 5.1: The country, Brunei Darussalam

137Figure 5.2: Strategic Plan

148Figure 5.3: PM process in the Brunei public sector

155Figure 6.1: PM Reporting process

157Figure 6.2: The MOD organisational Structure

183Figure 7.1: The MOH organisational structure

184Figure 7.2: PM reporting process

191Figure 7.3: The Consultant’s Strategy Governance Plan for the Ministry of Health

212Figure 8.1: The MOC organisational structure

212Figure 8.2: The units of the OSM

213Figure 8.3: PM Reporting process

219Figure 8.4: Proposed new MOC PM cycle

233Figure 9.1: The PSD organisational chart

235Figure 9.2: The new PM reporting process in the PSD

236Figure 9.3 Overview of PASTI program

257Figure 10.1: The MSD Organisational structure

260Figure 10.2: The MSD PM reporting process

261Figure 10.3: PM process in the MSD

279Figure 11.1: Summary of the main findings in the study

321Figure 12.1: The theoretical framework of this study

ABBREVIATION

BSC -the Balanced scorecards

HR -Human resources

HRM-Human resource management

ICT -Information and communication technology

IMF - International Monetary Fund

IT-Information technology

KPIs-Key performance indicators

MGD -Millennium Development Goals

MOC -Ministry of Communication

MOD -the Ministry of Defence

MOF-the Ministry of Finance

MOH- the Ministry of Health

MSD- the Management Services Department

NAP -the National Alignment Progamme

NPM - New public management

OECD - Organisation for Economic Co-operation Development

OSM-the Office of strategic management

PA- Performance appraisal

PM - Performance management

PMO-the Prime Minister’s Office

PSC-the Public Service Commission

PSD-the Public Services Department

SMC -Strategic management committee

SMG -Strategic Management Group

SPG - Strategic Planning Group

WHO-World Health Organisation

PASTI - Public Administration Service Transformation Initiatives

CHAPTER ONE: INTRODUCTION

1.1 Introduction

This chapter gives an introduction of the purpose of this study about implementation of performance management (PM) in the Brunei public sector and the motivation for this research which centres around the need to understand whether it remains an aspiration or has become an instrument for achievement. It comprises the research problem, objectives and research questions as well as an outline of the theoretical lens used to address the aim of the research. The structure of the thesis is also presented in the last section of this chapter.

1.2 Background of the research

In the Western context, over the last three decades public sectors have been reformed to improve efficiency and effectiveness through the introduction of new public management (NPM), as an alternative to the perceived weaknesses of the traditional model of bureaucracy (Dunleavy and Hood, 1993; Hood, 1991; Pollitt and Bouckaert, 2011). Advocates of NPM take the view that the practices of the private sector are better than those of the public sector. In recent years, there has been considerable recognition of NPM’s importance as it has been widely promoted by international organisations, such as the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) and the influence of this has been felt in developing nations, including Brunei. Like its neighbouring countries, the Brunei government has attempted to adopt NPM approaches, and this was expected to have a significant influence on improving its government ministries and departments. This was addressed in one of the Sultan’s titahs (speeches) in the 1990s that gave a directive to public sector organisations to review and improve their organisational performance (Brunei Resources, 2011):

Ministries must analyse and assess their organisational […] planning […] to ensure that organisational structure and… planning are meeting the needs and requirement of the nation.

As a result, a national programme was established in 2003 to ensure that ministries’ strategic plans were developed to include performance management (PM) practices, and key performance indicators were introduced to support the implementation of PM, which includes specifying which goals to achieve and the measurement and evaluation of performance (Verbeteen, 2007; Modell, 2009; Armstrong, 2010). The notion of PM is central to NPM as there is increased concern for results which, in turn, has increased the importance of PM tools and practices (OECD, 1991: Hood, 2005). However, there is debate as to whether NPM, including PM, is applicable in developing countries and in particular, at present, whether it has had the desired effect in Brunei is still questionable.

Despite the perception of NPM as a solution to public sector efficiency for governments, it is necessary to understand not only how it can operate in different sectors, but also how this practice which was developed in a Western context can be used to improve efficiency in developing countries which have different cultures and fundamental needs (McCourt, 2002; Yapa, 2014; Richards, 1991; Harun et al., 2012; Koike, 2013). For public organisations to adopt NPM practices, it might be assumed that it is only a matter of transferring the same theories and practices available in the private sector to the public sector and that similar success could be achieved. However, it is argued that differences between the public and private sectors have to be lessened or removed and more emphasis given to accountability in terms of results (Hood, 1995; Pollitt and Bouckaert, 2011; Hughes, 2003; Koike, 2013; Thiel and Leeuw, 2002; Radonor and McGuire, 2004; Bevan and Hood, 2004; Hodgson, 2004; Kennerly and Neely, 2002). Even in Western countries, where NPM ideas are most prevalent, previous studies on public sector reforms indicate there have been limited benefits from their adoption and in some cases such changes have brought about unintended and undesirable outcomes (Hood and Bevan, 2004; Dambrin et al., 2004; Pollitt, 2002; Harun et al., 2012; Verbeeten, 2007; Waggoner et al., 1999). This is epitomised by Radnor and McGuire (2004) posing the question regarding public sector reform in the UK, ‘performance management in the public sector: fact or fiction?’ They argue that, due to its private sector origins, NPM might not be totally compatible with public sector method and other authors have agreed with this (including Harun et al., 2012; Pollitt, 2002; Hodgson, 2004; Yapa, 2014).

Reforming the public sector in developing countries according to the NPM model is not a minor task but is a rather complex process (Hassan, 2005; Norhayati and Siti-Nabiha, 2009; Harun et al., 2012; Hodgson, 2004; Pollitt, 2002; Bevan and Hood, 2006; Yapa, 2009). The process of reforming the public sector involves transforming traditional bureaucracy to post-bureaucratic organisation forms of organisation which incorporated elements of corporate culture, flexibility and decentralisation. This transformation entails a fundamental shift that presents a set of challenges to the existing culture and identities not only because of its contradictory nature (between public and private sectors) but also because of their differences compared with Western countries in terms of cultural, political and fundamental needs. Previous studies have found that there is contradictions imbedded in the shift away from traditional bureaucracy to post bureaucratic organisation (see Hogdson, 2004; Legge, 2005; Behvan and Hood, 2006; Araujo and Branco, 2009). For example, previous studies on NPM reform of public sector accounting in developing countries have shown that some practices have been rejected, while others have been modified and their findings imply that there was a difference between the rhetoric and reality of NPM practice (Siti-Nabiha and Scapens, 2005; Nor-Aizah and Scapens, 2007; Araujo and Branco, 2009; Harun et al., 2012; Yapa, 2014).

In view of this, although formal systems or approaches have been adopted in the Brunei public sector, the fundamental question for this thesis is whether the introduction of PM has actually made any difference, whether improvement, deterioration or just difference [neither improve or deteriorate], to the underlying traditional bureaucratic cultures of the ministries or whether its adoption has largely been symbolic. From an initial analysis of public media prior to the study, there seemed to be indifference about the value of implementing PM in the Brunei government, as little progress appeared to have been made in efficiency of budget use in the five or six years since its introduction. There appeared to be a level of stability of existing practice, culture and values despite the need to change being emphasised through governmental programmes. This became the motivation for the researcher to explore why this indifference existed and how it can be overcome and this motivation was strengthened by discovering there was limited discussion in the literature about the uptake of PM in Brunei. Because its implementation, which had not previously been studied in detail, can be considered important for the country’s development, this study aims to make contributions to the knowledge about reform in the Brunei public sector, particularly looking at the use of PM as a practice of the NPM movement.

Thus, the aim of the study is to investigate the implementation of PM in the Brunei public sector, and the extent to which it has become institutionalised, n other words the extent to which it is being accepted and taken for granted as a normal mode of managing Brunei public sector organisations. In order to support this aim, the study has two main objectives:

1) To examine the extent of PM institutionalisation in Brunei public sector through the theoretical lens of institutional theory

2) To provide insight into the dynamics of PM in Brunei public sector as experienced by different organisational actors through collection and analysis of in-depth qualitative data.

To make a contribution to the understanding of the practice and effects of PM in the Brunei public sector, this study draws on literature about culture, power and human resources management (HRM) within the context of the debates about NPM and post-bureaucracy. To inform the findings of this study, institutional theory is used as its theoretical lens and this is explained in the next section.

1.3 Theoretical lens

Institutional theory was chosen because the study is largely looking at the process of institutionalisation at organisational level. The theory suggests that how a practice, in this case PM, is implemented and practised in organisations depends on their existing institutions or practices and on the power of the embedded actors in the implementation process. Institutional theory is concerned with understanding organisations within large social and cultural systems (DiMaggio and Powell, 1983; Scott, 2008; Oliver, 1991) which can both influence the behavior of embedded actors. This study recognises the relevance of examining the process of change and stability by drawing on several concepts of institutional theory, such as institutional entrepreneurship/work, path dependency, translation, legitimacy and decoupling. Using institutional theory to interpret the findings, the study looks at the paradox of embedded agency, to understand both the Brunei public sector organisations and the attitudes of their employees towards PM as this paradox questions the ability of actors to act ‘strategically to change’ when they are considered to be ‘institutionally embedded’ (Garud et al., 2007; Rautianinen and Scapens, 2013; Currie et al., 2012). In other words, existing institutions may shape and constrain the strategies that embedded actors develop (Batillana et al., 2009; Rautianinen and Scapens, 2013). In addition, embedded actors may also be influenced to choose existing practices that give them benefits, or ‘increasing returns’, when facing critical junctures (several alternatives) (Greener, 2005; Hall, 2010), especially in conditions of uncertainty and complexity. The tendency for path-dependent change is highest when existing institutions are challenged without increasing returns (Norhayati and Siti-Nabiha, 2009; Yang and Modell, 2013).

Nevertheless, in institutional theory, external pressure for change cannot be ignored. Researchers (DiMaggio and Powell, 1991; Nor-Aizah and Scapens, 2007; Oliver, 1991) suggest that the strategic response of embedded actors to change can range from acquiescence to decoupling, which is a form of translation process, separating the new practice from existing organisational activities to cope with institutional contradictions and secure social legitimacy. Several previous studies have looked at public sector reforms using different variants of institutional theory, but a gap in the literature has been identified with regard to the role of embedded agency in institutional change. Hardy and Maguire (2008: 213) and other authors including Currie et al. (2012) and Lawrence et al. (2009) argue that little emphasis has been given to the study of resistance to institutional work or unintended consequences of institutional work because of interest in the ‘heroic’ entrepreneur. Thus, this calls for further research to illuminate the impact of the role of embedded agency in organisational change analysis. In view of this, using institutional theory as the theoretical lens can help to make sense of PM as a reform tool in the Brunei public sector and how PM can effect change as well as resistance to PM. Furthermore, this study can also expand understanding of the role of embedded agency in institutional work by investigating the implementation of PM practice as an NPM model in a different social context, in this case a non-Western country, in order to consider in depth the influence of the cultural context on the agency of embedded actors. In other words, the role of embedded actors who work with PM, in terms of how they shape it to the local context, is considered in depth. Thus, this study aims to make a contribution to the existing knowledge about the intertwinement of ‘change and stability’ through reform which highlights the value of examining the social, cultural and political contexts in which such public sector reform is introduced.

Thus, recognising this, the aim of the study is to investigate the extent to which PM is institutionalised in the Brunei public sector. According to several authors (Selznick as cited in Scott, 2008; Siti Nabiha and Scapens, 2005; Dambrin et al., 2004; Harun et al., 2012), institutionalisation is a process by which a new practice permeates beyond the technical requirements of the organisation, infiltrating the values and norms of the organisation to become widely accepted and grow into the unquestionable form of practice. In this regard, as PM is considered a relatively new management practice for the Brunei government, it is important to explore the way PM is being implemented in its public organisations, and also the way organisational members respond to it, in order to explore the impact of the practice. Consequently, the research questions are as follows:

1) To what extent is PM institutionalised in the Brunei public sector through changes in the organisational structure and culture?

2) To what extent do the organisations integrate PM into organisational and individual practices?

3) To what extent is PM seen as legitimate by the individuals involved in terms of the provision of better strategic and operational practice?

These research questions are answered by examining the experiences of five public sector organisations in Brunei which were taken as case study and the rationale for the selected strategy is explained in the next section.

1.4 Research methodology

This study is informed by interpretative philosophy, which enables capture of the richness of the social, cultural and organisational influences associated with the implementation and use of PM in the public sector.

The ontological assumptions of this research are broadly interpretivist which allows the researcher to analyse the extent to which PM has affected and transformed Brunei public sector organisations or has been resisted by the organisational members. Interpretivism assumes that, in terms of how the world is seen, there are subjective and multiple realities which suggests that PM practices can be viewed as social and organisational practices. It acknowledges that different contingencies, in terms of organisational practices and cultural and historical aspects, influence the implementation of PM and, thus, this perspective assumes that PM practices are socially constructed and can be changed by the social actors themselves. Consequently, the epistemological position of this study, which is in line with the interpretive paradigm, influences the adoption of a qualitative methodology.

A qualitative methodology is appropriate when exploring a particular phenomenon in a specific context and a researcher seeks a deep understanding of people’s interpretation of this phenomenon (Saunders et al., 2007). Capturing experiences of the participants through interviews and document review is expected to shed light on the role of embedded agency in implementing and using PM in the Brunei public sector. The epistemological and ontological positions of the study are also in line with the theoretical lens chosen to explain how change and stability can be intertwined by drawing on participants’ experience of how PM practice has been adopted and implemented.

In this study, a multiple-case study approach, in which data were mainly collected in the form of face-to-face, semi-structured interviews but also from observation and document analysis, was used to investigate PM as it is considered a context-dependent phenomenon (Creswell, 2007; Yin, 2009). A purposive sampling strategy was used since to answer research questions such as those in this study requires researchers to recruit cases that are particularly informative (Saunders et al., 2009; Yin, 2009). Five organisations were selected from different areas of government activity and employees’ experiences of PM implementation in these five organisations were compared. This comparative case studies analysis approach was used to provide in-depth understanding of how the adaptation and implementation of PM in the Brunei public sector were approached and to show if any issues that were identified with PM were associated with the general culture and practices of Brunei.

The interview data were collected from eighty interviewees who were officials holding different hierarchical positions in the case organisations. All interviewees responded to questions about how they felt about and understood the PM process in their organisations because the emphasis was on obtaining rich data about the actual experiences of PM in practice that could be compared with formal policy claims, or even the literature that would show the difference between the rhetoric and reality of NPM. Informal onsite observation was also conducted to complement the primary data collected from interviews and document reviews and enable data triangulation.

This study examined the managerial policies relating to PM, how PM was used in practice and the routines surrounding its use. In this way, it provides information for future researchers, policy makers and those government employees involved in NPM practices about the way in which people carry out the implementation of PM as part of their organisational activities. Given the lack of previous academic enquiry, theory and methodology, the result of adopting this comparative analysis leads to 1) contribution to existing knowledge about the experience of NPM and PM in non-Western countries, 2) contribution to knowledge that enhances institutional theory in analysing institutional change and stability, and 3) practical considerations for the Brunei government. This study is the first of its kind that specifically examines qualitatively the impact of PM on Brunei public sector organisations and thus, it is not only useful regarding practical contribution including for policy-makers, but it can also be used as an academic reference in Brunei.

1.5 The organisation of the thesis

The background and the purpose of the study have been given in this chapter. Chapter 2 begins by providing a review of the literature about new pubic management theory and the concept of PM. It discusses the notion of NPM being an appropriate approach for addressing the problems of bureaucracy. It is crucial, if not obligatory, to discuss this as that is how NPM was developed as an important management philosophy. The discussion also revolves around the bureaucratic characteristics of the traditional administration model as referred to in Weberian theory and the emergence of post-bureaucratic form of organisations. Then, this chapter proceeds with a discussion of the literature concerning the structural and cultural changes required to move away from bureaucracy to post bureaucracy in order to adopt an NPM approach and the tensions associated with such a reform.

Chapter 3 introduces institutional theory as the theoretical lens of the study and describes how this is used to examine organisational change analysis. Although there are some studies of institutional theory in public sector reform that have been conducted in order to examine institutional change, the debate of agency versus structure is a growing field that seems lacking as an area of academic enquiry and theory. Thus, this chapter discusses the identified gap in the field concerning how the idea of embedded agency plays an important role in understanding the way existing institutions are being transformed or maintained. Taking into account the role of embedded agency, several concepts from institutional work, path dependency, translation and decoupling were selected from institutional theory to make sense of data about organisational change.

Chapter 4 discusses the research methodology. After identifying the research questions and objectives, the explanation of the research design is given. The chapter explains the rationale for an interpretivist approach being adopted for this research and for the selected strategy, i.e. multiple case studies of Brunei public sector organisations. Instruments for qualitative data collection and the method of analysis are also discussed in detail and the sample size, ethical issues and problems encountered during data collection are described. Ways to enhance the reliability and validity of this study as well as its limitations are also considered.

Chapter 5 introduces the Brunei administrative system and outlines its major features. This provides a foundation for later discussion of management and reform. Chapters 6 to 10 analyse the NPM experiences and present the analysis of the implementation and use of PM in each of the five case organisations in turn. Chapter 11 discusses the themes from the analysis and shows how they are linked with what was found in the literature review. Finally, Chapter 12 draws together the summary of the main findings to answer each research question and the conclusions of the study. The contribution of the research to theory (including the emerging theoretical framework), empirical research and methodology are presented, and the implications for practice are discussed. Suggestions for future research to overcome the research limitations are included at the end of this chapter.

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction

This chapter reviews the literature that is relevant to understanding the nature of performance management (PM) in the public sector. The chapter begins with an overview of new public management (NPM), and the debate about bureaucracy and post-bureaucracy and their associated structural and cultural issues. Although it was mentioned in Chapter 1 that this study is limited to Brunei as a developing country, it seems still necessary to review NPM from the developed (Western) public sector perspective, especially OECD countries, as it is considered fundamental to the introduction and development of PM in the public sector. Then, the literature on PM and its characteristics relevant to governments seeking to reform as well as the constraints of its application to the public sector are discussed. This is followed by discussion of the tension between ‘rhetoric and reality’ in post bureaucratic contexts of reform.

2.2 The new public management movement

The 1980s and early 1990s saw the emergence of new public management (NPM) in the public sector, in response to the inadequacies of the traditional model of administration (Hood, 1991; Dunleavy and Hood, 1994; Ferlie et al., 1996, Dent et al., 1996; Pollitt and Bouckaert, 2004; 2011). There are several other terms used by authors to describe public sector reform, such as ‘post-bureaucracy’, ‘managerialism’, and ‘entrepreneurial government’. However it is labeled, this new approach to the management of the public sector and public services has resulted not only in a shift in terminology but also a shift in the basis of decision making from rules to performance through the employment of private sector tools and business that put a strong emphasis on management processes (Denhardt and Denhart, 2000; Hood, 1991; Hughes, 2003; Osborne and Gaebler, 1993; Gray and Jenkins, 1995; Horton, 2002). Similarly, for Pollitt and Bouckaert (2004: 8), public sector reform refers to ‘the shift in public management style’ consists of deliberate changes to the structure and processes of public sector organisations with the objective of getting them to run better’. As such, administrative reform aims to improve the status quo of public services through efficiency, effectiveness and accountability. Boyd (2009: 159) categorises administrative reform into two dimensions: 1) performance/results-oriented reforms and 2) structural/process reforms.

According to Hood (1991 cited in Barzelay, 2001: XI), NPM had ‘discredited progressive public administration’s answer to administrative what-to-do questions in government and had established itself as an accepted administrative philosophy’. The emergence of NPM was initially an Anglo-American phenomenon led by the Thatcher/Reagan New Right governments which favoured the introduction of private sector methods and techniques into their administrative models which they argued were inefficient and wasteful (Osborne and Gaebler, 1992; Ferlie et al., 1996; Rose and Lawton, 1999; Barzelay, 2001; Gray and Jenkins, 1995). The influence of NPM in these Anglo-American countries spread to Australia, New Zealand, Scandinavia and Continental Europe respectively. The underlying assumption was that the governments believed the practices of the private sector were superior to the public sector administration, as claimed by Hood (1991: 6):

This [NPM] movement helped to generate a set of administrative reform doctrines based on the ideas of professional management expertise as portable, paramount over technical expertise, requiring high discretionary power to achieve results [free to manage] and central and indispensible to better organisational performance, through the development of appropriate cultures and the active measurement and adjustment of organisational outputs.

Success stories of public sector reform in the NPM pioneer countries stimulated other governments all over the world to explore new standards and roles by implementing new management structures (Denhardt and Denhardt, 2000), and developing countries began to apply the model and experience of NPM. Thus, the recent reform initiatives in Brunei administration, with which this study is concerned, have been contextualised as part of a broader international trend of public sector change and new public management (this can be understood by looking at institutional theory in Chapter 3).

2.2.1 Definitions and characteristics of NPM

Although NPM has had a considerable impact on both the theory and practice of public administration, there is no consensus in the literature on exactly what constitutes NPM initiatives (Hughes, 2003; Ferlie et al., 1996; Ferlie et al., 2005). Several authors (Hood, 1991; Ferlie et al., 1996; Hood, 1995; Sozen and Shaw, 2002; Christensen and Laegreid, 2003; Hughes, 2003; Barzelay, 2001) have defined NPM in terms of theoretical ideas of public administration, economics and management and, as a result, NPM reform has been characterised in various ways. Components of NPM as perceived by different academic writers (Mathiasen, 1999; Hood, 1991; Skalen, 1994; Hughes, 1995, respectively) are presented in Table 2.1, which shows substantial overlap between their different views.

Table 2.1: Core features of NPM according to different authors’ views

Mathieasen (OECD)

Hood

Skalen

Hughes

Focus on results

Hands-on professional management

Output based accountability

Use of flexibility

Decentralisation of structure

Explicit standards and measurement

Decentralisation and devolution

Clear objectives

Flexibility in provision

Greater use of output controls

Entrepreneurial

Increased politicisation

Use of incentive mechanisms

Competition

Competition and market mechanisms

Use of markets to test performance

Strengthening strategic centres

Private sector management style

Managerial

Privatisation

Greater accountability

Greater discipline in resource use

Deregulation

Disaggregation of bureaucracy

Source: Mathiesen (1999), Hood (1995), Skalen (2004), Hughes (2003)

From the variety of perspectives in the literature, Hughes (2003: 53) found that there are thirteen main elements of public sector reform: a strategic approach, management not administration, a focus on results, improved financial management, flexibility in staffing, flexibility in organisation, a shift to greater competition, the new contractualism, an emphasis on private sector styles of management practices, relationship with politicians, relationships with the public, separation of purchaser and provider, and re-examining what government does. More concisely, Dunleavy and Hood (1994) identified two main shifts in the move from public administration to NPM: 1) de-emphasising differences between the private and public sectors, and 2) moving from process to outcome requirements and accountability. The focus of this current research is on the latter, of which the key characteristics are: more emphasis on visible hands-on top management, explicit formal measurable standards and measures of performance and success, and greater emphasis on output controls or performance (Dunleavy and Hood, 1993; Pollitt, 2009), as these elements of NPM appear to have influenced administrative reform in Brunei (this is further explained in Chapter 5).

However, the extent to which the shift towards NPM in Brunei is an empirical reality or a rhetorical aspiration has to be considered as there has been considerable debate regarding this issue in the literature (as is discussed in detail in Section 2.4). As has been described above, some authors see the rise of NPM as part of the so-called decline of bureaucracy and the emergence of ‘post-bureaucracy’ (Pollitt, 2009; Harris and Wegg-Prosser, 2007; Hodgson; 2004). If NPM, or post-bureaucracy, were an empirical reality in Brunei, it would have a profound effect on administrative structure and culture that would represent a fundamental change in the institutional framework of the public sector, or would establish a new institutional framework within it. This points to the need to examine the nature of bureaucracy and post-bureaucracy and the shift in structure and culture needed to move towards the institutionalisation of NPM.

2.2.2 Bureaucracy to post-bureaucracy: structural changes

Before discussing post-bureaucracy, it is necessary to consider first the nature of bureaucracy. Bureaucracy is seen as the fundamental form of government and Weber’s theory of bureaucracy, which is the most important theoretical principle of traditional administrative efficiency, is the most influential theory in the study of public administration (Lawton and Rose, 1999; Hughes, 1995; Kumar and Kant, 1996, Pollitt, 2003). However, the meaning of the word ‘bureaucracy’ has become linked with incrementalism and was characterised as inefficient (Pollitt, 2003, Adler and Borys, 1996; PUMA, 2001, Araujo and Branco, 2009). Although the negative notion of bureaucracy has often been used to justify the emergence of NPM or post-bureaucracy, or even the perspective that bureaucracy is ‘dead’, the other two elements (fundamental form and efficiency) cannot be overlooked.

According to Weber, organisations that were based on legitimate authority, which involves defined structures of authority and power, would be the most efficient in terms of the achievement of widely accepted goals (Merton, 1967; Satow, 1975; Blau and Meyer, 1987; Mathiasen, 1996; Hughes, 1995; Mommsen, 1974). Weber characterised public administration as (Gareth and Mills 1948; 196-198; Hughes, 1995: 22):

1. Fixed specification of tasks

2. Hierarchy

3. Predominance of written documents

4. Expert training

5. Full-time occupation

6. Management based upon rules

7. Selection through competitive examination

8. Official activity separate from private lives of the officials

9. Employee to have no other major occupation.

10. Prohibition on employees appropriating either the post or its resources for their own uses.

This contrasts with the elements of NPM identified by Hughes (section 2.2.1) in the way it focuses on rules and procedures rather than performance and outcome. Weber further identified the position of the official as being defined by the terms and conditions of those who work in the bureaucracy (Gareth and Mills, 1948: 198-204; Hughes 2003: 23):

1. The office holding is a vocation

2. Official usually enjoys a distinct social esteem

3. The official is appointed by a superior authority

4. The official position is held for life

5. The official normally earns a fixed salary determined by position within the hierarchy and the official gets promoted according to seniority or merit, thus the official is set for a career within the hierarchical order of the public service.

The two principles of Weberian ideal-type bureaucracy, the characteristics of the organisation and the position of the official, are claimed to represent three general aims: certainty, impersonality and efficiency (Hughes, 2003). The claimed efficiency of a system that the bureaucratic approach can create was associated with formalisation and centralisation (Adler and Borys, 1996; Common, 2001; Merton, 1967; Blau and Meyer, 1987; Mathiasen, 1996; Hughes, 2003; Feeney and Denhart-Davies, 2009; Hall, 1982). While formalisation is defined as the degree to which rules define role, authority relations, communications, norms and sanctions and procedures (Hall et al., 1967: 907), centralisation refers to the delegation of decision-making authority throughout an organisation and the extent of participation by managers in decision making (Aiken and Hage, 1968 cited in Haji Saim, 2005). The degree of formalisation and centralisation can play a major role in shaping employees’ attitudes and behaviours at work either positively or negatively (Gerth and Mills, 1948; Hall, 1982; Hughes, 2003; Feeney and Dehart-Davis, 2009; Adler and Boryes, 1996), especially when there is conflict between two sources of decision-making/authority in bureaucracies: incumbency in a legally defined office and the exercise of control on the basis of knowledge (Weber, 1947 cited in Adler and Boryes, 1996: 62).

According to Gouldner (1965:22 as cited in Adler and Borys, 1996: 61-62), in the first case, the authority stems from administration based on discipline and if it lacks professional expertise, it can create a rule-bound administration that stifles creativity, fosters dissatisfaction and demotivates employees; in the second case, the authority is seen as gained from ‘the exercise of control on the basis of knowledge’ such that individuals obey because ‘the rule of order is felt to be the best known method of realising some goal’, which creates a sense of responsibilities and required behaviours. However, the relationship between formalisation and attitudinal outcomes depends on the context within which formalisation operates. Alder and Borys (1996: 65) take the view through contingency theory that the negative attitudinal outcomes attributed to fomalisation are often due to misalignment of task requirements and organisation design and positive attitudinal outcomes result both when high levels of formalisation are associated with routine tasks and when low levels of formalisation are associated with nonroutine tasks.

While conformance to routine can achieve uniformity of decision, it can also produce degrees of inefficiency, dehumanisation and ritualism that may interfere with capacity to accomplish goals (Merton, 1967; Blau and Meyer, 1987; Cameron and Quinn, 1999; Hughes, 2003; Budd, 2007). This points to two main criticisms of bureaucracy from an organisational-structural perspective: 1) bureaucracy dysfunction and 2) stability resulting in inflexibility. Dysfunction of bureaucracy related to over-conformance to rules could result in the displacement of goals and the occurrence of administrative malpractice or bureau-pathologies (Merton’s concept of goal-displacement and Blau’s concept of work-to-rule) (Merton, 1967; Niskanen, 1973; Blau and Meyer, 1987; Caiden, 1991; Feeney and Dehart-Davis, 2009). Bureaucracy dysfunction can also arise from its being a system of power and privilege, where information is guarded as ‘the office secrets’ and the freedom of the individual in relation to choice is restricted (Hughes, 1995; Blau and Meyer, 1987; Gerth and Mills, 1948; Mommsen, 1974).

In relation to stability, the criticism is that bureaucracy works well only within predictable and stable environments in which innovation and flexibility are not a source of competitive edge (Hall, 1982; Bolin and Harenstam, 2008). The managerialists claim that employees should have the ability to be more flexible, so that they can perform multiple roles efficiently and effectively (Kamenka, 1989; Blau and Meyer, 1987; Hughes, 1995). However, from the view of contingency theory, du Gay (2000: 6) seems to agree that bureaucracy can be seen as dysfunctional within a dynamic environment:

Bureaucratic government is represented as the paradigm ‘that failed’ in large part because the forms of organisational and personal conduct it gave rise to and fostered – adherence to procedure and precedent, avoidance of personal moral enthusiasms and so forth – are regarded as fundamentally unsuited to the contemporary economic, social, political and cultural environment. In an era of constant and profound change, a new paradigm is required for the public sector if that sector is to survive at all. Entrepreneurial governance is represented as just such a paradigm.

Thus, these critiques of bureaucracy had become the basis for arguments for NPM, or the move of the public sector from traditional bureaucratic to a post-bureaucratic paradigm, in search of better performance through incorporating new concepts and practices (such as knowledge sharing, strategic management, performance-related pay) (Pollitt 2009; Walsh, 1995; Hughes, 2003). Such a move implies the need to review and change organisational structures and roles from bureaucratic characteristics (Hodgson, 2004; Bolin and Harenstam, 2008; Pollitt 2009b), to ensure that they are aligned with performance goals and that the required strategies of control are in place to facilitate the efficient and effective conduct of its activities. Pollitt (2009b) and Heckscher (1994, cited in Hodson, 2004: 84) identified a number of distinct elements of post-bureaucratic organisations:

1. Hierarchies are flattened and horizontal connections are emphasised;

2. Emphasis on consensus through institutionalised dialogue;

3. Influence through personal knowledge and experience to persuade others;

4. A high level of need for internal (that is belief that the organisation is moving toward the achievement of organisational goals) to achieve influence and interdependence between all departments on the performance of all;

5. Emphasis on the organisation’s mission, linking overall organisational goals with individual goals;

6. Strategic information shared within the organisation to link individual contributions to the organisational mission;

7. Focus on principles leading to greater flexibility and responsiveness to changing circumstances to guide actions that are expected to achieve the organisation’s mission;

8. Restructuring of flexible decision-making processes;

9. Network of specialised functional relationships supported by information technology that provides information about what to do or where or who to go to for a particular issue;

10. The use of open and visible peer review processes to establish social recognition and foster trust among employees;

11. The emergence of a new form of labour market as a result of the open boundaries of post-bureaucracies;

12. The use of public standards of performance and a shift from collectivism towards individualism in employment relations;

13. Expectation of change.

However, post-bureaucratic organisations can take many forms. Bolin and Harenstam (2008) reviewed works associated with the rise of post-bureaucracies and found that there are variations and similarities in how post-bureaucracies are defined; for some, post-bureaucracy is a distinct form compared with bureaucracy and others claim that post-bureaucracy is largely a rhetorical fiction rather than a description of actual organisations (Bolin and Harenstam, 2008). Furthermore, a few authors claim that post-bureaucracy is an extension of bureaucracy whereby post-bureaucracy characteristics can co-exist with those of bureaucracy (Josserand et al., 2006; Budd, 2007). This appears to be due to the prevailing distinctive bureaucratic ethos and values, such as public interest, service, honesty, integrity, fairness and equity, which make government organisations different from private sector companies (Ferlie et al., 1996; Verbeeten, 2007; Cheung, 2002).

Table 2.2: Governance types – procedural vs corporate

Source of rationality

Form of control

Primary Principle

Service Deliver Focus

Procedural Bureaucracy

Law

Rules

Reliable Treatment

Universal

Corporate Bureaucracy

Management

Plans

Goal Driven

Target Groups

Source: Considine and Lewis (2003: 133)

Considine and Lewis (2003) constructed a typology of governance and organisational forms. Extracts relevant to this study concerning procedural and corporate bureaucracy, are as shown in Table 2.2 above. Procedural bureaucracy corresponds to Weber’s ideal type, where the source of rationality is law, and rules and regulations are the method of control, and this was claimed to be in decline by the end of the 1970s (Considine and Lewis, 2003). Meanwhile, corporate bureaucracy refers to the NPM approach that emerged by the 1980s as Considine and Lewis (2003: 133) explain:

‘This corporate type promoted the idea that officials should respond to targets set by managers and should be guided by a comprehensive performance-measurement regime that made such targets the mainstay of the organisation (corporate governance). Management improvement programs, goal-oriented planning systems, and program budget reforms were in many systems that moved toward this corporate governance ideal’.

The degree of moving from bureaucracy in different organisations can differ according to the context in which they operate (Pollitt, 2006). Not only in Asian country studies as mentioned above, but even a study of ten countries of the OECD (1997) (New Zealand, Australia, Canada, Denmark, Finland, France, the Netherland, Sweden, the UK and the USA) on performance management practices associated with NPM shows that, although they have attempted to move towards a new form of organisation, the results have varied from highly traditional public service represented by strong administrator/bureaucracy positions to a highly flexible operating model with a strong manager/market position. Even though there appears to have been a significant change in public sector organisations on a global basis, this cannot be regarded as a representation of a simple move from bureaucratic to post-bureaucratic organisation and bureaucracy still seems to be the most prevalent underlying form of organisation (Pollitt, 2009; PUMA 1997).

2.2.3 Bureaucracy to post-bureaucracy: cultural changes

The shift away from bureaucracy usually involves cultural adjustment rather than being just a process of organisational restructuring. Rhodes et al. (2012) state that administrative culture is a key contingent factor in the introduction of NPM, or moving towards post-bureaucracy, in the public sector and in understanding its impact. Thus, change in organisational culture has been regarded as an objective of management as it can be a means of performance improvement (Claver et al., 1999; Marcoulides and Heck, 1993) because organisational culture can be a powerful tool to encourage adaptation to change affecting those who work in the public sector in terms of roles, work conditions and employment relations (Brown, 1998; du Gay, 1999; Butterfield et al., 2004; Horton, 2004; 2006). Claver et al. (1999: 459) describe a general model of classical bureaucratic culture as follows:

The management style is authoritarian, and there is a high degree of control. In a bureaucratic organisation, there is little communication and the management is usually a univocal, top-down one. Individuals search for stability, have limited scope for initiative and are oriented towards obeying orders. The decision-making process is repetitive and centralized. There is reluctance to start innovative processes. There are high degrees of conformity and highly reluctant to change.

The prevailing ideals, norms and values of the public sector must change if it is to inculcate a performance-oriented organisational culture. Organisational culture has been defined as a ‘set of shared meanings, or taken-for-granted assumptions’ (Claver et al., 1999), however the question is whether a culture is something an organisation has or, as a process of enactment, something an organisation ‘is’. If a culture is what organisation has, there will be limited variations among different organisations in a given society as national culture is imported into an organisation via its membership (Legge, 2005: 220). In this view, the role of national culture provides distinct patterns of ‘manual programming’ which affects the feasibility of NPM outside its country of origin (Ohemeng, 2010; Hofstede and Hofstede, 2005). Using the main cultural dimensions identified by Hofstede (1991), Haji Saim (2005), confirming an earlier study by Blunt (1988), found that the cultural attributes of Brunei depicted high power distance, medium uncertainty avoidance and high collectivism, which contrast with the cultural attributes of the Western origin of NPM. However, if culture is what an organisation is, it may be conceptualised as something emerging from social interaction; it is both the shaper of human action and the outcome of a process of social creation and reproduction. In this position, it is likely that one will observe more variations across societies given people’s different experience of reality. Thus, when considering to what extent cultural change is feasible, it seems important to consider a combination of these two aspects of ‘has’ and ‘is’ that may co-exist in the public sector.

Koike (2013) found that an important factor influencing the adoption reform based on NPM, including performance management, in many Asian countries is their tradition of authoritarian bureaucracy. Moreover, he found from his study of performance management in Asia that a patrimonial culture rather than a merit-based rational-legal culture is still prevalent in the bureaucracies of many Asian states (Koike, 2013: 356). While some have considered this to be beneficial for implementing NPM practice because it creates obedience and conformity, it may turn out to be a political tool (Koike, 2013; Ohemeng, 2011: 479). In relation to this, Horton (2006: 537) argues public organisational cultures may not necessarily be entirely replaced in spite of the changes introduced, but rather are filtered with existing traditional values, norms and institutional frameworks. In other words, in spite of all the changes, much of the traditional public administration culture remains (Araujo and Branco, 2009; Koike, 2013). This suggests that importation of NPM values may result in clashes of values as unintended consequences of the attempt to move towards the NPM paradigm (Clarke and Newman, 1997; Dunsire, 1995; Harris and Wegg-Prosser, 2007), especially when there are strong cultural values which may discourage cultural diversity. The study of organisational change, in the perspective of NPM, needs to take into account the interaction of old and new approaches rather than assuming that the old disappears in the wake of the new (Lowndes, 1997: 51). Thus, it is noted that the rise in NPM has also seen an increasing role of human resource management within the public sector to attend to human relations issues (Pollitt, 2009; Koike, 2013; PUMA, 2001; Norhayati and Siti-Nabiha, 2009).

The debate between supporters and critics continues as to what should be the definition and nature of NPM (Hughes, 2003; Pollitt, 2009). Nevertheless, the NPM movement has made performance management (PM) a key component of public sector management processes (see Dunleavy and Hood, 1994; Talbot, 2008; Pollitt and Bouckaert, 2011), and PM is discussed next.

2.3 Performance management and overview

Performance management became a new approach to managing performance in the USA and in the UK in the mid 1980s (Armstrong and Baron, 1998), due to its role in aligning individual and organisational goals and has been a key factor in public sector reforms in most OECD-countries (PUMA, 1997; 2002) which later disseminated around the world. It is considered an essential part of normal management (Rose and Lawton, 1999) and is increasingly accepted as an integral part of public sector management. However, the terms PM and performance appraisal have been used interchangeably, but Armstrong and Baron (2005) have summarised the differences as shown in Table 2.3 and differentiated these as follows:

Performance management is a comprehensive, continuous and flexible approach to the management of organisations, teams and individuals which involves the maximum amount of dialogue between those concerned. Performance appraisal is a more limited approach which involves managers making top-down assessments and rating the performance of their subordinates at an annual performance appraisal meeting (2005: 14).

Table 2.3: Performance appraisal compared with performance management

Performance appraisal

Performance management

Top-down assessment

Joint process through dialogue

Annual appraisal meeting

Continuous review with one or more formal reviews

Use of ratings

Ratings less common

Monolithic system

Flexible process

Focus on quantified objectives

Focus on values and behaviours as well as objectives

Often linked to pay

Less likely to be directly linked to pay

Bureaucratic – complex paperwork

Documentation kept to a minimum

Owned by the HR department

Owned by line managers

Source: Armstrong and Baron (2005)

Performance appraisal is only a part of PM; the other part is organisational performance measurement (Fryer, 2009 et al.; Armstrong and Baron, 2005), which is a crucial element of a PM system. The two terms PM and performance measurement are also often used interchangeably although they are different. Radnor and Barnes (2007: 393) differentiate them as follows:

Performance measurement is quantifying, either quantitatively or qualitatively, the input, output, or level of activity of an event or process. Performance management is action, based on performance measures and reporting, which results in improvements in behaviour, motivation and processes and promotes innovation.

In addition to dialogue, PM involves training, management style, attitudes, shared vision, employee involvement, multi-competence, incentives and rewards (Radnor and Maguire, 2003). The process of PM involves managing employees based on measuring performance outcomes. While performance measurement is the basis for providing and generating feedback for building further success and for corrective action to be taken where necessary (Armstrong and Baron, 1998: 270; Tan, 2006), performance appraisal is intended to provide milestones, feedback, guidance and monitoring, on an individual basis. Thus, performance management is both about measurement and management, about information and action (Bouckaert and Dooren, 2009). According to PUMA (2002), PM has three common objectives, namely management and improvement, accountability and control, and budgetary savings. First, PM emphasises continuous improvement driven by a desire for improvement in internal functioning that may require a performance-oriented information system and more flexible management tools and techniques. Using PM practice can be a learning process to learn and improve information where improvement is necessary so that the organisation succeeds (Verbeeten, 2007). Second, PM focuses on accountability and control derived from new ways of interacting across both internal and external networks as different accountability relationships exist in the government. According to Verbeeten (2007), measuring performance with regard to goals, public managers can clarify their responsibility and control and for what purposes their resources are used. Thirdly, PM concentrates on budgetary savings as a result of the need for fiscal restraint by shrinking budgets and increasing efficiency.

2.3.1 Theories about performance management

The purpose of PM is to direct employees’ activities consciously towards completing the organisational goals successfully through instituting a quality planning process. PM is underpinned by several motivation theories, in particular, goal-setting and expectancy theories (Armstrong, 2009; Locke and Latham, 2002; 2006; Verbeeten, 2007). Goal-setting theory, developed by Locke and Latham (2006: 265) over twenty-five years ago, suggests that the setting of complex goals in organisations constitutes a major source of motivation (Locke and Latham, 2002; 2006; Armstrong, 2009; Verbeteen, 2007). The well-known dictum about measurement and performance, ‘if you cannot measure it, you cannot manage it’ (Armstrong, and Baron, 1998), shows measurement is an important concept in PM. Using the SMART framework (specific, measurable, agreed, realistic, time related) enables organisations to establish effective measurable objectives for PM (Armstrong and Baron, 1998; Armstrong, 2009; Day and Tosey, 2011).

As for expectancy theory, formulated by Vroom (1964), this assumes that effort depends on the likelihood that rewards will follow and that the reward is worthwhile (Armstrong, 2009: 320; Verbeeten, 2007; Sloof and Praag, 2008). Optimal compensation must strike a balance between insuring actors against risk and providing them with sufficient incentives to exert effort (Sloof and Praag, 2008: 1). Thus, expectancy theory maintains that it is important for employees to perceive a close link between effort and what is measured, as well as between the performance measured and the reward given (Vroom, 1964, cited in Armstrong, 2009). This influences whether actors perceive high goals as challenges (focus on success and usefulness of effort) versus threats (focus on failure) which makes a difference to their performance (Locke and Latham, 2006: 266). Both performance measurement and incentive need to be incorporated into the personal performance appraisal system, through developing and strengthening self-efficacy and feedback.

Goal-setting theory is said to be in line with the management-by-objectives (MBO) movement, which was developed by Peter Drucker in the 1970s (Armstrong and Baron, 1998; Day and Tosey, 2011). MBO proposes that effective management must direct the vision and efforts of all managers towards a common goal, with the organisational goals broken down into a number of lower-level goals. The MBO process, as shown in Figure 2.1, consists of three key elements: goal setting (meaningful organisational objectives developed by top management); participation in decision making (superiors and subordinates jointly develop objectives for the subordinates that are consistent with the organisational objectives); and objective feedback (superiors and subordinates assess the subordinates’ performance) (Etzel and Ivanceivich, 1974: 49; Dinesh and Palmer, 1998), which are in line with the characteristics of moving towards the post-bureaucratic organisation or, in other words, NPM.

Figure 2.1: The generalised MBO Process

Source: Etzel and Ivancevich, (1974: 50)

Source: Etzel and Ivanceivich (1974: 49)

As part of this method, the cascading process for individual goals and objectives needs to be aligned with organisational goals (Smith et al., 1990; Etzel amd Ivancevich, 1974; De Haas et al., 2000) rather than isolated managerial preferences. Setting of goals is done at both organisational and individual levels and is associated with a strategic planning process (De Haas et al., 2000; Chakravarthy and Lorange, 1991), which involves translating the goals and objectives to the level of individuals within the organisations. Organisations benefit from setting out their aims in a clear way and also integrating their objectives, both top-down and bottom-up, in order to have a shared vision and understanding of performance requirements (see Chakravarthy and Lorange, 1991; Armstrong and Baron, 1998; De Haas et al., 2000; Verbeteen, 2007; Locke and Latham, 2002). With a top-down approach, goals tend to be imposed with little opportunity for discussion, whereas a bottom-up approach stimulates strategic dialogue and provides the opportunity for individuals to participate and contribute to the formulation of their own objectives. This enables employees to understand what is expected and to contribute to setting the order of priorities because inputs from organisational members in their areas of expertise might have substantial impact on tactics and strategies to be developed for achieving goals (De Haas et al., 2000). Moreover, while a top-down approach appears to make it easier to standardise elements of PM, the trade-off is that it could undermine the legitimacy of the reform for the employees. On the other hand, a bottom-up approach allows for more commonality of implementation to develop across the organisation and increases the likelihood of effective implementation (De Haas et al., 2000; Pollitt, 2009; PUMA, 1997). However, despite much having been written about the need to manage performance, PM practices vary, even in the experience of OECD countries, not only in terms of the choice between a top-down or bottom-up approach but also in terms of objectives, approaches, institutional arrangements, and performance information systems (PUMA, 1997; Pollitt and Bouckaert, 2011). Indeed, every public sector has specific characteristics that make the practicality of implementing PM less than straightforward.

2.3.2 Problems of performance management in the public sector

The principles embedded in public and private sector practices can give rise to tension and paradoxes with attempting to implement PM (Boland and Fowler, 2000; Pollitt and Bouckaert, 2011; Modell, 2005; Verbeteen, 2007; Bevan and Hood, 2006; Shirley and Xu, 2001; Tan, 2005). According to Thiel and Leeuw (2002: 271), the performance paradox refers ‘to a weak correlation between performance indicators and performance itself’. Since the emergence of NPM, performance measurement has come to be considered to play a key role in the efficient management of organisations (Kennerly and Neely, 2002; Fryer et al., 2009), and what constitutes ‘performance’ has changed. Traditionally, performance measurement tended to focus on inputs, such as financial indicators that evaluate the discrepancies between budgets and expenses (Radnor and Barnes, 2007; Jansen, 2008). Moving towards NPM, the traditional financial perspective on performance has to be broadened to become based on more explicit performance measures that focus on efficiency, comparing targets and actual performance and emphasising outputs (Hood, 1995; Jansen, 2008; Dooren and Bouckaert, 2009: 152).

Thus, PUMA (1997) observed that attempts to measure public sector performance through MBO had been undertaken, but the results were often neither comprehensive nor systematic. MBO has been criticised for several reasons such as its focus on quantity rather than quality; short-term rather than long-term success; control rather than continuous improvement; individual rather than team performance; and, inward-orientation rather than customer orientation (Dinesh and Palmer, 1998; Etzel and Ivanceivich, 1974; Armstrong and Baron, 1998; Sinclair and Zairi, 2000). Then another approach called the balanced scorecard (BSC) was introduced, proposed by Kaplan and Norton (1992), offering a balanced way of presenting performance by considering four perspectives: financial, customer satisfaction, internal processes and innovation/growth. The BSC presents a framework that translates an organisation’s vision into a set of performance indicators distributed among these four perspectives and linking short-term operational control to the long-term vision and strategy of the organisation. The BSC includes both financial and operational measures because understanding of the cause and effect relationships of all strategic objectives is important, rather than concentrating on any single measure that may result in dysfunctional consequences and where performance may be maximised against a measure that weakens the overall performance (Ridgway, 1959 cited in Sinclair and Zairi, 2000; Bouckaert and Dooren, 2008). However, it is argued that use of the BSC seems to have failed because of the complex range of stakeholders involved in the administrative system (Modell et al., 2009). The idea of the BSC comes from the private sector, but studies have shown that it is more challenging to develop measures in public sector organisations due to the multi-faceted nature of the sector (Fryer et al., 2009; Norhayati and Siti-Nabiha, 2009; Hassan, 2005; Radnor and Maguire, 2004).Thus, the BSC is not a template that can be applied generally, as differences in context would require customised scorecards to fit each organisation’s mission, strategy, technology and culture (Kaplan and Norton, 1993).

Based on the review of the literature, performance management and measurement in the public sector is not without unintended as well as deliberate managerial consequences (Gray and Jenkins, 1995; Thiel and Leeuw, 2002; Verbeeten, 2007; Bevan and Hood, 2006; Modell, 2005; Bourne et al., 2002). Despite the claim that public sector organisations can succeed in implementing performance measurement, there are critics who say that public sector organisations have measured too many things and the wrong things and need to sharpen their focus when identifying the long-term issues of mission, objectives and strategies (Chow et al., 1998; Atkinson et al., 1997 as cited in Modell, 2004: 43). This reflects the paradox of performance where the reports on performance show a weak correlation between performance indicators and performance which may occur when the indicators appear to show performance but do not reflect the real situation.

Table 2.4: Types of deviant behaviours and their causes

Factors

Resultant types of behavior

A divergence between the organisational objectives and the measurement scheme

1. Tunnel vision: choosing to concentrate on the easiest indicators and ignoring the harder ones

2. Sub-optimisation of individual departments or units to the detriment of the total system

3. Myopia: focusing on short-term targets at the expense of long-term objectives.

An inability to measure complex organisations accurately

1. Measure fixation: focusing on the indicator rather than the desired outcome.

2. Misrepresentation: either misreporting or distorting the data to create a good impression

An inability to process performance data correctly

1. Misinterpretation: imprecise statistical measures

2. Gaming: deliberately under achieving in order to obtain a lower target next time

An inability to respond to changing circumstances

1. Ossification, so that when an indicator is no longer relevant it is not revised or removed.

Source: Fryer et al. (2009: 486)

There are several factors causing performance indicators to fail to show the real situation: 1) positive learning, which is that as performance improves, indicators lose their sensitivity in detecting bad performance or identifying areas that are in need of attention (Waggoner et al., 1999); 2) perverse learning, where individuals or organisations use performance information to manipulate their evaluations (Fryer et al., 2009; Thiel and Leeuw, 2002; De Waal and Counet, 2008; Locke and Latham, 2005); 3) selection and suppression, which is reducing or ignoring differences in performance by replacing poor performers with better performers giving the impression of improvement. Smith (1995 as cited in Fryer et al., 2009: 486) has summarised the unintended or deviant behaviours in setting targets, with different causes, as shown in Table 2.4 above.

Thiel and Leeuw (2002) further add that the unintended performance paradox can be the result of minimal accountability. As stated by Hernandez (2002 as cited in Radnor and Maguire, 2004: 259), ‘if performance measurement is simply viewed as a data collection and reporting exercise, it will serve little purpose to a community’. Thus, the performance information must not ‘decouple’, or become separate, from organisational activities and must be used to track progress in commitment to the goal, which is enhanced by self-efficacy (Boyne 2009 as cited in Fryer et al., 2009). In this case, PM is only useful if there are still improvements to be made in the aspect of indicators and targets. It has been discussed that public sector organisations can face a performance paradox; Norman and Gregory (2003: 46 as cited in Fryer et al., 2009) argue that this is because ‘results-oriented management is an unrealistic pursuit in the public sector context’. The distinctiveness of public management needs to be taken into account during the setting of targets in order to produce certain outcomes, due to its multi-faceted nature and the different requirements or perceptions of various stakeholders. However, performance paradox is not only due to the complex nature of the public sector, but also results from the different institutional characteristics of different contexts. Because of apparent performance paradox, several authors (Modell. 2004; Radnor and Maguire, 2004) have argued that PM, or even NPM, has appeared to be a myth in the public sector.

2.4 Critical perspectives on NPM

Despite the many claims that the leading proponents of NPM and PM have led a global revolution in public sector management leading to universal convergence on an agreed model, there are other perspectives that suggest that this can be seen as illusory (Pollitt, 2001; Bevan and Hood, 2006; Legge, 2005). Even though a number of studies have been conducted, the long-term benefits of such NPM reform still await empirical validation. In some countries, PM might not have turned out as was intended, in that the language of NPM sometimes seems to be used only rhetorically. Indeed, according to Turner (2001: 246):

The language of reform undoubtedly shows convergence. Whether those speaking it actually mean the same thing is highly doubtful. There is also some dispute over what NPM actually means in its own heartlands.

Even across the OECD countries, there is no standard application of NPM; rather institutional and cultural contexts have resulted in variations with regard to packages of reform (OECD 1997; Christensen and Laegreid, 2003; Pollitt and Bouckaert, 2004; Pollitt, 2007). Figure 2.2 shows the range of diverse response of developed countries along a continuum ranging from massive to minimal impact (DeLaine as cited in Ferlie and Steane, 2002: 1462; OECD, 1997; Pollitt, 2009). It shows that even though NPM derived from these countries, their governments have followed a rather selective approach emphasising their own interest rather than adopting the whole package of NPM.

Figure 2.2: Range of diverse response from different countries on NPM

Source: Ferlie and Steane (2002: 1462)

Despite the criticisms of bureaucracy, there are some areas where bureaucracy appears to remain necessary. Du Gay highlights (2003: 673) that whilst bureaucracy may be inappropriate in the private sector, it still has a valuable role in the public sector because of the distinction between their roles:

This epochal schema in which ‘bureaucracy’ is reduced to a simple and abstract set of negativities contrasted with an equally simple and abstracted, but positively coded, set of entrepreneurial principles systematically evacuates the field of public administration of any of its characteristic content. However, when attention is focused on the specific purposes of public administration and its particular political and constitutional embeddedness, the generalised articulation of bureaucracy with the outmoded and dysfunctional is less obvious and the generalised superiority of entrepreneurial principles much more problematic.

Table 2.5: Contrasting traditional public administration with new public management

Traditional Public Administration

New Public Management

Public organisation

Private organisation

Public regulations

Deregulation/deregulated markets

Rules

Objectives/Results

Due process

Efficiency

Legality

Effectiveness

Vocation

Self-interest

Collectivism

Individualism