Forces of Change Guide

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Public Performance & Management Review, Vol. 27 No. 4, June 2004, pp. 34–40. © 2004 M.E. Sharpe, Inc. All rights reserved.

1530-9576/2004 $9.50 + 0.00.34

A RESPONSE TO “PROMPTING THE TRANSFORMATION OF

PUBLIC ORGANIZATIONS”

HAL G. RAINEY University of Georgia

SERGIO FERNANDEZ Indiana University

The value of “Prompting the Transformation of Public Organizations” derives from its attention to differences in the scope of change in public organizations, and not only its attention to conditions and contingencies that impede change in public organizations but also to conditions and contingencies that support or drive change. In particular, the article advances propositions, supported by anecdotal and case examples, about ways in which organizational responsiveness and orga- nizational capacity, and imbalances between these two dimensions, influence organizational change processes.

Concentrating on certain parts of the argument, one can summarize by saying that the propositions contend that an imbalance increases resistance to change. “Professionalized organizations,” high in capacity but low in responsiveness, and “protected organizations,” low in capacity but high in responsiveness, will dis- play resistance to change. When professionalized organizations experience loss of capacity, and when protected organizations lose supportive patrons, each type of organization faces increasing pressure to change. Professor Nutt provides nu- merous examples and instances to illustrate these dynamics, many of which have high face validity for us, since they resemble cases of large-scale change in pub- lic organizations with which we are familiar.

The general importance of these propositions and the perspective they repre- sent derive from the emphasis on external influences that interact with internal organizational conditions and responses in ways that create pressures for change, but in different ways in different types of public organizations. In the past, analy- ses of change in government agencies tended to concentrate on why those agen- cies resist change, and to overgeneralize about their virtually universal tendency to do so. Downs (1967), for example, in probably the most widely cited analysis of public bureaucracy ever published, claimed (with absolutely no evidence) that some agencies attract “climbers” and “zealots” and tend to change more rapidly

Rainey and Fernandez / RESPONSE TO PAUL NUTT 35

than other agencies, but that over time they all fill up with “conservers,” in a “rigidity cycle” that leads them toward, well, rigidity.

Warwick’s (1975) “theory” of public bureaucracy was essentially a theory of why such bureaucracies resist change, based on a case study of a failed change initiative in the U.S. Department of State. Warwick concluded that it is dread- fully hard to manage a change in a public bureaucracy, although upon reexami- nation in the light of contemporary literature on the management of change in organizations, one must conclude that what Warwick actually observed was a dreadfully managed attempt at change—a case study in how not to lead and man- age change in organizations of any type.

Then Kaufman (1976) concluded that government agencies are “immortal,” and hence very resistant to the ultimate type of change. This started a debate over whether or not you can “bump off” a government agency, especially since it would not be there in the first place if some wielders of political clout did not want it (Daniels, 1997; Peters & Hogwood, 1988). One upshot of the dispute was that it depends on how you define the death of a public agency. If an agency “dies” when it undergoes a substantial reform or reorganization (such as merger into another agency), then agencies die frequently (Starbuck & Nystrom, 1981). If an agency lives on if some vestiges of its former self are still kicking in some new organizational arrangement, then government is full of organizational ana- logues to Methuselah. Generally, however, scholars and observers tend to con- clude that agencies resist drastic overhauls or terminations amounting to death, and hence display general change resistance in this sense.

More recently, researchers on change in public bureaucracy began to pay more attention not just to factors impeding change but also those inducing it. They have noted the irony that, while earlier studies emphasized change resistance in government agencies, in fact, government agencies change constantly. Meyer (1979), for example, concluded from an empirical study of government finance bureaus that government agencies are much more open to environmental influ- ences that induce change, such as competition and demand, than stereotypes and previous scholarship would suggest. Significantly, however, in relation to the “Prompting Transformation” article, Meyer also concluded that while change is frequent, “fundamental change” (apparently meaning what organization theo- rists would later begin to call “transformation”) is very rare.

Still more recently, a number of studies of innovative government agencies and programs have concentrated, quite justifiably, on innovative practices or initia- tives, as opposed to organizational transformations of larger scope and scale (e.g., Borins, 1998; Holzer & Callahan, 1998; Light, 1998; Linden, 1990, 1994). Several of these studies have paid attention to external conditions and relations, of course, such as influences of political officials, stakeholders, and partners. They have also identified those organizational practices, characteristics, and conditions that ap-

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pear to foster innovation, such as employing teams, thinking strategically, adhering to core values, focusing on the customer, developing human resources, and other practices that often take on a “best practices” character. In their concentration on innovations and on organizational conditions fostering them, however, these stud- ies tend to devote less attention than does the “Prompting Transformation” article to questions about the fundamental forces that generate the pressures and incen- tives that overwhelm change resistance and lead to large-scale strategic reorienta- tions or even, as the pressures increase, to larger-scale, more comprehensive “transformation.” We need more development of such ideas about the conditions and contingencies that impede change or cause resistance to it, but also about the conditions and contingencies that support and prompt change.

That need is also apparent from a review of the more general or generic litera- ture on organizational change (as opposed to the literature focused on public bureaucracy). This more generic literature presents something of a conflict be- tween the view that organizations of all types resist change and the view that organizations can and do change frequently. Much of the general literature on organizations depicts all organizations as displaying a great deal of inertia and change resistance (among many examples, see Hannan & Freeman, 1989). Many authors in this body of work tend to conclude that large-scale organizational transformation occurs very rarely, and only when the organization faces pres- sures so extreme that they force people in the organization to face the wrenching pain of such large changes. As a CEO of IBM once put it, there must be a “burn- ing platform” from which people have no choice but to jump.

On the other hand, there are numerous frameworks and theories of organiza- tional change (Van de Ven & Poole, 1995), and a number of different models and frameworks that identify potential determinants of successful change in organi- zations. Although few of these models and frameworks have been rigorously tested empirically, and despite notable differences in the kinds of levers and con- ditions for success emphasized by their authors, there are remarkable similarities between them (Armenakis & Bedeian, 1999). This likeness suggests a pattern of consensus about what accounts for the success of planned change in organiza- tions. Determinants of successful organizational change frequently discussed in the literature include: a widely shared acceptance of the need for change; the leadership’s ability to persuasively communicate the need for change; efforts to reduce resistance to change through widespread participation and other means; top management support and political support from political overseers and key exter- nal stakeholders; efforts to institutionalize or routinize change; and subsystem con- gruence, or the implementation of a set of mutually reinforcing changes. Even so, the emphasis on widespread acceptance of the need for change again raises the question of what provides the fundamental impetus that drives large-scale change.

This, in turn, brings us back to “Prompting Transformation,” in which Profes-

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sor Nutt raises this question by contrasting public organizations with business firms. Business firms must sell their products, and they can encounter the “burn- ing platform” situation when sales and profits fall drastically. What comparable pressures can drive transformative change in public organizations that “sell” their outputs to political oversight authorities? As summarized earlier, Professor Nutt proposes that transformation will be driven by a “protected” organization’s loss of patrons and a “professional” public organization’s loss of capacity.

The assertions in “Prompting Transformation” about these dynamics and about capacity and responsiveness are plausible as being among the major sources of pressure for and against large-scale change. The propositions and framework, however, seem clearly inadequate for a general typology of transformations. There are a number of other potential sources or drivers of change discussed in the literature on change in organizations and in public organizations that this analy- sis does not consider. Examples of such drivers of change include the dialectical clash between competing ideas in the policy arena, purposeful adaptation to changes in the external environment (i.e., change as a result of strategic planning and goal-setting), the diffusion of innovations across public agencies and even national governments (e.g., the spread of reinvention and New Public Manage- ment type reforms across different levels of government and various Western nations), executive migration, and homegrown bottom-up innovations.

Still, the propositions and framework in “Prompting Transformation” appear plausible to us for a couple of reasons. One reason is that they tend to be consis- tent with other authors’ observations about public bureaucracies. For example, analysts of the power and discretion of public bureaucracies emphasize the pro- fessional expertise of agency personnel as one factor that enhances power (e.g., Meier, 2000; Rourke, 1984). This viewpoint is consistent with Professor Nutt’s contention that high levels of professional capacity in an agency can render it less subservient to political overseers and hence resistant to change. His observa- tions about the protection of some organizations by political patrons are similar to observations about the “capture” of certain government agencies by their stake- holders. A second reason that the propositions and framework seem plausible to us arises from the similar dynamics we observe in two cases we know well, in- volving a large-scale change in work processes in the Social Security Adminis- tration (Rainey, 2003, pp. 384–389) and a major reform and redesign of the Internal Revenue Service (Thompson & Rainey, 2003). In both these cases, a leader who appeared consistent with the concept of a “mutualist” leader (see Proposition 7) played a crucial role in the change process (although we would emphasize that the role of such a leader, virtually by definition and by implication of Professor Nutt’s depiction, is to involve others in leadership and not to serve as a lone, heroic leader).

Although we find the propositions and framework interesting and plausible,

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and valuable as a way of advancing inquiry into what drives transformation in public organizations, one can point to a number of points where the analysis needs strengthening:

The analysis oversimplifies the transactions of a public organization with the political authorities in its environment. In conceiving responsiveness, Professor Nutt argues that public organizations “sell” their outputs to an oversight agency, and that the oversight agency in turn is accountable to a legislative body, leaving one wondering which oversight agency plays such a role in, for example, the fed- eral government. The oversight agencies would tend to include the Office of Per- sonnel Management, the General Accounting Office, the Office of Management and Budget, and a few others. These agencies regulate, audit, review, and other- wise influence the executive departments and other independent agencies, but hardly in a comprehensive and central way in which the agencies are transmitting their outputs to them or through them. The agencies “sell” to interest groups, constituen- cies and clientele, congressional committees, and other stakeholders. If “oversight authorities” are meant to include oversight commissions that exist for some agen- cies, this needs to be clarified and those agencies specified.

The concept and dimensionality of “responsiveness” need still more attention. Responsiveness can be indexed “by the amount of agency initiative, given by the effort in services offered less those not being offered.” This suggests that respon- siveness refers to general service delivery to constituencies and clients. Yet, the framework in Figure 1 and the related discussion suggest that some agencies high on responsiveness become particularly change-resistant agencies because they are “protected” by certain political patrons. This concept of responsiveness is very different from one involving general service delivery to an agency’s array of clients and constituents. It raises the knotty question that others analyzing responsiveness have encountered—responsive to whom? It is also inconsistent with the implication of Figure 1 that highly responsive agencies cultivate politi- cal patrons who protect them, unless it is specified that highly responsive agen- cies are those that are highly responsive to certain political patrons. Thus, responsiveness as general service delivery and responsiveness as the cultivation of protective patrons need to be disaggregated in the analysis.

In the anecdotal evidence and examples supporting the propositions about patrons and responsiveness, again the analysis could use some more attention to the subtleties and complexities of the political environments of government agen- cies and the public policy processes in which agencies play a role. The old con- cept of an “iron triangle” became outmoded because it failed to take into account the dynamic nature of coalitions and networks in the policy process and has been superseded by concepts such as “issue networks,” “policy communities,” “public service industries,” “policy subsystems,” and others. Similarly, it seems that ref- erences to the maintenance of “old-boy networks” hardly capture the complexity

Rainey and Fernandez / RESPONSE TO PAUL NUTT 39

and dynamism of the political and public policy processes with which public organizations engage.

To the discussion of capacity erosion, we suggest some additional possibili- ties. Capacity can erode due to atrophy, of course. The agency may lose good people. Funding may decline. Organizational systems may erode and become obsolete. But this last point raises the possibility that capacity can erode in the sense of its adequacy to adapt to and handle new developments in the environ- ment or new pressures from the environment, as distinguished from simple atro- phy in relation to stable flows of pressure and demand. In the Social Security Administration, a growing population, added congressional requirements for new benefits to new types of clients, and hence increasing complexity of the clientele strained the organization’s capacity and led to the drastic overhaul of work pro- cesses mentioned earlier. Similarly, but with greater pressure resulting in greater organizational change (an attempt at transformation) changes Congress made in the tax laws, advancing information technology that the agency had trouble adopt- ing and adapting to, and other environmental pressures and dynamics caused the existing capacity to erode in the sense not of declining, but of becoming inad- equate in relation to new challenges. The implications for organizational trans- formation can be the same as proposed in the paper, and this process can be added as an elaboration of the concept of erosion of capacity.

We have not addressed “routinized organizations,” due in part to space limita- tions. In addition, however, we did not see how, as defined, these organizations could reflect the imbalance between capacity and responsiveness that Professor Nutt proposes as the source of change resistance, with an erosion of one of these factors prompting transformation. Since routinized organizations are low on both dimensions, how can an imbalance be the source of resistance to change?

In spite of these criticisms, which we impose upon the author from the languid and comfortable perspective of the back-seat drivers who did not have to develop the analysis when the paper was blank, we repeat our observation that “Prompt- ing Transformation” advances valuable propositions and ideas about what drives large-scale change in public organizations.

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and research in the 1990s. Journal of Management, 25, 293–315. Borins, S. (1998). Innovating with integrity: How local heroes are transforming Ameri-

can government. Washington, D. C.: Georgetown University Press. Daniels, M. R. (1997). Terminating public programs: An American political paradox.

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Holzer, M., and Callahan, K. (1998). Government at work: Best practices and model pro- grams. Thousand Oaks, CA: Sage.

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Rourke, F. E. (1984). Bureaucracy, politics, and public policy. New York: Little, Brown. Rainey, H.G. (2003). Understanding and managing public organizations (3d Ed.). San

Francisco: Jossey-Bass. Starbuck, W. H., and Nystrom, P. C. (1981). “Designing and understanding organizations.”

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Thompson, J. R., and Rainey, H. G. (2003). Modernizing human resource management in the federal government: The IRS model. Arlington, VA: IBM Endowment for the Busi- ness of Government.

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Hal G. Rainey is Alumni Foundation Distinguished Professor of Public Adminis- tration and Policy at the University of Georgia. He has recently published the third edition of his book, Understanding and Managing Public Organizations (Jossey- Bass, 2003), and he has recently been elected as a Fellow of the National Academy of Public Administration.

Sergio Fernandez is an assistant professor at Indiana University, School of Public and Environmental Affairs. His research focuses on privatization, public-sector leadership, and organizational change.