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Job satisfaction of public sector middle managers in the process of NPM

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Article  in  Public Management Review · July 2016

DOI: 10.1080/14719037.2016.1203012

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Job satisfaction of public sector middle managers in the process of NPM change

David Pick & Stephen T. T. Teo

To cite this article: David Pick & Stephen T. T. Teo (2016): Job satisfaction of public sector middle managers in the process of NPM change, Public Management Review, DOI: 10.1080/14719037.2016.1203012

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Job satisfaction of public sector middle managers in the process of NPM change David Pick a and Stephen T. T. Teo b

aSchool of Management, Curtin University of Technology, Perth, Australia; bSchool of Management, RMIT University, Melbourne, Australia

ABSTRACT This study examines how middle managers in public sector organizations experienced ‘New Public Management’ (NPM)-related change initiatives. Data from 486 Australian middle managers in state public sector agencies are analysed and the hypothesized model is tested using partial least squares (PLS) structural equations modelling (SEM) on two samples. The cross-validation model analysis brings a new focus on middle managers experience of change via the linkages between the provision of change information, change-induced stressors and the job satisfaction of employees. The ‘need for information’ is an important element in understanding the consequences of change.

KEYWORDS Middle managers; job satisfaction; change management; PLS modelling

This study examines how change initiatives associated with New Public Management (NPM) affects the well-being of middle managers in the Australian public sector. The characteristics of NPM change well-documented in the literature (e.g. Christensen and Lægreid 2011) but little is understood about how these changes affect middle managers. Middle managers are those in the layers at least two levels below CEO with supervisory responsibility for at least two levels of subordinates (for example line- workers and professionals) (Hassard, McCann, and Morris 2009; Huy 2001). In this article, we aim to increase our theoretical understanding of the mechanisms of job satisfaction among middle managers in the process of NPM-inspired change and in doing so provide insights that are useful to practitioners.

The implementation of NPM reform carries with it the risk of compromising job satisfaction among public sector workers that in turn has serious implications for the sector. Research suggests that rise of NPM-inspired change has had a range of negative effects on public sector managerial work including reduced well-being, loyalty and job security leading to losses to organizational competence and perfor- mance (Lindorff, Worrall, and Cooper 2011). Drawing on existing research on participation and information in change, stress, well-being and job satisfaction in general, we aim to extend the understanding of how change affects middle managers in the public sector.

CONTACT Stephen T. T. Teo [email protected] Both authors contributed equally to this article and authorship is arranged in alphabetical order. © 2016 Informa UK Limited, trading as Taylor & Francis Group

PUBLIC MANAGEMENT REVIEW, 2016 http://dx.doi.org/10.1080/14719037.2016.1203012

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While middle managers in public sector organizations are usually responsible for initiating and implementing NPM change (Fernandez and Pitts 2007), they are also subject to it. There are both positive and negative effects of NPM-related change on middle managers. Positive impacts of NPM-related change included flexibility (e.g. Moen et al. 2011) while negative effects include work intensification (McCann, Morris, and Hassard 2008) and an increase in the range of responsibilities (Farrell and Morris 2013). For middle managers, this has had a number of negative implica- tions. Workloads and stress have increased (Conway and Monks 2011) as have working hours, while morale and job satisfaction have decreased (Farrell and Morris 2013). In spite of these problems, little empirical evidence exists on how they experience change (Fernandez and Pitts 2007).

It has been argued that middle managers often inhibit organizational change and should be removed (see Hassard, McCann, and Morris 2009). This perspective is not entirely accurate (Hassard, McCann, and Morris 2009; Huy 2001). Middle managers have been found to be critical in ensuring the success of large-scale change (Huy 2002). This is because they can be important in the change process as they make organizations run and can be a source of new ideas (Osterman 2009). Some effective middle managers tend to have sound ideas about implementing change, they have extensive formal and informal networks, they are closely tuned to employee attitudes and they can act as a moderating influence preventing inertia on the one hand and chaotic change on the other (Huy 2001).

While the vast majority of research into the effects of change on middle managers has focused on the private sector, there is a small but growing body of studies of the public sector. This research is important because public sector workers have a distinct ‘predisposition to respond to motives grounded primarily or uniquely in public institutions and organizations’ (Perry and Wise 1990, 368). This ‘public service motivation’ distinguishes public sector workers from their counterparts in the private sector. The research about the effect of NPM change on public sector middle managers though remains limited. Conway and Monks (2011) and Currie and Procter (2005) report that increased workloads and stress among middle managers and Falkenberg et al. (2009) report change can create feelings of powerlessness and lower job satisfaction among middle level employees. More needs to be understood about the impact of NPM-inspired change on the health and attitudes of public sector middle managers, the people who are generally responsible for its implementation (Fernandez and Pitts 2007). It is important then to undertake studies into this important group of public sector workers.

The existing research into middle managers and change in general raises a number of theoretical and conceptual problems about the nature of change and how change affects middle managers. In the context of public sector work this study contributes to furthering our understanding of organizational change and its affects on middle managers by examining the nature of NPM-inspired change and how the negative effects of such change can be ameliorated. In this study, we go some way to delineating the dimensions of NPM-inspired change and their relative significance. We also find that while the provision of information about change is connected to a reduction in stressors during change, participation in change is not. This finding means that we should examine in more detail the connections between stressors, participation and the provision of information in public change programmes. These findings are important because they highlight the need to undertake more research

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into middle managers in public sector organizations in general and more specifically to address the need for more research about how change connects to information and participation, and in turn how these impact on job satisfaction.

In the remaining sections, we first develop eight hypotheses and a theoretical model that we use to examine connections between NPM change, participation, the provision of information, stress, well-being and job satisfaction. In the second sec- tion, we describe the methods used in the collection and analysis of the data. We then describe the results of the study and conclude the article with a discussion of the implications for theory and practice.

Organizational change and participation

NPM change is characterized by devolution and delegation of authority and auton- omy (Christensen and Lægreid 2011), including privatization (Falkenberg et al. 2009), which is part of the broader shift to ‘post-bureaucratic’ forms of organizations driven mainly by the need to cut costs as well as increase efficiency and flexibility (Diefenbach 2009; Farrell and Morris 2013; McCann, Morris, and Hassard 2008). These changes have included cost reduction, delayering, and redundancy, reorgani- zation, merger or downsizing, culture change, increased use of temporary and agency staff, culture change, outsourcing, offshoring, and mergers (Lindorff, Worrall, and Cooper 2011). In many ways NPM reform has also driven public sector organizations to mimic practices in the private sector (Hood 1991; Subramaniam et al. 2013). These trends are evident in a range of public sector contexts including Australia (Lindorff, Worrall, and Cooper 2011), the United Kingdom (O’Reilly and Reid 2011), the United States (Yang and Kassekert 2009) and Scandinavia (Ibsen et al. 2011).

Research into public sector organizations suggests that staff participation in change is closely connected to employee well-being (West et al. 2011). Michie and West (2004) further found that two important factors that affect organizational performance are people management (including HR practices and employee involve- ment) and resulting psychological consequences (including well-being, stress and job satisfaction). Various studies also suggest that information is closely connected to participation in change, an important element in the change process (Oreg, Vakola, and Armenakis 2011; Whelan-Berry and Somerville 2010). Miller, Johnson, and Grau (1994) argue that change information without participation will not be effective because participation creates a sense of ownership of the proposed change. Both participation and information create acceptance and support for change and tend to lower levels of anxiety among employees (Bordia, Hobman, et al. 2004). Similarly, Allen et al. (2007) conclude that it is important to connect information with parti- cipative strategies to assist in the successful implementation of change. Others such as Lindorff, Worrall, and Cooper (2011) have shown that clear communication is an important element in improving how organizational change is handled in public sector organizations. In light of these research findings, we hypothesize:

Participation provides employees with a feeling of empowerment and control in the change process (Amiot et al. 2006) while change-related communication is also recognized as allowing change agents to build understanding of the need for change (Whelan-Berry and Somerville 2010). Hence, during organizational change, relevant information provides a sense of urgency and updates for employees, which minimizes negative outcomes associated with organizational change (Amiot et al. 2006; DiFonzo

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and Bordia 1998), and participation increases understanding about change and commitment to change (Whelan-Berry and Somerville 2010). Therefore, providing information and encouraging commitment are important and interrelated organiza- tional resources to be deployed during change (Korunka et al. 2003). Information and consultation appear to help facilitate change in that information (communication) and participation (consultation) work together to increase acceptance for change (Stewart and Kringas 2003). Thus, we hypothesize the following relationships:

Hypothesis 1. Implementation of NPM change initiatives are positively associated with middle managers’ participation in the change management decision-making processes.

Hypothesis 2. Implementation of NPM change initiatives are positively associated with the provision of change information to middle managers.

Previous research suggests that NPM-inspired change has various internal and external dimensions (e.g. Dunford et al. 2007; Ibsen et al. 2011). In our study, we suggest that internal-focused change includes reduced internal boundaries, reduced external boundaries, flexible work groups and empowerment while external-focused change includes disaggregation, outsourcing, short-term staffing, and creating net- works and alliances. Studies of change in public sector organizations suggest that it has a direct impact on stressors and stress (Dahl 2010). For public sector managers increased stress has been found to result in cynicism, fatigue and burnout (Doyle, Claydon, and Buchanan 2000, S64). Others have shown that organizational change in the public sector results in an increasing level of change-induced stressors (e.g. Noblet and Rodwell 2009a; Noblet et al. 2005). While the evidence for the presence of change-induced stressors is apparent, there is little research about those stressors arising from the specific organizational conditions within which the change is taking place – the ‘context- specific’ stressors. Somerfield and McCrae (2000) suggest that such detail is especially useful in understanding and theorizing about workplace stress. For middle managers, specifically, research suggests that change affects on this group of workers in parti- cular ways. These include an intensification of work (McCann, Morris, and Hassard 2008), and increases in the range of responsibilities, working hours, with a corre- sponding decrease in morale and job satisfaction (Farrell and Morris 2013). In addition, career prospects have stagnated and entitlements have declined along with job security, compromising the psychological contract (Hassard, Morris, and McCann 2012) and employee loyalty (Lindorff, Worrall, and Cooper 2011).

On the other hand, there is evidence that change can have positive effects. Research suggests that up-skilling, increased responsibility and autonomy, coupled with increased pay, have improved the workplace for some middle managers (McCann, Morris, and Hassard 2008). In the wider literature on change, many contend that positive change is a relevant although sometimes controversial concept. The concept of positive change has been used to include seizing opportunities for improvement and motivating people to perform better (Bouckenooghe 2010) as well as change that focuses on encouraging positive deviance (extraordinary perfor- mance), virtuousness, affirmative bias, building strengths (Cameron 2008) and diver- sity (Stevens, Plaut, and Sanchez-Burks 2008). Given the range of research findings about change and stress, we test the following hypothesis:

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Hypothesis 3. There is an association between the type of NPM change initiative and change-induced stressors for public sector middle managers.

Change initiatives and change-induced stress

Recent research suggests that stress arising from NPM-inspired change can be ameliorated through the provision of information about change but the effects of participation in change are not yet clear (Teo et al. 2016). There are some studies which examine the association between public sector change and rising stress levels, lower well-being and rising job dissatisfaction (Diefenbach 2009; Ibsen et al. 2011). Noblet and Rodwell (2009b) argue that change may be associated with stress but that good and timely information ameliorates such stress. Inadequate consultation during change management creates a negative workplace environment for line managers (Noblet et al. 2005). The lack of consultation, both in terms of participation and provision of information, could lead to a sense of managers losing control over the situation. Since information and participation are closely connected, we hypothesize that on-going access to information and input into decision-making is closely associated with the extent of the stressful working conditions that arise during change. Thus we hypothesize the following:

Hypothesis 4. There is a negative association between the extent to which public sector middle managers participate in the change management decision-making processes and change-induced stressors.

Hypothesis 5. There is a negative association between the amount of change informa- tion received by public sector middle managers and change-induced stressors.

Change initiatives and employee outcomes

Noblet et al. (2005) noted that public sector employees experience several stressors relating to change (such as lack of resources to accomplish tasks, insufficient time to complete work on time and to the standard expected, fast-paced workloads, unrea- listic performance targets and inadequate consultation). How people respond to potentially stressful situations varies considerably. One person might perceive a situation to be stressful while another in the same situation might see it as a challenge and source of stimulation. That said, it is generally accepted that high levels of workplace stress negatively affects the physical and mental well-being of employees (Smith 2001).

Job stress theories such as the stress appraisal process (Lazarus and Folkham 1984) have long recognized this individual variability and have posited that access to external resources (such as information, guidance and discretionary decision- making) can play a key role in whether a potentially adverse condition or situation is perceived as a threat or a challenge. Research generally supports the importance of external resources. In particular, active involvement and participation in the change process is associated with reduced uncertainty and enhanced feelings of control (Bordia, Hunt, et al. 2004). Communication during public sector change provides employees with the opportunity to minimize uncertainty and to more accurately

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predict the outcomes of change. This is because factors, such as access to information, control over the work situation and opportunities for participating in change pro- cesses outweigh the negative effects of high job demands and uncertainty in the work situation (Falkenberg et al. 2009). We expect employee attitudes to change are related to external (e.g. change initiatives and change processes) and individual factors (psychological well-being and job satisfaction). Empirical evidence also points to a relationship between psychological well-being to job satisfaction (Bradley and Cartwright 2002; Pick, Teo, and Yeung 2012), as well as between change-induced stressors and job satisfaction (Pick, Teo, and Yeung 2012). Similar to the present study, Bradley and Cartwright (2002) and Pick, Teo, and Yeung (2012) have estab- lished empirical support for arguing that psychological strain would lead to job dis- satisfaction. Therefore, we hypothesize the following:

Hypothesis 6. There is a negative association between NPM change-induced stressors and the psychological well-being of public sector middle managers.

Hypothesis 7. There is a positive association between psychological well-being and job satisfaction of public sector middle managers.

Hypothesis 8. There is a negative association between NPM change-induced stressors and job satisfaction of public sector middle managers.

The hypothesized model is analysed using partial least squares (PLS) structural equations modelling (SEM) path analysis (see Figure 1).

Methods

Context

The Australian state public sector currently employs around 1.45 million staff spread across six states and two territories. Of these, the five largest states (New South

Figure 1. Proposed path model. We used ‘Formalization’ (Palmer and Dunford 2001) as the method factor for checking common method bias. PinChg: Participation in change decision-making; Chg Info: change information; Job Sat: job satisfaction.

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Wales, Victoria, Queensland, South Australia and Western Australia) account for 76 per cent of state sector employees Australia-wide. The largest departments in the state public sector are health, education, community services, and police and are mainly located in the state capital cities. Over the past 25 years, successive state governments of all political persuasions have pursued policies aimed at increasing the efficiency and productivity of their workforce. It is this cost-cutting and drive for efficiency that has been the main driver of organizational change over this period (Farrell and Morris 2013; McCann, Morris, and Hassard 2008).

Data and sample

This study focuses on middle managers because they have key managerial and leadership responsibilities for implementing change (Fernandez and Pitts 2007) and they are much more likely to play prominent roles in executing and monitoring change programmes than workers at other levels (Bordia, Hobman et al. 2004; Huy 2002). This increased responsibility for the implementation of change in public sector organizations has a number of implications for this group of employees, most notably in terms of their access to information and decision-making processes. Public sector middle managers involved in delivering large-scale change are generally informed of the reasons why the reforms are necessary and, given their responsibility for imple- menting these initiatives in the manner they were intended, often have a much better understanding of what the changes will involve (Butterfield, Edwards, and Woodall 2005). Middle managers are also more likely to actively participate in change-related decisions that will affect their work area (including specific work roles) and will have the ability to make suggestions on the timing or scope of the changes or to voice concerns regarding the changes themselves (Lindorff 2009).

A self-completed questionnaire together with a cover letter was mailed out to 4,000 randomly selected managers in the state public service in Australia, as listed in the telephone directories in each State. After deleting returned mail because of change of address and/or person leaving the organization, we received 659 usable surveys (representing 16.5 per cent response rate) though the final sample size retained for data analysis was 486 as the focus of the current study was on middle managers. They were mainly male (54.6 per cent), aged 41 to 60 years (68.4 per cent), and had worked in their current organization for more than 10 years (40.5 per cent).

Although this is a low response rate, it doubles the response rate normally expected from using a ‘cold’ direct mail approach (Reed 1998). Following the procedure used by Guthrie, Spell, and Nyamori (2002), we conducted a ‘time trend extrapolation test’ (Armstrong and Overton 1977) to test for non-response bias. A multi-variate GLM was conducted to establish whether there was any statistical difference between early and late respondents (that is surveys received pre and post the first follow-up reminder). The analysis showed that there was no statistically significant difference between these respondents. The data were combined into a single sample for path analysis.

In the first instance, we utilized the random number function in SPSS to split the data into a calibration and validation sample for path analysis. Prior to undertaking the path analysis, an ANOVA was carried out to examine the difference in the means of the key variables between the calibration and validation samples (or cross-validation, see

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Bagozzi and Yi 1988). The result showed that there was no statistically significant difference in means between the two samples. The hypothesized model was initially analysed using SmartPLS on the calibration sample (N = 242). The resultant path model was then validated using the validation sample (N = 244). The purpose of utilizing a cross-validation model in SEM is to estimate parameters of the calibration model, and then determine the predictive effectiveness of this model with a validation sample drawn from the same population as the first (Bagozzi and Yi 1988, 83). As explained by Bagozzi and Yi (1988), the main purpose of utilizing a cross-validation model in SEM is to estimate parameters of the calibration model, and then determine the predictive effec- tiveness of this model with a validation sample drawn from the same population as the first (83). Therefore, cross-validation is not used as a hypothesis testing procedure. The main aim is to test the predictive accuracy of the fitted model developed in the calibration model. As such a valid model should produce the same result in the validation model. Hence, the final result from a cross-validation should report only the paths which were statistically significant in both samples.

Exploratory factor analysis (EFA) was conducted using principal axis factoring with varimax rotation. SmartPLS (Ringle, Wende, and Will 2005) was used to analyse the hypothesized model. PLS is a technique used for estimating path coefficients in causal models and the software allows for the simultaneous testing of hypotheses (see explanation by Hair et al. 2013). PLS technique is also appropriate for samples that do not have the usual normality assumptions and it is considered to be appropriate for small sample size (see Chin 2010).

Measures

Average variance of estimates (AVEs) and composite reliability coefficients of the scales are reported in the results section. All of the scales were previously validated scales and have been previously used in the Australian public sector context, as reported below. They were operationalized as reflective scales.

NPM-inspired organizational change initiatives (reflective scale) This construct assessed the extent to which Australian public sector organizations have implemented various change initiatives. These items were based on an extensive review of the type of change initiatives being adopted by Australian public and private sector organizations conducted by Palmer and Dunford (2001). Sample items included delayering, outsourcing, flexible work and empowerment. Respondents were asked to what extent their organization had adopted a number of change initiatives in the past five years. This scale was based on a 5-point Likert scale (from Not at all to Completely). EFA and discriminant analysis in SmartPLS resulted in two factors. These factors were ‘internal-focused change’ (four items: ‘reduced internal boundaries’, ‘reduced external boundaries’, ‘flexible work groups’ and ‘empowerment’) and ‘external-focused change’ (four items: ‘disaggregation’, ‘outsourcing’, ‘short-term staffing’ and ‘networks/alliances’).

Participation in change (reflective scale) We adopted a five-item 5-point Likert scale (Jimmieson, Terry, and Callan 2004) to operationalize ‘Participation in Change’. Ranging from Not at all to A Great Deal, it assessed the respondents’ perception of their participation in the decision-making

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processes surrounding changes in their jobs. A sample item includes ‘To what extent can you voice your concerns about changes that affect your job?’.

Change information (reflective scale) We used a five-item Likert scale to ascertain participants’ perceptions of the amount of change information provided and their understanding of what the change involved (Jimmieson, Terry, and Callan 2004). A sample item includes ‘How clearly are you informed about the implications that changes will have for your job?’

NPM-inspired change-induced stressors (reflective scale) Respondents were asked to respond to a number of situation-specific stressors, which required them to indicate to what extent each factor listed was a source of stress in their job. These were previously developed by Noblet, Rodwell, and McWilliams (2006) to examine the relationship between NPM reforms and the stress-related outcomes experienced by Australia-based public service employees. These items were rated on a 5-point rating scale ranging from Not at all to Major source of stress. Following Noblet, Rodwell, and McWilliams (2006), context-specific stressors that were rated by at least 50 per cent of respondents as being a moderate, large or major source of stress (that is a score of three, four or five on the 5-point scale) were retained for further analysis. Seven items met this criterion and these were incorpo- rated into the path analysis to represent a reflective construct measuring changed- induced stressors (refer to Appendix).

Psychological well-being (reflective scale) We adopted the GHQ-12 scale (Goldberg and Williams 1988) to measure self- perceived psychological health. Following Gao et al. (2004), this construct was operationalized to comprise three sub-scales: depression, anxiety and lack of con- fidence. Respondents rated their health on a 4-point scale ranging from 0 (much less than usual) to 3 (more so than usual). A sample item is ‘Have you recently been able to concentrate on whatever you’re doing?’ A higher value corresponds to higher psychological health (or less psychological strain).

Job satisfaction (reflective scale) We employed a 15-item scale by Warr, Cook, and Wall (1979) to measure participants’ satisfaction with a range of work-related issues including physical working conditions, career prospects, colleagues and job security. Respondents rated the items on a 7-point scale ranging from ‘extremely dissatisfied’ to ‘extre- mely satisfied’. Following Warr, Cook, and Wall (1979), job satisfaction was operationalized as a second-order reflective scale, comprising intrinsic and extrin- sic satisfaction.

Validity and reliability

The sample size was considered to be sufficient to achieve a medium effect size of 0.80 for a path model with seven constructs (Green 1991, 503). Employing the techniques recommended by Ringle, Wende, and Will (2005), we assessed the significance of PLS parameter estimates by using the bootstrap option incorporated within SmartPLS. Bootstrapping with 500 sub-samples was carried out to provide

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extra confidence that the results were not sample-specific by using repeated random samples drawn from the data. It was also important to ensure discriminant validity of the reflective construct by computing the AVE (Fornell and Larcker 1981).

Collecting data from a single source requires checks for common method bias to be conducted. In this study, ex-ante strategies were undertaken to check for the presence of common method bias (see Chang, Van Witteloostuijn, and Eden 2010; Podsakoff et al. 2003). The first consideration was survey design. The first step was to develop different scale endpoints and formats for the independent and depen- dent measures. Items were written in such a way to ensure that respondents were not looking to provide ‘right’ or ‘wrong’ answers, and respondents were explicitly asked to answer as honestly as possible. Once the survey questions were com- pleted, they were placed in random order and then piloted to ensure there were no items that included ambiguous, vague or unfamiliar terms. Respondents were also assured anonymity and confidentiality.

Three statistical checks for common method bias were also deployed. First, a single common latent factor analysis was computed using AMOS (Rikard et al. 2016). The analysis showed that the paths accounted for 7 per cent of the variance in the common latent factor. Following the process discussed by Podsakoff et al. (2003), the next test undertaken used a single common method factor. We used ‘Formalization’ (Palmer and Dunford 2001), a five-item reflective scale (sample items include ‘rules and procedures manuals’ and ‘documents on fringe benefits’). Results showed that none of the paths from this method factor to any of the constructs in our model were statistically significant. The last statistical check was Harman’s ex-post one-factor test (Podsakoff and Organ 1986). All the variables used were entered into an unrotated factor analysis to determine the number of factors. The analysis produced 19 factors (with eigenvalues greater than 1.0), accounting for 68.15 per cent of the variance. Results from these three statistical tests provided assurance that common method variance may not be an issue in the current study. This is noted as a potential limitation. Despite this limitation, while data collected from common source could result in common method variance (e.g. Brannick et al. 2010), scholars have argued that these biases do not invalidate the hypothesized relationships, but they do ‘marginally attenuate’ the strength of the findings (e.g. Crampton and Wagner 1994; Spector 2006; Yang and Hsieh 2007).

The quality of the proposed structural model was assessed using R-square of the dependent variables and the Stone-Geisser Q-square test for predictive relevance (Chin 2010). Since the values were stable for both omission distances and the majority of the Q-squares were greater than zero, we were confident that the model was stable and satisfied the predictive relevance requirement. We calculated the global goodness-of-fit index as reported by Tenenhaus et al. (2005) to determine the fit of the path model.

Results

Descriptive statistics and correlations are reported in Table 1. Respondents reported that the extent of NPM-inspired change initiatives being implemented was below the mid-point level. The level of participation in change decision-making and change information received was above the mid-point level. EFA resulted in two sets of NPM-inspired change variables: internal-focused change (flexible work groups,

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empowerment and the reduction of internal and external boundaries) and externally focused change (disaggregation, outsourcing, short-term staffing and networks/alli- ances). Discriminant analysis indicated though that the only set of change initiatives that had validity was internally focused change (i.e. above the minimum value of 0.50), as indicated by the Fornell–Larcker test (Fornell and Larcker 1981).

We also identified seven context-specific stressors (reported in Appendix). The four most important to our sample were ‘lack of resources to accomplish tasks’, ‘insufficient staff to complete work on time and to standard expected’, ‘insufficient time to take meal breaks’ and ‘frequent interruptions’. Respondents reported a somewhat higher level of psychological strain (indicating a lower value in psycholo- gical well-being). With regards to the level of job satisfaction, the mean was above the mid-point of the scale, which indicated that the respondents were satisfied with their job.

Results of the path analysis conducted for the sample indicated that the model corresponded well with the data (see Table 2). Based on the computation recom- mended by Tenenhaus et al. (2005), the global goodness-of-fit indices were 0.372 for the calibration sample and 0.371 for the validation sample. These indices were considered to be large goodness of fit (Wetzels, Odekerken-Schröder, and van Oppen 2009).

The effect size (R2) for job satisfaction for the calibration and validation samples were .317 and .323 per cent respectively. We then proceeded to check for the shrinkage in R2

for cross-validation models. Following Kleinbaum, Kupper, and Muller (1988), we

Table 1. Mean, standard deviation, composite reliability coefficients, AVE and correlations.

Mean SD α AVE 1 2 3 4 5

1. Gender .41 .49 – – 1.00 2. FT vs PT .99 .26 – – .01 1.00 3. Age 4.31 .96 – – −.04 −.12** 1.00 4. Position tenure 3.20 1.34 – – −.07 −.01 .30*** 1.00 5. Organizational tenure 3.95 1.23 – – −.01 −.06 .31*** .59*** 1.00 6. Management level 1.62 .68 – – .14** −.01 −.19*** .01 −.01 7. Internal-focused change 2.65 .83 – – −.04 .09* −.01 −.07 −.01 8. Participation in change 3.36 .94 .96 .81 −.10* .09* .05 −.04 −.06 9. Change information 3.31 .97 .97 .85 −0.03 .05 .02 −.01 .01 10. Change-induced stressors 2.91 1.01 .89 .66 −.05 .04 .05 .03 .02 11. Psychological well-being 4.95 1.28 .77 .53 .07 .04 −.02 −.06 −.03 12. Job satisfaction 5.57 .43 .94 .88 .06 .03 .07 .04 .01

6 7 9 10 11 12 13

1. Gender 2. FT vs PT 3. Age 4. Position tenure 5. Organizational tenure 6. Management level 1.00 7. Internal-focus change −.12** .76 8. Participation in change −.38*** .43*** .89 9. Change information −.25*** .40*** .81*** .93 10. Change-induced stressors −.09* −.13** −.16*** −.23*** .76 11. Psychological well-being −.04 .32*** .30*** .30*** −.27*** .73 12. Job satisfaction .15** −.37*** −.48*** −.49*** .39*** −.44*** .94

Square of AVEs are shown in diagonal row as italicized. N = 486 (full sample). *p < .05, **p < .01, ***p < .001.

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utilized the shrinkage test to assess the reliability of a chosen model by comparing the changes in R2 between calibration and validation model. In this instance, the difference between the two models is 0.006 (difference between .317 and .323). This finding suggests that the validation model is reliable as the shrinkage is less than the cut-off of 0.100 (Kleinbaum, Kupper, and Muller 1988). Therefore, with the exception of the path from internal change initiatives to participation in change (calibration), the remaining paths were statistically significant in both samples.

The path analysis produced a number of interesting findings (path coefficients and significance level were reported in Table 2 while Figure 2 showed the final path model). These internal-focused change initiatives were positively associated with the provision of change information (Hypothesis 1b) and participation in change deci- sion-making (Hypothesis 2b). Hypothesis 3 was not supported as there was no statistical association between change initiatives and change-induced stressors. Similarly, Hypothesis 4 was not supported as there was no statistical association between participation in change decision-making and change-induced stressors. Hypothesis 5 was supported as there was a negative and statistically significant association between the provision of change information and change-induced stres- sors. There was a negative association between the presence of change-induced stressors and psychological well-being, which supported Hypothesis 6. There was a positive and statistically significant association between psychological well-being and job satisfaction. Hypothesis 7 was supported. Change-induced stressors were found to negatively associate with job satisfaction. Hypothesis 8 was also found to be supported.

Discussion and implications

The aim of this research was to examine the extent to which NPM-inspired public sector change results in stressors and the subsequent relationship with psychological well-being and job satisfaction of public sector middle managers. Our study contributes to improve

Table 2. Results of path analysis.

Paths

Calibration (N = 242) Validation (N = 244)

Global goodness of fit: .391 Global goodness of fit: .391

Job satisfaction R2 .317 Job satisfaction R2 .323

Path coeff.

t- statistic

Sig. level

Path coeff.

t- statistic

Sig. level

H1b. Internal focus → Participation in change 0.45 8.9206 *** 0.50 11.8116 *** H2b. Internal focus → Change info 0.42 7.3439 *** 0.49 11.3177 *** H3. Internal focus → Change-induced stressors −0.13 1.7407 n.s. 0.01 0.1303 n.s. H4. Participation in change → Change-induced stressors

0.03 0.3054 n.s. 0.06 0.4703 n.s.

H5. Change info → Change-induced stressors −0.37 3.6356 *** −0.29 2.0293 * H6. Change-induced stressors → Psy well-being −0.26 3.337 *** −0.29 5.0659 *** H7. Psy well-being → Job satisfaction 0.35 5.7334 *** 0.43 7.6083 *** H8. Change-induced stressors → Job satisfaction −0.36 7.2514 *** −0.27 5.6205 ***

Global goodness-of-fit index was computed following the formulae in Tenenhaus et al. (2005). n.s., not statistically significant. *p < .05; ***p < .001.

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our understanding of how NPM-inspired organizational change affects public sector middle managers in five important respects. First, we found that the change experienced by the participants varies according to whether they are internal-focused or external- focused. Internal-focused initiatives were found to have an important influence in the present study. On the other hand, external-focused change initiatives (such as disaggre- gation, outsourcing, short-term staffing and establishing new networks/alliances) did not meet the required statistical cut-offs for it to be included in the path analysis. This finding raises questions about whether the effects of change are as uniform across occupational groups in the public sector as first thought. It would be interesting for other scholars to find out if the situation for middle managers found in this research is reproduced across other occupational groups and why there are similarities or differences.

Second, change information giving was found to have reduced the stressors caused by internally focused change. This finding corroborates the literature that links change information as an essential factor in gaining acceptance and support for change (Amiot et al. 2006; DiFonzo and Bordia 1998; Whelan-Berry and Somerville 2010). As noted in the U.S. public sector, middle managers play a key role as ‘change agents’ (Huy 2002). In the present study, we were able to provide additional empirical evidence on the experience of public sector middle managers in the State and Territory public sectors. As we found in the present study, the provision of change information during NPM-related reforms to them enables these middle managers to successfully navigate the negative effects of change implementation (Hypothesis 5).

The ‘need for information’ appears to be the key in understanding the conse- quences of change on the attitudes of public sector middle managers. Given the distinctiveness of attitudes in constituting ‘public service motivation’ (Perry 1996),

Figure 2. Results of path analysis. Only statistically significant paths and associated path coefficients in the calibration and validation samples are shown. C: calibration sample; V: validation sample. *p < .05; ***p < .001.

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the results of this research raise questions requiring further investigation, in parti- cular about the relationships between the need for information, the nature of change and the willingness of senior management to provide change information to those middle managers responsible for implementing change.

Third, while we found internal-focused change initiatives to be positively asso- ciated with participation in change decision (Hypothesis 1), participation in change decision-making had little or no effect on change-induced stressors. This finding is less in line with previous research in the U.S. public sector (Teo et al. 2016), it is an intriguing puzzle that requires more research attention, not least because it runs counter to other research evidence (Bordia, Hobman, et al. 2004; Stewart and Kringas 2003). Our findings may be explained by referring to the characteristics of the participants. They are middle managers who tend to be expected to implement change as well as be subject to change (Hassard, McCann, and Morris 2009; Huy 2001). This means that the dominant experience is ‘management of change’ in their work area rather than ‘participation in’ change that might be connected to a sense of being unable to influence events outside their immediate span of control (Osterman 2009). One alternate explanation is that the rise of NPM-inspired change is compro- mising the congruence of values between those currently held by public sector managers (known as public service motivation) and those being introduced through NPM that are more aligned with private sector practices. Participation in such change, if it does cause value incongruence, could explain this finding because such incongruence could negate any positive effects participation may have. The research by Georgellis, Iossa, and Tabvuma (2011) provides some clues to this ‘crowding out’ of public sector values and our study points to possible explanations and conse- quences. Alternatively it may be due to the additional workloads that participation can bring or perhaps that participation has different effects according to the type of change (e.g. internal versus external). This research has raises a number of questions about the variable efficacy of participation in reducing stress during change that requires further exploration.

Finally, this study showed that change-induced stressors could result in lower psychological well-being and lower level of job satisfaction of middle managers (Hypotheses 6–8). These findings corroborate the result of the meta-analytic review by Faragher, Cass, and Cooper (2005), which suggests that the provision of more information about change could lead to reduction in stress and improve psychological well-being. For decision-makers in public sector organizations, the model generated in this research provides useful insights into the mechanisms through which public sector change programmes can influence the health and attitudes of middle managers and the factors critical for mitigating the adverse outcomes of organizational change.

Conclusion

In summary, the current study responded to the call by public sector management scholars (e.g. Butterfield, Edwards, and Woodall 2005; Fernandez and Pitts 2007; Ferlie, Hartley, and Martin 2003) to study the experiences and responses of middle managers to change as these employees tend to be responsible for implementing change in their respective agencies (Hassard, McCann, and Morris 2009; Huy 2001; Lindorff, Worrall, and Cooper 2011). Our findings showed that the middle managers in our study experienced specific sources of stress because they were more likely to

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play prominent roles in executing and monitoring change programmes (Bordia, Hobman, et al. 2004). Furthermore, the provision of change information to middle managers means that they are less likely to experience the presence of change- induced stressors. They would also be more likely to experience higher psychological well-being and job satisfaction. The model generated in the current investigation provides useful insights into the mechanisms through which public sector change programmes can influence the health and attitudes of middle managers and points to a number of areas where the adverse outcomes of organizational change can be mitigated.

Limitations and future research implications

A number of limitations should be considered when assessing the generalizabiltiy of the findings. To minimize the effect of common method bias, several tests were employed. One-way ANOVA testing was also applied to assess whether the merging of the surveys from two different time periods was appropriately performed. While the response rate was low, the sample size was sufficient to allow the findings of the model to have general relevance. In retrospect it would have been useful to collect data about the quality of information and trust in sources of information. Furthermore, as indicated in the final path model, external change initiatives were excluded from the analysis due to low discriminant validity. Future study should examine if this particular construct is valid and present in the Australian public sector context. Consistent with the call by Oreg, Vakola, and Armenakis (2011, 514), future work should use research design appropriate for studying the longitudinal effects of change at the individual level, collect data from multi-raters and use objective indicators to supplement self-report information.

Taking into account the limitations, this study provides useful empirical insights into understanding the experience of middle managers in the NPM-related change implementation in Australia’s state and territory public sectors. In particular we provide empirical evidence about how middle managers, as agents of change, respond to change (Huy 2002; Hassard, McCann, and Morris 2009). Clearly, further research is required to identify the processes that generate this phenomenon. A potential area of investigation could be to examine how change cynicism may affect the extent of involvement and participation by middle managers in change (Brown and Cregan 2008).

While our research makes a number of contributions to theory and practice, it would, in retrospect, have been useful if we had collected data about the quality of information and trust in sources of information. This would have been beneficial to the analysis to provide more insights into how public sector middle managers react to the provision of information and how this impacts on the effects of organizational change. Further research into the relationships hypothesized in this study could be investigated using longitudinal data. For instance, the direction of the causal relation- ship between job satisfaction and psychological well-being is a potential area for further exploration. While Bradley and Cartwright (2002) and Pick, Teo, and Yeung (2012) have provided empirical evidence for the direction being from psychological well-being to job satisfaction, others such as Bowling, Eschleman, and Wang (2010) have reported the relationship to be from job satisfaction to psychological well-being.

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The theoretical framework, results and discussion presented in this study illuminate relationships between change initiatives, provision of information and employee out- comes that are worth further research. Much of the previous research examining the health and attitudinal outcomes associated with change in public sector organizations has focused on the experiences of public sector workers generally, rather than specific groups such as middle managers. A major contribution of this study is that it has extended earlier research to identify the pathways through which organizational change in public sector organizations cascades through information provision to explicit affective reac- tions and then to consequences (psychological well-being and job satisfaction). As key change agents, middle managers have the dual responsibility of implementing reforms in accordance with requirements of executives, governments and community groups while at the same time ensuring that agency staff have sufficient levels of well-being and job satisfaction to be able to carry out these new ways of operating.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes on contributors

David Pick is an Associate Professor in Management at Curtin University, Perth. His research interests focus on the effects of change in public sector organizations, paying particular attention to higher education and health services. He has had co-authored papers published in a variety of journals including: Higher Education Quarterly, Studies of Higher Education, Journal of Business Ethics and Journal of Advanced Nursing. He also regularly has co-authored papers accepted at conferences, most notably: The Academy of Management, ANZAM, British Academy of Management and The Society for Research into Higher Education.

Dr Stephen Teo is a Professor of HRM in the School of Management Department, RMIT University, Australia. Stephen teaches HRM Strategy, Business Research Methods and International HRM to undergraduate and postgraduate students. He is currently examining resilience, stress and produc- tivity in the healthcare sectors in Australia and New Zealand. Stephen has published in journals, such as Human Resource Management, Human Resource Management Journal, Journal of Vocational Behavior, Public Management Review and Studies of Higher Education.

ORCID

David Pick http://orcid.org/0000-0002-4614-8241 Stephen T. T. Teo http://orcid.org/0000-0001-5025-7937

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Appendix

Context-specific stressors experienced by public sector managers in Australia

Source of stress Mean SD % agreement

Lack of resources to accomplish tasks 3.03 1.26 60.2 Insufficient staff to complete work on time and to standard expected 3.14 1.25 65.8 Insufficient time to take meal breaks 2.36 1.27 65.4 Frequent interruptions 3.10 1.19 63.3 Long delays in addressing problems 2.66 1.17 53.8 Busy, fast-paced workload 2.78 1.23 53.5 Not having enough time to do job as well as you would like 2.84 1.25 52.6

These context-specific stressors were rated by at least 50 per cent of respondents agreeing with the item as being a moderate, large or major source of stress.

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