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PART ONE

THE DYNAMIC CONTEXT OF PUBLIC ORGANIZATIONS

Rainey, Hal G.. Understanding and Managing Public Organizations, John Wiley & Sons, Incorporated, 2014. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/ncent-ebooks/detail.action?docID=1595184. Created from ncent-ebooks on 2022-02-28 15:43:04.

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As this book heads for publication, the president of the United States and his political opponents in Congress have entered into a dispute over sequestration of federal funds. Previous legislation required that funding for federal programs be sequestered, or withheld, if by a certain date the president and Congress could not agree on cuts in federal fund- ing to reduce the federal defi cit. The date passed and the sequestration began. Executives and managers in U.S. federal agencies had to decide how to make the funding reductions. They announced plans to reduce numerous federal programs and to reduce the services those programs delivered. These reductions would have serious adverse effects on gov- ernment services at the state and local levels. Leaders of federal agencies announced plans to furlough tens of thousands of federal employees. An agreement between the president and Congress was still possible, render- ing it unclear whether or not these furloughs and service reductions would actually take place. By the time readers devote attention to this book, they will know the outcomes of this sequestration episode. Whatever the out- comes, the situation illustrates an important characteristic of public or governmental organizations and the people in them. They are very heavily infl uenced by developments in the political and governmental context in which they operate. Even government employees who may never encoun- ter an elected offi cial in their day-to-day activities have their working lives infl uenced by the political system under whose auspices they operate.

CHAPTER ONE

THE CHALLENGE OF EFFECTIVE PUBLIC ORGANIZATION AND MANAGEMENT

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4 Understanding and Managing Public Organizations

During the same period of time, the news media and professional publi- cations provided generally similar examples each day. A major storm caused immense damage in northeastern states. Soon after, stories in the news media described sharp criticisms of the public works department of a major city. Critics castigated the department ’s management and leadership, alleg- ing that weak management had led to an inadequate response to the storm that had aggravated the damage from it. In still another example, a major newspaper carried a front-page story claiming that excessive bureaucracy and poor management were causing inadequate and delayed services for vet- erans and their benefi ciaries. Again and again, such reports illustrated simi- lar points. Government organizations, which this book will usually call public organizations, deliver important services and discharge functions that many citizens consider crucial. Inadequate organization and management of those functions and services creates problems for citizens, from small irritations to severe and life-threatening damages. The organizations and the people in them have to carry out their services and functions under the auspices and infl uence of other governmental authorities. Hence they operate directly or indirectly in what David Aberbach and Bert Rockman call “the web of politics” (Aberbach and Rockman, 2000). The examples generally apply as well to governments in the other nations and the organizations within those governments. Nations around the world have followed a continuing pat- tern of organizing, reorganizing, reforming, and striving to improve govern- ment agencies’ management and performance (Kettl, 2002, 2009; Kickert, 2007, 2008; Light, 1997, 2008; Pollitt and Bouckaert, 2011). As in the United States, governmental or public organizations in all nations operate within a context of constitutional provisions, laws, and political authorities and pro- cesses that heavily infl uence their organization and management.

Toward Improved Understanding and Management of Public Organizations

All nations face decisions about the roles of their government and private institutions in their society. The pattern of reorganization and reform men- tioned in the preceding section spawned a movement in many countries either to curtail government authority and replace it with greater private activity or to make government operations more like those of private busi- ness fi rms (Christensen and Laegreid, 2007; Pollitt and Bouckeart, 2011). This skepticism about government implies that there are sharp differ- ences between government and privately managed organizations. During this same period, however, numerous writers argued that we had too little sound analysis of such differences and too little attention to management

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The Challenge of Effective Public Organization and Management 5

in the public sector. A large body of scholarship in political science and economics that focused on government bureaucracy had too little to say about managing that bureaucracy. This critique elicited a wave of research and writing on public management and public organization theory, in which experts and researchers have been working to provide more careful analyses of organizational and managerial issues in government.

This chapter elaborates on these points to develop another central theme of this book: we face a dilemma in combining our legitimate con- cerns about the performance of public organizations with the recogni- tion that they play indispensable roles in society. We need to maintain and improve their effectiveness. We can profi t by studying major topics from general management and organization theory and examining the rapidly increasing evidence of their successful application in the public sector. That evidence indicates that the governmental context strongly infl uences orga- nization and management, sometimes constraining performance. Just as often, however, governmental organizations and managers perform much better than is commonly acknowledged. Examples of effective public man- agement abound. These examples usually refl ect the efforts of managers in government who combine managerial skill with effective knowledge of the public sector context. Experts continue to research and debate the nature of this combination, however, as more evidence appears rapidly and in diverse places. This book seeks to base its analysis of public management and orga- nizations on the most careful and current review of this evidence to date.

General Management and Public Management

This book proceeds on the argument that a review and explanation of the literature on organizations and their management, integrated with a review of the research on public organizations, supports understanding and improved management of public organizations. As this implies, these two bodies of research and thought are related but separate, and their integra- tion imposes a major challenge for those interested in public management. The character of these fi elds and of their separation needs clarifi cation. We can begin that process by noting that scholars in sociology, psychology, and business administration have developed an elaborate body of knowledge in the fi elds of organizational behavior and organization theory.

Organizational Behavior, Organization Theory, and Management

The study of organizational behavior had its primary origins in industrial and social psychology. Researchers of organizational behavior typically

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6 Understanding and Managing Public Organizations

concentrate on individual and group behaviors in organizations, analyzing motivation, work satisfaction, leadership, work-group dynamics, and the attitudes and behaviors of the members of organizations. Organization the- ory, on the other hand, is based more in sociology. It focuses on topics that concern the organization as a whole, such as organizational environments, goals and effectiveness, strategy and decision making, change and innova- tion, and structure and design. Some writers treat organizational behavior as a subfi eld of organization theory. The distinction is primarily a matter of specialization among researchers; it is refl ected in the relative emphasis each topic receives in specifi c textbooks (Daft, 2013; Schermerhorn, 2011) and in divisions of professional associations.

Organization theory and organizational behavior are covered in every reputable, accredited program of business administration, public admin- istration, educational administration, or other form of administration, because they are considered relevant to management. The term management is used in widely diverse ways, and the study of this fi eld includes the use of sources outside typical academic research, such as government reports, books on applied management, and observations of practicing managers about their work. While many elements play crucial roles in effective management—finance, information systems, inventory, purchasing, production processes, and others—this book concentrates on organiza- tional behavior and theory. We can further defi ne this concentration as the analysis and practice of such functions as leading, organizing, motivating, planning and strategy making, evaluating effectiveness, and communicating.

A strong tradition, hereafter called the “generic tradition,” pervades organization theory, organizational behavior, and general management. As discussed in Chapters Two and Three, most of the major fi gures in this fi eld, both classical and contemporary, apply their theories and insights to all types of organizations. They have worked to build a general body of knowledge about organizations and management. Some pointedly reject any distinctions between public and private organizations as crude stereo- types. Many current texts on organization theory and management contain applications to public, private, and nonprofi t organizations (for example, Daft, 2013).

In addition, management researchers and consultants frequently work with public organizations and use the same concepts and techniques they use with private businesses. They argue that their theories and frameworks apply to public organizations and managers since management and organi- zation in government, nonprofi t, and private business settings face similar challenges and follow generally similar patterns.

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The Challenge of Effective Public Organization and Management 7

Public Administration, Economics, and Political Science

The generic tradition offers many valuable insights and concepts, as this book will illustrate repeatedly. Nevertheless, we do have a body of knowl- edge specifi c to public organizations and management. We have a huge government, and it entails an immense amount of managerial activity. City managers, for example, have become highly professionalized. We have a huge body of literature and knowledge about public administration. Economists have developed theories of public bureaucracy (Downs, 1967). Political scientists have written extensively about it (Meier and Bothe, 2007; Stillman, 2004). These political scientists and economists usually depict the public bureaucracy as quite different from private business. Political scientists concentrate on the political role of public organizations and their relationships with legislators, courts, chief executives, and interest groups. Economists analyzing the public bureaucracy emphasize the absence of economic markets for its outputs. They have usually concluded that this absence of markets makes public organizations more bureaucratic, inef- fi cient, change-resistant, and susceptible to political infl uence than pri- vate fi rms (Barton, 1980; Breton and Wintrobe, 1982; Dahl and Lindblom, 1953; Downs, 1967; Niskanen, 1971; Tullock, 1965).

In the 1970s, authors began to point out the divergence between the generic management literature and that on the public bureaucracy and to call for better integration of these topics. 1 These authors noted that orga- nization theory and the organizational behavior literature offer elaborate models and concepts for analyzing organizational structure, change, deci- sions, strategy, environments, motivation, leadership, and other important topics. In addition, researchers had tested these frameworks in empirical research. Because of their generic approach, however, they paid too little attention to the issues raised by political scientists and economists concern- ing public organizations. For instance, they virtually ignored the interna- tionally signifi cant issue of whether government ownership and economic market exposure make a difference for management and organization.

Critics also faulted the writings in political science and public admin- istration for too much anecdotal description and too little theory and sys- tematic research (Perry and Kraemer, 1983; Pitt and Smith, 1981). Scholars in public administration generally disparaged as inadequate the research and theory in that fi eld (Kraemer and Perry, 1989; McCurdy and Cleary, 1984; White and Adams, 1994). In a national survey of research projects on public management, Garson and Overman (1981, 1982) found relatively little funded research on general public management and concluded that the research that did exist was highly fragmented and diverse.

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8 Understanding and Managing Public Organizations

Neither the political science nor the economics literature on public bureaucracy paid as much attention to internal management—designing the structure of the organization, motivating and leading employees, devel- oping internal communications and teamwork—as did the organization theory and general management literature. From the perspective of orga- nization theory, many of the general observations of political scientists and economists about motivation, structure, and other aspects of the public bureaucracy appeared oversimplifi ed.

Issues in Education and Research

Concerns about the way we educate people for public management also fueled the debate about the topic. In the wake of the upsurge in govern- ment activity during the 1960s, graduate programs in public administration spread among universities around the country. The National Association of Schools of Public Affairs and Administration began to accredit these pro- grams. Among other criteria, this process required master of public admin- istration (M.P.A.) programs to emphasize management skills and technical knowledge rather than to provide a modifi ed master ’s program in political science. This implied the importance of identifying how M.P.A. programs compare to master of business administration (M.B.A.) programs in pre- paring people for management positions. At the same time, it raised the question of how public management differs from business management.

These developments coincided with expressions of concern about the adequacy of our knowledge of public management. In 1979 the U.S. Offi ce of Personnel Management (1980) organized a prestigious conference at the Brookings Institution. The conference featured statements by promi- nent academics and government offi cials about the need for research on public management. It sought to address a widespread concern among both practitioners and researchers about “the lack of depth of knowledge in this fi eld” (p. 7). At around the same time, various authors produced a stream of articles and books arguing that public sector management involves relatively distinct issues and approaches. They also complained, however, that too little research and theory and too few case exercises directly addressed the practice of active, effective public management (Allison, 1983; Chase and Reveal, 1983; Lynn, 1981, 1987). More recently, this concern with building research and theory on public management has developed into something of a movement, as more researchers have converged on the topic. Beginning in 1990, a network of scholars have come together for a series of fi ve National Public Management Research Conferences. These conferences have led to the publication of books

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The Challenge of Effective Public Organization and Management 9

containing research reported at the conferences (Bozeman, 1993; Brudney, O ’Toole, and Rainey, 2000; Frederickson and Johnston, 1999; Kettl and Milward, 1996) and of many professional journal articles. In 2000, the group formed a professional association, the Public Management Research Association, to promote research on the topic. Later chapters will cover many of the products and results of their research.

Ineffective Public Management?

On a less positive note, recurrent complaints about inadequacies in the practice of public management have also fueled interest in the fi eld, in an intellectual version of the ambivalence about public organizations and their management that the public and political offi cials tend to show. We generally recognize that large bureaucracies—especially government bureaucracies— have a pervasive influence on our lives. They often blunder, and they can harm and oppress people, both inside the organizations and without (Adams and Balfour, 2009). We face severe challenges in ensuring both their effective operation and our control over them through democratic processes. Some analysts contend that our efforts to maintain this balance of effective operation and democratic control often create disincentives and constraints that prevent many public administrators from assuming the managerial roles that managers in industry typically play (Gore, 1993; Lynn, 1981; National Academy of Public Administration, 1986; Warwick, 1975). Some of these authors argue that too many public managers fail to seriously engage the challenges of motivating their subordinates, effectively designing their organizations and work processes, and otherwise actively managing their responsibilities. Both elected and politically appointed offi - cials face short terms in offi ce, complex laws and rules that constrain the changes they can make, intense external political pressures, and sometimes their own amateurishness. Many concentrate on pressing public policy issues and, at their worst, exhibit political showmanship and pay little atten- tion to the internal management of agencies and programs under their authority. Middle managers and career civil servants, constrained by central rules, have little authority or incentive to manage. Experts also complain that too often elected offi cials charged with overseeing public organiza- tions show too little concern with effectively managing them. Elected offi - cials have little political incentive to attend to “good government” issues, such as effective management of agencies. Some have little managerial background, and some tend to interpret managerial issues in ways that would be considered outmoded by management experts.

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10 Understanding and Managing Public Organizations

Effective Public Management

In contrast with criticisms of government agencies and employees, other authors contend that public bureaucracies perform better than is commonly acknowledged (Doig and Hargrove, 1987; Downs and Larkey, 1986; Goodsell, 2003, 2011; Milward and Rainey, 1983; Rainey and Steinbauer, 1999). Others described successful governmental innovations and policies (Borins, 2008; Holzer and Callahan, 1998). Wamsley and his colleagues (1990) called for increasing recognition that the administrative branches of gov- ernments in the United States play as essential and legitimate a role as the other branches of government. Many of these authors pointed to evi- dence of excellent performance by many government organizations and offi cials and the diffi culty of proving that the private sector performs better.

In response to this concern about the need for better analysis about effective public management, the literature continued to burgeon in the 1990s and into the new century. As later chapters will show, a genre has developed that includes numerous books and articles about effective lead- ership, management, and organizational practices in government agen- cies. 2 These contributions tend to assert that government organizations can and do perform well, and that we need continued inquiry into when they do, and why.

The Challenge of Sustained Attention and Analysis

The controversies described in the previous sections refl ect fundamental complexities of the American political and economic systems. Those sys- tems have always subjected the administrative branch of government to confl icting pressures over who should control and how, whose interests should be served, and what values should predominate (Waldo, [1947] 1984). Management involves paradoxes that require organizations and managers to balance confl icting objectives and priorities. Public manage- ment often involves particularly complex objectives and especially diffi cult confl icts among them.

In this debate over the performance of the public bureaucracy and whether the public sector represents a unique or a generic management context, both sides are correct, in a sense. General management and orga- nizational concepts can have valuable applications in government; however, unique aspects of the government context must often be taken into account. In fact, the examples of effective public management given in later chap- ters show the need for both. Managers in public agencies can effectively

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The Challenge of Effective Public Organization and Management 11

apply generic management procedures, but they must also skillfully negoti- ate external political pressures and administrative constraints to create a context in which they can manage effectively. The real challenge involves identifying how much we know about this process and when, where, how, and why it applies. We need researchers, practitioners, offi cials, and citizens to devote sustained, serious attention to developing our knowledge of and support for effective public management and effective public organizations.

Organizations: A Defi nition and a Conceptual Framework

As we move toward a review and analysis of research relevant to public organizations and their management, it becomes useful to clarify the mean- ing of basic concepts about organizations and to develop a framework to guide the sustained analysis this book will provide. Figure 1.1 presents a framework for this purpose. Figure 1.2 elaborates on some of the basic components of this framework, providing more detail about organizational structures, processes, and people.

Culture

(Chapter 11)

Leadership & Strategy

(Chapters 7, 11)

People

Incentives

(Chapters 9, 10)

Goals & Values

(Chapters 6, 11)

Environments

(Chapters 4, 5)

Tasks & Technology

(Chapter 8)

Structures

(Chapter 8) Processes

(Chapters 7, 12, 13)

Organizational

Performance &

Effectiveness

(Chapters 6, 14)

Individuals

(Chapters 9, 10) Groups

(Chapter 12)

FIGURE 1.1. A FRAMEWORK FOR ORGANIZATIONAL ANALYSIS

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12 Understanding and Managing Public Organizations

Culture

(Chapter 11)

Leadership & Strategy

(Chapters 7, 11)

People

Incentives

(Chapters 9, 10)

Goals & Values

(Chapters 6, 11)

Environments

(Chapters 4, 5)

Tasks & Technology

(Chapter 8)

Structures

Specialization or Division of Responsibility

Departmentalization or Subunits

Hierarchy or Centralization

Formalization or Rules and Regulations

(Chapter 8)

Processes

Power Relationships

Decision Making

Communications

Change & Innovation

(Chapters 7, 12, 13)

Organizational

Performance &

Effectiveness

(Chapters 6, 14)

Auspices:

Public or Private

Nonprofit, Hybrid

(Chapter 3)

Individuals

Values & Motives

Perception & Attributions

Motivation

Job Satisfaction

Organizational Commitment

(Chapters 9, 10)

Groups

Cohesion

Teamwork

(Chapter 12)

FIGURE 1.2. A FRAMEWORK FOR ORGANIZATIONAL ANALYSIS (ELABORATION OF FIGURE 1.1 )

Writers on organization theory and management have argued for a long time over how best to defi ne organization , reaching little consensus. It is not a good use of time to worry over a precise defi nition, so here is a provisional one that employs elements of Figure 1.1 . This statement goes

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The Challenge of Effective Public Organization and Management 13

on too long to serve as a precise defi nition; it actually amounts to more of a perspective on organizations:

An organization is a group of people who work together to pur- sue a goal . They do so by attaining resources from their environ- ment . They seek to transform those resources by accomplishing tasks and applying technologies to achieve effective performance of their goals, thereby attaining additional resources. They deal with the many uncertainties and vagaries associated with these processes by organizing their activities. Organizing involves lead- ership processes, through which leaders guide the development of strategies for achieving goals and the establishment of struc- tures and processes to support those strategies. Structures are the relatively stable, observable assignments and divisions of responsibility within the organization, achieved through such means as hierarchies of authority, rules and regulations, and specialization of individuals, groups, and subunits. The division of responsibility determined by the organizational structure divides the organization ’s goals into components that the differ- ent groups and individuals can concentrate on—hence the term organization , referring to the set of organs that make up the whole. This division of responsibility requires that the individual activities and units be coordinated. Structures such as rules and regulations and hierarchies of authority can aid coordination. Processes are less physically observable, more dynamic activities that also play a major role in the response to this imperative for coordination. They include such activities as determining power relationships, decision making, evaluation, communica- tion, confl ict resolution, and change and innovation. Within these structures and processes, groups and individuals respond to incentives presented to them, making the contributions and producing the products and services that ultimately result in effective performance.

While this perspective on organizations and the framework depicted in the fi gures seem very general and uncontroversial, they have a num- ber of serious implications that could be debated at length. Mainly, how- ever, they simply set forth the topics that the chapters of this book cover and indicate their importance as components of an effective organiza- tion. Management consultants working with all types of organizations

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14 Understanding and Managing Public Organizations

claim great value and great successes for frameworks about as general as this one, as ways of guiding decision makers through important topics and issues. Leaders, managers, and participants in organizations need to develop a sense of what it means to organize effectively, and of the most important aspects of an organization that they should think about in trying to improve the organization or to organize some part of it or some new undertaking. The framework offers one of many approaches to organizing one ’s thinking about organizing, and the chapters to come elaborate its components.

After that, the fi nal chapter provides an example of applying the frame- work to organizing for and managing a major trend, the contracting out of public services.

As this chapter has discussed, this book proceeds on certain assertions and assumptions. Government organizations perform crucial functions. We can improve public management and the performance of public agen- cies by learning about the literature on organization theory, organizational behavior, and general management and applying it to government agen- cies and activities.

The literature on organizations and management has not paid enough attention to distinctive characteristics of public sector organizations and managers. This book integrates research and thought on the public sector context with the more general organizational and management theories and research. This integration has important implications for the debates over whether public management is basically ineffective or often excellent and over how to reform and improve public management and education for people who pursue it. A sustained, careful analysis, drawing on available concepts, theories, and research and organized around the general frame- work presented here, can contribute usefully to advancing our knowledge of these topics.

Instructor ’s Guide Resources for Chapter One

• Key terms • Discussion questions • Topics for writing assignments or reports

Available at www.wiley.com/college/rainey .

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The Challenge of Effective Public Organization and Management 15

Notes

1. Authors who address the divergence between the generic management literature and that on the public bureaucracy and who call for better integration of these topics include Allison, 1983; Bozeman, 1987; Hood and Dunsire, 1981; Lynn, 1981; Meyer, 1979; Perry and Kraemer, 1983; Pitt and Smith, 1981; Rainey, Backoff, and Levine, 1976; Wamsley and Zald, 1973; Warwick, 1975.

2. Books and articles about effective leadership, organization, and management in government include Barzelay, 1992; Behn, 1994; Borins, 2008; Cohen and Eimicke, 1998; Cooper and Wright, 1992; Denhardt, 2000; Doig and Hargrove, 1987; Hargrove and Glidewell, 1990; Holzer and Callahan, 1998; Ingraham, Thompson, and Sanders, 1998; Jones and Thompson, 1999; Light, 1998; Linden, 1994; Meier and O ’Toole, 2006; Morse, Buss, and Kinghorn, 2007; Newell, Reeher, and Ronayne, 2012; Osborne and Gaebler, 1992; O ’Toole and Meier, 2011; Popovich, 1998; Rainey and Steinbauer, 1999; Riccucci, 1995, 2005; Thompson and Jones, 1994; Wolf, 1997. Books that defend the value and performance of government in general include Esman, 2000; Glazer and Rothenberg, 2001; Neiman, 2000.

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Large, complex organizations and literature about them have existed for many centuries, but within the past two centuries in particular they have proliferated tremendously. Most of the large body of research and writing available today appeared fairly recently. This chapter reviews major developments in the research, theory, and thinking about organizations and management over the past century. Exhibit 2.1 (at the end of the chapter) provides a summary of the developments reviewed in this chapter.

This book ’s analysis of public organizations begins with this review for a number of reasons. It illustrates the generic theme mentioned in the previous chapter. It shows that the major contributors to this fi eld have usually treated organizations and management as generally similar in all contexts, not drawing much of a distinction between the public and pri- vate sectors. The generic emphasis has much value, and this book draws upon it. It also sets the stage for exploring the controversy over whether public organizations can be treated as a reasonably distinct category. Later chapters present evidence supporting the claim that they are distinctive in important ways.

Managers need to be aware of the historical developments summarized in this chapter. The review covers terms, ideas, and names that serve as part of the vocabulary of management; well-prepared managers need to develop a sound

CHAPTER TWO

UNDERSTANDING THE STUDY OF ORGANIZATIONS

A Historical Review

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Understanding the Study of Organizations 17

understanding of these. For example, managers regularly refer to Theory X and Theory Y, span of control, and other concepts that the review covers.

In addition, this historical overview illustrates a central theme in the study and practice of management: the important role of theory and expert opinion. The review provided here shows that the different bodies of theory about how to organize and manage have strongly infl uenced, and been infl uenced by, the way managers and organizations behave. Some of the general trends involve profoundly important beliefs about the nature of human motivation and of successful organizations. The review shows that management theory and practice have evolved over the past century. Theories about the motives, values, and capacities of people in organiza- tions have evolved, and this evolution has in turn prompted additional theories about how organizations must look and behave in response to the increasing complexity of—and rapid changes in—the contexts in which they operate. Theories and expert opinion have moved away from empha- sis on highly bureaucratized organizations with strong chains of command, very specifi c and unchanging job responsibilities, and strong controls over the people in them, and toward more fl exible, “organic” organizations; horizontal communications; and a virtual crescendo of calls for participa- tion, empowerment, teamwork, and other versions of more decentralized, adaptive organizations. The description in Chapter One of presidents and governors calling for more fl exibility in managing people in government refl ects this general trend in some ways, but it also raises the question of how government organizations can respond to this trend.

The review thus shows that theories are not impractical abstractions but frameworks of ideas that often play a major role in management prac- tice. It illustrates why the framework in Figures 1.1 and 1.2 looks as it does, and it shows that the framework actually refl ects many of the major devel- opments in the fi eld over the century.

The Systems Metaphor

Figures 1.1 and 1.2 and the accompanying defi nition of organization in Chapter One implicitly refl ect one major organizing theme for the past century ’s major developments in the fi eld: how the fi eld has moved from early approaches (now considered “classical” views) that emphasized a sin- gle appropriate form of organization and management, toward more recent approaches that reject this “one best way” concept. Recent perspectives

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18 Understanding and Managing Public Organizations

emphasize the variety of organizational forms that can be effective under the different contingencies, or conditions, that organizations face.

This trend in organization theory borrows from the literature on general systems theory. This body of theory has developed the idea that there are various types of systems in nature that have much in common. Analyzing these systems, according to systems theorists, provides insights about diverse entities and a common language for specialists in different fi elds (Daft, 2013, p. 33; Kast and Rosenzweig, 1973, pp. 37–56; Katz and Kahn, 1966, pp. 19–29).

A system is an ongoing process that transforms certain specifi ed inputs into outputs; these in turn infl uence subsequent inputs into the system in a way that supports the continuing operation of the process. One can think of an organization as a system that takes in various resources and trans- forms them in ways that lead to attaining additional supplies of resources (the defi nition in Chapter One includes this idea). Systems have subsys- tems, such as communications systems or production systems within orga- nizations, and throughput processes, which are sets of internal linkages and processes that make up the transformation process. The outputs of the system lead to feedback—that is, the infl uences that the outputs have on subsequent inputs. The systems theorists, then, deserve credit (or blame) for making terms such as input and feedback part of our everyday jargon. Management analysts have used systems concepts—usually elaborated far beyond the simple description given here—to examine management sys- tems and problems.

A major trend among organizational theorists in the past century has been to distinguish between closed systems and open or adaptive systems. Some systems are closed to their environment; the internal processes remain the same regardless of environmental changes. A thermostat is part of a closed system that transforms inputs, in the form of room temperature, into outputs, in the form of responses from heating or air conditioning units. These outputs feed back into the system by changing the room tem- perature. The system ’s processes are stable and machinelike. They respond consistently in a programmed pattern.

One can think of a human being as an open or adaptive system. Humans transform their behaviors to adapt to their environment when there are environmental changes for which the system is not programmed. Thus the human being ’s internal processes are open to the environment and able to adapt to shifts in it.

Some organization theorists have expressed skepticism about the use- fulness of the systems approach (Meyer, 1979), but others have found it

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helpful as a metaphor for describing how organization theory has evolved during the past century. These theorists say that the earliest, “classical” theories treated organizations and employees as if they were closed systems.

Classical Approaches to Understanding Organizations

The earliest classical theories, and the advice they gave to managers, emphasized stable, clearly defi ned structures and processes, as if organiza- tional goals were always clear and managers’ main challenge was to design the most effi cient, repetitive, machinelike procedures to maximize attain- ment of the organization ’s goals. Some organization theorists also charac- terize this view as the “one best way” approach to organization.

Frederick Taylor and Scientifi c Management

In a New Yorker cartoon published in 1990, a woman has walked into an office where a man is kneeling on top of filing cabinets and reaching down into the drawers of the cabinet and fi ling papers. The woman says, “According to our time-and-motion studies, you handle your time very well, but a lot of your motion is wasted.” The cartoon assumes that at the end of the twentieth century any intelligent person would know the meaning of a time-and-motion study. This technique became well-known because of the scientifi c management school.

Frederick Taylor (1919) is usually cited as one of the pioneers of man- agerial analysis. He was the major figure in the scientific management school, which in Taylor ’s own words involved the systematic analysis of “every little act” in tasks to be performed by workers. Taylor asserted that scientifi c management involved a division of labor that was relatively new in historical terms. Whereas for centuries work processes had been left to the discretion of skilled craftspeople and artisans, scientifi c management recognized a division of responsibility between a managerial group and a group that performed the work. The role of management was to gather detailed information on work processes, analyze it, and derive rules and guidelines for the most effi cient way to perform the required tasks. Workers were then to be selected and trained in these procedures so they could maximize their output, the quality of their work, and their own earnings.

The procedures that Taylor and others developed for analyzing and designing tasks are still in use today. They conducted time-motion stud- ies, which involved the detailed measurement and analysis of physical

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20 Understanding and Managing Public Organizations

characteristics of the workplace, such as the placement of tools and machin- ery in relation to the worker and the movements and time that the worker had to devote to using them. The objective was to achieve the most effi cient physical layout for the performance of a specifi ed task. Analytical proce- dures of this sort are still widely used in government and industry.

Taylor ’s determination to fi nd the “one best way” to perform a task was such that he even devoted himself to fi nding the best way to design golf greens and golf clubs. He designed a putter that the golfer stabilized by cradling the club in his or her elbows. The putter proved so accurate that the U.S. Golf Association banned it (Hansen, 1999).

Taylor ’s emphasis on the effi cient programming of tasks and workers provoked controversy even in its heyday. In later years critics attacked his work for its apparent inhumanity and its underestimation of psychologi- cal and social infl uences on worker morale and productivity. Some of this criticism is overdrawn and fails to give Taylor credit for the positive aspects of his pioneering work. Taylor actually felt that his methods would benefi t workers by allowing them to increase their earnings and the quality of their work. In his own accounts of his work he said that he originally became interested in ways of encouraging workers without supervisors’ having to place pressure on them. As a manager, he had been involved in a very unpleasant dispute with workers, which he attributed to the obligation to put them under pressure (Burrell and Morgan, 1980, p. 126). He wanted to fi nd alternatives to such situations.

Yet Taylor did emphasize pay as the primary reward for work. He stressed minute specialization of worker activities, as if the worker were a rather mindless component of a mechanistic process. He did not improve his image with later organizational analysts when he used as an illustration of his techniques a description of his efforts to train a Scandinavian worker, whom he said was as dumb as an ox, in the most effi cient procedures for shoveling pig iron. Though the value of his contribution is undeniable, as a guiding conception of organizational analysis scientifi c management severely oversimplified the complexity of the needs of humans in the workplace.

Max Weber: Bureaucracy as an Ideal Construct

Also in the early decades of the past century, Max Weber ’s writings became infl uential, in a related but distinct way. Organization theorists often treat Weber as the founder of organizational sociology—the analysis of complex organizations. His investigations of bureaucracy as a social phenomenon

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provided the most infl uential early analysis of the topic (Gerth and Mills, 1946).

The proliferation of organizations with authority formally distrib- uted among bureaus or subunits is actually a fairly recent development in human history. Weber undertook to specify the defi ning characteristics of the bureaucratic form of organization, which he saw as a relatively new and desirable form in society. He saw the spread of such organizations as part of a movement toward more legal and rational forms of authority and away from authority based on tradition (such as monarchical power) or charisma (such as that possessed by a ruler like Napoleon). The bureaucratic form was distinct even from the administrative systems of the ancient Orient (such as in Mandarin China) and from other systems regarded as similar to modern systems. In traditional feudal or aristocratic systems, Weber said, people ’s functions were assigned by personal trustees or appointees of the ruler. Further, their offi ces were more like avocations than modern-day jobs; authority was discharged as a matter of privilege and the bestowing of a favor.

The bureaucratic form was distinct in its legalistic specifi cation of the authorities and obligations of offi ce. Weber wrote that the fully developed version of bureaucracy had the following characteristics:

1. Fixed, offi cial jurisdictional areas are established by means of rules. The rules distribute the regular activities required by the organization among these fi xed positions or offi ces, prescribing offi cial duties for each. The rules distribute and fi x the authority to discharge the duties, and they also establish specifi ed qualifi cations required for each offi ce.

2. There is a hierarchy of authority, involving supervision of lower offi ces by higher ones.

3. Administrative positions in the bureaucracy usually require expert training and the full working capacity of the offi cial.

4. Management of subunits follows relatively stable and exhaustive rules, and knowledge of these rules and procedures is the special expertise of the offi cial.

5. The management position serves as a full-time vocation, or career, for the offi cial.

Weber regarded this bureaucratic form of organization as having tech- nical advantages compared with administrative systems in which the offi - cials regarded their service as an avocation, often gained by birthright or through the favor of a ruler, to be discharged at the offi cial ’s personal

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22 Understanding and Managing Public Organizations

discretion. In Weber ’s view, the existence of qualifi ed career offi cials, a structured hierarchy, and clear, rule-based specifi cations of duties and pro- cedures made for precision, speed, clarity, consistency, and reduction of costs. In addition, the strict delimiting of the duties and authority of career offi cials and the specifi cation of organizational procedures in rules sup- ported the principle of the objective performance of duties. Duties were performed consistently, and clients were treated without favoritism; the organization was freed from the effect of purely personal motives. With offi cials placed in positions on the basis of merit rather than birthright or political favoritism, constrained by rules defi ning their duties, and serving as career experts, bureaucracies represented the most effi cient organiza- tional form yet developed, from Weber ’s perspective.

Weber did express concern that bureaucratic routines could oppress individual freedom (Fry, 1989) and that problems could arise from placing bureaucratic experts in control of major societal functions. Nevertheless, he described bureaucracy as a desirable form of organization, especially for effi ciency and the fair and equitable treatment of clients and employees. He thus emphasized a model of organization involving clear and consistent rules, a hierarchy of authority, and role descriptions. For this reason, Weber is often grouped with the other classic fi gures as a proponent of what would later be characterized as the closed-system view of organizations.

The Administrative Management School: Principles of Administration

Also in the fi rst half of the twentieth century, a number of writers began to develop the fi rst management theories that encompassed a broad range of administrative functions that we now include under the topic of manage- ment, and the proper means of discharging those functions. They sought to develop principles of administration to guide managers in such functions as planning, organizing, supervising, controlling, and delegating author- ity. This group became known as the administrative management school (March and Simon, 1958).

The members of the administrative management school emphati- cally espoused one proper mode of organizing. They either implied or directly stated that their principles would provide effective organization. The flavor of their work and their principles are illustrated in promi- nent papers by two of the leading figures in this group, Luther Gulick and James Mooney. In “Notes on the Theor y of Organization,” Gulick (1937) discussed two fundamental functions of management: the division of work and the coordination of work. Concerning the division

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of work, he discussed the need to create clearly defi ned specializations. Specialization, he said, allows the matching of skills to tasks and the clear, consistent delineation of tasks. He noted certain limits on specialization. No job should be so narrowly specialized that it does not take up a full work day, leaving the worker idle. Certain technological conditions, or traditions or customs, may constrain the assignment of tasks; and there are certain tasks, such as licking an envelope, that involve steps so organically inter- related that they cannot be divided.

Once a task has been properly divided, coordinating the work then becomes imperative. On this matter, Gulick proposed principles that were much clearer than his general points about specialization. Work can be coordinated through organization or through a dominant idea or pur- pose that unites efforts. Coordination through organization should be guided by several principles. First is the span of control—the number of subordinates reporting to one supervisor. The span of control should be kept narrow, limited to between six and ten subordinates per supervisor. Effective supervision requires that the supervisor ’s attention not be divided among too many subordinates. Gulick also proposed the principle of one master—each subordinate should have only one superior. There should be no confusion as to who the supervisor is. A third principle is technical effi ciency through the principle of homogeneity—tasks must be grouped into units on the basis of their homogeneity. Dissimilar tasks should not be grouped together. In addition, a specialized unit must be supervised by a homogeneous specialist. Gulick gave examples of problems resulting from violation of this principle in government agencies: in an agricultural agency, for instance, the supervisor of the pest control division must not be given supervisory responsibility over the agricultural development division.

In the same paper, Gulick sought to defi ne the job of management and administration through what became one of the most widely cited and infl uential acronyms in general management and public administration: POSDCORB. The letters stand for planning, organizing, staffi ng, directing, coordinating, reporting, and budgeting. These are the functions, he said, for which principles needed to be developed in subsequent work.

In “The Scalar Principle,” Mooney (1930) presented a generally similar picture of the effort to develop principles. He said that an organization must be like a scale, a graded series of steps, in terms of levels of authority and corresponding responsibilities. The principle involved several com- ponent principles. The fi rst of these was leadership. Under this principle, Mooney said, a “supreme coordinating authority” at the top must project itself through the entire “scalar chain” to coordinate the entire structure.

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24 Understanding and Managing Public Organizations

This was to be accomplished through the principle of delegation, under which higher levels assign authority and responsibility to lower levels. These processes accomplished the third principle of functional defi nition, under which each person is assigned a specifi c task.

These two papers refl ect the characteristics of the administrative man- agement school. If certain of the principles seem vague, that was typical, as critics would later point out. In addition, these two authors clearly empha- size formal structure in the organization and the hierarchical authority of administrators. Although some of the principles are only vaguely discussed, others are quite clear. Tasks should be highly specialized. Lines of hierar- chical authority must be very clear, with clear delegation down from the top and clear accountability and supervisory relations. Span of control should be narrow. There should be unity of command; a subordinate should be directly accountable to one superior. Like Weber and Taylor, these authors tended to emphasize consistency, rationality, and machinelike effi ciency. They wrote about organizations as if they could operate most effectively as closed systems, designed according to the one proper form of organization.

The historical contribution of this group is undeniable; the tables of contents of many contemporary management texts refl ect the infl uence of these theorists’ early efforts to conceive the role of management and administration. In some highly successful corporations, top executives have made this literature required reading for subordinates (Perrow, 1970b).

Gulick identified very strongly with public administration. He and other members of the administrative management school played impor- tant roles in the work of various committees and commissions on reorga- nizing the federal government, such as the Brownlow Committee in 1937 and the Hoover Commission in 1947. The reforms these groups proposed refl ected the views of the administrative management school; they were aimed at such objectives as grouping federal agencies according to similar functions, strengthening the hierarchical authority of the chief executive, and narrowing the executive ’s span of control.

The immediate infl uence of these proposals on the structure of the federal government was complicated by political confl icts between the pres- ident and Congress (Arnold, 1995). They had a strong infl uence, however, especially on the development of an orthodox view of how administrative management should be designed in government. Some scholars argued that the infl uence has continued across the years. They contended that structural developments in public agencies and the attitudes of govern- ment offi cials about such issues still refl ect an orthodox administrative management school perspective (Golembiewski, 1962; Knott and Miller,

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1987; Warwick, 1975, pp. 69–71). The infl uence of the administrative man- agement school on these reform efforts can be considered the most signifi - cant direct infl uence on practical events in government that organization theorists have ever had. Nevertheless, critics later attacked the views of the administrative management theorists as too limited for organizational analysis. As described later, researchers began to fi nd that many successful contemporary organizations violate the school ’s principles drastically and enthusiastically.

Before turning to the reaction against the administrative manage- ment perspective, however, we should note the context in which the administrative management theorists as well as the preceding early theo- rists worked. The administrative management theorists’ work was related to the broad progressive reform movement earlier in that century (Knott and Miller, 1987). Those reformers sought to eradicate corruption in government, especially on the part of urban political machines and their leaders. They sought to institute more professional forms of administra- tion through such means as establishing the role of the city manager. In addition, the growth of government over the earlier part of the century had led to a great deal of sprawling disorganization among the agencies and programs of government; there was a need for better organization. In this context, the administrative management theorists’ emphasis on basic organizational principles appears not only well justifi ed but abso- lutely necessary.

It is also important to acknowledge that these early theorists did not advance their ideas as simple mindedly as some later critics depict it. Although Luther Gulick came to be characterized in many organization theory texts as one of the foremost proponents of highly bureaucratized organizations, he wrote a refl ection on administrative issues from World War II in which he drew conclusions about the effi ciency of democracy. He argued that the democratic system of the United States actually gave it advantages over the seemingly more authoritarian and hierarchical axis powers. The more democratic process required more participation and cooperation in problem solving and thus led to better planning and implementation of plans than in the authoritarian regimes (Van Riper, 1998). Gulick thus suggested that more democratic processes may look less effi cient than more authoritarian ones, even though they can produce more effi cient and effective results. It will be evident in later sections that Gulick ’s thinking thus foreshadowed much of contemporary management theory. (Gulick also played an important role in the development of park and recreational programs, and reportedly suggested to James Naismith

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26 Understanding and Managing Public Organizations

that he invent an indoor game to keep young people in condition during cold weather. Naismith then invented basketball.)

Another very original thinker, Mary Parker Follett, wrote very approv- ingly of the effort to develop administrative principles, and scholars some- times classify her as a member of this school. She wrote, however, a classic essay on “the giving of orders” (Follett, [1926] 1989) that had very original and forward-looking implications. In the essay, she proposed a cooperative, participative process for giving orders, in which superiors and subordinates develop a shared understanding of the particular situation and what it requires. They then follow the “law” of the situation rather than having a superior impose an order on a subordinate. Follett ’s perspective both foreshadowed later movements and infl uenced them in the direction of the kind of participatory and egalitarian management described later. It also foreshadowed contemporary developments in feminist organization theory (Guy, 1995; Hult, 1995; Morton and Lindquist, 1997).

Still, the several contributions covered so far concentrated on a rela- tively limited portion of the framework for organizational analysis given in Figures 1.1 and 1.2 and the defi nition of organization in Chapter One. They emphasized the middle and lower parts of the framework, particu- larly organizational structure. They paid some attention to tasks and to incentives and motivation, but they were quite limited in comparison with the work of later authors. Additional developments would rapidly begin to expand the analysis of organizations, with increasing attention paid to the other components in Figures 1.1 and 1.2 .

Reactions, Critiques, and New Developments

Developments in the emerging fi eld of industrial psychology led to a sharp reaction against Taylor ’s ideas about scientifi c management and the prin- ciples of the administrative management school. These developments also led to a dramatic change in the way organizational and managerial analysts viewed the people in organizations. Researchers studying behavior and psychology in industry began to develop more insight into psychological factors in work settings. They analyzed the relationships between such fac- tors as fatigue, monotony, and worker productivity. They studied working conditions, analyzing variables such as rest periods, hours of work, methods of payment, routineness of work, and the infl uence of social groups in the workplace (Burrell and Morgan, 1980, p. 129).

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The Hawthorne Studies: The Discovery of Human Beings in the Workplace

A series of experiments beginning in the mid-1920s at the Hawthorne plant of the Western Electric Company provided a more subtle view of the psychology of the workplace than previous theorists had produced. The Hawthorne studies involved a complex series of experiments and academic and popular reports of their results over a number of years. Controversy continues over the interpretation and value of these studies (Burrell and Morgan, 1980, pp. 120–143); however, most organization theorists describe them as pathbreaking illustrations of the infl uence of social and psycho- logical factors on work behavior—conditions that often have stronger effects than factors such as pay or the physical conditions of the workplace. An employee ’s work-group experiences, a sense of the importance of the employee ’s work, and attention and concern on the part of supervisors are among a number of important social and psychological infl uences on workers.

The leaders of the project identifi ed several major experiments and observations as the most significant in the study (Roethlisberger and Dickson, 1939). In one experiment, the researchers lowered the level of illumination in the workplace and found that productivity nevertheless increased, because the workers responded to the attention of the research- ers. In another study, they improved the working conditions in a small unit through numerous alterations in rest periods and working hours. Increases in output were at fi rst taken as evidence that the changes were infl uencing productivity. When the researchers tested that conclusion by withdrawing the improved conditions, however, they found that, rather than falling off, output remained high. In the course of the experiment, the researchers had consulted the workers about their opinions and reactions, questioned them sympathetically, and displayed concern for their physical well-being. Their experiment on the physical conditions of the workplace had actually altered the social situation in the workplace, and that appeared to account for the continued high output.

In observing another work group, the researchers found that it enforced strict norms regarding group members’ productivity. To be a socially accepted member of the group, a worker had to avoid being a “rate buster,” who turns out too much work; a “chiseler,” who turns out too little; or a “squealer,” who says something to a supervisor that could be detrimental to another worker. This suggested to the researchers a distinction between the formal organization, as it is offi cially presented in organization charts and rules, and the informal organization. The informal organization

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develops through unoffi cial social processes within the organization, but it can involve norms and standards that are equally as forceful an infl uence on the worker as formal requirements.

The Hawthorne studies were widely regarded as the most signifi cant demonstration of the importance of social and psychological factors in the workplace up to that time, and they contributed to a major shift in research on management and organizations. The emphasis on social infl uences, informal processes, and the motivating power of attention from others and a sense of signifi cance for one ’s work constituted a major counter- point against the principles of administrative management and scientifi c management.

Chester Barnard and Herbert Simon: The Inducements-Contributions Equilibrium and the Limits of Rationality

A successful business executive turned organization theorist and an aca- demic who would become a Nobel laureate provided additional major con- tributions that weighed against the administrative management school and moved research in new directions. These contributions added substantially to the attention that organization theorists paid to organizational processes (especially decision making), people, environments, leadership, and goals and values.

Encouraged by the members of the Harvard group who were respon- sible for the Hawthorne studies and related work (Burrell and Morgan, 1980, p. 148), Chester Barnard wrote The Functions of the Executive (1938). It became one of the most infl uential books in the history of the fi eld.

Barnard ’s definition of an organization—“a system of consciously coordinated activities or forces of two or more persons” (1938, p. 73)— illustrates the sharp difference between his perspective and that of the classical theorists. Barnard focused on how leaders induce and coordinate the cooperative activities fundamental to an organization. He character- ized an organization as an “economy of incentives,” in which individuals contribute their participation and effort in exchange for incentives that the organization provides. The executive cadre in an organization must ensure the smooth operation of this economy. The executive must keep the economy in equilibrium by ensuring the availability of the incentives to induce the contributions from members that earn the resources for continuing incentives, and so on. (Notice that the defi nition of organiza- tion in Chapter One speaks of leaders and organizations seeking to gain

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resources from the environment to translate into incentives. This refl ects the infl uence of Barnard ’s perspective.)

Barnard offered a rich typology of incentives, including not just money and physical and social factors but also power, prestige, fulfi llment of ideals and altruistic motives, participation in effective or useful organizations, and many others. (Table 10.2 in Chapter Ten provides a complete listing of the possible incentives he named.)

Barnard also saw the economy of incentives as being interrelated with other key functions of the executive—specifi cally, communication and per- suasion. The executive must use communication and persuasion to infl u- ence workers’ subjective valuations of various incentives. The executive can, for example, raise the salience of major organizational values. The persuasion process requires a communication process, and Barnard dis- cussed both at length. He also distinguished between formal and informal organizations, but he saw them as interrelated and necessary to each oth- er ’s success. He thought of the informal organization as the embodiment of the communication, persuasion, and inducement processes that were essential to the cooperative activity he saw as the essence of organization. Some authors now cite Barnard ’s ideas on these topics as an early recogni- tion of the importance of organizational culture, a topic that has received a lot of attention in management in recent years (see, for example, Peters and Waterman, 1982).

Barnard ’s divergence from the classical approaches is obvious. Rather than stating prescriptive principles, he sought to describe the empirical reality of organizations. He treated the role of the executive as central, but he deemphasized formal authority and formal organizational structures, suggesting that those factors are not particularly important to understand- ing how organizations really operate. Compared with other authors up to that time, Barnard offered a more comprehensive analysis of the organiza- tion as an operating system, to be analyzed as such rather than bound by a set of artifi cial principles. His approach was apparently exhilarating to many researchers, including one of the preeminent social scientists of the century, Herbert Simon.

Simon attacked the administrative management school much more directly than Barnard had. In an article titled “The Proverbs of Administration” in Public Administration Review (1946), he criticized the administrative management school ’s principles of administration as vague and contradictory. He compared them to proverbs because he saw them as prescriptive platitudes, such as “Look before you leap,” that are use- less because they are unclear and are often countered by a contradictory

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proverb: “He who hesitates is lost.” The principle of specialization, for example, never specifi ed whether one should specialize by function, cli- entele, or place. Specialization also contradicts the principle of unity of command, which requires that a subordinate report to a superior within his or her specialization. But if a school has an accountant, who is obviously a specialist, that accountant must report to an educator. The two principles confl ict.

Similarly, the principle of span of control also confl icts with unity of command. In a large organization, narrow spans of control require many hierarchical levels. There must be many small work units, with a supervi- sor for each. Then there must be many supervisors above those supervi- sors to keep the span of control narrow at that level, and so on up. This makes communication up, down, and across the organization very cumber- some, and it makes it diffi cult to maintain clear, direct hierarchical lines of authority.

Simon called for a more systematic examination of administrative pro- cesses to develop concepts and study their relationships. Researchers, he said, should determine when individuals in administrative settings should choose one or the other of the alternatives represented by the principles. As indicated by his critique, such choices are seldom clear. Such limits on the ability of organizational members to perform well and to be com- pletely rational are major determinants of organizational processes and their effects. Simon argued that these limits on rationality and ability must be more carefully analyzed. In sum, he argued for a more empirical and analytical approach to organizational analysis, with decision making as the primary focus.

Hammond (1990) contends that Simon ’s critique of Gulick and oth- ers in the administrative management school overlooked major strengths of that approach. As mentioned earlier, the administrative management school did seek to analyze challenges that managers constantly face— challenges that later researchers have not really found answers for and that have a continuing infl uence on organizational structures in govern- ment. Still, most organization theorists agree that Simon ’s rejection of the school ’s principles had the stronger infl uence on subsequent work in the fi eld and changed its direction.

Simon pursued his ideas further in Administrative Behavior (1948). As the title indicates, he emphasized analysis of actual behavior rather than stating formal prescriptions or principles. He drew on Barnard ’s idea of an equilibrium of inducements and contributions and extended it into a more elaborate discussion of an organization ’s need to provide suffi cient

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Understanding the Study of Organizations 31

inducements to members, external constituencies, and supporters for it to survive. (The defi nition and framework in Chapter One also refl ect the infl uence of Simon ’s perspective.)

Like Barnard, Simon was concerned with the complex process of induce- ment and persuasion and with abstract incentives such as prestige, power, and altruistic service in addition to material incentives. He emphasized the uncertainties and contradictions posed by the classical principles purport- ing to guide administrative decisions. He displayed a continuing interest in a fundamental question: Amid such uncertainty and complexity, how are administrative choices and decisions made? The classical principles of administration were based on the assumption that administrators could and would be rational in their choice of the most effi cient mode of organiza- tion. Much of economic theory assumed the existence of “economic man”— an assumption that fi rms and individuals are strictly rational in maximizing profi ts and personal gain. Simon observed that in administrative settings, there are usually uncertainties. “Administrative man” is subject to cognitive limits on rationality. Strictly rational decisions and choices are impossible in complex situations, because information and time for making decisions are limited, and human cognitive capacity is too limited to process all the infor- mation and consider all the alternatives. Whereas most economic theory assumed maximizing behavior in decision making, Simon coined a new con- cept. Rather than maximize, administrators “satisfi ce.” Satisfi cing involves choosing the best of a limited set of alternatives so as to optimize the decision within the constraints of limited information and time. Thus an administra- tor does not make maximally rational decisions, because that is essentially impossible. The administrator makes the best possible decision within the constraints imposed by the available time, resources, and cognitive capacity.

This conception of the decision-making process challenged a funda- mental tenet of economic theory. It infl uenced subsequent research on decision making in business fi rms, as amplifi ed by A Behavioral Theory of the Firm by Richard Cyert and James March (1963; see Exhibit 2.1 ). It pro- vided a major step toward more recent approaches to organizational deci- sion making, as we will see later. With James March, Simon later published another infl uential book, Organizations (March and Simon, 1958), in which they further elaborated the theory of an equilibrium between inducements and worker contributions. They presented an extensive set of propositions about factors infl uencing the decision by an employee to join and stay with an organization and, once in it, to produce. However, Simon ’s conception of decision making in administrative settings appears to be the foremost reason that he was later awarded the Nobel Prize in economics.

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Social Psychology, Group Dynamics, and Human Relationships

Another important development began in the 1930s when Kurt Lewin, a psychological theorist, arrived in the United States as a refugee from Nazism. An immensely energetic intellectual, Lewin become one of the most infl u- ential social scientists of the century. He developed fi eld theory and topolog- ical psychology, which sought to explain human actions as functions of both the characteristics of the individual and the conditions impinging on the individual at a given time. This may not sound original now, but it differed from other prominent approaches of the time, such as Freudian psychology, which emphasized unconscious motives and past experiences.

Lewin ’s emphasis on the field of forces influencing an individual ’s actions drew on his interest in group behaviors and change processes in groups and individuals (Back, 1972, p. 98). He studied power, commu- nication, infl uence, and “cohesion” within groups, and he developed a conception of change that has been valuable to analysts of groups and organizational change for years.

Lewin argued that groups and individuals maintain a “quasi-stationary equilibrium” in their attitudes and behaviors. This equilibrium results from a balance between forces pressing for change and those pressing against change. To change people, you must change these forces. Groups exert pressures and infl uences on the individuals within them. If a person is removed from a group and persuaded to change an attitude but is then returned to the same fi eld of group pressures, the change is unlikely to last. One must alter the total fi eld of group pressures, through a three-phase process. The fi rst phase is “unfreezing,” or weakening, the forces against change and strengthening the forces for change. Next, the “changing” phase moves the group to a new equilibrium point. Finally, the “refreezing” phase fi rmly sets the new equilibrium through such processes as expres- sions of group consensus.

One of Lewin ’s better-known experiments in group dynamics illustrates his meaning. Lewin conducted “action research,” which involved analy- sis and sometimes manipulation of ongoing social processes of practical importance, such as race relations and group leadership. During World War II, Lewin sought to aid the war effort by conducting research on meth- ods of encouraging consumption of underutilized foods as a way of con- serving resources. He conducted an experiment in which he attempted to convince housewives that they should use more beef hearts in preparing meals. He assembled the housewives in groups and presented them with information favoring the change. They then discussed the matter, aired and resolved their concerns about the change (“unfreezing”), and came

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to a consensus that they should use more beef hearts. In groups in which the housewives made a public commitment to do so, more of them adopted the new behavior than in groups in which the members made no such pub- lic commitment. The group commitment is an example of “refreezing,” or setting group forces at a new equilibrium point.

As the intellectual leader of a group of social scientists interested in research on group processes, Lewin was instrumental in establishing the Research Center for Group Dynamics at Massachusetts Institute of Technology and the fi rst National Training Laboratory, which served for years as a leading center for training in group processes. These activities produced an interesting set of diverse, sometimes opposing infl uences on later work in the fi eld.

Lewin ’s efforts were among the fi rst to apply experimental methods (such as using control groups) to the analysis of human behavior. The work of Lewin and his colleagues set in motion the development of experimen- tal social psychology, which led to elaborate experimentation on group processes. Some of the important experiments on groups were relevant to organizational behavior. In another classic experiment conducted by mem- bers of this group, Lester Coch and John R. P. French (1948) compared dif- ferent factory work groups faced with a change in their work procedures. One group participated fully in the decision to make the change, another group had limited participation, and a third group was simply instructed to make the change. The participative groups made the change more read- ily and more effectively, with the most participative group doing the best. These sorts of projects were instrumental in making participative decision making (PDM) a widely discussed and utilized technique in management theory and practice. Numerous experiments of this sort contributed to the growing literature on industrial psychology and organizational behavior.

Interestingly, Lewin ’s influence also led to an opposing trend in applied group dynamics. The National Training Laboratory conducted training in group processes for governmental and industrial organizations. After Lewin ’s death, the group dynamics movement split into two move- ments. In addition to the researchers who emphasized rigorous experi- mental research on group concepts, a large group continued to emphasize industrial applications and training in group processes. They tended to reject experimental procedures in favor of learning through experience in group sessions. Their work contributed to the development of the fi eld of organization development (described in Chapter Thirteen). It also led to the widespread use of T-groups, sensitivity sessions, and encounter-group techniques during the 1960s and 1970s (Back, 1972, p. 99). The work of

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34 Understanding and Managing Public Organizations

Lewin and his colleagues (Lewin, 1947, 1948; Lewin and Lippitt, 1938; Lewin, Lippitt, and White, 1939) substantially infl uenced analysts’ concep- tions of the components of Figures 1.1 and 1.2 , especially those concerned with processes of change and decision making and those concerned with people, especially groups.

The Human Relations School

The Hawthorne experiments and related work and the research on group dynamics were producing insights about the importance of social and psy- chological factors in the workplace. They emphasized the potential value of participative management, enhancing employee self-esteem, and improv- ing human relations in organizations. Numerous authors began to empha- size such factors.

The psychologist Abraham Maslow developed a theory of human needs that became one of the most infl uential theories ever developed by a social scientist. Maslow argued that human needs fall into a set of major catego- ries, arranged in a “hierarchy of prepotency.” The needs in the lowest cat- egory dominate a person ’s motives until they are suffi ciently fulfi lled, then those in the next-highest category dominate, and so on. The categories, in order of prepotency, were physiological needs, safety needs, love needs, self-esteem needs, and self-actualization needs. The self-actualization cat- egory referred to the need for self-fulfi llment, for reaching one ’s potential and becoming all that one is capable of becoming. Thus, once a person fulfi lls his or her basic physiological needs, such as the need for food, and then fulfi lls the needs at the higher levels on the hierarchy, he or she ulti- mately becomes concerned with self-actualization. This idea of making a distinction between lower- and higher-order needs was particularly attrac- tive to writers emphasizing human relations in organizations (for more detail on Maslow ’s formulation, see Chapters Nine and Ten).

Douglas McGregor, for example, published a book whose title fore- tells its message: The Human Side of Enterprise (1960). McGregor had been instrumental in bringing Kurt Lewin to MIT, and the infl uence of both Lewin and Maslow was apparent in his conceptions of “Theory X” and “Theory Y.” He argued that management practices in American industry were dominated by a view of human behavior that he labeled Theory X. This theory held that employees were basically lazy, passive, resistant to change and responsibility, and indifferent to organizational needs. Hence management must take complete responsibility for directing and control- ling the organization. Managers must closely direct, control, and motivate

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employees. McGregor felt that Theory X guided organizational practices in most industrial organizations and was at the heart of classic approaches to management, such as scientifi c management.

Theory Y involved a diametrically different view of employees. Drawing on Maslow ’s conception of higher-level needs for self-esteem and self- actualization, McGregor defi ned Theory Y as the view that employees are fully capable of self-direction and self-motivation. Underutilized though this theory was, management based on this approach would be more effec- tive, because individual self-discipline is a more effective form of control than authoritarian direction and supervision. McGregor advocated man- agement approaches that would allow more worker participation and self- control, such as decentralization of authority, management by objectives, and job enlargement.

Theory Y clearly rejected the classical approach to organization; that rejection was emphatic in other major works of the time that placed a simi- lar value on releasing human potential in the workplace. Argyris (1957), for example, argued that there were inherent confl icts between the needs of the mature human personality and the needs of organizations. When management applies the classical principles of administration, healthy indi- viduals will experience frustration, failure, and confl ict. Healthy individuals desire relative independence, activeness, and use of their abilities. These motives clash with the classical principles, such as those that call for narrow spans of control, a clear chain of command, unity of direction, and narrow specialization. These principles foster dependence on superiors and orga- nizational rules, promote passiveness due to reduced individual discretion, and limit workers’ opportunities to use their abilities. Argyris, too, called for further development of such techniques as participative leadership and job enlargement to counter this problem.

Like the classical theorists before them, the proponents of human relations theories in turn became the targets of scathing criticism. Critics complained that they concentrated too narrowly on one dimension of organizations—the human dimension—and were relatively inattentive to other major dimensions, such as organizational structure, labor union objectives, and environmental pressures. They argued that the human relations types were repeating the mistake of proposing one best way of approaching organizational and managerial analysis, that they always treated interpersonal and psychological factors as the central, crucial issues. Some critics also grumbled about the tendency of these theories to always serve the ends of management, as if the real objective were to get workers to acquiesce in the roles management imposed on them.

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36 Understanding and Managing Public Organizations

Even when the motives were pure, some critics asserted, the approach was often naive.

Probably the most damaging critique of the human relations approach was concerned with its lack of empirical support; that is, the lack of evi- dence that improved human relations would lead to improved organiza- tional performance (Perrow, 1970b). The upsurge in empirical research that occurred in the 1950s and 1960s produced evidence of considerable confl ict in some very successful organizations. Research also produced little evidence of a strong relationship between individual job satisfaction and productivity.

Like the criticisms of the classical approaches, these criticisms tended to be overblown and a bit unfair. They often overlooked the historical per- spective of the writers, underestimating the signifi cance of what they were trying to do at the time. The insights that these organizational analysts pro- vided remain valuable—and dangerous to ignore. Examples still abound of management practices that cause damage because of inattention to the factors emphasized by the human relations theorists. When improperly implemented, scientifi c management techniques have created ludicrous situations in which workers slow down or disguise their normal behaviors when management analysts try to observe them.

For example, a consulting fi rm once tried to implement a manage- ment improvement system in a large state agency in Florida. The system involved a detailed analysis of work procedures through a process similar to time-motion methods. The process involved having observers spot-check employees at random intervals to note their activities. If an employee was idle, the observer would record that fact. A university professor went to the offi ce of a mid-level administrator in the agency to discuss a research project. Finding the administrator on the phone, the professor began to back out of his offi ce, in case the administrator wanted privacy for the phone call. The administrator beckoned her back in, explaining that he was not on the phone; he was sitting there trying to think. He was holding the phone to his ear to be sure that the observer would not happen by and record him as being idle. Another administrator was not so careful. After working late into the night on a project and coming in early to complete it, he fi nally fi nished and sat back to take a break, without thinking. Too late! The observer happened by and checked his record sheet. Idle!

Another example involved a management trainee in a large manu- facturing fi rm who was assigned to work with the fi rm ’s systems engineers on the design of the assembly line. One step in the production process involved having an employee sit and watch two glass water tanks, through

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which refrigerator compressors would be dragged by a wire. If there was a leak in the compressor, an air bubble would be released, and the employee would remove the compressor as defective. The management trainee expressed disgust at the incompetence of the employees, who were constantly failing at this simple task: all they had to do was sit and watch two tanks of water for eight hours. As a solution, the systems designers changed the procedure so that an employee would sit directly facing a tank and would have to watch only one tank. The management trainee expressed even more disgust to fi nd that the employees were so stupid that they could not handle even this simple task! Later, representatives from this company contacted a university, looking for consultants to help them deal with the problems of absenteeism and vandalism on the assembly line. As these examples illustrate, even several decades after the human relations material began to appear, there are still plenty of instances of unenlight- ened management attitudes that could be improved by some reading in the human relations literature.

Open-Systems Approaches and Contingency Theory

Criticism of the human relations approach, increasing attention to gen- eral-systems theory, and new research fi ndings forced a more elaborate view of organizations. Researchers found that organizations successfully adopt different forms under different circumstances or contingencies. Organizational analysts became convinced that different forms of organi- zation can be effective under certain contingencies of tasks and technology, organizational size, environment, and other factors. The effort to specify these contingencies and the organizational forms matched to them made contingency theory the dominant approach in organizational analysis in the 1960s and 1970s. The contingency perspective still provides a guiding framework, although researchers have either moved beyond the earlier versions of it or moved in different directions (Daft, 2013, pp. 28–34).

Around the middle of the twentieth century, researchers associated with the Tavistock Institute in Great Britain began conducting research on sociotechnical systems, emphasizing the interrelationships between techni- cal factors and social dimensions in the workplace (Burrell and Morgan, 1980, pp. 146–147). For example, Trist and Bamforth (1951) published an analysis of a change in work processes in a coal-mining operation that is now regarded as a classic study. They found that the technical changes in the work process changed the social relationships within the work group. They depicted the organization as a system with interdependent social and

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38 Understanding and Managing Public Organizations

technical subsystems that tend to maintain an equilibrium. In response to disturbances, the system moves to a new point of equilibrium—a new ongo- ing pattern of interrelated social and technical processes. Additional studies by the Tavistock researchers further developed this view that organizations are systems that respond to social, economic, and technological impera- tives that have to be satisfi ed for effective operation of the system—that is, that there are group and individual characteristics, task requirements, and interrelations among them that must be properly accommodated in the design of the organization.

With their consistent emphasis on organizations as ongoing systems that seek to maintain equilibrium in response to disturbances, Tavistock researchers also began to devote attention to the external environments of organizations. In a widely infl uential article titled “The Causal Texture of Organizational Environments,” Emery and Trist (1965) noted the increas- ing fl ux and uncertainty in the political, social, economic, and techno- logical settings in which organizations operate, and they discussed the infl uence on the internal operations of organizations of the degree of “tur- bulence” in their environment. Thus the emphasis moved toward analysis of organizations as open systems facing the need to adapt to environmental variations.

In the United States, the most explicit systems approach to organi- zational analysis appeared in a very prominent text by Daniel Katz and Robert L. Kahn (1966), The Social Psychology of Organizations . They showed how the systems language of inputs, throughputs, outputs, and feedback could be usefully applied to organizations. In analyzing throughput pro- cesses, for example, they differentiated various major subsystems, including maintenance subsystems, adaptive subsystems, and managerial subsystems. Scholars regard Katz and Kahn ’s effort as a classic in the organizational lit- erature (Burrell and Morgan, 1980, p. 158), but it also provides an example of the very general, heuristic nature of the systems approach. Because of its very general concepts, organizational researchers increasingly treated systems theory as a broad framework for organizing information, as a “mac- roparadigm” (Kast and Rosenzweig, 1973, p. 16), but not as a clearly artic- ulated theory. The metaphor of organizations as open, adaptive systems remained powerful, however, as an expression of the view of organizations as social entities that adapt to a variety of infl uences and imperatives.

Besides the efforts to apply systems concepts to organizations, research results supported the view that organizations adopt different forms in response to contingencies. (Chapter Eight provides further discussion on contingency theories.) In England, Joan Woodward (1965) conducted

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a pathbreaking study of British industrial fi rms. She found that the fi rms fell into three categories on the basis of the production process or “tech- nology” they employed: small-batch or unit production systems were used by such organizations as shipbuilding and aircraft manufacturing fi rms, large-batch or mass-production systems were operated by typical mass- manufacturing fi rms, and continuous production systems were used by petroleum refiners and chemical producers. Most important, she con- cluded that the successful fi rms within each category showed similar man- agement-structure profi les, but those profi les differed among the three categories. The successful fi rms within a category were similar on such dimensions as the number of managerial levels, the spans of control, and the ratio of managerial personnel to other personnel, yet they differed on these measures from the successful fi rms in the other two categories. This indicated that the fi rms within a category had achieved a successful fi t between their structure and the requirements of the particular production process or technology with which they had to deal. The fi rms appeared to be effectively adapting structure to technology.

Another very infl uential study, reported by Burns and Stalker (1961) in The Management of Innovation , further contributed to the view that effective organizations adapt their structures to contingencies. Burns and Stalker analyzed a set of fi rms in the electronics industry in Great Britain. The industry was undergoing rapid change, with new products being devel- oped, markets for the products shifting, and new information and technol- ogy becoming available. The fi rms faced considerable fl ux and uncertainty in their operating environments. Burns and Stalker classifi ed the fi rms into two categories on the basis of their managerial structures and practices: organic and mechanistic organizations. Their descriptions of the character- istics of these two groups depict mechanistic organizations as bureaucratic organizations designed along the lines of the classical approaches. The name of the category also has obvious implications: these were organi- zations designed to operate in machinelike fashion. Burns and Stalker argued that the organic type, so named to underscore the analogy with liv- ing, fl exible organisms, performed more successfully in the rapidly chang- ing electronics industry. In these organizations there was less emphasis on communicating up and down the chain of command, on the superior controlling subordinates’ behavior, and on strict adherence to job descrip- tions and organizational charts. There was more emphasis on networking and lateral communication, on the supervisor as facilitator, and on fl exible and changing work assignments. Such organizations adapted and inno- vated more effectively under changing and uncertain conditions because

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40 Understanding and Managing Public Organizations

they had more fl exible structures and emphasized fl exibility in commu- nication, supervision, and role defi nition. The mechanistic form can be more successful under stable environmental and technological conditions, however, where its emphasis on consistency and specifi city makes it more effi cient than a more loosely structured organization. Thus, Burns and Stalker also emphasized the need for a proper adaptation of the organiza- tion to contingencies.

Another important research project heavily emphasized organiza- tions’ environment as a determinant of effective structure. Paul Lawrence and Jay Lorsch (1967) studied U.S. fi rms in three separate industries that confronted varying degrees of uncertainty, complexity, and change. The researchers concluded that the fi rms that were successfully operating in uncertain, complex, changing environments had more highly differen- tiated internal structures. By differentiated structures, they meant that the subunits differed a great deal among themselves, in their goals, time frames, and internal work climates. Yet these highly differentiated fi rms also had elaborate structures and procedures for integrating the diverse units in the organization. The integrating structures included task forces, liaison offi cers and committees, and other ways to integrate the diverse units. Successful fi rms in more stable, certain environments, on the other hand, showed less differentiation and integration. Lawrence and Lorsch concluded that successful fi rms must have internal structures as complex as the environments in which they operate.

Other researchers continued to develop the general contingency per- spective and to analyze specifi c contingencies. Perrow (1973) published an important analysis of organizational technology. He proposed two basic dimensions for the concepts of technology: the predictability of the task (the number of exceptions and variations encountered) and the ana- lyzability of the problems encountered (the degree to which, when one encounters a new problem or exception, one can follow a clear program for solving it). Routine tasks are more predictable (there are fewer excep- tions or variations) and more analyzable (exceptions or variations can be resolved through an established program or procedures). Organizations with routine tasks have more formal, centralized structures. They use more rules, formal procedures, and plans. Organizations with nonroutine tasks, where tasks have more exceptions and are harder to predict and where exceptions are harder to analyze and resolve, must have more flexible structures. They use more formal and informal meetings than rules and plans. (Chapter Eight describes a study confi rming these relationships in public organizations.)

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At about the same time, James Thompson (1967) published Organizations in Action , a very influential book that further developed the contingency perspective. Drawing on Herbert Simon ’s ideas about bounded rationality and satisfi cing, Thompson depicted organizations as refl ecting their members’ striving for rationality and consistency in the face of pressures against those qualities. He advanced numerous propo- sitions about how organizations use hierarchy, structure, units designed to buffer the environment, and other arrangements to try to “isolate the technical core”—that is, to create stable conditions for the units doing the basic work of the organization. Thompson suggested that organizations will try to group subunits on the basis of their technological interdepen- dence—that is, their needs for information and exchange with each other in the work process (see Chapter Eight). Organizations, he proposed, will also adapt their structures to their environment. Where environments are shifting and unstable, organizations will adopt decentralized structures, with few formal rules and procedures, to provide fl exibility for adapting to the environment (Chapter Four provides further description). One of Thompson ’s important achievements was to provide a driving logic for contingency and open-systems perspectives by drawing on Simon ’s ideas. Organizations respond to complexity and uncertainty in their technolo- gies and their environments by adopting more complex and fl exible struc- tures. They do so because the greater demands for information processing strain the bounded rationality of managers and the information processing capacity of more formal bureaucratic structures. Clear chains of command and vertical communication up and down them and strict specialization of tasks and strict rules and procedures can be too slow and infl exible in processing complex information and adapting to it.

Through the 1960s and 1970s, an upsurge in empirical research on organizations extended and tested the open-systems and contingency- theory approaches and added new contingencies to the set. Many of these studies took place in public and nonprofi t organizations. Peter Blau and his colleagues (Blau and Schoenherr, 1971) reported a series of studies—of government agencies, actually—showing relationships between organiza- tional size and structure. These and other studies added size to the stan- dard set of contingencies. Hage and Aiken (1969) reported on a series of studies of social welfare agencies that provided evidence that routine- ness of tasks, joint programs among organizations, and other factors were related to organizational structure and change. In England, a team of researchers (Pugh, Hickson, and Hinings, 1969) conducted what became known as the Aston studies—a major effort at empirical measurement of

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organizations—and developed an empirical taxonomy, grouping organiza- tions into types based on the measured characteristics. They interpreted differences in their taxonomic categories as the results of differences in age, size, technology, and external auspices and control. (Chapter Eight discusses important implications of these studies for theories about pub- lic organizations.) Child (1972) pointed out that in addition to the other contingencies that contingency theorists emphasized, managers’ strategic choices play an important role in adapting organizational structure. These and numerous other efforts had by the mid-1970s established the contin- gency approach—the argument that organizational structures and pro- cesses are shaped by contingencies of technology, size, environment, and strategic choice—as the central school or movement in organization the- ory. Authors began to translate the contingency observations into prescrip- tive statements for use in “organizational design” (Daft, 2013; Galbraith, 1977; Mintzberg, 1989; Starbuck and Nystrom, 1981).

Like the other theories covered in this review and in later chap- ters, contingency theory soon encountered criticisms and controversies. Researchers disputed how the key concepts should be defi ned and mea- sured. Different studies produced confl icting fi ndings. Some studies found a relationship between technology and structure, some did not (Hall and Tolbert, 2004, pp. 87–91). The basic idea that organizations must adapt to conditions they face, through such responses as adopting more fl exible structures as they contend with more environmental uncertainty, still serves as a central theme in organization theory (Daft, 2013; Donaldson, 2001; Scott, 2003) and management practice (Peters, 1987).

The developments in organizational research reviewed here have pro- duced an elaborate fi eld, with numerous professional journals carrying articles reporting analyses of a wide array of organizational topics. These journals and a profusion of books cover organizational structure, environ- ment, effectiveness, change, confl ict, communication, strategy, technology, interorganizational relations, and related variables.

In the past two decades, the fi eld has moved in new directions, many of which represent extensions of contingency and open-systems theories, with increased or redirected emphasis on organizational environments (com- pare Scott, 2003). Later chapters describe how organization theorists have developed natural selection and population ecology models for analysis of how certain organizational forms survive and prosper in certain envi- ronmental settings while others do not (Aldrich, 1979; Hall and Tolbert, 2004; Hannan and Freeman, 1989; Scott, 2003). Other theorists have ana- lyzed external controls on organizations, with emphasis on organizations’

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dependence on their environments for crucial resources (Pfeffer and Salancik, 1978).

The research and theory on people and groups in work settings described earlier have similarly led to a proliferation of closely related work in organizational behavior and organizational psychology, including a similar trend toward elaborate empirical studies and conceptual develop- ment during the 1960s and 1970s. Thousands of articles and books have reported work on employee motivation and satisfaction, work involvement, role confl ict and ambiguity, organizational identifi cation and commitment, professionalism, leadership behavior and effectiveness, task design, and managerial procedures such as management by objectives and fl extime.

As the different fields have progressed, relatively new topics have emerged. In the past decade a major trend toward adopting Total Quality Management programs in industry and government has swept the United States. This wave developed out of writings earlier in the past century by some key American authors, such as W. Edwards Deming and Joseph Juran, that had been embraced by the Japanese but virtually ignored in the United States until later (note that the historical overview in this chapter has said noth- ing about these authors). The topic of organizational culture has received a lot of attention and is featured in Figures 1.1 and 1.2 . Some important ear- lier authors such as Barnard and Philip Selznick (see Exhibit 2.1 ) had devoted attention to related themes; in the 1980s organizational culture surged to prominence in the management literature. Advances in technology— especially computer, information, and communications technology—have presented organizations and managers with dramatic new challenges and opportunities, and researchers have been pressing to develop the theoretical and research grounding needed to understand and manage these develop- ments. The increasing presence in the workforce of women and racial and ethnic groups that were severely underrepresented in the past has given rise to a body of literature focusing on diversity in organizations (Golembiewski, 1995; Ospina, 1996) and feminist organization theory (Hult, 1995). Later chapters give more attention to many of these recent topics.

The Quiet Controversy Over the Distinctiveness of Public Organizations and Management in Organization Theory

The rich fi eld of organization theory provides many valuable concepts and insights on which this book draws. It also raises an important issue for those interested in public organizations and public management: Have the

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characteristics of public organizations and their members been adequately covered in this voluminous literature? Has it paid suffi cient attention to the governmental and political environments of organizations, which seem so important for understanding public organizations? As mentioned in Chapter One and further described in later chapters, there has been a literature on public bureaucracies for many years, but the historical review provided here illustrates how little attention has been devoted to this literature by most of the organization theorists. In fact, many organiza- tion theorists have paid so little attention to a distinction between public and private organizations that any controversy over the matter remains quiet in most major journals on organization theory and outside of pub- lic administration journals. Implicitly, many organization theorists convey the message that we need no real debate, because the distinction lacks importance.

The analysts discussed in the preceding historical review have either concentrated on industrial organizations or sought to develop generic con- cepts and theories that apply across all types of organizations. For example, even though Peter Blau, a prominent organization theorist, published an organizational typology that included a category of “commonweal organi- zations” very similar to what this book calls public organizations , he published empirical studies that downplayed such distinctiveness of organizational categories (Blau and Scott, 1962). Blau and Schoenherr (1971) examined government agencies for his studies of organizational size, but he drew his conclusions as if they applied to all organizations. So have replications of Blau ’s study (Beyer and Trice, 1979), even though Argyris (1972, p. 10) sug- gested that Blau may have found the particular relationship he discovered because he was studying organizations governed by civil service systems. Such organizations might respond to differences in size in different ways than do other organizations, such as business fi rms. When the contingency theorists analyzed environments, they typically concentrated on environ- mental uncertainty, especially as a characteristic of business fi rms’ market environments, and showed very little interest in political or governmental dynamics in organizational environments.

Providing a more classical example of this tendency, Weber argued that his conception of bureaucracy applied to government agencies and pri- vate businesses alike (Meyer, 1979). Major fi gures such as James Thompson (1962) and Herbert Simon (Simon, Smithburg, and Thompson, 1950) have stressed the commonalities among organizations and have suggested that public agencies and private fi rms are more alike than different. The contributions to organization theory and behavior described in this review were aimed at the worthy objective of developing theory that would apply

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generally to all organizations. With some clear exceptions (Blau and Scott, 1962; Scott, 2003, pp. 341–344), the theorists repeatedly implied or aggres- sively asserted that distinctions such as public and private, market and non- market, and governmental and nongovernmental offered little value for developing theory or understanding practice. Herbert Simon continued to offer such observations until the end of his life. He contended that public, private, and nonprofi t organizations are essentially identical on the dimen- sion that receives more attention than virtually any other in discussions of the unique aspects of public organizations—the capacities of leaders to reward employees (Simon, 1995, p. 283, n. 3). He also bluntly asserted that it is false to claim “that public and nonprofi t organizations cannot, and on average do not, operate as effi ciently as private businesses” (Simon, 1998, p. 11). So one of the foremost social scientists of the twentieth century showed little sympathy for the distinction we have to develop in the next chapter.

Even so, research and writing about public bureaucracies had been appearing for many decades when many of these studies were published, and they were related to organizational sociology and psychology in vari- ous ways. They developed separately from organizational sociology and psychology, however. Political scientists or economists did the writing on public bureaucracies. They usually emphasized the relationship between the bureaucracy and other elements of the political system. The economists concerned themselves with the effects of the absence of economic markets for the outputs of public bureaucracies (Downs, 1967; Niskanen, 1971). The organizational sociologists and psychologists described in this chap- ter, although interested in environments, paid relatively little attention to these political and economic market issues. As noted, they worked much more intensively on internal and managerial dimensions—organizational structure, tasks and technology, motivation, and leadership.

Authors interested in the management of public organizations began to point to this gap between the two literatures (Rainey, 1983). As men- tioned in Chapter One and described in more detail in Chapter Three, various authors cited in this book mounted a critique of the literature on organization theory, saying that it offered an incomplete analysis of public organizations and the infl uences of their political and institutional environ- ments (Hood and Dunsire, 1981; Meyer, 1979; Perry and Kraemer, 1983; Pitt and Smith, 1981; Wamsley and Zald, 1973; Warwick, 1975). Yet they also complained that the writings on public bureaucracy were too anec- dotal and too discursively descriptive, lacking the systematic empirical and conceptual analyses common in organization theory. Also, the literature on public bureaucracies showed too little concern with internal structures, behavior, and management, topics that had received extensive attention

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46 Understanding and Managing Public Organizations

from researchers in organizational sociology and psychology and from general management analysts. Researchers began to provide more explicit organizational analyses of the public bureaucracy, of the sort described in this book. As Chapter One mentioned, recently a profusion of books and articles have provided many additional contributions. But all of this activity has actually dramatized, rather than fully resolved, the question of whether we can clarify the meaning of public organizations and public management and show evidence that such categories have signifi cance for theory and practice. Thus the next chapter turns to the challenge of formulating a defi nition and drawing distinctions.

EXHIBIT 2.1 Major Developments in Organization

and Management Theory in the Twentieth Century

I. CLASSIC THEORIES

The classic theories implied a “one best way” to organize and a “closed-system” view of organizations and the people in them.

A. Max Weber (Rational-Legal) • Weber provided one of the early infl uential analyses of bureaucracy. He defi ned

its basic characteristics, such as hierarchies of authority, career service, selection and promotion on merit, and rules and regulations that defi ne procedures and responsibilities of offi ces.

• Weber argued that these characteristics grounded bureaucracy in a rational-legal form of authority and made it superior to organizational forms based on traditional authority (such as aristocracy) or charismatic authority. Of these alternatives, bureaucracy provides superior effi ciency, effectiveness, and protection of clients’ rights.

• He also argued that bureaucracies are subject to problems in external accountability, as they are very specialized and expert in their areas of responsibility and may be subject to self-serving and secretive behaviors.

B. Frederick Taylor (Scientifi c Management) • Taylor was the most prominent fi gure in the Scientifi c Management movement. • He advocated the use of systematic analyses, such as “time-motion” studies, to

design the most effi cient procedures for work tasks (usually consisting of high levels of specialization and task simplifi cation).

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Understanding the Study of Organizations 47

• Taylor also argued that management must reward workers with fair pay for effi cient production so that workers can increase their well-being through productivity. This implies that simplifi ed, specialized tasks and monetary rewards are primary motivators.

C. Administrative Management School • The Administrative Management School sought to develop “principles of

administration” that would provide guidelines for effective organization in all types of organizations. The principles tended to emphasize specialization and hierarchical control:

• Division of Work. Work must be divided among units on the basis of task requirements, geographic location, or interdependency in the work process.

• Coordination of Work. Work units must be coordinated back together, through other principles:

Span of Control . A supervisor ’s “span of control” should be limited to fi ve to ten subordinates.

One Master . Each subordinate (and subunit) should report directly to only one superior.

Technical Effi ciency . Units should be grouped together for maximum technical effi ciency on the basis of work requirements, technological interdependence, or purpose.

• The Scalar Principle. Authority must be distributed in an organization like locations on a scale; as you move higher in the hierarchy, each position must have successively more authority, with ultimate authority at the top.

II. REDIRECTIONS, NEW DIRECTIONS, AND NEW INSIGHTS

Toward the middle of the century, new authors challenged the previous perspectives and moved the fi eld in new directions.

A. Human Relations and Psychological Theories 1. Hawthorne Studies: Motivating Factors

While studying physical conditions in the workplace, researchers found that weaker lighting in the workplace did not reduce productivity as predicted. They concluded that the attention they paid to the workers during the study increased the workers’ sense of importance, the attention they paid to their duties, and their communica- tion, and this raised their productivity. Other phases of the research indicated that the work group played an important role in infl uencing workers to attend to their job and be productive. The studies have come to be regarded as a classic illustra- tion of the importance of social and psychological factors in motivating workers.

2. Maslow: The Needs Hierarchy

Maslow held that human needs and motives fall into a hierarchy, ranging from lower-order to higher-order needs—from physiological needs (food,

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48 Understanding and Managing Public Organizations

freedom from extremes of temperature) to needs for safety and security, love and belonging, self-esteem, and fi nally self-actualization. The needs at each level domi- nate an individual ’s motivation and behavior until they are adequately fulfi lled, and then the next level of needs will dominate. The highest level, self-actualization, refers to the need to fulfi ll one ’s own potential. The theory infl uenced many other theories, largely due to its emphasis on the motivating potential of higher-order needs.

3. McGregor: Theories X and Y

Drawing on Maslow ’s theory, McGregor argued that management in industry was guided by “Theory X,” which saw workers as passive and without moti- vation and dictated that management must therefore direct and motivate them. Rejecting the emphasis on specialization, task simplifi cation, and hierar- chical authority in the scientifi c and administrative management movements, McGregor argued that management in industry must adopt new structures and procedures based on “Theory Y,” which would take advantage of higher-order motives and workers’ capacity for self-motivation and self-direction. These new approaches would include such structures and procedures as job enrichment, management by objectives, participative decision making, and improved perfor- mance evaluations.

4. Lewin: Social Psychology and Group Dynamics

Driven out of Europe by Nazism, Kurt Lewin came to the United States and led a group of researchers in studies of group processes. They conducted pathbreaking experiments on the infl uence of different types of leaders in groups and the infl u- ence of groups on group members’ attitudes and behaviors (for example, they documented that a group member is more likely to maintain a commitment if it is made in front of the group).

This work infl uenced the development of the fi eld of social psychology and of the group dynamics movement. The group dynamics movement actually developed in two directions. One involved a wave of experimental research on groups in labora- tories and organizational settings. For example, a classic study by Coch and French (1948) found that work groups in factories carried out changes more readily if they had participated in the decision to make the change; this study contributed to the growing interest in participative decision making in management. The second direction involved the widespread use of group processes for personal and organi- zational development, using such methods as encounter groups, “T-groups,” and “sensitivity groups.”

Lewin developed ideas about attitude and behavior change, based on “force fi eld analysis” and the concept of “unfreezing, moving, and refreezing” group and individual attitudes and behaviors. These ideas are still used widely in the writing about and practice of organizational development.

EXHIBIT 2.1 (Continued )

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Understanding the Study of Organizations 49

B. Chester Barnard and Herbert Simon 1. Chester Barnard

Barnard ’s sole book, The Functions of the Executive (1938), became one of the most infl uential management books ever written. Departing from the emphases of the administrative management school, he argued the importance of “informal” organizational structures. An organization is an economy of incentives, in which the executive must obtain resources to use in providing incentives for members to participate and cooperate. The executive must stimulate cooperation and com- munication and must draw on a complex array of incentives, including not just fi nancial incentives but such rewards as fulfi lling mutual values, conferring pres- tige, affi rming the desirability of the group, and others (see Table 10.2 ).

2. Herbert Simon

In his 1946 Public Administration Review article “The Proverbs of Administration,” Simon drew on Barnard ’s insights to attack the administrative management school. He criticized their “principles” as being more like vague proverbs, in some cases too vague to apply and in some cases contradictory. He called for greater analysis of admin- istrative conditions and behaviors to determine when different principles actually apply.

His book Administrative Behavior (1948) pursued these points and called for the sci- entifi c study of administrative behavior, with decision making as the central focus. He observed that actual administrative decision making is less rational than many economic theorists had assumed, in that decision makers are less likely to pursue clearly identifi ed and precisely valued goals—with an exhaustive review of alterna- tives and consistent selection of the path that will maximize goal attainment with minimal expenditure of resources—than such theorists had believed. In fact, admin- istrators’ ability to act rationally is often limited by incomplete knowledge and infor- mation, limited skills and mental abilities, the inability to predict or anticipate events, and other factors. Instead, they select the best available alternatives after a limited search, using available rules of thumb. Simon later referred to this as “satisfi cing.”

Cyert and March, in a study of business fi rms reported in A Behavioral Theory of the Firm (1963), provided evidence supporting Simon ’s observations. With others, March ’s later work along these lines would lead to development of the “garbage can model” of decision making, one of the most prominent current perspectives (see Chapter Seven).

March and Simon ’s Organizations (1958) provided elaborate conceptual frame- works and hypotheses about behavior in organizations, especially about individu- als’ decisions to join an organization and actively participate in it. Their work infl uenced the development of empirical research on organizational behavior. Pursuing his interest in decision making, Simon became a leader in research on artifi cial intelligence—the use of computers to make complex decisions.

Simon ’s insights about bounded rationality and satisfi cing, based on his anal- ysis of administrators’ challenges in making decisions under conditions of

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50 Understanding and Managing Public Organizations

complexity and uncertainty, infl uenced the development of open-systems and contingency theory (described later). In part because his ideas challenged basic assumptions in much of economic theory, he won the Nobel Prize for econom- ics in 1978.

C. Organizational Sociology and Bureaucratic Dysfunction

Following in the tradition of Weber, sociologists began studying the characteristics of organizations and bureaucracies.

1. Merton: Bureaucratic Structures and Member Personalities

Some of these authors began to observe that the bureaucratic characteristics Weber had regarded as good could actually lead to bad, or dysfunctional, con- ditions when they interacted with human characteristics, such as personalities. Merton (1940), for example, observed that specialization, elaborate rules, and an emphasis on adhering to the rules can lead to “trained incapacity,” in which people have trouble with problems that do not fi t within the rules of their special- ization. Also, “displacement of goals” can occur, in which people worry so much about adhering to the rules that their behavior confl icts with the goals of the organization. In addition, people in different departments may pursue the goals of their department more than those of the overall organization.

2. V. Thompson: Bureaupathology

Victor Thompson (1976), a public administration scholar, argued that bureaucratic organizations can cause “bureaupathology” in their members, who may become overly concerned with protecting the authority of their offi ce and too impersonal in their relations with clients and other members of the organization.

3. Selznick: Leadership and Institutionalization

Many other scholars studied other organizational processes. Selznick, in TVA and the Grass Roots (1966), analyzed the ways in which organizations and their lead- ers develop relationships with external environments, through such processes as “co-optation,” or drawing external groups into the decision-making processes of the organization to gain their support. In Leadership and Administration (1957), he analyzed the ways in which leaders develop their organizations as “institutions,” by infl uencing the organizational environment, setting major directions for the organization, and supporting these efforts through recruiting, training, and other enhancements of the organization ’s capacity.

4. Kaufman: Socialization

In his study The Forest Ranger (1960), Kaufman analyzed the ways in which the U.S. Forest Service developed the commitment of forest rangers and coordinated the activities of its widely dispersed employees through socialization processes that developed shared values and through accepted rules and procedures.

EXHIBIT 2.1 (Continued )

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III. RELATIVELY RECENT DEVELOPMENTS

A. Organizational Behavior and Organizational Psychology

The analysis of humans in organizations just described has led to the development of an elaborate body of theory and research on topics such as the psychology of individuals in organizations, work motivation, and work-related attitudes such as job satisfaction (Chapter Ten), leadership (Chapter Eleven), and group processes in orga- nizations (Chapter Twelve). The group dynamics movement described earlier has contributed to developing a body of knowledge about organizational development (Chapter Thirteen). These bodies of research, theory, and practice provide an under- standing of human behavior and psychology in organizations that far exceeds what the “classic” theories can offer.

B. Organization Theory and Design

The stream of sociological research on organizations described here contributed to a burgeoning fi eld of theory and research on large organizations that has taken many directions and covered many topics in recent years.

1. Adaptive Systems and Contingency Theory

One major development—the adaptive-systems perspective—has supplanted the classic view of organizations as machine-like, closed systems with one proper way of organizing. This perspective regards organizations as being varied in their char- acteristics because of their needs to adapt to the conditions they face. Contingency theories developed the idea that organizations vary between more bureaucratized, highly structured entities and more fl exible, loosely structured entities, depending on such contingencies as the nature of their operating environment, their tasks and technologies, their size, and the strategic decisions made by their leadership. The following are examples of infl uential adaptive systems and contingency-theory studies and analyses:

• Burns and Stalker (1961), in their research on fi rms in Great Britain, found that the managerial and structural characteristics of the most successful fi rms were different in different industries. In industries in which the operating environments (competitors, prices, products, technologies) of the fi rms were stable and predictable, “mechanistic” organizations with classic bureaucratic structures performed well. In industries in which these environments were rapidly changing and complex, more fl exible, loosely structured, “organic” organizations performed best.

• Joan Woodward (1965), in studying fi rms in Great Britain, found that the most effective fi rms in particular industries did not have the same structural characteristics as the most effective fi rms in other industries. Rather than there being one best pattern of organization for all industries, the study indicated that the most effective pattern depended on the requirements raised by technological aspects of the work in each industry.

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52 Understanding and Managing Public Organizations

• Lawrence and Lorsch (1967), in a study of businesses in the United States, found that the best-performing fi rms have structures that are as complex as their environment. Firms in environments with low levels of uncertainty (more predictable, less complex) operate well with less complex internal structures. Firms in more uncertain, less predictable, more complex environments have higher levels of differentiation (variation among units) and integration (arrangements for coordinating units, such as task forces or liaison roles).

• Peter Blau and his colleagues (Blau and Scott, 1962; Blau and Schoenherr, 1971) conducted a series of studies that showed that organizational size has an important relationship to organizational structure. Katz and Kahn (1966) published an infl uential book analyzing organizations as systems.

• James Thompson (1967) published a highly infl uential analysis of organizations that integrated the closed- and open-systems perspectives. Drawing on Simon ’s observations about the challenges of decision making under conditions of bounded rationality, Thompson observed that “dominant coalitions” in organizations strive to set up closed-system conditions and rational decision- making processes, but that as tasks, technologies, environmental conditions, and strategic decisions produce more complexities and uncertainties, organizations must adapt by adopting more fl exible, decentralized structures and procedures.

2. Extensions to Organization Theory

Later discussions describe many extensions to the adaptive-systems perspective, such as new theories about the effects of organizational environments (Chapter Four) and more dynamic or adaptive management processes, such as organiza- tional culture and market-type arrangements (Chapter Eleven).

Instructor ’s Guide Resources for Chapter Two

• Key terms • Discussion questions • Topics for writing assignments or reports • Case Discussion: Brookhaven National Laboratory

Available at www.wiley.com/college/rainey .

EXHIBIT 2.1 (Continued )

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The overview of organization theory in Chapter Two brings us to a fas-cinating and important controversy. Leading experts on management and organizations have spurned the distinction between public and private organizations as either a crude oversimplifi cation or an unimportant issue. Other very knowledgeable people have called for the development of a fi eld that recognizes the distinctive nature of public organizations and public management. Meanwhile, policymakers around the world struggle with decisions—involving trillions of dollars ’ worth of assets—about the privatization of state activities and the proper roles of the public and pri- vate sectors. Figure 1.2 asserts that government organizations’ status as public bodies has a major infl uence on their environment, goals, and val- ues, and hence on their other characteristics. This characterization sides with those who see public organizations and managers as suffi ciently dis- tinct to deserve special analysis.

This chapter discusses important theoretical and practical issues that fuel this controversy and develops some conclusions about the distinction between public and private organizations. First, it examines in depth the problems with this distinction. It then describes the overlapping of the public, private, and nonprofi t sectors in the United States, which precludes simple distinctions among them. The discussion then turns to

CHAPTER THREE

WHAT MAKES PUBLIC ORGANIZATIONS DISTINCTIVE

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the other side of the debate: the meaning and importance of the distinc- tion. If they are not distinct from other organizations, such as businesses, in any important way, why do public organizations exist? Answers to this question point to the inevitable need for public organizations and to their distinctive attributes. Still, given all the complexities, how can we defi ne public organizations and managers? This chapter discusses some of the confusion over the meaning of public organizations and then describes some of the best-developed ways of defi ning the category and conducting research to clarify it. After analyzing some of the problems that arise in conducting such research, the chapter concludes with a description of the most frequent observations about the nature of public organizations and managers. The remainder of the book examines the research and debate on the accuracy of these observations.

Public Versus Private: A Dangerous Distinction?

For years, authors have cautioned against making oversimplifi ed distinc- tions between public and private management (Bozeman, 1987; Murray, 1975; Simon, 1995, 1998). Objections to such distinctions deserve careful attention because they provide valuable counterpoints to invidious stereo- types about government organizations and the people who work in them. They also point out realities of the contemporary political economy and raise challenges that we must face when clarifying the distinction.

The Generic Tradition in Organization Theory

A distinguished intellectual tradition bolsters the generic perspective on organizations—that is, the position that organization and management theorists should emphasize the commonalities among organizations in order to develop knowledge that will be applicable to all organizations, avoiding such popular distinctions as public versus private and profi t ver- sus nonprofi t. As serious analysis of organizations and management bur- geoned early in the twentieth century, leading fi gures argued that their insights applied across commonly differentiated types of organizations. Many of them pointedly referred to the distinction between public and private organizations as the sort of crude oversimplifi cation that theorists must overcome. From their point of view, such distinctions pose intellectual dangers: they oversimplify, confuse, mislead, and impede sound theory and research.

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The historical review of organization theory in the preceding chapter illustrates how virtually all of the major contributions to the fi eld were con- ceived to apply broadly across all types of organizations, or in some cases to concentrate on industry. Throughout the evolution described in that review, the distinction between public and private organizations received short shrift.

In some cases, the authors either clearly implied or aggressively asserted that their ideas applied to both public and private organizations. Max Weber claimed that his analysis of bureaucratic organizations applied to both government agencies and business fi rms. Frederick Taylor applied his scientifi c management procedures in government arsenals and other public organizations, and such techniques are widely applied in both pub- lic and private organizations today. Similarly, members of the administra- tive management school sought to develop standard principles to govern the administrative structures of all organizations. The emphasis on social and psychological factors in the workplace in the Hawthorne studies, McGregor ’s Theory Y, and Kurt Lewin ’s research pervades the organiza- tional development procedures that consultants apply in government agen- cies today (Golembiewski, 1985).

Herbert Simon (1946) implicitly framed much of his work as being applicable to all organizational settings, both public and private. Beginning as a political scientist, he coauthored one of the leading texts in public administration (Simon, Smithburg, and Thompson, 1950). It contains a sophisticated discussion of the political context of public organizations. It also argues, however, that there are more similarities than differences between public and private organizations. Accordingly, in his other work he concentrated on general analyses of organizations (Simon, 1948; March and Simon, 1958). He thus implied that his insights about satisfi cing and other organizational processes apply across all types of organizations. In his more recent work, shortly before his death, he emphatically asserted that public, private, and nonprofi t organizations are equivalent on key dimensions. He said that public, private, and nonprofi t organizations are essentially identical on the dimension that receives more attention than virtually any other dimension in discussions of the unique aspects of pub- lic organizations—the capacities of leaders to reward employees (Simon, 1995, p. 283, n. 3). He stated that the “common claim that public and non- profi t organizations cannot, and on average do not, operate as effi ciently as private businesses” is simply false (Simon, 1998, p. 11). Thus the leading intellectual fi gure of organization theory clearly assigned relative unimpor- tance to the distinctiveness of public organizations.

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56 Understanding and Managing Public Organizations

Chapter Two also showed that contingency theory considers the pri- mary contingencies affecting organizational structure and design to be environmental uncertainty and complexity, the variability and complexity of organizational tasks and technologies (the work that the organization does and how it does it), organizational size, and the strategic decisions of managers. Thus, even though this perspective emphasizes variations among organizations, it downplays any particular distinctiveness of pub- lic organizations. James Thompson (1962), a leading fi gure among the contingency theorists, echoed the generic refrain—that public and private organizations have more similarities than differences. During the 1980s, the contingency perspective evolved in many different directions, some involving more attention than others to governmental and economic infl u- ences (Scott, 2003). Still, the titles and coverage in management and orga- nization theory journals and in excellent overviews of the fi eld (Daft, 2013) refl ect the generic tradition.

Findings from Research

Objections to distinguishing between public and private organizations draw on more than theorists’ claims. Studies of variables such as size, task, and technology in government agencies show that these variables may infl u- ence public organizations more than anything related to their status as a governmental entity. These fi ndings agree with the commonsense observa- tion that an organization becomes bureaucratic not because it is in govern- ment or business but because of its large size.

Major studies that analyzed many different organizations to develop taxonomies and typologies have produced little evidence of a strict division between public and private organizations. Some of the prominent efforts to develop a taxonomy of organizations based on empirical measures of organizational characteristics either have failed to show any value in draw- ing a distinction between public and private or have produced inconclusive results. Haas, Hall, and Johnson (1966) measured characteristics of a large sample of organizations and used statistical techniques to categorize them according to the characteristics they shared. A number of the resulting categories included both public and private organizations.

This fi nding is not surprising, because organizations’ tasks and func- tions can have much more infl uence on their characteristics than their status as public or private. A government-owned hospital, for example, obviously resembles a private hospital more than it resembles a govern- ment-owned utility. Consultants and researchers frequently fi nd, in both

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What Makes Public Organizations Distinctive 57

the public and the private sectors, organizations with highly motivated employees as well as severely troubled organizations. They often fi nd that factors such as leadership practices infl uence employee motivation and job satisfaction more than whether the employing organization is public, private, or nonprofi t.

Pugh, Hickson, and Hinings (1969) classifi ed fi fty-eight organizations into categories based on their structural characteristics; they had predicted that the government organizations would show more bureaucratic features, such as more rules and procedures, but they found no such differences. They did fi nd, however, that the government organizations showed higher degrees of control by external authorities, especially over personnel pro- cedures. The study included only eight government organizations, all of them local government units with functions similar to those of busi- ness organizations (for example, a vehicle repair unit and a water utility). Consequently, the researchers interpreted as inconclusive their fi ndings regarding whether government agencies differ from private organizations in terms of their structural characteristics. Studies such as these have con- sistently found the public-private distinction inadequate for a general typol- ogy or taxonomy of organizations (McKelvey, 1982).

The Blurring of the Sectors

Those who object to the claim that public organizations make up a distinct category also point out that the public and private sectors overlap and interrelate in a number of ways, and that this blurring and entwining of the sectors has advanced even further in recent years (Cooper, 2003, p. 11; Haque, 2001; Kettl, 1993, 2002; Moe, 2001; Weisbrod, 1997, 1998).

Mixed, Intermediate, and Hybrid Forms. A number of important govern- ment organizations are designed to resemble business fi rms. A diverse array of state-owned enterprises, government corporations, government- sponsored corporations, and public authorities perform crucial functions in the United States and other countries (Musolf and Seidman, 1980; Seidman, 1983; Walsh, 1978). Usually owned and operated by govern- ment, they typically perform business-type functions and generate their own revenues through sales of their products or by other means. Such enterprises usually receive a special charter to operate more independently than government agencies. Examples include the U.S. Postal Service, the National Park Service, and port authorities in many coastal cities; there are a multitude of other such organizations at all levels of government. Such

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organizations are sometimes the subjects of controversy over whether they operate in a suffi ciently businesslike fashion while showing suffi cient pub- lic accountability. These hybrid arrangements often involve massive fi nan- cial resources. In 1996, the U.S. comptroller general voiced concern over the results of audits by the General Accounting Offi ce (GAO, now called the Governmental Accountability Offi ce) of federal loan and insurance programs. These programs provide student loans, farm loans, deposit insurance for banks, fl ood and crop insurance, and home mortgages. The programs are carried out by government-sponsored enterprises such as the Federal National Mortgage Association (“Fannie Mae”). The comp- troller general said that the GAO audits indicated that cutbacks in federal funding and personnel have left the government with insuffi cient fi nan- cial accounting systems and personnel to monitor these liabilities prop- erly. The federal liabilities for these programs total $7.3 trillion. Since the comptroller general made his assessment, experts continued to point to accountability issues that these organizations pose, because they tend to have relative independence from political and regulatory controls and can use their resources to gain and even extend their independence (Koppel, 2001; Moe, 2001).

These conditions exploded in 2007 and 2008, as part of the fi nancial crisis described at the beginning of this book. Fannie Mae and Freddie Mac played major roles in the crisis, although experts heatedly debate the nature of their involvement and how much they contributed to the crisis. Critics claimed that government offi cials had for years emphasized provid- ing low-income citizens with access to mortgage money to use in buying homes, and Fannie Mae and Freddie Mac served as primary vehicles for implementing this policy. The critics contend that the policy led these two quasi-governmental organizations to extend large amounts of mortgage money to people who could not afford to make their mortgage payments. More important, they said, in implementing the policy Fannie Mae and Freddie Mac encouraged private banks to follow the same pattern, and the banks poured massive amounts of money into mortgage loans to people who could not afford them. It seems crazy that such organizations would make so many bad loans, but the organizations made money by pooling the mortgage payments into investment vehicles and selling them like bonds or notes to investors. Investors from around the world bought these “collat- eralized debt obligations” and related types of investments, and the banks had the incentive to keep extending more and more mortgages to people who could not afford them. Ultimately, the holders of the mortgages began to default on them, and this system of investments collapsed, causing huge

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losses for Fannie Mae and Freddie Mac, and even greater losses for the pri- vate banks and fi nancial institutions. The depth and severity of these losses is unclear at the time of this writing, and stories in the news media describe government policymakers’ and bank executives’ serious consideration of having the federal government take substantial amounts of control over one or more of the largest private fi nancial corporations in the United States, by buying large proportions of the corporations’ stock.

Some economists and fi nancial experts defend Fannie Mae and Freddie Mac, contending that they did not play as great a role in the crisis as critics claim, because they had standards that prevented them from extending as many bad mortgage loans as did the private corporations. Whatever the case, Fannie Mae and Freddie Mac both faced fi nancial collapse and had to be taken over and restructured by government offi cials. During 2008, the stock price of Fannie Mae declined from about $70 per share to $1 per share. It is hard to avoid interpreting that item of information as anything other than a disaster for stockholders. Whatever the magnitude of the role of the government-sponsored corporations in precipitating the crisis, one can hardly provide a more dramatic example of their importance.

On the other side of the coin are the many nonprofi t, or third-sector, organizations that perform functions similar to those of government orga- nizations. Like government agencies, many nonprofi ts obviously have no profi t indicators or incentives and often pursue social or public service missions, often under contract with the government (Weisbrod, 1997). To further complicate the picture, however, experts on nonprofi t organiza- tions observe a trend toward commercialization of nonprofi ts, by which they try to make money in businesslike ways that may jeopardize their pub- lic service missions (Weisbrod, 1998). Finally, many private, for-profi t orga- nizations work with government in ways that blur the distinction between them. Some corporations, such as defense contractors, receive so much funding and direction from government that some analysts equate them with government bureaus (Bozeman, 1987; Weidenbaum, 1969).

Functional Analogies: Doing the Same Things. Obviously, many people and organizations in the public and private sectors perform virtually the same functions. General managers, secretaries, computer programmers, auditors, personnel offi cers, maintenance workers, and many other spe- cialists perform similar tasks in public, private, and hybrid organizations. Organizations located in the different sectors—for example, hospitals, schools, and electric utilities—also perform the same general functions. The New Public Management movement that has spread through many

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60 Understanding and Managing Public Organizations

nations in recent decades has taken various forms but has often empha- sized the use in government of procedures similar to those purportedly used in business and private market activities, based on the assumption that government and business organizations are suffi ciently similar to make it possible to use similar techniques in both settings (Barzelay, 2001; Ferlie, Pettigrew, Ashburner, and Fitzgerald, 1996; Kettl, 2002).

Complex Interrelations. Government, business, and nonprofi t organiza- tions interrelate in a number of ways (Kettl, 1993, 2002; Weisbrod, 1997). Governments buy many products and services from nongovernmental organizations. Through contracts, grants, vouchers, subsidies, and fran- chises, governments arrange for the delivery of health care, sanitation services, research services, and numerous other services by private organi- zations. These entangled relations muddle the question of where govern- ment and the private sector begin and end. Banks process loans provided by the Veterans Administration and receive Social Security deposits by wire for Social Security recipients. Private corporations handle portions of the administration of Medicare by means of government contracts, and private physicians render most Medicare services. Private nonprofi t corporations and religious organizations operate facilities for the elderly or for delin- quent youths, using funds provided through government contracts and operate under extensive government regulation. In thousands of exam- ples of this sort, private businesses and nonprofi t organizations become part of the service delivery process for government programs and further blur the public-private distinction. Chapters Four, Five, and Fourteen pro- vide more detail on these situations and their implications for organiza- tions and management (Moe, 1996, 2001; Provan and Milward, 1995).

Analogies from Social Roles and Contexts. Government uses laws, regula- tions, and fi scal policies to infl uence private organizations. Environmental protection regulations, tax laws, monetary policies, and equal employment opportunity regulations either impose direct requirements on private organizations or establish inducements and incentives to get them to act in certain ways. Here again nongovernmental organizations share in the implementation of public policies. They become part of government and an extension of it. Even working independently of government, business organizations affect the quality of life in the nation and the public inter- est. Members of the most profi t-oriented fi rms argue that their organiza- tions serve their communities and the well-being of the nation as much as governmental organizations do. As noted earlier, however, observers worry

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that excessive commercialization is making too many nonprofi ts too much like business fi rms. According to some critics, government agencies also sometimes behave too much like private organizations. One of the fore- most contemporary criticisms of government concerns the infl uence that interest groups wield over public agencies and programs. According to the critics, these groups use the agencies to serve their own interests rather than the public interest.

The Importance of Avoiding Oversimplifi cation

Theory, research, and the realities of the contemporary political economy show the inadequacy of simple notions about differences between public and private organizations. For management theory and research, this real- ization poses the challenge of determining what role a distinction between public and private can play. For practical management and public policy, it means that we must avoid oversimplifying the issue and jumping to conclu- sions about sharp distinctions between public and private.

That advice may sound obvious enough, but violations of it abound. During the intense debate about the Department of Homeland Security at the time of this writing, a Wall Street Journal editorial warned that the federal bureaucracy would be a major obstacle to effective homeland security poli- cies. The editorial repeated the simplistic stereotypes about federal agen- cies that have prevailed for years. The author claimed that federal agencies steadfastly resist change and aggrandize themselves by adding more and more employees. The editorial advanced these claims even at a time when the Bush administration ’s President ’s Management Agenda pointed out that the Clinton administration, through the National Performance Review, had reduced federal employment by over 324,000 positions and criticized the way the reductions were carried out. Surveys also have shown that public managers and business managers often hold inaccurate stereotypes about each other (Stevens, Wartick, and Bagby, 1988; Weiss, 1983). For exam- ple, the increase in privatization and contracting out has led to increasing controversy over whether privatization proponents have made oversimpli- fi ed claims about the benefi ts of privatization, with proponents claiming great successes (Savas, 2000) and skeptics raising doubts (Donahue, 1990; Hodge, 2000; Kuttner, 1997; Sclar, 2000).

For all the reasons just discussed, clear demarcations between the public and private sectors are impossible, and oversimplifi ed distinctions between public and private organizations are misleading. We still face a paradox, however, because scholars and offi cials make the distinction

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repeatedly in relation to important issues, and public and private organiza- tions do differ in some obvious ways.

Public Organizations: An Essential Distinction

If there is no real difference between public and private organizations, can we nationalize all industrial fi rms, or privatize all government agen- cies? Private executives earn massively higher pay than their government counterparts. The fi nancial press regularly lambastes corporate executive compensation practices as absurd and claims that these compensation poli- cies squander many billions of dollars. Can we simply put these business executives on the federal executive compensation schedule and save a lot of money for these corporations and their customers? Such questions make it clear that there are some important differences in the administration of public and private organizations. Scholars have provided useful insights into the distinction in recent years, and researchers and managers have reported more evidence of the distinctive features of public organizations.

The Purpose of Public Organizations

Why do public organizations exist? We can draw answers to this question from both political and economic theory. Even some economists who strongly favor free markets regard government agencies as inevitable com- ponents of free-market economies (Downs, 1967).

Politics and Markets. Decades ago, Robert Dahl and Charles Lindblom (1953) provided a useful analysis of the raison d’être for public organiza- tions. They analyzed the alternatives available to nations for controlling their political economies. Two of the fundamental alternatives are political hierarchies and economic markets. In advanced industrial democracies, the political process involves a complex array of contending groups and institutions that produces a complex, hydra-headed hierarchy, which Dahl and Lindblom called a polyarchy . Such a politically established hierarchy can direct economic activities. Alternatively, the price system in free eco- nomic markets can control economic production and allocation decisions. All nations use some mixture of markets and polyarchies.

Political hierarchy, or polyarchy, draws on political authority, which can serve as a very useful, inexpensive means of social control. It is cheaper to have people relatively willingly stop at red lights than to work out a system

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of compensating them for doing so. However, political authority can be “all thumbs” (Lindblom, 1977). Central plans and directives often prove confi ning, clumsy, ineffective, poorly adapted to many local circumstances, and cumbersome to change.

Markets have the advantage of operating through voluntary exchanges. Producers must induce consumers to engage willingly in exchanges with them. They have the incentive to produce what consumers want, as effi - ciently as possible. This allows much freedom and flexibility, provides incentives for effi cient use of resources, steers production in the direc- tion of consumer demands, and avoids the problems of central planning and rule making inherent in a polyarchy. Markets, however, have a lim- ited capacity to handle the types of problems for which government action is required (Downs, 1967; Lindblom, 1977). Such problems include the following:

Public goods and free riders . Certain services, once provided, benefi t every- one. Individuals have the incentive to act as free riders and let others pay, so government imposes taxes to pay for such services. National defense is the most frequently cited example. Similarly, even though private organiza- tions could provide educational and police services, government provides most of them because they entail general benefi ts for the entire society.

Individual incompetence . People often lack suffi cient education or infor- mation to make wise individual choices in some areas, so government regulates these activities. For example, most people would not be able to determine the safety of particular medicines, so the Food and Drug Administration regulates the distribution of pharmaceuticals.

Externalities or spillovers . Some costs may spill over onto people who are not parties to a market exchange. A manufacturer polluting the air imposes costs on others that the price of the product does not cover. The Environmental Protection Agency regulates environmental externalities of this sort.

Government acts to correct problems that markets themselves create or are unable to address—monopolies, the need for income redistribu- tion, and instability due to market fl uctuations—and to provide crucial services that are too risky or expensive for private competitors to provide. Critics also complain that market systems produce too many frivolous and trivial products, foster crassness and greed, confer too much power on corporations and their executives, and allow extensive bungling and cor- ruption. Public concern over such matters bolsters support for a strong and active government (Lipset and Schneider, 1987). Conservative econo- mists argue that markets eventually resolve many of these problems and

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that government interventions simply make matters worse. Advocates of privatization claim that government does not have to perform many of the functions it does and that government provides many services that private organizations can provide more effi ciently. Nevertheless, American citizens broadly support government action in relation to many of these problems.

Political Rationales for Government. A purely economic rationale ignores the many political and social justifi cations for government. In theory, gov- ernment in the United States and many other nations exists to maintain systems of law, justice, and social organization; to maintain individual rights and freedoms; to provide national security and stability; to promote general prosperity; and to provide direction for the nation and its com- munities. In reality, government often simply does what infl uential politi- cal groups demand. In spite of the blurring of the distinction between the public and private sectors, government organizations in the United States and many other nations remain restricted to certain functions. For the most part, they provide services that are not exchanged on economic markets but are justifi ed on the basis of general social values, the public interest, and the politically imposed demands of groups.

The Concept of Public Values

In essential intellectual activity related to analyzing public organizations, authors have developed the concept of public values as a rationale for government and other entities to defend and produce such values. The concept is similar to concepts of market failure discussed earlier, such as public goods, externalities, and public information that protects citizens from inadequate knowledge of such matters as the health risks of phar- maceutical products. The concept of public values differs from those eco- nomics-based concepts, however. Authors developing the concept focus much less on economic market failure and more on the political and insti- tutional processes by which public values are identifi ed—and furthered or damaged.

Moore: Creating Public Value. The publication about public values most fre- quently cited by other authors is Mark Moore ’s Creating Public Value (1995). Moore implicitly defi ned public values by discussing differences between public and private production processes and circumstances justifying pub- lic production, and he provided many examples. Public value consists of what governmental activities produce, with due authorization through

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representative government, and taking into consideration the effi ciency and effectiveness with which the public outputs are produced. Public man- agers create public value when they produce outputs for which citizens express a desire:

Value is rooted in the desires and perceptions of individuals— not necessarily in physical transformations, and not in abstrac- tions called societies. . . . Citizens’ aspirations, expressed through representative government, are the central concerns of public management. . . . Every time the organization deploys public authority directly to oblige individuals to contribute to the public good, or uses money raised through the coercive power of taxation to pursue a purpose that has been authorized by citizens and representative government, the value of that enterprise must be judged against citizens’ expectations for jus- tice and fairness as well as effi ciency and effectiveness (p. 52).

Similarly, Moore contended that managers can create public value in two ways (1995, p. 52). They can “deploy the money and authority entrusted to them to produce things of value to particular clients and benefi ciaries.” They can also create public value by “establishing and operating an institu- tion that meets citizens’ (and their representatives’) desires for properly ordered and productive public institutions.” Public managers can behave proactively in this process. “They satisfy these desires when they represent the past and future performance of their organization to citizens and rep- resentatives for continued authorization through established mechanisms of accountability.” Public managers, Moore argued, “must produce some- thing whose benefi ts to specifi c clients outweigh the costs of production.”

Moore thus advanced a conception of public value that one can describe as a “publicly authorized production” conception. (These quota- tion marks are ours, and do not indicate a quotation from Moore.) Public value derives from what governmental activities produce, with authoriza- tion from citizens and their representatives. Public value increases when the outcomes are produced with more effi ciency and effectiveness. Thus Moore offered no explicit defi nition of “public value” except that it derives from citizen desires, and he offers no defi nitive or explicit list of public values.

The Accenture Public Sector Value Model. One fi nds a similar perspective in the “Accenture Public Sector Value Model” (Jupp and Younger, 2004),

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whose authors cite Moore as a source of the concept of public value. Similarly to Moore, the Accenture model never defi nes public values explicitly. The authors of the model explain that public value emerges from the production of outcomes of governmental activities, considered together with the cost-effectiveness of producing those outcomes:

“Outcomes” are a weighted basket of social achievements. “Cost- effectiveness” is defi ned as annual expenditure minus capital expenditure, plus capital charge (p. 18).

Without considering the merits of the model, one can point out that the model and its authors do not undertake to defi ne public values explic- itly. Public values consist of outcomes based on what a government entity is supposed to be doing, and based on what citizens want it to do, taking into account. As with Moore ’s conception, which infl uenced the Accenture model, the authors of this model offer no explicit or independent defi ni- tion of public value, except as outcomes that citizens want. They, too, offer no list of public values.

Bozeman ’s Public Values and Public Interest . Bozeman, in Public Values and Public Interest (2007), advances a conception of public values and public value failure with similarities to that of Moore, but with very important differences. In previous work, Bozeman (2002a) had proposed a concept of “public value failure” as a major alternative to the concept of market failure. He argued that market failure concepts have tended to concen- trate on market effi ciency and utilitarianism, whereas public value failure concentrates instead on failures of the public and private sectors to fulfi ll core public values. Bozeman suggests a number of instances in which this can occur. For one, mechanisms for articulating and aggregating values fail when core public values are skirted because of fl aws in policymaking processes. For example, if public opinion strongly favors gun control but no such policies are enacted, the disjunction between public opinion and policy outcomes fails to maximize public values about democratic repre- sentation. In another example, the public and private sectors may produce a situation involving threats to human dignity and subsistence, such as an international market for internal human organs leading impoverished individuals to sell their internal organs merely to survive. Interesting and important, the concepts of public value and public value failure further illus- trate the relatively abstract nature of the rationales for government and its organizations, and in turn become signifi cant aspects of the context for understanding and managing government organizations.

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In the more recent book, Bozeman (2007, p. 13) offers an explicit defi nition of public values: “A society ’s ‘public values’ are those providing normative consensus about (a) the rights, benefi ts, and prerogatives to which citizens should (and should not) be entitled; (b) the obligations of citizens to society, the state, and one another; and (c) the principles on which governments and policies should be based.” He also conceives of public values as existing at the individual level. He defi nes individual public values as “the content-specifi c preferences of individuals concerning, on the one hand, the rights, obligations, and benefi ts to which citizens are entitled and, on the other hand, the obligations expected of citizens and their designated representatives” (p. 14). In other words, he asserts that in societies one can discern patterns of consensus about what everyone should get, what they owe back to society, and how government should work. Individuals have their own values in relation to such matters, and the patterns of consensus consist of aggregations of those individuals who agree with each other about such matters.

This perspective resembles Moore ’s in various ways. Both perspectives locate value in the preferences of the citizenry, for example. Both empha- size the production of outputs and outcomes as sources of public value. Bozeman at certain points emphasizes public value “failure,” when neither the market nor the public sector provides goods and services that achieve public values. Moore emphasized positive production of outcomes that enhance public value, but, by implication, failure to produce such out- comes fails to create or increase public value.

Differences between the two perspectives involve matters of emphasis and explicit versus implicit expression. There are important differences, however, that have implications for the relationship between this discus- sion and public service motivation. One way of expressing some of these differences would contend that Moore emphasized production whereas Bozeman more heavily emphasizes the demand side of the production process. As his book ’s title— Creating Public Value: Strategic Management in Government— implies, Moore focused on the public manager ’s production of public value, by identifying outcomes that will increase it, developing strategy for producing those outcomes, managing the political context, and designing effective and effi cient operational management processes for pro- ducing the outcomes. In Moore ’s analysis, public value refers generally to outcomes of value to citizens and clients, with the public value increasing as the effi ciency and effectiveness of production increases. He identifi ed outcomes only through some examples but not through an explicit list- ing, defi nition, or typology. Bozeman ’s perspective more heavily emphasizes the existence of public values, independently of production processes but

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obviously enhanced or diminished by production processes. Moore dis- cussed how the public manager and others (such as political authorities) decide whether government can justify producing outcomes, rather than leaving the production to the private sector. Bozeman (2007) and Jørgensen and Bozeman (2007) do not restrict the production of goods and services that affect public values to government. Public and private organizations produce goods and services that either achieve or fail to achieve public val- ues. Hence, public values represent a psychological and sociologic construct referring to values that persons and social aggregates hold, independent of the production of goods and services that fulfi ll those values or violate them.

Identifying Public Values

The consideration of public values as psychological and social constructs that exist independently of production processes for outcomes that infl u- ence public values has a very signifi cant implication. It draws Jørgensen and Bozeman (2007; also Bozeman, 2007) into an effort to identify public val- ues. They point out that public administration scholars examining public values take a variety of approaches. One approach is to posit public values, making no pretense of deriving them. One can conduct public opinion polls, survey public managers, or locate public values statements in gov- ernment agencies’ strategic planning documents and mission statements and sometimes in their budget justifi cation documents. Another approach (Jørgensen and Bozeman, 2007) involves developing an inventory of public values from public administration and political science literature. When Jørgensen and Bozeman undertake to develop such an inventory, the list of public values becomes complex, multileveled, and sometimes mutu- ally confl icting. The inventory includes seven major “value constellations” (Jørgensen and Bozeman, 2007) or “value categories,” (Bozeman, 2007, pp. 140–141), each containing a set of values.

The complex results of the inventory should come as no surprise. As many authors have pointed out many times, the values that organizations pursue are diverse, multiple, and confl icting, and the values that govern- ment organizations pursue are usually more so. Bozeman (2007, p. 143) contends that lack of complete consensus about public values should not prevent progress in analyzing public interest considerations. He proposes a public value mapping model that includes criteria for use in analyzing pub- lic values and public value failure. For purposes of the present discussion, however, the absence of a compact, defi nitive list of public values has impli- cations for the discussion of public service motivation (PSM) that follows.

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As described later, much of the PSM research has pursued a conception of PSM that involves only a few references to any public values that might appear on any list or inventory. In addition, much of the PSM research has treated PSM as a general, unitary construct, of which different individuals have more or less. The complexity of the public values inventory, however, coupled with Bozeman ’s assertion that public values also exist at the individual level, sug- gests that individuals may vary widely in their conceptions of PSM.

The Meaning and Nature of Public Organizations and Public Management

Although the idea of a public domain within society is an ancient one, beliefs about what is appropriately public and what is private, in both per- sonal affairs and social organization, have varied among societies and over time. The word public comes from the Latin for “people,” and Webster ’s New World Dictionary defi nes it as pertaining to the people of a community, nation, or state. The word private comes from the Latin word that means to be deprived of public offi ce or set apart from government as a personal matter. In contemporary defi nitions, the distinction between public and private often involves three major factors (Benn and Gaus, 1983): interests affected (whether benefi ts or losses are communal or restricted to individu- als); access to facilities, resources, or information; and agency (whether a person or organization acts as an individual or for the community as a whole). These dimensions can be independent of one another and even contradictory. For example, a military base may purportedly operate in the public interest, acting as an agent for the nation, but deny public access to its facilities.

Approaches to Defi ning Public Organizations and Public Managers. The multiple dimensions along which the concepts of public and private vary make for many ways to defi ne public organizations, most of which prove inadequate. For example, one time-honored approach defi nes public orga- nizations as those that have a great impact on the public interest (Dewey, 1927). Decisions about whether government should regulate have turned on judgments about the public interest (Mitnick, 1980). In a prominent typology of organizations, Blau and Scott (1962) distinguished between commonweal organizations, which benefi t the public in general, and busi- ness organizations, which benefi t their owners. The public interest, how- ever, has proved notoriously hard to defi ne and measure (Mitnick, 1980). Some defi nitions directly confl ict with others; for example, defi ning the public interest as what a philosopher king or benevolent dictator decides

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versus what the majority of people prefer. Most organizations, including business fi rms, affect the public interest in some sense. Manufacturers of computers, pharmaceuticals, automobiles, and many other products clearly have tremendous infl uence on the well-being of the nation.

Alternatively, researchers and managers often refer to auspices or ownership—an implicit use of the agency factor mentioned earlier. Public organizations are governmental organizations, and private organizations are nongovernmental, usually business fi rms. Researchers using this simple dichotomy have kept the debate going by producing impressive research results (Mascarenhas, 1989). The blurring of the boundaries between the sectors, however, shows that we need further analysis of what this dichot- omy means.

Agencies and Enterprises as Points on a Continuum. Observations about the blurring of the sectors are hardly original. More than half a century ago, in their analysis of markets and polyarchies, Dahl and Lindblom (1953) described a complex continuum of types of organizations, ranging from enterprises (organizations controlled primarily by markets) to agencies (public or government-owned organizations). For enterprises, they argued, the pricing system automatically links revenues to products and services sold. This creates stronger incentives for cost reduction in enterprises than in agencies. Agencies, conversely, have more trouble integrating cost reduction into their goals and coordinating spending and revenue-raising decisions, because legislatures assign their tasks and funds separately. Their funding allocations usually depend on past levels, and if they achieve improvements in effi ciency, their appropriations are likely to be cut. Agencies also pursue more intangible, diverse objectives, making their effi ciency harder to mea- sure. The diffi culty in specifying and measuring objectives causes offi cials to try to control agencies through enforcement of rigid procedures rather than through evaluations of products and services. Agencies also have more problems related to hierarchical control—such as red tape, buck passing, rigidity, and timidity—than do enterprises.

More important than these assertions in Dahl and Lindblom ’s over- simplifi ed comparison of agencies and enterprises is their conception of a continuum of various forms of agencies and enterprises, ranging from the most public of organizations to the most private (see Figure 3.1 ). Dahl and Lindblom did not explain how their assertions about the different char- acteristics of agencies and enterprises apply to organizations on different points of the continuum. Implicitly, however, they suggested that agency characteristics apply less and less as one moves away from that extreme, and the characteristics of enterprises become more and more applicable.

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FIGURE 3.1. AGENCIES, ENTERPRISES, AND HYBRID ORGANIZATIONS

This fi gure displays the continuum between government ownership and private enterprise. Below the line are arrangements colloquially referred to as public, government-owned, or nationalized. Above the line are organizational forms usually referred to as private enterprise or free enterprise. On the line are arrangements popularly considered neither public nor private.

Private nonprofi t organizations totally reliant on government contracts and grants (Atomic Energy Commission, Manpower Development Research Corporation)

Private corporations reliant on government contracts for most revenues (some defense contractors, such as General Dynamics, Grumman)

Heavily regulated private fi rms (heavily regulated private utilities)

Private corporations with signifi cant funding from government contracts but with the majority of revenues from private sources

Private corporations subject to general government regulations such as affi rmative action, Occupational Safety and Health Administration regulations

Private enterprise

Government ownership of part of a private corporation

Government agency

State-owned enterprise or public corporation (Postal Service, TVA, Port Authority of NY)

Government- sponsored enterprise, established by government but with shares traded on the stock market (Federal National Mortgage Association)

Government program or agency operated largely through purchases from private vendors or producers (Medicare, public housing)

Source: Adapted and revised from Dahl and Lindblom, 1953.

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72 Understanding and Managing Public Organizations

Ownership and Funding. Wamsley and Zald (1973) pointed out that an organization ’s place along the public-private continuum depends on at least two major elements: ownership and funding. Organizations can be owned by the government or privately owned. They can receive most of their funding from government sources, such as budget allocations from legislative bodies, or they can receive most of it from private sources, such as donations or sales within economic markets. Putting these two dichoto- mies together results in the four categories illustrated in Figure 3.2 : pub- licly owned and funded organizations, such as most government agencies; publicly owned but privately funded organizations, such as the U.S. Postal Service and government-owned utilities; privately owned but governmen- tally funded organizations, such as certain defense fi rms funded primarily through government contracts; and privately owned and funded organiza- tions, such as supermarket chains and IBM.

This scheme does have limitations; it makes no mention of regulation, for example. Many corporations, such as IBM, receive funding from gov- ernment contracts but operate so autonomously that they clearly belong in the private category. Nevertheless, the approach provides a fairly clear way of identifying core categories of public and private organizations.

Public Ownership Private Ownership

Department of Defense

Social Security Administration

Police departments

U.S. Postal Service

Government-owned utilities

Federal Home Loan Bank Board

Defense contrators

Rand Corporation

Manpower Development Research Corporation

Oak Ridge National Laboratories

General Motors a

IBM

General Electric

Grocery store chains

YMCA

Public Funding

(taxes, government

contracts)

Private Funding

(sales, private donations)

a These large corporations have large government contracts and sales, but attain most of their rev- enues from private sales and have relative autonomy to withdraw from dealing with government.

Source: Adapted and revised from Wamsley and Zald, 1973.

FIGURE 3.2. PUBLIC AND PRIVATE OWNERSHIP AND FUNDING

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What Makes Public Organizations Distinctive 73

Economic Authority, Public Authority, and “Publicness.” Bozeman (1987) drew on a number of the preceding points to try to conceive the com- plex variations across the public-private continuum. All organizations have some degree of political infl uence and are subject to some level of exter- nal governmental control. Hence, they all have some level of “publicness,” although that level varies widely. Like Wamsley and Zald, Bozeman used two subdimensions—political authority and economic authority—but treated them as continua rather than dichotomies. Economic authority increases as owners and managers gain more control over the use of their organization ’s revenues and assets, and it decreases as external govern- ment authorities gain more control over their fi nances.

Political authority is granted by other elements of the political system, such as the citizenry or governmental institutions. It enables the organiza- tion to act on behalf of those elements and to make binding decisions for them. Private fi rms have relatively little of this authority. They operate on their own behalf and only for as long as they support themselves through voluntary exchanges with citizens. Government agencies have high levels of authority to act for the community or country, and citizens are compelled to support their activities through taxes and other requirements.

The publicness of an organization depends on the combination of these two dimensions. Figure 3.3 illustrates Bozeman ’s depiction of pos- sible combinations. As in previous approaches, the owner-managed private fi rm occupies one extreme (high on economic authority, low on political authority), and the traditional government bureau occupies the other (low on economic authority, high on political authority). A more complex array of organizations represents various combinations of the two dimensions. Bozeman and his colleagues have used this approach to design research on public, private, and intermediate forms of research and development laboratories and other organizations. Later chapters describe the impor- tant differences they found between the public and private categories, with the intermediate forms falling in between (Bozeman and Loveless, 1987; Coursey and Rainey, 1990; Crow and Bozeman, 1987; Emmert and Crow, 1988). Also employing a concept of publicness, Antonsen and JØrgensen (1997) compared sets of Danish government agencies high on criteria of publicness, such as the number of reasons their executives gave for being part of the public sector (as opposed to being in the public sector as a mat- ter of tradition or for economies of scale). The agencies high on publicness showed a number of differences from those low on this measure, such as higher levels of goal complexity and of external oversight.

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74 Understanding and Managing Public Organizations

Even these more complex efforts to clarify the public-private dimen- sion do not capture its full complexity. Government and political processes infl uence organizations in many ways: through laws, regulations, grants, contracts, charters, franchises, direct ownership (with many variations in oversight), and numerous other ways (Salamon and Elliot, 2002). Private market infl uences also involve many variations. Perry and Rainey (1988) suggested that future research could continue to compare organizations in different categories, such as those in Table 3.1 .

E co

n o

m ic

A u

th o

ri ty

Political Authority

Private firm managed by owner

Closely held private firm, professionally managed

Corporation with shares traded publicly on stock market

Corporation heavily reliant on government contracts

Government- sponsored enterprise

Government corporation or government organization funded through user fees

Government agency (funded from taxes)

Small voluntary association

Professional association

Private nonprofit organization

Research university

Government- industry research cooperative

FIGURE 3.3. “PUBLICNESS”: POLITICAL AND ECONOMIC AUTHORITY

Source: Adapted from Bozeman, 1987.

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TABLE 3.1. TYPOLOGY OF ORGANIZATIONS CREATED BY CROSS-CLASSIFYING OWNERSHIP, FUNDING, AND MODE OF SOCIAL CONTROL

Ownership Funding

Mode of Social Control

Representative Study Example

Bureau Public Public Polyarchy Meier and Bothe (2007)

Bureau of Labor Statistics

Government corporation Public Private Polyarchy Walsh (1978) Pension Benefi t Guaranty Corporation

Government-sponsored enterprise Private Public Polyarchy Musolf and Seidman (1980)

Corporation for Public Broadcasting

Regulated enterprise Private Private Polyarchy Mitnick (1980) Private electric utilities

Government enterprise Public Public Market Barzelay (1992) Government printing offi ce that must sell services to government agencies

State-owned enterprise Public Private Market Aharoni (1986) Airbus

Government contractor Private Public Market Bozeman (1987) Grumman

Private enterprise Private Private Market Williamson (1975) IBM

Source: Adapted and revised from Perry and Rainey, 1988.

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76 Understanding and Managing Public Organizations

Although this topic needs further refinement, these analyses of the public-private dimension of organizations clarify important points. Simply stating that the public and private sectors are not distinct does little good. The challenge involves conceiving and analyzing the differ- ences, variations, and similarities. In starting to do so, we can think with reasonable clarity about a distinction between public and private organi- zations, although we must always realize the complications. We can think of assertions about public organizations that apply primarily to organiza- tions owned and funded by government, such as typical government agen- cies. At least by defi nition, they differ from privately owned fi rms, which get most of their resources from private sources and are not subject to extensive government regulations. We can then seek evidence compar- ing these two groups, and in fact such research often shows differences, although we need much more evidence. The population of hybrid and third-sector organizations raises complications about whether and how dif- ferences between these core public and private categories apply to those hybrid categories. Yet we have increasing evidence that organizations in this intermediate group—even within the same function or industry— differ in important ways on the basis of how public or private they are. Designing and evaluating this evidence, however, involves some further complications.

Problems and Approaches in Public-Private Comparisons

Defi ning a distinction between public and private organizations does not prove that important differences between them actually exist. We need to consider the supposed differences and the evidence for or against them. First, however, we must consider some intriguing challenges in research on public management and public-private comparisons, because they fi gure importantly in sizing up the evidence.

The discussion of the generic approach to organizational analysis and contingency theory introduced some of these challenges. Many factors, such as size, task or function, and industry characteristics, can infl uence an organization more than its status as a governmental entity. Research needs to show that these alternative factors do not confuse analysis of differences between public organizations and other types. Obviously, for example, if you compare large public agencies to small private fi rms and fi nd the agencies more bureaucratic, size may be the real explanation. Also, one would not compare a set of public hospitals to private utilities

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What Makes Public Organizations Distinctive 77

as a way of assessing the nature of public organizations. Ideally, an analy- sis of the public-private dimension requires a convincing sample, with a good model that accounts for other variables besides the public-private dimension. Ideally, studies would also have huge, well-designed samples of organizations and employees, representing many functions and con- trolling for many variables. Such studies require a lot of resources and have been virtually nonexistent, with the exception of the example of the National Organizations Study (which found differences among public, nonprofi t, and private organizations, as described in Chapter Eight; see Kalleberg, Knoke, and Marsden, 2001; Kalleberg, Knoke, Marsden, and Spaeth, 1996). Instead, researchers and practitioners have adopted a vari- ety of less comprehensive approaches.

Some writers theorized on the basis of assumptions, previous lit- erature and research, and their own experiences (Dahl and Lindblom, 1953; Downs, 1967; Wilson, 1989). Similarly, but less systematically, some books about public bureaucracies simply provided a list of the differences between public and private, based on the authors’ knowledge and expe- rience (Gawthorp, 1969; Mainzer, 1973). Other researchers conducted research projects that measure or observe public bureaucracies and draw conclusions about their differences from private organizations. Some con- centrated on one agency (Warwick, 1975), some on many agencies (Meyer, 1979). Although valuable, these studies examined no private organizations directly.

Many executives and managers who have served in both public agen- cies and private business fi rms have made emphatic statements about the sharp differences between the two settings (Blumenthal, 1983; Hunt, 1999; IBM Endowment for the Business of Government, 2002; Rumsfeld, 1983; Weiss, 1983). Quite convincing as testimonials, they apply primarily to the executive and managerial levels. Differences might fade at lower levels. Other researchers compared sets of public and private organizations or managers. Some compared the managers in small sets of government and business organizations (Buchanan, 1974, 1975; Kurland and Egan, 1999; Porter and Lawler, 1968; Rainey, 1979, 1983). Questions remain about how well the small samples represented the full populations and how well they accounted for important factors such as tasks. More recent studies with larger samples of organizations still leave questions about representing the full populations. They add more convincing evidence of distinctive aspects of public management (Hickson and others, 1986; Kalleberg, Knoke, and Marsden, 2001; Kalleberg, Knoke, Marsden, and Spaeth, 1996; Pandey and Kingsley, 2000) or provide refi nements to our understanding of the

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78 Understanding and Managing Public Organizations

distinction without fi nding sharp differences between public and private managers on their focal variables (Moon and Bretschneider, 2002).

To analyze public versus private delivery of a particular service, many researchers compare public and private organizations within functional categories. They compare hospitals (Savas, 2000, p. 190), utilities (Atkinson and Halversen, 1986), schools (Chubb and Moe, 1988), airlines (Backx, Carney, and Gedajlovic, 2002), and other types of organizations. Similarly, other studies compare a function, such as management of computers or the innovativeness of information technology, in government and busi- ness organizations (Bretschneider, 1990; Moon and Bretschneider, 2002). Still others compare state-owned enterprises to private fi rms (Hickson and others, 1986; MacAvoy and McIssac, 1989; Mascarenhas, 1989). They fi nd differences and show that the public-private distinction appears meaning- ful even when the same general types of organizations operate under both auspices. Studies of one functional type, however, may not apply to other functional types. The public-private distinction apparently has some dif- ferent implications in one industry or market environment, such as hospi- tals, compared with another industry or market, such as refuse collection (Hodge, 2000). Yet another complication is that public and private organi- zations within a functional category may not actually do the same thing or operate in the same way (Kelman, 1985). For example, private and public hospitals may serve different types of patients, and public and private elec- tric utilities may have different funding patterns.

In some cases, organizational researchers studying other topics have used a public-private distinction in the process and have found that it makes a difference (Chubb and Moe, 1988; Hickson and others, 1986; Kalleberg, Knoke, Marsden, and Spaeth, 1996; Kurke and Aldrich, 1983; Mintzberg, 1972; Tolbert, 1985). These researchers had no particular con- cern with the success or failure of the distinction per se; they simply found it meaningful.

A few studies compare public and private samples from census data, large-scale social surveys, or national studies (Brewer and Selden, 1998; Houston, 2000; Kalleberg, Knoke, Marsden, and Spaeth, 1996; Light, 2002a; Smith and Nock, 1980; U.S. Office of Personnel Management, 2000). These have great value, but such aggregated findings often prove difficult to relate to the characteristics of specific organizations and the people in them. In the absence of huge, conclusive studies, we have to piece together evidence from more limited analyses such as these. Many issues remain debatable, but we can learn a great deal from doing so.

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What Makes Public Organizations Distinctive 79

Common Assertions About Public Organizations and Public Management

In spite of the diffi culties described in the preceding section, the stream of assertions and research fi ndings continues. During the 1970s and 1980s, various reviews compiled the most frequent arguments and evidence about the distinction between public and private (Fottler, 1981; Meyer, 1982; Rainey, Backoff, and Levine, 1976). There has been a good deal of progress in research, but the basic points of contention have not changed substantially. Exhibit 3.1 shows a recent summary and introduces many of the issues that later chapters examine. The exhibit and the discussion of it that follows pull together theoretical statements, expert observations, and research fi ndings. Except for those mentioned, it omits many controversies about the accuracy of the statements (these are considered in later chap- ters). Still, it presents a reasonable depiction of prevailing issues and views about the nature of public organizations and management that amounts to a theory of public organizations.

EXHIBIT 3.1 Distinctive Characteristics of Public Management

and Public Organizations: A Summary of Common Assertions and Research Findings

I . ENVIRONMENTAL FACTORS

I.1. Public organizations are characterized by an absence of economic markets for out- puts and a reliance on governmental appropriations for fi nancial resources.

I.1.a. There is less incentive to achieve cost reduction, operating effi ciency, and effective performance.

I.1.b. There is lower effi ciency in allocating resources (weaker refl ection of consumer preferences, less proportioning of supply to demand).

I.1.c. There is less availability of relatively clear market indicators and information (prices, profi ts, market share) for use in managerial decisions.

I.2. Public organizations are subject to particularly elaborate and intensive formal legal constraints as a result of oversight by legislative branch, executive branch hierarchy and oversight agencies, and courts.

(continued )

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80 Understanding and Managing Public Organizations

I.2.a. There are more constraints on domains of operation and on procedures (and therefore less autonomy for managers in making such choices).

I.2.b. There is a greater tendency toward proliferation of formal administrative controls.

I.2.c. There is a larger number of external sources of formal authority and infl uence, with greater fragmentation among them.

I.3. Public organizations are subject to more intensive external political infl uences. I.3.a. There is greater diversity in and intensity of external informal political infl uences

on decisions (including political bargaining and lobbying; public opinion; interest-group, client, and constituent pressures).

I.3.b. There is a greater need for political support from client groups, constituencies, and formal authorities in order to obtain appropriations and authorization for actions.

II. ORGANIZATION-ENVIRONMENT TRANSACTIONS

II.1. Public organizations and managers are often involved in production of public goods or handling of signifi cant externalities. Outputs are not readily transferable to eco- nomic markets at a market price.

II.2. Government activities are often coercive, monopolistic, or unavoidable. Government has unique sanctioning and coercion power and is often the sole provider. Participation in consumption and fi nancing of activities is often mandatory.

II.3. Government activities often have a broader impact and greater symbolic signifi cance. There is a broader scope of concern, such as for general public interest criteria.

II.4. There is greater public scrutiny of public managers. II.5. There are unique expectations for fairness, responsiveness, honesty, openness, and

accountability.

III. ORGANIZATIONAL ROLES, STRUCTURES, AND PROCESSES

The following distinctive characteristics of organizational roles, structures, and pro- cesses have been frequently asserted to result from the distinctions cited under I and II. More recently, distinctions of this nature have been analyzed in research with varying results.

III.1. Greater Goal Ambiguity, Multiplicity, and Confl ict

III.1.a. There is greater vagueness, intangibility, or diffi culty in measuring goals and performance criteria; the goals are more debatable and value-laden (for example, defense readiness, public safety, a clean environment, better living standards for the poor and unemployed).

EXHIBIT 3.1 (Continued )

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What Makes Public Organizations Distinctive 81

III.1.b. There is a greater multiplicity of goals and criteria (effi ciency, public accountability and openness, political responsiveness, fairness and due process, social equity and distributional criteria, moral correctness of behavior).

III.1.c. There is a greater tendency of the goals to be confl icting, to involve more trade-offs (effi ciency versus openness to public scrutiny, effi ciency versus due process and social equity, confl icting demands of diverse constituencies and political authorities).

III.2. Distinctive Features of General Managerial Roles III.2.a. Recent studies have found that public managers’ general roles involve many of

the same functions and role categories as those of managers in other settings but with some distinctive features: a more political, expository role, involving more meetings with and interventions by external interest groups and political authorities; more crisis management and “fi re drills”; greater challenge to balance external political relations with internal management functions.

III.3. Administrative Authority and Leadership Practices III.3.a. Public managers have less decision-making autonomy and fl exibility because

of elaborate institutional constraints and external political infl uences. There are more external interventions, interruptions, and constraints.

III.3.b. Public managers have weaker authority over subordinates and lower levels as a result of institutional constraints (for example, civil service personnel systems, purchasing and procurement systems) and external political alliances of subunits and subordinates (with interest groups, legislators).

III.3.c. Higher-level public managers show greater reluctance to delegate authority and a tendency to establish more levels of review and approval and to make greater use of formal regulations to control lower levels.

III.3.d. More frequent turnover of top leaders due to elections and political appointments causes more diffi culty in implementing plans and innovations.

III.3.e. Recent counterpoint studies describe entrepreneurial behaviors and managerial excellence by public managers.

III.4. Organizational Structure III.4.a. There are numerous assertions that public organizations are subject to more

red tape and more elaborate bureaucratic structures. III.4.b. Empirical studies report mixed results, some supporting the assertions about

red tape, some not supporting them. Numerous studies fi nd some structural distinctions for public forms of organizations, although not necessarily more bureaucratic structuring.

III.5. Strategic Decision-Making Processes III.5.a. Recent studies show that strategic decision-making processes in public

organizations can be generally similar to those in other settings but are more likely to be subject to interventions, interruptions, and greater involvement of external authorities and interest groups.

(continued )

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82 Understanding and Managing Public Organizations

Unlike private organizations, most public organizations do not sell their outputs in economic markets. Hence the information and incen- tives provided by economic markets are weaker for them or absent altogether. Some scholars theorize (as many citizens believe) that this reduces incentives for cost reduction, operating effi ciency, and effective performance. In the absence of markets, other governmental institu- tions (courts, legislatures, the executive branch) use legal and formal

III.6. Incentives and Incentive Structures III.6.a. Numerous studies show that public managers and employees perceive greater

administrative constraints on the administration of extrinsic incentives such as pay, promotion, and disciplinary action than do their counterparts in private organizations.

III.6.b. Recent studies indicate that public managers and employees perceive weaker relations between performance and extrinsic rewards such as pay, promotion, and job security. The studies indicate that there may be some compensating effect of service and other intrinsic incentives for public employees and show no clear relationship between employee performance and perceived differences in the relationship between rewards and performance.

III.7. Individual Characteristics, Work-Related Attitudes and Behaviors III.7.a. A number of studies have found different work-related values on the part

of public managers and employees, such as lower valuation of monetary incentives and higher levels of public service motivation.

III.7.b. Numerous highly diverse studies have found lower levels of work satisfaction and organizational commitment among public managers and employees than among those in the private sector. The level of satisfaction among public sector samples is generally high but tends consistently to be somewhat lower than that among private comparison groups.

III.8. Organizational and Individual Performance III.8.a. There are numerous assertions that public organizations and employees are

cautious and not innovative. The evidence for this is mixed. III.8.b. Numerous studies indicate that public forms of various types of organizations

tend to be less effi cient in providing services than their private counterparts, although results tend to be mixed for hospitals and utilities. (Public utilities have been found to be effi cient somewhat more often.) Yet other authors strongly defend the effi ciency and general performance of public organizations, citing various forms of evidence.

Source: Adapted from Rainey, Backoff, and Levine, 1976, and Rainey, 1989.

EXHIBIT 3.1 (Continued )

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What Makes Public Organizations Distinctive 83

constraints to impose greater external governmental control of proce- dures, spheres of operations, and strategic objectives. Interest groups, the media, public opinion, and informal bargaining and pressure by governmental authorities exert an array of less formal, more political infl uences. These differences arise from the distinct nature of transac- tions with the external environment. Government is more monopolistic, coercive, and unavoidable than the private sector, with a greater breadth of impact, and it requires more constraint. Therefore, government orga- nizations operate under greater public scrutiny and are subject to unique public expectations for fairness, openness, accountability, and honesty. Internal structures and processes in government organizations refl ect these infl uences, according to the typical analysis. Also, characteristics unique to the public sector—the absence of the market, the production of goods and services not readily valued at a market price, and value- laden expectations for accountability, fairness, openness, and honesty as well as performance—complicate the goals and evaluation criteria of public organizations. Goals and performance criteria are more diverse, they confl ict more often (and entail more diffi cult trade-offs), and they are more intangible and harder to measure. The external controls of government, combined with the vague and multiple objectives of pub- lic organizations, generate more elaborate internal rules and reporting requirements. They cause more rigid hierarchical arrangements, includ- ing highly structured and centralized rules for personnel procedures, budgeting, and procurement.

Greater constraints and diffuse objectives allow managers less decision- making autonomy and flexibility than their private counterparts have. Subordinates and subunits may have external political alliances and merit- system protections that give them relative autonomy from higher levels. Striving for control, because of the political pressures on them, but lack- ing clear performance measures, executives in public organizations avoid delegation of authority and impose more levels of review and more formal regulations.

Some observers contend that these conditions, aggravated by rapid turnover of political executives, push top executives toward a more exter- nal, political role with less attention to internal management. Middle man- agers and rank-and-fi le employees respond to the constraints and pressures with caution and rigidity. Critics and managers alike complain about weak incentive structures in government, lament the absence of fl exibility in bestowing fi nancial rewards, and point to other problems with governmen- tal personnel systems. Complaints about diffi culty in fi ring, disciplining,

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84 Understanding and Managing Public Organizations

and fi nancially rewarding employees generated major civil service reforms in the late 1970s at the federal level and in states around the country and have continued ever since. As noted in Chapter One, this issue of the need for fl exibility to escape such constraints became the most important point of contention in the debate over the new Department of Homeland Security in 2002.

In turn, expert observers assert, and some research indicates, that public employees’ personality traits, values, needs, and work-related atti- tudes differ from those of private sector employees. Some research fi nds that public employees place lower value on financial incentives, show somewhat lower levels of satisfaction with certain aspects of their work, and differ from their private sector counterparts in some other work atti- tudes. Along these lines, as Chapter Nine describes, a growing body of research on public service motivation over the past decade suggests spe- cial patterns of motivation in public and nonprofi t organizations that can produce levels of motivation and effort comparable to or higher than those among private sector employees (Francois, 2000; Houston, 2000; Perry, 1996, 2000).

Intriguingly, the comparative performance of public and nonpublic organizations and employees fi gures as the most signifi cant issue of all and the most diffi cult one to resolve. It also generates the most controversy. As noted earlier, the general view has been that government organizations operate less effi ciently and effectively than private organizations because of the constraints and characteristics mentioned previously. Many studies have compared public and private delivery of the same services, mostly finding the private form more efficient. Efficiency studies raise many questions, however, and a number of authors defend government perfor- mance strongly. They cite client satisfaction surveys, evidence of poor per- formance by private organizations, and many other forms of evidence to argue that government performs much better than generally supposed. As Chapters Six and Fourteen elaborate, in recent years numerous authors have claimed that public and nonprofi t organizations frequently perform very well and very innovatively, and they offer evidence or observations about when and why they do.

This countertrend in research and thinking about public organizations actually creates a divergence in the theory about them. One orientation treats government agencies as inherently dysfunctional and inferior to business fi rms; another perspective emphasizes the capacity of public and nonprofi t organizations to perform well and innovate successfully. Both perspectives tend to agree on propositions and observations about many

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What Makes Public Organizations Distinctive 85

characteristics of public and nonprofi t organizations, such as the political infl uences on public agencies.

This discussion and Exhibit 3.1 provide a summary characterization of the prevailing view of public organizations that one would attain from an overview of the literature and research. Yet for all the reasons given earlier, it is best for now to regard this as an oversimplifi ed and unconfi rmed set of assertions. The challenge now is to bring together the evidence from the literature and research to work toward a better understanding and assess- ment of these assertions.

Instructor ’s Guide Resources for Chapter Three

• Key terms • Discussion questions • Topics for writing assignments or reports • Class Exercise 1: The Nature of Public Service: The Connecticut Department

of Transportation

Available at www.wiley.com/college/rainey .

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The historical overview in Chapter Two was intended to make clear why organizational environment became one of the most important concepts in the study of management and organizations. The early con- tributors to the study of organizations concentrated on the middle parts of the framework in Figure 1.1 —on structures, mainly, with limited atten- tion to certain aspects of tasks, processes, incentives, and people. They placed little emphasis on an organization ’s environments or its managers’ responses to them. Contemporary researchers and experts now regard organizational environments, and the challenges of dealing with them, as absolutely crucial to analyzing and leading organizations. This is certainly true for public organizations, because they are often more open than other organizations to certain types of environmental pressures and constraints. Public organizations tend to be subject to more directions and interven- tions from political actors and authorities who seek to control them.

Management experts now exhort managers to monitor and analyze their environments, and consultants regularly lead executives and task forces through such analyses as part of strategic planning sessions (described fur- ther in Chapter Seven). In spite of all the attention to organizational envi- ronments, however, the management fi eld provides no exact science for analyzing them, in part because the concept is complex and diffi cult in vari- ous ways. Public organizations are often embedded in larger governmental

CHAPTER FOUR

ANALYZING THE ENVIRONMENT OF PUBLIC ORGANIZATIONS

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Analyzing the Environment of Public Organizations 87

structures. The Food and Drug Administration, for example, operates as a subunit of the U.S. Department of Health and Human Services, which in turn is a component of the U.S. federal government. The larger units of government impose system-wide rules on all agencies in the government, covering such administrative processes as human resources management, purchasing and procurement, and the budgeting process. In many agencies, different subunits operate in very different policy areas and often have stron- ger alliances with legislators and interest groups than with the agency direc- tor (Kaufman, 1979; Radin, 2002, p. 35; Seidman and Gilmour, 1986). All this can make it hard to say where an agency ’s environment begins and ends.

In addition, members of an organization often enact its environment (Scott, 2003, p. 141; Weick, 1979, p. 169). They consciously or unconsciously choose which matters to pay attention to and what to try to change. They make choices about the organization ’s domain, or field of operations, including the geographic areas, markets, clients, products, and services on which the organization will focus. Decisions about an organization ’s domain determine the nature of its environment. For example, some years ago lead- ers of the Ohio Bureau of Mental Retardation adopted a “deinstitutionaliza- tion” policy, moving patients out of the large treatment facilities operated by the agency and into smaller, private sector facilities. This changed the boundaries of the agency, its relations with its clients, and the set of organi- zations with which the agency worked. Organizations can sometimes create or shape their environments as much as they simply react to them. This com- plicates the analysis of environments, but it makes it all the more important.

These complications about the concept of an organization ’s environ- ment may explain the rather surprising disappearance of this concept from the work of some major organization theorists. Authors who developed and championed the concept (Aldrich, 1979) have more recently produced books that mention the term sparingly and do not treat it as a primary con- cept, with no explanation of its demise (Aldrich, 1999; Baum and McKelvey, 1999). The term organizational environment appears much less frequently in the titles of articles in prominent journals. In fact, as described shortly, most of the contemporary analyses of organizations and management employ concepts relevant to organizations’ relations with their operating contexts or environments. Authors may increasingly feel that new concepts—such as networks, stakeholders, and boundaries—discussed in this chapter have more value than the concept of an organizational environment. In addition, prominent authors still employ the concept of organizational environment in important ways (Daft, 2013, chap. 4, 5, and 6; Hall and Tolbert, 2004; Kalleberg, Knoke, Marsden, and Spaeth, 1996, chap. 6; Scott, 2003, chap. 6).

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88 Understanding and Managing Public Organizations

General Dimensions of Organizational Environments

One typical approach to working through some of the complexity of envi- ronmental analysis is simply to lay out the general sectors or clusters of conditions, such as those in Exhibit 4.1 , that an organization encoun- ters. Consultants and experts often use such frameworks to lead groups in organizations through an environmental scan (described in Chapter Seven) as part of a strategic planning project or in a general assessment of the organization. For example, the U.S. Social Security Administration (2000) used an environmental scan in their efforts to develop a major vision statement.

EXHIBIT 4.1 General Environmental Conditions

• Technological conditions: The general level of knowledge and capability in science, engineering, medicine, and other substantive areas; general capacities for communication, transportation, information processing, medical services, military weaponry, environmental analysis, production and manufacturing processes, and agricultural production

• Legal conditions: Laws, regulations, legal procedures, court decisions; characteristics of legal institutions and values, such as provisions for individual rights and jury trials as well as the general institutionalization and stability of legal processes

• Political conditions: Characteristics of the political processes and institutions in a society, such as the general form of government (socialism, communism, capitalism, and so on, or the degree of centralization, fragmentation, or federalism); the degree of political stability (Carroll, Delacroix, and Goodstein, 1988); and more direct and specifi c conditions such as electoral outcomes, political party alignments and success, and policy initiatives within regimes

• Economic conditions: Levels of prosperity, infl ation, interest rates, and tax rates; characteristics of labor, capital, and economic markets within and between nations

• Demographic conditions: Characteristics of the population such as age, gender, race, religion, and ethnic categories

• Ecological conditions: Characteristics of the physical environment, including climate, geographical characteristics, pollution, natural resources, and the nature and density of organizational populations

• Cultural conditions: Predominant values, attitudes, beliefs, social customs, and socialization processes concerning such things as sex roles, family structure, work orientation, and religious and political practices

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Analyzing the Environment of Public Organizations 89

Anyone can provide examples of ways in which such conditions infl u- ence organizations. Technological and scientifi c developments gave birth to many government agencies, such as the Environmental Protection Agency and the Nuclear Regulatory Commission. Technological devel- opments continually infl uence the operation of government agencies; these agencies must struggle to keep up with advances in computer tech- nology, communications, and other areas. Congress passed legislation mandating vast changes at the U.S. Internal Revenue Service largely as a result of diffi culties the agency had in developing and adapting to new information technologies for processing tax returns (Bozeman, 2002b). Demographic trends currently receive much attention, as analysts project increasing percentages of women and minorities in government employ- ment. This raises the challenge of managing diversity in the workplace (Ospina, 1996; Selden, 1997). Mainly due to the increasing size of the population of retired Americans, the Social Security Administration (SSA) projected that between 1999 and 2010 the benefi ciaries of its main programs will increase from about fi fty million people to more than sixty million. Due to this increase and changes in laws about Social Security, such as legislation requiring more services to benefi ciaries with disabili- ties, the agency projected the need for an increase of fi fteen thousand to twenty thousand work years of employee effort during this period if the agency continued to use its current procedures (U.S. Social Security Administration, 2000, p. 6). Public administrators attend to legal devel- opments, such as changes in public offi cials’ legal liability for their deci- sions (Cooper, 2000; Koenig and O ’Leary, 1996; Rosenbloom, Kravchuck, and Rosenbloom, 2001; Rosenbloom and O ’Leary, 1997). As for the political dimensions of organizational environments, much of the rest of this book, but especially this chapter and the next, pertains to such infl uences.

Another common approach to analyzing environments is to list spe- cifi c elements of an organization ’s environment, such as important stake- holders, or organizations and groups that have an important interest in the organization (Harrison and Freeman, 1999). A typical depiction of such elements of the environment might include competitors, cus- tomers, suppliers, regulators, unions, and associates. Similarly, Porter (1998) analyzed the major infl uences on competition within an indus- try: industry competitors, buyers, suppliers, new entrants, and substi- tutes. Consultants working with organizations on strategy formulation sometimes use such frameworks in a stakeholder analysis, to identify key

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90 Understanding and Managing Public Organizations

stakeholders of the organization and their particular claims and roles (Bryson, 1995).

Research on Environmental Variations

Organizational researchers have also produced more specifi c evidence about the effects of environments. Selznick (1966; see also Hall and Tolbert, 2004) helped lead this trend with a study of a government cor- poration, the Tennessee Valley Authority (TVA). He found that environ- mental infl uences play a crucial role in institutionalization processes in organizations. Values, goals, and procedures become strongly established, not necessarily because managers choose them as the most efficient means of production, but in large part as a result of environmental infl u- ences and exchanges. The TVA, for example, engaged in co-optation, absorbing new elements into its leadership to avert threats to its viability. The U.S. government established the TVA during the New Deal years to develop electric power and foster economic development along the Tennessee River. TVA offi cials involved local organizations and groups in decisions. This gained support for the TVA, but it also brought in these groups as strong infl uences on the organization ’s values and priorities. In some cases, these groups shut out rival groups, putting the TVA in confl ict with other New Deal programs with which it should have been allied. Thus an organization ’s needs for external support and its conse- quent exchanges with outside entities can heavily infl uence its primary values and goals.

Later research made the importance of the external environment increasingly clear. Prominent studies that led to the emergence of con- tingency theory found more and more evidence of the impact of environ- mental uncertainty and complexity (Donaldson, 2001). Burns and Stalker (1961), for example, studied a set of English fi rms and classifi ed them into two categories. Mechanistic fi rms emphasized a clear hierarchy of author- ity, with (1) direction and communication dependent on the chain of com- mand and (2) specialized, formally defi ned individual tasks. Other fi rms were more organic, with less emphasis on hierarchy and more lateral com- munication and networking. Tasks were less clearly defi ned and changed more frequently. Managers in these fi rms sometimes spurned organiza- tional charts as too confi ning or even dangerous. The mechanistic fi rms succeeded in stable environments—those with relative stability in products,

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technology, competitors, and demand for their products. In such a set- ting, they could take advantage of the effi ciencies of their more traditional structures. Other fi rms, such as electronics manufacturers, faced less stable environmental conditions, with rapid fl uctuations in technology, products, competitors, and demand. The more organic fi rms, which were more fl ex- ible and adaptive, succeeded in this setting.

Lawrence and Lorsch (1967) studied fi rms in three industries whose environments exhibited different degrees of uncertainty as a result of more or less rapid changes and greater or lesser complexity. As changes in the environment became more rapid and frequent, and as the environment became more complex, these conditions imposed more uncertainty on decision makers in the organizations. The most successful fi rms had struc- tures with a degree of complexity matching that of the environment. Firms in more stable environments could manage with relatively traditional, hierarchical structures. Firms in more unstable, uncertain environments could not.

In addition, different subunits of these fi rms faced different environ- ments. As these different environments imposed more uncertainty on the subunits’ managers, the successful fi rms became more differentiated; that is, the subunits differed more and more from one another in their goals, the time frames for their work, and the formality of their structure. However, this increased the potential for confl ict and disorganization. Successful fi rms in more uncertain environments responded with higher levels of integration. They had more methods for coordinating the highly differentiated units, such as liaison positions, coordinating teams, and confl ict-resolution processes. This combination of differentiation and integration made the successful fi rms in more uncertain environments more internally complex. The authors’ general conclusion advanced one of the prominent components of the contingency idea: organiza- tions must adopt structures that are as complex as the environments they confront.

As many studies of this sort accumulated, James Thompson (1967) synthesized the growing body of research in a way that provided additional insights. Organizations, he said, must contend with the demands of their tasks and their environments. They do so by trying to isolate the techni- cal core—their primary work processes—so that their work can proceed smoothly. They use buffering methods to try to provide stable conditions for the technical core. For example, they use boundary-spanning units— such as inventory, personnel recruitment, and research and development

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92 Understanding and Managing Public Organizations

units—to try to create smooth flows of information and resources. Yet environmental conditions can strain this process. In more complex environments—with more geographical areas, product markets, competi- tors, and other factors—organizations must become more internally com- plex. They do so by establishing different subunits to attend to the different environmental segments. More unstable environments create a need for greater decentralization of authority to these subunits and a less formal structure. The shifting environment requires rapid decisions and changes, and it takes too long for information and decisions to travel up and down a strict hierarchy.

Researchers have debated the adequacy of contingency theory (Hall and Tolbert, 2004), and many have moved off in other directions. Yet recent books still emphasize the importance and implications of contingency the- ory perspectives on organizational environments (Daft, 2013; Donaldson, 2001). An organization ’s structure must be adapted to environmental con- tingencies as well as other contingencies. In simple, homogeneous, stable environments, organizations can successfully adopt mechanistic and cen- tralized structures. In more complex and unstable environments, successful organizations must be organic and decentralized, partitioned into many departments with correspondingly elaborate integrating processes and processes for managing the organization ’s boundaries and relation with the environment.

Scholars have also further developed contingency-theory concepts into carefully conceived environmental dimensions. Exhibit 4.2 illustrates prominent examples that researchers still use (Berman, Wicks, Kotha, and Jones, 1999). Clearly these dimensions apply to public organizations. Tax resentment and pressures to cut government spending in recent decades show the importance of environmental capacity (munifi cence or resource scarcity) for public organizations. The federal government has a regionalized structure, refl ecting the infl uence of environmental het- erogeneity and dispersion. Even organization theorists who attach little signifi cance to the public-private distinction agree that public organiza- tions face particular complications in domain consensus and choice (Hall and Tolbert, 2004; Meyer, 1979; Miles, 1980; Van de Ven and Ferry, 1980). Jurisdictional boundaries and numerous authorities, laws, and political interests complicate decisions about where, when, and how a public orga- nization operates. Research strongly supports the observation that public status infl uences strategic domain choices (Mascarenhas, 1989), although later chapters show how public managers often gain considerable leeway to maneuver.

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Turbulence and interconnectedness characterize the environments of most public organizations. Studies of public policy implementation provide numerous accounts of policy initiatives that had many unanticipated con- sequences and implications for other groups. Public managers commonly encounter situations in which a decision touches off a furor, arousing oppo- sition from groups that they would never have anticipated reacting (Chase and Reveal, 1983; Cohen and Eimicke, 1998). Similarly, environmental stability, dynamism, and change rates have major implications for public organizations. Rapid turnover of political appointees at the tops of agen- cies and rapid external shifts in political priorities have major infl uences on public organizations and the people in them. For example, researchers fi nd evidence that turbulence and instability in the environments of public

EXHIBIT 4.2 Descriptive and Analytical Dimensions of

Organizational Environments

Capacity: the extent to which the environment affords a rich or lean supply of necessary resources

Homogeneity-heterogeneity: the degree to which important components of the environment are similar or dissimilar

Stability-instability: the degree and rapidity of change in the important components or processes in the environment

Concentration-dispersion: the degree to which important components of the environment are separated or close together, geographically or in terms of communication or logistics

Domain consensus-dissensus: the degree to which the organization ’s domain (its operating locations, major functions and activities, and clients and customers served) is generally accepted or disputed and contested

Turbulence: the degree to which changes in one part or aspect of the environment in turn create changes in another; the tendency of changes to reverberate and spread

Source: Aldrich, 1979.

Munifi cence: the availability of needed resources

Complexity: the homogeneity and concentration of the environment

Dynamism: the stability and turbulence of the environment

Source: Dess and Beard, 1984.

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94 Understanding and Managing Public Organizations

agencies affect the morale of their managers and infl uence their accep- tance of reforms (Golden, 2000; Rubin, 1985).

These environmental concepts are useful for enhancing our under- standing of public organizations. As this discussion shows, however, no con- clusive, coherent theory of organizations explains how these dimensions are related to one another and to organizations. In addition, organization theorists have defi ned these concepts at a very general level. Certainly they apply to public organizations, but to really understand public organizations we need to add more specifi c content to the environmental dimensions. There is a body of useful research and writing on public bureaucracies that can help in this task, to which this discussion will turn after a review of recent trends in research by organizational theorists relevant to the analysis of organizational environments.

Recent Trends in Research on Organizational Environments

Some of the most prominent recent research in organization theory concentrates on organizational environments and moves beyond contin- gency theory (Aldrich, 1999, chap. 3; Hall and Tolbert, 2004, chap. 12). Population ecology theorists, for example, analyze the origin, develop- ment, and decline of populations of organizations using biological con- cepts (Hannan and Freeman, 1989). Just as biologists analyze how certain populations of organisms develop to take advantage of a particular ecologi- cal niche, population ecologists analyze the development of populations of organizations within certain niches (characterized by their unique combi- nations of available resources and constraints).

Some population ecology theorists reject the contingency-theory depic- tion of organizations as rational, speedy adapters to environmental change. Indeed, they see environments as selecting organizational populations in a Darwinian fashion (Hannan and Freeman, 1989). The population ecology perspective analyzes how populations of organizations go through processes of variation, selection, and retention. Variation involves the continuing appearance of new forms of organization, both planned and unplanned. Then the selection process determines which forms of organization will survive and prosper, on the basis of their fi t with the environment or their capacity to fi ll an environmental niche. A niche is a distinct combination of resources and constraints that supports the particular form of organization. Retention processes serve to continue the form through such environmen- tal infl uences as pressures on the organizations to maintain past practices,

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and through such internal processes as employees developing common outlooks. Critics have raised questions about this perspective, arguing, for example, that its broad biological analogies devote no attention to human strategic decisions and motives in organizations (Van de Ven, 1979), and that its proponents have applied it mostly to populations of small organi- zations, leaving open questions about how it applies to huge government agencies and business fi rms.

Aldrich (1999) advanced an evolutionary perspective on populations of organizations that he described as more general and overarching than the population ecology perspective but that obviously draw upon it. He said that the approach also has important connections to the perspec- tives described later in this chapter. It includes the processes of variation, selection, and retention, with elaborations. All three of these processes can operate on organizations from external or internal sources. Variations in routines, procedures, and organizational forms can be intentional, as individuals seek solutions to problems, or blind, as a result of mistakes or surprises. In addition, there is a fourth process, struggle, in which indi- viduals, organizations, and populations of organizations contend with each other over scarce resources and confl icting incentives and goals. Aldrich did not undertake to describe specifi c implications or offer advice for man- agers, but his perspective goes even further than the population ecology approach, providing insights about ways in which organizational popula- tions (1) are integral to processes of social change; (2) show much more diversity of form than some research, such as the contingency approaches, has recognized; and (3) continually emerge and evolve. Both the popu- lation-ecology and the evolutionary perspectives, however, offer insights about historical and environmental forces that infl uence organizational change and survival, reminding us that any model for organizational analy- sis should remain sensitive to growth, decline, or other variations in organi- zational forms. For example, observers of very innovative public executives have argued that these executives appeared to engage in an “uncommon rationality” in which they “see new possibilities offered by an evolving his- torical situation” and take advantage of political and technological develop- ments that offer such possibilities (Doig and Hargrove, 1990, pp. 10–11).

Resource-dependence theories analyze how organizational manag- ers try to obtain crucial resources from their environment, such as mate- rials, money, people, support services, and technological knowledge. Organizations can adapt their structures in response to their environment, or they can change their niches. They can try to change the environment by creating demand or seeking government actions that can help them.

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96 Understanding and Managing Public Organizations

They can try to manipulate the way the environment is perceived by the people in the organization and those outside it. In these and other ways, they can pursue essential resources. These theorists stress the importance of internal and external political processes in the quest for resources. Chapter Six discusses how their analysis of resources in connection with internal power relationships applies to public organizations (Daft, 2013; Pfeffer and Salancik, 1978, pp. 277–278).

Transaction-costs theories analyze managerial decisions to purchase a needed good or service from outside, as opposed to producing it within the organization (Williamson, 1975, 1981). Transactions with other organiza- tions and people become more costly as contracts become harder to write and supervise. The organization may need a service particular to itself, or it may have problems supervising contractors. Managers may try to hold down such costs under certain conditions by merging with another orga- nization or permanently hiring a person with whom they had been con- tracting. These theories, which are much more elaborate than summarized here, have received much attention in business management research and have implications for government contracting and other governmental issues (Aldrich, 1999; Bryson, 1995). Yet they usually assume that manag- ers in fi rms strive to hold down costs to maximize profi ts. Governmental contracting involves more political criteria and accountability, and dif- ferent or nonexistent profi t motives, to the point that Williamson (1981) expressed uncertainty as to whether transaction-cost economics applies to nonmarket organizations. Later, however, he examined public bureaucracy from the perspective of transaction cost economics (Williamson, 1999). He concluded that the public bureaucracy, like other alternative modes of governance (such as markets, fi rms, and hybrids), is well suited to some transactions and poorly suited to others. Williamson argued that public bureaucracy handles “sovereign transactions,” such as foreign affairs, more effectively and effi ciently than other modes, such as fi rms and markets.

Studies of institutionalization processes hark back to the work of Selznick (1966). They analyze how certain values, structures, and proce- dures become institutionalized (that is, widely accepted as the proper way of doing things) in and among organizations. Tolbert and Zucker (1983) showed that many local governments reformed their civil service systems by adopting merit systems, because merit systems had become widely accepted as the proper form of personnel system for such governments. In addition, the federal government applied pressures for the adoption of merit sys- tems. Meyer and Rowan (1983) argued that organizations such as schools often adopt structures on the basis of “myth and ceremony.” They do things according to prevailing beliefs and not because the practices are clearly the

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means to effi ciency or effectiveness. DiMaggio and Powell (1983) showed that organizations in the same fi eld come to look like one another as a result of shared ideas about how that type of organization should look. Dobbin and his colleagues (1988) found that public organizations have more provisions for due process, such as affi rmative action programs, than do private organizations. These studies have obvious relevance for public organizations. Pfeffer (1982) suggested that this approach is particularly applicable to the public sector, where performance criteria are often less clear. There, beliefs about proper procedures may be more readily substi- tuted for fi rmly validated procedures linked to clear outcomes and objec- tives. Public and nonprofi t managers encounter many instances in which new procedures or schemes, such as a new budgeting technique, become widely implemented as the latest, best approach—whether or not anyone can prove that they are. In addition, some of the research mentioned ear- lier shows how external institutions such as government impose structures and procedures on organizations. Some of these theorists disagreed among themselves over these different views of institutionalization—whether it results from the spread of beliefs and myths or from the infl uence of exter- nal institutions such as government (Scott, 1987).

Partly to resolve such divergence in concepts of institutionalism, researchers drew distinctions between types of institutionalization processes that lead to institutional isomorphism —a wonderfully tortured bit of jargon that refers to organizations and other institutions becoming similar or iden- tical to each other in form (Dimaggio and Powell, 1983; Scott, 2003, pp. 134–141). This institutionalization of similar forms can come from coercive isomorphism, in which they have to comply with similar laws and regula- tions. Normative isomorphism comes from compliance with professional and moral norms such as those imposed through accreditation or certifi ca- tion processes by professional associations. Mimetic isomorphism occurs when organizations and other entities imitate each other, on the basis of a prevailing orthodoxy or culturally supported beliefs about the proper structures and procedures. Frumkin and Galaskiewicz (2004) used the data from the National Organizations Survey, a nationally represented sample of organizations, to examine whether public, private, and nonprofi t organiza- tions tended to differ in the incidence of these types of institutionalization processes. They found that coercive, normative, and mimetic effects were stronger for government establishments than for business establishments.

These developments show how elaborate and diverse the work on orga- nizational environments has become, and each one provides insights. In fact, scholars are currently arguing more and more frequently that there is a need to bring these models together rather than argue about which

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is the best one (Aldrich, 1999; Hall and Tolbert, 2004). Obviously they all deal with processes that infl uence organizations in some combination, and all are true to some degree.

The Political and Institutional Environments of Public Organizations

The work on organizational environments provides a number of insights, many of them applicable to public organizations. The preceding review of the literature on organizational environments also shows, however, why people interested in public organizations call for more complete atten- tion to public sector environments. The contingency-theory researchers express environmental dimensions very generally. They pay little attention to whether government ownership makes a difference or whether it mat- ters if an organization sells its outputs in economic markets. They depict organizations, usually business fi rms, as autonomously adapting to envi- ronmental contingencies. Political scientists, however, have for a long time deemed it obvious that external political authorities often directly mandate the structures of public agencies, regardless of environmental uncertainty (Pitt and Smith, 1981; Warwick, 1975). The most current perspectives on organizational environments bring government into the picture, but they also express their concepts very generally, subsuming governmental infl u- ences under broader concepts.

Major Components and Dimensions

Public executives commenting on public management and political sci- entists and economists writing about public organizations typically depict organizational environments in ways similar to the conceptual framework shown in Exhibit 4.3 (Brudney, Hebert, and Wright, 1999; Downs, 1967; Dunn, 1997; Dunn and Legge, 2002; Hood and Dunsire, 1981; Lynn, Heinrich, and Hill, 2000; Meier and Bothe, 2007; Pitt and Smith, 1981; Stillman, 2004; Wamsley and Zald, 1973; Warwick, 1975; Wilson, 1989). One also needs to recognize that the environmental pressures on pub- lic organizations, as with all organizations, are becoming more global in nature (Welch and Wong, 2001a, 2001b). The rest of this chapter discusses the top part of the exhibit, concerned with general values and institutions. The next chapter covers the bottom portion, dealing with institutions, enti- ties, and actors.

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Analyzing the Environment of Public Organizations 99

EXHIBIT 4.3 Major Environmental Components

for Public Organizations

General Values and Institutions of the Political Economy

Political and economic traditions

Constitutional provisions and their legislative and judicial development

Due process

Equal protection of the laws

Democratic elections and representation (republican form)

Federal system

Separation of powers

Free-enterprise system (economic markets relatively free of government controls)

Values and Performance Criteria for Government Organizations

Competence

Effi ciency

Effectiveness

Timeliness

Reliability

Reasonableness

Responsiveness

Accountability, legality, responsiveness to rule of law and governmental authorities, responsiveness to public demands

Adherence to ethical standards

Fairness, equal treatment, impartiality

Openness to external scrutiny and criticism

Institutions, Entities, and Actors with Political Authority and Infl uence

Chief executives

Executive staff and staff offi ces

Legislatures

Legislative committees

Individual legislators

Legislative staff (continued )

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100 Understanding and Managing Public Organizations

General Institutions and Values of the Political Economy

Chapter Two defi ned public agencies as organizations owned and funded by government. They operate under political authority and without economic markets for their outputs. The political system of the nation and its tradi- tions, institutions, and values heavily infl uence the exercise of this political authority. The U.S. Constitution formally states some of these values and establishes some of the nation ’s primary public institutions and rules of governance. Legislation and court cases have further defi ned and applied them. Rosenbloom and O ’Leary (1997) observed that the personnel systems in government are “law-bound.” That observation applies to many other aspects of management and organization in government agencies as well.

Other values and rules receive less formal codifi cation but still have great influence. For example, Americans traditionally have demanded

Courts

Other government agencies

Oversight and management agencies (GAO, OMB, OPM, GSA)

Competitors

Allies

Agencies or governmental units with joint programs

Other levels of government

“Higher” and “lower” levels

Intergovernmental agreements and districts

Interest groups

Client groups

Constituency groups

Professional associations

Policy subsystems

Issue networks

Interorganizational policy networks

Implementation structure

News media

General public opinion

Individual citizens with requests for services, complaints, and other contacts

EXHIBIT 4.3 (Continued )

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that government agencies operate with businesslike standards of effi ciency, although the Constitution nowhere explicitly expresses this criterion (Waldo, [1947] 1984). Relatedly, the nation maintains a free-enterprise system that affords considerable autonomy to businesses and consider- able respect for business values (Lindblom, 1977; Waldo, [1947] 1984). These values are not clearly and specifi cally codifi ed in the Constitution. According to MacDonald (1987), the Constitution actually lacks some of the provisions necessary for a free-enterprise system, in part because some of the framers considered certain economic activities, such as trading debt instruments, to be immoral. Full development of the necessary govern- mental basis for a free-enterprise system required the actions of Alexander Hamilton, the fi rst secretary of the treasury. Among other steps, he estab- lished provisions for the use of government debt as a source of capital for corporations. MacDonald, a conservative, would almost certainly disavow the conclusion that the private enterprise system in the United States was created largely through the efforts of a government bureaucrat, using gov- ernment funding. More generally, however, these examples illustrate the existence, through formally codifi ed instruments and less formally codifi ed conditions, of general values and institutional arrangements that shape the operation of public authority.

These general values and institutional arrangements in turn infl uence the values, constraints, and performance criteria of public organizations. They sound abstract, but they link directly to practical challenges and responsibilities for public organizations and managers.

Constitutional Provisions

The Constitution places limits on the government and guarantees certain rights to citizens. These include provisions for freedom of expression and the press, equal protection under the law, and protections against the denial of life, liberty, or property without due process of law. The provi- sions for freedom of association and expression and freedom of the press empower media representatives, political parties, and interest groups to assess, criticize, and seek to infl uence the performance of government agencies, in ways discussed in the next chapter.

Such provisions as those for equal protection and due process also have major implications for the operations of public organizations. The equal protection provisions, for example, provided some of the underlying prin- ciples and precedents for affi rmative action requirements. The require- ment for legal due process requires administrative due process as well and

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acts as one major form of control over public bureaucracies and bureau- crats (West, 1995, chap. 2). Agencies are often required to give notice of certain actions and to adhere to disclosure rules, to hold open hearings about their decisions, and to establish procedures for appealing agency decisions. For example, the Administrative Procedures Act requires federal agencies to adhere to certain procedures in rule making (and other legisla- tion has established similar requirements at other levels of government). When the Department of Education makes rules about student loans or the SSA makes rules about claims for coverage under its disability programs, the agencies have to adhere to such rule-making procedures. If the SSA denies or revokes an applicant ’s disability coverage, the applicant has the right to adjudication procedures, which may involve a hearing conducted by an administrative law judge. These requirements strongly infl uence the agency ’s management of disability cases and the work of individual case- workers. In general, the requirement for all the appeals and hearings con- fl icts with the agency ’s goal of minimizing costs and maximizing effi ciency of operations. More subtly, it raises complex issues about how effi ciency relates to the fair handling of individual cases by individual caseworkers (Mashaw, 1983). Chapters Eight and Ten show evidence that rules and procedures for disciplining and fi ring employees in the public service, based in part on due process principles, create one of the sharpest differ- ences between public and private organizations confi rmed by research. These examples illustrate how general constitutional principles that seem abstract actually translate into a set of immediate challenges in organiza- tional behavior and management.

Democratic elections are another feature of the political system in the United States and other countries that has direct implications for organiza- tion and management. The electoral process produces regular, or at least frequent, changes in chief executives, legislative offi cials, and the political appointees who come and go with them. These changes in leadership often mean frequent changes in the top-level leadership of public agencies— every two years, for many agencies—and often bring with them shifts in pri- orities that mean changes in agencies’ focus and sometimes in their power, their infl uence, and the resources available for their people and subunits.

The Constitution also establishes a federal system that allocates author- ity to different levels of government in ways that infl uence the organiza- tion and management of public agencies. State governments require that local governments establish certain offi ces and offi cers, such as sheriffs and judges, thereby specifying major features of the organizational structure of those governments. State legislation may mandate a formula to be used

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in setting the salaries of those offi cials. Many federal programs operate by granting or channeling funds to states and localities, often with vari- ous specifi cations about the structure and operations of the programs at those levels.

A particularly dramatic example of the way societal values and insti- tutions can infl uence public organizations comes from the provision in the Constitution for separation of powers. As indicated in Exhibit 4.3 and discussed shortly, government agencies face various pressures to provide effi cient, effective operations. Separation of powers, however, represents a system that is explicitly designed with less emphasis on effi ciency than on constraining the power of government authorities (Wilson, 1989). In the Federalist Papers, James Madison discussed the constitutional provision for dividing power among the branches of government as a way of constrain- ing power. He pointed out that a strong central executive authority might be the most effi cient organizational arrangement. But the government of the United States, he wrote, was instead being purposefully designed to constrain authority by dividing it among institutions. In one of the great exercises of applied psychology in history, he pointed out that if humans were angels, no such arrangements would be necessary. But because they are not, and because power can corrupt some people and oppress oth- ers, the new government would set ambition against ambition, dividing authority among the branches of government so that they would keep one another in check. Lower levels of government in the United States are designed with similar patterns of divided authority. For the organization and management of agencies, these arrangements have dramatic implica- tions, because they subject the organizations and their managers to multi- ple authorities and sources of direction that are in part designed to confl ict with one another. From its inception, the American political system has thus embodied a dynamic tension among confl icting values, principles, and authorities.

The controversy over whether this system works as intended never ends. Nevertheless, the political authorities and actors representing these broader values and principles impose on public organizations numerous performance criteria, such as those listed in Exhibit 4.3 . Authors use various terms to express the diversity of these criteria. Fried (1976), for example, referred to democracy, effi ciency, and legality as the major performance criteria for the public bureaucracy in the United States. Rosenbloom, Kravchuk, and Rosenbloom (2008) consider law, management, and poli- tics to be the three dominant sources of administrative criteria. Putnam (1993) sought to evaluate the performance of government according to

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its responsiveness to its constituents and its effi ciency in conducting the public ’s business. Exhibit 4.3 uses Meier and Bothe ’s (2007) distinction between competence and responsiveness criteria.

Competence Values

Public organizations operate under pressure to perform competently. Demands for effi ciency come from all corners. Newspapers and television news departments doggedly pursue indications of wasteful uses of public funds at all levels of government. Political candidates and elected offi cials attack examples of waste, such as apparently excessive costs for compo- nents of military weaponry. The U.S. General Accounting Offi ce (GAO), auditors general at the state and local levels, and other oversight agencies conduct audits of government programs, with an emphasis on effi ciency. Special commissions, such as the Grace Commission (organized under the Reagan administration), investigate wasteful or ineffi cient practices in government. Similar commissions have been appointed in many states to examine state government operations and attack ineffi ciency. The Clinton administration ’s National Performance Review (described more fully in Chapter Fourteen) emphasized streamlining federal operations and, as noted previously in Chapter Three, reduced federal employment by over 324,000 jobs. Ineffi ciency in federal operations served as one of the justifi - cations for its formation.

But effi ciency was not necessarily the highest priority in the design of the U.S. government, as just described. External authorities, the media, interest groups, and citizens also demand effectiveness, timeliness, reli- ability, and reasonableness, even though these criteria may confl ict with effi ciency. Effi ciency means producing a good or service at the lowest cost possible while maintaining a constant level of quality. These additional criteria are concerned with whether a function is performed well, on time, dependably, and in a logical, sensible way. Government often performs services crucial to individuals or to an entire jurisdiction. People want the job done; effi ciency is often a secondary concern. Also, in government the connection between a service and the cost of providing it is often diffi cult to see and analyze. Evidence that police, fi refi ghters, emergency medical personnel, and the military lack effectiveness or reliability draws sharp responses that may relegate effi ciency to a lesser status. In the aftermath of the September 11, 2001, attacks, federal spending for military action in Afghanistan and Iraq, and for homeland security, increased sharply even though a federal budget surplus turned into a defi cit during this period.

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Clearly the imperative of security against terrorism outweighed consider- ations of frugality and effi ciency.

Sometimes one element of the political system stresses some of these criteria more vigorously than others (Pitt and Smith, 1981). This can increase confl icts for public managers, because different authorities emphasize different criteria. For example, the judiciary often appears to emphasize effectiveness over administrative effi ciency because of its respon- sibility to uphold legal standards and constitutional rights. Judges rule that certain criteria must be met in a timely, effective way, virtually regardless of cost and effi ciency. The courts have ordered that prisons and jails and affi r- mative action programs must meet certain standards by certain dates. They protect the right to due process guaranteed to clients of public programs in decisions about whether they can be denied benefi ts. This increases the burden on public agencies, forcing them to conduct costly hearings and reviews and to maintain extensive documentation. The courts in effect leave the agencies to worry about effi ciency and cost considerations. The press and legislators, meanwhile, criticize agencies for slow procedures and expensive operations.

Casework by members of Congress, state legislators, and city council members can also exert pressure for results other than effi ciency. (In this context, casework means action by an elected offi cial to plead the case of an individual citizen or group who makes a demand of an agency.) A con- gressional representative or staff member may call about a constituent ’s late Social Security check. A city council member may call a city agency about a complaint from a citizen about garbage collection services. Although these requests can promote effective, reasonable responses by an agency, responding to sporadic, unpredictable demands of this sort can tax both the agency ’s effi ciency and its effectiveness.

Responsiveness Values

The responsiveness criteria in Exhibit 4.3 often confl ict sharply with com- petence criteria and also with each other. Public managers and organi- zations remain accountable to various authorities and interests and to the rule of law in general (Radin, 2002; Rosen, 1998; West, 1995). They must comply with laws, rules, and directives issued by government authori- ties and provide accounts of their compliance as required. Rosen (1998) described a long list of different mechanisms, procedures, and institutions for accountability. In addition, Romzek and Dubnick (1987; also Romzek, 2000) pointed out that public managers and organizations are subject to

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different types of accountability that have different sources and that exert different levels of direct control over administrators. Hierarchical and legal accountability exert high degrees of control. The hierarchical form involves imposition of rules, procedures, scrutiny, and other controls from within an agency. Legal accountability, in Romzek and Dubnick ’s defi nitions, involves high levels of control from external sources, in the form of oversight and monitoring by external authority. Professional and political accountabil- ity involve lower degrees of direct control over individual administrators. Professional accountability involves internal controls in an organization by granting administrators considerable discretion and expecting them to be guided by the norms of their profession. Political accountability also involves a lot of individual leeway to decide how to respond; that is, to external political sources such as legislators or other political stakehold- ers. The administrator decides whether or not to respond to an infl uence attempt by such a person or group. Obviously these forms of accountabil- ity can overlap and work in combinations, and the relative emphasis they receive can have dramatic consequences. Romzek and Dubnick attributed one of the worst disasters to befall the U.S. space program, the Challenger explosion, to a shift away from professional accountability in NASA to more emphasis on political and hierarchical accountability.

Public organizations and their managers are often expected to remain open and responsive in various ways. Saltzstein (1992) pointed out that bureaucratic responsiveness can be defi ned in at least two ways—as respon- siveness to the public ’s wishes or as responsiveness to the interests of the government—and that much of the discourse on the topic takes one or the other of these perspectives. These confl icting pressures sometimes coincide with accountability, in the sense of responding to directives and requests for information from government authorities. Yet public agen- cies also receive requests for helpful, reasonable, and fl exible responses to the needs of clients, interest groups, and the general public. Because they are public organizations, their activities are public business, and citizens and the media demand relative openness to scrutiny (IBM Endowment for the Business of Government, 2002; Wamsley and Zald, 1973). For some programs, the enabling legislation requires citizen advisory panels or com- missions to represent community groups, interest groups, and citizens. Administrative procedures at different levels of government require pub- lic notice of proposed changes in government agencies’ rules and policies, often with provisions for public hearings at which citizens can attempt to infl uence the changes. The courts, legislatures, and legal precedent also require that agencies treat citizens fairly and impartially by adhering to

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principles of due process through appeals and hearings. The Freedom of Information Act and similar legislation at all levels of government require public agencies to make records and information available on request under certain circumstances. Other legislation mandates the privacy of clients’ records under certain circumstances.

A related criterion, representativeness, pertains to various ways in which officials should represent the people and to another means of making government bureaucracy responsive to the needs of citizens. Representativeness is a classic issue in government and public administra- tion, with discourse about the topic dating back centuries. The topic has taken on even more momentum recently, because of the rise of such issues as equal employment opportunity, affi rmative action, and diversity. One view of representativeness holds that identifi able ethnic and demographic groups should be represented in government roughly in proportion to their presence in the population. The advisory groups mentioned previ- ously also refl ect representativeness criteria in another sense. One impor- tant and currently lively line of inquiry pursues the distinction between passive representation—which simply refers to whether members of dif- ferent groups are present in governmental entities and agencies—and active representation. Active representation occurs when the members of a group actually serve as advocates for the group in decisions about programs and policies. Selden (1997, p. 139; see also Selden, Brudney, and Kellough, 1998) reported evidence that where districts of the Farmers Home Administration had higher percentages of minority supervisors, more rural housing loans went to minorities. Keiser, Wilkins, Meier, and Holland (2002) point out that passive representation has been found to lead to active representation for race but not for gender. They then report evidence of conditions under which passive representation will lead to active representation for gender in educational contexts. For example, in schools with more female administrators, female teachers were associated with more educational success for girls. Similarly, Dolan (2000) reports evidence that female federal executives express attitudes more supportive of women ’s issues when they work in agencies with high percentages of women in leadership positions. Brudney, Hebert, and Wright (2000) report evidence that among agency heads in the fi fty states, the administrators’ values and perceived organizational role sets infl uence their tendency to display active representation. Other researchers examined representative- ness issues at local government levels as well (Miller, Kerr, and Reid, 1999; Schumann and Fox, 1999). These criteria add to the complex set of objec- tives and values that public managers and organizations must pursue and

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seek to balance. In federal agencies and many state and local government organizations, support for diversity is a criterion in the performance evalu- ations of many executives and managers, so representativeness in this sense joins the list of values and goals they need to pursue.

Later chapters describe additional examples and evidence of how confl icting values and criteria such as those just discussed infl uence pub- lic organizations and pose very practical challenges for public managers. External authorities and political actors intervene in management deci- sions in pursuit of responsiveness and accountability, and they impose structures and constraints in pursuit of equity, effi ciency, and effectiveness. Sharp confl icts over which values should predominate—professional effec- tiveness or political accountability, for example—lead to major transforma- tions of organizational operations and culture (Maynard-Moody, Stull, and Mitchell, 1986; Romzek, 2000). Before examining these effects on major dimensions of organization and management, however, Chapter Five con- siders in more depth the elements in the lower portion of Exhibit 4.3 : the institutions, entities, and actors that seek to impose these values and crite- ria, and their exchanges of infl uence with public organizations.

Instructor ’s Guide Resources for Chapter Four

• Key terms • Discussion questions • Topics for writing assignments or reports

Available at www.wiley.com/college/rainey .

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For a research project on public organizations, a college professor inter-viewed the secretary of the Florida Department of Community Affairs (DCA). The DCA manages programs for management of emergencies (such as hurricanes), housing and community development, planning for growth, and ecological protection that often include grants for which localities can apply. It thus has a great infl uence on the constituencies of many political offi cials and, as one might expect, gets a lot of attention from those offi cials. During the interview, the DCA secretary ’s adminis- trative assistant came in and handed her a note. The secretary told the interviewer that even though she had agreed to take no phone calls during the interview, she would have to interrupt the interview to return a phone call. She showed the interviewer the note. It was a message from one of the most powerful state senators. It said, “This is my SECOND phone call to you and you have not returned my call.” The administrative assistant explained that the senator had told her to write the note that way, to put “second” in all capitals and underline it. The director felt that she had better return the call right away. Government executives often have to be very responsive to elected offi cials.

CHAPTER FIVE

THE IMPACT OF POLITICAL POWER AND PUBLIC POLICY

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Chapter Two defi ned public organizations as those the government owns and funds and therefore has authority to direct and control. Chapter Four reviewed organization theorists’ ideas about the crucial relationship between organizations, including public organizations, and their environ- ments. It also argued that public organizations’ environments impose a relatively distinctive set of values and criteria on them, through direction and infl uence by government institutions and entities (see the bottom half of Exhibit 4.3 ). This chapter provides a brief summary description of the sources of authority and infl uence—the power—of these entities over pub- lic organizations.

The complex literature that analyzes these topics is impossible to cover fully in a brief chapter. Nevertheless, for the analysis of public organiza- tions we need to cover insights gained from studies of public bureaucracy in order to integrate them with the topics in general management and organization theory covered in later chapters. In addition, public managers need to understand and deal with the political entities discussed here. So it is important to highlight some of the key points and issues.

Power and influence relationships are seldom simple, unidirec- tional, or entirely clear. Analyses of public organizations certainly illustrate these complexities. Wood and Waterman (1994, pp. 18–22) pointed out that for years, scholars analyzing public bureaucracies often characterized them as being out of the control of their political mas- ters. Some scholars have depicted regulatory agencies as “captured” by the interests they were supposed to regulate. Others have concluded that “iron triangles”—tight alliances of agencies, interest groups, and congressional committees—dominate agency policies and activities and close out other authorities and actors. These accounts describe bureau- cracies as operating relatively independently of presidents, courts, and legislative bodies (except for special committees with which they might be allied).

A peculiar popular myth about public bureaucracies sees them as existing either for no reason and against everyone ’s better judgment or for only the selfish interests of the bureaucrats. In fact, a public agency that no one wants or that only the bureaucrats want is the easi- est target for elimination. Still, such popular views persist, and they correspond to very important political developments. Recent U.S. presi- dents, governors, and mayors have launched efforts to control bureau- cracies, seeking to wrest from them their allegedly excessive power or to streamline and reduce them (Arnold, 1995; Durant, 1992; Pfi ffner and

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Brook, 2000; U.S. Offi ce of Management and Budget, 2002; Walters, 2002; West, 2002).

Writers on public management often emphasize an opposing view, however. As mentioned in Chapter One, some experts on public manage- ment worry that elaborate constraints on public managers (1) deprive them of authority to carry out their jobs and (2) frustrate them profession- ally (National Academy of Public Administration, 1986). Thus the discus- sion on bureaucratic power has fallen into two confl icting camps, one in which bureaus and bureaucrats are seen as independent and infl uential and one in which they are regarded as impotent (Kingdon, 1995; Wood and Waterman, 1994).

More recently, evidence has mounted that both of these views have some merit; that bureaucratic power can more accurately be described as a dynamic mixture of both of these conditions. Researchers and gov- ernment executives report numerous cases in which federal agencies have shown marked responsiveness to the authority of the president, the Congress, and the courts (Golden, 2000; IBM Endowment for the Business of Government, 2002; Rubin, 1985; Wood and Waterman, 1994); conversely, Wood and Waterman (1994) also show evidence of bottom-up processes in which federal agencies initiate policy relatively independently. Similarly, there are studies of public management and leadership that provide accounts of proactive behaviors by leaders of public agencies (Behn, 1994; Doig and Hargrove, 1987; Hargrove and Glidewell, 1990; Riccucci, 1995). Dunn (1997) described respectful rela- tions between government executives and their political superiors, and Dunn and Legge (2002) find that many local government managers espouse a partnership model for their relations with elected offi cials. The relative power of public organizations, their leaders, and the gov- ernmental institutions to which they are formally accountable is dynamic and depends on various conditions, such as the salience of a particular issue, agency structure, agency expertise, and public attitudes and sup- port. This chapter reviews many of the formal powers of the external actors that infl uence public organizations, and as many of these dynamic factors as possible, because of their essential role in the fundamental organizational process of gaining fi nancial resources, grants of author- ity, and other resources from the environment. (Exhibit 5.1 summarizes many of these formal powers and other bases of infl uence.) As Norton Long (1949, p. 257) declared in a classic essay, “the lifeblood of admin- istration is power.”

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EXHIBIT 5.1 Sources of Political Authority and

Infl uence of Institutions, Entities, and Actors in the Political System

CHIEF EXECUTIVES

Appointing agency heads and other offi cials

Overseeing executive staff and staff offi ces (for example, budget offi ce)

Initiating legislation and policy directions

Vetoing legislation

Giving executive orders and directives

LEGISLATIVE BODIES

Holding the power of the purse: fi nal approval of the budget

Authorizing legislation for agency formation and operations

Giving approval of executive appointments of offi cials

Overseeing hearings, investigations

Holding authority over legislative committees

Initiating legislation

COURTS

Reviewing agency decisions

Holding authority to render decisions that strongly infl uence agency operations

Giving direct orders to agencies

GOVERNMENT AGENCIES

Exerting oversight and management authority (GAO, OMB, OPM, GSA) over other agencies

Acting as competitors for resources or authorization

Acting as allies in seeking resources or authorization

Carrying out joint programs with other agencies

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Public Organizations and the Public

Public organizations need support from what political scientists call mass publics —that is, broad, diffuse populations—and especially from atten- tive publics —that is, more organized groups that are interested in specifi c agencies.

OTHER LEVELS OF GOVERNMENT

Exerting infl uence from “higher” and “lower” levels

Engaging in intergovernmental agreements and districts

INTEREST GROUPS

Lobbying and infl uencing attempts by client groups, constituency groups, and professional associations

POLICY SUBSYSTEMS AND POLICY COMMUNITIES

Engaging with issue networks

Engaging with interorganizational policy networks

NEWS MEDIA

Reporting on government agency activities and problems

Acting under constitutional protections of freedom of the press

GENERAL PUBLIC OPINION

Providing (or refusing to provide) popular support

INDIVIDUAL CITIZENS

Requesting services, complaints, other contacts

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Public Opinion and Mass Publics

General public opinion infl uences the management of public organiza- tions. Two types of mass opinion fi gure importantly: attitudes toward gov- ernment in general and attitudes toward particular policies and agencies. Elected offi cials have often sought to reform government bureaucracies in ways that appealed to public opinion, especially among many citizens who regard the federal government and its employees as ineffi cient and in need of reform. Public opinion played a signifi cant role when President Jimmy Carter ’s administration reformed the U.S. civil service system in 1979, changing pay and disciplinary procedures and provisions for appoint- ing senior executives. The Carter administration promoted the reform as a means of motivating federal workers who needed to work harder and of making it easier to fi re lazy ones. The administration took this approach because it drew more media coverage than an approach simply emphasiz- ing improvements to management in government. Media representatives apparently felt that emphasis on fi ring lazy bureaucrats would appeal to the public (Kettl, 1989). President Reagan more aggressively attacked the fed- eral bureaucracy, cutting agency budgets and staffi ng, and sought to dimin- ish the authority of career federal administrators (Aberbach and Rockman, 2000; Durant, 1992; Golden, 2000; Rubin, 1985). Evidence indicated that morale in the federal service suffered. Surveys revealed that many career civil servants intended to leave the service and would discourage their children from pursuing a career in federal service (Volcker Commission, 1989). As part of the National Performance Review, the Clinton adminis- tration cut over 324,000 federal jobs between 1993 and 2000. The George W. Bush administration issued the President ’s Management Agenda, which called for improved management due to severe defi ciencies in manage- ment in federal agencies. All of these reform initiatives seemed clearly to be designed, in large part, to show the public that the president would reform the ineffi cient federal bureaucracy. A general climate of unfavorable public opinion about the public bureaucracy thus had signifi cant effects on the morale and work behaviors of government employees, the structure of the federal government, and the functioning of major federal agencies.

In 1989, a public outcry against a proposed pay raise for members of Congress, federal judges, and federal executives provided another good example of the effects of general public opinion on government employees and organizations. In opinion polls, more than 80 percent of the public opposed the increase. Ralph Nader and the National Taxpayers’ Union fought the raise aggressively, exhorting voters to write to and call their

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representatives to object to it. Congress overwhelmingly voted down the raise. After its defeat, stories in the New York Times and elsewhere reported bitter reactions by federal managers, including many who would not even have been in positions to receive the raise. They expressed sharp disap- pointment over the symbolic rejection of their value to the society.

In state and local governments across this country and in other nations, unfavorable public attitudes about government have provided some of the support for various reforms (Peters and Savoie, 1994). Some reforms have targeted government pay systems, seeking changes that would tie a govern- ment employee ’s pay more closely to his or her performance. The reforms have been justifi ed as a way to remedy allegedly weak motivation and per- formance on the part of public employees (Gabris, 1987; Ingraham, 1993; Kellough and Lu, 1993). In Georgia and Florida, for example, during the 1990s the governors proposed that merit system protections for state employees be abolished, in part so it would be easier to fi re them and to tie their pay more closely to their performance (Kellough and Nigro, 2002; West, 2002). Walters (2002) points out that Governor Miller in Georgia promoted the reforms to the public in the same way Jimmy Carter had argued for similar reforms during his presidency—by connecting them to the stereotype of the ineffi cient bureaucrats who could not be fi red. These sorts of reforms have been undertaken in various nations, and have been particularly prevalent in English-speaking countries in recent decades (Kettl, 2002; Peters and Savoie, 1994; Pollitt and Bouckaert, 2011). They refl ect the decline in general public support for government spending and programs.

Ambivalence and Paradoxes in Public Opinion

As shown by the surge in patriotic sentiment and praise for the New York City fi refi ghters and police after the September 11, 2001, attacks, public attitudes about government exhibit marked ambivalence, and this ambiva- lence infl uences public managers and their agencies (Lipset and Schneider, 1987; Whorton and Worthley, 1981). Surveys have often found that respon- dents say they would like lower taxes but do not want public spending reduced for most types of services (Beck, Rainey, and Traut, 1990; Ladd, 1983). Surveys have also found that when respondents are asked how they feel about federal agencies in general, they give unfavorable responses. When asked, however, for a specifi c evaluation of how they were treated by a particular agency in a specifi c instance, they give much more favorable responses (Katz, Gutek, Kahn, and Barton, 1975).

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Ambivalent public attitudes contribute to the challenges of public man- agement. In the absence of economic markets as mechanisms for measur- ing need and performance, public offi cials and public organizations often struggle with diffi cult questions about what the public wants. In recent decades, elected offi cials have often responded with reforms and deci- sions that directly infl uence structures, behavior, and management in pub- lic organizations. Nations cycle in and out of periods of antigovernment sentiment (Hirschman, 1982). Therefore it remains to be seen whether the negative orientation of reforms—emphasizing the need to reform poorly performing government agencies and employees—will continue. Nevertheless, these examples illustrate the infl uence on public manage- ment of general public sentiment.

Public Opinion and Agencies, Policies, and Offi cials

The general level of public support for a particular agency ’s programs affects the agency ’s ability to maintain a base of political support. Certain agencies hold a more central place than others in the country ’s values (Meier and Bothe, 2007; Wamsley and Zald, 1973), and the public regards their work as more crucial. The Department of Defense, police depart- ments, and fi re departments typically retain strong general public support because of the importance people attach to national defense and personal security. Some social programs, such as those perceived to involve welfare payments to the poor, receive weaker support in public opinion polls.

Hargrove and Glidewell (1990) have proposed a classifi cation of pub- lic agencies and managerial jobs that places a heavy emphasis on public opinion. They classify public management jobs on the basis of how the pub- lic perceives the agency ’s clientele (for example, public sentiment toward prisoners and welfare dependents is usually negative), the level of respect the public has for the professional authority of the agency and its head (for example, a scientifi c or medical professional basis usually gets more respect), and its general level of support for the mission and purpose of the agency. This chapter returns to such factors later when discussing the sources of authority for public agencies and managers.

Media Power: Obvious and Mysterious

The importance of public opinion bolsters the power of the news media. Congressional committees or state legislative committees summon agency

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executives before them to explain the events surrounding an embarrassing news story about an agency. Whistle-blowers who go public with news about agency misconduct or incompetence have often received such harsh treat- ment that the federal government has made special provisions to protect them (Rosen, 1998). Bad press can sledgehammer an agency or an offi cial, damaging budgets, programs, and careers. A survey of persons who served as high-level executives in various presidential administrations found that the vast majority of them regarded media coverage as having a signifi cant impact on public policy. Most of them had tried to get media coverage for their agency, and three-quarters of them reported spending at least fi ve hours a week on matters pertaining to the press and media coverage (Graber, 2003, p. 245).

Close media scrutiny of government plays an indispensable role in gov- ernance. The news media also report aggressively on scandals in private business, yet they appear to place more emphasis on scrutiny of govern- ment. Government is often more accessible, and it is more appropriate to watch it carefully, because government spends the taxpayers’ money. In cities around the country, local news reporters regularly chase down stories about governmental waste or abuse. For example, in some cities they have searched the parking lots of bars and restaurants during normal working hours to take pictures of the license tags of any government vehicles parked there. In one city a television station carried stories about the high costs of the furniture in the offi ce of one of the county commissioners. Major television networks have news segments and special series that regularly broadcast allegations of government waste.

News reporters usually take a strong adversarial stance. They want to avoid seeming naive or co-opted. They need to focus on serious problems and generate an audience by reporting on controversial issues. The Volcker Commission (1989) report described how Carter administration offi cials had trouble attracting interest in their proposals for civil service reforms until they developed a twenty-six-foot chart illustrating the tortuous steps it took to fi re a bad federal employee. The news media immediately focused on this issue and provided more coverage. This attention apparently led the president to emphasize the negative, punitive aspects of the reforms in try- ing to build support for them. Thus media coverage infl uenced the tenor of reforms that shaped the personnel practices of the federal government and infl uenced the morale of employees throughout the public sector.

If anything, news coverage of government appears to be increasingly negative. Patterson (2001) carefully documents that since 1960 news cover- age has become much less descriptive (reporters no longer present only

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the facts) and much more interpretive of developments. During the same period, coverage of candidates during presidential elections has become much more negative.

Instances in which unfavorable press coverage damages a person, pro- gram, or agency make concern about media coverage part of the lore of government (Linsky, 1986). Offi cials and experts from Washington speak of managing in a “goldfish bowl” (Allison, 1983; Cohen and Eimicke, 1995; IBM Endowment for the Business of Government, 2002), with media attention playing a stronger role in government than it does in business management (Blumenthal, 1983). For years observers have worried that some federal executives devote more time to creating a splash in the media than to performing well as managers (Lynn, 1981). Many public employees appear to feel that they will not get into much trouble for poor perfor- mance but will get into a lot of trouble for creating bad publicity (Downs, 1967; Lynn, 1981; Warwick, 1975). City and county offi cials will pack an auditorium to listen to consultants speak on how to handle media relations, and they regularly complain about unfair media coverage.

This apparent power of the media has mysterious qualities. The poten- tial damage from bad coverage is often unclear. Ronald Reagan earned a reputation as the “Tefl on president” by maintaining popularity in spite of sharp criticism in the media. As an additional irony, much of the worry over press coverage amounts to worrying over an entity in which the general public expresses little confi dence. Public opinion polls fi nd that public confi dence in journalists and the news media is lower than public confi - dence in many other institutions and has been declining in recent decades (Patterson, 2001). For a long time, many experts argued that the media exercise little infl uence over public voting patterns and attitudes about specifi c issues. Some experts on the news media now argue that the media exert a powerful infl uence on public attitudes, but in a diffuse way. Media coverage develops a climate that pervades the informational environment, and this in turn infl uences public opinion (Lichter, Rothman, and Lichter, 1986; Murray, Schwartz, and Lichter, 2001). In addition, some experts con- clude that journalists develop a shared view of what constitutes news, and this leads to a version of the news that is generally shared by the different news organizations (Patterson, 2001).

Media attention also varies. Some agencies regularly get more media attention than others. Hood and Dunsire (1981) found that the foreign affairs offi ce and the treasury get particularly high levels of press coverage in Britain, whereas other central government departments get relatively little attention. The media often seriously neglect administrative issues.

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