CHANGING THE EUROPEAN COMMISSION: NEW PUBLIC MANAGEMENT AND NEW TRENDS

International Conference on Administrative Development: Towards Excellence in Public Sector

Performance, Riyadh, Kingdom of Saudi Arabia (November 1-4)

Mehmet Akif Demircioglu mdemirci@indiana.edu

Indiana University-Bloomington, USASchool of Public and Environmental Affairs

Overview

• The European Commission (EC)• New Public Management (NPM) and

Administrative Reform (AR)• NPM in the EC– Kinnock Reforms

• Conclusion• Recommendation and Lessons

• European Commission• European Parliament• Council of the European Union• European Court of Justice• European Court of Auditors

European Commission

• Executive branch w/seat in Brussels (also Luxembourg)– There are approximately 23 000 of these European civil

servants.– The ‘seat’ of the Commission is in Brussels (Belgium), but it also

has offices in Luxembourg, representations in all EU countries and delegations in many capital cities around the world.

• Initiator of legislation• Implements EU policies and budget• Enforces EU law• Represents the EU internationally

• The European Commission has two main components: the College of Commissioners, comprised of one commissioner from each member state (there are 27 commissioners now), headed by the President of the Commission and serving for a five-year term, and the Directorates-General (DGs) (which reflect sectors or functions) and services, which is the permanent bureaucracy of the Commission, which prepares legislative proposals and directs implementation and compliance with EU regulations and directives.

Literature Review-NPM• Organizational change in the European Commission is probably most fruitfully explored as a European public policy itself (Richardson 2006).• Many journal articles address topics relating to organizational change, such as the adaption and implementation of “reinventing government” and

New Public Management Reforms (e.g., Berman and Wang 2000; Brudney and Wright 2002; Fernandez and Rainey, 2006; Grizzle and Pettijohn 2002; Hood and Peters 2004; Julnes and Holzer 2001; Thompson and Fulla 2001).

• The EC administrative reform is the topic of a number of insightful studies (Bearfield 2004; Coull and Lewis 2003; Kassim 2004a, 2004b; Levy 2004; Metcalfe 2000; Spence 2000; Spence and Stevens 2006; Stevens and Stevens 2006; Bauer 2001, 2002, 2008b).

• NPM has been portrayed as a global paradigm emerging in response to economic, institutional, political, and ideological changes (Box et al. 2001; Kamensky 1996; Kettl 1997, 2000; Osborne and Gaebler 1992; OECD 1995; Wise, 2002). Researchers have demonstrated that governments vary in what they take from the bundle of reforms (Brudney, Hebert, and Wright 1999; Hood 1996; Pollitt and Bouckaert 2000; Savoie 1994; Wise, 2002) and have provided evidence of transformation in both the meaning and content of reform strategies from one country to another (Christensen, Lægreid, and Wise 2002; Czarniawska and Sevon 1996; Lægreid 2000, 2001; Pollitt and Bouckaert 2000; Rosenbloom 1993; Wise 1994, 2002; Wise and Stengård 1999).

• The NPM which is a kind of framework of the change of public organizations draws on several different intellectual traditions (Aucoin 1990; Box et al. 2001; Carroll 1995; Kettl 1997; Lynn 1998; Rosenbloom 2001; Savoie 1994; Terry 1998; Wise, 2002). Many different activities fall under its umbrella, and no consensus on the meaning of the construct can be claimed (Ferlie et al. 1996; Hood 1996; Pollitt 1995; Stark 2002).

• NPM’s relative lack of boundaries may be seen by some as a fundamental weaknesses and by others as an advantage (Ferlie et al, 1996, 10; Quinlivan and Schon, 2002, 26).

• Although NPM has been presented as a ‘public management for all seasons’(Hood, 1998, 9), according to Rhodes, it is more accurate to talk about ‘competing webs of interpretation’ (Rhodes, 1999, 365). These webs differ from country to country, which explains the challenge of innovation that lies with the EC (Quinlivan and Schon, 2002, 20). Consequently, that emerges from the literature is that NPM is not well-defined.

• We should not focus on the abstract notion of whether NPM is right or wrong, yet ask in what contexts is the NPM likely to achieve performance improvements (Streeten, 1993, 235).

• There are roughly four reasons of the NPM: The macroeconomic troubles in the 1970s, neoliberal party politics of the 1980s, different administrative cultures stemming from different “state traditions”, and variation to different political institutions (Green-Pedersen, 272-273). Guy Peters (1997) contends that the Anglo-American tradition is more receptive to market-type reforms than is the case in the Germanic tradition in particular. According to Green-Pedersen, the reason of the last one may be found at two levels. First, macroinstitutional differences, such as majoritarian versus consensus systems, may result in different magnitudes of NPM reforms Second, differences may be due to microinstitutional differences. For instance, Peter Christiansen points to the power of public sector unions as part of the explanation for the limited extent of markettype reforms in Denmark.

• The analysis of management reforms of international organizations fits well into the line of comparative public administration research attempting to understand the spread of new public management ideas (Osborne and Gaebler 1992; Peters and Savoie 1998; Wright 1997).

NPM in the EU• One type of adjustment has been reforms of the public sector, such as the

introduction of explicit measures of performance, decentralization, private-sector styles of management, contracting out, and privatization. These reforms are generally known as the “New Public Management” (NPM) (Clark, 2000; Hood 1991; Rhodes, 1999).

Group EU

NPM leaders Denmark, Finland, the United Kingdom, Ireland, the Netherlands, Sweden

NPM laggards Austria, Belgium, France, Germany, Greece, Italy, Portugal, Spain

Other (lack of data) Luxembourg

Why Reforms?

• Management and budgetary problems, corruption, unaccountability, inefficiency, lack of clarity and transparency, status quo, failures of adaptation as well as innovation, and the trend of NPM.

Challenges of Reform in the EC• Bureaucratic resistance

– In 50 years the Commission had never systematically revised its personnel policy, which is enshrined legally in the EU staff statute.

• The Commission’s career structure was based more on seniority than merit. In the past, advancement depended on nationality, patronage, or length of service, rather than merit. Staff training was not compulsory, and the Commission spent little money on ensuring officials acquired the necessary skills. Officials enjoyed an attractive range of benefits and perks, such as family, education and travel allowances, as well as a generous pension scheme. However, a substantial body of European law governs employment conditions, and in particular protects the independence of officials, making it notoriously difficult to discipline under-performing staff. – Unproductive bureaucracy– Inefficient culture

Reform Attempt 1: Santer Commission (1995-9) Unsuccessful

• Following criticism of inefficiency and waste, the Santer Commission which took the office in 1995, launched a wide program of administrative reform called ‘Tomorrow’s Commission’. These reforms were promoted by Sweden and Finland where these two have strong traditions of transparency and accountability.

• The reform process was divided into three projects: Sound and Effective Management (SEM 2000), Designing the Commission of Tomorrow (DECODE), Modernization of Administration and Personnel Policy (MAP 2000).

• Nevertheless, a clear lack of communication and information with staff and lack of leadership from the top, and ineffective management led the resignation of the whole Commissioner in March 1999. – During 1998 the Commission began to lose authority due to

management criticisms from the Parliament.

Reform Attempt 1: Kinnock Reforms () Successful

• Prodi President, Neil Kinnock VP and • Reform White Paper. 1) modernization “culture based

on service”, “good administrative behavior”, and “technological infrastructure” 2) “efficient allocation (ie, outsourcing). 3) “improvement of financial management” and “audit procedures”. 4) modernization of human resources policy from recruitment and retirement while the power of the middle managers has been strengthen.

• Increased internal and public accountability--transparency, new operational systems, major changes in management of finance and people.– Evidence of NPM

Kinnock’s Reform AgendaKey elements of the Kinnock reforms

March 2000: Commission unveils a comprehensive strategy and action plan for reforming its staff regulations, and its accountancy, auditing, appraisal and management systems.

2001-2: Commission rolls out its new management reporting system. January 2003: New financial regulation, the basic text for reform of the Commission’s auditing systems, comes into force.

May 2003: Member-states agree on basic principles of new EU civil service staff regulations, including pension reforms.

2004: The new management system becomes fully operational.

2005: The Commission completed the introduction of a new accounting system.

• The Kinnock reforms seek to tie salary rises much more closely to promotion on merit. The Commission is increasing the number of grades to 16 from 8. Officials will still gain a salary raise, based on performance, for every step. However, the increases will be much smaller than those given for moving up a grade, and will progressively decrease the longer an official remains at the same level. Most importantly, promotions will depend upon a transparent system of credits. All staff will undertake a regular career development review.

• The staff reforms broke down the rigid division between the four Commission ‘streams’ (these range from ‘A’ level top officials to ‘D’ level support staff, such as security guards). inflexibility. In the past, talented staff who joined the lower ranks of the Commission found it difficult to move into other streams. In particular, ‘B’ stream officials, who provide technical support to the ‘A’ grades, were unable to switch streams without having to take another exam, even though their jobs were often similar in content. The new system has just two streams, the administration function group (AD), equivalent to the old ‘A’; and the assistant function group (AST), which embraces all the other streams. Officials who worked in the lower grades will enjoy enhanced promotion prospects, while the Commission is also making it easier to transfer into the AD stream.

Range of reform in the European Commission (b/w 1995-2007) (#0 Weber’s bureaucracy model, #4 NPM)

Indicators 1995 2007 Change

Recruitmentselection procedure in generalselection procedure for senior staffprofile of senior

200

212

No Changetowards NPM, but still closer to BM

Career structureentrance structure basic salaryextra pay merit bonus

10000

23120

towards NPM, but still closer to BMtowards NPMtowards NPM, but still closer to BMtowards NPM, but still closer to BMno change

Staff appraisalperformance assessment of future potentialsenior staff appraisal use of staff appraisal results

1000

4412

towards NPMtowards NPMtowards NPM, but still closer to BMtowards NPM, but still closer to BM

Trainingbudget and hours of trainingpurposemanagement training for senior staff

000

444

towards NPMtowards NPMtowards NPM

One hundred and sixteen telephone interviews with policy HoU (Heads of Unit) were completed, a response rate of 58 per cent (Bauer, 2008c).

Negative(%)

Positive(%)

Irrelevant(%)

Don’t know(%)

New reporting duties34 40 24 2

Preparing the Annual Strategy Decision 32 46 20 2

Drafting the DG Annual Management Plan 29 55 14 2

Interim evaluation and monitoring of achievements 24 50 23 3

Defining the responsibilities of individuals 11 63 20 6

Setting negative priorities 37 27 32 4

Drafting the Annual Activity Report 26 46 22 5

Negative(%)

Positive(%)

Irrelevant(%)

Don’t know(%)

Detailed job descriptions 13 73 13 1Annual appraisal exercises 36 50 11 3Setting work-related and personal targets 13 68 17 2Deciding on staff requirements and allocation of responsibilities

21 45 30 2

Promotion procedures 67 12 20 2Setting objectives within your unit 11 74 12 2Overseeing and assessing achievements 20 52 27 2Reducing function groups and having a single pay scale with16 grades

36 20 40 5

Conclusion

• Kinnock reform changed the European Commission– Performance Improvement– Staff Regulations– 16 Grades (increase financial motivation)– Financial regulation and auditing systems– Training and Experience– Clear goals and defining responsibilities– Evaluation of success-- transparency– More control of middle managers (Directors General)

Lessons• Organizations matters• Organizations’ size matters (effectiveness) also consultation

(“shura”)• Manager & leader matters• First versus second (or third) choice (Senter vs. Kinnock) • Up-down-out support

– Politicians, media, staff, managers• Failures becomes success?

– The crisis established political demands for making the Commission more ‘accountable,’ ‘responsible’ and ‘transparent’

• Indicate the position• Flexibility and control • Do step by step• Always dialog

Thank you

Mehmet Akif Demircioglumdemirci@indiana.edu