This section covers a review of literature by authors who have considered incorporating strategic management in the running of public sector activities. Rabin Et al. (2000) argues that strategic management can be used to provide an orderly approach through which the disorderly, highly complex problems that face states from time to time can be solved (p. 658).
Accordingly, Rabin et al. (2000) observes that though strategic management is perceived by political leaders as a “mechanism for incorporating a rational-technical perspective into the otherwise highly politicized processes of government” (p. 659), the strategic management process provides systematic methods through which governments are able to assess challenging situations, set goals in the public sector and formulate strategies (Cohen & Eimicke, 2002). More to this, states are also able to develop plans through which set plans are to be implemented, and evaluate the outcomes of the process.
Overall, Rabin et al (2000) considers strategic management an essential tool in public sector because it offers an impression of rationality in the public affair thus contributing to effective policy making and management. Further, by using strategic management, managers in the public sector are able to practice discretion at work. Citing Bryson & Roering (1988), Rabin et al (2000) further states that managers in the public sector are able to “develop a defensible basis for decision-making” (p.658).
It is also thought that the success of strategic management in the private sector has sparked interest in the same from the public sector, in an attempt by state officials to adopt best practice. To this end, Rabin et al (2000) argues that managers in the public sector adopt strategic management for purposes of “creating a basis” through which they can justify allocation of resources, evaluation of performances, conflict resolution, recruitment practices, and justifying of decisions to legislators as well as the public (p. 658).
Rabin et al. (2000) observes that the academic circles have not adequately covered how strategic management is used in the public sector. To this end, they observe that there exists a gap in literature especially in regards to the success of strategic management in the public sector. Specifically, studies are yet to establish how the public sector is able to co-align competing interests, multiple programs, conflicting policies and diverse purposes in order to achieve harmony in purpose, outcomes and working environments (p. 659).
Unlike the private sector, the institutionalization of strategic management in the public sector is constrained by several factors. Among them are constitutional requirements that require departments or agencies in government to act in specific manner (Mckevitt & Lawton, 1994; Rabin et al., 2000). Other constraints include legislative mandate, judicial mandate, politics, jurisdictional boundaries, public interest and the strengths and weaknesses of the public sector organization (Bovaird &Löffler, 2009).
Just like in the private sector, strategic management in the public sector takes into account both the internal and external environments in an organization. In the external environment, legal, economic and political variables have to be taken into account. In the internal environment on the other hand, organizational variables such as organizational policies, budgets and personnel are taken into account.
Waldt & Toit (1999) considers the different strategic management definitions offered by different authors and concludes that there is an obvious need to scan and analyze organizations with the aim of “formulating, implementing and evaluating strategies that would increase organizational effectiveness and efficiency” (p. 282).
On the question whether strategic management can be effectively used in the public sector, Waldt & Toit (1999) argues that the use of the same in South Africa had proven that it is indeed possible to effectively use strategic management in running governments as well as administering policies. Stewart & Clarke (1987) however point out administrative shortcomings, slow reaction to change by public institutions, inability to come up with long-term goals by public institutions and internal and external resistance as the main challenges facing the use of strategic management in the public sector.
Further, Waldt & Toit (1999) states that although strategic management is undoubtedly an approach that can be adopted to increase the performance and output of organizations in the public sector, most managers need to first understand the application value of such strategies before embarking on the implementation process (p. 286). Most notably, managers must take note of the unique nature of public sector institutions, since the unique situations raises specific needs that affect the application value of the strategy.
Ferlie (2001) has a different opinion on how strategic management is applied in government institutions. According to his deduction, its use has led to the rise of New Public Management (NPM) practices, which involves restricting of public sector in order to increase efficiency. Ferlie (2001) notes that contemporary public sector is more similar to the private sector mainly because managers in the public sector have borrowed successful practices from their counterparts in the private sector. His thoughts are shared by Berry (1994). Like Waldt & Toit (1999), Ferlie (2001) also notes that a lot of strategic management strategies that are successful in the private sector will need specific customization in order to fit the public sector.
Ferlie (2001) acknowledges that the public sector historically comprises rational models used in planning, which are resilient in nature and hence reviewing them would undoubtedly pose challenges to managers. His opinion is also shared by Stewart & Clarke (1987) and Whorton & Worthley (1981). Most notably, he states that in order for strategic management to be effective, managers in the public service need to focus more on the implementation of strategic management and streamlining operations that arise rather than focusing mainly on judicial tasks, policy advice or constitutional matters as was usually the case in the traditional public sector (Bovaird &Löffler, 2009).
Of essence to Ferlie (2001), he notes that strategic management in the public sector must shift focus from “policy issues” to “management issues”. This means that the management should not attach as much prestige or political significance to the state, policy matters, judicial and constitutional forces. Rather, NPM shifts political attention associated with such forces to effective management of expenditure in the public sector hence delivering better value to the society.
Notably, strategic management have made public organizations responsive to a demand for increased productivity and performance through use of efficacy targets, performance indicators, market testing and audit systems, all which allow players in the public sector to respond affirmatively to the increased interest in the development of management systems, performance assessment tools and systemic.
The use of Information Technology techniques has increased the propensity of government organizations to develop performance indicators which are then used for comparative performance benchmarking. This means that just as is the case in private sector where performance targets are set by boards and managers are expected to stick by the same if their careers are to develop in the specific organization, managers in the public sector face similar benchmarks.
In addition, Ferlie (2001) credits the use of strategic management in public organizations with the growth of initiatives that target the consumer thus giving them (consumers) improved quality of products and services as well as more choice.
More to this, Ferlie (2001) points out that previously, public institutions were run by administrators. Such have since been replaced with managers who actively participate in strategy formulation, decision-making and ensuring that the strategy is properly enacted in order to achieve the desirable effects (Peare & Robinson, 1988). In some cases however, the administrators are still actively participating in facilitative but modest roles in public organizations. Further, Ferlie (2001) notes that strategic management has enabled public institutions to move “from maintenance management to the management of change” (p. 4).
Of notable interest is the fact that processes that insulated public administration from external forces no longer exists in the contemporary public sector where strategic management is practiced. Rather, such practices have been replaced by management disciplines that use effective leadership, team building practices, financial management and human resources management to formulate long-term strategies for the organization as well as ensuring that the consumer of products and services is satisfied.
McBain & Smith (2010) argues that for strategic management to be successful, managers need to understand the theories and concepts that impact the public sector. The two authors identify the main challenges facing contemporary public sector as: social problems which are increasingly becoming complex; growing demands for services by the general citizenry; and the accelerated social change. The solution to the three identified challenges is NPM, which is touted as an ideal tool to provide the public sector with principles from the private sector, which have been proven to be successful management tools (McInerneye & Barrows, 2002)..
McBain & Smith (2010) further identifies environmental factors such as political influence and legal mandates as major factors influencing strategic management in the public sector, while transactional factors are identifies as coerciveness, public scrutiny, collective ownership, the need for accountability and scope of organizational impact. At the organization level, factors such setting goals without contradicting other issues and ensuring that the complexity of the identified strategy is manageable must be put into consideration.
According to McBain & Smith (2010) however, there are specific characteristics in the public sector, which shape how strategic management in the public sector is handled. First is the fact that strategy in the public sector is perceived as a scope for necessitating organizational outcomes. In this case, the more exposed to the public an organization is, the more its requirements for proper positioning within the “right” authorizing environment.
Strategy in public organizations is also perceived as a means to setting long-term goals and direction for the organization. To this end, McBain & Smith (2010) notes that public organizations are often faced with turbulent authorizing environments often leading to the organizations facing difficulties when setting long-term goals.
The third characteristic responsible for shaping strategic management as identified by McBain & Smith (2010) is strategic fit. This means that whatever strategy the organization takes must offer the public maximum value, while attracting the bare minimum need of political resources or authorization. Overall, strategic fit refers to the balance between delivering value and doing what is acceptable in the prevailing political environment (p.5).
Finally, McBain & Smith (2010) identifies the last factor affecting strategy in the public sector as “strategy as stretching competencies” (p. 5). Here, they explain that managers heading public organizations need not only use their internal capabilities, but also needs to mobilize support for their activities from other external actors. As such, the strategy identified by the organization must not only appeal to the human resource within the organization, but must also appeals to the public and the political class.
McBain & Smith (20100 argue that for strategic management in the public sector to be successful, there needs to be political management, operations management and cooperation management. Notably, political management and cooperation management are essential to an organization during the strategy identification and planning phases, while cooperation management and operations management are integral during strategy execution and adaptation phases. Overall, the two authors argue that political management dominates the long-term strategy discourse, while cooperation management and operations management dictate the short and mid-term organisation performance.
Sulle (2009) writes about how strategic management is used in Tanzania- a developing country in Africa. Most notably however, he observes that strategic management is a fairly new concept even in the developed countries, having been introduced as a management tool in the public sector only 20 years ago. Just like other authors covered in this review, Sulle (2009) acknowledges that strategic management is borrowed from the private sector. However, he states that the use of strategic management approach in private enterprise was justified by the working environment, which often requires firms to be innovative in order to survive in the competitive market environment.
As a mere survival tactic, firms in the private sector had to find a way through which they could re-align their activities and operations to the prevailing market environments through strategic planning. Notably, public organisations do not perceive competition or survival as immediate threats. This then means that public sector organisation’s adoption of strategic management is motivated by something more that the need for competition.
Sulle (2009) identifies the rational for adopting strategic management to public sector organisations as economic motivated. Most notably, he identifies avoiding a recurrence of the economic crisis that hit governments in the 1980s as one of the major factors that led to governments having more interest on strategies that were successful in the private sector. Cut back management and the re-alignment of long-term goals in an organisation in order to work within the available resources is among the identified factors behind the economic rationale.
However, strategic management is not only a management tool for use during economic hardships. Rather, Sulle (2009) states that public institutions have learnt that the same can be used in limiting budgets and ensuring that funding is awarded according to prevailing priorities during better economic times. Unlike players in the private sector, Sulle (2009) acknowledges that organisations in the public sector often face funding related constraints and uncertainties; this then requires the organisations to uphold transparency in their aims, inputs, outputs and overall outcomes in order to secure trust and funding from the state. This thought is also shared by Llewellyn & Tappin (2003).
In cases where the public resources are meagre, Sulle (2009) notes that strategic management is used to control how such resources are allocated to the different needs presented to the organisation. This then means that only the most deserving areas get to benefit from the resources. This conviction is shared by Llewellyn & Tappin (2003), who state that even when funding from the state is insufficient, government agencies, which have strategic management records can use the same to secure funding from other sources. Notably, an organisation that has managed to keep to an identified strategy is perceived as capable of sticking to a commitment and financial matters.
Green (1998) argues that strategic management has received much interest from governments because of the need to control public spending through efficient management of public organisations. This explains why government issue funding ceilings accompanied by performance targets whenever the state is funding a public organisation. According to Green (1998), the use if strategic management was in some cases intended to clear the ambiguities that traditionally existed between organisation costs and performance results.
Sulle (2009) argues that the introduction of NPM gave rise to porous boundaries between the private and public sectors thus meaning that human resources and skills could easily be transferred from one side of the divide to the other. In the Tanzanian case for example, the author notes that NPM reforms have led to decentralized public management, whereby semi-autonomous state organisations are given the responsibility of ensuring that quality services are delivered to the public.
Unlike in the past where the organisations were closely linked to the parent government ministries, the adoption of NPM have resulted in government ministries putting all organisations associated with them at an arms length. By doing this, the organisations are no longer managed through hierarchies, but are rather given a free-hand to deliver the best results possible. In most cases, the government is treated as a service buyer, which means it has to purchase services from the organisation just like other buyers do.
In a survey in the US, Berry (2001) notes that state organisation leaders cited four distinct reason for the adoption of strategic management: 1) the need to set clear missions and direction for state organisations; 2) the need to use prior experience gained elsewhere in strategic management in the organisation; 3) a need to imitate desirable business practices; and 4) a need to find a lasting solution to management stress and competing pressures in resource allocation. These reasons suggest that apart from being a managerial tool, strategic management needs to be part of the larger reform in public sector organisations.
Bryson & Roening (1988) observes that strategic management in the public sector, just as is the case in the private sector need to start with a strategic plan. Zanetti & Cunningham (2000) observes that though many authors take a pluralistic approach to strategic management, the mandate of the process essentially lies with the top managers in an organisation. This opinion is hared by Vincent & Douglas (1996), who states that the high ranking managers in an organisation are responsible for ensuring that the organisation is properly guided, directed and made to respect operation boundaries.
Berry (2001) however acknowledges that there are conflicting opinions among authors about the people in public organisations who should take part in the development of organisational strategies. Most notably however, Berry (2001) acknowledges that the different models that arise among authors about the right strategy to adopt in public sector strategy planning are more or less the same. His argument is based on the fact that no two public organisations are completely similar, hence raising the need for unique strategies to be formulated uniquely for each organisation. This argument is in line with an assertion from Eadie (1983), who states that organisations make their strategies based on their overall goals, and the technical, financial resources at the organisation’s disposal. Eadie (1983) identifies four steps through which organisations seeking to use strategic planning must go through. They are:
- an organisation must develop a firm grasp on environmental aspects that are pertinent to its overall goals and mission;
- the organisation must be able to critically examine its internal strengths, which include finance, human resources and other kinds of resources;
- developing organisational goals and comparing them with resources available to the organisation in order to determine their feasibility. Based on the results, the organisation then determines the objectives of the strategy;
- the organisation develops strategies based on objectives identified in step 3 above. An implementation plan is also set at this stage, whereby measures of ensuring accountability and meeting deadlines as well as the provision of all the necessary resources are set.
Strategic management in public sector also needs to take an approach that incorporates a SWOT analysis as suggested by Sinclair (1991). Here, the organisation’s “strengths, weaknesses, opportunities and threats” are taken into account in order to provide a basis for strategy formulation (Peare & Robinson, 1988). According to Sinclair (1991), a SWOT analysis allows an organisation to analyse its external and internal environment hence enabling it to identify the different factors that are either favourable or threatening to its success.
Vinzant & Vinzant (1996) argue that public institutions are not exempted from the realities of strategic management despite the fact that they do not face much competition as organisations in the private sector do. As such, public sector organisations also need to engage in strategic planning in order to determine the goals, organisational objectives and strategies that fits their unique scenario; they also need to engage in prudent resource management where the available resources in the organisations are allocated to plans that fit within the bigger strategic management; the organisation also needs to engage in controlling the implementation plan and evaluating the different strategies for results.
Stewart & Clarke (1987) argue that while as strategic management is attainable in the public sector, the challenges faced by managers in this sector are far more than what private sector managers in similar situations have to contend with. For example, organisations operating in the public sector are often without clear goals, which are motivated by vague policies, unstable political environment and competing interests. Sinclair (1991) on the other hand identifies the unavailability of necessary resources as one of the main challenge of strategic management in public sector organisations. Calver et al. (1999) also identifies the limited decision-making autonomy in public sector organisations among the key challenges facing strategic management in the organisations.
Christen & Laegreid (1999) and Newman (1985) observe that both the private and public sector have traditionally observed different management cultures. According to them, the adapting successful practices from the private sector and hoping that the same would bear the same results in the public sector is misleading. Most notable in their argument is the fact that public organisations cannot ignore the need to balance political opinions, public interest, and the interests of managers within the organisation (Keston, 1992).
In a case study in Norway, Christensen & Laegreid (1999) observed that radical reforms did not take place in the public sector as would have been expected on the adoption of strategic management. Instead, politicians and administrators took an active role in deciding how organisations should act. This was done for purposes of ensuring that a political, administrative and public balance was attained. This observation is shared by Calver et al. (1999), who states that the bureaucratic culture in many state run organisation remain as the single most stumbling block to the effective use of strategic management strategies in the public sector.
This thought is also shared by Keston (1992) and Meyer (1985). The authors reiterate that although bureaucracy has positive characteristics such as regulation, formal rules, task division and hierarchical structure, it has the ability to disintegrate into irresponsible, inflexible and inefficient forms of public administration. When this is the case, lack of new ideas, mechanism and passiveness become central features which act against strategic management. Claver et al. (2007) observes that though bureaucracy can offer stability in state run organisations, it is often detrimental to innovative processes which are responsible for the positive change observed elsewhere in the private sector.
Strategic management is more successful in local governments as opposed other government sectors since the measurement of the primary objectives has always taken a central role (Kloot & Martin, 2000). The introduction of strategic management in the public sphere has thus offered local governments a new way of determining organisational performance especially because it offers managers a new way to link strategic plans articulated by the top managers and performance measures.
Bryson (1988) holds the opinion that long-term planning is a necessary requirement for any organisation irrespective of whether it is a public or private organisation. To this end, he identifies eight steps, which each organisation must follow in order to identify and determine important issues faced by their organisations. Bryson (1988) identifies the steps as:
- initial agreement development. The agreement is meant to guide strategic planning;
- identifying and clarifying mandates within the organisation;
- developing and clarifying the values and missions within the organisation;
- assessing the external environment of an organisation;
- Assessing the internal environment of an organisation;
- identifying strategic issues that an organisation needs to address;
- Developing strategies for the organisation;
- Describing an organisation’s future.
According to Bryson (1988), the eighth step is not always necessary, but is important to ensure that the managers have a vision of how the company should look like in the future. According to Bryson (1988), strategic planning allows managers in an organisation to think strategically, have clear goals for the future and learn to anticipate future consequences of their present decisions.
Further, people in the managerial positions learn to make decisions based on coherent, defensible arguments, while exercising utmost discretion when handling matters that are under the control of the organisation. Consequently, such actions lead to improved organisational performance, enhanced problem solving, and the ability to deal effectively with changing organisational circumstances and organisations end up encouraging teamwork while attaching great value to existing expertise within the organisations.
Conclusion
This review of literature covers different views by different authors regarding strategic management adoption in the public sector. Notably, most authors covered in this review contend that strategic management is a viable tool for use in streamlining operations in organisations in the public sector domain. Notably however, public sector organisations face myriad problems, which are not present in the private sector scenario. As observed herein, top among the challenges facing such organisations is their semi-autonomous status. This places political, social as well as economic restrictions on the organisations (Mclnerney & Barrows 2002).
Bureaucracy, which is also closely associated with the semi-autonomous nature of strategic management in public organisations, also places a major hurdle in their decision-making processes, as well as strategy formulation. The fact that most of the public sector organisations depend on a political player to authorise set budgets further complicates strategic management process.
It is however agreeable among the authors that though organisations in the public sectors do not face the same competition threat as players in the private sector, adopting strategic management practices would no doubt make the organisation better planners and better providers of services to the public. This means that they are able to create value for the public and hence are able to justify the finances and other resources pumped into the organisation by government (Agranoff, 2007; Zamanous & Glaser, 1994).
Managers of such organisations identified by Moore (1995) as mayors, governors, presidents and any other elected or appointed person to a public office are then able to account for public resources deployed to their organisation irrespective of whether they handle projects in their organisations directly, or they assign the running of the projects to staff members within the organisation. Overall, it is agreeable that strategic management in the public sector needs to be modelled to address the unique features contained in public organisations. The strategies should notably address the need to respond to the needs and wants of the citizens for quality services, the need for employees for workplace employment, and the overall need for organisations to emphasise its values and missions.
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