Article

Assessing the Performance of Departmental Chief Executives: Perspectives from New Zealand

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Abstract

This article examines the new approach to specifying and assessing the performance of departmental chief executives in New Zealand introduced in 1988 by the fourth Labour government (1984–1990). Drawing on the findings of a series of interviews with ministers, chief executives and other senior public servants conducted between late 1989 and late 1991 by a number of researchers, the article outlines the origins and implementation of the new policy framework, and evaluates its strengths and weaknesses. From the evidence available to date, it appears that the new model has won the support of most of the parties directly affected, and that it has enhanced the accountability of chief executives to their portfolio minister(s). However, the implementation of the new regime has highlighted the inherent problems of assessing the performance of senior personnel in the public sector and of imposing sanctions in the event of substandard performance. In addition, various issues of a constitutional nature have arisen concerning the roles and responsibilities of chief executives, the balance of power between chief executives and their portfolio minister(s), and the proper role of the Prime Minister and Cabinet in the new accountability framework.

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... New Zealand features a professional civil service, appointed on merit (Boston, 1992). Department chief executives are appointed by the State Services Commissioner and endorsed by Cabinet (Gill, 2008), though in practice this endorsement has been withheld on only one occasion in the past 20 years (Paun and Harris, 2015). ...
... Responsibility for setting expectations has gradually shifted from ministers to the Commissioner. As mentioned earlier, performance agreements were originally negotiated and agreed between chief executives and ministers (Boston, 1992). In the early 2000s, responsibility for negotiating performance expectations was progressively shifted to the Commissioner but was still based on advice from the relevant minister or ministers. ...
... The current process is hampered by an information asymmetry, where the chief executive has access to better information on their department than does the Commissioner (Boston, 1992). ...
... The State Sector Act of 1988 brought about changes in the method of appointment and employment of heads of government departments as well as their authority, responsibility, and functions (Walker, 1996;Mulgan, 1994;Boston, 1992;Scott, Bushnell, and Sallee, 1990). ...
... Following the State Sector Act there was a considerable turnover of chief executives. On average there were about 10 appointments or reappointments per year between April 1990and May 1993(Boston, 1993. In addition, most chief executives appointed during this period were placed on a five-year contract (Boston, 1993;Whitcombe, 1990, 63). ...
... On average there were about 10 appointments or reappointments per year between April 1990and May 1993(Boston, 1993. In addition, most chief executives appointed during this period were placed on a five-year contract (Boston, 1993;Whitcombe, 1990, 63). With reappointments, however, the standard practice has been a three-year term. ...
Article
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This article faddresses the implications of political executives losing control over the implementation of their policy following managerial reforms put in place under the auspices of the new public management. Such loss, in turn, makes them hunger for more control over the bureaucracy. The striking outcome of this process is that the senior servants who are removed from policy making and thus supposed to be less political (i. e., less in the line of fire and more secure as a result) find their positions becoming more insecure due to the political executives' desire for more control. This outcome is best formulated as a paradox: Investing in the public administration's managerial capital (i. e., giving public managers more authority to manage programs) is most likely to result in political executives' disinvesting in the public administration's political capital (i. e., giving ministers greater capacity for setting central directions and priorities and intervention in personnel matters) so as to resolve the problems of loss of control over policy implementation raised by the managerial reforms put in place under the new public management. This hypothesis is strongly supported by a comparative analysis of changes in senior officials' tenure security and protection from external competition in Australia, New Zealand, Canada, the United Kingdom, Austria, and Malta between 1980 and 1996.
... New Zealand features a professional civil service, appointed on merit (Boston, 1992). Department chief executives are appointed by the State Services Commissioner (though appointments must be endorsed by Cabinet), and are employees of the Commissioner (Gill, 2008). ...
... In the absence of considerable public sector literature (Boston, 1992;Gill, 1998), the private sector provides a useful starting point for developing theory for departmental chief executive performance appraisals (Rainey, 2003;Park, 2016). However, performance in the public sector also differs in important respects, and a department chief executive faced with a change in incentives will not necessarily behave in the same way was either a private sector chief executive, or a private sector employee (Propper and Wilson, 2003). ...
... Department chief executives are appointed for a fixed-term of three-to-five years (Boston, 1992), in contrast to private sector executives who typically do not know for how long they will be employed. Performance appraisals may be used to support decisions on reappointing chief executives, or to support decisions to appoint chief executives to different roles. ...
... Chief executives are appointed on term contracts which are renewable depending on performance, but they negotiate or renegotiate their contracts not with their ministers but with the commissioner directly. Ministers have no power to dismiss chief executives (Boston, 1992). ...
... The same applied in Australia. And in New Zealand, Boston (1992) found that ministers rarely made significant changes to the performance agreements drawn up by chief executives. ...
Article
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Politicians and public servants are commonly depicted as being in a unilinear power relationship. However, senior officials are subject to accountability relationships with various central government authorities in addition to ministers. Multiple accountabilities can work at cross-purposes and prevent bureaucrats from complying with ministerial directions, however legitimate those directions may be. One aim of recent public management reform has been to do away with some of these accountabilities. But they have only been replaced by others. Multiple accountabilities are an inescapable part of the reality of government.
... More radical still is the proposal that Britain should adopt a formal output-outcome distinction on New Zealand lines, with ministers taking responsibility for outcomes and the choice of outputs and chief executives taking responsibility for the delivery of agreed outputs (see Boston 1992). This is advocated by, among others, Greer (1994), Boston (1995), and-in apparent contradiction with their earlier argument- Foster and Plowden (1996, 191-3). ...
... Even New Zealand, with its output-outcome divide, does not go that far. To the contrary, reform was designed to make departmental chief executives accountable solely to the minister, though this aim was not quite achieved (Boston 1992;Polidano 1998). ...
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Various concerns have been raised about the practicability of Next Steps and the adequacy of accountability mechanisms in Britain, particularly after the dismissal of Derek Lewis as chief executive of the Prison Service. This article critically reviews these concerns. It argues that the agency model is viable notwithstanding doubts about the practicability of the policy–operations distinction; that Next Steps is not the cause of defective accountability or the scapegoating of bureaucrats by ministers; and that a commonly proposed solution—making agency heads accountable to parliamentary select committees—has fundamental drawbacks of its own. The “conventional wisdom” that Next Steps cannot work ignores important evidence and badly needs reassessment.
... In practical terms, political nominations are favored also by the widespread use of fixed-term appointments and employment contracts, which ideally have been employed to bolster responsiveness and performance of senior public servants. Indeed, Uelese Amosa (2008, p. 613) notes that the actual consequence has been that "appointment and promotion of senior civil servants to upper ranks of the public sector is a result of their affiliation with and loyalty to the ruling political party" (Boston, 1992). Furthermore, politicians and connected bureaucrats may exploit procedural loopholes and hidden norms to informally bias the selection and promotion of personnel. ...
Preprint
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The present work reviews how scholars of different disciplines have examined political appointments in recent years, in particular, those regarding public and semi-public organizations. First of all, I show how political economy research has shed light on several reform processes , arguing how economic and managerial policies have been implemented also considering political rationales, such as, for instance, the preservation of parties' control of privatized firms. This enduring power of political parties primarily results from their preserved appointment authority over semi-public firms (beyond public agencies), one of the tools by which the political class continues to govern the enterprises in question. In particular, this appointment authority has been exploited by parties in order to reward their members and control bureaucracies, among other purposes. The phenomenon naturally resulted in a widespread surviving politicization of the state, which presents several consequences, especially in terms of public-private politically connected firms' performance. In the conclusions, I suggest some further research trajectories which could enhance the literature.
... In addition, New Zealand's experience with contractual appointments should be borne in mind. Here it remained difficult to deal effectively with non-performers in spite of this country's undoubted commitment to reform (Boston 1992). Malta's ability to do any better has yet to be assessed. ...
Article
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Malta's latest round of administrative reform has produced mixed results. While it has achieved more than any previous initiative, vital elements of the reform program have not been carried out and results have fallen short of initial expectations.The reform initiative yields a number of lessons, some of which have already been brought to light—the need to keep the reform agenda small, the need for sustained political backing—and others which are less well known, such as the difficulty of creating an effective authority to direct reform, and the drawbacks to giving reform agencies lavish funding and a high profile.
... Wistrich (1992) has reservations on the distinction between outcomes and outputs, saying that this may prove as impracticable as the old one between policy and administration. Boston (1992) says that performance contracts are not proving effective in dealing with non-performers. On the other hand, Scott, Bushnell and Sallee (1990) assert that the reforms have produced benefits in terms of productivity, clarity of objectives, and staff motivation. ...
Article
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This article compares two approaches to administrative reform. The first, the traditional approach, relies on the generation of a reform blueprint by an autonomous commission made up of non-bureaucrats. The second and more recent approach relies instead on a small unit often staffed by civil servants and reporting directly to the highest political authorities.The new approach offers reformers the flexibility needed to circumvent opposition yet achieve rapid results: an advantage essential to successful reform, yet signally lacking in the traditional approach. This is amply borne out by case studies from Britain, Canada, Australia and New Zealand. The administrative reform commission may now be an obsolete instrument.
... Management and accountability in the New Zealand public sector have been thoroughly reformed in the years since the election of a reforming government in 1984 (Boston, Martin, Pallot and Walsh, 1991; Wistrich, 1992). These changes to New Zealand public sector organizations are based on agency theory (Scott and Gorringe, 1989, p. 81; Martin, 1990, p. 135; Boston, 1991, p. 1; Hood, 1991, p. 6; Ball, 1992, p. 7; Boston, 1992, p. 409; Wistrich, 1992, p. 119). ...
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This paper presents a practical examination of New Zealand public sector decentralization, accountability and financial reporting. There are differences between the accountability requirements for the various organizational forms in the New Zealand public sector such as State-owned Enterprises, Government Departments, local government and crown entities. These differences can be explained by differences in the principal-agent relationships involved. The principal-agent relationships themselves vary because of differences in the nature of the activities carried out by the various organizations and their varying levels of importance.
... Significantly, under the State Sector Act 1988, the roles, responsibilities, accountabilities and conditions of appointment of vice-chancellors were changed, officially at least, in legislation that applied across the whole of the Government and establishing that government departments and agencies should each have a chief executive officer. These officials were all vested with the said roles, responsibilities, accountabilities and conditions of appointment, and became the employers of all staff in their organisations, allegedly so that these officials were freed to manage (Boston, 1992;Newberry and Jacobs, 2008). Among other broad changes within the Government to impact on the universities were accrual accounting and its financial implications, and changes to other financial controls exercised by the Treasury, Audit Office and others over tax-funded spending organisations. ...
Conference Paper
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... Department chief executives are appointed for a fixed-term of three-to-five years (Boston, 1992), in contrast to private and not-for-profit sector executives who typically do not know for how long they will be employed. Performance appraisals may be used to support decisions on reappointing chief executives, or to support decisions to appoint chief executives to different roles. ...
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The government's vision for the public service
  • J Bolger
Bolger, J. 1991. The government's vision for the public service', pp. 11-13 in Proceedings of the Senior Management Conference. Wellington: State Services Commission. Boston J. 1990. 'Some reflections on the performance agreements of chief executives and the
Chief executive's overview
  • D Hunn