Disertatii si Eseuri

Human Resource Development – Essay by Mia Dragostin

noreply@blogger.com (Bogdan Craciun) — Sun, 08 Feb 2009 23:55:00 +0000

Diversity and controversy in HRD’s theory and practice

In HRD literature there is a large debate regarding its content and underlying theories. The debate reflects the increasing interest toward this emerging domain of human development, in an organizational context. This paper presents in the first part some of the theories that generated controversy among academics, and between HRD theorists and practitioners. Further, in the second part, I try to identify the implications of the current debates for HRD’s domain. The main conclusion I could draw is that for developing human’s performance in organizations HRD is required close co-operation between the two apparently separated worlds of theorists and practitioners. In the third part of the paper a case study will be analyzed from HRD perspective.

1. Evolutions and controversies regarding content, theories and practice of HRD

1.1. Content Evolution in HRD

The content of HRD has developed continuously since 1960, when Nadler first coined the term of Human Resource Development (HRD) (Dilworth, 2003).

Swanson (2001) sees HRD concerned with learning and with the help provided to people and organizations for improving performance.

Mankin (2001) finds as main components of HRD those exposed by Thomas and Mabey (1994, cited in Mankin, 2001): organizational development, career development and the department of training and development, within the last component noticing a shift from training and development to learning [as per Nadler and Nadler, (1989), cited in Mankin, 2001]. In the same spirit with Mankin’s opinion, who thinks that the evolutionary characteristic offered by learning to HRD is the one that gives HRD true identity, Kessel (2001) considers that HRD has the purpose of developing the human capability and the productivity of knowledge, and increasing these developments’ transfer into practice.

1.2. Theories controversies in HRD

Core theories give a distinguishing theoretical base for the discipline (Swanson, 2001)

But to the claim that HRD has as basis the system and anthropological theories, Swanson replies that the theories reciprocally exclude each other: the system theory is about understanding the system and trying to improve it, in contradiction with the anthropological view on HRD (as anthropology does not change the system it studies) (Swanson, 2001). Thus, is illogical to keep both theories at the base of HRD.

Swanson (2001) notes other attempts of providing HRD with a core theory: in 1989 Gradous advocates the system theory to be the unifying one for all useful theories required. Also Watkins (1989, cited in Mankin, 2001) requests the addition of other theories: intervention theory, the work design theory, critical theory and human capital theory.

Despite the efforts, in 2001 Swanson finds that the lack of unitary theoretical view generated the present state activity, which is characterized by being random, short-term orientated, no deep understanding; the reduced ability to replicate the success is seen as the result of the above characteristics.

Without a ground theory, Swanson (2001) argues that practitioners are doomed to build their strategies from scratch, or, as alternative, to choose a trial and error mode.

Swanson’s (2001) proposes the “Three-legged stool theory” has as base the psychological, economic and systems theory. These are the three legs and the platform represents their integration in the theory HRD (figure 1).

Figure 1 Theoretical foundations of HRD according to Swanson (Swanson, 2001, p.306)

Unlike Swanson, who perceives the lack of unitary theoretical view as impediment for sustainable results, Mankin (2001) advocates for embracing HRD as an ambiguous concept, by both academicals and professionals. He argues that only a fluid, evolving concept of HRD is able to sustain the process that has as main purpose to facilitate change. Furthermore, Mankin emphasizes that using its own request for the supervised learners to challenge the values and beliefs in the learning process, HRD itself has to undergo the same process of questioning own values and beliefs. This fact can only take HRD, according to Mankin (2001) to be understood as process more than in functions.

Mankin’s (2001) model (figure 2) finds HRD as being the central part of convergence of three factors: strategy and structure, HRM, and culture.

Figure 2 The HRD model according to Mankin (Mankin, 2001, p.79)

Similarly, Lee (2001) supports the idea that HRD should not be defined on “philosophical, theoretical and practical grounds”, because the dynamic and ambiguous features of HRD’s content. Lee considers the tendency of trying to identify a good practice- generally valuable, with no context specificity (context of nation, culture, even type of industry) - as a dangerous because it might end into an inflexible rules book. For her standardization of practice noticed inside professional bodies, the “one method good for all situations”, is seen similar to a political action, imposed to its constituents. Standardization approach is considered “unrealistic” due to HRD’s large variety of situations.

Clearly, Lee advocates a Heraclitean approach to defining HRD, approach that allows the concepts of meaning and boundary to be negotiable, fluid, placed under “becoming”, rather than “being”. Thus she implies an irreconcilable tension between academicals and professional bodies and practitioners.

1.3. HRD practices

“You cannot force people to be smart”

Kessel (2001, p. 385)

Similarly to Lee, Kessels (2001) sees HRD as an actor part of a greater play which is knowledge revolution. Practitioners and academicals who concentrate on performance improvement through technology, are seen by Kessel as professionals who use for a new situation (knowledge revolution), the tools used for the previous revolution (productivity revolution).

In industrial age, the employees were selling their loyalty and obedience in return for salary and the employers were administrators of employees’ performance. Handy (1995) calls this type of workplace as a “prison for the human soul”. This orientation towards being compliant with existing ways of being and thinking is reinforcement for the resistance to change.

In my understanding, the “old way”, where workers are required to obey and the process of learning (where learning has a developmental, innovative meaning), are irreconcilable.

Learning needs flexible adaptation.

There is a huge difference between compliance and flexible adaptation. Compliant is an individual who restrains himself in order to be “no more”. Flexible adaptive is an individual who expands himself in order to be “more”. And if companies are in search of the second type of individual when looking for employees (because this one could give them competitive advantage), then companies need to rethink their expectations and reshape their demands and offers with the employees.

Indeed, in knowledge age, the employees are mainly expected to contribute with creativity, innovation and passion, and the employers are expected to allow them to be part of organization’s ambitions. A greater emphasis, believes Kessel (2001), should be placed on relations and passion: the relations between employer and employees, the relations between employees and the passion towards what they are doing. HRD should contain this new orientation towards integrating human dimension of emotions, relations and communication. Gardiner & Whiting (1997) find as well at the basis of learning organization’s success the relationship of trust built between management and employees,

And, similarly to Lee (2001), Kessel (2001) advocates a non-standardized approach to HRD, which considers the context of the existing culture. As example, the authors presents Netherlands, where the long habit of collaboration and negotiation shaped a view on HRD somehow opposed to the one “imported” via USA, which emphasizes the performance improvement based on technology. Kessel sees practice of HRD responsible for offering a territory for human mind expansion, as opposed to establishing learning objectives and producing learning strategies. Freedom and interest for a topic should be the criteria for each employee when choosing the learning direction, believes Kessel (2001)

In the same spirit, Leitch et al.(1996, quoted in Gardiner & Whiting , 1997) stress that the learning organization is not an activity, but rather an orientation, and the authors recommend use of a scale in measuring the process, and not the sharp realization of an established goal.

The above tensions between the performance improvement approach and a more flexible and contextual development approach is observed as well by Ruona & Lynham (2004), who claim that the different views in HRD practices, have roots in different underlying philosophies.

In the framework presented, Ruona & Lynham see that Research and Practice are only complementary processes integrated in a much bigger cycle of thinking (figure 3).

Figure 3 Ruona and Lyhnham’s philosophical framework for thought and practice (Ruona & Lynham, 2004, p. 155)

The authors reveal that how the world is seen, how the knowledge about world is acquired and how should be acted in inquiry and practice, all are articulated using systems theory into a framework that could guide HRD interventions in a holistic manner. The HRD interventions become part of a larger vision, and we can deduct that any change in vision, could generate a change in the design of interventions.

I find this interconnectedness to represent the core of double loop learning as defined by Argyris, and the consequence of this fact is that HRD not only should, but as well could be an efficient self-learner. My conclusion is that an HRD practitioner who is aware of the philosophical framework as presented by Ruona and Lynham (2004), is permanently aware of the options it has when designing the interventions, and constantly could be reflective on own actions and own thinking. This awareness can help practitioners understand that resting interventions only on measures is not enough, in the same degree in which resting interventions only on ideas is not enough as well.

As ancients said, the success is based in balance, and Ruona & Lynham’s (2004) framework give practitioners and researchers alike, the signposts for inquiry and reflection. The signposts could help HRD people to avoid exaggerations and know that they are not allowed to play with people’s minds and souls, their only job being to facilitate, not to impose, not to manipulate.

Kessel (2001) expresses a similar view regarding the ultimate role of HRD, by acknowledging that employers (and by this I understand HRD people) could only contribute to facilitate capability development of each individual.

2. Implications of HRD’s intense debate regarding content, theory and practice

The intense debate existing inside HRD is generated by serious concerns regarding the professional standards of HRD and regarding the efficiency evaluations generated by standards.

First concern would be synthesized in a few words simply by: science vs. pseudo-science

With the existing low barriers of entry in HRD professional field, Woodall (2001) expresses her concerns that practitioners may lack a strong theoretical base of the field. The question following this fact is: how do we make a difference between a viable HRD intervention and a pseudo-viable one?

Should we trust an HRD intervention’s future result judging by the underlying theory of the intervention? Or the authorization that guarantees the expertise of the HRD person is safe-proofing the future result? Is it results measuring showing that HRD intervention was successful? And if measuring is a way of proving HRD efficiency, when is wise to have these answers? Literature shows that some interventions need several years for implementation and results. For instance, Schaeffler UK (Anonymous, 2007) needed 5 years for HRD intervention to achieve desired results. Could any measurement prior to 5 years proved that the approach is wrong?

The many questions that are generated by HRD could, in the end, be resumed to only one: how does a company know that learning has an effect and worth the money invested?

This question leads us to identify some of the problems related to HRD’s efficiency.

We keep asking how can the results of HRD’s interventions can be measured, or evaluated. But I think that first it should be found the answer to another question: is performance evaluation possible in HRD? Is it any realistic method to evaluate in numbers how efficient is a new drive, attitude, a new atmosphere? How can be measured the immeasurable: people’s feelings and attitudes? Is this – performance appraisal - a proper method to evaluate if learning takes place?

How can one use the same measure for different contexts? I think that this impossibility to treat different contexts with the same approach makes so difficult the evaluation. Theorists are trying to find a common ground, basic principles by which to judge learning and change.

It might be found an answer in the assumption that results are directly linked with attitude, so by comparing the results post HRD intervention with the results preceding intervention, from the difference could be demonstrated HRD intervention’s value.

This assumption would take the discussion towards new questions.

First: if at the post intervention moment of measurement, there is no significant difference, as the process of learning and change is not completed yet, is not too hasty to conclude that the intervention was not efficient?

And the second question is: how can one be sure that the resistance to change, that might impede on learning timing, does not come from the fact that indeed the intervention did not took into consideration the proper combination of factors and methods when approaching the change process?

In both situation, I find a great degree of uncertainty when attempting to formulate a generalized answer, and there is needed a great degree of flexibility, understanding and reflexivity to analyze the interconnection of factors in the change context.

More questions follow.

When is learning integrated? After how long is learning manifesting its results: after one week, or one month? The actual implementation in daily work of learning depends on topic or depends on individual; or work setting (structure and culture) is influencing in the same degree the results?

To answer these questions requires us to understand learning, to understand humankind development. The principles are the same, whether we think about humans as workers or as part of their species.

The experience of Gravells (2006), a life-long practitioner of managing change for others, confesses the psychologically dramatic features of the process when confronted personally with change. Gravells acknowledges his failure in supporting change with a mindset which had principles based in linear, programmatic processes. This experience reveals that change is not targeted on a specific part of human being, but is total. Gravells’ insights are important for HRD.

Among them:

change can be enacted and not controlled;
managers should be aware that measuring learning progress does not always have the same meaning as when measuring a distance between two points on land, for instance.
organization could support the flexibility to adapt to change by enabling people to acquire the habit of learning and of being reflexive
the most influential action to enhance the ability to change was, as experienced by Gravells, learning to learn

Conclusions

I can conclude with certainty that HRD is a challenging domain in a century where a shift in main theoretical assumptions for organizational development occurs. The rate of change, technological, demographical, socio-cultural requires new organizational approaches and different views and theories existing in HRD reflects both the diversity of change phenomenon. HRD approaches have as main belief that learning is a way of mastering change, and learning is seen as an asset for both individuals and organizations, which could lead the quest for a better life.

Evolution in HRD requires reconciliation between academicals and practitioners. The holistic view of the world proves that in the same way a dichotomy body/mind is no longer valid, a dichotomy academicals/practitioners brings no benefit to any of parts. I think that the efforts should be directed not towards showing where each other fails, but towards finding similarities and common grounds.

Case study

Prestige HR Services

I have presented our case study in Annex 1.

From our case study results that the main goal of the change desired by CE is for him to undertake a more strategic role, while the team of directors to undertake increased responsibilities for day-to day operations.

I propose to use Ruona & Lynham’s philosophical framework to analyze the situation and determine future HRD developments. We will try to find some answers to the following questions:

How is the world seen? Is the reality structured into “there” and “here”?

How do they know the world? What are the standards?

Background

In past (and up to present), we are told the CE is the main source of company’s success, which is mainly achieved through his energy.

In present the CE is still involved in the daily running of the company.

The CE’s future expectation is that directors take new responsibilities.

The non-executive director observes that CE is frustrated that directors’ team does not seem able to improve their performance and thus is required his intervention to solve the problems. On the other hand, the directors are fearful and hide things from him. The main concern of the external observer is that such a behavior could lead to a culture of dependency and fear.

My analyze starts with understanding the meaning of IIP, as Prestige HR Services is accredited Investor in People (IIP).

According to Investor in People UK Standard (Anonymous, 2004), an IIP is developing effective strategies with the aim of improving through people the performance of the organization. The IIP principles are:

1. “A strategy for improving the performance of the organization is clearly defined and understood;

2. Learning and development is planned to achieve the organization’s objectives

3. Strategies for managing people are designed to promote equality of opportunity in the development of the organization’s people.

4. The capabilities managers need to lead, manage and develop people effectively are clearly defined and understood

5. Managers are effective in leading, managing and developing people.

6. People's contribution to the organization is recognized and valued

7. People are encouraged to take ownership and responsibility by being involved in decision making.

8. People learn and develop effectively

9. Investment in people improves the performance of the organization

10. Improvements are continually made to the way people are managed and developed” (Anonymous, 2004, p. 2)

I must note that this whole effective strategies developing is done at Prestige HR in absence of HR or HRD function.

As previously the company was able to be awarded IIP, this means that in the existing context, the strategies applied gave results that were considered successful.

But the powerful clash of emotions at top-management level shows us something else: the main problem here concerns the leadership.

The symptoms presented by the study case indicate the presence of a hierarchical structure which developed an authoritarian leadership style. More, we identify the workplace structured as “me and them”, in a way little conducive for co-operation.

The CE is involving in day-to-day running of the company, and this uncovers his managerial mentality: he must intervene in order to supplement directors’ faulty actions. This is a signal for us that CE believes that without his close supervision the work cannot be properly done. More, it seems that CE is the only owner of strategy orientation: with no department to guard the development of strategies and their implementation, we could only suppose this role is assumed by CE. So we could understand his desire to pass his daily tasks for running the company to his directors, which would release him to think about strategy.

The CE sees strategy at an operational level, as something that is built, pressed on the button and then operates instantly.

In conclusion, the IIP awards witness the fact that top-management is interested in applying new principles of good HR practice, but the leadership present state reveal that these principles are not completely understood, or are achieved in a distorted manner. Trying to describe the world of CE, we could think that CE is not aware that his understanding of leadership is not benefiting of reflexivity. CE seems not to be aware that his style and present view of workplace world is unsuitable for the performance and teamwork environment he desires.

CE faces communication problems which come from his authoritarian style.

CE is controlling, and does not trust his directors. The most dangerous fact is that from fear, people hide things. There is nothing worse for top managers than to misuse the informational channels. This generates distortion, and when decisions are made, is possible that important, relevant information is not taken into account; this generates wrong decisions, unfitted to real situation. Maybe this is one of the reasons why problems seem to come out of blue - how else can we understand CE’s frustration?

Here we should discuss a problem with the, what CE calls team of directors: his aim to free himself of daily tasks and instead increase directors’ responsibilities, is nothing else than delegation of tasks. He wants to get rid of short-term tasks in order to have time for strategy.

But the question is: can ever strategy belong to just one person? Could the CE think about himself as a team player, as long as he is not able to have a dialogue with his directors?

It is discussable CE’s understanding of strategy and vision. He is expecting his directors to act independently, but he keeps them under a strict control, as long as the company tends to be described as a blame culture one. And the way he wants to involve in company’s strategy is much closer to Moses going to the Mountain, and came back with the Laws. CE seems to see his strategy as a list of rules to be obeyed, not a vision to be shared.

The performance HRD cannot help us too much in this regard. As an IIP, it looks like the company took whatever could be measured under scrutiny and developed.

But the actual problems prove that this measurement is not the real denominator of achievement.

If we listen carefully to Lee, Kessel and Gravells, we could have another point of view of the real problems.

First, it seems that the professional skill levels is not a problem in company, but looks like the company needs to change the entire organizational culture. This has to start with CE himself. He should let go his own perception about himself, which tells us that “without me, nothing is working”. His first step could be to start considering himself as becoming part of directors’ team. In this moment CE is in the phase of “me and them”. When he can become part of their team, only from that moment on he could hope for something to improve in the day-to-day running of the company.

Second, he should be aware that strategy is not something that it just happens; strategy is like a fire: someone has to take actively care of it, from development, to implementation, to being realistic and adaptive to new environmental challenges. And even more, strategy has to be shared and followed. By other people. And as people cannot be just told “do as I say”, and expect to be high-performing, in order to achieve new goals in the next five years, CE needs to gain people’s benevolence and involvement.

Maybe Prestige HR started from one person’s effort. But it can develop only if the goal for next years is shared and desired by all employees. At this stage the company does no longer belong to only one person. In a much too complex environment, one person’s leading and control is not the source of the desired performance. Even more, if the type of business requires from employees more than routine activity, and asks for creativity and innovation, the CE’s approach to people similar to mechanistic approach in industrial era, is inappropriate.

Recommendations for HR Prestige

Our recommendations regard implementation of a new culture, encouraged from top-down, and this includes both CE and the team of directors.

First, the CE needs to revise his own understanding of strategy and even should critically be reflexive on his managerial style and approach.

After clarifying these aspects, the communication should be encouraged. The open communication after a long time of blame culture has to start with fostering trust: by allowing errors, which have to be source for learning, and by rewarding and acknowledging the successes.

Employees would need to overcome the fear to speak up. For this, one important step for CE is to overcome the stage “they” and “me”, and begin to see directors as partners.

Then, teamwork has to be encouraged so that people discover the benefits of commitment and engagement from inside. More, the sharing of knowledge could increase company’s competitive advantage.

Finally, strategy will become a concern for everybody in the company.

With people’s engagement and free collaboration, the blame culture, the mistrust and the excessive need for control will disappear. New way to integrate strategy will lead to fostering a real organizational culture, unique and possibly, impossible to be duplicated at the same standards by competitors.

But this intervention will take time and a lot of effort.

Because, as Louis Gerstner put it, “[changing a culture] is not something that you do by writing memos. You’ve got to buy in with their hearts and their beliefs, not just the minds” (cited in Gardner, 1999, p.129).

Annex 1

Prestige HR Services

Prestige HR Services is a recruitment consultancy which was established five years ago and now has a turnover of £3m with a gross margin of around 45%. It employs 29 staff of consultants with a further 10 administration staff and a senior tea, which includes a Chief Executive (CE) and three Directors. The company is an accredited Investor in People but has no dedicated HR or HRD function.

This is an important period for the company and its core strategy is to increase turnover to £15m over the next five years. The CE perceives an opportunity for continued strong growth and has a clear vision to take the company forward to be a major player in the market. To this end, the CE has appointed a Non-Executive Director, essentially to provide strategic advice to the Board and direct input to the strategic development of the business.

The CE also recognizes that the company needs to change to achieve the growth over the next five years. He will need to take up a more strategic role while the other Directors will need to take on increased responsibilities for the day-to-day operation of the company. This will represent a substantial change for the senior management and the CE is not sure that they understand either his view for the future of the company or the implications for their role.

The incoming Non-Executive Director has also expressed his concern that until now the company's success has been achieved largely because of the energy and drive of the CE. The CE is a dynamic and bright individual, an excellent Sales person and very involved in the day-to-day running of the company. However, the CE is becoming increasingly frustrated by the performance of his team of Directors. He believes that they have not taken on responsibilities for the day-to-day running of the company as he would have expected and he feels he always has to pick up and deal with operational problems. He believes that without his continued operational input and leadership, the performance of the Directors will be consistent and will fall short of the required level.

In conversation with the Non-Executives Director, the CE has expressed strong views about the performance believing the Directors should be capable of “stepping up to the plate” and taking on the responsibilities for running the company but they seem unable to take on the challenge. The CE has also expressed concern that if he continues to deal with day-to-day operations and manage performance shortfalls he will never fully be released to take more strategic role. This has increased his level of frustration.

In Board meetings observers have frequently witnessed the CE’s frustration boil over and he becomes angry, confrontational and blaming. As a result, the Directors are increasingly fearful of the CE and frequently hide things from him. The Non-Executive Directors is concerned that if this behavior continues it will limit the ability of the company to grow successfully as it is creating a culture of dependency and fear that will ultimately restrict the performance of the Directors and staff.

In an in depth performance review the Non-Executive Director has raised these issues and found the CE very receptive and aware of the consequences of his current behavior. However, both were unsure of what to do, both for the CE and for the company.

The Change Navigators – developing strategies for managing culture change

Bibliography

Dilworth, L. (2003) – ‘Searching for the Future of HR’, in Advances in Developing Human Resource, vol.5, pp.241

Gardine, P., Whiting, P. (1997) – “Success factors in learning organizations: an empirical study” in Industrial and Commercial Training 29 (2), pp. 41–48

Gravells, J. (2006) – “The Myth of Change Management: A Reflection on Personal Change and Its Lessons for Leadership Development” in Human Resource Development International, 9(2), pp. 283 - 289

Handy, C. (1995), "Trust and the virtual organization", Harvard Business Review, Vol. 73 No.3, pp.40-50.

Gaedner, H. (1999) – “Intelligence reframed: multiple intelligences for the 21^st century”, Basic Book, New York

Kessels, J. (2001) – “Joseph Kessels interviewed by Jane Woodall” in Human Resource Development International, 4 (3), pp. 383 - 390

Lee, M. (2001) – “A Refusal to Define HRD” in Human Resource Development International, 4 (3), pp. 327- 341

Mankin, D.P. (2001) – “A Model for Human Resource Development” in Human Resource Development International, 4(1), pp. 65 - 85

Ruona, W., Lynham, S. (2004) – “A philosophical framework for thought and practice in human resource development” in Human Resource Development International, 7(2), pp. 151 - 164

Swanson, R. (2001) – “Human Resource Development and its Underlying Theories” in Human Resource Development International, 4 (3), pp. 299- 312

Anonymous (2004) - Investor in People UK Standard, on [www], http://www.investorsinpeople.co.uk/Documents/IIP_StandardOverview1.pdf, accessed on 21st of December 2007

Anonymous (2007) – “Investment in people at Schaeffler (UK) Limited”, on [www], http://www.cipd.co.uk/helpingpeoplelearn/_lrncltreshfflr.htm, accessed on 22^nd of December 2007

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Managing Public Money – Essay by Bogdan Craciun

noreply@blogger.com (Bogdan Craciun) — Sun, 08 Feb 2009 23:03:00 +0000

Aggregate Discipline – a lost battle for 2006’s budget

As an aspirant country for EU integration, Romania must respect the Maastricht criteria for fiscal constraints (a deficit lower than 3% GDP and the Public Debt lower than 60% GDP).

The Law of Public Finance (LPF) enacted on 2002 introduces the medium-term expenditure framework (MTEF) based on Programme Budgeting (PB) approach in order to attain these criteria.

According to LPF the ministries should make their budgetary proposals within the ceilings received from Ministry of Finance (MoF), after these ceilings were approved by Government. Ministries attach a list that informs about their estimates on programs for the next three years. In the process of Parliament’s budgetary authorization these estimates have only informational character; they do not constitute authorative baselines for work on the future years’ budgets.

The Parliament Report (1) reveals that on the next years the budget proposals for ministries do not relate in any way to the previously forecast estimates. This fact makes the effort of estimating superfluous. And generates lack of credibility for the procedure.

Starting from previous situation, I consider that Romania has a very low level of fiscal discipline (FD), throughout the full process of budgeting.

The first solution to tighten the FD could be the amendment of the LPF. Instead of informative estimates for next three years I suggest to have authorized estimates by Parliament used as binding in the respective years. Romania can benefit from Australia’s and Sweden experience in this area.

My solution makes sense if we take into account the fact that now Romania promotes a lax fiscality, unlike the moment when the LPF was enacted – when fiscal prudence was promoted. According to Schick, “constrictive rules might be appropriate in countries where institutional arrangements promote or tolerate fiscal laxity” (Schick, 1998, p. 55).

The fiscal laxity was introduced by the change of the governing party after 2004’s elections with a new – and long debated – law on reduced taxes on income.

The non-correlation between the relaxed fiscality, and tight, compulsive estimates for line ministries, resulted on an unrealistic 2006 budget. The poor predictability of the budget induced four budgetary rectifications so far. The deficit was raised from the prognosed 0.5% GDP to 2.5% GDP at the last rectification. The successive rectifications indicate both the shift in policy (the supplementary spending was directed to investments), as well as lack of accuracy in revenues forecasting (their collection was much higher than anticipated). The raise of deficit proves once more – according to van Hagen’s study conclusion – (cited by Schick, 1998, p. 60) – that Romania has a fiscal relaxation, and its high deficit is subject to macro-economic instability danger.

The second solution regards reducing the uncertainties and it implies cost assessments for policies and programs. Strong accounting practices and periodic control of the result of expenses are needed.

Romania’s formal rules comply with Emus purviews for a strong aggregate FD (see Timeline Table 2). But the informal rules show the lack of FD. It is highly doubtful the way the medium-term approach is applied in Romania, as long as the budget is subject to changing circumstances and it shows more to be input focused and less policy based.

Parliament authorizes more spending than requested by government (see Spending Authorization Table 1), while ministries themselves make exaggerated budget proposals (BP) right under the PB practice. Even though the BP must be justified through PB – according to LPF – as Parliament Report, the primary BP from line-ministries can be up to 30% more than the actual need, and are still based on the assumption that MoF will operate a reduction.

Collegial rules for budget preparation favor compromise and these are exactly the causes that enforce the spread of practices for influence and self-interests pursuing.

The fragmented government (based on a coalition with many issues in dispute) has virtually little capacity to support the measures required by strong FD.

The third solution required to improve the FD it is a mix of measures: transparency for politicians and managers’ activities and a powerful judicial system that punishes the abuse. During the four years of legislature, the deputies and senators have judiciary immunity. The law must be changed so that the politicians answer in front of law for corruption charges. Otherwise the budget remains just an opportunistic one, despite all formal rules that show commitment to aggregate budget long-term orientation.

Allocative Efficiency – between new rules and old practices

Romania applies PB approach to budgeting for line-ministries since 2000. At present, according to Parliament Report, half of ministries base their budget proposals entirely on PB. The same report reveals poor knowledge in elaborating and prioritizing the programs. When analyzing the allocative efficiency, (see Timetable Table 2) results that the formal rules of implementing MTEF are in place. The allocation process takes into account the government’s objectives. But reallocation stirs up political conflicts. The last budgetary rectification is seen by the governmental coalition as a successful and daring orientation to investments, while the Opposition Parties see the reallocation as a sign of poor forecast of expenditures.

Starting with 2006 cash-accounting is replaced by the accrual-accounting (AA) at all public institutions levels. The benefits of AA are only to be seen in the future. Main challenge for AA implementation seems to be the undertrained staff for both the new principles of AA and for the required IT skills.

The 2006 budget shows both recurrent and capital components. At present the functional classification (FC) of the budget complies with GFS/COFOG standards. The new FC brought difficulties for public institutions on situating certain expenses. But the effort worth it as this classification is powerful instrument in analyzing the allocations of resources inside and among sectors. If we take as example the total amount of subsidizes, transfers and social allocations for 2006 that rise up to 38.96% of total expenses we can understand where government spends the money - for sustaining inefficient State-owned-enterprises or ineffective state guarantees. And this is a valuable piece of information. But only if there is enough managerial will to use the information for improvement. The burden imposed by state guarantees (40.6% of the public debt in 2005) could be reduced by establishing maximal ceiling for guarantees´ total amount with an explicit list of guarantees. The arrears (40% GDP in 2000) became important impediment for macro-stability. The echeloning of the debts of inefficient companies as reply to the social pressure should stop.

As the unused funds cannot be retained by ministries, they tend to make the majority of their spending to the end of the year just not to lose the extra-money. The irregularity of expenses could be overcome only by rigorously applying the PB procedures.

Operational Efficiency – shift from inputs to outputs evaluation

Operational efficiency shifts the focus of evaluation and control from inputs on outputs produced. This approach it is new to Romania’s PEMS.

Traditionally Romania’s public finance control is based on inputs, with little care for results. Outputs evaluation implementation needs time. Special attention is required because - as the November Corruption Perception Index from Transparency International reveals - Romania is considered second highest corrupt country from the surveyed ones.

I consider that at present Romania is simply forbidden to implement at this moment the managerial accountability. As Schick advises on “A Contemporary Approach to Public Expenditure Management”, first should be implemented external control, then the internal control and only after that entrusting the managers with accountability.

Romania’s young auditing institutions (created on 2002) formal rules comply with the EU demands, but their activity shows lack of consistency in evaluation. The auditing institutions are independent but seem incapable to work on their own initiative. So far, the only notorious case submitted to auditing was examined in 2004 at Prime-Minister’s request – at EU’s complaint – for conflict of interests in SAPARD program, where wives of the members of commission that granted the funds were managers of the companies that gained the contracts. As a result new rules where implemented to avoid these situations.

The scarcity of well-trained professionals is another problem: at present, out of 4000 auditor’s job openings, only 2650 are held. Adding the poorness of IT information, it can be understood the low level of operational efficiency.

The performance indicators are just being stated and implemented in Romania. By PB – where the expected performance indicators are enclosed in - could be the starting point for generalizing their usage. The experience of UK – that separated the policy making from service delivery could be in future a good practice for increasing the operational efficiency. But this means more accountability for managers, so this practice could be used only after the basis of external and internal auditing is solved. Otherwise the separate service delivery will only increase the corruption with its mix of nepotistic favors and personal interests.

Conclusion

Important things are still to be done for improving Romania’s PEMS. In my opinion the most important reform’s goal is the training of skilled professionals.

If on a future assessment of Romania’s PEMS “spenders would conserve resources, allocators would reallocate, and managers would perform, not just comply” (Schick, 1998), then it can be considered that the reform of PEMS was successful.

Bibliography:

1. Ministry of Finance, Romania, (2005) “Report regarding the macro-economical status for 2006 and projections for 2007-2008”, Accessed November 25^th, - referred on this paper as “Parliament Report”

[http://www.mfinante.ro/buget/buget2006/pdf/Raportbuget2006definitiv_Parlament.pdf]

2. Schick, A., (1998) “A Contemporary Approach to Public Expenditure Management”, Accessed October 29^th, [http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2006/02/02/000012009_20060202122216/Rendered/PDF/351160REV0Contemporary0PEM1book.pdf]

Spending Authorization Table 1

	Original	Ceilings	Budget
Spending Units (SU)	proposals	approved	Approved
		by Government	by Parliament
	2006	2006	2006
TOTAL Budget	55,883.80	38,268.48	37,946.34
Presidential Administration	29.04	29.00	29.00
Romania’s Senate	123.85	87.37	84.37
Deputy Chamber	318.53	190.44	170.44
Prime – Minister Court	583.86	528.90	528.90
Government General Secretary	292.83	238.64	241.14
External Affairs Ministry	439.80	401.14	401.14
European Integration Ministry	99.62	95.64	95.64
Public Finance Ministry	1,366.11	1,000.00	997.50
Ministry of Justice	2,459.48	1,390.00	1,390.00
Ministry of Defense	7,190.66	5,978.94	5,978.94
Ministry of Internal Affairs	10,785.80	4,708.07	4,696.57
Ministry of Labour	7,275.40	5,440.00	5,090.00
Ministry of Economy and Trade	1,309.70	1,245.00	1,245.00
Ministry of Agriculture	3,715.50	2,858.90	2,843.90
Ministry of Environment	1,483.80	526.70	527.70
Ministry of Transports	6,098.50	4,950.20	4,950.20
Ministry of Education	6,131.09	3,868.44	4,048.90
Ministry of Health	1,276.06	1,336.00	1,337.16
Ministry of Culture	915.80	429.40	443.00
Ministry of Communication	84.60	12.10	12.10

Source: annex to budget law 2006

Timetable Table 2

Date/Period	Action
1. By 31^st of March	Elaboration of macro-economical and social indicators
2. By 1^st of May	MoF sends to Government the fiscal and budgetary policy objectives plus the expenses ceilings
3. By 15^th of May	Government approves the above and sends them to Parliament’s commissions for finance, banks and budget
4. By 1^st of June	MoF sends to spending units a letter specifying the macro-economical context, methods and the expenses ceilings approved by Government
5. By 15 of July	The spending units send to MoF their proposals referring the budget project and annexes, including the forecasts for next 3 years
6. By 30^th of September	MoF sends the project of budget to Government
7. By 15^th of October	The projects are send to Parliament’s debates and approval

Source: LPF (500/2002)

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Managing Public Money de Bogdan Craciun este licenţiat printr-o Licenţă Creative Commons Atribuire-Necomercial-Fără Opere Derivate 3.0 România.

The Year I Was Born – Essay by Bogdan Craciun

noreply@blogger.com (Bogdan Craciun) — Sun, 08 Feb 2009 01:45:00 +0000

1977 is the year I was born in Bucharest, Romania.

At that time, for Romanians, the communist Romania was the perfect country, from where no one would ever wants to leave, where there is protection from “ferocious capitalism and imperialism”. “The most praised of the leaders” – as Ceausescu was called – and entire communist propaganda apparatus isolated Romania and managed to create a false image in Romanian’s minds, not only regarding the western countries, but regarding Romania itself.

At the international level, the events that mostly impressed me were:

· March 27 – Tenerife disaster: a collision between KLM and PanAm Boeing 747s at Tenerife, Canary Islands, kills 583 (the worst single aviation incident on record)

· May 23 – Scientists report using bacteria in a lab to make insulin

The synthesizing of insulin is the end of a long research path that started with Paulescu’s discovery (a Romanian doctor) of the insulin hormone produced by human body in 1921.

· May 25 – Star Wars opens in cinemas (later renamed Star Wars Episode IV: A New Hope) and becomes a hit

With the “Star Wars” series, movie conquered forever the fantasy land.

· August 15 – The Big Ear, a radio telescope operated by The Ohio State University as part of the SETI project, receives a radio signal from deep space; the event is named the "WOW!" signal for a notation made by a volunteer on the project

Even today, this event is considered the most important signal received from outer space.

· August 16 – Music icon Elvis Presley dies in Memphis, Tennessee, taking with him in the grave many young ladies, which committed suicide.

The way the “Elvis” brand was promoted shows how powerful is a good marketing strategy even with a medium quality product, as his voice was.

· August 20 – The United States launches the Voyager 2 spacecraft

· September 5 – Voyager 1 is launched after a brief delay

Today both spacecrafts passed beyond the outermost layer of our solar system, sending for 30 years very precious scientific information about our solar system.

· September 10 – Hamida Djandoubi's is the last guillotine execution in France

WOW!!! It was unbelievable to find out that in XX-th Century, such a punishment method could still exist and apply. Terrible!

· September 16 – The Greek soprano Maria Callas dies in Paris forgotten by world, in not very clear circumstances

This is an interesting case of Managing People: the Big Manager – Human Society – was not able to protect such a great treasure. Here is a link that says everything about her talent:

http://www.youtube.com/watch?v=BysvxpzzxtM

· November 22 – British Airways inaugurates regular London to New York City supersonic Concorde service

As all modern jet aircrafts we use today, Concorde was built on Henri Coanda’s (a Romanian engineer) discovery, called “Coanda Effect”, considered crucial to successful supersonic flight.

Unfortunately today we can see a Concorde only in museums. Because of high maintenance costs, the Concorde flights were cancelled.

· December 8 – is awarded the most important Nobel Prize (in my opinion) to Ilya Prigogine, for chemistry, for his contributions to non-equilibrium thermodynamics theory, proving that non-equilibrium may become a source of order. Now this theory is largely used in concepts about change and evolution.

· December 25 – The great English actor and director Charlie Chaplin dies in Swiss after am impressive carrier

No lecture, no theory, no research about dictatorial leadership could tell more and explain better than these two minutes of supreme art of Charlie Chaplin in the following scene (please follow the link):

http://www.youtube.com/watch?v=IJOuoyoMhj8

On the national level, 1977 is the year when:

· March 4 – a very powerful earthquake occurs – 7,2 Richter degrees, with devastating consequences for Romania and especially for Bucharest

I was at that time 2 weeks old, living at the tenth floor of a block of flats. My parents told me that they remember that the block was bending from one side to the other and the baby-carriage I was in at that moment was travelling around the house.

In only 55 seconds the earthquake caused the deaths of 1578 people (1424 only in Bucharest), 11300 wounded and more than 35000 houses crumbled. Zimnicea City was totally destroyed and it had to be reconstructed from the ground. Many remarkable Romanians lost their lives; among them – Toma Caragiu, a great talent of Romanian theatrical stage.

· March 22 – it is signed the document by which is enacted the mutilation of Bucharest.

Using as explanation the need of reconstruction after the earthquake, the communist leaders decide not to reconstruct but to demolish. An entire residential quarter was pulled down. Before “communist reconstruction” Bucharest was an elegant city, build with concern for beauty, commonly referred to as “the little Paris”. The result of “the reconstruction was a new Bucharest, where the jewels of the past were cowardly under grounded, while monstrous gauds took their place.

Nicolae Ceausescu decided that Bucharest must change and nothing could stand against his plans. Bucharest was tortured, architectural masterpieces were destroyed, and Romanians souls were emptied. “The Socialism’s Victory” asked a tribute that can never be taken back: starting with may 1977 are knocked down tens of houses, dated since XVIII th century.

One of the biggest offences that could be brought to Romanian people is to demolish a church. The Church, as institution is seen as the main cause for Romanian People’s historical survival. The “reconstruction” struck the heart of Romanian’s spirituality: they knocked down churches that were not even affected by earthquake, without any reason.

It all started with Ienei Church, a 336 years old building. It was the signal that the nightmare of politics of destroying the national cultural patrimony was no longer just a bad dream: it was reality.

The greatest tragedy for Romanians’ Christian spirit was the knocking of “Saint Friday’s” Church. Even now, the citizens of Bucharest are talking about this event with great sorrow.

This church was built in 1650 by Matei Basarab, the ruler of Walachia. The saint was considered the protector of the city. Here is the narration regarding the fateful day, as told by the vicar of the church: “A strange silence flew over the whole neighbourhood. No wind breeze. I noticed by the entrance an unknown presence. It was Elena Ceausescu. By her, a tall man, with hair completely white, was explaining her that on both sides of the church will be built a block of flats and thus it will not be seen. I heard everything...After a few minutes of thinking, madam Ceausescu waved and said just this: “Down with the rubbish...” She passed by me, got into the car and gone she was. The last liturgy it was on Sunday, 14th of June. The last vespers on Monday, 15th of June. The guys from Security came in that very evening, during the service, got to the altar and told them bluntly that their church is going to be knocked down. Then people didn’t want to get out! A group of students were shouting: “We stay here! Kill us with your bulldozers” In the end were all taken out with lachrymatory gas. On 16th of June they pulled down the vicar’s house. On Wednesday and Thursday, the church. On Friday, 19th of June, “Saint Friday” was disappearing into a huge reddish cloud of dust. Dust of secular brick, dust from Matei Basarab's church. On the spot where the church was set, there was now only a carpet of lit candles. When the last wall of the church fell down, a rumble was heard through all Bucharest...”

Today on that place is nothing built. It is only a deserted place, but people still come to light candles there.

There were destroyed twenty secular churches, many institutions and architectural masterpieces – jewels that we could see only in our memory:

Vacaresti Monastery

Vacaresti Monastery (inside)

Coltea Hospital

Public Service Office

Unirii Open Market

The Year I Was Born de Bogdan Craciun este licenţiat printr-o Licenţă Creative Commons Atribuire-Necomercial-Fără Opere Derivate 3.0 România.

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Understanding organization – Essay by Bogdan Craciun

noreply@blogger.com (Bogdan Craciun) — Sun, 08 Feb 2009 01:12:00 +0000

Diagnosis and recommendations to the State Mining Co

“The design of organization has been singled out as a significant factor in achieving good performance by senior managers and experienced consultants.” (Child, 1986, p.211)

Diagnosis:

In my opinion the main problem – delays provoked by equipment failure at the coalface – has two core causes: the first one is the intra and inter-departments miscommunication, and the second one is the lack of coordination within the current formal and informal organizational structure.

Our organization is constructed by the “machine metaphor” (Morgan, 1997). This type of structure is more suitable to stable environments (Burns and Stalker), less suitable for a coalmine, where the unpredictable could happen in any second.

I consider that the hierarchical structure is the reason for lack of communication.

From the organizational scheme results that the mechanical and electrical chief engineers are subordinated to General Manager – no one else than the Chief Mining engineer. This hierarchy perpetuates the old, traditional structure, when only Mining engineers existed, while the subordination feeds the superiority feelings of mining department personnel when dealing with mechanical and electrical department staff.

This is the first fracture in communication.

The second communication fracture happens between assistant engineers and their deputies.

The report reveals that the assistant engineers do not like to cooperate with their deputies. They collaborate only with their professionals with whom they develop a “union” solidarity.

In the same time the assistant engineers are treated with superiority by the undermen and overmen from Mining Department, even if they are hierarchically equal.

The third communication fracture is between Deputy Managers and Chief Engineers and this is caused by different tasks that each engages: practical issues, the first one and strategic, the last one. As the pressure of the crises and machine repairs, tasks performed by Deputy Managers is immense. It is perceived as pointless every strategic attempt of management from the Chief engineer. Here I identify a difficulty of balancing the short-term (daily) tasks with the long-term, strategic perspective. The deputies might consider that the long-term strategy is useless as long as they permanently confront with crises, while the chief engineers might consider their efforts useless as long as they cannot prevent and predict in any way the crisis.

Another problem is the lack of unity regarding the way information is processed and transferred intra and inter-departments.

Inside departments there are diverse communication styles that generate misunderstandings when information is carried between departments. When the “almighty” deputy manager, with a direct and sharp style meets the other deputies, more diplomatic in discourse, it is obviously that a conflict is wakened. The Deputy Manager could be annoyed by other’s deputies’ mildness, the Mechanical and Electrical Deputies might consider Manager Deputy’s approach as authoritarian and maybe personal offending. When the feelings of people involved in a task are so much incited, there’s no doubt that no further collaboration for a common goal is possible.

When a crisis happens, all departments try to pin the blame on someone else. This is a sign of the powerful rivalry and of the low sense of having a common aim regarding the output as quantity and quality.

The report points out a phenomenon normal for large organization, especially if they are divided: the quality of information and their routes to superior levels of hierarchy. It is obvious there are no real data for top management to analyze and to understand the causes of the crisis that produce delays in production. The total unpredictability of the events puts the organization in the situation of not being able to get all the advantages brought by the new technology.

Recommendations:

The above problems I suggest could be solved redesigning the structure of the company using a “natural systems” approach. Clarke and Clegg indicate the results of such an attempt: cross-functional teams, processes integrated across organizational boundaries, delegation of authority to lower levels and reducing of the management layers numbers. (Clarke and Clegg, 1998 cited in Handout p. 24)

The reconstruction of the formal organization implies redesigning the hierarchical levels, the tasks responsibilities and increase of accountability.

In this process it is very important the attitude of the management towards change, the way it is influenced by people and their perception about change.

Restructuring of the organization, according to Bullock and Batten (1985) - cited in Cameron, Green (2004) - would follow four steps: exploration, planning, action and integration. This method treats the problem (in our case) to improve communication channels – as technically soluble. One of the redesigning results is the collection and transmission of the information from the work place to next levels, without any interpretation, just facts (certain parameters, relevant for each department, could be collected at regular time intervals, from certain work places points). The distortion of data is avoided. Each department will organize these data, and using a tolerance chart, they could identify in real time any event that could trigger a crisis.

This new line of reporting the data could constitute the first step for identifying real causes of delays. The top management will be able to identify if there’s a technology problem, a geological one or a personnel one. It is very possible to have a wrong match between machines used and the geological characteristics of the coal, or a lack of professional skills of workers.

In time the top management could decide if they need better geological forecasts and to invest in such equipments, or if they need other types of machines, or if they need to talk to the machine producers to customize them for the geological characteristics of the mine, or if they need to invest in people’s professional training.

These managerial actions feed-back the real causes, and try to modify and improve the inputs taking into consideration the outputs.

The final result could be the reducing of the unpredictability: the geologist, with more accurate information regarding the coal state, will pass the information to mechanical engineer who could chose better the type of machines to operate, and these information go to electrical engineers that assure that the system gets the power it needs.

The new data collecting and reporting network should be impersonal and facts oriented. This approach might make information flow, in a company where the history shows that personal feelings and conflicts leave a dramatic mark on effectiveness of communication.

It is obvious that there is dysfunctional peer-to-peer communication both on vertical (hierarchy inside the same department) and on horizontal (collaboration spread between departments inside the same hierarchical level).

For improving the vertical collaboration I suggest the following amending of the organizational scheme: all the Chief engineers should have the same hierarchical level, belonging to what I would call “The Planning and Production Department” – in fact a “change team” that, according to Glaser and Glaser (1992) – cited in Cameron, Green (2004, p. 65) – could implement and monitorize change. This is the case especially in our organization, with a strong autocratic management tradition.

“Because of the tradition of autocratic leadership, neither participation nor collaboration is natural or automatic processes. Both require learning and practice” (Glaser and Glaser (1992) – cited in Cameron, Green (2004, p.65)

The role of the “change team” would be the realization of congruence, according to the Nadler and Tushman (1997) congruence model – cited in Cameron, Green (2004, p. 105). The components of the organization – work, people, formal organization and informal organization are dependent on each other. A change in one of the components should be followed by modifications in the other components. Nadler and Tushman consider that “effective management of change means attending to all four components”, “as organization easily revert to the original mode of operation unless attended all four components” – cited in Cameron, Green (2004, p. 106).

And this seems to be the biggest future risk for organization: the return to old state.

As main modification of the organizational structure, I recommend to be introduced another hierarchical level, on top of chief engineers (annex 1), called General Manager. The General Manager will have as main responsibility the production. In the same time he should bring the chief engineers together, should create a common vision, common goal of their activities and should coordinate efforts and collaboration. The first step would be the setting of common goal agenda, goals designed in a SMART manner. I consider that the three chief engineers should be engaged into a team-building activity, so that each other to understand that the other one is as well a valuable professionals.

Here I find to be the most challenging part of change process. This company has both characteristics of a machine type and a political system type. The latter is obvious by the strong polarization of decisional power and status for the staff from Mining Department. A crisis in this company creates winners and losers. The change would require a powerful support – maybe from stakeholders – otherwise the present influential managers could prevent changing from happening. But powerful support is not enough. As according to Senge (1999) – cited in Cameron, Green (2004, p. 135) – “little significant change can occur if is driven from the top; CEO programs rolled out from the top are a great way to foster cynicism and distract everyone from real efforts to change”. Senge’s model for change advise to “start small” and to “grow steadily” as important stages for change implementation.

For improving the collaboration between departments I propose to follow Childs (1984, p. 107) idea of creating clusters of activities. Considering the work in mine and the risks involved, there are equal interests for fitters, electricians and mineworkers for working well together and for collaboration. But these equal and common interests should be reminded. It is not difficult to make the miners see that they need the help of fitters and electricians in order to do their jobs and get the results they are expected.

The change would follow the 4 steps linear model of team development as described by Tuckman (1965) – cited in Cameron, Green (2004, p. 67) – that consists of forming, storming, norming and performing.

I believe that the simultaneous intervention at a top management and teams’ level would bring real change and durable improvement.

Interpretation of coalmine’s problems, using the concepts of organization theory

“If you keep doing what you’re doing you’ll keep getting what you get” - Anonymous

The work in coalmine is one of the traditional activities of the modern human life, with great risks and great economic rewards.

The formal structure of the company shows a mechanistic model, with separate functional departments. It is organized on Fayol’s management structure, who advocates the line and staff principle (the line being in charge with attaining organizational objectives, while the staff departments provide support to their managers). The weakness of this structure, pointed out by Fayol himself, is the “lack of communication across departmental boundaries”. This weakness is shown in the organization from the case study through the information asymmetry, a Principal-Agent problem.

The study case marks out that a managerial decision demands information in a certain amount and of a certain quality. Herbert Simon considers that too much information is more damaging than too little. In the study case the problem is not necessarily about quantity, but about the accuracy of the information, about the relation between the real data and what information receives the decision maker.

Another symptom is lack of integration that is translated into competing professional departments.

At the present the most powerful position in organization is hold by the Mining Department. The report shows a pronounced division among departments, with little communication and a huge rivalry. The managers encourage the policy of covering the backs instead of giving a higher vision and purpose. The company is the field of an open “political” conflict.

When we change the organizational scheme a special attention should be offered to the issues of power and status.

Analyzing the information from our report, I find that the greatest risk for the organization’s future is the resistance to change from personnel side.

Beckhard and Harris’ “change formula” (1987) - cited in Cameron, Green (2004, p. 102), identifies the factors strongly needed for change to happen:

C = A x B x D > X

C – change

A – level of dissatisfaction with the status quo

B – desirability of the proposed change or end state

D – practicality of the change (minimal risk and disruption)

X – “cost” of changing

Factors A, B, D must outweigh the perceived cost X for the change to occur. “The factors do not compensate for each other if one is low. All factors need to have weight.” Cameron, Green (2004, p. 103)

Analyzing the problems at the coalmine from this formula’s point of view I understand that the level of dissatisfaction with status quo differs as we have in fact two rival parts. On one side there are the Mining Department personnel, with higher status and on the other side, the mechanical and electrical department personnel, with lower status. This means that there will be resistance to change from the first group and willingness to amend situation, from the second group. This means conflict.

According to Burrell and Morgan (1979) – cited in Morgan (1996, p. 203), the way conflict is handled in an organization varies much with the view the manager has.

If the manager in charge with the change has a unitary view, he can attribute this conflict to troublemakers. Maybe he will operate dismissals of those perceived as such.

If the manager in charge with change has a radical view, he can consider that conflict is inevitable, and if is suppressed, the conflict will exist latent. In a pluralist managerial view, the conflict has potentially positive aspects. The pluralist manager “accepts the inevitability of organizational politics” and is “focused on balancing and coordinating the interests of organizational members so that they can work together within the constraints set by organization’s formal goals, which really reflect the interests of shareholders and others with ultimate control over the fate of the organization”. (Morgan, 1996, p. 204)

The evaluation of the “change formula” at the beginning of diagnose, will help understand if in future the change will be really possible. Without people’s involvement and commitment, the organization could just revert to the initial state and the experiment would fail.

It is well known that for the externally imposed changes the process is never successful. That is why the redesigning of the organizational structure, besides the formal part, must show great concern for the people’s motivation and commitment to change.

The coalmine structure shows that the new technology is implemented in production but not integrated at the managerial vision level. Change of technology requires change of the job arrangements. Otherwise, as Child (1986) notes, technology could be used as scapegoat and all the responsibilities for output transferred on it, as is happening with the mechanical and electrical department in the study case. Maybe on paper the new technology seems the best from the perspective of engineers. But machines cannot do more than they were designed to be: cannot consolidate a coal wall if is on the brink of falling, cannot stop themselves before digging in a place where a flood will follow shortly. These are information handled by humans, by professionals. Professionals decide when is the time for a machine to work, where to dig, under what technical characteristics. They know and have the responsibility of stopping the machines and do what is need when they can prevent a major crisis.

As the operative work of miners is reduced should be increased the monitoring roles of the jobs. Increasing of responsibility and decision-making at workers level could help save precious time: if the worker is provided with some tolerance criteria plus the expertise of the professionals from his cluster group, he could be granted a level of decision where to stop the work and send the report to superior for deeper analyze. In this way, reacting to the data received, the worker might prevent a wall falling or flooding. With an increased level of responsibility – by actively monitoring and reporting – the worker becomes proactive. It is what I call a “just in time” feed-back.

All these things are going to be achieved by integrating new job description with professional training. This will enable workers to incorporate new skills and responsibilities.

By simply involving workers more will be less crisis and higher productivity.

The problem from the presented case study was a general issue in the coal industry of the last century.

Using as starting point the open system theory of Bertalanffy (1950), the researchers from Tavistock Institute elaborated the sociotechnical theory. This theory emphasizes the interdependence between technology and work organization. As Child (1986, P. 34) notes, “the earlier sociotechnical systems research examined and experimented with possibilities of creating a social organization of work, based on cohesive and self-regulating groups of employees, within production systems which retained an unchanged technology of plant and equipment”. The theory speaks about “job enrichment”. From my point of view the essential gain from this theory’s approach is the fact that the organization could benefit not only from the workers “muscles power”, but, more important, could benefit by activating their “Grey substance muscles”, satisfying workers’ natural need for personal growth, (Hackman and Oldham, 1980 – cited in Child, 1986 p.36)

By using the sociotechnical theory at the managerial level, by integrating managers with different specializations in the same hierarchical level group, is encouraged common action for solving the group tasks.

Bibliography:

Cameron, Esther, Green, Mike – Making sense of Change Management. A complete guide to the Models, Tools and Techniques of Organizational Change, 2004, Kogan Page, London

Child, John – Organization: A guide to problems and practice, 2^nd ed, 1986, Harper and Row Publishers, London

Morgan, Gareth – Images of Organizations, 1997, Sage Publications, London

Annex 1

Restructured Formal Structure

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NGO’s II – Essay by Bogdan Craciun

noreply@blogger.com (Bogdan Craciun) — Sun, 08 Feb 2009 01:02:00 +0000

Why should NGOs attempt to influence development policies through campaigns, advocacy and other means? What constraints and what challenges do they face in undertaking such work?

This paper is trying to identify some of the reasons that ask for NGOs’ engagement in influencing policy-makers’ agenda.

The paper is organized in three chapters. In the first chapter I discuss why should NGOs attempt to influence development policies; in the second chapter are identified some of the constraints and challenges that are faced by NGOs in their advocacy and campaigning work. The last part of the paper contains conclusions to the topic discussed.

Chapter one

The need for advocacy arises from social needs.

There are many reasons that justify NGOs attempts to influence policy-makers’ agenda.

First reason is related to the fundamental civil right, generally accepted in all democratic regimes; and this is the right to freedom of expression. Through advocacy and campaigning people make use of their right to freedom, by associating, by expressing their needs, by making to be heard their ideas and opinions, especially in the social public policy areas.

Advocacy – part of a larger agenda

Evans (1996) states that voluntary organisations were traditionally involved in both providing services and campaigning on behalf of their beneficiaries. The basic services provided by NGOs’ activities regard health and education, food and housing providing, heading for helping the poor and the social excluded ones, responding to day-to-day problems.

But an NGO has more functions than service providing, according to a large number of authors.

“The mission of the voluntary agency to articulate the interests of neglected minority groups and populations at risk may take on greater significance as the social services … overshadowing the service-provision functions of voluntary agencies” (Kramer, 1081, p. 231).

Najam (1999) as well specifies four types of roles for NGOs work: service delivery, advocacy, innovation and monitoring (quoted in Lewis, 2000, p.109).

What difference can advocacy make?

Some authors consider that advocacy is more important than any other function of a NGO. It is the case of O’Connell (quoted in Kramer, 1981, p.212), that considers advocacy to be “the quintessential function of the voluntary sector”. In the same spirit, Sherry considers that voluntary associations should “continually shape and reshape the vision of a more just social order, to propose programs which might lead to manifestation of that vision, to argue with them with others in the public arena, and to press for adoption and implementation. For voluntary associations to do less than that is to abdicate their civic responsibility” (Sherry, quoted in Kramer, 1981, p. 212).

Bates and Pithkeathley (1996) believe that “campaigning is an absolutely vital part of the work of the charity sector … Dedicated and passionate people saw a social injustice, often from their own experience, and set about doing more than just alleviating the problem by opening a school or feeding the poor. They turned a private trouble into a public issue to bring about changes in the law and in public opinion” (Bates and Pithkeathley, 1996, p. 92)

Campaigning and advocacy are instruments of the participation in social development, concept that, according to Oakley et al (1998), puts in the central spot people and “their right to be involved in development decisions and actions which might affect their livelihoods” (Oakley et al, 1998, p. 15).

The importance of advocacy and campaigning is emphasized by Kramer (1981) when he nominates the groups that make public policy in England, among them being “pressure groups”, which are closely connected to executive civil servants. The fact that “the government clearly accepts the role of voluntary organizations as advocates for particular constituencies” (Kramer, 1981, p. 49) show that pluralistic aspect of policy making requests the participation of NGOs by advocacy and campaigning.

In USA “lobbying by pressure groups is expected, and it is out of the interaction between them, the bureaucracy, and the legislature that laws are fashioned” (Kramer, 1981, p. 71).

The basic definition for advocacy, which is a “device to influence the balance of the needs/rights of the group in the favor of the needs/rights of individuals, especially those on the social margins” (Brandon quoted in Bateman, 2000, p. 17), expresses the main philosophical problem that advocacy deals with: human rights.

NGOs should attempt to influence development policies because in this way they bring their contribution to social integration, and democratic pluralism. NGOs can contribute on improving people’s lives by advocating for the particular needs of cultural or social minorities. By advocacy and campaigning work NGOs undertake an active citizenship role, transforming communities from passive consumers of public services and public policies into active citizens who are able to evaluate, to judge, to compare to their real needs and, finally, to decide if they accept or not the status and level of the services and policies intended to them.

Chapter two

Constraints of advocacy work

According to Kramer (1981), advocacy work is directed towards: influencing legislation or regulation, improvement of governmental service programs, securing governmental funds and securing benefits for clientele. The difficulties met in following up these results constitute the constraints of the advocacy work.

When NGOs commit themselves to advocacy, they place themselves in an intermediate position, with the community they emerged from on one side, and administrative and political power holders, on the other side. The power holders can be the State as well as the large corporations.

Because of this middle position, the communication is extremely important for advocacy work. In order to be effective in their advocacy, NGOs need to handle good quality message. The quality of communication is one of the constraints that affect advocacy results.

Bates and Pitkeathley (1996) consider that the message transmitted should be clear, without being simplistic. The specificity of the message helps on understanding and focusing on the advocated issues.

The relation to mass-media becomes extremely important, with large consequences on results of campaigns. In USA press releases and appearances on TV or radio are part of the every-day campaigning process.

“As can be seen in many situations, journalists have not only the power to ask questions but to demand answers. Using media more consistently needs to be a political strategy” (Reading, 1994, p. 91).

Trying to identify in literature what other constraints affect advocacy, I found out that many of what is “traditionally” perceived as constraints for advocacy, in fact proved not to be universally true.

It is the case of the beliefs noted by Kramer (1981): “advocacy is believed to be constraint by bureaucratization, professionalization, a federated structure, or service delivery” (Kramer, 1981, p. 230). But the examples found in the worldwide experience prove sometimes the contrary. It is cited the case of federated organization in the Netherlands, with large influence on government; or the case of large bureaucratization voluntary organizations (receivers of public funds, with highly professionalized personnel) in USA and England, which were amongst “the most active improver agencies” (Kramer, 1981, p. 230).

An interesting discussion related to the constraints and challenges of advocacy work regards the constituency. With a large number of constituents, the influence exerted on policy makers can really be effective. When the advocated issues belong to a small community, the influence could be inessential. The chances of being heard and taken into consideration by policy makers are greater when NGOs get into coalitions. NGOs’ alliances, regional or international, proved to make the network makes more influential.

The coalitions can have and a negative aspect: as part of a network, NGO has to negotiate both some of their goals and resources. As a result NGOs that join alliances could renounce at some of their initial ideas. Keeping the balance between autonomy and individuality on one side and the need of power of influencing (that comes from alliances) represents more than an ideological issue, a practical one.

Advocacy strategies – means of better influencing

Another constraint on advocacy work is the type of strategy engaged.

These strategies used for influencing the power holders in their decisions could be, according to Kramer (1981) at least two: an aggressive demands strategy or cooperation and partnership. I will discuss later in this paper about each strategy of influencing. What I want to emphasize now is that NGOs’ need a good understanding of the social environment and of the political and business interests that could try to affect public interests of the community.

According to Chapman and Fisher (1999, p. 8), campaigning unfolds in three steps: getting issue on agenda, action and real change.

Bates and Pitkeathley (1996) speak from their own experience and state that “to be an effective lobby a charity needs four things: a constituency; a clear and simple message; respect and some success” (Bates and Pitkeathley, 1996, p. 83).

Reading (1994) takes a step further and considers that voluntary associations should develop a political role for community evolution. The means for an NGO to achieve this role would be “1. Acting as a community care broker; 2. Stimulating public debate; 3. Stressing the importance of collective as well as individual need; 4. Promoting a new political and moral philosophy” (Reading, 1994, p. 87).

ActionAid India proposes six strategies for advocacy work with partners, called “the advocacy ‘toolkit’, aimed to help NGOs everywhere in their work: negotiations, lobbying, gaining membership of government bodies, building networks and coalitions, using the media and conducting campaigns”. (ActionAid India, 1993, quoted in Lewis, 2000, p. 124)

Previously in this paper I emphasized that the strategy followed by advocacy work shapes the dialogue with the policy makers. The type of strategy engaged could be an “outsider” or an “insider” strategy. The outsider strategy is confrontational, many times implying marches or demonstrations. The insider means to work side by side with the policy maker, in a collaborative, non-confrontational way. The insider strategy is connected with long-term relations, where negotiating brings small but steady improvements.

The informal, interpersonal relationships with officials are cultivated as a mean of better results for advocacy work. Kramer (1981) cites what is called in England “the old boy network” which represents the personal relationships among officials and the NGOs representatives.

Oakley et al (1998) explain what are the stages of a long-term campaign: “heightened awareness about an issue, contribution to debate, changed opinions, changed policy, policy change implemented, positive change in people’s lives” (Oakley et al, 1998, p. 95). If a campaign did not get yet to the final stage, does not mean the efforts are in vain. It only means that the process is still unfolding and that achieving the intermediary stages is the sign that the activity goes on the right direction.

Regardless the type of strategy adopted by NGOs, the advocacy activity is causing tensions, and this is their biggest challenge: to promote change with all its implications (risks, dynamic, tensions) in a totally unpredictable environment.

And this challenge brings us in front of a much-commented problem: the personality of people engaged in running a campaign, people able to pursue the goals of their campaign without amplifying the pressures beyond tolerance. People that are not only involved in community’s needs for change, but are as well good communicator and persuaders, skilled in delivering a credible message, take campaigns to success. For this, charismatic leaders try to convince the policy makers of the necessity of the change they claim. Bratton (1990, quoted in Lewis, 2000, p. 124) emphasizes the importance of a well-connected leader, and states that one of the factors that makes the policy advocacy effective is “a set of informal ties with political leaders by NGO leaders (this was found to be a main predictor of impact)”, while Kramer (1981) notes that “the ideological commitment of the executive leadership system” is the most significant for advocacy influence.

Due to the complexity of the task undertaken by NGOs, their leaders need not only charisma and good personal connections, but need as well to engage good managerial skills. As NGOs activate in a dynamic environment, their leaders confront a serious challenge for managing and keeping under control such organizations. Management is the activity that pursues efficiency, improvement. Here is the point where another constraint comes into stage: the need for professionals conflicts with the volunteers’ amateurism. Advocacy needs highly trained communicators, highly efficient managers if is really wanted a substantial influence on policy makers. But when the professionals are seen by volunteers activists as “full-time planners of other people’s short-term burst of energy and masochism” (Kramer, 1981, p. 206), it is difficult to have in the same pot the professionalism required by performance and the enthusiasm of volunteers.

But only a leader is never enough. It is equally important the contribution that NGOs’ members bring into advocacy efforts.

The advocacy work is concerned with results obtained in influencing the development policies. To assess the efficiency of the advocacy work in influencing the change at policy making level, we should need to know which factor or combination of factors resulted into achieving policy outcomes; we need to understand what brings change and how certain interventions, related or not, influence the result. As Bates and Pitkeathley note emphasizing the importance of flexibility that an NGO has in achieving its goals: “You may not be able to achieve them (i.e. goals) all. Some may have to await a change of government, a shift in national thinking, a win on the National Lottery. But there will be some which can be reached, given a following wind and perhaps some negotiation and compromise […] Campaigning agencies need to grab their opportunities. When they occur, you must be ready for them and have your campaign ready to go. The opportunity may present itself in the form of an unexpected amount of money; a rare conjunction of people and policies; a shift in public opinion; or a sympathetic voice where you usually meet opposition. Whatever the opportunity, you have to seize it and push your agenda” (Bates and Pitkeathley, 1996, p. 87).

To understand the complex influence of social environment on advocacy results, I found the case regarding Covey’s (1995) research on “an NGO advocacy alliance in Mexico revealed that in the end it was macro-economic issues which eventually made the proposed World Bank-funded forestry project unattractive to the government, rather than the NGO advocacy alliance which was secondary in its impact”. (Covey, 1995, quoted in Lewis 2000, p. 130)

Another constraint of the advocacy work is the performance assessment. The difficulty of efficiency assessment is in the same time a constraint and a challenge for advocacy work: a constraint as there are no direct links between action and result, and the risk of not-getting-to-the-target is high; and a challenge as is asking for constant efforts to improve the networks, the communication with grassroots, with policy makers and with media.

NGOs, that are actors on the middle stage of the social environment, should have as main “tool” for advocacy work the communication strategies that need to be flexible, adaptable and persuasive. Generating awareness is the result of a good communication strategy. When the advocacy work generated the desired change in policy, NGOs’ roles do not end there. They engage in monitoring the quality of governmental services, assuming the role of what is called “watchdog”.

The funding issue represents another much-debated constraint. It is important to find out what is the relation between funding and the way the donors influence the NGOs advocacy agenda, the problem of autonomy being one of the most delicate matters.

When talking about funding, it is necessary to identify if the pursue of change is a genuine problem of the community or a matter imposed by the donor. Thus the financial (in)dependence is a major factor that influences the issues advocated. Kramer (1981) shows that “contrary to conventional wisdom, reliance on public funds is not constraining […] the U.S. agencies that receive the largest amount in public funds are among the most active advocates” (Kramer, 1981, p. 229).

In literature we find an interesting question regarding the balance between advocacy and service providing for NGO activity. The discussion starts from the evidences that showed how the “organizational-maintenance activities” could reduce the advocacy performance (Kramer, 1981). It is cited the recommendation of O’Connell (quoted in Kramer, 1981, p. 229), that the quantity of time devoted for advocacy by an NGO should be between 25-50 percent of the total amount of time, otherwise other activities as “fund raising and program management may drain off the time and energy of leadership that might be channeled into influencing social policy” (Kramer, 1981, p. 229).

A balance should be kept between the functions of an NGO. Kramer (1981) brings as consideration that an NGO exclusively dedicated to advocacy work could not have public support: “it is doubtful that financial support and tax exemptions would still be forthcoming if service programs were substantially reduced in scope and social agencies become pressure groups […], concerned only with the quality and quantity of governmental service” (Kramer, 1981, p. 232).

Conclusions

Advocacy work is one of the most important functions an NGO could have. The result of this work is the influence on policy-makers’ agenda. Advocacy is the expression of active citizenship, with a great impact on democratic values.

Advocacy has as final result the development of civil society, the realization of change, or as Reading puts it: “transformation of consumer into citizen, of caring professional into social policy practitioner and of uninvolved government into government responsible for all its citizens” (Reading, 1994, p. 96).

Bibliography

Bates, Francine, Pitkeathley, Jill – Standing up to be counted, Campaigning and voluntary agencies, in Sweet Charity, The Role and Workings of Voluntary Organisations, Routledge, London, 1996

Chapman and Fisher – Effective NGO Campaigning: a New Economics Foundation briefing – summary paper, March, 1999, in Course Pack, 2006-2007

Kramer, Ralph – Voluntary Agencies in the Welfare State, University of California Press, London, 1981

Lewis, David – Management of Non-Governmental Organizations: Catalysts, Partners and Implementers, Florence, KY, USA: Routledge, 2000

Oakley Peter, Pratt Brian, Clayton Andrew – Outcomes and impact: evaluating change in social development, UK: INTRAC publication, 1998

Reading, Paul – Community Care and the Voluntary Sector, Venture press, Birmingham, 1994

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NGO’s I – Essay by Bogdan Craciun

noreply@blogger.com (Bogdan Craciun) — Sun, 08 Feb 2009 00:58:00 +0000

Service delivery should not be a priority focus for NGO work

In the following paper I will discuss whether service delivery should be or not a priority focus for NGO work and I shall concentrate my attention especially on public services delivery.

This paper identifies in the first chapter some of the motifs that plead for NGOs’ service delivery involvement. In the second chapter I summarize the weaknesses of NGOs service delivery, as they are presented in literature.

The final chapter presents the conclusions with reference to the topic of the essay.

Chapter one

The content of NGOs’ services

“The voluntary sector is nothing if not diverse” (Reading, 1994, p. 5)

Service delivery is one of the four main functions of an NGO, as per Najam’s (1999) definition, closely related to the other three: advocacy, innovation and monitoring. In his definition service delivery represents “acting directly to do what needs to be done” (Lewis, 2000, p. 121).

What are the activities undertaken by NGOs in service providing?

There is a large range of activities, starting with basic healthcare services, continuing with all range of educational programs (including cultural activities typical to a certain community), housing, support and counseling. NGOs could engage as well in activities that deal with local or global environmental problems. What differs from one country to another is the level of participation.

For instance in UK “the voluntary sector is the largest provider of staffed residential care for adults with physical or sensory disabilities, learning disabilities, and alcohol or drug problems; and of hospice care; and is a substantial provider of mental health services and many specialist child welfare services” (Kendal and Knapp, 1996, p. 237). In the Nordic countries “most health and social care services are funded from tax revenue and are provided by public – either local or regional – authorities” (Lehto, Moss, Rostgaard, 1999, p. 104).

Who are the beneficiaries of the services provided by NGOs?

As non-profit organizations, NGOs can thoroughly concentrate on the humanitarian value of their services. Being organizations free of profit seeking, NGOs can point their resources – financial and human – towards helping the poor and the socially excluded ones. These are the traditional beneficiaries of NGOs’ services. But in our days not only poor and disadvantaged are services recipients; the general population could benefit as well. It is the case of “Shakespeare Birthplace Trust” with main activity the preservation and the promotion of Shakespeare’s birthplace. The Trust does not receive any public or governmental funds and depends entirely on donors and incomes from visitors.

Strengths that make NGOs services desirable

Service delivery is an activity that rests at the very heart of NGO’s existence and philosophy. Kramer (1981) speaks about the fact that “one of the primary functions of the voluntary agency is to pioneer in developing services and to pave the way for their adoption by governmental bodies” (Kramer, 1981, p. 173), while Jones (1996) goes one step further and states that in UK “the interdependence of the state and voluntary sectors has in many ways increased, with voluntary organizations (especially in the field of social welfare) becoming mainstream providers of services commissioned and funded by state agencies” (Jones, 1996, p. 41)

The NGOs are known to have provided public services mainly when the State was weak and incapable of supplying its citizens with basic services. It is the case of Africa – especially the conflict zones of Southern Sudan, Somalia, as cited in Clayton et al (2000) – where the NGOs became unique providers of healthcare and water supply.

But there are countries where even if the State remains the main service provider, as India and Latin America (Clayton et al, 2000), the NGOs are deeply engaged in monitoring the quality of these services and their correspondence to people’s needs.

NGOs provided services and solutions where the State could not offer valid answers to the existing problems.

Reading (1994) identifies the strengths that explain the better provision of public services from NGOs. Among them is important to be noted:

“1. capacity to innovate, experiment and test new ideas;

2. flexibility, and the ability to respond quickly to changing needs;

3. good community links;

4. cost – effectiveness, arising from their ability to target on very specific groups, localities or issues;

5. the capacity to promote change, challenge vested interests and campaign for improved services;

6. the opportunity to involve members of the community in planning and monitoring services;

7. the status to act as advocates for particular groups;

8. the potential to give people a sense of power and influence over the decisions which affect their lives” (Labor Party Consultation Document, 1990, cited in Reading, 1994, p. 7)

I could identify some more traits specific to NGOs’ services:

1. the specificity of services: NGO identifies a problem and acts for its solving. The expertise and experience gained in diverse situations makes the services to be better adapted to the needs.

Because NGOs have a direct connection to people that face a problem, and thus, direct access to citizens concerns and difficulties. The solution provided does not belong to a general frame, but is designed to solve individual problems. In this specificity of the solution, that takes into account both the people and the environment affected, rests the high efficiency of NGOs’ services. In comparison with the results obtained by a governmental service providing, which in most cases applies general solutions and not individually designed ones, the NGOs solutions will hence be perceived as better, more consistent with people needs and demands.

David Davis, who said: “the voluntary sector has a far greater ability to take a holistic approach and to take responsibility for the problems of the whole person” (Mohr, 2005, p. 32), backs up this perception.

The preference towards NGOs’ services finds an interesting explanation on Kramer, that states “others regard voluntary agencies as intrinsically preferable, because of their presumed greater flexibility, capacity for innovation, and use of volunteers, or, in some cases, because they serve as a brake on further expansion of government bureaucracy” (Kramer, 1981, p. 250).

Of course that there are other opinions regarding the efficiency of NGOs services. As Clayton et al (2000) note, the impact studies concentrated on NGO activities do not prove without denial that NGOs are more efficient than governmental institutions in helping the poorest, while Kramer (1981) notes that in fact, as by their involvement hide the basic weaknesses of the governmental services, “voluntary agencies risk perpetuating second-rate, substitute programs and thus in the long run depriving clientele of more effective services” (Kramer, 1981, p. 250).

Chapter two

Weaknesses in NGO service delivery that could limit quality of services provided by NGOs

As NGO service delivery is not profit oriented, I consider that the shortcomings of this activity should be assessed mainly as regards to the quality of these services.

Among the factors that affect the quality of services delivered by NGOs there are:

a) Limited funds.

It is important to note that limited funds constitute an impediment on the quality of services, as Reading (1994) points out.

The implication of limited funds is that a partnership between NGOs and State in contracting the public services is desirable. The only disputable thing would be the percentage of the State funds in total funding system of NGOs. The most important concern related to the amount of government support touches the delicate matter of independence and non-conformity to government’s views, when it is the case.

It is well known that the donors condition their help and dictate the terms. When the State involves in NGOs’ financing, it behaves as any other donor, it dictates standards of performance, rules for monitoring and accountability. And this could generate the “rise to the danger that they become dominated by input or process indicators, rather than quality or user outcome measures” (Kendall and Knapp, 1996, p. 230).

In order to secure the future financing, the NGOs might change something in their policy and submit totally to governmental requests, regardless they are similar or not to their credo. As Kramer considers, “voluntary agencies will have to work hard to avoid being a tool of government, particularly when they work inside a framework determined by government and are dependent on it for funds” (Kramer, 1981, p.251).

In order to avoid such a situation, NGOs established funding rules, which, according to Smillie (1995) are: Scandinavian NGOs restrict governmental share of funding to 50% of their total funds, while Oxfam UK restricts to 20% of total the state’s funding contribution; at Oxfam America the restriction is total, the organization receives no governmental funds.

Balancing the need for funds with the need for independent voice and autonomy is one of the fundamental issues that an NGO must deal with.

I found two interesting cases that reveal the different two faces of the same coin. First example, Medecins du Monde UK wants to keep total independent of State funding and reject any contractual agreement with NHS bodies.

On contrary, Terrence Higgins Trust experience shows that “NHS contracting is for them the best way to deliver their services” (Peta Wilkinson quoted in Third Sector, 2005, p. 56). This example shows that the relation between the percentage of State funding and the efficiency of the voluntary organization is by no means unique and definitive.

b) Difficult large scale coordination

Each NGO has a specific expertise and experience in a certain type of service. There are NGOs that provide health services: help for breast cancer cases (Breast Cancer Care); help for having healthier children (National Childbirth Trust); others provide services in education.

The narrow specialization proves to be in the same time a strong point and a weak point in NGOs’ activity.

For instance, there is a high probability that an organization specialized in gender equality for women will deliver this; there is a high probability that an organization specialized in HIV prevention will eventually attain its goals. The narrower is the specialization, the better chances for a good result there is, in my opinion.

But a narrow specialization of services has its weak point too: it makes difficult a large scale coordination of activities, a national long-term vision so that the resources to be planned and allocated where a shortage in services is identified. And this it seems to be difficult to be attained by NGOs, according to Robinson and White (1997), cited in Clayton et al (2000), as NGOs cannot provide a framework where to be integrated regional and national levels. In my view this large-scale coordination is difficult mainly because of the specific character of each NGOs service: even if there are many NGOs concerned with, for instance, healthcare, they have specific expertise inside the huge domain of healthcare.

The need for coordination of NGOs service providing arises from the need to avoid scattering of resources: time, money, and personnel. The trend for decentralization is always followed by a need for a coordinating central point, where all the needs, claims and desires of the civil society to be collected. It is required an organism able to do the coordination of NGOs activities.

c) Difficulty to evaluate the results, difficulty for transparent accountability.

If there is desired a partnership State-NGOs for public services delivery, performance criteria and accountability issues become important. Where are involved public money, it is absolutely necessary transparency and accountability towards citizens. It should be scrutinized the way the financing was granted as well as the outcomes of the activity.

Many of the services provided by NGOs are social services whose final impact is difficult to be assessed in measurable terms, and this proves why it is so important to have established a general system of service outcome evaluation, common for both public and NGO provider. This is necessary for a fair comparison of the services and as starting point for a healthy competition for performance.

The emergence of what is called “contract culture” seems to solve the both above-mentioned weaknesses. Jones (1996) notes that contract culture “might be experienced as a threat by the voluntary sector, compromising its independence and freedom, but it does also provide opportunities to secure funding for expansion and growth” (Jones, 1996, p. 55)

It is necessary for any NGO that wishes to engage in service delivery to be aware of all the above challenges. It is true that no NGO dedicated to its cause will abandon just because there are difficulties. By being aware of these difficulties NGOs could equip themselves better for “challenging the challenges”.

Salamon calls NGOs’ weaknesses as “types of failure”. In his opinion they are:

“‘Philanthropic insufficiency’ the inability to generate funds;

‘Paternalism’, the tendency of even high – minded community elites to misunderstand the problems of the poor;

‘Particularism’, the tendency of nonprofits to focus on neighborhood, ethnic, or religious groups;

and ‘amateurism’, the reliance of volunteer services and the inability to pay the cots of professionally competent staff” (Salamon quoted in Chasse, 1995, p. 530), and could be overcome, in his opinion, by the partnership with the government.

This chapter that showed the challenges that confront NGOs service delivery could have as final conclusion the idea that a partnership between NGOs and State could be the best solution for public services providing. As Miliband, the UK’s minister for third sector states, “the voluntary sector brought qualities to services and society that the state did not”, while “there are things that state can provide that the voluntary sector cannot” (Thomas, 2006, p. 52). The society needs, according to Miliband, the NGOs involvement in services, as they brought “innovation, engagement with users and a unique ethos” and “the state provided universality and equity of services” (Thomas, 2006, p. 52).

Chapter three

Conclusions

NGO service provision could be a good solution where is needed innovation and rapid reaction in solving a problem. Rose (1974) and Peyton (1989) consider that “innovation and social change are a principal purpose (and contribution to society) of VNPOs (Voluntary and Non-profit organizations)” (Osborne, 1998, p. 66).

In the first section of my essay I have showed that NGOs involvement is traditional to human kind and needed by society. It is obvious that service delivery is the very heart of any NGO activity, so I conclude that indeed, NGOs have to focus on service delivery.

The discussion is whether this involvement should remain only at the intervention level or should became permanent, in other words, if NGOs should get involved into delivering public services.

The funding issues prove that making from NGOs service delivery a long-term activity implies continuous funding. It was shown that a great percentage of governmental funding assisting the finances of NGOs could impede on their independence.

Funding is not the only problem that challenges NGOs when trying to provide long-term public services.

In a crisis situation any help that NGOs provide is welcome, but when NGOs engage themselves into sustainable development activities, let us not forget that performance and efficiency standards come into stage. These standards are required by transparency and accountability demands, but these standards could take away the innovation and flexibility, traits so characteristic to NGO service providing. Without these traits NGOs could transform themselves in just another bureaucratic organism, which is using only statistics and average data in their relation with citizen’s problems.

Because I consider that independence and innovation are the very core characteristic of NGOs, the threat of losing them makes me consider that NGOs should not focus with priority on public services delivery. NGOs should intervene when is obvious that governmental public services cannot cope with the demands. Just to use an example: in Romania the nomad dogs represent a huge problem. The State department that was assigned to deal with this problem proved to be totally ineffective. NGOs got involved in finding a solution and now in Romania the nomad dogs’ issue, even if it is not yet totally solved, found great improvement through NGOs’ contribution.

This is only one example that shows that trough their flexibility and connection to people; NGOs make possible the adaptation to change, to ever evolving social needs.

The literature reveals that the partnership between NGOs and state is the future of public service providing.

The partnership for public services providing between Government and NGOs is not a miracle solution. Even if the participation of citizens (represented by NGOs) is a desired outcome of decentralization and democratization at governmental level, to transfer the responsibility of basic services from state on NGOs shoulders is not fair. The responsibility of public services for poor and socially excluded especially must be undertaken by State. NGOs can help but cannot provide large-scale coordination. This paper shows the difficulties for NGOs that engage in public service delivery. In my opinion, if NGOs undertake the responsibility of providing large scale services, services that exceed their usual funding level and require uninterrupted financing from State, they could behave in time as a State subordinate institution, no longer a non-governmental, independent one.

I consider that more important than service delivery for an NGO is to be the voice of the citizens. The service providing should be a matter of choice for NGOs involvement, especially when the public institutions fail over and over again to do their job or when they cannot provide a certain type of services. I believe that the citizens should not allow the government to pass the responsibility of main public services to NGOs. Governments should take advantage of financial and human resources brought by NGOs in service delivery and should coordinate for efficiency the efforts done voluntarily by the civil society.

Bibliography

1. Bebbington, Anthony J.- Reinventing NGOs and Rethinking Alternatives in the Andes- in Annals of the American Academy of Political and Social Science, 1997, Published by Sage Publications Inc, accessed on www, http://jstor.org on 25th of June 2007

2. Chasse, J. Dennis, Nonprofit Organizations and the Institutionalist Approach,

in Journal of Economic Issues, 29:2 (1995:June) p.530

3. Clayton, Andrew, Oakley, Pete, Taylor, John – Civil Society Organizations and Service Provision- Civil Society and Social Movements, Programe Paper Number 2, October 2000, United Nations Research Institute for Social Development

4. Jones, Ray – Swimming together, The tidal change for statutory agencies and the voluntary sector, in Sweet Charity, The role and workings of voluntary organizations, edited by Hanvey Chris and Terry Philpot, Routledge , London, 1996

5. Lehto, Juhani, Moss, Nina, Rostgaard, Tine – Universal public social care and health services? in Nordic Social Policy, Changing welfare states, edited by Kautto Mikko, Heikkila, Matti, Hvinden Njorn, Marklund Staffan and Ploug Niels, Routledge , London, 1999

6. Lewis, David, - Management of Non- Governmental Organizations: Catalysts, Partners and Implementers, Routledge Publishing House, 2000

7. Kendall, Jeremy, Knapp, Martin – The Voluntary Sector in the United Kingdom, Manchester University Press, Manchester, 1996

8. Kramer, Ralph, M. – Voluntary Agencies in the Welfare State, University of California Press, London, 1981

9. Mohr, Katheryn - Davis:” Charities better at welfare” – in Third Sector, November 2005, accessed on www http://www.thirdsector.co.uk/Channels/Fundraising at 26th of June 2007

10. Osborne, Stephen- Voluntary organizations and innovation in public services, Routledge, 1998, London

11. Oxfam, on www http://www.dango.bham.ac.uk/record_details.asp?id=460&recordType=ngo, accessed on 26^th of June 2007

12. Reading, Paul – Community Care and the Voluntary Sector, Venture Press, Birmingham, 1994

13. Smillie, Ian – The Alms Bazaar: altruism under fire – Non Profit organizations and international development – Intermediate Technology Publications, 1995

14. Thomas, - Public Services: Partners in Health, in Third Sector 2006, p.52, on www http://www.thirdsector.co.uk/Channels/Fundraising/Article/615933, accessed on 26^th of June 2007

15. World Development Report 2004: Making Services work for poor people - World Bank Publications, 2004

NGO's I de Bogdan Craciun este licenţiat printr-o Licenţă Creative Commons Atribuire-Necomercial-Fără Opere Derivate 3.0 România.

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Introduction to Development Projects – Essay by Bogdan Craciun

noreply@blogger.com (Bogdan Craciun) — Sun, 08 Feb 2009 00:43:00 +0000

Martinez Dairy Project

Executive summary

Even if contains some positive aspects, the Martinez project is not comprehensively designed (missing the logical framework and the ranch’s cash flow), it arises a series of questions (technical; connected to revenues and expenses content), lacks important information, contains contradictions and does not reach entirely its objective. I recommend projects’ revising and resizing for a further re-analyzing.

For the project success is not sufficient to have only a possible 5 years contract with Manzanilla plant. I recommend concluding of a resolute contract for 15 years with Manzanilla plant before beginning of investment.

Considering the social and environmental implications of the project I recommend a careful valuation of the popular support for the project and especially an environmental impact appraisal.

The important private potential of the area for milk production and the low average family income, makes me recommend the support of projects that make use of this potential as alternative to the Martinez project.

Several questions need to be answered in project’s analyze:

1. What needs does the project satisfy?

2. Is the project as designed meeting its own objective?

3. What are the objective factors that can affect the project success?

4. Can be found alternatives to the project?

5. Who benefits and who loses from this project and what is its social impact?

6. What are the legal implications of the project?

7. Who will implement the project?

8. What is the project environmental impact?

9. Has the project economical justification?

10. What external factors can constrain the project?

11. Is it the project technically feasible?

12. Are all costs and revenues included? Are they relevant and correct?

13. What other questions needs project to answer to?

I present the results of project analysis, which consists of answers to these questions. For the economical appraisal I used the Net Present Value (NPV) method.

Project analysis results:

1. Martinez Project correctly identified the area’s massive demand for milk (according to demand forecast). But there is no information regarding the demand for ranch’s second important revenue source: the cull animals and heifers.

2. Using for analysis the data provided by schedule D, the project does not reach its objective (200.000lts of milk per year needed by Manzanilla plant to break-even), except in the 6^th year. From 7^th year on, the milk production is 7000lts less than the required quantity. My question is if the locals’ herds can supply the required extra milk. Otherwise it is required acquisition of larger herd from the beginning.

3. The output forecast level it is highly influenced by: the quality of environment where the animal lives; the cow’s individual biological characteristics, health and fertility level (and this includes both the number of calves and the quantity of milk obtained from each cow); the quality of water and nutrition – it is known that the quantity and quality of milk are directly influenced by nutritional level of the food. There is no information how the nutrition level varies through the year, directly connected to the type of food supplied to cattle (grass/hay/concentrates). The project does not specify if all of the above were taken into consideration when the output forecast was made.

The projects present a calving percentage of 0.79%, which is rather an optimistic figure (more realistic is about 0.67%). Therefore I am concerned with the output figures that could be negatively affected.

4. If the private large heards of cattle can satisfy the Manzanilla's need of raw milk, this suppling source can be exploited with minimal investment, with better social effects (by increasing the family income and keeping the pasture in common use) and without destructive ecological implications (no clearing). We are not told as well the import price for milk in order to compare it with Manzanilla’s plant milk price.

5. The project brings national benefits by saving foreign exchange.

The urban citizens gain by benefiting of fresh milk. Some of the Martinez’s villagers potential hired at the ranch can gain as well.

The direct beneficiary is Manzanilla plant, supplied now with the raw milk it needs.

The herds’ owners that were using the common pasture lose now the land taken by ranch. The social impact is severe negative as might affect their income.

6. If the local authorities do not agree with the price of 100$/ha offered by Government, could appear litigation and delay of the project, raising costs of waiting.

We are not told anything as well about: the companies that will work on clearing, fencing, water supply, electricity connection, buildings and access roads construction, and if the contracts were awarded following the legal auction procedures; the terms of the transport contract; the legal way of clearing close to forest reserve.

7. It is not clearly identified the person that is implementing the project, that will monitorize, control and is responsible for its realization and function.

8. The environmental impact analysis it is difficult to be done as the project puts us into a major dilemma: the land commandeered is it already pasture or it is forested? From "Location" paragraph we understand that the land is at present used for grazing, this means it does not need to be cleared. From "Farm development" paragraph and schedule A emerges that the land will be cleared, and this means the land is forested.

If the land is already a pasture, the environmental impact resumes to the fertilizers’ type (artificial or natural). I recommend the using of the resulted manure as fertilizer (an excellent and cheap natural one) that could bring ecological and economical benefits.

If the land is forested, the environmental impact will be disastrous (will be cleared 70ha of forest).

9. The economical analysis (annex 1) show that the project is more feasible under first finance scheme (NPV=153.27), than under second one (NPV=60.46). Even if this analysis allows me to recommend the project to be undertaken, we find from annexes that the value of NPV banks on the residual value inputs (of the 15^th year) more than on actual output results.

10. The using for daily milk’s transport from ranch to plant of a third person weighs down, brings constraints and may financial unbalances the project. I recommend providing the transport through own means (maybe using the 1000lts capacity pick-up truck found in schedule A), solution that could lead to a substantial operating costs' cut-down and to constraints elimination.

11. The purchase of the best productive cow breed, the rainfall quantity suited for pasture, the annual medium temperature and the size of the ranch in standards for the number of cows, make the project one with chances to succeed. Still are a number of technical questions raise: how long in a year does frost affect the soils? Will the staff be recruited from locals? Is there required unskilled staff, or must be trained through special training?

12. With a standard contingency level of 5%, there are still several questions regarding the other costs of the project:

· If the premium payment is the rent of 1500$/year (schedule C), in 15 years the total amount is 22500$ and comparatively with the 7000$ initial payment, this gets the ranch to a renegotiation of this called ‘’small’’ payment.

· The insemination is done naturally or artificially? If naturally is one bull enough? If artificially, what are the costs?

· As the frost is not unknown, the project did not take into account the costs of building of a silo.

· Is there a permanent veterinary doctor? Does not the ranch need a minilaboratory for medical analyses for cows and for milk’s sanitary quality?

· Is the generator purchased the main source of electricity for ranch purposes? Is the nearby electrical source of power (22KV) suitable for ranch’s needs? If not, the electrical power connection costs are not pointed out in the capital costs. The price for electricity (as utility) is not marked out in the operating costs schedule.

· If necessary, what are the costs for personnel training?

· There is another question linked to the revenues: the project does not take into account any revenues from timber selling after clearing (if any clearing).

13. What is the deadline for constructions finalizing and for the start of ranch operations? Here is the risk for costs of waiting apparition; does the insurance cover cattle, milk’s transport, equipments/buildings/machinery, or all?; Is the distance (75km) from ranch to plant short enough to transport in safe conditions the raw milk (a very perishable product)?

Financial analysis

After the financial analysis results that the recapitalisation can be funded from own capital and the first financial loan scheme is to be preferred to the second (annex 1). But even if the projects benefits of a good value discount factor (8%) and we must not take into account the taxes (being a project of national interest), the projects is highly geared (1:9) and presents negative cash flow for the second, third and fourth year. The project is financially risky and my recommendation is the search for external or internal grants, numerous and suitable for agricultural projects.

Using existing data, I propose as solutions for a positive cash-flow, two financing schemes (annex 2), using the 2% interest rate and 1 year grace period. The initial loan is reduced from 417.300$ to 414.000$ and is followed by:

other 3 loans (in second year 40.000$; on third 35.000$ and on fourth 12.000$). The cash flow becomes positive for all years and the total amount borrowed is 501.000$. In this case we would have a sustainable project;
grants for second year (40.000$), for third year (31.000$) and for fourth year (5.000$). The project is not only sustainable now, but even with a better NPV (199.58).

Another important solution could be the backing up of the project by a larger equity share. And this brings us to another question: who is paying the equity (19.100$), when, how and under what conditions?

Introduction to Development Projects de Bogdan Craciun este licenţiat printr-o Licenţă Creative Commons Atribuire-Necomercial-Fără Opere Derivate 3.0 România.

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Managing for Service Effectiveness – Essay by Bogdan Craciun

noreply@blogger.com (Bogdan Craciun) — Sun, 08 Feb 2009 00:35:00 +0000

How can public service managers use their power to empower service users and other stakeholders?

The public service user is concerned with the quality of the service received. In order to assure both the quality of the services and the match between their content and the needs that services are supposed to satisfy, the service user should get involved in monitoring and keeping the service provider accountable.

Within the financial limits of the budget available, the public service provider is supposed to make sure that the scarce resources are well allocated, that the results satisfy not only the needs but as well the expectations of the users. The financial constraint and the efficiency standards make that the public service provider’s future actions to depend on the feed-back from end users.

The relationship between the public managers and the citizens that benefit of the services provided by them is an interrelationship one: the public service manager (PSM) is accountable towards the service users, while the citizens have to deal daily with the actual quantity and quality of the services they receive.

This interdependency is developed in the form of a dialogue, which could bring solutions for services improvement.

In order to hold an equal position with the official in this dialogue, the citizens need to overcome the stage of passive receiver and to get involved in service assessment and should actively communicate the feed-back. The service provider is no longer holding a monopolistic, almighty position. The process that starts with planning of the services up to the final stage of the implementation is a process where the dialogue and collaboration between providers and users is close and influential. This process in which the citizens effectively participate is credited with increased efficiency of the service, especially when broaching the issues of ever changing social needs.

As form of citizen participation, the empowerment is seen in literature as the best solution for balancing the community needs and the management effectiveness.

Batliwala (1993, cited in UNDP, 1997, p.176) defines the empowerment as the process that makes the powerless to gain control. Sen (1997) strongly emphasizes the fact that empowerment is a two fold process. Empowerment is concerned both with gaining control over available resources “physical, human, intellectual, financial”, and with gaining control on self “beliefs, values and attitudes” in relation with the new acquired resources. The process of empowerment must contain both above describes sub-processes in order to have a meaning. “A change in external resources without a change in consciousness can leave people without the resilience, motivation and awareness to retain and/or build on that control, leaving space open for others to wrest control” (Sen, UNDP, 1997, p.176)

Sen’s analyze presents the two levels where the public service manager can work for citizens empowerment: a formal level implied by the structure of the service provider’s organization and a second informal level, which relates the leadership qualities of the manager with the need for development and learning of the community.

The PSM could empower the community, as service end user, in three different phases of the service providing. The first phase is related to assessing the quality of the services. It is part of the accountability process to receive the feed-back from users.

The second phase of empowerment is when a PSM wishes to involve the community in public service delivery.

The third phase of empowerment is constituted by the community’s direct involvement in the designing of public services. People could contribute directly in this third stage only if the community has already acquired the experience and the expertise from the previous two phases.

There are some external, structural constraints on what a PSM is inclined and able to do for citizens’ empowerment. Denters and Klok (2006) show there are two approaches to systems of performance management: hierarchical and egalitarian. Each approach determines what a PSM is allowed to do in relation to empowerment. In a hierarchical approach the focus of PSM is on efficiency and effectiveness, while in an egalitarian efficiency and effectiveness is doubled by a request for responsiveness. If the first approach could be assimilated to the top-down decision-making, the second one is linked to the bottom-up pattern.

These two approaches show that the public managers’ attitude towards citizens’ involvement depends of the type of government in place in the public service.

If the experts of the government make the rules, it is highly doubtful that the collective self-government to be regarded as an efficient and effective solution. In a hierarchical construction the managers cannot involve the citizens, recipients of their services too much. It is possible that public participation to be only at the consultation and advice level. Egalitarian approach is the pre-condition for a truly citizen involvement

First top-down initiative for a manager is to overcome the passivity of the citizens and make them understand that they have not only the right to benefit of a certain service, but in the same time, they have the right to assess it. The average citizens are not used to express their opinion and usually accept the decisions made by the officials. It is the educational part of the empowerment process that could help the public manager to develop an active community. The public manager, that certainly has leadership qualities, can make citizens understand that their inactivity actually becomes a factor for not having better services.

When the manager works in a social environment aware of its rights, he could empower the community by enabling forums, referendums. The next step is to give legal status to communities and to involve them as members of the boards.

Another empowering action is to involve citizens in consultations, as part of the designing stage for the services provided. Citizens’ consultation helps the PSM to prioritize the allocations of the resources, usually under-budgeted, towards the satisfying the most acute needs.

One formal solution of empowerment could be the establishing of neighborhood forums with official status, as part of the local councils structure. This is a way of giving citizens a powerful option for participating. Other practical means of involving citizens in participation could be: opinion polls, conferences, focus groups, people’s forums and citizens’ juries, according to Doherty (2001).

One of the most difficult challenges for a public manager is to encourage the solidarity. As the Social Report Planning Bureau, 1998 states, “solidarity has become optional and can lead to ‘investments’ in various directions depending upon the preferences of the individual” (cited in ed. McLaverty 2002, p.144). The difficulty of the solidarity enforcement is more deepened by the fact observed by Flores (2002), that the participatory structures, promoted by public bodies, do not attain their targets, so the community solidarity and involvement is not achieved. The associations of the citizens prove to be interested in community problems and to have real cohesion only if they are spontaneously, informally constituted, without the officials’ involvement. The associations constituted by free will are more united; they get to the consensus without much fighting.

“It is required the citizens participation for the success or failure of the initiatives” (Flores, 2002, p.72).

If better public services are needed, there should be a clear distinction between politics and the service providing at a public service level. If the public manager is under political pressure, he can use the relationships developed with the citizens for political influence, support or manipulation.

The public manager, which is in dialogue with citizens, needs empowerment for himself as well. The PSM must develop a new attitude towards the citizens that should to be seen as partners of service implementation and not only as subjects of the services.

Flores (2002) describes an interesting Mexican experience from Tlalpan. It is showed that through the forums the service users got involved in solving their neighborhood problems. But the above cited experience proves that citizens prefer alternative informal grouping that are perceived as acting more effectively and as having more success than forums. The public manager that connects with both formal and informal organizations, with different power of influencing, has to deal with these groups “without favoring a group in particular” (ed. McLaverty, 2002, p.74)

A Spanish experience, as related by Blakeley (2002), shows that approval of Municipal Charter put on legal basis the citizen participation which “no longer depend solely on the willingness of politicians, civil servants and social movements activists” (ed. McLaverty, 2002, p.85). Despite the fact that the citizen participation becomes thus a legitimized voice, Blakely notes that citizen participation declined. As main reason is cited the fact that citizens reject the project “defined and promoted ‘from above’ ” (ed. McLaverty, 2002, p.86).

Both the above experiences show as conclusion that the structural developments are not enough to promote community empowerment. Shall we remember that Sen (1997) stresses out in a very powerful and obstinate way that empowerment “is not something that can be done to someone by someone else” (Sen, UNDP, 1997, p.177) and that the only contribution that governments could have is “to create a supportive environment”. This is very important to keep in mind when a public manager wants to use his knowledge and power for involving citizens in an empowerment process.

Bibliography

Blakely, Georgina – Decentralization and Citizen Participation in Barcelona, in Public participation and innovations in community governance, edited by Peter McLaverty, Ashgate Publishing Ltd, Hants, England, 2002

Denters Bas, Klok Pierer-Jan – Measuring institutional performance in achieving urban sustainability, in Legitimacy and Urban Governance, A cross-national comparative study, edited by Hubert Heinelt, David Sweating and Panagiotis Getimis, Routledge, London and New York, 2006

Doherty, Tony, Managing Public Services: Implementing Changes, Routledge, USA, 2001

Flores, Arturo – Tlalpan Neighborhood Committees: a True Participatory Option, in Public participation and innovations in community governance, edited by Peter McLaverty, Ashgate Publishing Ltd, Hants, England, 2002

McLaverty, Peter – Is Public Participation a Good Thing?, in Public participation and innovations in community governance, edited by Peter McLaverty, Ashgate Publishing Ltd, Hants, England, 2002

Sen, Gita – Empowerment as an Approach to poverty, in United Nations Development Programme – The Human development Report 1997, New York, United Nations Publications, 1997

Managing for Service Effectiveness de Bogdan Craciun este licenţiat printr-o Licenţă Creative Commons Atribuire-Necomercial-Fără Opere Derivate 3.0 România.

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Governance – Essay by Bogdan Craciun

noreply@blogger.com (Bogdan Craciun) — Sun, 08 Feb 2009 00:30:00 +0000

Corruption and Ethics

In this paper I discuss which anti-corruption strategies (deep or visible) should countries prioritize. On the first part of the paper I identify the domains where the deep and visible corruption activates. On the second part are found the results of the corruption literature research that aimed to reveal the strategies proposed by specialists for each type of anti-corruption strategy. In the third and final part it can be found my answer to the topic question of the assignment.

There is a great concern regarding corruption for every country. The wording “every country” is not at all exaggerated, because “corruption increasingly appears a problem common to most if not all democracies.” (Della Porta, Vannucci, 1999, p. 5)

Such a widespread phenomenon requires a better understanding of its causes and consequences.

Part one

Talking about anti-corruption strategy implies the assumption that corruption is systemic.

We cannot talk about strategy against corruption where is involved only an individual and only by hazard.

In order to understand the systemic corruption we need to identify the factors that determine its spreading.

“Corruption is the abuse of public office for private gain” (World Bank, 2002, cited in Haller and Shore, 2005, p. 2).

This World Bank’s definition for corruption gives us an equation with three factors: it tells us the action (abuse), the environment where the action takes place (public office) and the result of the action (private gain).

If in literature there is no unitary definition regarding the deep and visible corruption, I try to define the concepts using as guide the second factor from equation: public office. The hierarchy inside the public office identifies two levels: the executive level of public office and the decision making level.

The executive level of public office can be involved into what is called “petty corruption” or low-level corruption. This type of corruption represents the one experienced by ordinary citizens in their daily contacts with public institutions.

The decision-making level is involved in “grand corruption”. Moody-Stewart (1997, cited in Rose-Ackerman, 1999, p. 27) define “grand corruption” the phenomenon that “occurs at the highest level of government and involves major government projects and programs”. I consider that grand corruption does not involve only the members of the government. We can identify it better by referring to the actions implied (and not by position of public servants’ involved): the procurement, concessions, privatizations, licenses and subsidies awarding. I consider that we should focus our attention on activities as, for instance, the local authorities, that do not respond hierarchically to government, but are subject to many corruption allegations when contracts of procurement and concessions occur.

In this paper I assume that the executive low and middle management level could be the environment where the deep anti-corruption strategies may operate. The top management level of public office (regardless of government membership) could be the environment where visible anti-corruption strategies may operate.

Part two

The anti-corruption strategies should look on all three factors in order to be efficient: to avoid the abuse, there must be stated clear limits where the civil servants operate; to avoid deep and visible corruption, there must be engaged anti-corruption strategies to deal with them; to avoid illicit private gain, there must be a transparent assets declaration for civil servants and there must be some consequences for illicit gains.

Klitgaard (2000) reveals the factors that should be taken into account when designing the anti-corruption strategies:

“C = M + D – A where Corruption (C) equals monopoly power (M) plus discretion by officials (D) minus accountability (A)”. (Klitgaard, 2000, p. 27)

In a pure mathematical interpretation, the smaller the monopoly and the discretion are, along with increasing accountability, the smaller corruption is. Actions that could have as results reducing the monopoly and enhancing the accountability of the officials involved are basic strategies for anti-corruption.

Forms of low-level corruption are much diversified. The most spread type is that called by Della Porta, Vannucci (1999) “misadministration”. Misadministration it happens when the civil servants deliberately present to the citizens the public administration as functioning without efficiency. The bribes that are offered buy “the good will” of the civil servant to give special attention to citizen’s problem and solve it as soon as possible, with the best possible results. As Miller, Koshechkina and Grodeland (1997) note on their research, for ordinary citizens this type of corruption “makes the most immediate and the most visible difference in their lives”. (Miller et al, 1997, p. 208).

In order to establish how deep anti-corruption strategies should look like, we should check the reasons that encourage low-level corruption.

According to Rose-Ackerman (1999), “if the public officials are underpaid and under motivated, the incentives to pay bribes are high, with great benefits” (Rose-Ackerman, 1999, p. 25). The bigger is the wage discrepancy for equivalent jobs between public and private sector, the bigger is the corruption possibility. The bribes are a source of alternative income, usually motivated by the classical argument of “supporting the family” and after that – when the corrupt starts to enjoy the “taste of easy-made money” – by the incentive of making a small fortune.

How does the corruption spread? The diffusion of corruption is a double way process: from top down on hierarchical stream command or from down up by complicity. “Toleration of corruption encourages more and more people to engage in corruption over time”. (Rose-Ackerman, 1999, p. 25)

Della Porta, Vannucci (1999) conclude that “Where the corruption is widespread the risk of being accused is extremely low” (Della Porta, Vannucci, 1999, p. 255). These opinions show that corruption is self-feeding and self-maintaining as the mythical Hydra creature whose head grows back as soon as it is cut.

The deep anti-corruption strategies should begin with the reform of civil service.

As Klitgaard (2000) advises, the fight against corruption “should not begin or end with fulmination about ethics or the need for a new set of attitudes” (Klitgaard, 2000, p. 27). He recommends to begin with actions that influence the three factors from his (now) famous formula of corruption: “… look for ways to reduce monopoly power, limit and clarify discretion, and increase transparency, all the while taking account of the costs, both direct and indirect, of these ways” (Klitgaard, 2000, p. 27).

One of the strategies could include the separation of the technocrats – career officials – from the influence of politics. If this is not the case in a country, every time when through elections the ruling party changes, the decision makers from public service could be changed just on political command, without any relation to their professional skills. On long term this procedure is extremely poisoning for public service management. Della Porta, Vannucci (1999) consider as well that “a more rigorous separation between political functions and administrative functions” is needed. (Della Porta, Vannucci, 1999, p.270)

Another issue of the reform, equally important to the first one, is the payment of adequate salaries to civil servants. “If public sector pay is very low, corruption is a survival strategy”. (Rose-Ackerman, 1999, p.72).

If in any public service there are people who accept jobs low paid, which require high skills, this could be a signal that people will try to demand bribes in order to cover the needed amount of money on top of the salary, according to Kitchen (1994, cited in Rose-Ackerman, 1999, p. 73). It is the case of low paid customs’ officers from Eastern Europe that legally are entitled to about 200€ monthly wages and by bribes they complete these wages up to an average of 1500€. (source, ANV report, 2006). Usually the officers pay huge amounts of money in advance to secure this type of job (rumors talk about 10000€ for a simple custom officer position). In their activity they will have a strong incentive to retrieve the money paid in advance and to top up the low salary.

Better salaries could attract not only better professionals for public service, but people of a better moral quality as well. In the end better salaries might increase “their social status and in the same time the cost of illegal activity. The risks of being implicated in judicial proceedings would then include the loss of a greater income and more prestigious social position” (Della Porta, Vannucci, 1999, p. 270). Klitgaard (2000) agrees that “people will tend to engage in corruption when the risks are low, the penalties mild, and the rewards great” (Klitgaard, 2000, p.27).

The payment should be directly connected to what Rose-Ackerman (1999) calls “merit recruitment, market wage rates and retraining (as in modern China)”. (Rose-Ackerman, 1999, p. 70)

Rose-Ackerman (1999) considers that reform should not head only for apolitical and well paid officials. There is needed as well a restriction regarding the conflict of interests. The law should enforce sanctions that define and demarcate clearly the private economic gain for public officials. Rose-Ackerman (1999) finds that code of ethics and statutory requirements are needed “to prevent government service from becoming a cynical route to easy wealth, all countries need a basic conflict-of-interest program that stresses ethical conduct” (1999, p.77).

The legal framework is important from the point of view of Della Porta, Vannucci (1999): “Individual decisions to participate in corrupt exchanges depend upon the probability of being discovered and punished, the severity of the potential punishment and the expected rewards compared with the available alternatives”. (Della Porta, Vannucci, 1999, p. 19)

Deep anti-corruption strategies ask for a strong public system framework, with clear rules stated in laws. With a reformed civil service and a rationalized bureaucratic system, with transparency and accountability the deep anti-corruption strategies could assure the smooth functioning of the system.

Forms of high level corruption

The high level corruption occurs where contracts for procurement, privatization auctions and the tax collection operate. As “grand corruption” occurs in every country, not only in developing countries, it is necessary to understand its symptoms.

According to Rose-Ackerman (1999), contracts for procurement could involve corrupt payments if there is any interest for the private corrupter to “be included in the list of pre-qualified bidders and to restrict the length of the list”; if it needs some “inside information”; if it wants to “induce the officials to structure the bidding specifications so the corrupt firm is the only qualified supplier” and if wants “to be selected as winning contractor”. “After winning may pay to get inflated prices or skimp on quality”. (Rose-Ackerman, 1999, p. 27)

Interesting is that not only large scale projects could involve corruption but even the “goods used in consumption” which “are prime candidates for payoffs because it may be difficult ex post to discover whether or not they actually were delivered.” (Rose-Ackerman, 1999, p. 29)

Privatization is a process with first aim the reducing of the corruption and of the unwise spending of public money for sustaining different enterprises. But especially on the former socialist countries the process of transferring the assets from state into private ownership is subject for corrupt interventions. Without proper legal frameworks and with a huge lack of transparency, the privatization was a modern form of theft that resulted into a faction of over-night wealthy people, to the detriment of the now impoverished state.

Rose-Ackerman (1999) proposes a set of grand anti-corruption strategies underlining the corruption dynamics into what I would call “first law of corruption process”: “sometimes removing one set of corrupt incentives may create new opportunities elsewhere (...) Deregulating in one area may increase corruption elsewhere” (Rose-Ackerman, 1999, p. 39). The strategies proposed include “program elimination (eliminate licenses exports, subsidies, price control)”, “credible privatization process” that should be “transparent and well publicized”, “revenue collection” with “tax reduction and of nominal rates of tariffs”. Procurement anti-corruption strategies imply mainly using of benchmarking prices in order not to pay more than the market for the same products. There is a strong recommendation of using non-customized products that usually justify a bigger price.

For Della Porta, Vannucci (1999) the anti-corruption for public procurement should assure “maximum visibility, transparency, easier access to information, decision making centers to have precisely defined powers, under a legal framework with reduced contracting procedures”. (Della Porta, Vannucci, 1999, p. 272)

Part three

Which corruption strategy should be prioritized?

As I emphasized earlier on this paper, the tolerance of corruption breeds corruption.

Miller et all (1997) propose a “zero-tolerance policy” towards corruption, using the example of Britain’s and America’s “zero-tolerance policy” towards crime: “a permissive attitude to low level crime not only degrades the living environment and lifestyle of ordinary citizens, but also encourages low level criminal to graduate higher level crime” (Miller et all, 1997, p. 209)

The literature recommends a mix of anti-corruption strategies. As Rose-Ackerman (1999) recommends “to change public attitudes and to convince ordinary people that the government is serious about tackling corruption, is suggested emphasis on reducing corruption where is most obvious to citizens. It should begin with services that people are entitled to obtain for free. If the service is not a basic necessity, people may accept the introduction of a user fee to substitute for bribes. A next step is the reform for corrupt systems that permit people to avoid taxes or to violate laws with impunity. In those cases credible reform must start at the top. A crackdown should reach the rich and powerful. If large taxpayers are required to pay their taxes, others may be more willing to go along. Focusing only on ordinary citizens generates resentment that can undermine the entire effort”. (Rose-Ackerman, 1999, p. 88).

The twine between the two types of anti-corruption strategies is backed up as well by Klitgaard (2000): “to generate support, we may wish first to attack the kinds of corruption that are most obvious to citizens or most hated by them, or that seem to them the most urgent. For political reasons, it is good to begin an anti-corruption campaign where citizens perceive it to be most evident and most annoying, or where the political leadership has given a field particular salience, or where it is believed that corruption is undercutting economic reform” (Klitgaard, 2000, p. 76)

For governments involved in anti-corruption strategies is essential to prove to the public that things are really happening. “Frying the big fish” as Klitgaard (2000) calls the uncovering of big corrupts is extremely important for a public opinion which considers (usually in an environment where the corruption is systemic) that “money buy everything” and that “one hand washes the other” and “ravens do not scratch one another’s eyes out”.

In my opinion uncovering the “big sharks” is where the anti-corruption fight has its start, the “zero point”. The systemic corruption implies close and solid relationships. In these relations it lays the power and the weakness of systemic corruption: it is enough to cut the head in order to destroy the connected “body of corruption”. Some would argue that “the body and its head” will recover soon. I would say that the recovery needs time. For anti-corruption fighters this time is very precious for implementing the deep-anticorruption strategies. Because besides the “big fish” discloser and punishment, there is needed a plan for everyday fight with deep corruption. The results of this cyclic process – never ending, in my opinion – (visible alternated with deep anti-corruption strategies) will prove its efficiency only in time.

These discourses reveal that anti-corruption involves citizens and their perception is important in designing the mix of anti-corruption strategies. This is the reason why there are no general “recipes” for anti-corruption fight, and the strategies should be designed taking into consideration the local specific. For this a multi-disciplinary team of specialists is required to understand the phenomenon. In the team that designs the anti-corruption strategies for a country should join not only lawyers or managers, but psychologists as well. Is important to understand human psychology (with causes and motivations) and use this understanding to tackle the causes of corruption, not only the effects of it. This team should “keep in touch” with all the changes that occur in the way the corruption manifests. Without this connection to the dynamics of corrupted practices, I consider that no mix of anti-corruption strategies could be effective in this fight on long term.

As example for my point of view I use the evolution of anti-corruption strategies in Romania after 1990.

At the beginning was the post-socialist anti-corruption style, when the strategies were aiming the low level corruption. The actions undertaken at this stage responded mainly to denunciations from desperate citizens, or from the partners looking for revenge or even from fellow workers unhappy that they cannot manage as well as the denounced corrupt. A great part of the cases ended without any punishment or very low punishments (as dismissals, transfer to other departments or adjourned sentence). The reason for such solutions: the corrupt acted not only for own interest but for “big sharks” interests as well, who, by political pressures or networks, succeeded to make their protégé escape scot-free.

The new anti-corruption strategy, powerfully backed-up by country’s now president, promotes the visible strategy. It aims at convicting all big corrupts. Some voices assert this new direction is requested by EU as main condition for joining. But should be taken into consideration the intense popular enthusiasm the first results of the new strategy received. There was a widespread support from ordinary citizens. Small and big corrupts began to worry. The small corrupt that were protected by the big ones – now under scrutiny, put an end to many corrupt practices.

The war between the President of Romania and the Minister of Justice, on one hand, and the “big sharks”, on the other hand, is still a harsh one. Some big corrupts were taken off the judicial prosecution on the basis of procedural mistakes. The legal punishment was not applied. This makes all the efforts useless and causes population disappointment. That is why a few weeks ago the President of Romania declared that the prosecutors intentionally make mistakes in order to let the ‘big sharks’ escape.

That proves that the “healing” process needs also political will, perseverance and a deep understanding of the phenomenon. I believe this strategy will have the desired results and in future all those that think to choose corruption as source for wealth and power, will think twice before engaging in it.

References:

ANV (Romanian National Customs Agency - in Romanian). 2006. “Every import/export company pays annually over 10.000€ to the customs officers” [WWW]. 2006. http://www.euractiv.ro/uniunea-europeana/articles%7CdisplayArticle/articleID_8298/Fiecare-firma-de-import-/-export-da-peste-10.000-de-euro-pe-an-vamesilor.html (18^th January 2007)

Della Porta, D., and Vannucci A., (1999), Corrupt exchanges: actors, resources, and mechanisms of political corruption, New York, Aldine de Gruyter

Haller, D., and Shore, C., (2005), “Introduction – Sharp Practice: Anthropology and the Study of Corruption”, in Haller and Shore (Eds), Corruption – Anthropological Perspectives, London, Pluto Press

Klitgaard, R., MacLean-Abaroa R. and H. Lindsey Parris, (2000), Corrupt cities - A practical guide to cure and prevention, Oakland, Institute for Contemporary Studies Press

Miller, L.W., Koshechkina T., and Grodeland A., (1997) How citizens cope with Postcommunist Officials: Evidence from Focus Group Discussions in Ukraine and the Czech Republic. In P. Heywood (Eds) Political Corruption. Oxford, Blackwell Publishers

Rose-Ackerman, S., (1999), Corruption and government: causes, consequences, and reform, Cambridge, Cambridge University Press

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Financial Management Methods – Essay by Bogdan Craciun

noreply@blogger.com (Bogdan Craciun) — Sun, 08 Feb 2009 00:25:00 +0000

Evaluating the performance of “VisitBritain” overseas marketing activity

Background:

Nowadays the tourism’s importance is greater than ever. According to the World Tourism Organization (2006), tourism affects the enterprises, development, trade, communities, and lives – to name only a few. Tourism is one of the largest industry and the largest service industry – in the “global village”. Tourism activity creates millions of jobs, improves lives of visitors and hosts and is an important connecting factor between traders, contributing to local economies wealth. There are countries where tourism is the main source of income.

Not many countries afford to create and support a governmental organization that promotes overseas by marketing its tourism industry.

“VisitBritain” is the National Tourism Organization for Great Britain sponsored by the Department of Culture, Media and Sport, and by private tourism businesses. Its main goal is to increase inbound visitors to Britain and to sustain tourism industry by promoting Britain overseas and England as a tourist destination within Britain.

Tourism is not isolated and is deeply influenced not only by country’s climate, natural beauties and cultural opportunities, but as well by the policy of the country. Britain’s tourism industry is influenced by its capricious weather and by the fact that its policy in Afghanistan and Iraq made of it a highly potential target for terrorist attacks. Another influence of politics on tourism comes from the tourist visas required from many virtual visitors of Britain. The hassle of getting a simple tourist visa, the cost of it and sometimes its refuse, makes any potential visitor give up even before wishing to visit a certain location in Britain. Schengen countries that removed tourist visas for large categories of foreign citizens scored, as result of this policy, an important boost of their tourism industry.

All the above problems that affect British tourism industry, put VisitBritain, on one hand, in a very delicate and ingrate posture, and, on the other hand, in a very important one for British economy.

On 12 November 2004, The UK’s National Audit Office concluded an external audit report concerning VisitBritain’s overseas marketing performance (a hard copy attached).

As VisitBritain is publicly and non-government funded, in this report might be interested all stakeholders (the Department of Culture, Media and Sport and all the associations and private sector businesses partners). Mass Media could also show concern in the report as a good subject for news. The citizens of Great Britain who wish to understand how the public money was spent could be potentially interested in these report findings. The VisitBritain’s internal audit could be interested as well in this report, in order to improve its own analyze in the future. The competitors on the international tourism market should show themselves preoccupied with VisitBritain’s strategies and results, as a powerful competitor should always be kept under close and careful supervision, even to adopt any of the strategies that proved to be profitable.

What reveals the report about the performance in the organization?

The report reveals that the performance of the Organization is hampered by weaknesses found in marketing process (pointed out in my further analysis). The great transition proposed to be done at the core part of VisitBritain’s activity (the country-branding), could have a desired impact on the present performance.

The key issues raised by report are: results measured by return on investment, communication channels with its partners and marketing methods to reach its customers and potential customers.

Communication with industry is considered a weak link for VisitBritain. “Half of the partner organizations” declare that “are dissatisfied with their input into VisitBritain’s strategic direction” (p. 17), which I interpret as a lack of understanding and common vision. More, some of the respondents “feel that input to VisitBritain’s strategic direction is limited to those making a financial contribution” (p. 18). As VisitBritain has as one of its goals “to help the United Kingdom tourism industry to address international and domestic markets more effectively” (p. 9), the above situation sends a powerful alarm signal that there is not a proper communication between industry and VisitBritain.

The report shows the contradiction between the short-term objectives – sustained by the “big players” and the “longer term marketing objectives that draw out the distinctiveness of Britain” (p. 26) – required by country’s long-term touristy objectives. In order to sustain the second vision, the country-branding is proposed to be used actively as marketing tool. This could ensure the competitiveness on global touristy market. A greater emphasis is put on seeking of innovative products and experiences that British tourism market could focus to attract visitors and especially to make visitors come back again.

The report shows that the auditor was able to collect some data that allowed the performance assessment of VisitBritain’s activity. The report concentrates on past results and shows the future development lines.

In my opinion this report reveals the transition from an organization “serving” private purposes – confronted with conflict of interests – to an organization leading its industry, an organization that identifies the opportunity’s stream for its partners.

It seems that VisitBritain treats the medium and small enterprises as customers and not as partners. I want to explain this statement: in private businesses’ marketing is sometimes used the “20/80 Pareto” rule: when 20% of the customers bring 80% of sales, these 20% customers should receive a better treatment than the others. This is private business marketing. VisitBritain seems to connect the timing of campaigns’ announcement with the amount of money partners are able to provide for certain campaigns. The fact that the participants “learn about the campaigns too late to be part of them” it shows that VisitBritain might treat them as customers (differently and with favors) and not as partners with equal rights at timely information. The report avoids telling us if in authors’ opinion VisitBritain is favoring only the financial powerful enterprises.

Regarding the communication with visitors I consider that the way VisitBritain approaches the new markets shows lack of concern for potential visitors, people that have never visited Britain. The rush after return on investment, that the report reveals, keeps the organization reluctant to developing new markets – a process which involves costs in present and revenues only in future. Besides the costs, VisitBritain should concentrate its efforts to understand at least the perception about Britain of the new markets citizens. I can take as example some of European citizens, who generally are not attracted by Britain as a holiday destination, but more by countries as Spain, Italy, France or Greece. VisitBritain should know why this is happening and should try to alter these citizens’ present perception about Britain.

The report proves the VisitBritain’s interest in finding out about their visitors experience and how their satisfaction affects their likelihood of return. VisitBritain should show interest as well in the potential visitors prejudice, expectations and stereotypical thinking towards Britain as a travel destination, and after understanding them to try to build a better image.

The statement “VisitBritain staff are encouraged never to let a data capture opportunity go and customer details are constantly added to their customer database” (p.19) is at least awkward. It is well known that this manner of data collection is disturbing: the customer usually avoids this type of questioning and even if s/he cannot refuse the conversation, is possible that the answer is not accurately true. VisitBritain could make better use of the information that could be easily collected directly (with better connection) from the service providers. Generally the questionnaires are perceived as annoying and somehow intrusive. But the service provider can take the information needed from the customer without giving him the impression s/he’s questioned, in a pleasant manner. This information is indeed of high value as the answers are obtained very close to the moment the tourist had the experience. The answers might have a greater value of truth as between the service provider and tourist there is a direct communication.

More, the data collected direct from business can give other important relevant information for instance regarding the customer’s loyalty and real profile. As is well known, the real profits of the marketing activity are obtained not when there is the first selling, but mostly when the second, third selling is done. That is why the VisitBritain’s marketing should focus as well on collecting customer data via its partners.

One key question that report tries to answer is: how much does the marketing contribute to the tourism industry’s profit?

How much of the spending with marketing is investment and how much is just dead cost? Because in marketing there is always one question: "Half the money I spend on advertising is wasted; the trouble is I don't know which half" (John Wanamaker, 1838-1922).

How appropriate the analysis, recommendations and the presentation are?

Generally the evaluation of marketing performance is considered a difficult task. Evaluating the performance of marketing is nearly impossible if is not designed from the beginning to be measured. VisitBritain’s performance evaluation is not using own database and the figures they present as performance – return on investment – have a great uncertainty degree. I consider that VisitBritain’s performance measurement methodology is not professionally designed (from the beginning). A marketing effort who’s effect are assessed as overstated (probably) by some consultants (commissioned by National Audit Office), while other, contrary, view the figures underestimated (University of Luton), creates confusion and generates distrust. The presently used method of evaluating the performance is made up bits and pieces and does not bear the sign of own criteria and proper organizing for capturing results.

As reader of this report I would like to have a comparison evaluation of the VisitBritain’s annual return on investment with the same indicator that belong to other foreign organizations, competitors, with the same marketing activity. I could understand by comparison if this return on investment (29:1) (that the report seems to be proud of) is indeed a figure that shows profitability.

No matter how big or small is this return on investment (29:1), in comparison with other countries’ equivalent return on investment, I consider that it is sufficiently big to allow VisitBritain to implement long-term strategies.

In report there is no clear reference which type of tourist activities brings the best return on investment. I do not know if the mix of marketing, as conceived by VisitBritain, is competitive as there is no reference level (tests and controls). I do not know if the 2003-2004 return on investment of 30:1 means that VisitBritain achieved its target. The goals are stated but no measurements methods included.

I understand that VisitBritain makes efforts to change its marketing channels of communication to customers by using the new technologies, as Internet, call centers and direct marketing methods. Still the report does not give any clear performance evaluation divided on these methods. Using the results of a research on tourism marketing (DeHaan, 2005), we can see that the channel of direct marketing plus the leaflets (that generally are considered to be part of direct marketing) have the biggest percentage for obtaining customers’ awareness (37.7%). It is obvious that the costs for overseas offices rental are in fact lost money. More, using the e-mail and Internet communication in a creative way, the customers could find out about VisitBritain's activity in a less expensive manner. According to the report, the website was rated by the Financial Times as “the best overall” national tourism organization website in 2002. Potential visitors around the world are provided with information regarding cities, accommodation and events, with a total of 35 markets websites in local language. VisitBritain closely follows the “a click away” trend, which is an excellent way to inform the customers 24/7 quick and comprehensive.

We are not told if the assumption used for segmentation (p.15, figures 12 and 13) are checked and confirmed by actual surveys and what the return on investment provided by each segment is.

It is stated that the communication with the industry is done mainly through the partner professional associations. The channel they use for data collection is mainly the newly acquired “customer relationship management system”.

Analyzing the way VisitBritain cooperates with its partners, I do not have enough data to understand how and to what degree VisitBritain is “controlled” by the powerful partners. But taking into account the fact that 53% respondents consider that VisitBritain did not help them to market their products overseas (p. 18, figure 17), this makes me wonder if this is not a case of influence and spending public money on private interests.

The report does not reveal anything about the risk/sensitivity factors that could be considered as weak points for Britain’s tourism.

One of these sensitive factors I am thinking about is the insularity. It impedes on visitor’s transport. Getting to Britain is done mainly by using the plane. And the hassle of a plane departure could keep a lot of people away of visiting Britain. There are not taken into account the opportunities of low-fare plane travels and no reference to them and the number of customers they could involve.

Another sensitive factor is the fickle weather. As Britain cannot compete for leisure holidays with the sunny Spain, Italy, France or Greece – to name just a few of the European competitors – it is possible to have indoor-spa tourism and shopping/cultural tours as important tourism activities.

The report does not show the return on investment breakdown on additional events that are related to tourism and promote it. I do not know if were analyzed the ever-increasing tourism opportunities brought by sportive events (World or European Championships for various sports) or the massive promotion that the community of international students could spread all around the world. Again no information if VisitBritain programmes took into consideration the very important academically and scientifically tradition of the country. This could be splendid exploited for any sort of international scientific and professional reunions or congresses.

The report should reveal the influence of the above factors on return on investment and if VisitBritain has any intention to make use of the advantages they confer for improving the performance.

The orientation towards country-branding is the action that shows that indeed VisitBritain is committed to changes. Essential changes.

The marketing technical improvements would be useless without this new strategically vision. Even if VisitBritain seems to adopt a little later the country-branding concept (Spain, for instance did it soon after 1975), this decision that is revealed towards the end of the report shows a quantum leap of vision and approach. Kyriacou and Cromwell (East West Coms) consider that UK, with a rich cultural background and tourist offers, have a developed image and brand value. But with the aggressive country-branding that other countries have, the traditional image of UK presented by VisitBritain is – maybe – obsolete and dusty. This lack of initiative and commitment towards country-branding caused the results presented on the first two parts of the report. With the decision to engage VisitBritain in an active country-branding everything changes. This decision could be a turning point for VisitBritain’s marketing activity. The campaigns do not speak any longer about specific offers, but about values and about what makes Britain a tourist destination. The emphasis shifts from “who you are” – the customer segmentation, to “what we offer” – “depth, heart, vitality”. This I consider to be the key issue that the report should emphasize more. VisitBritain adopted a new vision (country-branding) that puts all the traditional tourist activities into a modern light, with a real 21^st century approach. What are the benefits of country-branding initiated by VisitBritain? If we listen to Kyriacou and Cromwell, we can find out the benefits of the country branding: “How a country is perceived, both domestically and from abroad, from the quality of its goods and services, to the attractiveness of its culture and its tourism and investment opportunities, to its politics, economic policies and foreign policy, can be shaped under a brand. The branding process strengthens democracy and helps both internal development and successful integration into the world community, on all levels.” (Kyriacou and Cromwell, East West Coms)

What the report considers “tensions” between short term and long term objectives are in fact the symptoms of transformation from an atomized vision (as the individual campaigns guided by a bigger return on investment are) to a holistic one (as the country-branding is). This proves that VisitBritain decides not to be influenced by “big players”, but to lead all industry towards its own vision. VisitBritain is no longer a manager but a leader. And I think this is exactly the purpose of a national tourist agency that promotes overseas the country.

I consider as well that the author of the report is quite generous and do not bring to the public awareness the difficult issues from VisitBritain’s activity.

Overall the auditor’s recommendations approach is a good one, having a technical character, on one hand, and a strategically one, on the other hand.

Still, I believe that the auditor should have recommended VisitBritain to become more conscious of its importance for British economy and to have a stronger position in its relation with the political institutions, regarding the tourist visas policy (for instance).

The report recommendations about the return on investment are well structured and reach all the necessary technical aspects for VisitBritain to achieve its return on investment target.

The recommendations regarding the relationship with the tourism industry are appropriate, but, from my point of view, the auditor should have advised VisitBritain to provide as soon as possible the tourism industry with the results of the research about the perception of Britain abroad as a tourist destination. It is well known the fact that in accordance with this perception, the tourism industry can offer proper product and services.

References:

DeHaan Tourism and Travel Research Institute, 2006, [WWW], “Tourism Marketing Evaluation Peak District Visitor Guide 2005 Evaluation Conversion Research”

http://www.visitpeakdistrict.com/downloads/evaluationform.pdf?PHPSESSID=2048cd8549f2 , 2006, (15^th January 2007)

Kyriacou, S. and Cromwell T., 2006, [WWW] “The Concept and Benefits of Nation Branding”, http://eastwestcoms.com/Concepts-and-benefits-of-nation-branding.htm, 2006, (15tyh January 2007)

Wanamaker, J, cited from [WWW] http://thinkexist.com/quotes/john_wanamaker/2.html, (16^th January 2007)

World Tourism organization, 2006, “Tourism enriches” [WWW], http://www.unwto.org/newsroom/campaign/tourism_enriches_eng.pdf, 2006, (16^th January 2007)

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Making Policy – Essay by Bogdan Craciun

noreply@blogger.com (Bogdan Craciun) — Sun, 08 Feb 2009 00:13:00 +0000

Critically examine the usefulness and weaknesses of the policy network approach

In order to examine the usefulness and weaknesses of the policy network approach, we need to revise the existing literature that is concerned with this issue.

There are many different approaches to the policy network. The American literature speaks about interest groups and describes it with Lowi’s (1969) famous “iron triangle”, metaphor for a closed and powerful circle of control at sub-governmental level. In the British literature Richardson and Jordan consider the prevalence of interpersonal relationship over the structural relation inside a network. An interesting evolution has Rhodes conceptualization on policy network: in 1981 Rhodes’ point of view was that the structural relations between political institutions are prevalent over the interpersonal ones. In 1992 Rhodes’ collaboration with Marsh results into a new insight presenting what I would call an “ecological theory”, that takes into account both

influences exerted on policy outcomes by the sectoral and the sub-sectoral aspects of networks, in other words: both the structure and the interpersonal relations.

Policy maker, policy making process and networks

Considering the policy maker and the network as two actors on the same stage, it can be more easily understood the interaction and the bargaining process that appears.

The policy maker has the power to access resources and to distribute them to various needs expressed by networks. The networks have the power to attribute or to alter the access of the policy maker to this privilege (of accessing and distributing the resources). Here the bargaining power of each part comes into stage. The policy maker is looking for a future where he can secure his privileges. The network is looking and asking for a decision that has as effect a policy change that suits its own goals and agenda.

In a democratic society the policy maker secures its future privilege by assuring future re-election. This re-election is reinforced by a positive public opinion that comes from policies perceived as beneficial by society and by a political support from networks. Each part of the equation is equally important, thus a policy maker must take both of them into account. The only problem is that the interest of the two – public opinion and a specific network agenda – could get into contradiction to each other. And here the policy maker should deal with the eternal dilemma of running with the hare and hunting with the hounds: to satisfy specific interests of networks and to keep the public electoral support by satisfying social, public needs. Sometimes these two types of interests can differ and thus compete for a decision on their favor under the principle of exclusion (only one of two interests may get the favorable decision).

The policy maker is expected, according to Vickers (1995, p.130) to know how to balance and how to optimize. The policy decision must satisfy the existing needs – that usually are so many and so diversified that we could consider them as infinite – with limited resources: money, energy, skill and time. When the policy does not take into consideration the limited resources or fails to satisfy the existing needs in a proper manner, that policy is the way to disaster.

The policy maker should be able to evaluate the needs and the limitations, the challenges and the risks in order to design a successful policy.

The needs respond to changes that occur in society. Changes are produced by the natural tendency for survival and growth. New interests and motivations in society express these changes. Policy making is the result of the interactions that arise in the process of the social life. The policy maker matches the internal needs and resources to external demands and opportunities.

Policy making is a communication process. According to Vickers (1995), the social change occurs by transfer of information. Communication could be used as weapon, as a “unilateral instrument of coercion”, that can be considered as a physical form of change as produces as result at least restriction of freedom. As the role of communication is to inform, to persuade, to deter, these are some of the roles of communication between the policy maker and its milieu.

Policy making is a day-to-day task, as it deals with a dynamic process. It needs to work with predictions. As the rate of change increases, there is always a gap between reality and assumption. The power to predict accurately (what is going to happen and what are we going to do), to foresee the actual results of the decision taken is part of policy making.

What and who influence change?

What are the factors that determine change? The factors that determine change are the factors that could influence the policy maker. A source of influence is the level of resources: they may shrink or grow; so the policy makers decide where the restriction or growth falls. The values and the standards by which the services are judged may change and they become an influencing factor for policy maker’s agenda.

Confronting change, the policy maker could decide to protect the present state and to reduce as much as possible a negative influence while he could choose to encourage expanding and growth.

Who or what exerts influence on policy maker? The influence is exerted by everyone that could make the policy maker dependent and by everything that could bring constraints to policy maker’s activity. Among them are, according to Vickers: “the planner, those who execute the plans, those who have the legal or practical power to veto them and those whose confidence and concurrence is required in order to make the policy effective”. (Vickers, 1995, p.110). Vickers considers that “implementing of policy must include plans to secure the necessary cooperation or to insulate it against interference”.

Questions that should be answered by the policy network approach

There are some questions to which the policy network approach is asked to answer in order to prove its utility. Some of these questions are related to the nature of network: how is formed; what motivates the individuals to get together and work together for a common negotiated agenda; how the differenced are negotiated; how does influence the result of its action on cohesion and further development of the network?

Other questions deal with the double way inter-relation between the existing network with the institution it tries to influence; how does the type of network determine the outcomes; how does the outcome determine the future structure of the network (the hierarchical/power structure)?

One of the most sought for answers in policy network approach is the predictability of the influence efforts of network on policy maker’s decision: what factors modify the influence of the network, how do they affect the policy outcomes.

In order to have a useful approach we need to understand the factors that influence the change. A policy maker is by definition not a risk taker. Its own agenda (of securing future privilege) prevents him from making adventurous decisions or controversial ones for citizens. The networks activity imply the pursuing of own objectives. Their objectives are an echo of the new evolving needs that come from the inner dynamic of life. This adaptation of network goals to real needs ask for changes, more or less challenging for the policy maker.

This problem of the dynamic of networks and the dynamic of their relation with the policy maker is one issue considered as weakness or policy network approach by some authors. Peters (ed. Marsh, 1998, p.25) points out “the absence of more explicit linkage between network models and models of the policy process”.

Answers and Different Opinions

In literature the change of the network is related to change in policy outcomes. The outside factors affect policy networks. The perception of these factors, the way they are interpreted and negotiated inside the network affect the outcomes.

Marsh and Rhodes (cited in Marsh ed, Comparing policy networks, 1998, p.53) consider as main factors that modify the influence of the network the exchange relationships and power dependence as well as the level – sectoral or subsectoral of the network.

How do the identified factors affect the policy outcomes? One weakness of the policy network approach is, as seen by Daugbjberg “it has not developed a theoretical model for explaining policy outcomes” (Ed Marsh, 1998, p.78)

Marsh and Rhodes (1992, cited in Ed Marsh, 1998) try as well to find a casual link between the type of network and the policy outcomes.

They identify the tight network where the members share the same ideology and similar values. The number of members is limited and their interaction frequent. There are little or no dissensions among members. Generally the members have similar access to resources thus their bargaining power is virtually equally important. This could be a community network of business or professional type or even social based one, composed by people that need their own political voice heard in a society where the access to political system could be closed or restricted.

Another type of network is the loose network, or the issue network. These networks accept large numbers of new members, whose involvement is usually not constant. The members that get into an issue network usually have different access level to resources, so their bargaining power inside the network is unequal. There is a core where the decision is concentrated.

Marsh and Rhodes (1998) consider that the tight network produces continuity in policy while the loose networks are responsible for unpredictable policy outcomes.

Dowding (1995) accepts the idea that networks matter but he considers the policy network model is not able to explain policy outcomes in a scientific manner.

Even if the opinions of various authors regarding the usefulness of policy network are split, there are practical efforts to find a methodology to use the policy network approach.

One interesting study resulted in the comparative analyze of the policy outcomes of environmental policy in Danish and Swedish agriculture, Daugbjerg (ed. Marsh, 1998) proves that networks type could determine the policy outcomes. Thus the Danish network could get the Ministry of Agriculture’ s support due to its cohesion and the farmers escaped the costs of Polluter Pays Principle and got it subsidized by state. The Swedish network could not obtain the same policy result because the weak cohesion of the network and weak influence on Ministry of agriculture. In the end the Swedish farmers had accepted the Polluter Pays Principle. The author of the comparative study considers that the degree of cohesion of a network determines the result, determines the decision.

This practical result of analyze is consistent with the previous theoretical supposition of Marsh and Rhodes.

A weakness of the policy network approach is the manner in which the conflicts are resolved. Peters appreciates Sartori’s efforts to explain policy change, by using the “policy advocacy” model. But Peter’s points out that outcome of conflicts depend largely on the method of solving them: one of these methods being synthesis, the second being application of political power, while bargaining mechanism is the third method. As for each method of conflict solving involves different outcomes, this equals to a low level of predictability.

Another weakness identified by Peters is the linkage between policy network approach and the agenda setting. According to him, Baumgartner and Jones (cited in ed. Marsh, 1998, p.31) introduce in literature the “punctuated equilibria” idea that considers that “agenda in a policy area are relatively stable unless there is some event or political change that upsets the equilibrium”.

A brilliant step forward in policy network approach is Compston's (2006) integrative approach in discussing the factors that influence the policy outcomes. Using the policy network theory and the Advocacy Coalition Framework of Sabatier, he identifies the process that explains a major change in policy. The conceptual contribution from policy network approach is spotting that “for major policy change to occur there must first be preexisting changes in the views, bargaining strategies, power resources or coalition possibilities of network members and these can only be brought about by external factors of the model” (Compston, 2006, p.3). Compston considers that it is nearly impossible “to predict the ways in which external events can influence public policy” and this view shows, in my opinion, that Compston understands the human dimension of the networks, an aspect previously neglected by theorists. Still he identifies some external factors that can be predicted and he calls them “king trends” –“events that constitute major long-term technological, economic environmental

and social trends“, “significant for people’s lives and expected by experts to continue for the next 20 years” (Compston, 2006, p.4). And this is a big advancement in the public policy predictability.

Policy network approach should be able to describe the evolution of each type of network from inside (how it shapes, what needs has, what standards has, how negotiate the agenda) and its relation with the external world and especially to policy maker (how the network influences policy maker’s agenda; how network can persuade and controls policy maker’s decision).

An important contribution on understanding the network dynamics is brought by Hay (ed. Marsh, 1998, p.44). Hay’s research regarding the network formation, recruitment and internal dynamics lights one of this “most sadly overlooked, least discussed, and yet obviously crucial aspects of networking”. He describes schematically network formation, where the first factor as importance for individuals to aggregate into a network is “the recognition of the potential for mutual advantage through collective (as opposed to individual) action.” Hay considers that the recruitment is a process by which the network is renewed and accesses new resources.

For the network’s life, important is the coordination of different intentions, motivations, and expectations of its constituents. Hay brings his contribution to the “network failure” concept, where his opinion is that “network failure is almost entirely a matter of perception” (ed. Marsh, 1998, p.50) and usually must be answered the question “failure for whom” in order to understand its subtitle mechanism.

Human dimension of networks

While discussing the usefulness and weaknesses of the policy network approach we should bear in mind that “all the networks are dominated by economic and government interests” (ed. Marsh, 1998, p.188). The human dimension of the networks makes me state that understanding the activity and the way a network negotiates its resources is not a matter of strictly cause and effect. I doubt that in this social domain “what determines what” can be so easily identified and more – precisely forecast. We deal in policy network with a negotiation in two steps: the first one is the internal network negotiation among its members. This result of the internal negotiation, which represents the network’s agenda, gets into the second stage of negotiation, with the policy maker. The negotiation in double steps is a totally psychological matter, where the result depends on motivations, expectations and feelings. The fear of losing something, or the desire to obtain something valuable, could be important drivers for sudden and unexpected human actions and decisions. There is no general rule or patterns for a 100% success in all negotiations. There is always a possibility for failure of the bargaining process; there are always some actors on the stage that could change the results in the last moment. Even if the literature states the possible relation that could exist between the type of state and the type of networks, I consider that is too little attention granted to the cultural specific of each country. The network has its specificity on each cultural region and this makes the general rules impossible to be given.

Another weakness in my opinion is the fact that the authors do not pay too much attention to the conflicts that arise when is negotiated an outcome between the policy maker and more than one network. We need to understand if, when, how the networks with similar interests negotiate between them and between themselves and the policy maker their own agenda with different priorities. For example: if we have two networks that militate for women rights, one of the networks having as the first priority the equality of chances in career, the other one fighting for the abortion legalization. It is interesting to find out what influences the policy maker in his first choice for action: the issue, the public’s interest in issue, the power of the network or common personal values to one of the choices. The interaction between the networks competing for common resources is an important matter of both policy networking and social dynamic.

Conclusions

In my opinion the policy network approach is an important instrument for future theoretical advances that could help us understanding the new developments in governance.

Firstly, the network policy is the new type of governance in European Union (EU).

Benington and Harvey consider that “transnational network are now a key part of the policy development process within the EU” (ed. Marsh, 1998, p.149). Marsh concludes that networks are more and more perceived as a “new form of governance” (ed. Marsh, 1998, p.190).

EU is defined as “a hybrid intergovernmental and supranational organization” (CIA site, 2007). Its economic goals are to eliminate trade barriers, to adopt common currency and to create common living standards. As an international agent, EU is aiming to develop itself as a political and economic power.

But we must take into consideration the reality that the historic national disputes and the difference in income among regions make EU to face difficulties in generating consensus for common policies.

The definition for the concept of networks as stated by Hay (ed. Marsh, 1998, p.38): “modes of coordination of collective action characterized and constituted through the mutual recognition of common or complementary strategic agendas” makes me conclude that EU is such a network from the moment it was conceived.

Another application that requires the contribution of policy network approach could be the research on Public Private Partnerships. The modern policy making confronts a new concept for executive level procurements: Public Private Partnership (PPP). This new concept that aims for state public service decentralization has as main goal offering better services to citizens by a close collaboration with private agents. This modern solution found for improving the quality of public services has as main concept the network policy. The transparency and accountability of the tendering and biding process are important, but equal importance has the understanding of the networking process. With the aim of better quality of its public services the executive policy maker has to learn to resist to pressures, to avoid the traffic of influence and corrupt practices in awarding the contracts. The policy maker aims for equal opportunity milieu where the only important values to be decided by market mechanism. The policy network approach findings and research could help in developing a fair and higher qualitative process for offering citizens better services.

The policy network concepts help to understand what is happening and why in modern world of policy making. Still the policy network approach needs to contribute on clarifying many issues pointed out in the present paper.

Bibliography

CIA – “The World Factbook -- European Union”, 2007, [WWW]. 15^th March 2007, https://www.cia.gov/cia/publications/factbook/print/ee.html, (Accessed on 25^th March 2007)

Compston, Hugh – King trends and the future of public policy, Palgrave Macmillan, 2006

Marsh, David, edited – Comparing policy networks, Open University Press, 1998

Vickers, Geoffrey, Sir – The art of judgment: A study of policy making, Sage Publications, 1995

Making Policy de Bogdan Craciun este licenţiat printr-o Licenţă Creative Commons Atribuire-Necomercial-Fără Opere Derivate 3.0 România.

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Citizens participation in the process of budgeting in Romania - Dissertation by Bogdan Craciun

noreply@blogger.com (Bogdan Craciun) — Fri, 06 Feb 2009 20:09:00 +0000

Abstract

The present paper is a study that analyses the quality of public services from Romania. Further to this analyze is proposed a budgetary strategy that could have as final result the improving of public services’ quality.

The study is organized in seven chapters. The first chapter is a background introducing the main discontents of population regarding the public service environment, and trying to find out where the problem is, according to the mass-media disclosures. In the second chapter is presented the CPBV process concept.

The third is a summary of previous solutions used in dealing with similar problems.

The fourth chapter is analyzing up to what extent the new process proposed could help in improving the quality of Romanian public service sector.

In the fifth chapter is detailed the concept of service quality and builds the framework for the process proposed.

The sixth chapter is listing the expected benefits and the possible limits of the strategy.

The final chapter is constituted by conclusions.

I express my gratitude for Mr. Simon De-Lay’s comments and guidance received when this paper was elaborated.

Chapter I

I.1. Romanian Background

Starting with 1^st of January 2007 Romania is EU member. This obliges Romania to adopt policies and rules according to the EU’s vision. Bureaucratically speaking, many of the rules and procedures required by EU member status are lawfully adopted. It seems that Romania is heading the right direction. But, as in an old Romanian saying: “The theory as theory, but the application is what kills us!”, the reality shows something else.

Excerpts picked up from the Romanian mass-media can provide the reader with a view of public’s perception regarding the public services in Romania; the widespread public opinion catalogues the public services as inefficient and ineffective. The main causes seem to be: corruption, excessive political influence, unprofessional management, and a general lack of interest regarding the very purpose of public service institution.

19^th of April 2001: “A group of Liberal councillors from City Council express their discontent regarding the fact that RAGCL and Urban Trans SA, despite of being directly subordinated to City Council and providing services absolutely necessary for population, their activities bring losses to local budget”. (Modiga, 2001)

15^th of December 2005: “Romanian economy had, and still has, many black holes. A black hole is the place where the public money hugely pour in, a few (or some more) smart boys get rich, and the taxpayer is discontent that the money he pays through taxes do not return to him in services. A black hole could be a State enterprise, a national company, as well as the health system. Because only such can be called the place where the State allocates three to four times more money (in currency) than five years ago, the services are not better, the hospitals endowment did not improve […]”. (Popescu, 2005)

2007: “The governors perceive the budget as an endless sack: budget it pays for the public servants’ pensions, salaries and holidays, and erases debts. The fact that the State is the worst administrator is not new for anyone. Many of the companies that still belong to the State are used as vehicles for electoral charity. As politician, you simply cannot let the engine of votes to die, but you erase its debts, preferring to go with it seized up. The private companies, in return, are forced executed”. (Rusu, 2007)

17^th of August 2007 “Starting with the prefect and ending with the hired of the public institutions of Botosani, have spent thousands of lei (Romanian currency) for trips abroad: for lobby, to conclude contracts or for exchange of experience, being followed by colleagues or football teams; everything with money from budget. Spain, France, Belgium, Great Britain or Sweden, these are the preferences of local elected ones”. (BotosaniNews, 2007)

The examples above prove that the public service is in Romania an old story, with many characters that contribute and influence the development of the script: politicians, governors, public managers, ordinary public servants, act as they have a common enemy: the taxpayer.

Politicians work for their own interests, which are personal or group interests. The enacted laws follow docile their wishes. The public money is at their disposal. No sum limits, nobody to be accountable to. The electoral defeats do not count too much. The enemies in Parliament become friends in economical interests when the doors shut. The best business is with the State, so there is an obvious preference for no (or fake) auctions in public service contracting; large networks of friends, relatives and highest bribers benefit of extracting public money in return for almost nothing: expensive services and products, little quality included. Quality is defied as could stop the pour of money for weak services or products, performance is avoided, and criticism for improving the situation is a good reason for getting fired (because you try to put at risk the state of affairs).

I.2. What do the citizens know about budgeting?

Citizens’ voices will not be heard too much. They just pay too much, for almost nothing.

I have undertaken a research by compiling a survey (annex 1). The answers received to this survey’s questions showed that 92% of respondents have no idea what percentage of their salary contributes to the central budget. 85% do not know which public institutions have as financial source the allocations from central budget. 46% do not know what services they should receive from each public institution, while 34% have a vague idea regarding the services provided by the traditional public institutions: school and health. When asked what if are satisfied with the services currently received from public institutions, 88% of respondents declared unsatisfied with the quality of the services they receive.

The conclusion of this survey is that generally the public does not have too much knowledge of the way the public services work. It is the administration representatives and the politicians (the keys keepers of the public money’s safe) who want to maintain this state in order to profit better of public money, without being accountable to anyone.

I.3. The main cause of poor public service

I believe that the main cause of the poor public service in Romania is the mentality of all public servants, starting with top manager and ending with the ordinary clerk. Personal interests are prioritized, and little concern for public interest is showed. Romanian public service is a system that has in place all the necessary laws; but a weak justice system is unable to penalize the breaking of the law.

Romanian public service is subordinated to the political influence. Politicians and high level public managers use discretionary the budgetary funds; they decide to keep alive with public money bankrupt State enterprises; is this manner is bought the social peace: State guarantees, subventions, inefficient credits granted by State banks. After the moment of paying the taxes, citizens have no means of control on how and where the money was spent.

In order to institute the citizens’ control on allocations of central budget funds, it is needed a process that enables keeping the politicians and public managers accountable and their actions transparent. One experience that allowed citizens to monitor the use of the budgets is the participatory budgeting, as it was developed in Brazilian cities of Porto Alegre and Belo Horizonte.

Using the Brazilian experience in participatory budgeting, and the concept of earmarking, I propose a new strategy (called Citizen Participation in Budget Venues – CPBV), adapted to Romanian social environment, strategy that allows citizens’ budgetary monitoring, even from the budget preparation stage.

The improvement of public service’ quality and a positive impact on Romanian democracy could be achieved by this strategy.

In the following chapter I shall analyze the difference between the bureaucratic declarations regarding the state of public services and the public’s perception on this state.

I.4. Causes of the present situation of public services in Romania

Analyzing the public service environment in Romania, it can be identified quite a large gap between what governors declare they want to achieve, and what people see as being achieved.

The Romanian Government initiated in 2001 a program of reforming the Public services. By implementing the reform, Government aims to create a framework able to institutionalize the quality of Public services; in other words, Government creates a framework (banking on laws, procedures codes, monitoring and audit rules) with the declared goal to obtain better services. There are some analyses of the present state of the administrative reform in Romania.

These are mainly Governmental reports, “Report regarding the achievement of Program of governing after two years of mandate, March, 2007” being one of them. This report provides a comparison between the stated goals of the Program and the present achievements, noting in a rather glorifying manner the results and neglecting, in a great extent, the under achievements and especially the causes of under achievements.

In my research I could not find coherent reports regarding the perception manifested by the end-users of the public services. I am aware of a large scale popular, every-day, discontent with the general performance of the Government, but cannot be found studies and reports that evaluate the public services in an scientifically and coordinated manner.

For diagnosing the present state of customer satisfaction with public services, were used Gallup Organization Romania’s surveys. The topics of these surveys are only tangential related to the domain of this research, and generally the data found is scarce and more or less connected to the state of public service delivery in Romania.

In order to understand better the real situation in Romanian public service area, it was applied the SERVQUAL thinking, by trying to identify the existing gaps between the mentalities and expectations manifested by Parliamentarians (and other public arena decision makers) on one side and those of ordinary citizens on the other side; the same thinking was used for identifying the internal gaps between the reform demands as expressed by public service top management and the perception of the reform results held by executive public servants

I.4.1. Differences of opinion between ordinary citizens and Parliamentarians

Romanian Governments have put on paper numerous public services reform strategies. Governmental functionaries and Parliament representatives together use frequently in their speeches concepts as “better services”, “performance measurements”, “human resources development”.

Dinca (2006) considers that the present stage of reform in public services show “rigidity and incapacity of adaptation to new requirements, lack of responsibilities, non-existence of loyal competition and the lack of transparency”. (Dinca, 2006, p. 30)

But ordinary citizens ceased to trust the words and promises and believe only in what they see. What they experience day by day makes 62% of them declare that in one year’s time they believe their life will be the same or worse (The Gallup Organization/Rusu survey, 2004). Even if there is no direct link between the above percentage and the quality of public services, I just can speculate that bad public services may have an influence on this perception.

The survey brings out the striking contrast between the conceptions and mentalities proved by politicians on one side and by ordinary citizens on the other side. 40% of citizens answer that the State should assume more responsibility for every citizen’s welfare, while only 22% of politicians chose the same answer. If 63% of citizens agree that some branches of economy and the public services are too important to be let in count of private enterprises, while only 17% of parliamentarians agree with the above statement.

In Romania, as anywhere else, the Parliamentarians are those who decide on laws. If the way they perceive and understand citizens’ needs differs so much of the way ordinary citizens express their own needs, we can only assume that what policy decision do not match with citizens’ need.

Why is perpetuated such a situation? The answer could be either: the parliamentarians want to find out citizens’ needs but do not have any process to help them. Or, the second answer could be a bluntly: they simply do not care; consequently, they do not bother to find out.

The politicians’ lack of social interest connected with the lack of accountability demands from ordinary citizens, makes a clear picture explaining how is possible to perpetuate this situation.

Anyone who lived in a democratic country would ask: why do not ordinary people keep the politicians and governors accountable? Why they do not use their rights to make their demands heard?

In order to find an answer to this question, is needed to be understood a cultural aspect of Romanian citizen. After a dictatorial regime as communism was, where the terror of denunciation after a chat with a “friend” (and of being taken to Security’s cellars for an “unconventional” – and maybe painful – interview) was a daily matter even in 1989 – the year of the Revolution –, is easier to be understood people’s reluctance to join into associations with each other. This reluctance to associations is still powerful even in June 2006, when 62% of Rusu/Gallup’s surveyed citizens believe “that most people cannot be trusted”. This answer reveals the Romanian dimension of democracy: fragmented and contradictory.

CPBV addresses both politicians’ lack of social interest, and the lack of accountability towards citizen, determining on short-term and long-term the desired outcomes: accountability and interest for public problems.

I.4.2. Public servants’ hopes for future

The Government represents the Public service institutions at the highest level. The reports on public services’ reform situation compiled by Government represent in the same time a summary of the activities undertaken for reform, and a form of auto evaluation.

The Romanian Government Report (2007) looked over the achievements of the last two years and proves that a performant public service framework is in place. There are laws enacted that regulate each individual service’s domain (e.g. law for organizing and functioning of water supply and sewerage public service, law for organizing and functioning of public lighting); there are laws for decentralizing of institutions, fiscally and at management level; there are procedures, as is CAF (Auto evaluation Framework of the way the public administration functions); there are in action procedural rules and codes of conduct for public servants. The Romanian Public Service has the right system in place for providing good services.

But seen from inside, the public administration reform’s results are perceived extremely negative by the public servants. The Gallup/IPP (2004) survey expresses the findings on public servants’ perceptions regarding the effect of the reform of public administration. Only 8.3% of respondents consider that the Government’s legislative measures are well compiled and implemented, while 89% believe that these measures are incompetent structured from the beginning (40.6%) or, if these legislative measures were well structured, they are wrongly applied (48.3%). When asked to identify the causes of wrong applying of the legislative measures, 42.4% of public servants declare they do not have enough information in order to identify them (are people afraid to speak the truth, or they simply do not know?). As the survey concludes, these data suggest that public servants have a negative opinion and attitude towards the quality of public administration reform process. More, “the risk of de-commitment of public servants for reform process is a real one and this fact is making more difficult the transforming of public servants into performant professionals” (Gallup/IPP, 2004, p. 119) is the final conclusion of the survey.

The survey brings to light another important issue: what can motivate the public servant. 87% answer that a bigger salary is the main motivator for a better performance. The survey’s administrators think “a mentality of ‘I work because I am paid’ ignoring any other form of professional satisfaction is very detrimental on long-term for public servants’ profesionalization” (Gallup/IPP, 2004, p. 115). The perception of corruption is widespread: 62% of public servants consider that corruption is generalized at all levels. When asked "what is the purpose of the activity in their institution", some respondents answered: “in some degrees, the institutions serves obscure interests of certain persons or groups that pursue obtaining of personal benefits” (Gallup/IPP, 2004, p. 113).

The Gallup/IPP (2004) survey reveals that the public administration is under political pressure. 55% of public servants believe that local political factors have a decisive role in hiring of new public servants, 15% consider that this practice is a rule, not an exception. The political membership is perceived as a reason for better treatment when the public servants belong to the party that won the local elections, while 7% complain of worse treatment because they belong to the party in opposition. It is important to note that the law forbids any discriminatory manifestation. (Gallup/IPP, 2004, p. 114)

The survey indicates another characteristic that impedes on reform’s success: 70% of respondents (which are public servants) feel that both their peers and hierarchical superior are reluctant to change. Reform equals change, and the resistance to change is in fact the cause of the reform’s fiasco.

As the salaries are exteriorly determined, especially in public sector,

people feel they cannot influence it in any way; not performance and competence is at the core of financial reward, but relationships and nepotism, membership to a political group or a group of interests. It is obvious that the professional attitude of public servants is the result of an environment that prohibits efforts towards performance.

All the above considerations take us to a unique problem: the top management.

The Gallup/IPP (2004) survey revealed that top management of Romanian public service is reluctant to change. More, it seems that a bottom-up approach, in which the executive public servant would try to influence the top management for reform could not be attainable as 51% of surveyed public servants do not feel encouraged to comment and to disagree the decisions of their superiors (Gallup/IPP, 2004, p. 113).

As the role of the top management in inducing and implementing change is essential, a question arises: how can the top management be determined to move from exclusively political and personal interests, to involvement with the reform.

Firstly, I believe that the old habits cannot be changed by reform. I strongly believe that a genuinely reform can take place only with new top management personnel. And secondly, if are taken into account all previously noted factors, I believe that CPBV strategy is the process that can pull the reform process.

In this paper I try to identify the relation between causes and the effects that affect the public services in Romania, and suggest a solution aimed to achieve real improvements in public services’ quality. The strategy we propose is called Citizen Participation in Budget Venues (CPBV) and the mechanism is described hereinafter.

Chapter II

II.1. The process of CPBV

By law, every Romanian working citizen is obliged to pay a tax on income. In present this tax is 25.5% of gross income. After the tax is paid, the citizen finds no further trace of what is done with this money.

It seems that the root of this problem stays in the way the taxes are defined in Romania. The benefit principle of taxation: “people should contribute to taxation according to the benefits they receive from Government expenditure” (Carling, 2007, p. 2) as expressed by the early writers on tax, cannot be found in the way the Romanian National Institute for Statistics defines the taxes on income: “the current taxes on income, wealth a.s.o. cover all compulsory, unrequited payments (my emphasize), in cash or in kind, levied periodically by general Government and by the rest of the world […]” (Romanian National Institute for Statistics, 2005, chapter 11, p. 8)

I think that this view on taxes is a reason for the fact that taxpayers do not know how money is used, for what purposes and with what results.

It is generally accepted that this money contributes to the central budget. From budget money is distributed towards all the obligations assumed by Government, including public services. In 2005 the share of total budgetary venues represented by income from taxes on income and social insurances represented 39.68%, while for 2006 this share was of 39.98%.

CPBV is a process that enables each working citizen to direct the 25.5% tax from his salary towards the ministries that provide the services he is most interested to benefit from, or he is satisfied with; the amount of the share directed towards ministries is totally under citizen’s decision.

For every financial year, the citizen uses a form and fills in personal choices related to the ministries that receive a share of salary taxes (figure 1). This information is fed into a national database. As consequence of their contribution, the citizens are entitled to access the chosen public service.

Each Ministry receives from the CPBV national data base the information regarding the amount of money people decided to direct towards them. Each Ministry knows exactly what the citizens’ needs for their services are.

In CPBV the citizen pre-pays the services he finds important for his present needs. The citizen can access a service not included in his distribution only by paying a fee.

Figure 1

This is a sample

FISCAL CERTIFICATE

Fiscal year ……………

ID Number of the Employee	1234567890 (employer fills in)
Brut salary	2500 RON (employer fills in)
Tax to be allocated	25.5%

Beneficiary Ministries	Government’s Recommendation for Allocation	Employee’s decision of allocation
Ministry of Education	4.7%
Ministry of Health	5.2%
Ministry of Justice	2%
Ministry of Transport	2.1%
Ministry of Agriculture	1.7%
Ministry of Culture	2.5%
Ministry of Internals	2.2%
…	…
…	…
Total	25.5%	25.5%

I declare hereby that the data above are correct

Signature Date

Notes: 1) The certificates that are not filled in (or contain mistakes), will not be taken into consideration. By default, for all these anterior cases, will be used the allocation as per Government’s recommendation.

2) The unsigned certificates will not be accepted.

II.2. Timeline of the CPBV process

The system of CPBV does not contradict the timeline of the present system of budgeting in Romania, as described by Law 500/2002.

I shall refer to the budgeted year as number i, the year previous to the budgeted year is noted i – 1.

Here is the timeline for the present budgeting process:

By 1^st June year i – 1: Ministry of Finance (MoF) communicates the limits of spending for each ministry for year i;

By 15^th July year i – 1: Budgetary proposals from ministries are sent back to MoF;

By 30^th September year i – 1: MoF sends to Government the State budget proposal;

By 15^th of October year i – 1: Government sends the State budget proposals to Parliament.

In CPBV the data would be collected before 1st of July, when the ministries proceed on formulating their budgetary proposals, under the spending limits received from MoF.

The timeline of the CPBV process:

1. The employer downloads from the MoF site, or receives by mail, the formulary of Fiscal Certificate (FC);

2. The employees fill in the FC with their own allocation decisions or agree with those recommended by Government, formulary that they will sign;

3. Up to end of May, the employer must bring all the FC’s to MoF;

4. MoF centralizes data from all the employers into a central database, which allows diverse search and sort possibilities to extract various statistical information; this is one of the most important functions of CPBV for policy decision making;

5. In the first year of CPBV, MoF certifies the allocations through an individual, nominative FISCAL CARD (FCD), which is then sent to employers for distribution to all employees. With this card it can be activated only the data base from MoF, which contains the FC data.

6. MoF presents Government and Parliament the results of CPBV, for analyse and for elaborating future strategies for public services;

7. MoF sends by first of June the results of CPBV allocation towards all the beneficiary Ministries, these preparing the budgetary over-funds calls.

During the budgetary year, MoF receives from Chamber of Work updates regarding the employees’ status (change of job, salary amendments), and amends the database accordingly.

With every public service use, the employee presents the FCD to the service providing institution; this accesses the database from MoF and gets all the relevant data regarding the taxpayer. In consequent budgetary years, MoF only updates the database, using fresh information from new FC, with the new budgetary options. FCD remains the same.

In the classic budget settlement the main decision makers are: Government, Ministry of Finance, Prime Minister, Parliament, other institutions subordinated to MoF, In CPBV the citizen becomes part of the decisional process.

II. 3. The overall expected impact of CPBV

Efficiency

In this process the citizens direct the budgetary funds straight to the ministries whose services they need or are satisfied with. It is avoided in this way the Governments’ interference (which proved so far to behave discretionary and incapable to handle correctly and efficiently the financial resources). The Ministries have the freedom to use the budget received from citizens in a way that allows the fulfilling of their promises, according to the projects approved by Government; they are allowed to establish the levels of salaries and bonuses granted to their employees (and this is the most important motivational factor for public servants in this stage of development). Ministries need to prove that money were efficiently, as a consequence in the following year could to benefit again of the same funds (or maybe bigger), and resulted from CPBV allocations. In other words, if a Ministry does not perform with real results, (spends money on useless projects, is not able to motivate the ordinary public servants to have a high professional and ethical standard), the unsatisfied citizen will penalize by allocating a smaller percentage next year, or by totally giving up the services provided by that ministry and choosing a private service provider.

Transparency

The Ministries will be encouraged for transparency. They will have to share on websites their present and future projects, the budgets and the way it were spent. In the budget preparation stage, the Ministries have to report for last year’s activity. Then they have to advertise with citizens future goals of the Ministry.

Accountability

Accountability will be enhanced as there will be open reports of how where the funds used and with what results.

Ministries will have to advertise future projects, trying to persuade the citizens to allocate towards them the CPBV shares.

In this way the public institutions will adopt the market principles, will get into competition with the other public institutions (in their struggle for bigger percentages) and with private providers of similar services (they need to keep the same level of quality of the services, in order to keep the customer – their citizen in this case – loyal).

I need to emphasize that the citizen cannot decide not to allocate at all the 25.5%, they only can decide toward what ministries their tax share goes to, avoiding the present Governmental/parliamentary allocation of central budget.

It is obvious that through CPBV process only a part of the central budget is under citizen direct control. The other sources of central budget, apart of taxes on income can be collected and could be subject of usual budgetary process. As a result of CPBV, the central budget is constituted of venues earmarked for providing certain public services and venues from other sources than tax on income, that constitute the necessary funds required by macro economical balances.

The citizen turn from anonymous tax-payer into citizen-customer looking for at least a standard service quality; the public institutions become aware that if they do not provide services at an expected quality, they might have less pre-paid customers next years, thus, a smaller budget and bigger constraints for their activities.

The Government in CPBV will decide the appropriateness of allocating resources from central budget to support the ministries that still need a balance of money for their activity. The Government guards the correct spending of funds. The Government uses the results offered by CPBV (the most realistic and pragmatic research regarding the demand for a certain service) as a guide for future policies and strategies regarding public services.

Chapter III

III.1. Antecedents of budgetary concepts related to CPBV

Budgetary participation had different meanings in different concepts.

One of the most well-known concepts is the Participatory Budgeting in Brazilian cities.

Souza (2000) indicates that the concept of Participatory Budgeting (PB) in Brazilian cities was applied at the local Government level. The process engages citizens with low-income to decide upon the allocations of a part of local revenues towards those investments which are considered to be a priority for that community. As in the centre of the process is the poor community, the size of the part from local revenues which was addressed by the citizens’ allocative decision was established using a distribution criteria; by this criteria, a progressive distribution of the resources was intended towards the poor areas, so that poor areas received more funding than the well off ones, while at regional level, the share of investments was direct proportional to the level of poverty of the region.

PB revealed that the priorities of the people differ from those imagined by local Government (Souza, 2000, p. 14)

In explaining the causes of the good results of the PB in Brazilian cities, Souza (2000) presents the associative characteristics of the inhabitants of Porto Allegre: “38.4% of people belong to a civic association, 92.2% follow the current events”; in 1989 the study reveals that 60% of population had a history in protest-based activism.

The first effect of PB identified by the study is that by being involved in the decision process regarding the investments in their community, it was encouraged participation with the direct result of “heightening citizenship” which was regarded even more valuable than “the material gains” (Souza, 2000, p. 1).

The increase of Government transparency was the second effect of Participatory Budgeting, as “public resources and expenditures are disclosed to PB participants and to the media, discouraging negotiations based on vested interests, such as those facilitating clientelism and/or corruption. Decision-making becomes more transparent bringing into the open both the choices about how to spend part of the budget and the bulk resources (Souza, 2000, p. 19).

The improvement of accountability is the third effect of PB. There were compiled and made public lists with names and addresses of the person held accountable; websites offered information regarding PB procedures and results; communication between executives and citizens improved and it was considered to be one of the reasons of PB success. It is hard to believe that accountability process allows much innovation, but how else than innovative can be considered the creation of “cultural markets”, which means that community’s delegates were going from area to area to promote PB. The PB had a snowball effect, by triggering participatory engagement of social groups, other than the low-income citizens.

The fourth effect was that through PB “unorganized people were transformed into members of a civil society that can influence (but not decide - my emphasize) issues that directly affect them.” (Souza, 2000, p. 24)

There is an interesting point of view expressed by Navarro. He believes that PB could be generalized if certain preconditions are satisfied:

“1. political will to cede power to associations; 2. political posture to avoid clientelism; 3. fiscal control; 4. resources to be invested” (Souza, 2000. p. 26)

Some of the limits of PB identified by study were: as PB reflects the priorities of the poor, what about the priorities of non-participants? Among the non-participants were counted the poorest and the less-educated, which have as main concern not the infrastructure issues but have survival concerns (cost of living, low salary, job opportunities). The study observes that as income rises above the minimum wage, voters’ concerns shift to the provision of public goods and services.

PB main result is that “increases the capacity of the excluded social groups to influence decisions on the allocations of public resources, and increases the access to basic urban services for the poor” (Souza, 2000, p. 27). Through recurring changes in rules and procedures, PB proved to be a learning process, “a state-sponsored experience” (Souza, 2000, p. 32)

III.2. The inadequacy of the Brazilian experience to Romania

Brazilian participatory budgeting has as prerequisites the political will for community empowerment and the community availability for participation. None of them can be found in Romania.

Citizens do not have the habit of using the associative prerogatives in order to fight for their rights. Putnam (1993) showed “using a complex methodology that the level of civic development is responsible for both the economical success and for institutional performance” (quoted in Sandu et al., 2006, p. 137). Sandu et al. (2006) conclude using the results of the large anthropological and sociological survey they undertook that “we can speak more about a non-interest for politics than an interest” (Sandu et al., 2006, p. 139). On top of this unconcern with politics is the fact that only one fifth of the population considers that it can really influences in any way the important decisions. 73% are absolutely sure that political parties are more interested in winning the elections, than in solving people’s problems; 55% are totally sure that the change of political power does not bring a change in ordinary people’s lives.

Souza (2000) finds out that the good results from PB in Brazilian cities are generated by the associative characteristics of the citizens.

Here is a comparison between Brazilian citizens and Romanians’ associative characteristics:

Characteristic	Brazilian Citizens Porto Allegre	Romanian Citizens
Affiliation to a civic organization	38.4% (Setzler, 2000, quoted in Souza, 2000, p. 15)	0.5% (Sandu et al., 2006, p. 158)
Interested in political events	92.2% follow current events (Setzler (2000), quoted in Souza, 2000, p. 15)	20-25% show interest in political events (Sandu et al., 2006, p. 158)
Statement: “Civic associations or politicians defend people’s interests”	40% trust this is true (Setzler (2000), quoted in Souza, 2000, p. 15)	90% think that politicians follow own interests (Sandu et al., 2006, p. 146)
Protest-based activism	In 1989, 60% of population had a history in protest-based activism (Abers (1998) quoted in Souza, 2000, p.15).	87% of population did not participated ever in any protest activity, 11% participated only in legal protests (petitions or legal strikes) (Sandu et al., 2006, p. 162)

In my opinion, the discrepancies revealed by the above comparison are an indicator of the fact that the Brazilian participatory budgeting experience could not be applied successfully in Romania.

III.3. Differences between taxes allocation in CPBV and the earmarked taxes

The definition of pure earmarking considers that “all revenue from a particular tax is kept separate from general revenue, can only be used for a specific Government expenditure programme and fully funds that programme.

Another version of pure earmarking sets aside a fixed portion of a particular tax for specific expenditure programme and fully funds that programme. …

A softer version of earmarking involves that earmarked tax funding only a part of a specific expenditure programme, with t5he reminder funded from general revenue ” (Carling, 2007, p. 1).

CPBV differs from earmarked taxes:

	CPBV	Pure Earmarked taxes	Soft earmarked taxes
What is the amount	Percentage of the tax owed by law	Supplementary taxes on tax on income	Supplementary taxes on tax on income
Who makes the decision on earmark destination	Citizen	Governors	Governors
What is funded by earmarked tax	Public services/ ministries activities	Expenditure programmes chosen by Government	Expenditure programmes chosen by Government
What is the coverage of the budget created by earmarked tax	Partial, with reminder funded from general budget	Fully funded by earmarked tax	Funded partially from earmarked tax , partially from general budget
Who benefits of the results of taxes	Users	Examples: Beneficiary pays- Australia tax wool (Carling, 2007, p. 8) Consumers pay for benefits of producers – Australia tax on milk and sugar (Carling, 2007, p.8)
Constraints		Hard budget constraints, the revenues determine the expenditure programme	Earmarked tax is not a limit for the size of the programme, taxpayer knows nothing about the cost of programme

III.4. How does CPBV favour the earmarking of the allocations?

Carling (2007) lists some of the pure earmarking constraints: they impose rigidities on budgets, favour particular expenditures as earmarking provides monopoly access to certain revenues, and the Government has less discretion on reallocation the budgetary funds. The opponents of earmarking protest against relating the budget of a programme on the revenues collected through earmarking and not on benefits and costs of the programme.

The advocates of the earmarking concept believe the link between taxes and expenditures realised by earmarking enables the taxpayers to make better informed fiscal choices, contributing to democratic process of budgeting. Also, through earmarking the composition of Government expenditure will reflect taxpayer preferences.

I personally doubt this assumption as long as the taxes, even earmarked, “come from above”, the decision is not made by the taxpayer individually, but by their representatives, which are policy makers. The parliamentary representation of citizens is not giving the expected results. It was proved that in Romania the politicians use the public functions mainly for private interests. Individual citizens are not decisive in any way in the budgetary process. CPBV ensures that the necessary funds for public services are not hijacked through abusive political decisions.

In CPBV, by directing the taxes towards a certain use, we deal with an earmarking process. Some of the earmarking constraints become strengths of the new system: the imposed rigidities on budgets become a way of control and discipline for discretionary use of budget by governors; the fact that money is directed to certain public service domain is a method of assuring that the budget expenditure composition is related to population’s demands. In CPBV, one assumption is “what is not popular, is not necessary”, a not requested service (as perceived by citizens) is necessary, so the system is obliged to be restructured/ reduced/ given up to. This makes that the programmes under development in CPBV could be only the beneficial ones.

Earmarking is considered to increase the general Governmental spending. In CPBV is encouraged the adjustment of the spending, so that the services with no popular support do no longer exist, these are no longer supported by general funding, or a supported in a much smaller proportion. For supporting the non – popular in demand services, the Government must come with an explicit, transparent declaration, as in this case is impossible to affirm that a certain service is provided as citizen need it; the support is a publicly politically assumed decision, with consequences to be suffered accordingly.

In conclusion, CPBV is totally different of the Governmental imposed earmarked taxes. CPBV earmarks the allocations from tax on income for specific public services desired by citizens.

Generally the extra taxes imposed by Government are dispraised by public. Why do people hate taxes? Because they do not have any benefit whatsoever from their payments.

By CPBV the system of subsidies, tax exemptions and tax breaks is under scrutiny.

In practice CPBV could be expensive, could be complicated, but I believe is fair. CPBV results represent in the same time a funding process, and a diagnose tool. The data revealed by CPBV could explain the priorities segmented by geographical regions, age, educational status, and even by other demographical indices as nationality or marital status.

The results of CPBV are totally reliable because of the link that exists between taxes allocation and services received; people’s interests – for which they pay – are expressed by CPBV, and not only intentions or dreams, as usually it happens with any survey that asks them “what would you chose to”.

Difference between general taxes and CPBV taxes

General taxes

CPBV taxes

Government controls budget allocations, could result in poor service

Citizens keep the service provider ministries under scrutiny by monitorizing the services received

Mixed perception at point of use of public services virtually free of charge:

Services free for certain services (education, public administration)

and services provided only after prove of tax paying: health services

Services accessed free on base of tax allocation contribution

To paraphrase a quite famous movie at its time, the CPBV is able to show (to the politicians that really want to see and understand) what citizens want.

Chapter IV

IV.1. CPBV uses budget as a trigger of change

Figure 2.

The CPBV Change Chain

The arrows should be read as “determine”

“A budget is not only a financial plan that sets forth cost and revenue goals for outcomes, within a business firm, but also a device for control, coordination, communication, performance evaluation and motivation” (Kenis, 1979, p. 707).

IV.2. The functions of the budget in CPBV

In CPBV the budget has three functions:

First function: budgets reflect the market dynamics of demand.

From citizen’s point of view, budget is “a resource allocation for selection among possible activities as well as for identifying activities that are worthwhile.” (Mikesell, 1978, p. 512)

Second function: budgets exert control on organizational, political and managerial structure of the world that budget lives in.

In 1953 Argyris saw budgets as basis for rewarding and penalizing workers in a company, and 54 years later nothing changed with this function of budgets.

Budgets can penalize and reward all the participants: the ordinary public servants, the top managers of public institutions, the politicians.

The third function: budget is a guardian on short term and on long-term for the quality of services.

Quality for services can be achieved through a two ways flow (between service provider and service user) of credible information. In Romanian public service information can easily be manipulated and distorted, becoming thus misleading and untrustworthy. In CPBV the information cannot be manipulated without a huge fraud or system error. Both the fraud and the error can be detected and those responsible uncovered.

IV.3. Budgets and motivation for performance

It is possible that a concern could arise related to employees’ motivation when they do not participate in budget decisions, as is the case in CPBV. The empirical studies of many authors, including Kenis (1979) proved that there is no relationship between participation in budgeting and employee’s performance. I can conclude that the performance of employees will not be worsened through CPBV process.

The budgets received through CPBV represent a feedback that cannot be neglected in any way, neither by top management, nor by operational functionaries. The contribution of feedback in motivation is essential: “if members of an organization do not know the results of their efforts, they have no basis for feelings of success or failure and no incentive for higher performance; furthermore they might become dissatisfied” (Kenis, 1979, p.709).

Maull et al. (2001) see the organizational culture as the primary condition for the successful implementation of quality management. Sureshchandar et al. (2002) consider that the commitment of top management is a prerequisite for effective and successful implementation of high-quality services.

“The time passes, the wage ambles, and we joyfully work”

Little interest for the job, little motivation, little results. 87% of the public servants appreciate that a bigger salary would stimulate their performance. The logic of CPBV is using the power of this motivational factor by creating a direct dependency between the performance of services provided and the budgetary level of the institution, level that determines the salaries. By CPBV is created a loop in which demands encourage, through budget, the incentive for better performance. Budgets will “raise goals of employees and motivation” (Argyris, 1953, p. 97), demonstrating their motivational role through rewarding and penalizing.

IV.4. How can CPBV influence the quality of public services?

The content of public services is related mainly to: health, education, transport, local Government and police.

The profitability of a service company is based on customer; customer’s satisfaction determines his loyalty, and loyalty of the customer translates into revenue growth, and finally, into profitability.

CPBV can be a tool for measuring the profitability of the public services, as it encourages public institutions to struggle for their customer loyalty.

I define the profitability of public services as being a result of both repeated budgetary contribution from citizen and customer satisfaction levels.

Public services become unprofitable when customers cease their contribution to the service and/or when the customer satisfaction surveys show a low level of satisfaction with the services received.

Building customer loyalty, the public institution establishes long-term relationship with citizens, securing future budgetary contributions.

CPBV becomes a huge database that can provide all the numeric information needed to understand the present situation and which could assist in designing new characteristics for improved services.

The total budget that a ministry will be able to collect from citizens will be the first signal that announces that something is changed with the service quality.

When the Ministries need more money for their activities, on top of budgets received through CPBV, they have to ask the Government for balance from central budget. They will have to present both the projects they have and the budgets received from citizens. The Government will allocate or not the requested balance from central budget only after understanding citizens’ choices. Government has on one side the report that the Ministry prepares itself, and the report resulted from citizens’ choices. The asymmetry of information that usually occurs at the interface between Government and ministries will be thus reduced. The Government will allocate the balance from central budget towards ministries with a complete knowledge of the citizens’ needs, and their evaluation of the services received; the allocative decision of the Government has two components: an informed overview of population needs and a political decision that reflects the vision of the Government regarding public interests.

Therefore I find that CPBV is a good tool of monitoring and control of public service institutions.

In order to improve the standards of certain public services – as basic health and basic education services -, on market could activate alternative private providers. These private providers, under a partnership with a Ministry, could offer standard services to those citizens that directed a part of their CPBV contribution towards the partner Ministry. At the end of budgetary year, if the percentage of basic services provided by private institution will be equal or greater than those offered by public institution, there will be raised a big question mark regarding the viability of public service institutions. These questions could be put and asked only after such a research, which is made possible by CPBV. In this way is promoted the real competition in public services.

Chapter V

V.1. Services cannot be improved without an active customer

In CPBV the concept of active customer is at the core of the process that is expected to generate better services. This concept is using: an Input-Process- Output framework, a user-based approach and the needs/wishes duality that makes the whole concept market oriented.

“Services are not things” Shostack (1987)

(quoted in Schneider and White (2004, p. 6)

The Public service delivery process can be described using an Input-Process-Output (IPO) model. In Fitzgerald et al.’s (1991) IPO model the quality of the services can be influenced and measured in all three stages by the customer.

According to Fitzgerald et al. (1991), in the Input stage, the active customer gets involved in determining the content of a service, and this action can contribute to improving the final quality. In the Process stage, the presence of active customer gives the provider the opportunity to correct any fault of the service, as a response to the feedback offered “live” by customer. In the third stage the actual results are measured, by analyzing the customers perception on the service received and by comparing own results with those realized by competitors.

In a strategy that has as purpose a control exercised by customer on the service’s quality, the IPO model is an adequate framework.

V.2. How can services be described?

General expectations that State has the duty to offer better public services for its citizens generated strategies used for improving the quality of public services, in terms of content, and delivery characteristics.

Schneider and White (2004) determine the characteristics of services: relative intangibility, relative inseparability, relative heterogeneity, characteristics that describe the special problems that the service quality defining poses.

Being relatively intangible, services have a tangible component (goods) and an intangible delivery experience. By relative inseparability the above authors understand that in the moment the services are produced, in the same moment customer consumes them. Customer perceives the quality of the service exactly in the same moment when quality is “produced” by the service provider. The relative heterogeneity of services is defined by Schneider and White (2004) through the fact that the human intervention in the process of delivery makes that there are no two totally identical services delivered. A human is flexible and is expected to deal with the particular needs and expectations of a customer, even if there are standard specifications regarding the content of service.

When defining the quality of services concept, Scheider and White (2004) use a user-based approach. According to this approach, “the quality of a service is determined by its user”. The authors believe that the user-based approach is the most adequate to service quality; both intangibility and heterogeneity of the services find a better evaluation in customers’ perceptions. There could be attempts to evaluate services only using a technical approach, which imply measuring “the number of deviations from standards or number of defects” (Schneider and White, 2004, p. 10). But the alone objective evaluation of service quality deprives the service provider of the necessary information regarding the match between the services offered and the customers’ needs and expectations. Only by using this information the service quality can be improved.

In CPBV the IPO model represent the framework that supports the customer’s quality control. The user-based approach promoted by Schneider and White (2004) represents for CPBV strategy a second layer, that takes into consideration the adaptability and flexibility that the services provided need to manifest in order to be of any benefit for customers.

The concept of service quality contains, according to Gronroos (1990), both the needs and the wishes of the customer. Needs determine what the customer want and wishes account for how they want the service provider to treat them. Customer is a “quality generating resource” (Gronroos, 1990, p.209) and this is the third dimension we attach in CPBV to the active customer concept. This concept presents the customer as a service beneficiary and as the co-generator of the service quality, in the same measure as the service provider. It cannot be imagined that the quality of the service is generated exclusively by the service provider. Quality of the service is a result of continuous interaction and communication between the service provider and customers.

V.3. Why public services need better quality?

Generally the efforts of reforming public services were made in the process/ output stages. The New Public Management is a reform concerned with Process stage, concentrating on how the services are delivered. The performance assessment strategies use the feedback in order to alter data to input stage for consequently better results.

The CPBV strategy is based on citizen-customer’s control exerted at Input level in order to determine the characteristics of a service, this control being aimed for better quality. I believe that this strategy can have positive results in Romania, especially because the efforts of improving services the process/output stages were not carried out yet.

The strategies of improving service quality as proposed by CPBV, address all the three stages of IPO model.

The most important goal of CPBV: to develop a service culture

An important goal of CPBV strategy is to create and develop a service culture.

Gronroos (1990, p. 211) believes that “managers and supervisors maintain the culture and if the firm wishes to be characterized by a service culture, they will have to keep up the spirit and support the norms and values of such a culture”. CPBV proposes a change of culture at top management level, followed by a flow of change up to the executive levels of the service organization. As generally the service organizations have a flat structure, the penetration of new culture does not need too much time to happen.

As it was affirmed previously, the quality of the services is a result of interaction between service provider and customers. That is why not only the public service providers need to amend their organizational culture. In the same time this change must happen with each individual citizen. Services improve only because the customers need so. Otherwise the services will not develop in any way. The result of a service culture is the interaction between the demanding customers and the responding service provider. Each of the two actors in a service culture needs to collaborate in order to attain personal goals. Each of them has one thing the other wants, and only by negotiations, communication, feedback and innovation this dialogue helps in exchanging the desired possessions: service providers have the services the customers need, the customers possess the money that service providers are after. If this reciprocal need of other’s possession does not manifest, there is no negotiation for content and quality, there is no bargain, and there is no fair exchange. If there is any asymmetry in this relation, the service degenerate: if the service provider is not flexible and customer oriented, the customer will not give up the money for an inappropriate, for him, service; in the same time, if there is no perspective of getting customer’s money (or getting this money much too easy, as is the case with the public services), the service provider is not stimulated to innovation for creating better services for that customer.

By proposing CPBV I pursue to reduce the asymmetry of power and interests that affect the public service delivery in Romania.

V.4. How does the CPBV realize the change process?

“Budgeting is a method for financial control which involves the planning and use of a budget” (Charpentier, 1998, p. 2).

What changes will take part: first of all CPBV will determine a shift in the way the citizen is perceived by the service providers. Through CPBV the citizen is no longer perceived only as an anonymous taxpayer; the providers of public services start to treat the citizen as a customer who pre-paid for services.

The public servants gain a new perception on citizen: that of citizen-customer. This new value attributed to citizen comes from the new role that CPBV invested the citizens with: the decision-maker role.

This decision-making role of a customer citizen is achieved when the income taxes are collected. It was demonstrated that the citizens have no control on how their money from taxes are used. CPBV proposes that the legal taxes on income that the citizen is obliged to pay to be addressed by citizen towards the services he is personally most interested into.

In CPBV strategy, by directing a share of his taxes towards certain public services, the citizen-customer realizes 4 important effects:

1. Anthony and Young (1994) show that budget has an essential function as a control instrument in public organizations. The main control is exercised at top managers’ level and top managers are exactly the people that can implement a service culture.

2. Charpentier (1998) shows that the budget participation empowers the budgetees, (those who participate in budget elaboration). If we consider that the budgetee in CPBV is the citizen, we find ourselves in front of a process of citizen empowering.

3. At the level of public institution, there will be incentives for transparency and accountability towards those who contribute in large amount to their budgets, and these are citizens. In the same time, the public service will be delivered from the political pressures

4. One last (but not least) effect that the CPBV strategy could have is the increase of service profitability, i.e. better performance.

Romania is not a welfare state. This is important to be kept in mind. The access to public services is generally granted as a result of a tax contribution. Except the compulsory public education, if there is no contribution, there is no right to access a service. The CPBV strategy does not contradict in any way the present situation of public services, which do not become unbalanced and restricted to certain users in any way. The Souza (2000) study observes that as income rises above the minimum wage, voters’ concerns shift to the provision of public goods and services. This result can have as consequence the idea that the quality of the services can be influenced only by those who pay, that have a certain level of income. Those who receive services through the social protection could not be concerned of their content and quality. The influence exerted by citizen in CPBV process could be the only one that could achieve the improvement of public services.

Let’s take as example the health services. In order to access the public health services, if there is no contribution through social assurances, the only alternative is to pay a fee.

Generally the citizens complain of the quality of these services and especially of the bribes that are considered as normal part that makes the process to have good results. The situation can be changed when the citizen engages in Budget Venues Participation.

Chapter VI

VI.1. The benefits of applying CPBV for public services in Romania

Applying CPBV, is aimed to be achieved:

Better monitoring and control

Citizens become aware that they have the right to receive services of a certain quality. The percentage of the tax directed towards a Ministry/service would entitle him/her to at least two levels of service content: standard and advanced. This measure of structuring the public services on, at least, two levels of content is inspired by Nwanko and Richardson (1994), who observe that customers are not a “monolithic group”; therefore the public services should be designed to acknowledge their diversity (Nwanko and Richardson, 1994, p. 33). A post-service survey, compulsory in the first years for each service access, would provide the information regarding the customer satisfaction.

These initial data constitute the control level, against which the system of performance measurement will be designed.

There will be comments saying that CPBV will leave some of the present services with a low or no budget. Because the central Government has and other sources than taxes on income, it can be decided if it is adequate the use of alternative budgetary sources to support services that citizens do not need. In this way will be eliminated the institutions that now are perceived as having no other purpose than serving personal or group interests. In this situation no Government can hold forth that one service that does not have any budgetary contribution from citizens is really necessary. If so far in Romania many meaningless for citizen services and agencies were founded from the generous common bucket (and this is the consolidated budget), now, by CPBV, the real needs of the citizens are brought out. CPBV is providing undistorted information, fed through informational system into a national database. There will be generated demand reports that would configure the real need of population. Based on this demand there will be made allocations, there will be initiated changes in managerial systems and strategies. The public services will function on market principles, with the great advantage that will have against private service providers: their services will be paid in advance; they will not work on forecasts, but on real, palpable budgets.

No more opinions and presumptions are needed to gauge the needs for services of citizens. Everything is clear on the table.

Transparent decision process

At the end of the year, before citizens decide the distribution of their income tax share, the ministries must send activities reports that explain the past activity and especially the future plans, for which they could ask for citizens’ budgetary support.

In this situation citizen is able to make an informed decision regarding the distribution of his/her share, taking into consideration three factors: the level of past satisfaction on the service that was paid, the level of personal interest in future developments of a certain service and the ability of an institution to prove transparent and genuinely interested in satisfying the needs/wishes of the citizen customer.

Rusu/Gallup survey shows that 89% of citizen respondents prefer to plan their spending. This natural predilection towards planning of expenses supports the assumption that Romanian citizens will be willing to get involved in this process. The result of my personal research showed as well the respondents availability for getting involved into a process of participation similar to CPBV.

Citizen empowering

When 60% of the citizen respondents consider that “the poor are poor because the rich people and the powerful ones keep them in poverty” (Rusu/Gallup, 2004, p. 30), we can only understand how widespread the feeling of weakness and impotence is in Romanian society. By manifesting the decision-making right through CPBV, the citizens not only that they become aware of the fact that are entitled to demand accountability from public institutions, but actually they gain the power to do something and influence the institutions in their organizational behaviour towards them as service-users. I believe that this empowerment will give individual citizens the sense that they have the power to change something. An unexpected result, on long-term, could be an alteration of what is called “locus of control”. According to Lefcourt (1966), “locus of control” is of two types: internal and external. “Internal locus of control refers to the perception of positive and/or negative events they as being a consequence of their own actions and thereby under personal control; external control refers to the perception of positive and/or negative events as being unrelated to one’s own behaviours in certain situations, and therefore beyond personal control” (Lefcourt, quoted in Brownell, 1981, p. 846).

Generally the citizen empowerment movement is related to communities and voluntary associations. Romanian citizens are not, at least in this moment, as surveys show, great supporters of citizen associations. Sandu et al. (2006) reveal that 16% or Romanian urban population does participate in associations, with 1.1% involved in civil rights associations. A big gap proves to exist between the percentage of urban Romanians that would hypothetically sign a protest paper (and this percentage is 47%) and the percentage of those that have actually ever signed a protest paper, which is 11%. When 11% of Romanians that sign a paper is compared with 33%, the world average of people signing a protest paper, it can be understood that both the associative rights and the protest behaviour that the Romanians manifest give little hope for a solution for change. Romanians need to be offered a tool for change that takes into consideration that they prefer to solve alone any problem, without being obliged to be part of a group. I believe that CPBV is this kind of tool.

In the background chapter of this paper I showed the results of my personal survey, which proved that large majority of Romanian respondents, did not know what the level of their contribution to the central budget is, which institutions benefit of their money, and what kind of services they expect to be provided by public institutions. Through CPBV they find answers to all these questions.

VI.2. Effects of CPBV on top management

We need two conditions to explain the effects of CPBV on public institutions’ top managers. The first condition is to use the budget as a tool for change.

The second condition is that the change has to begin with the organizational culture.

Control of budgets, exerted by citizen-customer, combined with the improvement of the organizational culture might determine in Romanian public service the implementation of a service culture.

The budget level of an institution determines the amplitude of the activity, and even if that institution survives at all. The public institutions in Romania base their budgeting on the Medium-Term Framework; but many times these projects are bureaucratic, artificially constructed.

For public institutions, budgets are a matter of life and death. Generally, the public institutions in Romania depend on allocations from central budget and do not get involved in identifying alternative budgetary sources.

In CPBV the institution’s budget of the institution will be directly related to citizen-customer’s demands. Budget could be used as a factor that can push top managers to engage in a service culture.

Top managers have to make a decision: either to go on, by providing services adequate to citizen-customer’s demands; or to give up the job. Tertium non datur!

This market pressure could bring the expected performance, because if top managers decide to continue, they must encourage the reform.

I previously proved that the framework – the “hardware” – for efficient public services is in place in Romanian administration. What could not be found yet is the “software”, the right catalyst that is able to make the hardware work. I believe that CPBV is that type of software, capable to “boot” the system.

Hopefully CPBV will generate the movement towards the standards expressed by the Nolan Third Report of the Committee of Standards in Public Life (1997): “selflessness, integrity, objectivity, accountability, openness, honesty, leadership”.

CPBV will influence the top-management towards adopting and implementing the service culture. In this service quality oriented environment brought to life by top management, the service organization can perform. Douglas and Fredendall (2004) consider that a visionary leadership is essential in order to create the service organization.

Because CPBV relates the quality of services to the budget level of the institution, the participation of people in organization is encouraged. Top managers conceive strategies for service deliveries and communicate their vision to operational levels; executive staff produces the services, and through their interaction with citizen-customers receive the feedback, which communicated back to top management help to improve the strategy for obtaining services of improved quality.

VI.3. Effects of CPBV on ordinary public servants

When the visionary leadership is active in organizations, the enactment of people’s commitment of people is the next step. As we noted before, the biggest incentive for Romanian public servant is the salary. CPBV is exactly the tool that can address the motivation factor for public servants. By providing good services for their citizen-customers, the public servants contribute to their future better salaries. As the salary policy will be related to the performance they provide, this performance being judged not only by institutional measures, but especially by market of their customers, this is an incentive for every public servant to adhere to the service culture proposed by top management. I believe that, in time, the public servants will discover and other factors for job motivation. It will take time, but people will change. When they are aware that the citizen that faces them is the one that influences, through a decision, his/her future financial wellbeing, the public servant will feel compelled to perform as best as possible in order to “secure” the customer, and his/her contribution for future. In this climate will be possible the “soft” developments of “professional camaraderie, trust and interdependence among employees, which, according to Gupta et al. (2005) are the base of superior service delivery.

By involving actively in customer loyalization, the public servant projects for himself a better future.

The dimension of change at public servant level is very complex and challenging. Top managers need to develop skills that, maybe, have nothing to do with their professional expertise. Romanians are revealed by surveys as “change resistant”. Any new ideas or new job descriptions could initiate a conflict. The manager has to learn to accept the fact that people will resist to change, and must train for skills that allows him to help people to take the step for change. In Romanian society, as anywhere else, the failure is not well-received. Change implies a lot of risks – people could get worried for their jobs, or feel unable to acquire new skills; a greater percentage of errors will occur; there will be an increased demand for innovation and creativity. People step out of the silent zone of habits and step into the dynamic world of market-oriented businesses. A lot of effort is needed to achieve this transformation. But I believe the rewards offered through CPBV will measure the amplitude of the effort.

VI.4. Limits and challenges

There can be voices that claim that CPBV is not equitable towards those who paid in past for public services that they did not used, or did not need. I consider that this hypothesis is not valid, as long as citizens continue to pay for services, they only decide the allocation of the paid taxes. The 25.5% of the salary is mandatory to be paid, and the public services evolve continuously, in the same pace with human civilization’s development. In other words people always pay today for new services, which will be useful for our successors.

Some of the limits of the CPBV are listed below:

1. The informational infrastructure needed for CPBV is vast, with a national spread. All the institutions that provide services need to be able to access the MoF database, by being able to read the FCD;

2. The complexity of the data gathered could impede on budgetary process. But taking into account the benefits of the informational age, and the benefits brought by CPBV, I believe that the “costs” of this complexity gives enough incentives to overcome a possible “losing in the process”;

3. A Ministry has the freedom to redistribute the possible extra funds (after programmes expenses) towards salary increases and bonuses. There is the risk that the Ministry could focus its strategy exclusively to this purpose, to the detriment of development projects. Even if this risk is quite high, it is probably that Ministry NOT to receive money next budgetary year from the citizens unhappy with the received services. Another method of avoiding such a situation is that Government establishes a maximum salary and bonuses level (which would not impede the freedom of Ministry’s decision, but will keep under control the possible abusive exaggerations);

4. Some Ministries provide indirect public services (Defence Ministry for instance) to receive very low funds, which could not reflect the strategic need of the country. In this case it is possible to be required a redefinition of public services, into two categories: domestic and strategic public services. CPBV will direct the citizens allocations only towards the domestic services, the other would be sustained by central budget funds, with other venue sources;

5. Unethical fights could appear between institutions, in their desire for bigger percentages;

6. There could be misinformation and negative campaigns that aim influencing citizens through mass-media or even through employers (who have direct connection and power of influencing against the employees);

7. Could appear discriminations (consciously or unconsciously) for those who allocated small percentages than others for a certain public service.

Chapter VII

VII.1. Conclusions

I believe that citizens’ involvement in directing their taxes through CPBV process can be seen as the driving force towards a process that has as final result better quality of services. As a process that addresses the input of any activity: the budget, CPBV is enabling citizen control on expenditures right from the moment of constituting the venues. This is a bottom-up approach that is able to put pressure on top management in order to provide the public services, in the quantity and quality required by citizens, and not in the quantity and quality imagined and presumed by politicians and public servants. The result of the adaptation to citizens’ demand is the increase of services’ efficiency and performance, with long-term effect on work motivation and public service mentalities.

Annex 1

Survey

Méthodologie :

- Volume of sample: 190 with ages over 18

- Sampling Criteria: urban – Bucharest

- Survey on date: 12th of July 2007 – 22nd of July 2007

- Data collecting: in front of supermaket

The survey I prepared had following questions:

1. Do you know what percentage of your salary is collected to the central budget?
A. Yes	B. Yes, but not very clear	C. No

2. Do you know what public institutions are financed from central budget?
A. Yes	B. Yes, but not very clear	C. No

3. Do you know what services must provide for citizens the public institutions?
A. Yes	B. Yes, but not very clear	C. No

4. Are you satisfied with the quality of the public services you access?
A. Very satisfied	B. Satisfied	C. Could be better	D. Not satisfied

The number of respondents was: 182

Women: 98

Men: 84

Urban citizens: 174

Rural citizens: 8

Level of education:

- 10 compulsory grades: 11

- High school graduates: 127

- College graduates: 44

Age:

- 18 – 40: 104

- Over 40: 78

Results:

1. Do you know what percentage of your salary is collected to the central budget?
A. 10	B.5	C. 167
2. Do you know what public institutions are financed from central budget?
A. 14	B. 12	C.156
3. Do you know what services must provide for citizens the public institutions?
A. 36	B. 61	C. 85
4. Are you satisfied with the quality of the public services you access?
A. 0	B. 18	C. 4	D. 160

Graphics:

1. Do you know what percentage of your salary is collected to the central budget?

2. Do you know what public institutions are financed from central budget?

3. Do you know what services must provide for citizens the public institutions?

4. Are you satisfied with the quality of the public services you access?

Bibliography

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Argyris, C. - “Human Problems with Budgets”, Harvard, Business Review, vol. XXXI, no.1, p.97-110

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Charpentier, C.– “Budgetary Participation in a Public Service Organization”, Working Paper in Business Administration N0 1998:3, September 1998

Carling, R. – “Tax Earmarking, Is it a Good Practice?” Perspectives in Tax Reform (12), CIS Policy Monograph 75, The Centre for Independent Studies, 2007, on [www],

http://www.cis.org.au/policy_monographs/pm75.pdf, accessed on 11^th of September 2007

Curry, A.-“Innovation in public service management”, Managing Service Quality, Vol.9, Issue 3, p. 180, 1999

Dinca, D. – “Autoritatile locale si descentralizarea serviciilor publice” (Local authorities and public services’ decentralization). in Cadran Politic no. 14, p.30, 2006, on [www], http://www.cadranpolitic.ro/view_article.asp?item=252&title=Autorit%C4%83%C5%A3ile_locale_%C5%9Fi_descentralizarea_serviciilor_publice, accessed on 30^th of August 2007

Douglas, T.J. and Fredendall, L.D. (2004), "Evaluating the Deming management model of total quality in services", Decision Sciences, Vol. 35 No. 3, pp. 393-423.

Fitzgerald, L., Johnston, R., Brignall S., Silvestro, R., Voss, C. – “Performance Measurement in Service Business”, Black Bear Press Ltd, Cambridge, 1991

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accessed on 26^th of August 2007

The Gallup Organization Romania, Horia Rusu Foundation (Rusu/Gallup Survey) – “Capitalism in Romanians’ Mentalities, Research concerning the perception and undertaking of capitalist values in Romania”, March, 2006, on [www], http://www.gallup.ro/download/Capitalism_Gallup_Horia%20Rusu.pdf, accessed on 26^th of August 2007

Gronroos, C. – “Service Management and Marketing, Managing the Moments of Truth in Service Competition”, Lexington Books, Toronto, 1990

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Maull, R., Brown, P. and Cliffe, R. (2001), "Organisational culture and quality improvement", International Journal of Operations & Production Management, Vol. 21 No. 3, p. 302-26

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Nwankwo, S., Richardson, B.- “Measuring and Achieving Quality Customer Service in the Public Sector”, in Managing Service Quality, 1994, 4;6; ABI/INFORM Global, p. 32

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Sandu, d., Comsa, M, Rughinis, C, Toth, A, Voicu, M, Voicu, B- “Viata sociala in Romania urbana”, Polirom Publishing House, Iasi, 2006

Schneider, B., White, S. – “Service Quality, Research Perspectives”, Sage Publications, London, 2004

Souza, C. – “Participatory Budgeting in Brazilian Cities: Limits and Possibilities in Building Democratic Institutions”, University of Birmingham, International Development Department, Working Paper 28, 2000

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Sureshchandar, G.S., Rajendran, C. and Anantharaman, R.N. (2002), "The relationship between management's perception of total quality services and customer perceptions of service quality", Total Quality Management, Vol. 13 No. 1, pp. 69-88

Citizens participation in the process of budgeting in Romania de Bogdan Craciun este licenţiat printr-o Licenţă Creative Commons Atribuire-Necomercial-Fără Opere Derivate 3.0 România.

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Disfunctionalitati ale Comisiei Europene - Eseu de Madalina Anton

noreply@blogger.com (Bogdan Craciun) — Fri, 06 Feb 2009 15:05:00 +0000

Introducere

Uniunea Europeana (UE) este un concept care a aparut inca din antichitate si care se straduieste si astazi sa se contureze ca organism politic, economic si social intr-un mod clar, coerent si durabil.
Pasi concreti in realizarea acestui vechi deziderat s-au facut in 1951, cand Franta, Germania, Italia si Tarile Beneluxului s-au unit intr-o Comunitare Europeana a Carbunelui si Otelului, avand ca scop asigurarea pacii si bunastarii in regiune.
In 1957 s-a constituit Comunitatea Economica Europeana (CEE), care s-a transformat treptat, dupa valuri succesive de extindere in ceea ce cunoastem noi astazi ca este Uniunea Europeana.
Desi a inregistrat o dezvoltare spectaculoasa in ultimii 50 de ani, inca nu se poate vorbi despre un organism care sa functioneze precum un mecanism total functional – cum este cel al Statelor Unite ale Americii – aparand atat disfunctonalitati interne ale sistemului, cat si factori externi neprevazuti perturbatori.
In continuare am sa ma refer la cateva din disfunctionalitatile actuale ale uneia dintre institutiile UE – Comisia Europeana (CE).

Monitorizarea deficitara a programelor interne de aderare ale noilor state membre

O disfunctionalitate a CE care s-a observat imediat dupa aderarea Romaniei la UE, a fost legata de incapacitatea acesteia de a interveni asupra modului in care si-au gasit finalitatea anumite programe care au stat la baza respectarii acquis-ului comunitar de catre statul candidat la aderare.
Un astfel de program care nici astazi nu si-a gasit finalitatea este programul “Bursa Speciala Guvernul Romaniei”, care avea ca scop reforma administrativa, ca si conditie de aderare. Prin acest program trebuia sa se formeze un corp tanar de manageri publici, scoliti la cele mai prestigioase universitati din lume, care la revenirea lor in tara sa aduca “sange proaspat” si o viziune moderna despre ceea ce inseamna Adminintratie Publica. Programul a functionat bine pana la momentul aderarii si pana la momentul injectarii acestor tineri in Administratia Publica, cand s-a constatat o incompatibilitate legislativa interna, “neprevazuta”. (1)
La solicitarea ajutorului CE de catre Asociatia Beneficiarilor Bursa Speciala Guvernul Romaniei (ABBSGR), raspunsul acesteia a fost ca este vorba despre o problema interna a statului membru si ca ea nu poate interveni in acest caz. (S. Olteanu)
Concluzia care se poate trage de-aici este ca desi CE analizeaza, aproba programe si da “unda verde” pentru aderare anumitor state, nu are capacitatea de a interveni asupra modului in care acestea s-au finalizat.
O solutie pentru rezolvarea acestei disfunctionalitati politico-legislative ar fi ca la momentul aprobarii programelor respective, sa existe clauze punitive clare asupra statului respectiv, in cazul in care acesta nu-si duce la bun sfarsit programele de aderare. De asemenea sa fie desemnat un observator din alt stat membru pentru fiecare program in parte, care sa raporteze catre CE modul in care s-a finalizat programul respectiv in termenul stabilit.

Incapacitatea de a interveni eficient asupra incalcarii anumitor dreptului fundamentale ale cetatenilor UE

Unul dintre drepturile fundamentale ale cetatenilor UE este dreptul neingradit la munca in spatiul UE.

Desi Romania si Bulgaria au devenit la 1 Ianuarie 2007 membre cu drepturi depline ale UE, alte state membre UE – amintesc aici Marea Britanie – au ingradit prin legislatii interne proprii dreptul cetatenilor din aceste doua noi state membre sa lucreze liber si fara nicio restrictie pe teritoriul lor.

Reactia CE a fost una slaba din punct de vedere al actiunilor intreprinse asupra acestor state – doar la nivel de avertismente si proteste – ceea ce denota incapacitatea acesteia de a-si impune autoritatea in fata statelor membre UE puternice d.p.d.v. economic si politic.

O solutie in acest sens ar fi aceea de a-si atrage de partea ei “voci puternice” din cadrul acestor state mari, care sa reprezinte interesele UE mai mult decat interesele propriilor tari. De asemenea un lobby solid facut pentru tarile nou membre in fata statelor puternice, s-ar putea constitui intr-o solutie viabila.

Transpunerea greoaie a legislatiei europene la nivelul noilor state membre

Tot cu ocazia aderarii noilor state la UE s-a constatat ca desi legislatia UE este obligatorie si cu aplicare imediata, exista probleme de transpunere a acesteia la nivelul noilor state membre. Cauza principala o constituie diferentele economice, sociale, legislative, culturale si politice intre statele membre.

De aici rezida ideea ca recomandarile CE la elaborarea de legislatie europene nu tin cont de aceste diferente.

Solutia cea mai simpla in solutionarea acestei disfunctionalitati este ca recomandarile sa se faca tinand cont de aceste diferente, pastrandu-se in acelasi timp spiritul UE.

Bibliografie:

1. http://www.abbsgr.ro/

S. Olteanu – Beneficiar Bursa Speciala Guvernul Romaniei

2.http://www.zf.ro/politica/politica-externa/ue-condamna-restrictiile-pe-piata-muncii-pentru-muncitorii-straini-3081526/

Disfunctionalitati ale Comisiei Europene de Madalina Anton este licenţiat printr-o Licenţă Creative Commons Atribuire-Necomercial-Fără Opere Derivate 3.0 România.

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Managing in the Information Age - Essay by Bogdan Craciun

noreply@blogger.com (Bogdan Craciun) — Fri, 06 Feb 2009 11:24:00 +0000

How does eGovernment change the relationship between Governments and their citizens?

We witness an important change in the public management practice: the shift from Government to Governance. This shift in thinking and practice makes that the role of the central Government in decision-making to be reduced, while the co-ordination and negotiation with local governmental and non-governmental bodies became the main role for Government. In the new concept of Governance the civil society is no longer a passive actor. The participatory governance assumes that citizens are in the same time, beneficiary of the services provided by the public management and assessors of these services. The Government, represented by its public managers, does no longer make decisions for community but with community and within community.

This new relation is considered to make better use for public money and to improve the quality of services that are provided customized for the needs of the community.

This change of roles in the relation between public management and citizens makes that new instruments are required: monitoring and evaluation from the community point of view. This process ends in an important feed-back, which is used as mean for modifying the service deliveries accordingly.
In order to understand a phenomenon, is required a large amount of data. The facts are connected; the relation between them is not a “singular cause-singular effect” one. The holistic view of social events asks for extensive information, for a data base where the basic facts to be mixed and connected in order to find a meaning.
eGovernment provides both the public Managers and the citizens the possibility of finding the meaning. Data collection is no longer a burden; the focus of the activity shifts to understanding of reality.

The applying of new concepts of citizens’ participation is based on an intensive communication, with two channels that interact in exchanging information. The eGovernment is an essential tool in this communication process.

From the citizens’ point of view the main benefit of eGovernment is the accessibility and the possibility for getting involved and making the individual voice heard. For public management the main benefit is the monitoring and evaluation that citizens can provide. It is well known how difficult is monitoring and evaluation especially when the outcomes cannot be precisely defined. The system of evaluation needs data and facts that must be interpreted. The feed-back from citizens could provide directly the interpreting without wasting time. If the Governmental institutions are able to perceive the citizens comments, either good or bad, as a way of changing for better the present, then the communication facility brought by eGovernment mechanism could help improve the timing and the content of the feed-back actions taken by Government, as a result of new intercommunication process with citizens.
I consider that eGovernment could be perceived as a device for adaptation of the governmental institutions to the social environment and to what is happening in the real world. It is well known that the governmental policies are constructed on forecasts, on
modeling and on large presumptions. In order to have a correct dimensioned policy, the government needs signals from reality, and these signals could totally differ from initial presumptions when the policy was formulated.

Through this facility of dialogue of eGovernment, the public management is turning a new page in the book of institutional effectiveness and efficiency in relation with citizens. The performance as required by present standards could no longer be a chase for illusory. Performance standards could become a meeting point for citizens that pursue better life style and for Governmental institutions that pursue serving the public interest, by better understanding the problems that the citizens are facing, and even taking into consideration solutions proposed by citizens. At this point the eGovernment could make the connection between the social dynamic and the governmental policies, thus the social needs’ changes are noticed in due time. The eGovernment improves not only the accountability of the public institutions, but it also proves that good results do not rely only on a good forecast, but on responsiveness and active feed-back to present state and changes.

The perception of enhanced openness boosts the confidence of the people in the governmental institutions. And this is by far one of the most important changes in the relation between Government and citizens that the eGovernment could bring.
If Governance is about consulting and involvement of citizens, eGovernment facilitates networking, both at the level of community and at the level of the partnership between government and local communities as well.

The eGovernment is a proper mechanism of keeping the balance between centralization and decentralization. It is well known that finding this balance is, in fact, the secret of an efficient public management. By knowing the needs of local communities (decentralization), the central government could prioritize and balance the resource allocations towards the domains that the politics orientations consider to require most attention. Because we should not forget that the Governments are responsive to the electorate! The failure to fulfill the electoral promises usually ends in losing the next mandate. The eGovernment is, for any government, regardless its political color, a method of finding out in real time, before the time of “great final sum up”, if there are carried out the right actions, in a proper way. From this perspective, the eGovernment solution enables the “unique” solution to problems encountered, impossible to be done without it.
eGovernment could make people to trust their Governments, and Governments, in return, could benefit of people’s help. The innovation required for improving Government’s activity is always a practical solution for a faulty situation. And who can know better the situation than the citizens that are daily experiencing it? If we just remember our own feelings as citizens towards Government at Election Day, we can understand that generally the reason we change our political options is because of the failure of those who enjoyed our confidence, who promised something and where not able to deliver the promises.

The eGovernment could be involved in all stages of Governance: planning, negotiation, mediation, decision-making. The relationship Government-citizens evolves, through this transparency to open debate arenas, where the decisional
power of institutions to allocate resources is contra balanced by the decisional power of communities to vote and support a certain policy or even political group. The decisions cease to bear the mark of one authoritarian mind and conception. The decisions are results of what I could call as “decisional market”, a process where the interests of public managers and of citizens merge or get into conflict. The eGovernment gives to both end users (public managers and citizens) the possibility to express themselves, to explain, to try to influence, in one word, to interact. The public institutions have the chance to connect to real people’s needs and even expectations. This new adaptability of the “system” is believed to promote equality and avoid discrimination.

But it is very important to note that eGovernment could enhance the quality of communication between Government and citizens only if, at the both ends of the communication line, there are people interested in the success of this communication.
eGovernment is an artificial, human created, communication structure. It exists as long as people use it. In the same way, in which an unused path in the woods disappears under the wild vegetation, the eGovernment new systems need people’s implication and perseverance in order to have any result. Otherwise all the effort is useless and good intentions of flexibility, accessibility and permanent connection that eGovernment provides, can easily transform into pure wishes.

One of the constraints on eGovernment is the high level of technology involved. There are needed careful considerations when implementing it. Otherwise instead of promoting equality, could cause a new type of discrimination – the technological one. People need both devices and skills in order to use eGovernment. If this aspect is not taken into account, the results obtained from the system could be erroneous: when only the computer literate citizens can access the eGovernment, is obvious that the non-computer-literate’s opinions are not taken into consideration. And many times exactly this category of citizens is the one that eGovernment should be concerned more. In this case, in the relationship between Government and these citizens could appear an “impenetrable wall” that could affect the communication between them.

One of the greatest benefits of eGovernment is the easiness and promptitude of data collecting. The sociological sciences show that the way human interpret specific objective data depend a lot on a subjective point of view. Shall we remember the usual interpretation of the glass half filled with water that could be considered by some of us as half full, by others – half empty? The informatical devices available cannot overcome our inner perceptions and preconceptions. The eGovernment cannot be expected to do on our behalf more than we can do ourselves.

The eGovernment sends citizens a clear and direct message from the Government that it is available for communication, collaboration and ready to be transparent for its own actions. This means that the relationship between Government and citizens could be based on trust and mutual involvement and responsibility.

Bibliography:

Commission of the European Communities (CEC) – Commission Staff Working Document, Annex to the Communication from the Commission to the Council, the European Parliament and Social Committee and the Committee of the Regions, “2010 eGovernment Action Plan: Accelerating eGovernment in Europe for the Benefit of All”, [www], 2006, http://ec.europa.eu/information_society/activities/egovernment_research/doc/impact_ass.pdf (29th of April 2007)

Heeks, Richard – eGovernment for Development
Basic Definitions Page, [www], 2004, http://216.239.59.104/search?q=cache:abljFSxbfaoJ:www.egov4dev.org/egovdefn.htm+egovernment+definition&hl=ro&ct=clnk&cd=1&gl=ro (29th of April 2007)

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