MBA Public Policy, University of BIrmingham

Dissertation: The ‘Clinician-Manager’ Paradox

2008-02-26T01:15:00.000-08:00

Tittle: The ‘Clinician-Manager’ Paradox Role of professional management in AIIMS, PGIMER & six-AIIMS project under PMSSY

Preface
The running of a hospital requires two types of management. The ‘Clinical management’ or ‘Patient management’; that deals with the care of individual patients and ‘Health management’; that deals with provision of health care facilities and handling of human, financial, infrastructural, information & communication resources. Traditionally the matrons have assisted the doctors in running the clinical and the health management in the hospitals. (Davies and Harrison, 2003; Degeling et al., 2003) However lately, specialised managers are being appointed to undertake the task of health management or the doctors have the responsibility to act like professional managers. (Hoggett, 1996; Flynn, 1992) The doctors do not want to be involved in management, on a perception that it conflicts with professional duties and adds unnecessary work. (Atun, 2003) Nevertheless, managerial input is required for efficient resource management and effective service delivery. The clinician concern about patient outcome and the managerial concern about management of patient experience within finite resources, cause different perceptions on management in a hospital. (Edwards et al, 2003) This creates a dichotomy, resulting in a ‘Clinician-Manager Paradox,’ in which the two roles are placed in continually opposing professional perspectives. (Goodwin, 1996)

This discordant behaviour is explored in the dissertation, through the management theories, and in different medical practices around the world, to find the cause and the effect of the acrimonious relationship. The academic analysis subsequently focuses on ‘Clinician-Manager paradox’ in two of India’s largest tertiary medical care Institutes AIIMS, New Delhi and PGIMER, Chandigarh. A team of doctors and bureaucrats, headed by a Director, runs the Institutes. The Government through Ministry of Health supervises them. (AIIMS, 1956; PGI, 1967) The prime focus of managers and bureaucrats is to administer these Institutes managerially and financially. The clinicians in the Institute are focused on patient care, research and medical excellence. The two often run at cross-purposes in trying to balance between resource availability, deliverance of patient care and achievement of research excellence.

Harmeet had worked in PGIMER Chandigarh from 2002 to 2006 as the Chief financial officer and his background as a medical professional and as a bureaucrat allowed exposure to both sides of the story. The sojourn at University of Birmingham has now afforded an opportunity to explore this area of management formally, in great depth with his mentor and guide A. N. Rubienska. ‘Annie’ has years of experience of working in several countries in the fields of management, social marketing and leadership. The dissertation explores the issue from an insider personal standpoint and from an outsider academic viewpoint. The draft ideas, which emerged, have been discussed with the clinicians and managers, the actual players in this drama. The purpose is three-fold. Firstly, to analyse the existing discourses and to suggest ways in which the managers and clinicians can work together, in AIIMS and PGIMER. Secondly, to provide a fresh perspective on adoption of an appropriate management models for the forthcoming six-AIIMS like Institutes under PMSSY. Thirdly, it aims to augment the teaching curriculum of the upcoming hospital managers (MHA Students) in these institutes by sensitizing them to the paradox.

Complete Dissertation:
The ‘Clinician-Manager’ Paradox

Module: Managing People

2008-02-26T00:59:00.000-08:00

Section One: Individual Activity (Initial reactions)
The Learning Loops:
The primary method of managing people was to understand how people respond to changes. The learning loops provided a good insight into the same. I understood that the response to mismatch between intention and outcome was to search for another strategy, which would then satisfy the governing variables, in case, the new action strategy was used in order to satisfy the existing governing variable. I realized that since the change was in the action only, not in the governing variable itself therefore it was called single-loop learning. Going further in to the concept it was easy to relate that in case the governing variable and the action strategy change, then they constitute double-loop learning. I saw Double-loop learning as a more effective way of making informed decisions.

I think I can sum this very interesting concept as, "Single-loop learning rests in an ability to detect and correct error in relation to a given set of working norms. Double-loop learning involves on being able to take a "double look" at the situation by questioning the relevance of working norms."

Argyris and Schön model of a theory of action:It was interesting to note that Argyris and Schön have said, that people seldom reveal their assumptions about each other, especially about motives. When they act on their assumptions, their motives are very often misunderstood.

The common result is the mutual self-fulfilling prophecy: ‘Every person's assumptions are maintained by the other's behavior and support the person's own behavior.’ I will use this concept for better understanding of the people in my organisation.

“Organizational Learning” Argyris and Schön’s influential monograph proposed that a learning organisation is one that is permanently changing its interpretation of the environment. In doing so, the organization learns new things and forgets old ones. Drawing on their background as action theorists, Argyris and Schön show how these interpretations are gained and how they are connected to different Organizational behaviours. They distinguish between three types of learning, rooting them in an understanding of organisational agency that targets growth and effectiveness:
• Single-loop learning: This is adjustment learning, referring to the rational use of one’s own means and instruments to adapt to environmental requirements, given a set of organisational goals, strategies and behaviours. It targets an improvement of the “theory in use” of an organisation using a simple action outcome feedback and follows the heuristic, “maximise gains and minimise loss”.
• Double-loop learning: This is turnover learning with respect to the meta-level of goals, strategies, and behaviours of an organisation, and aims to adapt them to environmental requirements. The learning process includes un-learning of redundant knowledge to clear space for new behaviours. Furthermore, cooperation, including assumption and benefit sharing with collaborators, is seen as a vehicle for learning.
• Deutero learning: This is meta-level learning of the highest order where the organisation reflects on its own identity. Here, the learning process itself is the object of learning (”to learn how to learn”). The organisation’s norms and values are subject to critique and change.

Edgar Schein
Culture surrounds us all, and we need to understand how it is created, embedded, developed, manipulated, managed, and changed. To understand the culture is to understand your organization. He approaches this issue through his three levels. He argues that the pattern of basic underlying assumptions can function as a cognitive defence mechanism for individuals and the group, as a result culture change is difficult, time consuming and anxiety provoking. Cultures are deep seated, pervasive and complex and it can be extremely difficult to bring the assumptions to the surface. He uses the classic three step approach to discuss change - unfreezing, cognitive restructuring and refreezing. He has a lot to say about leadership and culture. The key issue for leaders is that they must become marginal in their own culture to a sufficient degree to recognise what may be its maladaptive assumptions and to learn some new ways of thinking themselves as a prelude to unfreezing and changing their organization.
Culture is customs and rights and the organizations 'own way', its norms, values, behaviour patterns, rituals, traditions and implies structural stability and Patterning and integration.
It arises from shared history and adaptation and change are not possible without making changes that affect the culture. It is not always rational, more often not. For large organizations there are issues around the development of subcultures and the integration of newcomers.

T.V.Rao: The Power of 360 Degree FeedbackIn the changed business scenario where organizations are required to compete globally, benchmarks have become global. Organizational survival and excellence require not only meeting but setting global standards. Speed of change becomes a critical variable. Organizations have had to react fast, learn from their experiences and aim towards achieving world class excellence through constant learning and renewal. 360 degree has been found to be one such facilitator of change at the individual level. The concept of 360 degree feedback, is a performance management system, linking 360 degree feedback with performance management and finally pay strategies. The concept encourages more indigenous innovations and enhances learning through mutual sharing.

Conscious competence learning model
The Learning begins at stage 1 - 'unconscious incompetence', and ends at stage 4 - 'unconscious competence', having passed through stage 2 - 'conscious incompetence' and - 3 'conscious competence'. The conscious competence model explains the process and stages of learning a new skill (or behavior, ability, technique, etc.) It most commonly known as the 'conscious competence learning model', sometimes 'conscious competence ladder' or 'conscious competence matrix', although other descriptions are used, including terminology relating to 'conscious skilled' and 'conscious unskilled'
Suggested fifth stage of conscious competence model
As with many simple and effective models, attempts have been made to add to the conscious competence model, notably a fifth stage normally represented as: 'Conscious competence of unconscious competence', which describes a person's ability to recognize and develop unconscious incompetence in others.

ERG Theory of Clayton P. AlderferIn a reaction to Maslow's famous Hierarchy of Needs, Alderfer distinguishes three categories of human needs that influence worker’s behavior; existence, relatedness and growth. These ERG Theory categories are:

- Existence Needs: physiological and safety needs (such as hunger, thirst and sex) (Maslow's first two levels)
- Relatedness Needs: social and external esteem (involvement with family, friends, co-workers and employers) (Maslow's third and fourth levels)
- Growth Needs: internal esteem and self actualization (desires to be creative, productive and to complete meaningful tasks) (Maslow's fourth and fifth levels)

Contrarily to Maslow's idea that access to the higher levels of his pyramid required satisfaction in the lower level needs, according to Alderfer the three ERG areas are not stepped in any way. ERG Theory recognizes that the order of importance of the three Categories may vary for each individual. Managers must recognize that an employee has multiple needs to satisfy simultaneously. According to the ERG theory, focusing exclusively on one need at a time will not effectively motivate. In addition, the ERG theory acknowledges that if a higher level need remains unfulfilled, the person may regress to lower level needs that appear easier to satisfy. This is known as the frustration-regression principle. This frustration-regression principle impacts workplace motivation. For example, if growth opportunities are not provided to employees, they may regress to relatedness needs, and socialize more with co-workers. If management can recognize these conditions early, steps can be taken to satisfy the frustrated needs until the subordinate is able to pursue growth again.
Performance and Reward Management

Performance management is concerned with measuring individuals' effectiveness in their roles, understanding their aspirations and determining which development actions would be most appropriate. Reward management is about understanding individuals' motivating factors, and determining the level of pay, bonus and other rewards they receive. In some organisations the links between the two are strong and explicit, while in others they are kept deliberately separate. Work in these areas can be prompted by evidence of employee dissatisfaction, such as high turnover or poor morale, or by the desire to drive a change in some aspect of employees' behaviour.

Performance Appraisal:
I understood the steps involved in the performance appraisal. We do not have formal face-to-face appraisals in our country. I think I can introduce this concept of fixing a goal at the start of the year and then doing an appraisal with my subordinates every quarter. This would help us both in mutual understanding of work expectations and performance.

Section Two: Interesting points from Group Activity

Sharing our Performance appraisals:
I think one of the most stimulating discussions we had in this module was how performance appraisals were done in different parts of the world. We shared our experiences from U.K., Zambia, Tanzania, India and Canada. Appraisals were used meaningfully in some countries as U.K. and Canada to improve the performance and give annual pay hikes but in others as India, Zambia and Tanzania they were used more like a tool to keep subordinates under check.

Breaking up of the Term One Group:
The Second term timetable and the new optional subjects split our MBA group into several small groups across different modules. It also brought in new people from other MSc. Modules to the MBA module. The compact homogenous group of 23 that we had in MBA was at times mixed into a bigger group of 68 students. Also at other times, we were four MBA students in a group of 32 students.
Most people in MBA miss the camaraderie and bonding which had been developed in the first term. I think the attachment to and rapport of small compact MBA group, which existed in term one, was the reason for some excellent group work and group discussions.

Quinn and the conflicting values model:
We discussed at length the competing/conflicting values model of Quinn. We all rated ourselves on the chart and I found myself between internal process model(being a bureaucrat) and open ended model (being a painter)
We discussed at length the competing/conflicting values model of Quinn and more we studied the more variations of this model were available for examination.

Another variation of this model was in identifying the type of person the manager was. He could be an Anchor, Analyst or he could be a Networker or Pioneer.
Learning from Chinese friends:
During the module, we had visitors from the Chinese Administrative School attending lectures with us. Interacting with them exposed us to the teaching methods being employed by their institute to teach the Chinese civil servants. I was especially impressed with the focus in their teaching on the ‘Rule of Law’ while administering the people.

Section Three: Research
The Fifth Discipline by Peter M. Senge
I went to the Internet to learn about this book by Senge. I found that Senge's main thesis is that for an organization was that the organisation has to become a Learning organization, and it must embrace the following five disciplines:

1) Building Shared Vision so that the organization may build a common commitment to long-term results and achievement.
2) Mental models are a technique that can be used to foster creativity as well as readiness and openness to change and the unexpected.
3) Team Learning is needed so that the learning is passed on from the individuals to teams (i.e. the organization as a whole).
4) Personal Mastery is the individual's motivation to learn and become better (hence the term Mastery).
5) The fifth discipline is that of Systems Thinking which allows to see a holistic systemic view of the organization as a function of its environment.
Learning Organisations by: Andre Wierdsma, Joop Swieringa

I looked up for this book on organizational learning and found that, this book gives concrete concepts and examples of organizations that are learning to learn that how can an organization continue to develop. The book was a practical book on the principles of the learning organization. I hope that this book will serve as a good guide to the knowledge management matters in my daily work.
A humorous look at how Mangers fine tune their ‘people skills’

Ten Commandments for Managing People:This is one piece of paper, which will be on my table all the time. I think this is the biggest lesson I learnt on managing people in this module. (From Accenture-‘The Smart people’)
Ten Commandments for managing people.
1. Don’t get into a rut thinking there is only one right way to do a job.
2. Don’t expect everyone to be the same. Do not look for clones of yourself because it can only limit the organization’s -- and your -- growth potential.
3. Don’t give a lot of criticism.
4. Don’t isolate yourself.
5. Don’t wait until the project is completed to give your feedback.
6. Don’t expect your staff to perform poorly.
7. Don’t forget to tell staff members about your expectations, priorities and deadlines.
8. Don’t do performance appraisals only once a year.
9. Don’t be an autocratic leader.
10. Don’t push people to their limits. Don’t expect them to function well over a long period without ample resources.

A Handbook of Human Resource Management Practice
by Michael Armstrong

This is another book by Armstrong, which I read. He has discussed several new aspects of HRM in his book like; the significance of the Psychological contract, Scenario planning, Talent management processes, the sequential and empirical approach to formulating HR strategy. I was unaware of several of these concepts.

Learning and Development by Rosemary Harrison

Reading the book I realized that Rosemary was the chief examiner for the CIPD and this book was used as standard textbook for CIPD professional qualification. Rosemary in her book provides clear framework for understanding how HRD professionals can formulate and implement a learning and development strategy, identify learning needs, gain top management commitment to an organisational programme of training and development. She discusses at length on how to, manage and develop a training function, and design, deliver and evaluate learning events. I think it must be included in the MBA training course at IDD also.
Competency-Based Human Resource Management by David D. Dubois and William J. Rothwell

Traditionally, human resources departments and organizations have existed to fill jobs and manage the people who do jobs. Authors David D. Dubois and William J. Rothwell suggest a different approach: recruiting and managing competencies instead. The distinction is important, the authors say, because thinking of an organization as an aggregation of jobs makes it difficult to change quickly in response to new opportunities and threats. Much of what the authors suggest is plausible; some of it is even persuasive. They present a strong business case for taking the competency-based approach to HRM. Driven by six macro-economic, technology& business trends, the competency needs of most organizations are discussed in the book.
Section Four: Ideas on Managing People for follow up

‘Call me Annie and not Ma’am!’
This was my first interaction with my module coordinator. I liked the British way of addressing people by first names instead of ‘Sir’, ‘Madam’, ‘Mister’ and ‘Ms’ as we do in our country. This offers a degree of personalization and takes away the shallow formality. This is an idea I would want to try in my organisation.

Balancing the Scorecards
I would like to explore further the new approach to strategic management which was developed in the early 1990's by Drs. Robert Kaplan and David Norton a system they named as 'balanced scorecard'. I understand that it recognises some of the weaknesses and vagueness of previous management approaches and provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective.

We don’t use this method in our organisation.I would like to incorporate in my organisation what the balanced scorecard suggests that we may view the organization from four perspectives,
1. The Learning and Growth Perspective
2. The Business Process Perspective
3. The Customer Perspective
4. The Financial Perspective
I would like to spread these benefits of using the balanced scorecard within my organisation:
1. It helps the whole organization to focus on the few key things needed to create breakthrough performance.
2. It helps to integrate corporate programs as; quality re-engineering, and customer service initiatives.
3. It helps to break down strategic measures to local levels so that unit managers, operators, and employees can see what's required at their level to roll into excellent performance overall.
‘Hoshin Planning’I had read about the Japanese planning scheme called ‘Hoshin Planning.’ It was fascinating to know that the balanced scorecard has strong similarities to Hoshin Planning or ‘Hoshin Kanri’, the organization-wide strategic planning system used widely in Japanese companies. Both seek breakthrough performance, alignment, and integrated targets for all levels. The balanced scorecard suggests which specific areas should be measured for a balanced picture, but this is not contradictory to Hoshin Planning. However, there was an important difference also. The balanced scorecard method seems to be more of a one-way street -- the executive team creates the strategy, and it cascades down from there. But, the Japanese emphasize "catch ball", the process of give and take between levels that helps to define strategy in Japanese companies.

Section Five: Activities Undertaken
I attempted to synthesize learning from the ‘Understanding Organisations’ and ‘Managing People’ modules.

Complex situations

Gareth Morgan offered on such bridge between the two modules. He has used the concept of metaphor and analyzed its role in understanding organization and management. It was obvious that effective managers and professionals in all professions have to become skilled in the art of "reading" the situations they are attempting to organize or manage. I am able to appreciate that they are aware that new insights often arise as we approach situations from "new angles" and that a wide and varied reading can create a wide and varied range of possibilities. Using a metaphor, managers are like the cricket captains trying to read the pitch before the start of the match. Their reading determines the performance of the team (organisation) on that day. My synthesis of Morgan’s analysis of organisations and managers is that managers make up the organisation and their collective ability is the ability of the organisation.

While understanding the metaphors of Morgan it dawned upon me that, ‘Metaphor always creates distortions. If we take the metaphor; ‘The man is a Lion’. He is brave, strong and ferocious. But he is not covered inn fur and does not have four legs, sharp teeth, and a tail!’

I tried to synthesize the learning from the ‘Leadership’ and ‘Managing People’ modules.

• Some managers (but not all) are leaders
• Some leaders (but not all) are good managers
• A manager gets work done through the efforts of other people includes planning, organizing, motivating, and controlling
• A leader creates and realizes a vision communicates that vision and moves the organization toward that vision
This is what my final synthesis of the two is:
‘Management is about coping with complexity
Leadership is about coping with change’

I found relationship between three modules on ‘Managing People’, ‘Understanding Organisations’ and ‘Leadership.’

It was important to synthesise the learning across the three modules of Managing People, Understanding Organisations and Leadership. It was simply clear that at the bottom of all the actions are people and they are the most important part of the organization.

Learning about different Stages of Managing people in an organisation

After this extremely stimulating discussion on personnel management, I thought of what was happening in our organisation and I had this insight learning about the whole process of recruitment. (which I actually never realized was happening all the time.)
1. The first step involved searching for the suitable person for the job
2. The next step was recruiting that person by offering suitable remuneration
3. After the person was recruited, he was trained for the assignment.
4. The last part was the crucial part. This involved retaining the selected, suitable and trained person on the job.
Working overtime synthesizing Quinn, McBer and Lucas:
I working on Saturday was big fun. The whole IDD belonged to the MBA group. We were into the groups discussing the competencies of these three theorists. What came out was that probable all began in their jobs in the more bureaucratic and inward modes, but as they grew in organisations, interaction, planning, coordinating across different organisations required a different kind of competency. We all probably began to move towards an outward and flexible way of working. One more we discussed in the groups was that none of the models discuss about ‘keeping the Boss happy.’ We found that in our jobs the relations with the boss mattered a lot and that having good relations was important and helped at times. Most models are silent on this aspect of work area competency.

Discussing the present job and dream job:
This was another marathon discussion on the content of the present job. We also discussed what a dream job would be. We all focused on money being the most important aspect of the job, but we were told to imagine that we have tons of money and it does not matter in the equation. It was like an economist telling ‘assume there is a perfect market.’ However, there is no perfect market and thus there is no dream job without monetary considerations. We all are struck with the drudgery and misery of our present job striving to make both ends meet and dreaming about a job where we will not have to worry about money. It came out in the discussion that we all would go for the dream job after retirement. It just struck to me that if the present job is not a dream job, and we have to wait until sixty years of age (retirement) to complete the present job. Then I think the present job is the dream job, because will be doing it for the best part of our lives.

Reward Management: A Handbook of Remuneration Strategy and Practice by Michael Armstrong, Helen Murlis
I found the book to be comprehensive and highly practical in its approach. The book revealed that reward management is about performance – of individuals, teams and the whole organization. The book gave me insights into the performance management processes and various approaches to paying for performance, skill and competence. I think some of the processes can be adopted in my organisation.

PESTEL Analysis

PESTEL stands for Political, Economic, Social, Technical, Environment
and Legislative. A strategic planning technique, that provides a useful framework for analyzing the environmental pressures on a team or an organisation. A PESTEL Analysis is useful for groups who have become too inward-looking. They may be in danger of forgetting the power and effect of external pressures for change because they are focused on internal pressure.
( Rogers, J (1999) Facilitating Groups Management, Futures: London )

In analyzing the macro-environment, it is important to identify the factors that might in turn affect a number of vital variables that are likely to influence the organization’s supply and demand levels and its costs. The “radical and ongoing changes occurring in society create an uncertain environment and have an impact on the function of the whole organization” (Tsiakkiros, 2002). A number of checklists have been developed as ways of cataloguing the vast number of possible issues that might affect an industry. A PEST analysis is one of them that is merely a framework that categorizes environmental influences as political, economic, social and technological forces. Sometimes two additional factors, environmental and legal, will be added to make a PESTEL analysis, but these themes can easily be subsumed in the others. The analysis examines the impact of each of these factors (and their interplay with each other) on the business. The results can then be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans
Kotler (1998) claims that PEST analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. The headings of PEST are a framework for reviewing a situation, and can in addition to SWOT and Porter’s Five Forces models, be applied by companies to review a strategic directions, including marketing proposition. The use of PEST analysis can be seen effective for business and strategic planning, marketing planning, business and product development and research reports. PEST also ensures that company’s performance is aligned positively with the powerful forces of change that are affecting business environment (Porter, 1985).
PEST analysis looks at the external business environment and is an appropriate strategic tool for understanding the “big picture” of the environment in which business operates, enabling to take the advantage of the opportunities and minimize the threats faced by company’s business activities. When strategic planning is done correctly, it provides a solid plan for your company to grow into the future.

With a PEST analysis, the company can see a longer horizon of time, and be able to clarify strategic opportunities and threats that the company faces. By looking to the outside environment to see the potential forces of change looming on the horizon, firms can take the strategic planning process out of the arena of today and into the horizon of tomorrow.PEST is not a set of rigid compartments into which ideas need to be sorted. It is better thought of as a set of hooks that can be used to fish for important facts. Once the factors have been “fished out”, it does not matter which hook they were attached to. When it comes to writing up the analysis, there is no need to mention the PEST labels at all
Kotler, P. (1998) Marketing Management – Analysis, Planning, Implementation, and Control, 9th Edition, Englewood Cliffs: Prentice-Hall.
Porter, M. (1985) Competitive Advantage, New York: Free Press.
Tsiakkiros A (2002) “Strategic planning and education: The case of Cyprus”, The International Journal of Educational Management Bradford, 2002

The Cultural Factor in Managing people: Fons Trompenaars
Fons Trompenaars
Undertook research to identify and model the source of national cultural differences alongside corporate culture. He also identifies a number of dimensions in which cultures can differ.

Universalism v pluralism (rules and procedures or relationships)
Individualism v communitarianism (me or the group)
Specific v diffuse (superficial or deep relationships, are bits of life kept apart or brought together)
Neutrality v affectivity (conceals or show emotions)
Inner directed v outer directed (the environment around)
Achieved status v Ascribed status (from who you are or what you do)
Sequential time v synchronic time (one after another or all at once)

Every organisation has its own unique culture even though they may not have consciously tried to create it. Rather it will have been probably created unconsciously, based on the values of the top management or the founders or core people who build and/or direct that organisation. Over time individuals (particularly the organisation's leaders) attempt to change the culture of their organisations to fit their own preferences or changing marketplace conditions. This culture then influences the decision-making processes, it affects styles of management and what everyone determines as success.
When an organisation is created it becomes its own world and its culture becomes the foundation on which the organisation will exist in the world. People's actions in organisations are not always 'their own' but are largely influenced by the socialisation processes of the specific culture to which they belong. Organisational culture is often referred to in the same breath as organisational change - and you will often see the process of developing a new culture or changing the existing one linked into the transition curve. "Organizational culture is the key to organizational excellence... and the function of leadership is the creation and management of culture." Edgar Schein Organizational Culture and Leadership
Interpreting and understanding organisational culture is an important activity for managers and consultants because it affects strategic development, productivity and learning at all levels. Cultural assumptions can both enable and constrain what organisations are able to do. The job of the consultant is often to provide a method and a structure for organisations to be able to surface the most relevant cultural assumptions. Those that will assist change and those that will hinder the process
Organisational theorists began to apply the term culture to corporate/work situations over the past 20 years. Initially the term was used to describe the leadership practices and later in the 80's management gurus defined culture in terms of symbols, slogans, heroes, rites, and rituals etc. These may be elements of culture- but they are not the heart of culture.

What is culture?
"The way we do things around here" is a common sense definition of culture. But it over simplifies the concept and misses powerful underlying concepts and processes. It’s better to regard culture as referring to the shared assumptions, beliefs, values and norms, actions as well as artifacts and language patterns.
It is an acquired body of knowledge about how to behave and shared meanings and symbols which facilitate everyone's interpretation and understanding of how to act within an organisation.
Culture is the unique whole, the heart and soul, which determines how a group of people will behave. Cultures are collective beliefs that in turn shape behavior.
They can include:
Cognitive frameworks, Shared meanings and perceptions, Behavioral codes, Values, stories, heroes & heroines, Symbols & rituals. A key role for culture is to differentiate the organisation from others and provide sense of identity for its members. Cultures do not have to be logical or consistent, in fact they seldom are and can appear quite haphazard and chaotic to the outsider. Can also have subgroups with different cultures and with varying agendas. A strong culture is one that is internally consistent, is widely shared, and makes it clear what it expects and how it wishes people to behave.

Organisational Cultures
Schein argues that culture has three levels -• artifacts - espoused values •- basic underlying assumptions. He argues that culture is the outcome of the shared experiences arising from an organisation's attempts to resolve fundamental problems of adapting to the external world and achieving internal integration and consistency. This constructs a collective pool of knowledge that determines what is appropriate behaviour, directs understanding and gives guidance on how to resolve problems.
Gareth Morgan (1986) describes culture as shared meaning, shared understanding and shared sense making. He argues that culture must be understood as "an active, living phenomenon through which people create and recreate their worlds".
Both stress that culture is a dynamic, evolving process, not at all static. Their views also imply that key individuals have a crucial role to play in shaping and refining the culture.
Other writers see an organisation's structure as determining its culture. i.e. certain structures create certain types of culture, as reflected in Charles Handy's work. He outlines a simple framework for categorising cultures.

Cross cultural models Geert Hofstede
There have been some recent models created to attempt to study and classify cultural diversity in relational to organisational needs. One model, based on the work of Geert Hofstede classifies cultures based on where they fall on a five item continuum. Hofstede likens culture to a 'collective programming' of the minds of one group that differentiates them from other groups. He believes this programming derives from one’s social culture. He puts a different slant on culture, as Hofstede talks of it as 'software of the mind'. Culture is "the collective mental programming of the people in an environment". Criticism of his views arises as he suggests less of a role for individuals in developing culture, instead they are seen as rather passive - simply the recipients of culture and his views appear to ignore diversity within national cultures. It depends how inclined you are to individualism, remember Hofstede is European and most other writers/theorists are American.
The legacy of different social contexts is important.

1. Individual vs. Collective Orientation
2. Power-Distance Orientation
3. Uncertainty-Avoidance Orientation
4. Dominant-Values Orientation
5. Short-Term vs. Long-Term Orientation

Result Oriented Management by Jan Schouten and Wim van Beers
The Result Oriented Management system - or: "Resultaatgericht Management" (RGM) as it is called in Dutch - aims to achieve maximum results based on clear and measurable agreements made upfront. RGM is primarily a management style based on the thought that people will work with more enthusiasm and fun if:
• they clearly know what is expected of them,
• are involved in establishing these expectations,
• are allowed to determine themselves how they are going to meet these expectations,
• And obtain feedback about their performance.
In Result Oriented Management, the manager sets goals and determines priorities and makes resources available that are needed: time, money and capacity. The employee provides his time, knowledge and abilities and indicates under which conditions he can deliver the required results. In doing so, he takes the personal responsibility for achieving those results. Result Oriented Management is a management system that works with so called Result Oriented Agreements. All parties have the same expectations about their targets and can approach each other on results. All agreements must always be 'SMART': Specific, Measurable, Accepted, Relevant and Traceable. Within the borders of the agreements that are made, the employees are free to determine how they want to achieve their targets. RGM helps to translate corporate goals to divisional and individual goals.
The Fifth Discipline: Peter Senge (Learning Organisations)
Senge has some wonderful thoughts about organisations being learning organisations. He calls these the five disciplines.

Systems Thinking (the integrative [fifth] discipline that fuses the other 4 into a coherent body of theory and practice)

Personal Mastery (people should approach life and work "as an artist would approach a work of art")

Mental Models (deeply ingrained assumptions or mental images "that influence how we understand the world and how we take action")

Building Shared Vision (when there is a genuine vision "people excel and learn, not because they are told to, but because they want to")

Team Learning (team members engaging in true dialogue with their assumptions suspended)

All these 5 disciplines must be employed in a never-ending quest to expand the capacity of the organization to create its future. Learning Organizations are those that are able to move past mere survival learning to engage in generative learning - "learning that enhances are capacity to create”

Honey and Mumford Learning Styles
Learning Styles were developed by Peter Honey and Alan Mumford, based upon the work of Kolb, and they identified four distinct learning styles or preferences: Activist, Theorist; Pragmatist and Reflector.
Activist: Activists are those people who learn by doing. Activists need to get their hands dirty, to dive in with both feet first. Have an open-minded approach to learning, involving themselves fully and without bias in new experiences
Theorist: These learners like to understand the theory behind the actions. They need models, concepts and facts in order to engage in the learning process. Prefer to analyse and synthesize, drawing new information into a systematic and logical 'theory'
Pragmatist: These people need to be able to see how to put the learning into practice in the real world. Abstract concepts and games are of limited use unless they can see a way to put the ideas into action in their lives. Experimenters, trying out new ideas, theories and techniques to see if they work.
Reflector: These people learn by observing and thinking about what happened. They may avoid leaping in and prefer to watch from the sidelines. Prefer to stand back and view experiences from a number of different perspectives, collecting data and taking the time to work towards an appropriate conclusion

Robert Gagné: Taxonomy of learning.
Gagné work has been particularly influential in the design of instructional materials (particularly for military personnel) and as such, his theory has been classified as an instructional theory. Gagné theory is based upon an Information Processing model and described several factors that influence learning and as such are called the Conditions of Learning.

There are three elements in Gagné's theory: a taxonomy; internal and external factors necessary to achieve learning and nine events of instruction.

The taxonomy learning comprises five categories:
1. Verbal Information
2. Intellectual Skill
3. Cognitive Strategy
4. Attitude
5. Motor Skill
Intellectual Skill can be further sub-divided into:
• Stimulus recognition
• Response generation
• Procedure following
• Use of terminology
• Discrimination
• Concrete and Defined concepts
• Rules
Different internal and external conditions are necessary for each type of learning. For example, for verbal information to be learned there must be a chance to practice in different situations and environments. For cognitive strategies to be learned there must be the opportunity to practice new solutions to problems.

Experiential learning model.

Professor Phil Race offers an alternative experiential learning model.
There are four processes and rather than progressing through a cycle, they interact with one another like ripples in a pond.
If there is a starting point it is "wanting" to learn
Wanting: Although we do learn without wanting to, for example phobias are learnt behaviour, effective learning usually requires motivation and the desire to learn.
Doing:
Experiential learning is all about learning by doing. Therefore if you are to learn effectively then you need to actually do something, ride a bike, switch on a computer, whatever it is that you are hoping to learn.
Digesting
Effective learning needs time for reflection and thinking. People who are good at learning ask themselves questions like: "How did that go?" "What worked" "What didn't" "How could I do that better next time?"
Digesting like the physiological process requires quiet relaxed time. You wouldn't digest a heavy meal by rushing around. Perhaps you need to think about learning in the same way.
Feedback
Integral to effective learning is feedback. We all like to know how well we are doing. Research indicates that one of the most enjoyable aspects of learning is getting feedback from friends and colleagues.

Sensory Acuity and NLP
Sensory acuity (seeing, hearing, feeling (physically and emotionally), smelling and tasting) is a critical piece of NLP and life. It is important to be aware of Feedback/information that indicates the extent to which a person is:
• On or off target in achieving the outcomes.
• Awareness about, other people’s actions and reactions to certain situations/ stimuli.
• The person’s reaction to certain situations/stimuli.
When observing other people, we will want to notice:
• Words they use (predicates).
• Eye movements (eye accessing cues).
• Changes in skin colour/tone.
• Breathing.
• Voice quality.
• Posture/gestures.
• Changes in energy - many people with kinesthetic as a preferred representational system or who are visually impaired are very attuned to changes in energy. We all have the ability to do this. We just have not taken the time to practice the skill.

Reward management
Pay is an important feature of human resource management - after all, it is the main reason why people work. It is a sensitive and controversial area that has been extensively debated at both practical and theoretical levels. In the US the term 'compensation' is used to encompass everything received by an employed individual in return for work. For example, Milcovich et al (2001: pp.6) state that, "Employees may see compensation as a return in exchange between their employer and themselves, as an entitlement for being an employee of the company, or as a reward for a job well done" (original emphases). The reward or compensation people receive for their contribution to an organisation includes monetary and non-monetary components.
Remuneration does not simply compensate employees for their efforts - it also has an impact on the recruitment and retention of talented people. The term 'reward management' covers both the strategy and the practice of pay systems. The effectiveness of an organization’s performance and reward management can have a major impact on not only morale and productivity but also its ability to attract and retain staff. Many companies have found that far from complementing the stated aims of the business, their performance and reward systems were actually driving counter-productive behaviour.
Reward management is about understanding individuals' motivating factors, and determining the level of pay, bonus and other rewards they receive. In some organisations, the links between the two are strong and explicit, while in others they are kept deliberately separate. Work in these areas can be prompted by evidence of employee dissatisfaction, such as high turnover or poor morale, or by the desire to drive a change in some aspect of employees' behaviour.

Adult Learning Theory
1. Speck (1996) notes that the following important points of adult learning theory should be considered when professional development activities are designed for educators:
2. "Adults will commit to learning when the goals and objectives are considered realistic and important to them. Application in the 'real world' is important and relevant to the adult learner's personal and professional needs.
3. Adults want to be the origin of their own learning and will resist learning activities they believe are an attack on their competence. Thus, professional development needs to give participants some control over the what, who, how, why, when, and where of their learning.
4. Adult learners need to see that the professional development learning and their day-to-day activities are related and relevant.
5. Adult learners need direct, concrete experiences in which they apply the learning in real work.
6. Adult learning has ego involved. Professional development must be structured to provide support from peers and to reduce the fear of judgment during learning.
7. Adults need to receive feedback on how they are doing and the results of their efforts. Opportunities must be built into professional development activities that allow the learner to practice the learning and receive structured, helpful feedback.
8. Adults need to participate in small-group activities during the learning to move them beyond understanding to application, analysis, synthesis, and evaluation. Small-group activities provide an opportunity to share, reflect, and generalize their learning experiences.
9. Adult learners come to learning with a wide range of previous experiences, knowledge, self-direction, interests, and competencies. This diversity must be accommodated in the professional development planning.
10. Transfer of learning for adults is not automatic and must be facilitated. Coaching and other kinds of follow-up support are needed to help adult learners transfer learning into daily practice so that it is sustained." (pp. 36-37)

Porter's Five Forces
The Porter’s 5 Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps to understand both the strength of the current competitive position, and the strength of a position that is being looked at for moving. With a clear understanding of where power lies, can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps. This makes it an important part of the planning toolkit.

The Final word on Managing People

Efficient managers excel in plagiarising ideas of subordinates!

Module: Service Effectiveness

2008-02-26T00:52:00.000-08:00

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

‘Empowerment is a reflexive activity, a process capable of being initiated and sustained only by the agent or subject who seeks power or self-determination. Others can only aid and abet in this empowerment process…by providing a climate, a relationship, resources, and procedural means through which people can enhance their own lives.’ (Simon, 1990, p.32) The above quote aptly, sums up critical role of both the user and the public service manager in facilitating the process. The current essay uses my role as a public sector manager in empowering the community on Personal health insurance. It focuses on the ‘Power levers’ (Kakabadse et al., 1988) in an ‘Empowerment Continuum’ (AMA, 1991) framework.

‘Power Levers’
There are different types of power including reward, coercive, legitimate, personal expert information and connection power. (Kakabadse et. al., 1988)

‘Empowerment Continuum’
The ‘empowerment continuum’ involves engagement of the user and the public service provider in a continually progressive process. It is divided into four distinct but progressive stages of information, consultation, participation and delegation. (AMA, 1991)

‘Empowerment Continuum’

1. Informing:
The insurance scheme covered three villages that had no medical facilities. It involved provision of daily outpatient care in the villages by a visiting team of doctors from a medical institute where I worked. An on-call ambulance service was available for patients requiring hospitalization. The nominal insurance cost covered all the treatment costs. As a public service manager, ‘Information power’ was used in informing the potential users about the insurance scheme, type of services, their availability and where and how to access them. The information was in an accurate and in an easy to understand format. The ‘information overload’ was avoided by not giving too much information. ‘Personal power’ was added by face-to-face communication and a direct, personal interaction, as it was a good way to inform and to ensure that message has been correctly received. A feedback mechnism was established through the village council. It ensured that the ‘intended users have received the key information and it conveyed the intended meaning.’ (Willis, 2007) Thus the ‘information power’ was not allowed to become ‘one-way communication by the simple device of providing superficial information, discouraging questions, or giving irrelevant answers.’ (Arnstein, 1969)

2. Consulting:
Initially after the project was started, the response was encouraging but soon it faded away. It was decided to use ‘Expert power’ the power of specialist knowledge, to provide opportunities for consultation by encouraging the users to give their opinions and feedback on the available services and on those that are required. The villagers were consulted on the type and quality of services and if they were agreeable on the model of service provision and the cost of insurance. It emerged that users felt that their initial feedback not been incorporated into the scheme. It was a copybook situation of ‘hearing but not listening’. (Dibben and Bartlett, 2001) It seemed like we had ‘decided to build an acute unit and [were] then consulting on the colour of the furnishings.’(Sayce, 1997) There was thus a gap in what the villagers perceived they would get as services in the insurance cost and what was provided by the hospital. The ‘Expert power’ of the manager was utilised to decide what could incorporated from the consultation process. However this consultation was continuously needed, therefore, it was honestly explained to the users extent to which they made a difference, to policies and practices. The ‘reward power’ was used to give adequate feedback and recognition to the users for their input. The users felt that their consultation was contributing to service improvement. It was to avoid a situation, as one of the respondents to consultation questionnaires had said, ‘nothing ever happens with those damned questions, except the surveyor gets $3 an hour, and my washing doesn’t get done that day.’ (Arnstein, 1969).

3. Participating:
Within a few months of consultation process, the Insurance scheme again gained momentum. The number of users exceeded the expectations and there was demand for extending it to other villages. It was then decided to solicit help from existing users in running the scheme. The ‘Legitimate power’ (power provided by statute) was used, to empower the users by allowing participation in the process of service provision. The ‘information power’ was also used to inform the users on the available avenues for participation and clarifing their role, as participants. To make sure that the users measured up to the task the ‘Expert power’ used to impart the requisite skills to the users through training. It built confidence in the users, for effective participation and helped them to pick from the various available choices. As the management of the scheme went into the hands of the users, there was resistance from the staff in the organisation, to user participation. The ‘connection power’ (power of knowing people) and the ‘coercive power’ (power to discipline within organisation) was used to ‘change values and perceptions of the service providing staff in accepting user participation and user decision making.’ (Birchall, 1998) It required a lot of ‘Connection power’ to avoid the ‘participation gap’ (Lowndes, 2001) and to help new participants to break-into already established groups. The participants decided on what new services were to be started and what charges were to be levied. They monitored the quality of the services and gave feed back on the same. There was thus a meaningful user participation in service provision, as the users to be expressed their views and their views carried weight. (Deakin and Wright, 1990) The users were ‘aware of their real interests’ during these opportunities for participation in decision-making about services. (Lukes, 1974)

4. Delegating:
The next step in the process was delegation whereby the users would become active ‘co-producers’ and my ‘expert power’ would act as a catalyst in training the user group to enable them to take responsibility for the critical decisions. However, delegation, which was the most advanced stage of empowerment, was not possible as it was limited by the level of ‘Legitimate power’ that I as a manager possessed. Although it did not mean setting up of an alternate system of service provision, the available policy framework and the legislative capability did not provide scope for delegation. Delegation or user control was also limited by the capability of the user groups to undertake delegated work.

The entire process of empowerment is examined through a matrix below (Willis, 2007).

Manager’s Role Informing the users/ stakeholders Consulting with users/stakeholders Participating with users/stakeholders Delegating
Control to users/stakeholders

Planning

Information by posters/leaflets/brochures/ e-mail about forthcoming proposals, taking feedback Questionnaires/ surveys for requirements, needs Users help to do need assessment, co-decide on service provision User based Plan/policy formulation

Monitoring of Implementation

Information/ feedback about funds spent/ progress of project Surveys/interviews for service delivery, further requirement, altering/enhancing services Users co-decide the service, help to monitor and modify Users co-produce & monitor the service

Evaluating

Information/ feed back on service performance and quality
Surveys, consultation for evaluation on program quality, need fulfillment, shortcomings Users assist to evaluate, assess and modify the services Users evaluate and modify the service according to needs

A matrix depicting the different roles of public service manager during the empowerment process (after Willis, 2007)

Fulfilling expectations
With increasing awareness, the service user groups are seeking greater involvement in services with higher levels of participation. (Birchall and Simmons, 2004) This happened in our case also and the users wanted larger participation. The ‘legitimate power’ had to be used to limit participative work, to the extent it fitted in the existing professional and legislative framework. The local village politicians were vocal and persistent on gaining empowerment on behalf of the villagers. The ‘information power’ and ‘expert power’ was used to avoid the ‘professional users’ (Campbell, 2004), as these activists were not the real service users and were not in contact with their constituency. Although there was a temptation to ease off the pressure, but this would have resulted in empowering the wrong people.

Other insights gained
During the course of this empowerment analysis I found that a manager may use legitimate, expert and information power to create suitable conditions for the empowerment of the users however, as the old saying goes, ‘you can lead a horse to water, but you can’t make it drink’. I also learnt that the, ‘the manager has to aware be of the predicament that, ‘as to not just why the public should be involved, but also why they would want to be involved.’ (Corrigan and Joyce, 1997; Sweeting and Cope, 1997) Individual service users may decide ‘not to be empowered based the current perceptions of the process or past experiences.’ (Birchall and Simmons, 2004) The public manager has to cautiously balance the information, expert, legitimate powers between the customer, citizen and the community, and ensure that there is ‘no imbalance in empowering one and disempowering the other.’ (Clarke and Stewart, 1992) However, ‘it is naive to believe that there will be unanimous agreement among service users with regard to their expectations’ (Leslie et al., 1998). I learnt that the manager however might use ‘Expert power’ to attempt a closer the fit between service user expectations and decisions made, to provide a higher the sense of empowerment to his users.

Further, it emerged that the manager has to be very careful with the process of empowerment, as it can easily turn to one of ‘disempowerment.’ The appropriation of the ‘Expert power’ by professionals as a critical part of their role may cause ‘disempowerment.’(Baistow, 1994) This can result in ‘professionally defined and service-focused approach in which service users have little say and control’ (Pease, 2002). Disempowerment can also occur at ‘any level of the administrative process, where service user input and its impact disappears into a ‘black hole.’ (Holosko et al., 2001) The manager has to maintain a delicate balance between legitimate, information, reward and personal power. The manager therefore has to establish a procedure of accountability alongside the process of empowerment. (Deakin and Wright, 1990) Accountability helps to maintain a check on the ‘power balance’ of the service provider and gives ‘information power’ to the manager through feedback, on the quality of the services.

Conclusion
To conclude, empowerment is about giving information to people so that they know their rights, supporting people to consider their options and make their own choices and decisions. The power flows from a public service manager to the users groups to empower them. The public service manager may use the Information and Expert power to start the empowerment process by user involvement through information and consultation. This may be enhanced to a more effective level of user-based decision making through user choice by using legitimate, connection and reward powers. Finally, there may be involvement of user capabilities to ‘co-produce’ the service. However, the role of the manager in empowerment is does not end with the users feeling empowered; rather it is a continuous process of not a few steps but the whole journey.

References

AMA, (1991) Quality and Contracts in the personal Social Services, (London: AMA)

Arnstein, S. R., (1969) A Ladder of Citizen Participation, Journal of American Institute of Planners, 35(4), pp. 216-224

Baistow, K. (1994) Liberation and regulation? Some paradoxes of empowerment, Critical Social Policy, 14(3), 34–46

Birchall, J., (1988) Building Communities: the Co-operative Way, (London: Routledge)

Birchall, J., and R. Simmons, (2004) User Power: The participation of users in public service, National Consumer Council, (London: NCC)

Bryant, M. (2001) Introduction to user involvement, The Sainsbury Centre for Mental Health, (London: SCMH)

Campbell, P., (2004) From Little Acorns – The mental health service user movement,
In Beyond the Water Towers, The Sainsbury Centre for Mental Health, (London: SCMH)

Clarke, M. and Stewart, J., (1992) Citizens and Local Democracy, Empowerment: a Theme for the1990s (London: Local Government Management Board).

Corrigan, P. and Joyce, P.,(1997) Reconstructing Public Management: A New Responsibility for the Public and a Case Study of Local Government, International Journal of Public Sector Management, 10(6), pp.417–32.

Deakin, N., and Wright, A., (1990) Consuming public services, (London: Routledge)

Dibben, P. and D. Bartlett, (2001) Local Government and Service Users: Empowerment through User-Led Innovation? Local Government Studies, Vol.27, (3), pp.43–58

Holosko, M.J., Leslie, D.R. and Cassano, R. D., (2001) How service users become empowered in human service organizations: the empowerment model, International Journal of Health Care Quality Assurance, 14(3) pp. 126-132

Leslie, D.R., Holzhalb, C.M. and Holland, T.P. (1998), Measuring staff empowerment: development of a worker empowerment scale, Research on Social Work Practice, 8 (2), pp. 212-22

Lowndes, V., Pratchett, L. and Stoker, G. (2001), Trends in public participation:
Part 2—Citizens’ perspectives, Public Administration, 79(2), pp.445-455

Lukes, S. (1974) Power: A Radical View, (Basingstoke: Macmillan)

Mayo, E., (2005) Empowerment for All, National Consumer Council, (London: NCC)

Pease, B. (2002) Rethinking empowerment: a postmodern reappraisal for emancipatory practice, British Journal of Social Work, 32, 135–147

Simon, B.L. (1990), Rethinking empowerment, Journal of Progressive Human Services, 1(1), 27–39.

Sweeting, D. and Cope, S., (1997) Modernising Local Democracy: Democratic Innovations in Local Government, Local Government Policy Making, 23(5) pp.61-82

Sayce, L., (1993) Mind's Policy on User Involvement, (London: Routledge)

Willis, M., (2007) Service Effectiveness: MBA Course Pack, (Birmingham: IDD)

Module: Public Finance

2008-02-26T00:38:00.000-08:00

Assignment: Shifting towards Environmental Taxation in developed country: Rationale, problems and practical difficulties

Introduction
The economically well-developed countries mostly have large industrial base (except some like UK, which outsource) with high consumption of fossil fuels and carbon producing power plants. (OECD, 1996) In these countries, the byproducts of manufact-uring industries and the consumer goods themselves are the cause of pollution. The developed countries also have a well-developed tax structure and compliance mechanisms. The National taxes consist of taxes on goods and services and personal incomes and some form of environmental taxation exists in these countries. (OECD, 1999, fig.1) In this essay, we will examine the case for taxing the environmental bads, in a developed country, and using them to replace the existing taxes. We will also examine the practical difficulties in carrying out such a tax shift.

Fig.1: Environmental Taxes as GDP percentage in developed countries

What is a ‘Tax Shift?’
The Environmental tax shift involves altering of whole or part of the national taxes towards goods, services and activities, which inflict a societal cost, because of their harmful environmental consequences. People and companies pay the costs of this harmful activity, instead of imposing them on other people and the future generations. The tax burden is thus shifted from economic activities and onto pollution. The revenue generated from those taxes contributes to the overall tax effort. (Durning, 1998)

1. Rationale for shift towards taxation of environmental ‘bads’

1.1 Taxing the externalities (Internalization of Externalities)
In a market, the marginal value to consumer must equal to the marginal cost of production for the producer at any given set of prices. This is true for perfect market conditions and leads to pareto-optimality. However, in actual conditions the production and consumption lead to ‘externalities,’ which disturb the pareto-optimality. (Sandmo, 2003) The market prices do not take cognizance of the harmful effects of non-renewable natural resources, effluents, consumer waste and water pollution and their costs remain ‘externalized’. (Kirgis, 1972) Environmental taxation helps to devise the prices that reveal true economic costs and ‘internalize ’the ‘externalities’ through a Pigouvian tax. (Whalley 1998) Thus, environmental taxes by internalizing the economic costs help to correct the imbalance in market prices.

1.2 The double dividend
The developed countries have high Tax to GDP ratio and a large percentage of taxes are collected through taxes on personal incomes and goods and services. (Eissa and Blundell, 2000) These taxes distort the behaviour of the people resulting in ‘dead weight loss of taxation.’ For example, taxes on labour potentially discourage employment. Using this rationale, taxing pollution would make the polluting activity less attractive. Introducing environmental taxes will ‘improve the environment, reduce the dead weight costs and increase elasticity of the tax system.’ (Eissa and Blundell, 2000, p.2) This was elaborated as ‘double-dividend hypothesis’ by Terkla (1984), Lee and Misiolek (1986) and Oates (1993) who state that, in a partial equilibrium framework, a pollution tax not only improves the environment (first dividend), but also generates public funds such that the excess burden of other taxes can be reduced (second dividend).

1.3 Revenue Recycling
Environmental tax shift can reduce taxes on employment and investment. Hoerner (2000) studied if all the revenue from environmental taxes can lower either labor taxes, capital taxes, or a combination of the two. He found that a substantial majority of U.S. industry (73 to 80 percent by value, employing 78 to 92 percent of U.S. workers) would be net beneficiaries of a tax shift. He found that for economic efficiency, revenues accruing from environmental taxes could be used to reduce other, pre-existing distortionary taxes. Thus, implementation of environmental tax shift will improve the ability of government to recycle taxes to finance a reduction in the existing taxes. This approach called ‘revenue recycling.’ is a well-established result in environmental economics and it maximizes gains in economic efficiency. (Sanstad and Wolff, 2000, p.1)

1.4 Increase eco-efficiency and competitiveness
The levy of environmental taxes will promote innovation into new technologies and processes to meet the need for fuel, energy, chemicals, paper and other such products. These innovations will then move the economy towards the ‘eco-efficient’ use of energy and resources (Taylor, 2003) by ‘raising the price of nature.’ (Weizsäcker and Jesinghaus 1992)
Further, tax promoted innovations will help improve ‘competitiveness’ of the businesses. These self-generated innovations will make the businesses less vulnerable to the increased risks due to mounting environmental legislation. The proactive adoption of new technology and approaches would reduce the cost of technology development and adoption for the businesses. (Taylor, 2003, p.14) Thus, the environmental taxes will provide ‘dynamic efficiency’ gains to the economy. (OECD, 1996, p.12)

1.5 Match market costs and social costs
In practice, the market prices do not reflect social costs and the industry and individuals overuse the resources and ‘continue to do what makes sense for them individually, though it makes little sense for others or for society in general.’(Wolff, 2000, p.41) The mismatch between market prices and social costs results in pollution and waste. The Environmental taxes are based on the ‘Polluter pays principle’ (EEA, 1996) and add a social cost on the industry or the consumer creating that pollution. The environmental taxes rationalize the ‘distribution of externalities’ (EEA, 1996) by making the person who is causing the externality to pay for the externality. This helps to maximize economic welfare. Environmental taxes are market-based mechanisms as opposed to regulation, which is a command and control approach. Taylor (2003, fig2) contends that market mechanisms act better in controlling the environment than the command and control approaches.

Fig.2: Effect of Environmental Taxes in pollution control

1.6 Complying with Kyoto protocol
Taxation is never popular and there is always an outcry against new taxes. The environmental taxes are not entirely new taxes. Some form of environmental taxation such as energy tax, tax on CO2 and SO2 emissions, landfill tax, fuel escalator surcharge are already in existence in several developed countries.(Poterba, 1993) Most developed countries are signatories to the Kyoto Protocol, (UNO, 1998) which envisages trading in carbon to pay for the pollutants. The government is under obligation to enforce the carbon tax on the polluters. In addition, the government has to devise a mechanism to collect taxes through distribution of tax permits to meet its national tax obligation. This opportunity can be utilized for a wider tax shift and introduction of environmental taxes to replace the existing taxes.

1.7 Additional revenue for environmental improvement
It is likely that even after the levy of environmental taxes, the producers and consumers will probably not stop pollution causing activities. Taxes on these will help raise revenues that may also be used to subsidise producers or consumers to shift to more environment friendly activities. This would be an additional source of funds for environmental improvement. (Clinch et. al., 2004)

2. Problems in shift towards environmental taxation

2.1Double dividend and burden shifting
Goulder (1994) compared the effects of an energy tax in a scenario where revenue was recycled through future tax cuts. Goulder (1995) also studied the effects of a carbon tax, offset by reductions in period-by-period marginal tax rates. He only found “weak” double-dividend effect of reductions in economic losses from energy or carbon taxes by means of using revenues to reduce other, distortionary taxes. In none of these cases, however, did Goulder find a double dividend outcome in which economic losses were completely offset by this mechanism. (Sanstad and Wolff, 2000, p.15, 16) Thus, the utility of the double dividend argument has to be clearly established (Oates, 1995, p.918) and therefore it may not be possible to have burden shifting through environmental taxation.

2.2 Competitiveness
The proponents of environmental taxes state that the taxes would make the businesses competitive by making them ‘eco-efficient.’ However, environmental taxation may result in loss of competitiveness. A developed country operates in the international market. If environmental taxes are adopted by the country but its trading partners do not do so, this will increase the cost of production and result in loss of international competitiveness. (Clinch and Dunne, 2004)To avoid payment of environmental taxes some companies may even relocate production and emissions to other countries. Such significant shifts would adversely affect the economy, jobs and result in loss of taxes. (Clinch et. al., 2004)

2.3 Trust in the government to use taxes effectively
Even though there is great concern about environment in the developed countries, yet people normally perceive that environmental taxes will be an additional burden. They were suspicious that the revenues will actually be used to ‘reduce other taxes or fund hypothecated expenditure.’ (Dresner et al., 2004, p.936) The people have little faith in their politicians and governments to do a tax shift in an efficient and transparent manner. This would be one of the major impediments, which the government will face in implementing the tax shift. The government will have to prove itself to be ‘capable and committed’ to use the environmental tax revenue to reduce labour taxes rather than ‘it just disappearing into a black hole.’ (Clinch and Dunne, 2004)

2.4 Increased costs for the poor
The producers facing the burden of environmental taxes may shift the increase in cost increases to consumers in shape of higher prices. This may increase the prices of fuel, gas and heating for the poor sections of the society who are large consumers of these products and are sensitive to pricing mechanisms. Further, they will not be benefiting from the reductions in the labour taxes, as they are normally not liable to pay labour taxes. (Ekins and Dresner, 2004) and (Dresner et. al., 2004) Thus, equity issue is involved in the imposition of environmental taxes and they may prove to be regressive for the vulnerable members of the society.

2.5 Harmful to certain industries
The environmental taxes will adversely affect certain industries. Fossil fuel industries energy-intensive industries as mining, bulk metals, cement, steel, nitrogenous fertilizers, chemicals and ceramics would experience substantial price increases due to increased taxes. These industries are important part of the economy employ large work force. (Kasa, 1999) Any major price increases or reduction in their sales would have an adverse impact on the economy. Closure of these industries may increase unemployment.

2.6 Adverse impacts on environment
Imposition of environmental taxes may result in illegal disposal of the waste due to high disposal costs as imposition of tax on nickel-cadmium rechargeable batteries in Denmark resulted in their illegal disposal. (Devas, 2007) Imposition of taxes may in shift of industry to areas, which have a higher cost for example the fossil fuel based power plants may move towards nuclear power, which has even greater environmental risk. The process of reducing pollution will lead the move to recycle waste, which in itself consumes a large amount of energy. (Devas, 2007)

2.7 Limitations of environmental taxation
Environmental taxes are powerful tools but there are limitations to their use. Taxes can only be levied if we can measure the externality. There are ‘externalities’ that are not possible to measure or where measuring the externality is expensive or intrusive. (Durning, 1998) Taxes cannot help to clean up the existing mess. Taxes may not be able to protect picturesque coasts and other scenic and important zones from development for which regulation and other forms of controls are needed.

3. Practical difficulties in making the ‘Tax Shift’

3.1 Predictability of Revenue
An environmental tax shift policy to substitute revenue by reducing existing taxes requires a very accurate system to predict the revenue from the environmental taxes. The revenue from environmental taxes will be unpredictable as it will depend on the change in the prices of goods and services because of the tax. This in turn will depend upon sensitivity of producers and consumers to price increase. (Taylor, 2003) In cases of a significant response to environmental taxes, the revenues will decline. This rate of decline may be difficult to estimate and this will any make reduction in existing taxes unpredictable. (Broadway, 2003) Continual adjustment of tax rates may then be necessary to maintain revenue neutrality. This may have high administrative costs.

3.2 Difficulty in fixing actual cost
The imposition of the environmental taxes will have difficulty in defining the ‘true’ present and future economic costs of the resources used as well as the damage caused to the environment and human health at every stage of production, processing, distribution, consumption and disposal. Similarly, it would not be practically possible to estimate the present level of pollution caused by the existing pollutant. Consequently, it will be difficult to decide on the baseline level of pollution and to measure if pollution has decreased or increased because of taxation. The environmental taxes probably will be decided in a lump sum, adhoc manner and they may not accurately reflect the cost of the externality. (Robertson, 1996)

3.3 Deciding between different taxes
Several type environmental taxes can be levied. These can be carbon tax, sulphur charge, toxic waste charge, water pollution charge, battery charge, household waste charge, noise pollution tax, landfill tax and many more. The government would have to decide on the method of taxes, if they will be cost covering or incentivising or revenue generating. The government would also have to decide if few or all these taxes have to be implemented. A large number of taxes or taxable items would result in public outcry and imposition difficulties. (Clinch et. al., 2004) and (Ekins and Dresner, 2004)

3.4 Administering the tax
While looking at the question of the environmental taxation we have also to examine the issue of administrating this tax. Is the tax easy to administer and enforce? Is it easy for taxpayers to comply with the tax? Is it easy to evade? The taxes may be easy to collect if levied close to the source of pollution, however if they are applied throughout the economy, they may be difficult to collection and may lead to evasion. (Hassett and Metcalf, 2000) The government will need to develop an institutional framework for tax administration, which will estimate the level of pollution, levy taxes, collect taxes and then redistribute these taxes to development finance. The will require extensive training in tax administration and detection of evasion of new taxes.

3.5 Governmental structure
A strong environment friendly government is needed to implement environmental tax shift. In a developed country, the composition of the parliament, presence or absence of coalition government and relative strength of the green parties will determine the shift towards environmental taxation. Further, the internal structure of government may be a possible obstacle to introduction of environmental tax. The Finance ministry may not agree to ‘hypothecate its tax policy’ to the ministry of Environment, who would want to ‘score for environmental performance.’ (Clinch et. al., 2004)

3.6 Opposition to taxes
There may be large-scale opposition from people on imposition of taxes on items, which have little demand elasticity for example in Britain levy of ‘fuel charge escalator’ met with strong resistance. (Ekins and Dresner, 2004, p.34) Similarly the environmental taxes aim at the energy-intensive companies in chemical, metallurgical, pulp and paper sectors and petroleum & gas refineries. Historically they have been played an important role in the economy. They also employ large number of people. They are politically well connected and are vocal in the business confederations. (Kasa, 1999) Anything affecting their competitiveness or effecting employment will have significant political implications and would adversely influence any levy of environmental taxes.

3.7 Macroeconomic conditions
The possibility of increasing the demand for labour via the reduction of labour taxes will largely depend upon the macroeconomic and labour market conditions in the country. If the country is having high unemployment figures, tax shift, which provides incentives to the workers, will become more attractive. However, it will be hard to introduce environmental taxes if the real earnings of the people are falling, as environmental taxes would then result in net increase in costs. (Clinch et. al., 2004)The people may not see the point in lowering the taxes on employment and increasing the taxes on the consumables as fuel, gas, electricity and heating. It may seem pointless to shift money from one place to another.

3.8 Gradual Implementation
The immediate total tax shift towards ‘environmental taxes’ is not possible. At present the nature and amount of tax receipts is uncertain. The governments also need a time to gain experience in implementing and enforcing these taxes. It would also ensure that existing revenues are gradually replaced and not abruptly cut off. A phase-in would give governments time to fine-tune the tax system. A phase-in would also give reformers time to guard against a potential weakness of environmental taxes. (Taylor, 2003) People and companies also need time to pursue practices, which lower the pollution. Thus, gradual transition towards these taxes, over several years, is only possible.

Conclusion
The environmental taxes provide an economic opportunity of rationalizing market costs of polluting goods. They also provide an opportunity for revenue generation but environmental taxes are unfamiliar tools of public finance. The revenue generation from environmental taxes is uncertain. Further, they will have a major impact on the industry, which may lead to strong opposition to their implementation. The government will have to make an important trade-off between environmental taxes and the potential loss of international competitiveness to countries that impose lower or no environmental taxes. The tax structure would also need careful design to have a phasing mechanism. The recycling of environmental revenues to replace the existing taxes would need formats for efficient functioning. The adverse impact on vulnerable sections of society would also need careful tax design. The environmental taxes at present do not yield significant revenue. Although they appear to provide a very potent and effective form of taxation, yet it is uncertain as to what extent they would be able to replace the existing taxes.

References
Broadway, R., (2003) National Taxation, Fiscal Federalism and Global Taxation, WIDER Discussion paper no. 2003/87 (Helsinki: United Nations University)

Clinch, J., and L. Dunne, (2004) Environmental tax reform: an assessment of social responses in Ireland, Energy Policy, 34(8), pp. 950-959

Clinch, J., L. Dunne, S. Dresner (2004) Environmental and wider implications of political impediments to environmental tax reform, Energy Policy, 34(8), pp. 960-970

Devas, N., (2007) Public Finance course pack, (Birmingham: IDD)

Dresner, S., T. Jackson, N. Gilbert, (2004) History and social responses to Environmental tax reform in the United Kingdom, Energy Policy, 34(8), pp. 930-939

Durning, A. T., (1998) Tax Shift: How to Help the Economy, and Get the Tax Man Off Our Backs, (Washington: Northwest Environment Watch Books)

EEA (1996) Environmental Taxes: Implementation and Environmental Effectiveness, (Copenhagen: EEA)

Eissa, Nada, R .Blundell and L. Blow, (2000) Employment, Environmental taxes and Income taxes, Redefining Progress and Center for a Sustainable Economy, (San Francisco: Redefining Progress)

Ekins, P., Dresner, S., (2004) Green taxes and charges: Reducing their impact on low-income households, (York: Joseph Rowntree Foundation)

Felder, S., and R. Schleiniger, (2002) Environmental tax reform: efficiency and political feasibility, Ecological Economics, 42(1-2), pp. 107-116

Goulder L.H., (1994) Deficit Reduction through Energy, Income, and Consumption Taxes: Impacts on Economic Growth and the Environment, in Tax Policy for Economic Growth in the 1990s. (Washington: American Council for Capital Formation)

Goulder L.H., (1995) Effects of Carbon Taxes in an Economy with Prior Tax Distortions: An Inter temporal General Equilibrium Analysis, Journal of Environmental Economics and Management, 29(3), pp.271–297

Gaube, T., (2005) "Second-Best Pollution Taxation and Environmental Quality," Frontiers of Economic Analysis & Policy, 1(1), pp.1-20

Hassett, K., and G. Metcalf, (2000) Environmental Taxes to Finance Capital Tax Reform, Redefining Progress and Center for a Sustainable Economy, (San Francisco: Redefining Progress)

Hoerner A, J., (2000) Burdens and Benefits of Environmental Tax Reform: An Analysis of Distribution by Industry, Redefining Progress and Center for a Sustainable Economy, (San Francisco: Redefining Progress)

Kasa, S. (1999) Social and political barriers to green tax reform. The case of CO2-taxes in Norway, (Oslo: CICERO)

Kirgis, Jr. F. L., (1972) Effective Pollution Control in Industrialized Countries: International Economic Disincentives, Policy Responses, and the GATT, Michigan Law Review, 70(5), pp. 859-918.

Lee, D. R. and W. S. Misiolek (1986) Substituting Pollution Taxation for General
Taxation: Some Implications for Efficiency in Pollutions Taxation, Journal of Environmental Economics and Management, 13, pp.338-347

Oates, W. E., (1993) Pollution Charges as a Source of Public Revenues, in Giersch, Herbert (ed.), Economic Progress and Environmental Concerns (Berlin: Springer), pp.135-152.

Oates, W. E., (1995) Green Taxes: Can We Protect the Environment and Improve the Tax System at the Same Time? Southern Economic Journal, 61, pp.915-922

OECD (1996) Implementation Strategies for Environmental Taxes, (OECD, Paris)

OECD (2001) Environmentally related taxes: Issues and strategies, OECD Observer (OECD: Paris)

Poterba, J.M., (1993) Global Warming Policy: A Public Finance Perspective, The Journal of Economic Perspectives, 7(4), pp. 47-63.

Robertson, J., (1996) Eco-Taxes, New Internationalist, available online at: http://www.newint.org/issue278/taxes.htm (accessed 14 March 2007)

Sandmo, A. (2003) Environmental Taxation and Revenue for Development, WIDER Discussion Paper No. 2003/86, (Helsinki: United Nations University)

Sanstad A.H. and Wolff G.H., (2000) Tax Shifting and the Likelihood of Double Dividends: Theoretical and Computational Issues, Redefining Progress and Center for a Sustainable Economy, (San Francisco: Redefining Progress)

Terkla, D. (1984) The Efficiency Value of Effluent Tax Revenues, Journal of Environmental Economics and Management, 11, pp.107-123

Taylor, A., (2003), Environmental Tax Shifting in Canada: Theory and Application, Pembina Institute and the Triple E Tax Shift Research Collaborative, available online at: http://www.pembina.org/pubs/pub.php?id=155 (accessed 13 March 2007)

UNO (1998) Kyoto Protocol to the United Nations Framework Convention on Climate Change, (Washington: UNO) avaialble online at: http://unfccc.int/resource/docs/convkp/kpeng.pdf (accessed 13 March 2007)

Weizsäcker, E.U. von, Jesinghaus, J. 1992, Ecological Tax Reform, (London: Zed Books)

Whalley, J., (1999) Environmental Considerations in Tax Policy Design, Environment and Development Economics, 4 (1), pp.111 - 124

Wolff G.H., (2000) When will business want environmental taxes? Redefining Progress and Center for a Sustainable Economy (San Francisco: Redefining Progress)

Module: Managing Organisations

2008-02-26T00:17:00.000-08:00

Assignment: Developing an Organisational Structure in Balakash Republic to undertake ‘War against Drugs’

1. Theoretical framework for bureaucratic Organisation
Organizations are groups of people, with ideas and resources, working toward common goals. The purpose of the organizing function is to make the best use of the organization's resources to achieve organizational goals. (Morgan, 1986) Further, Morgan (1993) gave the metaphor of machines to describe the organisations. According to him organisation is like a machine and is obedient product of human intelligence. Mintzburg (1979) described a Mechanistic organization as rigid with clearly delineated jobs, well-defined hierarchical structure which relied on a formal chain of command for control. Bureaucratic organizations, with their emphasis on formalization, are the primary form of mechanistic structures.

Weber (1958), described the ‘bureaucracy’ as a rational, goal-directed hierarchy, with impersonal decision-making, formal controls, and subdivision into managerial positions and specialization of labor. The machine bureaucracies coordinated and standardized work processes and specified rules for each task. (Skrtic, 1995)Weber (1958) underlined that the bureaucracy functioned on commands and rules, given by officeholders as trustees of an impersonal rational-legal order. The obedience to these uniform principles symbolized the bureaucratic authority. Spencer (1970), highlighted that, ‘Authority represents polar principles of an organization and was based upon compliance to commands.’

However, over a period the bureaucracy has failed to deliver. Simon (1967) maintained that, ‘politicised agendas are reshaping bureaucracies and playing a crucial role in evacuating bureaucracy of its content and role.’ Merton (1952), emphasized that bureaucracy was suffered from ‘goal displacement’ where by means undermined the ends they were supposed to see. Peters (2001) also found that division of tasks and goals without complete elaboration resulted in mere compliance to rules and reduced efficiency and effectiveness.

These shortcomings have lead to the modern bureaucratic organisations is being reexamined and they are being assigned new roles. This is because it is believed that the ‘‘traditional’’ way of governing society is ill suited to cope with the tasks and circumstances faced. The problem is extended because administrative success also ‘depends on the performance of several actors and institutions organized on different principles and with different cultures, resources, histories, and dynamics.’ (Olsen, 2005) A paradigmatic shift from administering and governing through bureaucracies and hierarchies has been prescribed. (Dunleavy and Hood, 1994)

Osborne and Gaebler (1992) held that modern bureaucracy must be an organisation, which was responsive to the needs of people and gave the concept of ‘agencification’. ‘An ‘executive agency organisation’ is semi-detached from its parent department, with its own budget and freedom from some departmental regulations.’ (James, 2003) It has accountability for the performance of specific operational tasks and personal accountability of the chief executive for performance.

Balakash
The channeling of drugs through Balakash has resulted in several problems. The government is unable to deliver results because of ineffective law enforcement agencies. The present assignment looks ways to modify the government organisational structure to fight against drugs.

Fig. 1: Map of Balakash indicating the drug route

2. Organisational Problems in Balakash Government

a. Macro level problems
Organisational Conflict
In Balakash, there is organisational conflict between Ministry of Interior, Ministry of Defense (MoD) and the NSS on carrying out counter narcotics operations. The bureaucratic roles and power structure do not follow clear-cut hierarchical and organisational lines. These different wings of the government organisation do not communicate with each other and do not know what other groups are doing. They appear to have distorted perceptions of each other. It appears they are competing against each other, and ‘building individual empires.’ The conflict is around autocratic and non-cooperative leadership styles of Ministers and sharing of organisational resources.

Unclear strategy and goals
The anti-narcotics operations do not have a clear cut well defined goal or a mission statement. The strategy is focused on inputs i.e. money spent by each ministry, rather than outputs and outcomes, which is reduction in drug trade or drug users. The targets for counter narcotics operations are ambiguous. They focus on numbers rather than addressing the underlying cause. The Ministries hide their poor performance behind these numbers.

Fig.2: Existing structure of the drug enforcement in Balakash

Overlapping Jurisdictions
The anti-narcotics operations are mainly to be carried by the Ministry of Interior, which works through police (in Bardak), customs service (in Nova Castra), highways police (outside Bardak), anti drugs division (Bardak), and an undercover wing (Alta). The Ministry of Defense controls the military and operates through an anti-narcotics division around Alta and on highways. A bureau called the National Security Service, which has undercover operations. Consequently, the different units undertake operations, which are uncoordinated, unfocussed, and cut into each other’s territory. There is tendency of scoring points over each other rather than delivering results.

Fig.3: Map of Balakash indicating the areas of operational overlap of different ministries

Indeterminate accountability
The accountability for the counter-narcotics operations is undefined. The Ministry of Interior and the Ministry of Defense are only concerned about launching operations and arrests but not for drug sales or drug seizures in the international waters by other countries. The Ministry of Education and Social development is concerned about the growing drug use in urban areas and especially schools but it cannot hold the other two Ministries responsible for the same. The arrests are not resulting in convictions due to poor evidentiary work by the enforcement agencies who in turn blame the judiciary for being lenient on the narcotics offenders. Further, due to poor accountability, corruption is spreading and this is resulting in deteriorating law and order, petty crimes, theft and inter-gang conflict in the cities.

b. Micro level problems

Unprofessional combat force
The work force is inadequately trained to carry out the anti-narcotics operations. It is also riddled with corruption and inefficiency. The armed forces also lack the requisite skills of evidence gathering and sustaining criminal proceedings against the narcotics offenders.

No focus on the cause of drug trade
The entire thrust of the counter-narcotics drive is on the offenders and users, but there is no focus on the cause of the problem, which is lack of development in the hill areas and poverty in the urban areas. Consequently, there is conflict between the Ministry of Interior and Governor of Alta on allocation of funds. No funds are allocated to provide alternative livelihoods and demand reduction for the drugs.

Soft legal system
The judicial system does not have separate laws or fast track courts for drug related offences. It also does not have checks to prevent drug related money laundering.

Recommendations

3. Structure of the Agency
The situation in Balakash is too complex for small changes to make an impact and it will be difficult to sustain them. A ‘unified large scale’ program has to be undertaken to create a momentum in the fight against the drugs by unifying all counter-narcotics activities the different ministries. The proposed agency will work on the model of a ‘Coordinating Council’ may be called Counter Narcotics Coordinating Council (CNCC)

Fig.4: Proposed model of Agency: Counter Narcotics Coordinating Council

Design
It is based on five pillars of Law Enforcement, Planning and Institution-Building, Demand Reduction/Alternative Livelihoods, Judicial Reform and Accountability. The council will draw upon the elements of existing institutions and would be capable of working with them.
The council will have five wings:
1. Operational Wing( law enforcement and counter-narcotic operations)
2. Planning Wing (counter narcotics strategy, interagency coordination and training of the armed forces)
3. Judicial Wing(monitoring of judicial trials, judicial reform and anti-money laundering)
4. Social Wing(demand reduction, drug rehabilitation and alternative-livelihoods)
5. Media Wing( interacting with media, preparing reports and accountability)
The agency will co-opt few select and suitable officers and staff the five core functional areas from the different ministries of the government. The staff in the agency will coordinate and supervise their respective ministries falling under their areas of expertise and oversee the work related to their area of operation. They will coordinate among themselves on operational requirements, task orientation and delivery of results.

Fig.5: Implementation structure of the Counter Narcotics Coordination Council

Implementation
Counter Narcotics Fund: To improve coordination and planning, all funds meant for anti-narcotics activities will placed under the Counter Narcotics Coordinating Council as a Counter narcotics Fund. This will ensure more effective resource allocation at all levels.

1. Operational Wing: All the counter-narcotic operations will be re-organized into two specialized forces to any prevent overlap in operational areas. The two forces will focus on two different areas, one will focus on major drug cartels, drug traders and the distribution network and the other will focus on maintaining law and order, guarding ports and highways and controlling small drug crimes. These would be:
a. Counter Narcotics Police of Balakash (CNP). This force will draw the best officers with proven record of accomplishment from the existing police, highway police, customs and port authority. It will create an agency with capability to maintain law and order and conduct operations in cities, ports, highways against illicit drugs targets
b. A Balakash Special Narcotics Force (BSNF), a Para-military force. It will take elements from the NSS, Anti-narcotics division of Military and Anti-narcotics wing of Ministry of Interior. It will have the task of undercover operations, surveillance, counter-intelligence and carrying out raids against high-value targets and drug operatives.
2. The Planning wing: This wing will draw the officers and staff with skills of strategic planning. This will also include officers who will impart specialised training Officers and staff skilled in judicial processes will also be associated to train the forces. The Wing will also include officials with financial background who will supervise allocation of funds and resources.
3. Social Wing: This will include officials from the Ministry of social development, province of Alta and city of Bardak and Nova Castra for carrying rehabilitation work.
4. Judicial Wing: This will draw officials with judicial background who will follow up on trials and look in reforms in the judicial systems to strengthen the law against the drug offenders and speedy trials.
5. Media Wing: They will have officials with PR skills and officials trained in figure and audit work. They will maintain all the data and coordinate with the media and the audit.

4. Role of the Coordinating Council
The coordinating council through its different wings will have to undertake ‘radical steps’ to address the problem. The agency will operate both at the strategic and operational levels.

At the Strategic Level
The agency will have to adopt a ‘multi-pronged approach’, which will include,
1. Launching direct attack on the drug trade through armed forces
2. Preventing movement of drugs through Balakash, seizing drug consignments, arresting and convicting big drug operatives
3. Carrying out sanitisation of customs, ports and the borders to prevent easy drug movement
4. Focusing on curbing drug distribution in the cities
5. Monitoring and preventing drug use among schoolchildren and rehabilitation of existing users.
6. Addressing the issue of poverty in urban poor and hill farmers
7. Efforts to provide alternate livelihood to of hill farmers and urban poor people for shifting dependence on drug trade
8. Strengthening anti-narcotics legislation stricter penalties for drug related offences
9. Stricter controls against money laundering.

Changes at Operative level1. The council will coordinate on uniform distribution of counter-narcotics funds and resources.
2. At the operative level, the council will provide single and unified command for all the counter-narcotics operations.
3. It will ensure a single agency for intelligence gathering, intelligence sharing, operational coordination and follow up on the courts and convictions.
4. It will also train forces for counter-narcotics operations and for inter-unit coordination. 5. It will follow up on trials and look for reforms in the judicial systems to strengthen the law against the drug offenders and speedy trials.
6. It will help in developing a law against money laundering and will coordinate with banks on this.
7. It will maintain all the data on drug seizures, drug offenders, traders, drug users especially schools and young children.
8. It will also coordinate with the media through press releases of the results of the operation.
9. It will also coordinate with the parliament and audit.
10. It will initiate supporting hill farmers in moving away from drug trade and curbing drug use in schools.

Individual ChangesThere would be regular informal exchange of information between different wings at all times. All counter narcotics efforts will be coordinated and collaborated. Besides this:

1. All counter narcotics forces will move under the command of CNCC
2. The Operational wing will directly supervise the anti-narcotics operations by exercising operational control over the two newly created counter narcotics forces.
3. Planning wing will also oversee newly set up training centres for the police force in combat training and evidence gathering.
4. The Social Wing will make resource allocation including separate resource allocation for drug rehabilitation and demand reduction and for hill farmers for agricultural and alternate livelihood support.
5. The judicial wing will also look for judicial reform to strengthen the law drug related offences.
6. The Social wing will coordinate with social authorities for awareness campaign for reducing drug demand and will start health support for drug rehabilitation
7. The Media wing will collect data on data on drug seizures, drug offenders, traders, drug users especially schools and young children. This will be published in media regularly.
8. The media wing will handle the audit and accountability functions.

5. Accountability

Overall accountability of the CouncilThe coordinating council will be vested with significant powers and funds. A suitable accountability mechanism will have to be established which will allow it freedom of operation, transparency and delivery of desired outputs.

1. To the Prime Minister: The Council will be accountable to the Prime Minister for its operational activities and results. It will report to the PM and work under its direct control. The Council chief will be available for briefing the Prime Minister, informally, on a daily basis, or as regularly as feasible. He will report and share full operational details with the PM. The council will have a formal monthly reporting to the PM on the success against drug trade, demand reduction, rehabilitation and alternative farming.

2. To the Parliament: The council will receive all the anti-narcotics funding and for this purpose, it will report to the parliament through a quarterly report on amounts spent and results achieved. This will ensure financial transparency and accountability.

Fig.6: Accountability of CNCC to various oversight bodies

3. To the Auditor General: To have an independent check on the activities of the council, the performance and the accounts of the council will be open to central audit. It will be accountable to the Auditor General of Balakash who would conduct an annual audit of the outputs and outcomes achieved. This audit will however not compromise on the operational capabilities of the counter narcotics forces as details of informers and contacts will have to be kept confidential.
4. To Media and Public: The council will regularly publish its performance and achievements including money spent and will thus be accountable to the public through media. However, the operational details will be outside the preview of the media.

Accountability within the council
Within the council, each wing will be accountable to the council. For operational purposes, the Special Forces will report on a daily basis to the Council chief. The various wings of the council will interact on a daily need basis with each other and will report on a weekly or fortnightly basis to the Council. Each area will be accountable for results within its field of operation; however, the council will ensure proper coordination, unified focus on results, uniform distribution and utilization of resources within different areas.

6. Theoretical Backing for Organisational design
Agency: The suggested solution the coordinating council is based on the concept of an agency. (Osborne and Gaebler, 1992) The agency creation will result in ‘structural disaggregation.’ This will bring about an unbundling of the bureaucracy or breaking up large-scale ministerial departments into ‘core’ departments. (Talbot, 1999) The focus will be on tackling the ‘drug menace’ rather than meeting the narrow departmental targets.
Project Based Organisation: The model also incorporates the concepts of project-based organisation, (Morgan, 1989) wherein the organisational bureaucrats will have a high degree of functional freedom. They would have an opportunity to exhibit dynamism and innovation in the organisation. (Morgan 1989)
Authority and Legitimacy: The coordinating council has a clearly defined authority, power and legitimacy. Legitimacy provides status with which ‘an organisation is imbued and perceived and enables it to operate with the general consent of peoples and governments.’ (Slim, 2002) The council draws power from the top executive head and is answerable to that authority. This provides the council with ‘legal-rational’ bureaucratic authority to function. (Weber, 1958) The authority will help in effective control and command.
Conflict Avoidance: The council structure will address to the ‘bureaucratic conflict’ by defining hierarchy and ‘system conflict’ by assigning clear functional roles and funds. (Pondy, 1967)
Coordination and collaboration: The utility of the coordination council will be that it will pool resources from all spheres. The council will undertake its core activities through the five wings. Key specialists belong to the wings and make their contributions through their wings. The actions will be coordinated and will bring in the ‘Groupthink Effect’ in committee meetings, and creativity exercises such as "brainstorming", lead to Management By Objectives. (Drucker, 1954)
Professional Bureaucracy: The council in itself provides unity of command and the council chief provides a clear line of command. This will help to avoid jurisdictional overlap and conflict amongst various forces. The makes the council into a ‘professional bureaucracy’ where ‘professionals know the theory behind their work and have the discretion to adapt it to the actual needs’. (Tomlinson, 1982) This it will provide a rational approach for tacking drug trade and drug abuse.
The Flat Hierarchy of the council will increase the coordination and, information flow across the organisation and minimize delays and communication problems. (Urwick, 1956) The council has narrow span of control. (Fayol, 1949) which will allow easy communication and better control. It will also result in quick feedback from the staff.
Theory of action: The council will also be able to provide a ‘theory of action’ or ‘knowledge and a set of causal connections about how to be effective in the world.’ (Argyris & Schön, 1976) This theory of action will provide clear-cut goals to the organisation by incorporating organisational abilities and experiences.
Accountability: Accountability is an important element of any good organisation. ‘It involves being answerable for decisions or actions, often to prevent the misuse of power and other forms of inappropriate behaviour.’ (Barberis, 1998) The council is accountable at various levels for this purpose.

Conclusion
The coordinating council will present a unified, multi-pronged approach in tackling the drug menace. It will reduce organisational conflict and provide coordination & collaboration. It will also address to problem of demand reduction, rehabilitation and provision of alternative livelihoods.

References
Argyris, C., & Schön, D., (1976) Organizational Learning, (Reading: Addison-
Wesley)

Barberis, P., (1998) The new public management and a new accountability, Public Administration, 76(4), pp. 451–70

Drucker, P., (1954) The Practice of Management, (New York: Harper & Row)

Dunleavy, P., and C. Hood, (1994) From old public administration to New Public Management, Public Money and Management, 14, pp.9–16

du Gay, P., (2000) In Praise of Bureaucracy: Weber, organisation, ethics, (London: Sage)

Fayol, H., (1949) General and Industrial Management, (London: Isaac Pitman)

James, O., (2003) The Executive Agency Revolution in Whitehall; Public Interest Versus
Bureau-Shaping Perspectives (New York: Palgrave Macmillan)

Merton, R. K., A. P. Gray, B. Hockey, and H. C. Selvin, eds. (1952) Reader in bureaucracy, (Glencoe: Free Press)
Mintzburg, H. (1979) The Structuring of Organisations, (New York: Englewood Cliffs)
Morgan, G., (1986) Images of Organisation, (Newbury Park: Sage)
Morgan, G., (1993) Imaginization, (Newbury Park: Sage)
Olsen, J. P., (2005) Maybe It Is Time to Rediscover Bureaucracy, Journal of Public Administration Research and Theory, 16, pp.1–24

Osborne, D. and Gaebler, T., (1992) Reinventing Government, (Reading: Addison Wesley)

Pondy, L. R., (1967) Organizational Conflict: Concepts and Models, Administrative Science Quarterly, 12, (2), pp. 296-320

Simon. H.A, (1967) Administrative behavior, (New York: Macmillan)
Skrtic, T.S. (ed.) (1995) Disability and Democracy -Reconstructing (Special) Education for Post modernity, (New York: Teachers College Press)
Slim, H., (2002) By What Authority? The Legitimacy and Accountability of Non-governmental Organisations, The International Council on Human Rights Policy International Meeting on Global Trends and Human Rights — Before and after September 11(Geneva: ICHRP)
Spencer, M. E. (1970) Weber on legitimate norms and authority, The British Journal of Sociology, 21 (2): 123-134.
Talbot, C., (1999) Public performance – Towards a new model? Public Policy and Administration, 14(3), pp.37-47
Tomlinson, S., (1982) A Sociology of Special Education, (London: Routledge)
Urwick, L.F., (1956) The manager’s span of control, Harvard Business Review, 34, pp.39-47
Weber, M., (1958) The three types of legitimate rule, Berkeley Publications in Society and Institutions, 4 (1), pp. 1-11, Translated by Hans Gerth

Module: Making Policy

2008-02-26T00:13:00.000-08:00

Assignment: Critically examine the usefulness and weaknesses of the policy network approach. Provide examples where it can provide useful insights.

‘Policymaking’ is a highly specialised area and it greatly influenced by the various players, inside and outside the policy making process. The ‘policy network approach’ is a model to explain these influences on the policy process. The present essay examines the efficacy of ‘policy network approach’ to interpret the policy making process. It aims to analyse the utility and shortcomings of this approach.

The policy network approach
‘Power does not reside in institutions, not even the state or large corporations. It is located in the networks that structure the society.’ (Castells, 2004)These networks exist everywhere around us. In the contemporary policy making process, most of the policy formation and implementation takes place outside the formal institutions of the government. The ‘Policy network’ is defined as ‘an organized arrangement to facilitate interaction between the state and the organized interests.’(Bogason and Toonen, 1998) The ‘Policy networks’ are thus the specific type of networks those, which are focused on the policy process. Policy networks approach is an ‘analytical tool for understanding institutional exchange relations between the state and the organisations of civil society.’ (Borzel, 1998) or a ‘tool for analyzing decision making and interest group influence on the government’ (Richardson and Jordon, 1979)

Policy Universe, Community and Network
The policy network approach analyses relationships that are ‘structural rather than personal.’ (Marsh 1998) The policy network approach defines the policy process through three sub-concepts and they are policy universe, policy community and policy networks. ‘Policy universe’ consists of ‘actors’ and ‘potential actors’ who share a common interest in the policy. They generally contribute to the policy process on a regular basis. ‘Policy community’ defines the system where these ‘players interact with each other’ and exchange resources to ‘optimize and balance mutual relationships.’ The ‘policy network’ is the ‘linking process, the outcome of those exchanges, within a policy community.’ (Wilks and Wright, 1987)

Government and Interest group interaction
The policy network approach helps to analyse the relationship between the government and the interest groups. It highlights that the government needs to ‘establish a relationship with interest groups to have information, support and legitimacy’ for its decisions. The interest groups in turn need to ‘protect and promote their interests by participating in the policy making process.’ (Daugbjerg, 1996) This was in evidence in France in 1990s. There was a need to reform the power structure of the French government by decentralizing more powers to the small cities and towns. However, the cities were not prepared for this transfer. In the French city of Rennes, the government and the urban elites deliberately encouraged the formation of policy networks. These networks were developed, institutionalized and instrumentalized. These then helped to implement the decentralization reforms. (Le Gales, 2001) However, ‘the policy network approach has become a dogma’. It is being applied to every field of government, politics, management and organisations. The ‘whole administrative world seems to consist of networks.’ (Bogason and Toonen, 1998) Thus, policy networks may be acting as a link for the government to formulate and implement policy, but they are being used to elucidate every correlation with the government.

Provides structural basis for policy outcomes
The policy network approach helps in understanding different outcomes of similar policies in different policy networks. Policy networks can be strongly connected more ‘permanent policy communities’ or weakly formed ‘short-term issue networks.’ (Rhodes, 1992) or these can be a continuum, ranging from the highly formalized ‘policy community’ to the loosely structured ‘issue network’. (Smith, 1997) We can see the roles of these different policy networks in the environmental policies outcomes of the Danish and Swedish governments. Sweden, with issue-based networks made policies that imposed heavy cost on the polluters by employing taxes and universal regulation. In Denmark, well-established policy communities existed and the polluters were able to influence them. The anti-pollution policies were soft on the polluters, gave them incentives, and created standards for individual polluters. (Daugbjerg, 1997) Thus, different types of networks lead to different policy outcomes in these countries.

Policy continuity
The policy networks are associated with policy continuity. They withstand any drastic changes to the existing structure. The networks provide inertia in the existing policy structure. They also lead to incrementalism and thereby maintain the status quo of existing balance of interests. As Marsh and Rhodes (1992) put it, ‘continuity is preserved because of the ability of the policy network to prevent introduction of radical changes.’
In India, an Indian female labourers’ civil society network, SEWA (Self Employed Women’s Association) was working with rural poor women. Although the government had committed considerable funds for poverty alleviation, projects were abandoned as wasteful or irrelevant. The involvement of this civil society as a network empowered the stakeholders to influence the continuation of the poverty alleviation programme. (Nanavaty, 1994) Thus, the network played a crucial role in linking and continuing the policy process to the experience of the poor women themselves.

Policy making as ‘Demand fulfillment’
The traditional policymaking was done by a well-defined, hierarchical and impersonal political administration. Policy network approach helps to look things from the ‘demand side’ of the policymaking. It helps to explain how policy is articulated, maneuvered, modified and framed keeping in view the opinions of various interest groups. (Miller, 1994) The policy networks also provide an important alternative for individuals and organisations trying to influence development policies. (Mendizabal, 2006) In India, the NGOs ‘Common Cause’ and ‘Parivartan’ were championing the cause of having free information. They held several awareness campaigns and helped build consciousness on the issue among the people. The Government of India set up a ‘working group’ of eminent lawyers, researchers, and heads of government agencies and the two NGOs, forming a policy network, which recommended a Freedom of Information Bill and this led to framing of Right to Information Act by the Parliament. (Saxena, 2004) Thus, policy networks played a vital role in formulation of ‘Right to Information Act.’ in India.

Role of different actors in the policy process
The ‘policy network framework’ identifies the multiplicity of the policy making processes and recognises the role of ‘actors’ within and outside the policy making process. It also provides a framework for analyzing as to who has access to and influence over the policy makers. (Marsh and Rhodes, 1992) We can examine this in the agencification process in UK. The networks varied according to the level of dependency operating between minister, department and agency and the degree of integration of the network. Certain agencies as Benefits agency, Child support agency and Prison agency, where high power dependency existed were able to influence their operational needs better, whereas the agency as Forensic science service which was at distance from the minister was able to its shape policies and policy outcomes better. (Gains, 2003) However, the network approach neglects of the role of ‘power’ in influencing the policy formulation. The network approach, especially network management, places too much emphasis on the role of co-operation and consensus and ignores conflict, power and power differences (Brans, 1997).Thus the network approach does not explain the outcomes where there are disapproving voices.

‘Meso Level’ concept
The policy network concept is a ‘meso-level concept’. The ‘meso-level analysis focuses on the relations between the government and the interest groups.’ (Rhodes and Marsh, 1992,) The case of Common Agricultural Reforms in European Union reflects the ‘meso level’ role of organized policy network in policy change. (Daugbjerg, 1999) After formation of EU, there was a strong pressure from the United States and WTO for radical agricultural reforms. The reforms aimed at ending protections to the farmers and allowing market forces to operate. However, the new agricultural policy, which finally emerged, ensured favourable commodity prices for farmers and the reforms were only moderate in nature. Daugbjerg (1999) found that because of the presence of strong agricultural policy network at the meso-level, had actually prevented radical reforms and fundamental changes from taking place in the EU reform agenda.
The meso level approach of the policy networks helps to understand and classify relationships between interest groups and governments. However, it does not explain ‘the interorganisational and interpersonal relationships.’ (Borzel, 1997) The other pitfall of ‘using meso-level approach in isolation from macro or micro-level limits the variables it can consider and hence limits the causal pathways it can establish.’ (Evans, 2001) This can be seen in Pakistan where a vast network of policy community such as international donors, political parties, business groups, military and bureaucracy exist. They are in constant interaction with the issue networks consisting of NGOs, civil society, media and the middle class. The Military and the landed elite watch their self-interest and do not care for the poor. The role of the government in having pro poor policies is non-existent. (Nadvi and Robinson, 2003) The policy network approach fails to explain the reasons of failure of positive outcome of interaction of the policy network and that how is one group of the policy community is able to influence the outcome despite an equally strong policy issue network. Thus, network approach ‘does not fully explain how the networks influence the policy outcomes and which interests dominate the policy networks.’ (Borzel, 1997)The network approach has a limited utility in such areas and to have a ‘complete understanding of these; we have to study policy networks in conjunction with theories of state to understand the policy processes and policy outcomes.’ (Borzel, 1997)

Analysis of governmental decision-making process
The ‘Policy network analysis’ approach has been a useful tool to analyse decision-making and interest group influence in the government decision making. ‘The policy outcomes are defined as a result of bargaining power of the actors in the network.’ (Toke, 2000) We can see this in operation in formulation of new ‘National Water Policy’ in India. ‘Tarun Bharat Sangh’, an NGO working on water conservation & water harvesting systems was involved in the drafting process of the national policy, but only few their recommendations were adopted. The NGO felt that the policy was discriminatory and did not do full justice to the cause of the regional states. The NGO through a national forum ‘Jal Biradari’ launched a nationwide movement to amend the national Water policy. However, the policy advocacy network has not been able to influence the government substantially on the National water policy. (Advocacy)
Using the policy network approach Smith (1997) contends that if networks wish to maintain a good relationship with the government they have to abide by certain ‘rules of the game.’ The networks have to ‘act constitutionally’ and accept the government's final decision. They have to show that the ‘can be trusted; and only make reasonable demands.’ Toke (2001) argues that policy network approach can thus be used to ‘describe the locus of decision- making exercise and it explains the degree on inclusion or exclusion of interest groups in policy making in various sectors and sub sectors of the government.’ However, several theorists have normative objections against policy networks and the role of public actors within them. De Bruijn and Ringeling (1997) argue that, ‘the network approach considers government organizations to be the same as any other organization, and neglects their role as guardian of the public interest.’ Other critics further contend that government strategies based on network theory can seriously jeopardize policy innovation, the pursuit of the common good and the primacy of politics. (Ripley and Franklin, 1987) As is apparent in the above illustration, the policy network approach does not explain the role of diverse undercurrents and politics in policymaking.

Relates membership to policy formulation
Policy network concept has gained currency in the intellectual world in terms of its utility and relevance to understand and explain how policies are made between government and interest groups. The network approach also suggests that the ‘networks affect outcomes because close networks shape agendas and because close networks mediate exogenous change.’(Wright, 1988) This substantiated further as, ‘understanding the membership and structure of the policy networks provides explanation for the policy outcomes.’ (Marsh and Smith, 2000) We see that in Ecuador, twice in the last 5 years, well-organized networks of indigenous peoples and peasants have played critical roles in removing highly questioned governments from power. In both cases, however, they have failed to bring about changes in the policies they opposed; and the new governments have maintained the status quo. Although it had a clear effect on politics, their organisation at the grassroots did not translate into the capacity to influence policies. (Eurofic, 2005).This example offers an interesting insight into the role of the policy network approach, which informs us that the ‘networks influence outcomes.’ The community networks, which were powerful enough to replace the governments, were unable to influence the same governments to change the oppressive policies. The major limitation of the policy networks approach is that they do not provide explanation to exact role of the policy networks. The policy network approach does not provide any linkage between the character of the network and its influence on the outcome of the policy. The approach is thus ‘limited in not being able to provide a model for policy explanations and outcomes.’ (Blom-Hansen, 1997)

A ‘Western concept’
Policy network approach has largely been developed in the Western literature. Policy networks are widely in existence in the developed countries of Europe US and Canada. It seems policy network approach has done little work in the South. However, the recent emphasis on empowering Southern civil society to participate more in the policy process has initiated interest in developing systems to be ‘used as informal and dynamic communications structures to offer a key tool to bridge the divide between policymakers and those at grassroots level.’ (Afford)The policy network approach used in Africa by creating policy networks as ‘Co-Govern’ (Co-govern) which is used for influencing policy and governance of natural resources. Similarly SEND the Social Enterprise Development Foundation of West Africa, sensitizes Ghanaian policy-makers on ways to harness the Ghanaian Diaspora’s resources to enable poverty reduction and development in Ghana. (Afford) The policy networks are also in operation in Peru some of these are ‘Foro Educativo’, the Educational network, ‘Foro Salud’ the health network, ‘CIES’ is the network for economic and social research. These networks interact with government at different levels and have become legitimate actors in the various policy processes. (Mendizabal, 2006) Thus, we find that although it is mainly a western concept and functioning mainly in the developed countries but, in recent years, its effective use has been seen in countries as India and in South America and Africa.

Policy network approach is a ‘metaphor’
The critics of the policy network approach as Dowding (1995), Howlett (2002) argue that it lacks explanatory power. It is highly descriptive and does not provide for the explanations of outcomes of policy processes ‘the policy network theory may be more of a metaphor than a model, useful more for descriptive purposes than for predicting or explaining specific patterns or propensities for policy change.’ (Dowding, 1995) He further argues that the, ‘notion of policy networks is a metaphorical term characterizing group-government relations.’ (Dowding, 1995) This criticism is because the characteristics of the policy network model have not been fully explored and the relations have not been rationalized in form of equations. The network approach ‘model needs to be examined in a more systematic and quantitative way so that causal relationships are established.’ (Howlett, 2002)

Network approach lacks evaluation criteria
Other critics as Borzel (1998) and Brans (1997), argue that, the policy network approach lacks theoretical foundations and clear concepts. The network approach is not based on a ‘solid theoretical body of knowledge because of which a coherent theoretical framework is lacking and its concepts are unclear’ (Borzel 1998). Although the policy network approach is useful to explain several areas of policymaking process, it seems that, the evaluation criteria it suggests are vague and lacking a substantive norm. The network approach ‘rejects the use of ex-ante formulated goals as evaluation criteria, and so the approach does not offer a clear framework for evaluation.’ Thus, the approach ‘insufficiently acknowledges the influence of the goals of governments’ (Brans, 1997).

Ascertaining precise role
The above discussion, and examples, of utility and disparagement, of the network approach leads us to a significant question of establishing the exact role of the policy network approach. Ascertaining the precise role the policy network analysis has both significant conceptual and practical implications. The policy networks can become a part of the policy design if they ‘affect outcomes’ in predictable ways, but ‘if the network approach is merely a metaphor to describe actor interrelationships, without any predictable impact on policy outcomes’, (Howlett, 2002) then the concept merely remains as a theoretical framework with no practical utility. As we have seen that, despite the scholarly and substantial work, the network approach is still not a widely accepted as a theory on which practitioners in the public sector base their actions. As Klijn and Koppenjan (2000) state that, ‘it is therefore not surprising that the descriptive and explanatory aspects of the theory until now have received more attention than its prescriptions.’

Conclusion
We can conclude that policy network approach is a relatively elaborate and recognizable theoretical framework, which can be used to analyse, explain and evaluate policy processes. This approach demonstrates the role of policy networks in the policy-making process and offers clues in creation and management of these networks. However, the relevance of the network approach and the policy networks for national policymaking process and policy outcome is unclear. Although the policy network can explain some processes of the policymaking, however the exact impact of policy networks on the policy formulation, policy implementation and policy change has still to be clearly established.

References
Advocacy, Influencing Water Policy: India, available online at: http://www.righttowater.org.uk/code/advocacy_4.asp (accessed 07 March 2007)

Afford, Influencing Africa, available online at: http://www.afford-uk.org/services/influencing/africa (accessed 07 March 2007)

Blom-Hansen, J., (1997) A ‘New Institutional’ perspective on Policy networks, Public Administration, 75, pp. 669-693

Bogason, P., and A.J. Theo, Toonen, (1998) Introduction: Networks in public administration, Public Administration, 76 (2), 205-227

Börzel, T., (1997) What's so special about policy networks? An exploration of the concept and its usefulness in studying European governance, European Integration online, Papers 1, no 16

Börzel, T., (1998) Organizing Babylon: On the different conceptions of policy networks, Public Administration, 76(2), pp. 253-273

Brans, M., (1997) Challenges to the Practice and Theory of Public Administration in Europe, Journal of Theoretical Politics, 9(3) pp389–415

Castells, M., (2004) The Network Society: A cross-cultural perspective. Castells, M., (Ed.), (Cheltenham: Edward Elgar)

Coleman, W.D. and A. Perl, (1999), Internationalized Policy Environments and Policy Network Analysis. Political Studies, Vol. XLVII, (4), pp. 691-709

Co-govern (2003) Promoting Common Property in Africa: Networks for Influencing Policy and Governance of Natural Resources, available online at: http://www.caledonia.org.uk/commonweal/docs/cogov2.pdf
(accessed 08 March, 2007)

Daugbjerg, C., (1997) Policy networks and agricultural policy reforms: Explaining de-regulation in Sweden and re-regulation in the European Community, Governance, 10 (2) pp. 123-142

Daugbjerg, C. (1999) Reforming the CAP: Policy Networks and Broader Institutional Structures, Journal of Common Market Studies, 37(3), pp. 407-28

De Bruijn, J. A. and A. B. Ringeling,(1997) Normative Notes Perspectives on Networks in W. J. M. Kickert, E. H. Klijn and J. F. M. Koppenjan (eds) Managing Complex Networks. (London: Sage)

Dowding K., (1995) Model or Metaphor? A Critical Review of the Policy Network approach, Political Studies, 43, 136-58;

Evans, M., (2001) Understanding Dialectics in Policy Network Analysis, Political Studies, 49, (3), pp. 542-550

Eurofic Newsletter, May 2005, (2005) available online at:http://www.euforic.org/? (accessed 09 March 2007)

Gains, F., (2003) Executive Agencies in Government: The Impact of Bureaucratic Networks on Policy Outcomes, Journal of Public Policy, 23(1), pp. 55 – 79

Grantham, A., (2001) How networks explain unintended policy implementation outcomes: the case of UK rail privatization, Public administration, 79 (4). pp. 851-870

Howlett, M. (2002) Do Policy Networks Matter? Linking Policy Network Structure to Policy Outcomes: Evidence from Four Canadian Policy Sectors:1990-2000,Canadian Journal of Political Science, 35, pp. 235-267.

Klijn, Eerik-Hans, J.F.M. Koppenjan, (2000) Policy Networks: Foundations of network approach to governance, Public Management, 2 (2), pp. 135-158

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Marsh, D. and R.A.W. Rhodes, (1992) Policy networks in British government. (Oxford: Oxford University Press)

Marsh, D., (1998) Comparing policy networks, Marsh, D. (Ed.), (Buckingham: Open University Press)

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Module:Managing in the Information Age

2008-02-26T00:04:00.000-08:00

Assignment: In what ways could better knowledge management improve performance in the public sector?

Role of Public Sector
In this era of New Public Management, the public sector is customer driven. (Osborne, 1993) The government no longer retains a monopoly in service provision and it has to compete with private sector, international organisations and NGOs. The customer centric approach involves satisfaction of customer needs through focus on service delivery. The central resource available with the government and for this is knowledge and not goods & capital. (UNPAN, 2003) Therefore, public sector can only deliver effective performance by successful management of its knowledge, which is the ‘ability of an organisation to use its collective knowledge through a process of knowledge generation, sharing and exploitation enabled by technology to achieve its objectives.’ (Davenport and Prusak, 1998)

Framework
The essay uses the ‘Three fold Knowledge Management framework’ of Holsapple and Joshi, (2002). The framework has three components; a knowledge resources component (organization’s reservoirs of knowledge), an activities component (functions an organization performs in processing its knowledge resources) and a KM influences component (factors that affect the conduct of KM in an organization). The aforementioned role of public sector is discussed in conjunction with knowledge management components to suggest ways for improvement of public sector performance.

1. Acquiring knowledge
The knowledge resources component consists of two kinds of knowledge. (Holsapple and Joshi, 2002)The ‘explicit knowledge’ or the knowledge contained in computer systems, organisational codes, procedures & rules, books, brochures, videos, tapes and other artifacts. This knowledge is easy to identify and collect. The second type of knowledge is the ‘institutional knowledge.’ This stored in the minds of the people. It is hidden from the public and from the parts of the organisation itself. This knowledge is difficult to share. As a result, a lot of ‘wheel reinventing’ goes on in public administration. (Metaxiotis and Psarras, 2005) However, this ‘tacit knowledge’, is required to be collected and made available when needed. (Nonaka and Takeuchi, 1995) This is difficult as in the public sector, there is culture based on lack of trust and of not sharing knowledge. (Bate & Robert 2002) The people in organisation hoard knowledge as it gives them power. (Luen and Al-Hawamdeh, 2001) In public service, the premium on hoarding knowledge has to be offset with incentives like recognition and awards for knowledge sharing. The first step in knowledge management is therefore gathering and sharing the explicit and tacit components of organisational knowledge. Knowledge sharing will help the public sector organisation to have greater access to the knowledge of their employees. As Lew Platt, the former CEO of Hewlett-Packard pointed out, ‘if only HP knew what HP knows, it could be three times more productive’. Knowledge management and sharing will thus prevent ‘duplication of effort and help to make better decisions.’ (CIO Council, 2001) It will help to increase efficiency and produce better service delivery by the public sector.

Further, in public sector employees over a period, either move across departments or retire. They take their ‘tacit knowledge’ with them. Knowledge management can be used to help in retention of the ‘Institutional knowledge’ and preservation of institutional memory. This will bring stability and continuity to the organisation. (Milner, 2000) The performance of public service will be thus unaffected by such organisational changes. This knowledge can be further utilised in human resource management to train the newly recruited staff and reduce organizational learning time. This in turn will increase efficiency.

2. Processing knowledge
The second component of effective knowledge management involves classification and retrieval of knowledge from organisational memory and making it available for the users. (Holsapple and Joshi, 2002) The commonest devices to collect, process and store knowledge are computer systems. Some people believe that knowledge management is about ‘capturing all the best practices and knowledge that people possess and storing it in a computer system in a hope that someone will use them.’ (NHS, 2003) This may lead to wastage of resources. However, if information technology is used intelligently by integrating content and technology it can provide customer oriented services. In public sector, the user has to interact with multiple agencies for similar kinds of needs. Through knowledge management and use of information technology, the information, which is routinely required, can be shared among various public services to prevent duplication of information. The public service can ‘join up all services to focus on the needs of the customer’ and thus create a ‘one stop shop’ for the customer. (Reid and Bardzki, 2004) It will help the user in not filling multiple forms and accessing different public service offices. It will help the public service staff by reducing workload and increasing efficiency. It can also help to decentralize decision making at the operational level for better delivery of services. This process has been implemented in UK under the Modernising Government Agenda, where a portal ‘UK Online’ has been set up to provide services. (Reid and Bardzki, 2004) Online knowledge based service portals can thus serve a dual purpose of firstly, in intelligent capture, storage and retrieval of knowledge on computer systems and secondly, in providing online delivery of services. In a public sector, use of information technology based knowledge management can minimise human intervention in service provision. The computer being indifferent to the user can provide information without bias or premium. This will improve ease of access and availability of service. (Xiaoming and Kaushik, 2003)

The responsibility of the public sector is towards the stakeholders and not shareholders and under the new public management; this means their involvement in the process of policymaking. (UNPAN, 2003)The policy making now a days takes place outside the usual framework of bureaucracy and is mostly carried by informal arrangements called the ‘policy networks.’ (Rhodes and Marsh, 1992) The ‘policy networks’ comprise of the users & stakeholders and include their knowledge and experience. They also reflect their needs and expectations from the policy makers. Effective knowledge management can help in collection of knowledge from the policy networks and process it around policy initiatives. This can help to deliver a policy, which is more participative and focused on the needs of the people. Knowledge management can thus help in knowledge sharing which can help in power sharing. Knowledge sharing also promotes transparency in society. Transparency is a key factor to improve performance, as it can expose corruption and incompetence and can allow for checks and balances and stakeholder participation.

3. Utilising knowledge
The third component of knowledge management relates to the conduct of the knowledge. The knowledge, which has been collected and processed, can be used to deliver improved public service. (Holsapple and Joshi, 2002) One such mechanism is formation of ‘Collaboratives.’ This involves creation of horizontal knowledge networks that cut across hierarchical lines across several organisations. Collaboratives bring together wide range of professionals, who share their knowledge and learn the best practices from each other. (Bate and Robert, 2002) The collaboratives liberate individual ‘tacit’ knowledge and make it ‘explicit,’ through sharing of ideas & experiences. This knowledge is utilised by the members in their respective organisations. (Sveiby and Simons, 2002) The NHS has formed collaboratives, which help clinicians and local mangers to redesign services around the needs of local patients. (Department of Health 2000) Another mechanism of effective knowledge management is creation of ‘Communities of practice’ (Lave and Wenger, 1991) which are informal groups, working across internal or external boundaries, sharing knowledge and experience. The members put forward solutions based on their knowledge and experience as problems arise (Dougherty, 2004). An example of communities of practice exists on the Indian Administrative Services where officers of the batch, which join the service and train together, remain connected to each other throughout their service careers. The officers, who are posted in different parts of the country, interact with each other to share knowledge on solving administrative problems, handling public welfare programs and policy formulation & implementation. This helps them in finding quick solutions to public service problems. The GSDRC in the University of Birmingham has formed knowledge networks based on the concept of communities of practice to bring together people from a wider variety of occupations and interests. This puts the GSDRC team into contact with experts on various fields and helps it to learn from them by drawing on their experience from different situations. This knowledge is used by DFID for policy formulation and better service delivery. The information is also available on the website for use of common public and other stakeholders. (Lucas, 2007) Thus, these networks help in management of knowledge and improve the performance of the public sector.

Conclusion
The current public sector performance paradigm seeks to orient services and policies around the user. Knowledge management, which is the mental, behavioural, and cultural shift from the old adage ‘knowledge is power’ to the new mindset ‘sharing knowledge is power’ can assist this process. Effective knowledge management can provide means to enhance the ability of public service organization to achieve its organizational objectives by addressing to the needs of its stakeholders. It can help to decentralize decision making at the operational level for better delivery of public service and facilitate participation of the stakeholders. This in turn can help to bring the government closer to citizens, by making it convenient and cost effective. Knowledge management can also increase the efficiency of public service organisation by helping it to learn from its employees. This saves on duplication of effort and finds best solutions to the problem.

References
Bate, S. P. & Robert, G., (2002) Knowledge Management and Communities of Practice in the Private Sector: Lessons for Modernizing the National Health Service in England and Wales, Public Administration, 80 (4), pp. 643-663

CIO Council, (2001), “Managing Knowledge @Work, An Overview of Knowledge Management”, Knowledge Management Working Group of the Federal Chief Information Officers Council, August.(Washington: CIO)

Davenport, T., and L. Prusak, (1998) Working Knowledge: How Organisations Mange What They Know, (Boston: Harvard Business School Press)

Department of Health (2000) The NHS Plan: A plan for investment, a plan for reform (London: DOH)

Dougherty, D. (2004) Organizing practices in services: Capturing practice-based knowledge for innovation, Strategic Organization, 2(1), pp. 35–64

Lave, J. and Wenger, E. (1991), Situated Learning: Legitimate Peripheral Participation (Cambridge University Press, Cambridge)

Lucas, B., (2007) Communities of Practice: MBA Course Pack, (Birmingham: IDD)

Luen, T.W. and Al-Hawamdeh, S., (2001) Knowledge management in the public sector: principles and practices in police work, Journal of Information Science, 27 (5) 2001, pp. 311–318

Metaxiotis, K. and Psarras, J. (2005) ‘A conceptual analysis of knowledge management in e-government’, Electronic Government, Vol. 2, No. 1, pp.77–86
Milner, E.M., (2000) Managing Information and Knowledge in the Public Sector (London: Routledge)
NHS (2003) KM principles and practices, NeLH Specialist Library, available online at: http://www.nelh.nhs.uk/knowledge_management/km1/principles.asp (accessed on 17 March 2007)

Nonaka, I. and Takeuchi, H. (1995) The Knowledge-Creating Company, (Oxford: Oxford
University Press)

Osborne, D., (1993) Reinventing Government, Public Productivity & Management Review, 16(4), pp. 349-356.

Reid, V. and Bardzki, B., (2004) Communication and Culture: Designing a Knowledge-enabled Environment to Effect Local Government Reform, Electronic Journal of e-Government, 2(3), available online at http://www.ejeg.com/volume-2/volume2-issue3/v2-i3-art7-richter.pdf (accessed on 21 March 2007)

Rhodes, R.A.W., and. D. Marsh, (1992) New directions in the study of policy networks, European Journal of Political Research, 21, pp.181-205.
Sveiby, K.E. and Simons, (2002) Collaborative climate and effectiveness of knowledge work – an empirical study, Journal of Knowledge Management, 6(5), pp. 420-433
UNPAN (2005) Unlocking the Human Potential for Public Sector Performance, World Public Sector Report 2005, (New York: UNPAN)

Xiaoming, C. and Kaushik, V. P.,(2003) Issues of Knowledge Management in the Public Sector, Electronic Journal of Knowledge Management, 1(2), pp. 25-33

Module: Financial Management Methods

2008-02-25T22:18:00.000-08:00

Assignment: Audit Report:What it reveals about the performance in the organization?
How appropriate the analysis recommendations and presentation are?

The analysis is based on this Audit Report by The NAO
Improving Emergency Care in England

This performance audit report has been prepared by The Computer and Auditor General of United Kingdom. The report evaluates A&E (Accident and Emergency) services in UK. The performance audit is based on two documents. The first, ‘The NHS Plan’ (DOH 2000) which envisaged the emergency care access target of four-hour time spend in A&E by December 2004.The second, ‘The Reforming Emergency Care’ (DOH 2001) which set the targets for modernisation, increasing capacity and introducing professionalism in the A&E services.

Performance in the organisation
A report of CAG (1992) had brought out that ‘of among patients actually using A&E, waiting time was the aspect they considered most important.’ The present report (CAG 2004) also highlights that ‘For many people, visiting A&E is their only contact with the NHS hospital sector.’ and any delays in A&E creates an adverse opinion of the organisation. The NHS (DOH 2001) is acutely aware of the fact that waiting times have a human cost, in having an impact on the patients. Long waiting times create anxiety for the patients, reduce their quality of life and can cause actual deterioration of their condition. Based on these the NHS had undertaken to reduce the waiting times in A&E and to improve the overall working of the A&E areas and the support systems.

Capability to deliver and perform
The CAG report (2004) states that there were 12.7 million visits to major A&E services in 2003-04. This covered a range of activities including Hospitals, Trusts, GPs, Ambulance services and Walk-in clinics. Since the implementation of four-hour performance criteria, trusts had reduced, the time patients spend in A&E. In 2002, 23 per cent of patients spent over four hours in A&E departments, but in the three months April to June 2004, this percentage has been reduced to 5.3 per cent. A significant number of trusts reported that 96-98% of their patients are treated under the specified deadline. Some trusts treated nearly all their patients within four hours and the variation among different trusts has reduced significantly. However the the worst performing trusts still have some way to go to reach the level of the best. It is seen that, there were patients who had to wait a long time for a simple procedure. The staff at times focussed more on patients who are in danger of breaching the four hour target rather than with those in greater clinical need; and also if the deadline is breached the incentive to expedite their admission or transfer was reduced leading to further delays. Although there is overall improvement in reduction in waiting times but some patients with complex needs as the older patients and patients with mental health problems were spending longer than four-hours in A&E.

Ability to innovate
The performance has improved not only in A&E but also in modernisation of related services and this has been because of changes in traditional working practices. In the A&E areas, significant improvements were achieved by separating patients into parallel streams with dedicated staff and improving access to diagnostic services. The trusts developed concept of ‘Clinical decision areas’ to attend to patients under observation.The report notes that improvements in these were made possible despite shortages of staff in the area of radiology, radiography and pathology.

The department and the trust have also responded to patient need by looking for solutions outside the A&E areas and orienting them around the patient needs. The trusts created new open-access minor injury and illness providers, which include 81 Walk-in Centers. These have been set up to complement GP and A&E services for patients with minor injury or illness. It also notes to get to patients that are more serious and to avoid getting bogged down by minor calls the A&E Ambulance services have devised a methodology to re-route ambulance callers or A&E patients to a more suitable provider. Certain trusts have developed an Emergency Care Practitioner who has autonomy to treat and make decisions about patients. The organization thus exhibited ability to break new grounds and develop new paradigms to deliver the targets. During this implementation process the patient needs were always kept in focus.

Ability to devolve targets & create internal productivity measurements
The A&E services run over a diverse geographical area and they involve close interaction of hospitals, trusts, GPs, Ambulance trusts and other clinical areas. The targets of improving the A&E services were, communicated to the entire organization and operational flexibility given to all hospitals and trusts. There was sufficient coordination and competition among various trusts. There was a vision and goal sharing. The Doctors and staff all made efforts to achieve the targets. There has been no compromise in patient care or neglect, in meeting the targets. There was increased response from senior members in devising new methods as increased hospital rounds, delegating decision making to junior and middle level doctors in less critical cases. Couple with this the trusts and the A&E areas of bigger hospital arranged to measure their own performance either by use of information technology or by engaging special personnel. The Department also regularly monitored the performance. Thus, the organization exhibited an inherent desire to improve and deliver results.

Ability to link financial incentives
The Health department built an incentive mechanism to enhance performance and created a 500,000-pound sterling grant. This grant was for the trusts exceeding 96% target and sustaining it. The trusts responded to this incentive and 107 claimed this grant indicating inherent competitive and improvement seeking strength of the organisation. This grant was then utilised by the recipient trusts to make fresh investment s in infrastructure, improvement of buildings and redesigning old building and equipment for better patient safety and comfort. This helped to take care of the second goal of modernisation and infrastructure improvement. The trusts who received the incentive payments re-oriented their staff to cover up for shortages of staff and trained personnel. However these incentives have not worked for all trusts and there are certain trusts who despite the incentives have not improved. These trusts need to be focussed upon

Ability to enhance public value
This reduced time patients spend in A&E has led to increased patient satisfaction. There have also been physical improvements to the environment in A&E to help reduce stress for both patients and staff. The Department is a huge organisation consisting of several trusts catering in diverse areas in different conditions and circumstances. The service provided is critical and essential and 24x7 hence, there is no scope for any laxity or relaxation. The demand and expectation levels are often high as people approach the A&E services in crisis. It is indeed a creditable performance to have such an all around improvement.

Problems remain
A per the report a vast majority of the trusts have made improvement sto their A&E services and were confirming to the four hour deadline as also having a ‘Modern Matron’ …who had responsibility for the quality of patients' experience…maintaining and improving the fundamentals of care.’ CAG 2004 , but there were some trusts which were lagging behind these targets and special efforts were needed to bring them at par with others. There are also bottlenecks outside the A&E systems, which affect its performance. These include, ‘avoidable peaks and troughs in the availability of beds on wards caused by mismatches between admissions and discharges; barriers to obtaining a specialist opinion, caused by conflicts with specialists non-emergency work; and difficulties in obtaining authority to admit patients to wards’.CAG2004. The trusts have shotage of trained emergency care medical staff and clinical suport staff for diagnostic facilities.The design some of the A&E buildings is not suitable for modern working practices. Thus the A&E are not able to provide efficient, patient-orientated environment.

How appropriate the analysis recommendations and presentation are

Analysis
The NAO formed a consultative panel with representatives from NHS, Department of Health, Ambulance services, Nursing bodies and patient associations. The diverse group A&E professionals have ensured entire gamut of A&E services is examined and critically evaluated. The performance analysis is therefore reliable, as both the auditors and professionals from the A&E services have carried it out.

The NAO team has used a wide variety of tools for diverse data collection. The reporting team from NAO carried out four censuses in different spheres of A&E. It collected feedback and data from most hospital trusts through emailed questionnaires. It also carried out field visits to five major health economies. It has did case studies and conducted a patient surveys. The performance analysis is thus fairly accurate.

The NAO team has referred to the previous CAG report (1992) on this subject. They updated the problems and issues raised in that report. The analysis is thus ensures continuity as it assesses performance over a period.

The present report (CAG 2004) thus is fairly accurate in its analysis and assessment of the performance of the A&E services. The report has covered not only the actual working of A&E areas but has also examined the associated areas as diagnostics, ambulance availability, and 24-hour accessibility to services. Besides analysing percentage of patients treated in the four hour targeted deadline but it also studies the effect of lack of bed availability in compromising with the waiting time for elective operations in accommodating A&E patients. It also analyses effect on the clinical priorities in meeting the deadline. This has been examined by analysing premature patient discharges and unnecessary admissions. It also analysed that if the size of department gave flexibility or proved to be a hindrance in achieving reductions in delays. NAO has used objectives and performance targets as management tools to help the trusts develop policy, manage resources effectively and accurately report their performance to Parliament and the public. (NAO 2000)

After discussing the four hour target the report then focuses on the second aspect of the performance indicator which is the modernisation of the hospital and services.
The report has not merely focussed on the A&E services but has gone deeper into other areas, which affect the A&E services. ‘Avoidable peaks and troughs in inpatient numbers, widening traditional staff roles and greater use of information technology and remote access, make use of local benchmarking; to rationalize patient time spends for those areas being rebuilt or being built afresh, incorporate good design practice developed by NHS Estates.’

The report has accurately identified areas which are being neglected as a result of increased focus on four hour dead line and it also is able to identify the areas which are affecting the process of modernization and reorienting priorities around patient needs.

The report also looks at the fact that that A&E is not a standalone process but a ‘multidisciplinary, cross organisational’ operation. It also focuses on the bottlenecks outside the A&E, which are holding back the performance.
However, the report even after having collected so much data and details fails to analyse the performance of individual trusts and hospitals. The report only gives a holistic view of the entire NHS. It has glossed over the performance of Individual trusts. It has highlighted a few outstanding trusts in bold blocks to serve as beacons for other trusts but does not give a comparative analysis of all the hospitals. These, benchmark performances and average performances could have been available for each unit. This data could have also provided information on trusts meeting the benchmark, average percentage achieved by all hospitals and the number of hospitals above and below the benchmark. Thus, the department and each trust would know their relative position.

Recommendations
The recommendations cover here different areas one is the A&E services themselves second is the collaboration effort with other clinical and Para-clinical departments thirdly covering the emergency care networks. “The Department and the NHS have made significant and sustained improvements in A&E waiting times, though more needs to be done. Achieving the Department's vision for whole-system modernization of emergency care will require greater integration and more effective joint working.”
It also suggests that the emergency care as a system as a whole should be developed. The Department should seek to establish emergency care networks that will be ‘cross-organizational’ and ‘multi-disciplinary groups’. These would take the lead in developing local delivery. The report points out that A&E departments are not the only source of emergency care, nor the only option for all patients, though patients continue to expect their emergency care needs to be met by A&E departments. The report recomends that an integrated system be formulated in which all servicesa re integrated.It stresses the need that the A&E services cannot function alone for that they have collaborate with other clinical areas. The department and the trusts should work on the ‘department workforce planning model’. This will involve all departments involved with the process. The strategic bodies who are designing and planning the services should also agree plans to address the shortfalls in skilled staff through workforce planning. Improving joint working in emergency care as A&E is not stand-alone but dependent so many others areas to deliver.
The report also looks at the limitations of the reporting systems, which were in existence before the new four hour deadlines came into operations.

Presentation
The report is presented in an easy to read and understand format. It is available in print and electronic form on the internet. Easy accessibility helps in transparency and establishes faith in the organisation. The report is prepared to assist the parliament to analyse the performance of the organisation. The report provides a brief overview the organisational performance. This summary covers target achievement, areas of improvements and recommendations. It also provides a glossary of medical terms to enable better understanding of the report.

The report in fact also targets the NHS Trusts, Ambulance Trusts, the Health Department, the Health Commission and the various health administrators. To help them assess their performance and ascertain their standings the report has four detailed sections. These elaborate on the summary topics and include performance, modernisations and areas requiring further improvement. The most meaningful part of the report is the section on recommendations. These are clear and concise and have opinions of the experts in their respective fields.

The executive summary, graphs and the appendices are very useful media for its reports. Media can follow up on the practices of the top performing hospitals highlighted in the boxes.

Conclusion
The report is quite comprehensive and largely commendatory of the efforts of the NHS medical and paramedical staff. In a way coming from an independent body, this would be a morale booster for the entire system. Significant improvements have taken place without compromising on patient quality and mortality. Target setting by the organization it self has lead to better patient focus as also a large number of innovations to remove bottlenecks. The patients and the victims who are already experiencing the improvements would feel reassured about the ongoing process. The report is not all adulatory but it sends in a word of caution by highlighting the areas which need improvement as also pointing out the fact that at times in a bid to meet the target there may be some bypassing of the processes. It also stresses the need that the gains are not uniform and although they are linked to incentives, there are places, which need to do the catching up. It further highlights the work force, resource and architectural difficulties, which still need to be resolved in fulfilling the complete expectations of patients.

References
DOH, 2000) The NHS Plan: a plan for investment, a plan for reform, Department of Health, July 2000

DOH, 2001)Reforming Emergency Care, Department of Health, October 2001
Department of Health research, 2004

CAG, (1992) Accident and Emergency Services in England, Comptroller and Auditor General (London: NAO)

CAG, (2004) Accident and Emergency Services in England, Comptroller and Auditor General (London: NAO)

Module: Introduction to Development Projects

2008-02-25T22:09:00.001-08:00

Executive Summary

The Martinez dairy project is good in terms of costs and benefit. The project will generate money. The project will have an economic impact in helping to develop dairy farming, increase milk supply to Martinez division and Manzanilla town, help in fulfilling milk demand of the Manzanilla plant.

Discounted cash flow method has been used to assess the viability of the project. The project has a before financing, positive NPV of $ 10.33 indicating real positive movement of resources and IRR of 8% indicating efficiency of resources. Positive NPV and Positive IRR indicate that the project is a good investment over time. Net Benefit before financing is negative in the first year and the yearly Cash Balance of the project remains negative until the 11th year of the project hence project requires to be financed.

The project is dependent largely on the National Dairy Development Board’s Manzanilla Plant for sale of its milk produce. The milk sale price is tied to the Manzanilla plant and there is no scope to make the price for the milk sale. At the projected demand of 200,000 litres at $1.20, Manzanilla plant has an oversupply. The Manzanilla project is likely to make a loss, which will affect the Martinez project.

Martinez project though viable on its own is dependent upon success of Manzanilla plant. In case the Board decides to move ahead with the project the project will require a loan. Loan option no.2, which has higher grant element, may be used.

1. The report analyses the following questions
1. Is the project good in terms of its costs and benefits?

2. Is the project is going to make money

3. If it is going to make money then how much money, it will make.

4. Likely economic impact of the project

2. Methods to analyze the project
1. Cash Balance (Net benefit): Using the input and output prices the cash balance of the project will be calculated. This would indicate if sufficient cash is available to run the project through its project life.

2. Discounted Cash Flow(Discounted Net Benefit): DCF will calculate project worth, over a time scale. Public sector discount factor of 8% will be used for calculation. This will help to assess that if the value of investment in future will be more than it is today.

3. Net Present value: The DCF/DNB will help to measure NPV and the IRR of the project. A positive NPV will indicate that project is worth more in future and is right for investment.

4. Internal Rate of Return: The IRR will indicate return on the project at the discounted value.

5. Net Benefit before Financing (NBBF): This would indicate if the project is going to generate economic benefit. A positive NBBF would help in making an investment decision.

6. Net Benefit after Financing (NBAF): Calculation of NBAF will help sort out the any problem of financing the project.

3. Analysis of the project
This analysis is done in two parts

a. Analysis of the Martinez project
b. Analysis of milk sales of Martinez project to Manzanilla project

a. Analysis of the Martinez project
Net Benefit:
The project has a positive Net Benefit indicating that the project is worth much more in future than it is today. The Net Benefit is $ 490,000 indicating that the project will generate returns on completion of its 15 years of economic life. However, most of these returns come in the last 4 years of the project and $ 415,000 come only when the residual value of the land and the herd is realized in the 15th year of project life.

Discounted Net Benefit:
The Discounted Net Benefit is positive indicating that the project is worth more in the future than it is now. In other words, it will generate money even at discount rate of 8%.

Net Present Value and Internal Rate of Return:
The project has a positive NPV and it has an IRR of 8%, the NPV reduces the project value to a single digit and helps us to assess the project. Positive NPV for this project indicates that the project acceptable and will give adequate return on investment.

The yearly Cash Balance of the project remains negative until the 11th year of the project. This indicates that the project requires outside funding to take off and sustain until that period.

Net Benefit Before Financing and Net Benefit After Financing:
The NBBF gives a huge negative figure in the first year of the project, but since NPV is positive it indicates that, the project is economically viable and will generate economic benefit but it requires financing.

After financing NBAF is positive indicating that financing will help in getting the project of the ground.

c. Analysis of milk sales to Manzanilla plant
The break-even point of the Manzanilla project has been worked out at 336,000 liters at a selling price of $1.20 per liter. (Out of which 200,000 liters will be supplied by Martinez dairy and 80,000 liters by the existing suppliers.) However, the demand forecast chart of the Manzanilla plant indicates that there is a demand for only 200,000 liters at the sale price of $ 1.20. If the Manzanilla plant continues to buy from its existing suppliers there is an excess supply as indicated below.

Years Milk Availability for the Manzanilla plant (in liters)
Existing Suppliers Martinez Plant Production Demand forecast Manzanilla plant Excess Production
1 80,000 0 200,000 -120,000
2 80,000 137,200 200,000 17,200
3 80,000 161,200 200,000 41,200
4 80,000 182,600 200,000 62,600
5 80,000 197,200 200,000 77,200
6 80,000 202,200 200,000 82,200
7 to 15 80,000 193,200 200,000 73,200
Demand forecast for Manzanilla plant
@$1.20 per liter is 200,000

To resolve this situation two alternatives are possible:
The First alternative is that, since the Martinez project is being exclusively set up to sustain the Manzanilla project it should stop buying milk from other suppliers gradually and by the 6th year the production from Martinez project will be sufficient to meet the demand forecast.

Years Milk Availability for the Manzanilla plant (in liters)
Existing Suppliers Martinez Plant Production Demand forecast Manzanilla plant Excess Production
1 200,000 0 200,000 0
2 62,800 137,200 200,000 0
3 38,800 161,200 200,000 0
4 17,400 182,600 200,000 0
5 2,800 197,200 200,000 0
6 0 202,200 200,000 0
7 to 15 7,000 193,200 200,000 0
Demand forecast for Manzanilla plant
@$1.20 per liter is 200,000

The second alternative is that if the sale price of the milk by the Manzanilla plant is reduced to $1.00 as per the demand forecast, the sale volume of milk goes up to 290,000 liters. This will then absorb the entire production of the Martinez plant as can be seen in table below:

Years Milk Availability for the Manzanilla plant (in liters)
Existing Suppliers Martinez Plant Production Manzanilla milk production Excess production
1 80,000 0 290,000 -210,000
2 80,000 137,200 290,000 -72,800
3 80,000 161,200 290,000 -48,800
4 80,000 182,600 290,000 -27,400
5 80,000 197,200 290,000 -12,800
6 80,000 202,200 290,000 -7,800
7 to 15 80,000 193,200 290,000 -16,800
Demand forecast for Manzanilla plant @$1.00 per liter is 290,000

It is thus obvious that the Manzanilla plant will not be able to make a profit. If we interpolate the figures in demand forecast, it is seen that Manzanilla plant can sell milk at about $1.10 per liter to be able to sell 280,000 liters, which is the optimum demand forecast. However, this would result in a loss of $0.10 per liter, which will have to be either borne by the Manzanilla plant or subsidised by the government. Alternatively, the purchase price of milk from other suppliers would have to be reduced to compensate for this. If this loss is going to be passed on to Martinez project by the Manzanilla project then the diary project becomes unviable as it would then be loss making.

5 a. Answers to project questions

1. The project is good in terms of costs and benefit

2. The project will generate money

3. The project will generate $ 490,000 at the end of 15 years of its economic life.

4. The economic impact of the project will be:

a. Help in dairy development in the region.

b. Increase milk supply to Martinez division and Manzanilla town.

c. Help in fulfilling milk demand of the Manzanilla plant.

5 b. Recommendations to the Board
1. The project has positive Net Benefit and the gives a positive Discounted Net Benefit at a discount rate of 8%

2. The Martinez project has a before financing, positive NPV of $ 10.33 indicating real positive movement of resources.

3. It is giving an IRR of 8% thereby indicating positive efficiency of resources.

4. Positive NPV and Positive IRR indicate that the project is a good investment over time.

5. The project has a positive NPV but NBBF is negative is the first year hence it is good investment but requires financing.

Thus, the project is viable and but it has some inherent problems, which need to be looked into before we proceed.

These are:

1. The project is viable only if it runs for 15 years as most of the returns come in the last few years of the project life.

2. The project is dependent largely on the National Dairy Development Board’s Manzanilla Plant for sale of its milk produce.

3. The milk sale price is tied up to the Manzanilla project and there is no scope to make the price for the milk sale.

4. The milk production of the Martinez project will compete with existing local dairy farmers who may increase production or reduce prices to be competitive.

5. The sale of the culled animals has not been tied up with any reliable source and in the absence of the same; it may be difficult to have regular sales and this may affect the inflow of income.

6. The price offered by the National Dairy Development Board’s plant for raw milk is $0.50 per liter is only for initial 5 years. There is no tie up for milk sale after 5 years.

7. At the projected demand of 200,000 at $1.20, Manzanilla plant has oversupply. Either it has to stop buying from the other suppliers to accommodate supply from Martinez project or it has to reduce its selling price to $1.10 to meet optimal demand forecast of 280,000 litres. In either scenario Manzanilla project makes a loss.

8. As Manzanilla plant will continue to make losses it is, possible that it may be shut down, thereby leading to closure of the Martinez Dairy project also.

9. The Martinez project though viable on its own is dependent upon Manzanilla plant for milk sales. Unless there is assured sale of milk at $ 0.50 for 15 years Martinez project will find it difficult to sustain

6. Loan Option:
In case the Board decides to move ahead with the project the project will require a loan.

The initial capital investment and the operating costs for the first year are $ 412,700, this needs financing through a loan.

There is further requirement of loan in subsequent years to pay the loan installments and refinance the machinery.

There are two options which are available.
The two options which are available have been analyzed as under;

1st year Year 1-2 year 2-15
Amount
Loan 1 471300
CF 1.08 509004
CRF 2% 0.082602 42044.75
DF/AF 8% 7.633
PV 320927.6
GE 150372.4

1st year year 2-4 year 5-15
Loan 2 471300
CF 1 471300
CRF 6% 0.126793 0 59757.54
DF/AF 8% 5.247
PV 313547.8
GE 157752.2

GE of Loan 2 is higher than GE of loan 1 by 7379.747

1. It is seen that the Loan option 2 has a higher grant element.

2. Further, in Loan option 2, no repayment has to be made in the first 4 years, thus Loan option 2 is advisable.

3. It is also advised that entire loan of $ 471,000 may not be drawn in the first year, only $ 417,300 may be drawn (see table below) a further draw down of $ 15,000 can be done in the year 8, and another $7000 in the year 12, for the refinancing of machinery. The balance can be funded from the internal resources. This would entail efficient use of internal resources and would also reduce the loan component and ease the repayment load on the Dairy.

Module: Marketing Public Services

2008-02-14T00:56:00.000-08:00

Assignment: Personal Development Program

COMPETENCY AREA: FOCUSING ON DELIVERY

SELF ASSESSMENT
For this module, there were two significant activities: the Poster presentation and the Media presentation.We met as a group and discussed every detail at length. The group made a dedicated effort for media and the poster presentation and delivered effectively and timely

COMPETENCY AREA: GIVING PURPOSE AND DIRECTION

SELF ASSESSMENT
I used my experience and background to help the group devise innovative ideas for poster campaign. Encouraged everyone to participate in whatever area they were comfortable e.g. internet searching, image searching, layout designing, preparing media brief or making the formal presentation.

COMPETENCY AREA: LEADING BY EXAMPLE

SELF ASSESSMENT
During college days, I had worked on several poster assignments, but I wanted the group members to work collectively on the poster.
We had series of meetings but nothing concretised from them.

As the deadline for the poster presentation approached, the members panicked, and a realisation dawned upon me that the democratic method will not work. It was time for leading by example.

I took upon myself the poster work and prepared a draft poster. The group then critically analysed it. Based on analysis the poster was fine-tuned. It was printed and was ready for display on time

COMPETENCY AREA: THINKING STRATEGICALLY

SELF ASSESSMENT
We had to think of two different strategies for producing a ‘Sound Byte’ in our media campaign and an ‘Appeal to the Heart’ in our poster campaign. We had brain storming sessions in which we did knowledge & experience sharing. We then dovetailed these ideas into the final finished product.

COMPETENCY AREA: GETTING THE BEST FROM PEOPLE

SELF ASSESSMENT
Two of our group members were scared of facing the Media. To help them overcome their fear, I did the initial TV interview and Radio talk to show them how to do it. I did mock interviews with them and then sat through their session for moral support. They performed well.

COMPETENCY AREA: LEARNING AND IMPROVING

SELF ASSESSMENT
During our media workshop, I listened very carefully to Dicken Reed, a BBC World presenter, as he conducted the interviews. I told myself that I must do something special.
I picked up a new topic: Health Insurance in India and planned that in the interview I will narrate an anecdote, detail a visual experience, push in a strong message and then wrap it up with humour. Further, all the time I will look Dicken in the eye and smile.
The interview went as planned and the result: Dicken, the audience and me had a magical experience.

Module: Leadership and Management Development

2008-02-14T00:46:00.000-08:00

Assignment: Personal Development Program

COMPETENCY AREA: FOCUSING ON DELIVERY

SELF ASSESSMENT
The Term one was a very steep learning curve for me as I have never been into the world of University learning. I worked four to five hours everyday, doing extensive reading, assimilating & analysing study material and then synthesizing it into my assignments.

The present module required incorporation of intra-modular and inter-module knowledge on Leadership into the Learning Diary. Interesting bits from the study material including books, articles, photographs, cartoons, quotations, personal examples were added to the Learning diary make it informal and interesting.

A ‘turgid’ journal article was reviewed and a ‘insightful’ PDP form was also submitted as a part of the assessment requirement.

COMPETENCY AREA: GIVING PURPOSE AND DIRECTION

SELF ASSESSMENT
The first term modules had several group tasks. A number of students did not work on the task and wanted to ‘free ride’.
In most cases, I ended up completing the task. To make group work participative I devised a method, in which a group spokesperson was identified & a tight time-frame for task completion was set.
For every group activity, the spokesperson was changed. The group incentive was a longer tea break if it finished early. The group focus increased, free riding ended and the outputs improved tremendously.

COMPETENCY AREA: LEADING BY EXAMPLE

SELF ASSESSMENT
In the module, I had an opportunity to present my concepts on Leadership to the entire class. I prepared a PowerPoint presentation. Using the example of Shackelton I outlined ideas on Primal and Thought leadership. The presentation was well received and a lively debate on motivation and leadership followed the presentation.

COMPETENCY AREA: THINKING STRATEGICALLY

SELF ASSESSMENT
I have vast management experience as compared to my course-mates and being an extrovert; I was modulating the discussions and leading group activities.

This situation was potentially dangerous as in the past people have developed strong dislike for this attitude and termed me as agressive and bossy.

The same was beginning to happen here in MBA. It was time for a new strategy. I began by being quiet in the lectures. I allowed others to speak and discuss ideas. After everyone had, had an opportunity to speak, I spoke with higher-level ideas and analysis.

I never criticised anyone but built on what others had said. I went out of the way to help the weak students and made friends with all my course mates including those on the MSc. In the group discussions, I delivered the ideas but made others do the presentation. I gave suggestions, helped find research material and performed Peer reviews for batch-mates.

During the module students realised that they could walk up to me anytime for help and guidance. My knowledge and experience was available to them. This strategic thinking helped me to evolve as a likable ‘Peer Leader’.

COMPETENCY AREA: GETTING THE BEST FROM PEOPLE

SELF ASSESSMENT
During the present module on Leadership, we had poster presentation for the previous module on Social Marketing. When the posters were being put up for display, one of the group posters had to be moved to less visible spot. A member of that group was visibly irritated. It tensed up the atmosphere.

I told him that it is not about winning, but about letting, others compete. If their poster were good, it would make an impact no matter where it is displayed. He saw the logic and the issue was resolved.

In the next lecture while assessing ourselves on the Thomas Kilman conflict mode instrument, the member confided that what I had told him that day had made him to move up from 1 to 12 on the scale of compromising and he had discovered something new within himself.

COMPETENCY AREA: LEARNING AND IMPROVING

SELF ASSESSMENT
I learnt several new concepts such as Hybrid leadership (Grint), How men and women converse (Tannen), Symbolism and Gender (Morgan), Experiential Learning (Kolb). These have offered me new ideas on Leadership and helped me in better understanding of people.

I also learnt to critique a journal article and work with web CT. These have increased my competence levels and taken me higher on the learning curve.

The Thomas-Kilman conflict mode- instrument analysis, Mary-Briggs Instrument on personality types gave insights into what I was and helped me see myself in a different light.

Module: Managing Public Money

2008-02-14T00:38:00.000-08:00

1.Assessment of existing Public Expenditure Management systems in Moldova

1.1 Budget Formulation and Execution
The Parliament and its Committee for Economic Policy, Budget and Finance scrutinise and approve the proposals of Line Ministries (LMs).Under the ‘Law on National Public Budget’, the State budget, State Social Insurance Budget (SSIB), Donor funding and Autonomous Treasury Unit budgets are passed simultaneously (World Bank, 2006b). These are available on the Ministry of Finance (MoF) website. The MTEFs (Medium Term Planning Frameworks) are a part of the budget calendar, the cabinet after approving the MTEF document submits it to Parliament for information (IMF, 2004b). The formulation of the Budget is based on forecasts and ministerial ceilings laid down in the MTEF document. Budget is comprehensive, transparent and has reliable revenue forecasting. However, ‘MoF controls the Budget execution by allocating overall budgetary spending limits to the LMs, based on forecasts received from LMs’ (World Bank, 2006a). The spending limits although flexible, offer little operational flexibility to the managers due to cumbersome procedures.

1.2 Financial Accounting and Reporting
Moldova has a cash-based accounting for the treasury and modified cash based accounting for the budget institutions. A ‘National Treasury System’ has been developed for ‘comprehensive treasury coverage’ (World Bank, 2003).The treasury monitors cash on daily basis but the SSIB accounts are tallied on monthly basis. There is regular auditing and scrutiny of the accounts. Tax transactions are computerized and reconciled regularly between treasury, banks and tax collection units. There are also about 10% EBEs (extra budgetary expenditures) which are presented to the parliament for post facto approvals. The treasury controls the cash management except for the SSIB and donor receipts.

The payrolls, which are decentralized, are not effectively supervised. Procurement contracts are also not closely monitored by LMs. This results in inadequate controls and bureaucratic corruption. The accounting mechanisms even though in place, are insufficient in certain areas.

‘Budget Execution Reports’ (World Bank, 2003) are regularly received by the MoF from LMs. However, as consolidated financial statements are not prepared, MoF does not have complete information. This results in inadequate communication of the cash availability information to the spending units and creates unfunded commitments and arrear generation. Reporting thus lacks an integrated Financial Management Information system.

1.3 Monitoring by Internal and External Audit
Small internal audit units exist in MoF, State Tax Service, Customs and National Social Insurance House. The Control and Revision Service (CRS) under the MoF performs ‘ex-post verification of budget execution’ (World Bank, 2006a). The internal auditing function is not well developed in Moldova.

The Court of Accounts (CoA) performs the function of External audit. It carries out a ‘transaction level auditing’ (World Bank 2006a). To check widespread bureaucratic corruption, CoA often ‘digresses from its main role of audit and performs the role of control, enforcement and prosecution’ (IMF 2004b). However, in the CoA, the government nominates the top management members. This severely compromises the independence of CoA and makes it susceptible to political interference. Moldova lacks modern auditing standards and practices.

1.4 Legislative control
Parliament exercises control over budget through its Economic and Finance committee. The budget is presented before the Parliament who passes it after three readings. ‘Annual Budget Execution reports’ are presented to the Parliament is at in a ‘disaggregated manner’ (World Bank, 2006b). The country also has the institution of an Ombudsman who receives and investigates the financial complaints and submits a report to the Parliament. The audit reports are normally not examined or are examined late by the Parliament. The Parliament does not carry out an in-depth analysis of the final report of audit. It does not give any directions or instructions on these reports. Thus there is not enough Parliamentary participation.

2. Ways to reform the existing Public Expenditure Management systems

2.1 Strong MoF with Operational Flexibility
A strong and effective MoF is the required for planned formulation and implementation of the budget (Schick, 1996). The MoF may therefore ensure strict adherence to the budgetary cycle. The MTEFs can also be re-aligned. They may have ‘year-to-year roll over linkage’ in various programs (IMF, 2004b).The may also specify the reasons for changes in previous estimates. This would increase control over the budget by long-term planning and resource allocation.

However, the entire focus of budgetary control in Moldova is on compliance to procedures with no attention on delivery. As Schick (1996) points out that ‘while the strict control of allocations is justified….to have greater control over the use of budget resources. A certain degree of Managerial delegation is needed which can be gradually increased based on performance.’ Thus, flexibility at the operational level can be provided to the managers combined with simplified procedures. This is would provide incentive to managers to improve outputs and outcomes.

2.2 Strengthen Cash Management Systems
Cash Management is the starting point of any control mechanism because, ‘If you can’t count the money, you can’t allocate it, and if you can’t allocate it you can’t manage it’ (World Bank, 1998). In Moldova, the ‘cash accounting’ and ‘modified cash accounting’ systems are fairly well established. These however do not offer comprehensive financial control. A major reform can be, to upgrade the existing system by a ‘comprehensive accrual system of accounting’ (IMF, 2004a). The accounting changeover however has to be backed by an effective FMIS as, ‘FMIS will reduce the opportunities for diversion of funds away from the priorities reflected in the budget, both at a strategic level and at an operational level’(DFID, 2000). The payrolls and procurement contacts can also be monitored through FMIS. This will also help to check bureaucratic corruption.

There can be an extension of the role of the treasury to bring the EBEs (Extra budgetary expenditures), SSIB funds, and the Donor contributions under its control.

2.3 Ensure Consolidated and Concise Financial Reporting
As stated in the World Bank, PEM handbook (1998) ‘It is essential not only that information be provided, but that it be relevant and in understandable form’ (World Bank, 1998). The present fragmented reporting system is fragmented. It offers ineffective controls. A consolidated computerized FMIS can be developed (as discussed above). This can generate regular and consolidated ‘Budget execution reports.’ These will provide timely and accurate information on the spending by the LMs and would improve control of MoF on budget formulation and fund releases.

2.4 Develop Internal Audit and Strengthen External Audit
As stated in the UNPAN (1999), ‘Internal audit …is part of the management process.’ In-house monitoring and controls can be developed in combination with an internal audit organization, ‘incorporating the international best practices’ (IMF,2004a).These controls will reduce ‘top-down compliance and enforcement from the MoF’ (IMF,2004a). These would also make the financial managers accountable and reduce corruption in the financial management systems.

External Audit helps to oversee in, ‘a regular and effective manner how public money is raised and spent’ (World Bank 2003). Enactment of a new Audit law and creation of a Certification body can standardize the Audit code and procedures. To ensure competence and independence, the CoA can train its staff in modern audit concepts and procedures. To avoid political interference COA may move away from the role of ‘control, enforcement and prosecution agency’ (World Bank, 2003) and focus more on strengthening the accountability controls. These accountability controls can be ‘ex ante’ (automatic prevention of LMs from exceeding budgetary allocations) or ‘ex post’ (Verification of reliability of financial data and public spend by the auditors) (Leruth & Paul, 2006).

2.5 Ensure a dynamic Parliamentary Oversight
Legislature has the important function of ‘exercising ultimate control’ (World Bank, 2005).But the Parliament has to be active and supervisory. The select committees of Parliament may examine in detail a certain percentage of the audit reports and all reports pointing out serious reports. Corrective actions may be suggested which address the system failures or policy deficiencies.

To promote transparency, fight corruption and encourage debate, Media and Civil society can scrutinize the audit reports after discussion in the Parliament.

Conclusion
Over last few years, Moldova has incorporated several public expenditure management controls. Implementation of these measures has resulted in improved budgetary formulation and execution. Budgetary processes are now well defined, transparent and timely. Adoption of MTEFs indicates control over the budget by way of long-term planning and resource allocation. However, it would be unwise to assume that once these initial controls are in place the budget process will deliver the desired outcomes. A strong and effective MoF is an important starting point for further reforms. A cash management system, based on accrual accounting is desirable. Efficient and accurate financial accounting and reporting systems are the backbone of any vibrant control mechanism and they can be developed further. These measures may be supported with strong internal controls and an independent external scrutiny to entire budget cycle. These would ensure accountability and transparency. Strong public expenditure management controls combined with operation flexibility will help Moldova progress and develop in future.

References
Department for International Development (2001) Understanding and reforming public expenditure management Guidelines for DFID (London: DFID) http://www.dfid.gov.uk/pubs/files/pfma-pem.pdf 25 November 2006

International Monetary Fund (2004a) Report on the Observance of Standards and Codes, Moldova, Accounting and Auditing (Washington: IMF)
http://www.imf.md/press/Moldova%20ROSC%20AA%20final%20Sept%202004.pdf
26 November 2006

International Monetary Fund (2004b) Republic of Moldova: Report on the Observance of Standards and Codes—Fiscal Transparency Module (Washington: IMF)http://www.imf.md/press/rosc-cr04412.pdf 27 November 2006

Leruth, Luc and Paul, Elisabeth (2006) A Principal-Agent Theory Approach to Public Expenditure Management Systems in Developing Countries (Washington: IMF) http://ssrn.com/abstract=934463 27 November 2006

Schick, Allen (1998) A Contemporary Approach to Public Expenditure Management (Washington: World Bank)
http://www1.worldbank.org/publicsector/pe/handbooks.htm 25 November 2006

UNPAN (1999) Integrated Financial Management in Least developed Countries (New York: UNPAN)
http://www.unpan.org/case_study.asp 25 November 2006

World Bank (1998) Public Expenditure Management Handbook (Washington: World Bank)
http://www1.worldbank.org/publicsector/pe/handbooks.htm 25 November 2006

World Bank (2002) Medium Term Expenditure Frameworks: From Concept to Practice, Preliminary Lessons from Africa (Washington: World Bank)
http://www.worldbank.org/afr/wps/wp28.pdf 25 November 2006

World Bank (2003) Moldova Country Financial Accountability Assessment (Washington: World Bank)
http://siteresources.worldbank.org/INTMOLDOVA/Resources/Moldova_CFAA_Dec1.pdf 25 November 2006

World Bank (2005) Public Financial Management: Performance Measurement Framework (Washington: World Bank)
http://www1.worldbank.org/publicsector/pe/handbooks.htm 25 November 2006

World Bank (2006a) Program document for proposed Poverty Reduction Support Credit for Republic of Moldova (Washington: World Bank)
http://siteresources.worldbank.org/INTMOLDOVA/Resources/PRSC_eng.pdf
25 November 2006

World Bank (2006b) Republic of Moldova Public Expenditure and Financial Accountability Assessment Final Report (Moldova: Ministry of Finance)
http://www.minfin.md/common/raportinfo/Raport_PMFP-EN.pdf 25 November 2006

Module: Governance

2008-02-14T00:25:00.000-08:00

Assignment:‘The role of the government is to compensate for market failure.’ How accurately this captures the role of Government in India.

Market failure in India
India on attaining independence in 1947 inherited a backward economy. India had minimal infrastructure in transport, power, commercial banking, heavy industry, and communications. Agriculture and industry had ordinary investments. There were only a few participants and modest resources in the market. These resources and investments were unequally distributed. The market did not have enough competition and ‘allocative efficiency’. Olson (1986) points out that ‘whenever there is a Pareto sub-optimal allocation of resources, it results in a market failure.’ The government thus concluded that there existed a ‘market failure’ of investment and infrastructure in most sectors in the market. To compensate for these ‘market failures’ the government initiated a process of compensation by making huge investments in the public sector. (Dutta-Chaudhari, 1990)

Role of the Government
The government in India followed a path of ‘developmental economics’ in which the government took a leading role in investment allocation, economy control and wealth distribution. (Dutta-Chaudhari, 1990) It intervened in the areas of Public goods (Roads, Infrastructure and Public Health), Quasi-public goods (Irrigation, Waterways, Electricity, Agriculture and Education) and Private goods & services (Telecom, Ports, Airports, Tourism, Hotels, Airlines, Heavy Industry). (Virmani 2004) The government believed that if physical capacity was created, production, productivity and growth would follow and these in turn would compensate for the market failure. The ‘theory of market failure’ was used by the government to justify the production of all kinds of goods and services. (Virmani 2006) In 1960s and 1970s, economic activity was carried through the government public sector enterprises. This created government dominance in railways, telecom, electricity, ports and communication. All types of markets were run either by the government or sheltered by way of imposition of tariffs and barriers. The government also controlled market dynamics through quotas, permits and licenses.

This role of the government in the markets was justified by Bator (1958) who argued that, ‘the undersupply of goods and existence of market failures serve as standard justifications of possible governmental role in private economy.’ Similarly, Nelson (1987) in his theory on normative form of government argues that, ‘whenever there is market failure, it is the role of the government to intervene in the market to restore equilibrium’. Thus, an economic argument existed which supported government intervention in markets, which did not efficiently distribute goods and resources. On the other hand, Buchanan (2003) argues that this archetype was merely a socialist ideology backed by the theory of welfare economics, which presumes that politicised corrections for market failures would work perfectly. Shepsle & Weingast (1984) also caution against this interventionist approach and point out that, ‘it remains to be seen if the political solutions…entail efficiency gains or they exacerbate market failures.’

Market compensation through Public sector
Let us now examine the governmental approach in compensating for the market failure and the result of its intervention. The government made significant investments in the public sector and attempted to compensate for market failure through these enterprises. Public sector enlarged its role in most market spheres. The public sector had poor quality and outdated technology, which only partly fulfilled the market demand of goods. The gap in demand caused black marketing and profiteering. To rectify this non-performance government brought in a number of administrative and legislative public sector policies. These policies were to, ‘assign roles to public sector to compensate for its inadequacies in the market’. (Wolf 1979) The public sector however, continued to engage in the market, as a commercially unviable business. It had no incentive or disincentive for being efficient and cost-minimal. The government activity continued to focus on protection of the market and production through inefficient public sector, which resulted in low returns on heavy investments.

Rent seeking private sector
A few private industries, which developed, became ‘rent seekers’ (Tullock 1967) and sought government safeguards to thrive. This was because ‘whenever government grants rights or provides tariff protection, the beneficiaries seek for continuation of this rent seeking behavior.’ (Buchanan 1986) They took insignificant initiatives to develop new technologies or create economies of scale. But, governmental involvement in market economy exceeded its ability to achieve constructive results. The governmental attempt to regulate caused a ‘regulatory capture’ by those being protected. This also resulted in ‘allocative inefficiency’ and ‘x-inefficiency.’ (Grande 1991) Thus, government compensation for the market failure created an abnormal situation. It did not resolve the problems of market failure but created fresh problems. The ‘government compensation in the markets, which should have brought efficiency and equity in the markets, in reality, caused low efficiency, no equity gains and created a new inequity.’ (Virmani 2005)

‘Government Failure’The theory of applied economics supports the paradigm that ‘competitive markets’ present the most ‘efficient allocation’ in the economy as they lead to ‘Pareto optimal allocation of resources.’ Cordes (1997) in discussing various theories of role of government argues that the ‘utilitarian theory’ supports the idea that the government should intervene whenever this efficiency is absent. Krueger (1990) however points out that, the government by its time-to-time interventions is unsuccessful in developing a pareto-optimal situation in the markets. Government involvement causes greater deviations in efficient use of resources than the market forces. This ‘neo- classical theory’ of political economy, draws attention to ‘government failure’ for its insufficiency in compensating for a ‘market failure.’ This argument has been further supported by Stiglitz (1989) who emphasizes that, ‘the fact that markets face certain problems does not in itself justify government intervention…the government is likely to face similar problems if it intervenes.’

Indian market, because of government intervention became unproductive, monopolistic and inefficient. This created economic inconsistencies. In early 1980s there were ‘distortions in the shape of loss making public sector enterprises, monopoly in public distribution, heavy industry and mines, deterioration in telecom, transport, health and education sectors and inefficiency in nationalized banking and insurance sectors. Whether market failure was there or not it was a colossal government failure.’ (Srinivasan, 1985) The failure of government role in market has also been emphasized by Virmani (2006) when he states that, ‘the government is neither omniscient (all knowing) nor omnipotent (all-powerful) nor omni-competent. Even with the best of intentions and motivations it can and does fail spectacularly.’ For the government it was hard to accept these shortcomings as a ‘government failure’ but in 1991, this ‘governmental failure’ landed India into an acute crisis of balance of payments. The government did not have money to pay for its imports. Gold reserves had to be physically mortgaged to Bank of Japan to borrow money to make payments for oil imports. Thus, the attempt by the government in India to ‘compensate for the market failure’ resulted in its ‘own failure’ in the market economy. This was an anti-climax to the compensatory role the government in the markets.

Dilemma of the role in the markets
The balance of payments crisis made the government realize that the market interventions had reached a dead-end. The processes, which had been set in place by the government, did not yield the desired outcomes and some drastic measures were needed. The role of government in the market needed reassessment. Chibber (1997) argues that, ‘many observers feel that the logical conclusion to be drawn from these failures is that the ideal state is the minimalist state.’ However, he also feels that based on the success stories of present and past, ‘A minimalist state would do no harm, but neither could it do much good.’ Nelson (1987) on role of government in such a scenario states, ‘there is no satisfactory normative theory regarding appropriate roles of government in a mixed economy.’ But, Chibber (1997) puts in another argument that, ‘transition economies and the mixed economies of the industrial world, in response to the failures of state intervention, are moving toward greater reliance on market mechanisms.’ Krishnakumar (2000) questions the government hesitation on changing its approach by stating, ‘The popular belief now is that if market failure was the rationale for government intervention, and the latter too could not deliver the goods, then why is there no movement back to the market.’ In this critical scenario, one thing was aptly clear that the governmental role warranted a fresh outlook. The government had to choose if it should continue to in the market place as a compensator or realize that it too had failed and revert to the market mechanism. The change in Government however solved the issue and the new government initiated a major reform process to move back to the market mechanism.

Market ReformsThe reforms initiated in 1991, ‘brought a system change, involving liberalization of government controls, a larger role for the private sector and greater integration with the world economy.’(Ahluwalia, 1999).These reforms included structural reforms including decontrol of private investment, opening up the economy to foreign trade and foreign investment, financial sector reforms, dismantling quantitative restrictions, reducing tariffs, reducing price controls. Reforms also included public sector reforms like disinvestment, diluting government stake allowing them to access to capital markets, reforming financial sector including Banking, Capital markets and Insurance. (Ahluwalia, 1999)

Government's role as facilitator in the market
The reforms brought a change in the role of the government in the markets and the through them the government sought, ‘to achieve, a well designed transition back to market based economy that aligned producers, consumers and the government.’ (Bhattacharya and Patel 2003) For the comeback of the market economy, the government realized that, ‘the key step in reducing the impact of excessive regulation was to reduce the degree of intervention in the economy.’ (Brahmananda 2004) To achieve this government dismantled several controls, licensing mechanisms, quantitative restrictions and developed the concept of single window clearance. It encouraged market through fast track approvals. The government in post-reform market economy changed from being a compensator to being a facilitator. It is now encouraging private investment by providing favorable environment for investment. Government is creating an environment for markets to establish and operate competitively. It is having mechanisms in place to prevent monopolies and distortions. It is no longer making investments through public sector or restricting the operations of market economy but is now focusing on a policy framework to enable production & regulation. It is providing an independent professional regulatory system to promote competition & minimize regulatory costs. The market forces are controlling the dynamics in the market place and government is helping in creating and regulating the markets. The rent seeking behavior of permits, permissions and quotas has been essentially discarded. The results and vibrancy of reforms indicate a trend in this direction.

Government role is not yet overThe government in 1990s and 2000s allowed the market forces to operate in software and information technology sector. It did not enter these areas and market forces sustained the growth. The government acted as regulator by having level playing field and introducing enabling legislation. This resulted in unprecedented growth in software, information technology and communications. India is now a force to reckon with in these areas. (Trivedi 2006) Other areas like telecom, banking, insurance, infrastructure and airports are showing tremendous results. The liberalization measures due to deregulation and decontrol, increased competition have encouraged private entrepreneurs to be more responsive to the price signals in the markets. This has helped improve efficiency in resource use. (Emran, et al, 2003) But, there are areas where there exists significant market and government failure. In agriculture sector, it is still uneconomical for the market to provide equity and investment. In the field of education and health, the market has seen lopsided development of knowledge and capacity. The government role has not ended in these areas. ‘The government being the natural principal in this sphere has to step-in and compensate in these areas.’ (Krishnakumar 2000) The government is therefore enhancing its own capabilities in these fields. It is also promoting private enterprise to perform in these areas and wherever possible combining the benefits of public and private economies through public private partnerships. The government is also making investments that are focused on public & quasi-public goods for a high social equity and is therefore is trying to establish critical infrastructure of roads, railways, ports and airports to support production and economic activity. (Bhattacharya and Patel 2003)

A new role for the Government
Although the government has moved away from performing a compensatory role in the market but it has still major role to play, which is, to act as an effective regulator in the market. As underlined by Bhattacharya and Patel (2004) that, ‘government monopoly power can be mitigated through effective regulation’ and any new market failure will not happen because of the ‘flawed government ownership’ but because of ‘private ownership operating underneath a potentially flawed regulatory structure.’ Thus, government role as an effective regulator is very important and as a regulator, government is trying to create a level playing field and generate healthy competition. (Morris 2002) It is also attempting to bring more players in the market as ‘the best regulation is through competition.’ (Brahmananda 2004) The government wants to assure competition so that there are no inefficiencies and non- accountability in these sectors. Government ‘does not want to fail twice, initially in not allowing the market to develop and now as the market is developing by not regulating enough.’ (Sharma, 2001)

Apart from being a regulator, the government is also performing another role, which is making certain that ‘property rights are identified clearly and institutions are in place to ensure their proper allocation.’ (Davidson and Weersink 1998) This is assisting the creation new markets as it is lowering the ‘transaction costs’ and ‘strengthening the faith of the players in the market in the public exchange.’ (Zerbe and McCurdy 1999)

Conclusion:
The role of the government has progressed as the economic theories have evolved. The original normative theory on the role for ‘governmental intervention in case of a market failure’ has been replaced by the neo-classical theory of ‘government failure.’ This is evidenced in India, by governmental role in market failure. The government initially began, as an active ‘compensatory agent’ for the failure of the market mechanism. It was however, unsuccessful in compensating for the failure and governmental intervention created distortion in the market. The government did not have sufficient means to outdo its own inefficiency and bring efficiency in the market. Therefore, in my opinion the role of the government is not to compensate for the market failure. In fact, government is not the ideal compensator for a market failure, as it does not have the capacity to do it successfully and such intervention only results in governmental failure.

The new economic paradigm of reversion to the markets after government failure has lead to reforms in India and the start of a new economic process. Under the reform process, the government has reverted to market mechanisms for equity and efficiency. The government role has now evolved to another level. From being, a compensator in the market the government now has the role of an impartial regulator. As a regulator, government prevents distortions and inequity, controls rent-seeking behavior and corrupt practices, in the market and ensures its smooth functioning. It facilitates growth and provides opportunities. The government also plays the role of a catalyst by allowing both the private enterprise and the individuals to perform. The government role has not ended. It is an ongoing process. The government has to continue to create suitable environment for economic growth and check on its own predatory growth. The Government has to combine the benefits of public and private economies through public private partnerships. It has to reduce unnecessary intervention and complement the role of public and private enterprise.

References:

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Brahmananda P.R., (1999) Neo-classical theory of political economy, Businessline Jun 26, Chennai: Hindu, pp 1

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Buchanan J.M., (2003) Public Choice Politics without Romance, Policy, 19(3): 13-19
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Davidson J., and Weersink A., (1988) What Does it Take for a Market to Function, Review of Agricultural Economics, 20(2): 558-572

Dutta-Chaudhari M., (1990) Market Failure and Government Failure, The Journal of Economic Perspectives, 4(3): 25-39

Emran M.S., Alam M.I., Shilpi F., (2003) After the ‘License Raj: Economic Liberalization and Aggregate Private Investment in India
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