ON THE BUREAUCRACY OF BUREAUCRACIES: ANALYSING THE SIZE AND ORGANIZATION OF OVERHEAD IN PUBLIC ORGANIZATIONS
| DOI | http://doi.org/10.1111/padm.12300 |
| Published date | 01 March 2017 |
| Date | 01 March 2017 |
doi : 10. 1111/p adm .12300
ON THE BUREAUCRACY OF BUREAUCRACIES:
ANALYSING THE SIZE AND ORGANIZATION OF
OVERHEAD IN PUBLIC ORGANIZATIONS
JANBOONANDJANWYNEN
Governments across the globe try to rebalance their budgets by rationalizing overhead operations.
When overhead-reducing policies are adopted, it is important to understand why some central gov-
ernment organizations have a higher overhead than others, and why organizational models to pro-
duce overhead efciencies are used to different degrees. This study focuses on the Flemish context
to analyse differences between central government organizations in the size and organizationof two
overhead processes: human resources management (HRM) and nance and control (FIN). Signi-
cant effects are found for autonomy, organizational size, spatial dispersion and budgetary stress, yet
effects vary according to whether HRM or FIN is considered and whether the focus is on the size or
the organization of HRM or FIN. Our ndings have practical implications to get a process-sensitive
understanding of the size and organization of overhead, and theoretical implications as they cast
light on factors that shape decision-making in public organizations.
INTRODUCTION
One of the most enduring questions in the theory and practice of public administration
relates to the optimal size of bureaucracy for the delivery of public services (Andrews
and Boyne 2014). The question is particularly pervasive regarding the overhead of pub-
lic organizations, which can be seen as ‘the bureaucracy of bureaucracies’. Organizational
overhead refers to the expenditures that organizationsinvest in a variety of overhead func-
tions aimed at supporting employees in the primary production process (Huijben et al.
2014).
In response to the global nancial crisis, many governments have attempted to reduce
expenditures on overhead functions in central bureaucracies, arguing that the scant
available resources should be redirected to frontline services where they directly matter
to societal actors (OECD 2015). As a result, overhead is often discussed in negative terms
as an indicator of government waste. This study argues that such a view conicts with
studies showing that organizations require sufcient overheadcapacity to perform (Meier
and O’Toole 2010; Andrews and Boyne 2011; Rutherford 2016) or to insulate them from
environmental shocks (Meier and O’Toole 2009; O’Toole and Meier 2010), and that this
capacity is contingent on a set of organizational and environmental characteristics (Boyne
and Meier 2013; Andrews and Boyne 2014). Furthermore, several ongoing reforms aim
to recentralize previously fragmented and duplicated overhead processes as a means
to achieve economies of scale and scope during periods of scal stress (OECD 2015).
These reforms, emphasizing recentralization and the reintroduction of more hierarchical
relationships between organizations and central government, might conict with existing
models and logics of overhead production in central government organizations (Tonkiss
2016).
The present study contributes to a body of work that has examined differencesin the size
of overhead according to organizational and environmental characteristics. First, research
Jan Boon is at the Department of Political Science, University of Antwerp, Belgium. Jan Wynen is at the Public Gover-
nance Institute, Katholieke Universiteit Leuven, Belgium.
Public Administration Vol.95, No. 1, 2017 (214–231)
© 2017 John Wiley & Sons Ltd.
OVERHEAD IN PUBLIC ORGANIZATIONS 215
has mainly analysed differences in overhead expenditures between organizations in sim-
ilar institutional settings, which leads to the question whether the effects that were found
are valid across policy sectors. Second, research has focused on a limited set of potential
determinants of differences in overhead expenditures relatedto organizational size, struc-
tural complexity and environmental turbulence (Boyne and Meier 2013). Third, research
has not recognized sufciently that overheadis not a homogenous collection of similar pro-
cesses, but that it comprises a wide array of domains related to human resources, nancial
management, facilities and so forth, which differ in important characteristics (Ting et al.
2014). Fourth, despite the ongoing crisis climate that leads public organizations to rational-
ize their overhead and to focus their resources on core tasks, little is known about whether
and why organizations choose different organizational models for achieving the required
efciencies. Yet how overhead is organized can have a great impact on the overall size of
overhead (Huijben et al. 2014).
The present study analyses differences in overhead expenditures between central gov-
ernment organizations. Central government organizations that vary in autonomy and task
are theoretically intriguing but empirically understudied. Because most studies examine
organizations within the same sector, empirical support for the importance of task and
autonomy for overhead management is lacking. This is problematic during a time when
many central governments are attempting to reorganize overhead functions across policy
sectors.
Two overhead processes are taken into account: human resources management (HRM)
and nance and control (FIN). In addition to examining determinants in overhead expen-
ditures between public organizations, this article analyses differences in the extent to
which overhead is organized in-house. The following research questions are addressed:
What explains differences between public organizations in their expenditures on HRM
and FIN overhead? (RQ1); What explains differences between public organizations in the
extent of in-house organization of HRM and FIN overhead functions? (RQ2).
In what follows, we rst outline the background of this study: What exactly is overhead,
and what has already been written on the topic? After providing a theoretical framework
for understanding the size and organization of overhead, we give an overview of the
research design of the study. We lastly present our ndings, which are then summarized
and discussed in the nal sections of the article.
ORGANIZATIONAL OVERHEAD: WHAT? HOW MUCH? HOW TO ORGANIZE?
Organizational overhead refers to the expenditures that organizations invest in a variety
of overhead functions aimed at supporting employees in the primary production pro-
cess (Huijben et al. 2014). Overhead functions can refer to a large number of tasks within
different processes, including HRM, information technologies, nance and control, com-
munication, legal affairs and facility services. Overhead functions are devoted to advising,
supporting and/or facilitating the activities and performance of the primary production
process (Andrews and Boyne 2014).
The size of organizational overhead
Differences in the size of overhead expenditures have been the subject of academic and
practitioner debate for decades (Tosiand Patt 1967; Pondy 1969) and have regained impor-
tance with the advent of the global nancial crisis that requires governments to work more
efciently (Boyne and Meier 2013). In particular in earlier writings, scholars discussed the
Public Administration Vol.95, No. 1, 2017 (214–231)
© 2017 John Wiley& Sons Ltd.
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