Performance Decline and Turnaround in Public Organizations: A Theoretical and Empirical Analysis*
| Published date | 01 September 2005 |
| Date | 01 September 2005 |
| DOI | http://doi.org/10.1111/j.1467-8551.2005.00458.x |
| Author | Pauline Jas,Chris Skelcher |
Performance Decline and Turnaround in
Public Organizations: A Theoretical and
Empirical Analysis
*
Pauline Jas and Chris Skelcher
Institute of Local Government Studies, School of Public Policy, The University of Birmingham, Birmingham
B15 2TT, UK
Corresponding author E-mail: p.e.jas@bham.ac.uk
Public sector performance is currently a significant issue for management practice and
policy, and especially the turnaround of those organizations delivering less than
acceptable results. Theories of organizational failure and turnaround derive largely
from the business sector and require adaptation to the public service. The performance
of public organizations is more complex to measure, is related to institutional norms,
and the idea of ‘failure’ is problematic. Empirical findings from a real-time, longitudinal
study of poorly performing English local authorities are used to develop an initial theory
of performance failure and turnaround suited to public organizations. The paper argues
that the typical performance of public organizations over time is cyclical. Where
cognition and leadership capability are absent, organizations fail to self-initiate
turnaround. In this situation authoritative external intervention is necessary. The
strategies applied are principally concerned with building a leadership capability that
engages senior politicians and managers in order to overcome inertia and collective
action problems. The theory is presented in the form of seven propositions that provide a
basis for further research across the public sector.
Introduction
The improvement of organizational performance
is a major theme in contemporary debates about
the governance and management of public
services. It reflects the greater emphasis that is
now given to measuring the outputs and out-
comes of public policy, the emergence of perfor-
mativity as a central discourse within public
management and the encouragement of feedback
to governmental agencies by active citizens and
consumers (Boyne, 2003). Globally, reform pro-
grammes have employed a number of standard
strategies to stimulate performance improvement,
moderated by the particularities of national
politics and culture (Batley and Larbi, 2004;
Pollitt and Bouckaert, 2000). Some reforms
change the external environment within which
public bodies operate, inducing new strategic
*
This article arises from a research and action-learning
programme entitled ‘Learning from the Experience of
Recovery’ commissioned by the UK Government’s
Office of the Deputy Prime Minister, in association with
the Audit Commission, Local Government Association
and Improvement and Development Agency. The views
of the authors do not necessarily represent those of the
commissioning bodies. Chris Skelcher’s contribution to
this paper was supported by Fellowship Award RES-
331-30-000129 from the ESRC/EPSRC Advanced In-
stitute for Management Research. An earlier version of
the paper was presented at the Eighth International
Research Symposium on Public Management, Buda-
pest, March 2004. The paper draws on data collected by
the authors and other members of the research team:
Michael Hughes, Peter Watt, and Philip Whiteman (all
from the University of Birmingham) and David Turner
(from the University of Gloucestershire).
British Journal of Management, Vol. 16, 195–210 (2005)
DOI: 10.1111/j.1467-8551.2005.00458.x
r2005 British Academy of Management
contingencies that are anticipated to lead to
organizational adaptation. Examples include the
exposure of public bureaux to competitive
pressures, incentives to inter-organizational col-
laboration around mutual policy goals and the
expansion of the domain of external inspection
beyond the traditional concern with financial
probity and into matters of efficiency, effective-
ness and service achievement. Other reforms are
focused specifically on the internal world of the
public organization. They include introducing
devolved management within a corporate perfor-
mance framework, restructuring to create agen-
cies and transforming a bureaucratic culture into
one that is more responsive and customer-
oriented.
Discussion of ways to promote improvements
in public service performance generally ignores
the question of the relative starting points of
different organizations. Examination of any of
the metrics for public-service organizations de-
monstrates that there is not a level playing field;
organizations vary in their performance relative
to each other. This observation suggests two
questions. First, is it possible to identify what
leads to poor performance? And second, if it is,
what strategies are most effective in improving
performance achievement?
The article considers these issues. Its overall
purpose is to develop a more differentiated
analysis of public service performance determi-
nants and improvement strategies, oriented to-
wards those at the lower end of the performance
spectrum. The rationale for this focus is that
inequalities in public welfare are more likely to be
reduced in absolute terms by boosting the
performance of these organizations rather than
by seeking to increase the aggregate performance
of the whole population. The article addresses
these questions in the following way. The first
section sets out the predominant model of public
service improvement and develops the argument
for a theoretical understanding that differentiates
between those organizations at different points
on the performance profile. The second section
introduces the methodological basis of the
research reported in this article, the empirical
focus being local authorities in England. A theory
of poor performance and turnaround applicable
to the public sector is set out in the third section.
The final section draws out implications for
research, policy and practice.
Improvement, performance and
turnaround in the public sector
The predominant public service improvement
ethos in the UK is associated with a normative
trait theory of management for excellence. The
foundation of this approach is Osborne and
Gaebler’s Reinventing Government (1992), the
public service equivalent of Peters and Water-
man’s classic In Search of Excellence (1982). This
‘excellence theory’ is constructed inductively
from examples of public management reform
that are held out by policy makers and managers
as illustrative of ‘best practice’. It typically
consists of a series of prescriptions based on
features of apparently high-performing organiza-
tions, with the inference that these explain their
success and provide the means of improving
those whose achievements are less notable.
Elements of the prescription currently emphasize
such features as transformational leadership,
performance management, partnership working
and competition. The normative environment for
public organizations motivates a process of
isomorphism around the ‘excellence’ model
(Newman, Raine and Skelcher, 2001). While the
adoption of ‘best practice’ characteristics secures
legitimacy with key stakeholders, it cannot
confidently be demonstrated that it explains
improved performance (Borins, 2001; Boyne
et al. 2003; Pollitt and Bouckaert, 2000). Indeed,
the history of public management – as of that in
the private and voluntary sectors – is one of a
succession of preferred paths to better perfor-
mance. This can be seen in the regular debates
about key dimensions of change – centralize
or decentralize?, managerialize or professiona-
lize? Consequently we can conclude that the
adoption of currently fashionable elements of
structure, process or culture will not necessarily
produce improved performance. The organiza-
tion may look modern when compared to
prevailing institutional norms, but this is not a
guarantee that its services will be delivered as
expected. Other factors are at work, including
the relationship between the corporate govern-
ance and management of the organization and
its service delivery functions, and the ways in
which change and continuity in the organization
affect the meaning systems and behaviour of
actors at various levels in the hierarchy (Llewel-
lyn, 2001).
196 P. Jas and C. Skelcher
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