Top Civil Servants Under Contract
| Date | 01 December 2000 |
| Author | Per Lægreid |
| Published date | 01 December 2000 |
| DOI | http://doi.org/10.1111/1467-9299.00235 |
EUROPEAN
FORUM
TOP CIVIL SERVANTS UNDER CONTRACT
PER LÆGREID
This article focuses on the introduction of the new top civil servant contract system
in New Zealand and Norway. Even though both countries introduced contractual
arrangements at the same time, the content of the reforms and their scope, scale
and intensity are very different. The New Zealand reform was more radical and
internally consistent. In contrast to an aggressive and thorough implementation in
New Zealand, the contract system was implemented more cautiously and reluc-
tantly in Norway. The effects of the reform are ambiguous and uncertain in both
countries. A transformative perspective focusing on the interconnection between
international administrative doctrines, national political-administrative culture, and
polity feature is used to understand why contracts reforms have different contents,
effects and implications.
INTRODUCTION
Over the past fifteen years increased interest in managerial thinking and
the market mentality has changed personnel policy in the public sector.
Wage and employment policy has moved into the domain of general
administrative policy and become an active tool in reconstructing the state.
This paper focuses on how this strategy has been adopted to change the
position and working practice of top civil servants. Traditionally, public
administration has been based on two main doctrines aimed at ensuring
competent, effective and equitable government (Dunleavy and Hood 1994).
The first doctrine emphasizes the public sector as a distinctive domain and
makes a clear division between it and the private sector. The second doc-
Per Lægreid is Professor in the Department of Administration and Organization Theory at Bergen
University, and Senior Researcher at the Norwegian Research Centre in Organization and Manage-
ment (LOS-centre).
Public Administration Vol. 78 No. 4, 2000 (879–896)
Blackwell Publishers Ltd. 2000, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street,
Malden, MA 02148, USA.
880 PER LÆGREID
trine implies that a number of general procedural regulations should
restrict the discretionary power of leading civil servants. Today these two
doctrines are being challenged by New Public Management (NPM) which
envisages a public sector organized more along the lines of the private sec-
tor, and a civil service whose leaders have greater flexibility and more
opportunity to exercise discretion. The classical role of the civil servant as
a Weberian bureaucrat has been challenged by a new role as managing
director. In this paper I will take a closer look at these changes in adminis-
trative doctrines by focusing on one particular administrative reform: the
introduction of contract systems for top civil servants in New Zealand in
1988 and in Norway in 1990. A central question is how this reform affects
the relationship between political leaders and the top civil servants under
contract.
This paper challenges the globalization thesis, which views the introduc-
tion of individual contracts for senior civil servants as a worldwide process
of diffusion of similar reform ideas and solutions (Hood 1998). This conver-
gence hypothesis states that the introduction of NPM reforms has reduced
the differences between public administration in OECD countries. This is
not the case when we look at New Zealand and Norway. Even though both
countries introduced contractual arrangements at roughly the same time,
the content of the reforms and their scope, scale and intensity were very dif-
ferent.
There is an important distinction between relational contracts and agency
contracts. Relational contracts are implicit understandings which endure,
not because of legal sanctions but because of the shared needs of the parties
involved. In such contracts trust is essential (Martin 1995). Agency con-
tracts, on the other hand, are formal, binding legal arrangements. They are
goal-oriented, incentives-based, concrete and specific and have a limited
time horizon. The main argument for using such contracts is the belief that
they enhance efficiency. A typical form of agency contract would be the
employment of chief executive officers (Lane 1999, p. 183). Agency contracts
are based on the idea that people act in their own self-interest and extends
the study of such behaviour beyond market transactions to situations where
other values such as loyalty and duty are important.
In this paper I will discuss how useful agency contracts are with respect
to top civil servants. The contract arrangements for administrative leaders
in New Zealand and Norway represent an interconnected system of
employment agreements and performance agreements. Thus far, the per-
formance element in the contract system has been investigated to a greater
extent than the employment elements. In the United States management by
contract has been less widespread than in many other OECD countries and
the performance contracts being written do not appear to be contracts in
any sense of legal enforceability (Peters 1996). Several US studies have
revealed the paradox of performance pay. While performance-based pay
reforms have been very popular, they have not been particularly successful.
Blackwell Publishers Ltd. 2000
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