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Why Does Post-Bureaucracy Leadto More Formalisation?Harald Torsteinsen aa Harstad University College , Harstad , NorwayPublished online: 16 Nov 2011.
To cite this article: Harald Torsteinsen (2012) Why Does Post-BureaucracyLead to More Formalisation?, Local Government Studies, 38:3, 321-344, DOI:10.1080/03003930.2011.629194
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Why Does Post-Bureaucracy Lead toMore Formalisation?
HARALD TORSTEINSENHarstad University College, Harstad, Norway
ABSTRACT This paper discusses and tries to explain the paradoxical observation thata local government reform aimed at reducing or even removing bureaucracy actuallyleads to more formalisation, not less. During the last 10–15 years more than 40 per centof Norwegian municipalities have adopted an organisational model that makes theadministration more disaggregated, decentralised and flat. The reform has beenpromoted by strong post- or even anti-bureaucratic rhetoric, arguing for increasedmanagerial autonomy at the operational level. The basic idea is that greater autonomywill create better performance. The paradox of increased formalisation is discussed onthe basis of rhetoric, unintended consequences, diagnostic problems and linguisticproblems. The paper concludes by pointing out the need for a more nuanced conceptionof bureaucracy than the dichotomous approach of post-bureaucracy can offer. It alsooutlines a couple of supplementing explanations for increased formalisation.
KEY WORDS: Local government reform, agency model, post-bureaucracy,formalisation
1. Introduction
This paper focuses on the paradox that post-bureaucratic reform maysometimes lead to more instead of less bureaucracy. How is this possible,and how can we explain it? According to Jaffee (2001), post-bureaucracy isone of the most powerful ‘emerging organizational paradigms’ of today.Post-bureaucracy means flat, flexible and responsive organisational formsand managerial practices, emerging in the wake of the reduction or removalof traditional bureaucracy (Morris and Farrell 2007). It is ‘an organization inwhich everyone takes responsibility for the success of the whole’, and itconsists of ‘structures that develop informed consensus rather than relyingon hierarchy and authority’ (Heckscher 1994, p. 24). Post-bureaucracy
Correspondence Address: Harald Torsteinsen, Harstad University College, Harstad 9480,
Norway. E-mail: [email protected]
Local Government StudiesVol. 38, No. 3, 321–344, June 2012
ISSN 0300-3930 Print/1743-9388 Online � 2012 Taylor & Francis
http://dx.doi.org/10.1080/03003930.2011.629194
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therefore emerges as something both in opposition to, and the opposite of,bureaucracy (Rasmussen, 2008).
Scholars of public administration and management also describe (andsometimes advocate) a post-bureaucratic development in public organisa-tions (for instance Osborne and Gaebler 1992, Hughes 1994). They claimthat the liberation of public managers from political intervention in runningoperations will unleash human and organisational resources and stimulateinnovation. Politicians should concentrate on steering instead of rowing.The same positive effects are thought to follow from liberating operationalmanagers from the direct hands-on control of strategic managers. Themessage among the proponents of this new public management (NPM) isclearly both anti-bureaucratic and anti-political.
Flattening hierarchies, decentralising decision-making, empowering em-ployees and introducing self-management are all common examples ofprocesses characterising post-bureaucratic organisations (Jaffee 2001, p.159). Studies have revealed that many contemporary organisations possessthese and other post-bureaucratic traits (Pettigrew and Fenton 2000;Gregory 2007). Even traditional public bureaucracies have important post-bureaucratic elements. For instance, meetings have become one of the mostwidespread forms of coordination within the Swedish police (IvarssonWestberg 2005, Forssell 2006). This happens in spite of the fact thatmeetings are more an example of post-bureaucratic, mutual adjustment(Mintzberg 1983) than of typical bureaucratic coordination, a form that onewould expect to find, especially within a police organisation. Anotherexample is the rapid and widespread adoption of semi-autonomous, special-purpose agencies or performance units1 in Norwegian municipalities, aimedat removing traditional hierarchy and bureaucracy (Torsteinsen 2006).
Many reforms of public administration, including the agency reform inNorwegian municipalities, have been explicitly directed at switching the focusfrom input and process to output and results. This is actually one of the maincharacteristics of NPM, as originally outlined and defined byHood (1991). Inthe agency reform process, rules and procedures are expected to loseimportance, while professional and managerial discretion is expected to gainimportance. However, this will not necessarily lead to less bureaucracy. Pollitt(1990, 1993) and Hood (1995) even claim that the managerialism of NPMcreates neo-bureaucracy and neo-Taylorism.More recent studies indicate thatthey may be right (Olson et al. 2001, Torsteinsen 2006, 2008). The effects ofpost-bureaucratic reforms in general and NPM more specifically, therefore,seem to be both complex and paradoxical (Hood and Peters 2004).
This paper discusses some of the paradoxes observed in relation toreforms described and promoted by post-bureaucratic rhetoric. Theapproach is exploratory and rather pragmatic. This means that the studymoves ahead step by step, thus mixing literature review, primary data andexplanation. The paper presents some results of recent research and thenproposes some theoretical explanations.
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At this stage, at least four explanations seem possible and will bediscussed:
1. Post-bureaucracy is more a question of rhetoric than reality.2. Post-bureaucratic reforms lead to unintended consequences.3. Post-bureaucratic reforms suffer from diagnostic problems; the pre-
reform organization was not as bureaucratic as first declared andsupposed.
4. Post-bureaucratic reforms suffer from linguistic problems; the meaningof bureaucracy and consequently post-bureaucracy, is not clear enough,i.e. lacks operational validity.
The paper begins with some comments on the concepts of bureaucracy andpost-bureaucracy, and then the arguments that post-bureaucracy leads tomore formalisation, with some empirical evidence to support this argument.After these introductory sections, the four explanations are discussed.
2. A short note on bureaucracy and post-bureaucracy
Bureaucracy can briefly be defined as ‘government by permanent office-holders’ (McLean and McMillan 2003). Probably the most common way todefine bureaucracy in more detail is to resort to Weber’s description of theso-called ideal bureaucracy (Pollitt and Bouckaert 2004, p. 62):
fixed spheres of competence; a defined hierarchy of offices; a cleardistinction between the public and the private roles (and property) ofthe officials; specialization and expertise as the basis for action; full-time, career appointments for officials; and management by theapplication of a developing set of rules, knowledge of which was thespecial technical competence of the officials concerned.
According to Hopfl (2006, p. 13), this ideal bureaucracy is ‘a construct oflater writers’, and therefore the list of defining characteristics variessomewhat from scholar to scholar. Anyway, in this paper I will use thedefinition derived from Pollitt and Bouckaert (2004). I will also differentiatebetween hard and soft bureaucracy, where hard bureaucracy is close toWeber’s ideal bureaucracy, whereas soft bureaucracy is flatter, more flexibleand less formal. Soft bureaucracy has, nonetheless, retained importantcharacteristics and values from traditional bureaucracy, especially rule-based decision-making and hierarchical authority, which create thenecessary foundation for accountability.
As a parallel to Weber’s ideal-type bureaucracy, Heckscher has developedhis own ideal-type post-bureaucracy (Heckscher 1994, pp. 25–28). Hiscriteria are as informal as Weber’s are formal: Problem- and project-driveninteraction versus strict and stable division of labour; dialogue, consensus
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and trust versus formal position, hierarchy and control; mission and generalprinciples versus rules and procedures; looser organisational ties andborders, with flexibility and more temporary, part-time memberships versusfull-time, life-long professional careers, etc. Heckscher admits that ‘[t]hediscussion of post-bureaucratic organization is complicated by the fact thatit doesn’t exist’ (Heckscher 1994, p. 17), and he adds that ‘[t]o my knowledgethere is no concrete example that truly exemplifies the type – certainly not inbusiness, certainly not on a large scale or for more than a short period’(p. 17). In other words, the post-bureaucratic organisation is a purelytheoretical construct. Still he sometimes argues as if it did exist: ‘The centraltheoretical claim of a post-bureaucratic organization is that it is possible tomake binding decisions without relying on offices. This claim in turn relies ontwo concepts unfamiliar to bureaucracy: consensual legitimation and process’(pp. 38–39, original emphasis). The problem of using ideal-type definitions isthat one might start to think of bureaucracy and post-bureaucracy as fixedpoints on a discrete scale. The prefix ‘post’ conveys the impression that post-bureaucracy is a new organisational form completely different and free frombureaucracy. Instead, I would like to treat bureaucracy as a continuousvariable, or rather, a set of continuous variables, making it possible toanalyse different degrees of bureaucracy and different mixes of bureaucraticelements. In my view one might even ask if organisation would be possibleat all without some elements of bureaucracy: to organise is to formalise, andto formalise is to bureaucratise.
Formalisation can be described as ‘organizational control over theindividual’ (Hall 1996, p. 65). More specifically, the use of rules seems torepresent the core of formalisation (p. 66). In the Weberian tradition, ruleswere directed at controlling input and process, whereas now rules are moredirected at controlling performance and output. This paper counts anorganisation relying on written rules as more formalised than anorganisation relying on unwritten rules.
Turning to available empirical evidence, there seems to be a substantialdistance between rhetoric and reality. Jaffee (2001) refers to several studiesindicating that reforms sailing under the flag of post-Fordism and post-bureaucracy have led to mixed results at best. Toyotaism and lean productionfor instance, ‘represent[s] an intensificationofworkandamore comprehensivesystem of social control’ compared to more traditional forms (p. 155). InNorway and Sweden, public management reforms, inspired and promoted bypost-bureaucratic ideas, have led to increased formalisation (Forssell 2006,Torsteinsen 2006, 2008). Heckscher, one of the most prominent academicproponents of post-bureaucracy, probably would not accept these cases asexamples of genuine post-bureaucracy. He operates with a purist approachthat seems to excludemost real-world examples fromhis ideal-type conception(Heckscher 1994). But when he lists ‘[i]nteractive forms – the participatorysystems, task forces, and teams of the corporate world, as well as self-regulation of professions and sciences . . .’ as the core of post-bureaucracy
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(p. 53), it is difficult to understand why these forms should not be found inbureaucratic organisations. Heckscher’s problem is that these elements areregular parts of contemporary bureaucratic organisations. Still, he stubbornlyrejects the so-called ‘pretenders’ and uses a lot of energy to distinguish themfrom genuine post-bureaucracy (Heckscher 1994, p. 53).
It is intriguing to observe that in spite of repeated and at times radicalcriticism, bureaucracy is still with us. According to Meier and Hill (2007),the explanation for this is that bureaucracy continues to meet someimportant governance needs and values in our societies: the need to organizelarge-scale tasks, the need to break down complex problems, the need forstable administration, securing equity and effectiveness, the need forexpertise and not least the need for accountability, made possible throughhierarchy (Meier and Hill 2007, p. 66–67).
3. A short note on data
This paper addresses the following question: Why do so many organisa-tional reforms promoted by post-bureaucratic rhetoric end up with more,rather than less, formalisation? How can one explain this paradox?
To throw light on the question of this paper, I will use data from a researchproject on the introduction of semi-autonomous, special-purpose agencies in 12Norwegian municipalities (Torsteinsen 2006, 2008), performed in the period2001–2007. The project provides survey data, interviews and documentaryinformation. The survey includes more than 450 respondents, all of whom aremunicipalCEOs, deputyCEOsandagencymanagers.The overall response ratewas 52 per cent. Those interviewed represent a small sample of these res-pondents, including some management consultants, altogether 32 interviews.
This study questions the degree of bureaucratisation in Norwegianmunicipalities before the agency reform (Torsteinsen 2008). As a matter offact, the degree of bureaucracy seems to have been rather limited. Instead,several post-bureaucratic elements can be recognised. Much, if not most, ofthe pre-reform bureaucracy at this levelmight be explained by national policy,regulation and control. The agency reform, implemented during the last 10–15years in 42 per cent ofNorwegianmunicipalities (Hovik and Stigen 2008), has,on the onehand, led to aflatter hierarchy, increaseddecentralisation andwiderspace formanagerial discretion. On the other hand, the reformhas led tomoreconcentration of power in the hands of formal managers, and moreformalisation of management relations and output control. The number oflaws and rules regulating internal work processes is practically unchanged,while the formalisation of performance and output management has grown.
4. Does post-bureaucracy lead to more formalisation?
Before turning to the main question of this paper (i.e. why does post-bureaucracy lead to more formalisation), I will start by raising what seems
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to me a logical first question: does post-bureaucracy actually lead to moreformalisation? In brief, I will argue that it does, often enough at least tojustify the primary focus of this paper, and I will present some empiricalevidence to support this argument. The first part will consist of a shortreview of relevant literature, while the second part contains data from myown research.
The observation that social and management reforms sometimes lead toparadoxical results is not new. Several scholars have studied reforms andcommented upon this phenomenon (Merton 1936, Handy 1994, Jaffee 2001,Hood and Peters 2004, Gregory 2007). Jaffee (2001), for instance, refers tostudies from the car industry documenting the gap between rhetoric and reality.Although reforms were promoted as embodying post-Fordist, cooperative,egalitarian work principles, workers instead reported a heavier workload andfaster-paced workdays, standardised and repetitive jobs, technical controlreinforced by divisive forms of social control, etc. Jaffee (2001, pp. 142–143)sums up the conclusions of his literature review in two points:
First, many theories about organizational process – how it will work,what the outcomes will be – are unlikely to be realized in practice.
Second, it is equally plausible that many of the claims made aboutmeaningful skilled work and a cooperative egalitarian work environmentunder lean production are nothing more than forms of managerial ideology.
Although ‘management initiates and directs most of the emerging and neworganizational forms reviewed’ in the book, workers say that ‘the primaryreason for the lack of desired workplace influence’ is ‘managementresistance’ (Jaffee 2001, p. 183).
Similar experiences have been reported by scholars of public administra-tion. As early as the first half of the 1990s, Pollitt (1990, 1993) and Hood(1995) claimed that NPM, aimed at reducing traditional bureaucracy, had infact led to neo-bureaucracy and neo-Taylorism. This reflected theschizophrenic character of NPM, with a managerial strand associated withTaylorism and Fordism and a decentralist strand associated with post-Taylorism and post-Fordism and ‘the primacy of market-based coordina-tion’ (Walsh 1995, p. xiv). Later, Hood and Peters (2004) drew renewedattention to the emerging paradoxical effects of NPM. They found it easierby this time, as NPM had reached its middle age and surprises andparadoxes had become more visible. They refer, for example, to Gregory’s‘production paradox’, focusing on the intensified specification of indicatorsand outputs associated with contemporary performance contracts andcontrol systems (Gregory 1995, 2007). This observation is somewhat similarto the findings reported by Olson et al. (2001). They argue that ‘[t]hecorollary of a move to quasi-profit centres and more disaggregated publicsector organizational structures has been a significant extension in formal
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accounting systems’ (p. 509). They also claim that ‘[i]n the ‘‘new’’ publicsector world, periodic reporting has definitively increased in volume, as hasboth (internal and external) auditing and inspection’ (p. 510). McSweeney(2006) has provided ample evidence of intensified bureaucratisation withinthe UK Civil Service in spite of reforms intended to move it in a post-bureaucratic direction. One example of this development is the growth in thenumber of accountants from 1982 to 2002. McSweeney (2006, p. 28) writesas follows:
By mid-1992, whilst the total number of civil servants had fallen by 13per cent (both on a head-count and full-time equivalent basis), thenumber of accountants had risen by over a third to 815. By mid-2002(the latest period for which figures on the number of accountants isavailable), the number of civil servants had been reduced even more(by over 14 per cent on a full-time equivalent basis and by over 8 percent on a headcount basis), but the number of accountants had risenby almost two-and-a-half times compared with 1992 to just over 2000.
In a study of regulation inside UK government 10 years after thereorganization of most of the civil service into agencies, Hood et al. (1999, p.5) concluded that ‘regulation of government seemed in many domains tohave increased in formality, complexity, intensity, and specialization overthe last two decades’ McSweeney (2006) refers to several other studiesshowing that increasing bureaucratisation is a general trend, affectingalmost every area of public management, including local government. Thisincludes ‘increased powers of inspection, the proliferation of new inspectionagencies, and the reassertion of hierarchy’ (p. 28).
This brief review indicates that there is abundant support in internationalresearch literature for the claim that post-bureaucratic reforms often lead tothe paradoxical result of more formalisation. The results of recent researchpoint in the same direction (Torsteinsen 2006, 2008). The agency modeladopted by more than 40 per cent of Norwegian municipalities during theperiod 1992–2008 is characterised by the disaggregation of local governmentinto multiple, semi-autonomous service-providing agencies. The number ofagencies among the 12 municipalities in the study varied from 20 to morethan 200 after the reform had been implemented. With the removal ofmiddle management and the flattening of the hierarchy into a two-levelstructure, with only the CEO and the agency managers left, the span ofcontrol of the municipal CEOs rose dramatically. While coordination earlierbetween middle management and managers of service production was to alarge extent informal, and often trust-based, it now became moreformalised. All 12 municipalities formalised the relationship between theCEO and agency managers through the introduction of a managementagreement or quasi-contract. The contracts contained an agreement on theexpected performance of the agency manager and his/her agency during the
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next year as well as the possible positive or negative consequences forperformance or non-performance. These contracts were often formulated ingreat detail, sometimes referring to other documents. For instance, in one ofthe municipalities, the text of the contract alone covered almost six pages.An interesting aspect of these contracts is that they are becoming more andmore standardised across municipalities.
In addition to these contracts, and usually more or less related to them,some of the reform municipalities have adopted systems for measuringperformance. The most common system is a kind of balanced scorecard,usually tailored to suit the specific needs of the public sector and themunicipalities. The effect of this development is a significant increase informalisation of local government. In one of the interviews, an agencymanager said that
[e]arlier we didn’t have all these documents, the standardised require-ments. And we didn’t have management contracts saying do this anddo that. I guess we are working on the same tasks now, but things aremore formalised. The demands are higher, the control is more in-depth.
Another agency manager commented that ‘I am going nuts with all theseforms’. A deputy CEO responded laconically to a question about the benefitof the new performance accounting regime: ‘A lot of paper!’ Another deputyCEO described the process of developing performance indicators as ‘huge’and added that ‘the first time we did user surveys in all agencies, it wasgigantic . . . it was so big’. Although the reform municipalities have tried tostreamline, simplify and improve their systems over time, they still collectenormous amounts of performance data. In order to handle and to utilise allthis information, formalisation has become a necessity. Therefore, there isno doubt that the post-reform municipality has become much moreformalised and in that sense more bureaucratic than the pre-reformmunicipality.
5. Why more formalisation?
So far this paper has argued and presented empirical evidence that reformsoften lead to more formalisation, even in cases where they have beenpromoted as post-bureaucratic reforms. The adoption of semi-autonomous,single-purpose service-providing agencies in Norwegian municipalities is anexample of this paradoxical process. This part of the paper tries to answerthe question of why this happens. To answer this question, the followingfour possible explanations are explored: rhetoric, unintended consequences,diagnostic problems and linguistic problems. Taken together they can beplaced under one over-arching explanatory model, namely that of boundedrationality (Simon 1965). As such, they give four different explanations of
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why rational calculation behind the agency reform has been limited andbiased. The bounded rationality model is based on at least three importantpremises: (1) information is limited and often unreliable, (2) humancognitive capacity to evaluate and process information is limited and (3)time and resources that can be invested in decision-making is limited.Therefore, humans and organisations have to make decisions on insufficientgrounds, reaching sub-optimal, but hopefully satisfactory results: ‘satisfi-cing’, as Simon (1965) called it.
The primary purpose of the following analysis is to answer the question ofwhy more formalization. In doing so, the paper will have to touch uponmore general aspects of the reform in order to provide a broader picture,thus putting formalization into context.
5.1. Rhetoric
According to this explanation, post-bureaucracy is more a question ofrhetoric than reality. Rhetoric could be defined as ‘the persuasive use oflanguage’ (McLean and McMillan 2003). As such language can be used asan instrument for mobilising support or for seducing people. It could evenbecome an instrument for self-seduction.
Words, slogans, stories and symbols often have strong effects on people’sconceptions, beliefs, emotions, and actions. The power of symbols is well-known and well-documented within politics (Edelman 1964). Therefore, it isneither surprising nor accidental that rhetoric plays an important role inpromoting reform ideas. First, rhetoric can be used cynically, to distractattention from problems and to camouflage possible hidden agendas behindreforms, for example shifting the power balance within the organisation.Rhetoric could thereby serve the purpose of sweetening the pill, if notregular deceit. Second, it can be used in a more positive sense to createenthusiasm and support for open reforms, that is reforms without obviouscynical aspects. The reformers themselves may even be the greatestenthusiasts, with a strong belief in the reform idea and the reform project.In extreme cases, the reform movement might become a kind of secularrevival, characterised by quasi-religious fever. In both cases rhetoric oftenhas the emotional and cognitive effect of underestimating challenges andblunting critical thinking. Post-bureaucracy is a contemporary example ofan idea, or rather a group of ideas, that has been promoted by rhetoric(Jaffee 2001, Rasmussen 2007).
The agency model has gained substantial popularity among Norwegianmunicipalities during the last 15 years, not least because of the strategic useof strong political symbols. Its basic message is that increased autonomy willgive better performance, that is freedom makes human beings andorganisations perform better and gives better results. In more operationalterms, the agency model promises better and cheaper services and highersatisfaction, both among users and employees. Who could be against that?
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The attractiveness of the model therefore seems to follow from its broadappeal: to local politicians of all political colours, to users of public servicesand to managers and employees of local government.
The conception of the agency model as a post-bureaucratic form oforganisation can be illustrated by this quote from a former prominentrepresentative of KPMG in Norway, describing the typical pre-reformmunicipality (Noraberg Consulting AS, undated report, p. 3):
The traditional hierarchic (and bureaucratic) organisation model, withmultiple levels of authority from top management to service provider,is expensive and rigid and deprives the service providers of the ability toadapt rapidly to the needs in the market for services. Combined withold-fashioned forms of management it also obstructs the implementa-tion of a modern employer policy. The resources of the employees aretherefore not liberated, with reduced performance of the municipalorganisation as such as a result.
For a long period, KPMG promoted and helped Norwegian municipalitiesin implementing the agency model and to such a degree that it becameknown as ‘the KPMG model’. The quote exemplifies the rhetoric of thereform, showing the way from traditional and even old-fashioned bureau-cratic and hierarchic rigidity and suppression to modern and liberatingforms of organisation and management.
The rhetoric found in municipal documents advocating the reform is alsopermeated with references to humanism and democracy. For instance, in adocument from one of the reform municipalities, we find the followingstatement (Stord Kommune 1997, p. 9): ‘Our principles of management arebased on the idea that trust and delegation of authority give responsible andindependent employees’. Further, in a document from Arendal munici-pality, we can read the following (Arendal Kommune 1999, pp. 37–38):‘The condition for succeeding with the reform lies not primarily in newstructures, but in culture and forms of work and cooperation’ and‘. . . managers are the most important carriers of organizational culture,and good communication skills and a positive perspective on humanity arenecessary to succeed’.
In some of the more than 30 interviews that were conducted, it wasastonishing to see the strength in the respondents’ beliefs and their genuineenthusiasm. One deputy CEO, for example, was almost carried away by hisown words. The interview, meant to last 1 hour, went on for almost 3 hours.According to him, there was only one problem: ‘Local politicians do notunderstand the agency model and do not respect the rules of the new game.They criticize us publicly and overrule decisions made by the new semi-autonomous agencies’. A couple of years later he became so frustrated withthe obvious gap between rhetoric and reality that he left his position andwent to a job in a national agency.
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The agency reform, in the Norwegian municipal context, is sociallyconstructed in the rhetoric of freedom, trust, flexibility and modernisation,and contrasts with the old-fashioned, repressive and rigid bureaucracy. As aresult, the reform is given a position of indisputable moral supremacycompared to traditional forms and practices. However, when the vision andthe rhetoric of the post-bureaucratic agency model meet reality, a great dealremains the same.
5.2. Unintended consequences
The observation that social action often leads to unintended consequences isby no means new (Merton 1936). Even in cases of clear intentions, rigorousanalysis and well-organised implementation, reforms may have effects thatwere not foreseen. In his reflections on bureaucracy, Max Weberdemonstrated a precise understanding of the paradoxical character ofhuman rationality and social intervention (Gregory 2007). Some of theeffects of reform may be good, others may be bad. For reforms motivated bypost-bureaucratic ideas, for instance the agency model, effects of increasedformalisation must be characterised as unintended and bad. This exampleillustrates a substantial degree of bounded rationality among localpoliticians; they did not fully understand the logic of the agency reform,neither when it was passed nor when it was implemented.
One of the most important aspects of the agency model is increasedfreedom at the operational level in an organization. This creates newchallenges for coordination. First, there will be a growing need forinformation at the strategic level about activity and performance at theagency level. One problem with such processes is that they have a tendencyto accelerate: after a while the demand for information, and for more andmore detailed and precise information, grows out of proportion. This seemsto be a general experience, referred to as the ‘production paradox’ (Gregory1995). Organisations, therefore, could easily find themselves caught in an‘evaluatory trap’, with information overload and with costs exceedingbenefits (Olson et al. 2001). A main drive behind this paradox is theambition to measure activities and results that are not readily observable.Second, with the great number of agencies and no longer the former middlemanagement between the CEO and the agency managers, the span ofcontrol of the CEO has increased enormously. At the same time, incentiveshave been designed to stimulate individual agency performance. Althoughseveral performance criteria are available, keeping to the budget is the onething that really matters. Even in municipalities that have introduced abalanced scorecard, ‘the economy is priority number one, no matter what’(from an interview with a female agency manager heading a big home forthe elderly). This statement illustrates a general experience among agencymanagers. Therefore, ‘wise’ agency managers try to avoid all activityinflicting extra costs. Consequently, cooperation between agencies suffers,
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even in cases where users with multiple needs are dependent on the servicesfrom several individual agencies. These and other types of sub-optimalisa-tion seem to be quite widespread.
The huge number of agencies and the absence of middle management puta heavy burden of coordination and control on the shoulders of the CEOeven though he or she may have the support of two or three deputy CEOs.They strive hard to uphold direct dialogue and contact with their agencymanagers. Therefore formalisation becomes a necessity in spite of all goodintentions.
I have observed both paradoxes at play among the 12 municipalities in mystudy. Most of them have experienced problems in developing andestablishing systems and methods for measuring performance. The balancedscorecard method has been popular, but the amount of information that itgenerates has surprised and scared many. So has the degree of paperwork,reporting and bureaucracy. ‘We are reporting and are being audited as neverbefore’ said the agency manager of a home for the elderly with 100employees in one of the interviews. Little by little, the systems have beensimplified, but some of the basic problems remain.
In a paradoxical way, increased freedom stimulates increased coordinationand control. Experience so far has shown that this process has led towidespread formalisation of relations between agency managers and CEOs.The management contracts and performance measurement and reportingsystems emerging from the ‘post-bureaucratic’ agency model seem to be farmore bureaucratic than the former old-fashioned bureaucracy. Theseexamples of unintended consequences seem to reflect an obvious lack ofrational calculation. According to Simon’s bounded rationalitymodel (Simon1965), one of themost serious limitations to human rationality is to be found inrelation to cognitive capacity. This limitation confronts a logic built intocoordination and control activities, the rational ambition to refine and perfectperformance criteria, data collection methods and reporting standards. Atsome point, when the line of ambition breaks the curve of cognitive capacity,rational calculation will suffer. Another limitation can be linked to inertia dueto cultural and other types of cognitive patterns. Reforms challengeestablished institutional patterns and are therefore difficult to implement.Culture and cognitive maps continue to live on in the hearts and heads of theparties involved, and they continue therefore to play their traditional roles. Athird limitation can be related to organizational structure; the mismatchbetween task and design. The intention to stimulate agencies to cooperatehorizontally is ‘sabotaged’ by vertically oriented performance criteria andincentive structures that put a premium on individual agency performance. Inaddition to limitations in cognitive capacity, but at the same time linked to it,there are limitations to rationality due to differences of interests. Reformsusually affect established patterns of power and interest and therefore triggerresistance. Interest-triggered resistance is not necessarily non-rational, but itcould represent a competing type of rationality.
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5.3. Diagnostic problems
In order to prescribe the right cure and medicine for a patient, the doctorfirst has to make a diagnosis. The main diagnosis behind the agency reformwas that ‘the patient’, that is Norwegian local government, suffered fromstifling bureaucracy. Therefore, the patient had to be set on an anti-bureaucratic cure in the shape of the agency model. This section tries toexplain how formalisation can be related to diagnostic problems with theagency reform inspired by post-bureaucracy. First, the diagnosis itself isquestioned. Second, two contradictory diagnoses given by former KPMGconsultants at one and the same time are presented. Lastly, it is argued thatthe diagnosis made by the KPMG was more cure-driven than illness-driven.
5.3.1. How ill was the patient? What was the matter with Norwegian localgovernment, and what kind of disease did it have? To answer thesequestions, I will present two stories: one based on the situation in the 12municipalities in my study, and one based on the general situation inNorwegian municipalities before the mid-1990s.
First, the situation in the 12 municipalities: I did not perform detailedstudies of the pre-reform status in these municipalities apart from readingthrough case documents arguing for the adoption of the reform andperforming post-reform interviews with CEOs, deputy CEOs and agencymanagers. The basic challenge before the agency reform seems to have beenthe economy. But in that respect these municipalities did not differ fromNorwegian municipalities generally. The explanation for the economicproblems did not differ either: the division of the administration into foursectors or departments (schools and kindergartens; health, social and elderlycare; culture; technical affairs), each headed by a department manager. Inaddition, there was a system of political boards, elected by the municipalcouncil and mirroring this departmental structure. The strength of thesedepartments and the strength of the political–administrative alliancebetween the departments and the political boards made it difficult for theCEO and the municipal council to obtain the economic discipline they feltwas necessary. The established department model therefore became theprime example and proof of old-fashioned and rigid bureaucracy. Thereform municipalities differed, however, from the average Norwegianmunicipality on some variables; they were bigger in terms of populationand resources, and some of them were more innovative in the sense that theywere prepared to try out new organisational features. Arendal, Larvik andTønsberg, for instance, had visited Danish municipalities at an early stage,bringing home inspiration and ideas.
Second, several studies of Norwegian and Nordic municipalities havedocumented a culture characterised by dialogue, cooperation, consensus,conflict-avoidance, incremental change and decentralisation (Baldersheim1993, Kjølholdt 1997, Klausen and Stahlberg 1998, Lotsberg 2005). CEOs
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usually trust their subordinates and seem reluctant to intervene in their work(Kjølholdt 1997). At the same time, local government is organized and runaccording to traditional bureaucratic and hierarchic norms. The broad andgeneral picture, then, of the pre-reform municipality seems to looksomething like this: local government in Norway and the Nordic countrieshas been (and still is?) characterised by a combination of a cooperative,decentralist culture and a soft, pragmatic bureaucracy and hierarchy. Thiscombined culture has given room for a variety of different practices,reflecting differences in size, economy, political–administrative relations,personalities, events, etc. Historically, the prime source of bureaucracyseems to have been national authorities intended to implement and regulatewelfare state policies. Lately, local government has come under increasedpressure from ambitious national authorities trying to regulate welfareservices in even more detail (Baldersheim and Rose 2003). This could resultin increased bureaucracy.
So the question, how ill was the patient before the agency reform, must beanswered in this way: there is no clear evidence that bureaucracy andhierarchy have been a dominant aspect of the average Norwegianmunicipality. There is stronger empirical support for saying that localgovernment culture is characterized by dialogue, cooperation and decen-tralization. I have no evidence from documents or interviews and thereforeno reason to believe that the situation in the 12 municipalities in this studydeviated significantly from this general pattern. So, the patient does notseem to have suffered to any great extent from the disease indicated by thediagnosis after all.
5.3.2. Contradictory diagnoses. When two former KPMG consultants wereinterviewed together, an astonishing aspect was noted: their story containedtwo contradictory diagnoses on the situation in Norwegian local govern-ment. The contradiction was not in the sense that they disagreed andpresented separate diagnoses, but more that the story they told about whatwas wrong had some inner inconsistencies. The first diagnosis wentsomething like this: the problem with local government is that there is toomuch bureaucracy and hierarchy. This stifles speed, flexibility andinnovation, making services more expensive and of lower quality, andcreating frustration and dissatisfaction among users and service providers.The result is waste and overspending. This philosophy is also visible in thereport cited earlier in this paper (Noraberg Consulting AS, undated report).
The second diagnosis went in the opposite direction: the problem with localgovernment is that there is too little discipline and too little respect for the rulesof the game. Somemanagers are running schools, homes for the elderly, etc., asif these were their private practices. ‘Budgets are sacred. Managers spendingmore than their budgets should lose their rights’.As to economicmanagement,there has to be a Stalinist regime: ‘. . . not much humanism in that. . .’, ‘it is theeconomy that counts – all else is purely ornamental.’
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These two inconsistent diagnoses suggest that the analytic process behindthem is rather impressionistic, anecdotal, selective and pragmatic.
5.3.3. Cure-driven diagnosis. In the early days of the agency reform,KPMG seems to have been the dominant provider of ideas, analyses andimplementation support. Nearly all of the municipalities in this study hadengaged KPMG at some stage in their reform process as well as many otherstoo. This probably explains why the agency model has become known as‘the KPMG model’ among Norwegian municipalities.
KPMG seems to have started its work directed at Norwegian localgovernment around 1997. According to an interview with one of the centralKPMG consultants, much of the initial inspiration came through KPMG inEngland, including the use of agencies, the NPM movement, andparticularly from the privatisation and competition philosophy of Thatch-erism. This wave of ideas first went to Denmark and Sweden before theycame here in a modified version. According to former KPMG consultants,their prime source of inspiration was Danish municipalities.
It seems, then, that KPMG, Norway, on the basis of NPM ideas fromEngland and modified through experience in Denmark and Sweden,developed a Norwegian version of the agency model, which was then soldto Norwegian municipalities. According to CEOs, deputy CEOs and agencymanagers in the municipalities, the model presented was recognisable andstandardised, and not so much tailor-made as KPMG tried to suggest. Thisindicates that ‘the KPMG model’ is not so much a cure based on thediagnosis of individual municipalities as a standardised treatment based ongeneral and popular, sometimes ill-founded pre-conceptions about what iswrong with local government. This ‘one-cure-fits-all’ approach is a strongindicator that the agency reform may be understood as a cure-drivensolution and not necessarily the best ‘medicine’ for all municipal illnesses.
Consequently, one reason why post-bureaucracy leads to more formaliza-tion could be found here: inadequate knowledge and therefore inaccurate oreven wrong diagnoses of the individual patient cures with contradictorytreatments (both more freedom and more ‘Stalinism’) and commerciallymotivated distribution of standardized cures.
In this case, lack of rational calculation seems obvious. Since localpoliticians were the ones who made the final decision to introduce theagency model, important reasons for bounded rationality should besearched for in the political process. First of all, local politicians and localcivil servants had limited knowledge of the reform model. That is why theybecame so dependent on the consultancy firm KPMG. Even in a case wherethe CEO proposed a three-level model instead of the two-level model putforward by KPMG, local politicians opted for the KPMG alternative. Asthe KPMG model spread and became increasingly popular, that in itselfserved as an argument for adopting the model. The attractiveness of themodel was further enhanced by its combination of businesslike effectiveness
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and operational empowerment. All this served as proof that the agencymodel was the right alternative for contemporary and future challenges.Second, political decision-making as such is characterised by compromises(Allison 1971), groupthink (Janis 1982) and sometimes an increasedwillingness to take risks (Stoner 1961). These are all processes thatcontribute to reducing rationality.
5.4. Linguistic problems
The last explanation of why post-bureaucracy seems to lead to moreformalisation has to do with the use of words and concepts. Thisexplanation obviously has some links to the rhetorical explanation. Thereason why it is treated separately, though, is that while rhetoric isintentional, linguistic problems tend to be less so, surfacing more or less atdifferent stages in the decision-making process.
Concepts like bureaucracy and post-bureaucracy are elusive andunclear, communicating different meanings to different users. A funda-mental problem stems from the popular usage of these words wherebureaucracy stands for something bad, and consequently everything thatseems to represent an alternative stands for something good. In thepractical world of reform, this creates a lot of linguistic confusionbecause reforms containing obvious bureaucratic elements like ‘let themanagers manage’, performance control, management contracts, regularreporting, etc., cannot be called by their right name. Such reforms wouldbecome linguistically ‘polluted’ and thereby unmarketable. Therefore,there seems to be a tendency to conceal such elements and to under-communicate or even deny their existence, not necessarily as an act ofbad faith, but perhaps more often as an unconscious process. Again, thiscontributes to bounded rationality.
This section will reflect on the different understandings of bureaucracythat can be interpreted from the interviews and written reports anddocuments. Basically, there seem to be at least three ways to definebureaucracy:
1. Bureaucracy is identical to the ideal-type bureaucracy defined anddescribed by Max Weber.
2. Bureaucracy is an old-fashioned organisational form, established anddeveloped in a specific period in human history, suited to the needs ofthat period. It is static and therefore not adaptable to contemporarychallenges.
3. Bureaucracy is a contemporary organisational form with historic rootsand recognisable characteristics, but nonetheless dynamic and adap-table to the needs of time, place and circumstance. Max Weber’s ideal-type bureaucracy is more an inspiration and a measuring rod than astraitjacket.
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In interviews and written documents the second, historic understanding ofbureaucracy seems to dominate. It is also visible in the quote presentedearlier (Noraberg Consulting AS, undated report). The same thinking isrepresented in a book published by the Norwegian Association of Local andRegional Authorities (Helland 2002). Here bureaucracy and especiallyhierarchy are described as major obstacles to flexibility, innovation, servicequality and efficiency. The problem with this and other definitions ofbureaucracy is that they consist of ‘a series of stereotypes’, usually ‘acceptedwithout any empirical evidence other than an occasional anecdote’ (Meierand Hill 2007, p. 52). It comes as no surprise, then, that to the extent thatthis conception of bureaucracy is associated with, or used to describe, aspecific organisation or group of organisations, for instance local govern-ment, it will automatically be classified as old-fashioned and outdated,without further inquiry. This naturally paves the way for reforms that aresaid to supplant or transcend bureaucracy.
Empirical studies referred to earlier in this paper have indicated that thebureaucracy of contemporary Norwegian local government is of the softtype. In reality, the pre-reform municipality was a mixture of a cooperativeculture and traditional public management (Klausen and Stahlberg 1998).The reformers, however, argued as if the typical municipality wasdominated by hard bureaucracy, that is bureaucracy defined in terms ofideal-type characteristics or historic stereotypes. They promoted the agencyreform by describing it in opposite terms: as a flat, flexible, responsive andnon-bureaucratic organization. But when the post-reform municipalityarose, it was perplexingly like the pre-reform model. Operational freedomfor agency managers has definitely increased, but for some the change is notbig: ‘When it comes to releasing energy, it is not my experience that theagency reform has contributed in any significant way to that. I feel that Ihad substantial freedom before [the reform]’ (interview with a female agencymanager, heading a primary school).
Even for the 73 per cent majority of the agency managers who are satisfiedand report an increase in operational freedom, the reform has not solved thebasic economic problems. The financial stress therefore makes their freedommore formal than real. In order to meet the economic challenges, at least 4of the 12 municipalities in this study introduced the balanced scorecard orsome other performance measurement system2. In the absence of the oldmiddle management, and with the enormous span of control of the CEOs,this kind of performance control seems inevitable. The adoption ofmanagement quasi-contracts, regulating the relationship between the CEOand the agency managers, should be seen as a part of this new coordinationand control regime. In spite of the obvious formalisation that theseinstruments represent when compared to the more informal pre-reformmunicipal management, reformers are still reluctant to talk about bureau-cracy in relation to the new organisation. Bureaucracy belongs to history.Insofar as the agency reform has succeeded, the post-reform municipality is
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now a non-bureaucratic organization. It is also astonishing to observe thatreformers continue to insist that the structure of the post-reformorganisation has only two management levels, while more than half of theagency managers say that there is a third level; 49 per cent feel that thedeputy CEOs function as a de facto middle management level, and 60 percent feel that the staff and support agencies function as such. In addition,several agency managers report that there is at least one managerial levelbelow their own level, for instance the ward level in nursing homes. So, inthis type of reform discourse, bureaucracy has become a word that loses allcontact with empirical reality. It is treated almost as a dichotomy variable,with bureaucracy and post-bureaucracy representing discrete opposites.Post-bureaucracy is defined more in terms of what it is not than what it is.Thereby, words like bureaucracy and post-bureaucracy lose their value as ameans of communication.
6. Concluding discussion
There seems to be little doubt that many contemporary organisations,including Norwegian local government, are flatter, more disaggregated andmore decentralised than their predecessors. Some reformers and scholarsinterpret these and similar developments as a farewell to bureaucracy andhierarchy. At the same time, formalisation has increased. Relations that afew years ago were predominantly informal are being transformed intohighly formalised quasi-contracts and performance management schemes.So, reforms motivated by ideas of post-bureaucracy, NPM, etc., and sloganslike ‘let the managers manage’, ‘empowerment’, ‘flexibility’ and so forthhave actually led to more bureaucracy. The price, so to speak, for increasedfreedom for operational managers has been an increase in efforts for morecoordination and control from the strategic level. This paradox, withincreased formalisation following in the wake of a post-bureaucratic reform,is, however, not necessarily a paradox at all. It only seems paradoxicalbecause
. rhetoric is primarily aimed at ‘selling’ the agency reform, therebyexaggerating benefits and downplaying negative effects.
. unintended consequences come as a surprise because reformers oftenlack sufficient knowledge or experience of the reform process.
. diagnoses are often ill-founded and wrong. Diagnostic problems arisebecause no thorough examination of the individual case has been madein order to map its specific problems and needs. Instead, diagnoses aremass-produced, superficial and standardised, reflecting managerialfashion, ideological prejudice or commercial interest.
. the understanding of bureaucracy is based on popular stereotypes.Linguistic problems arise when we think of organisations interms of dichotomous variables; organisations are either bureaucratic
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or post- (i.e. non-) bureaucratic. Bureaucracy is defined and associatedwith all that is negative, while everything that is post-, anti- or non-bureaucratic is per definition good.
If we instead conceive of bureaucracy as a continuous variable, with hardbureaucracy at one end of the scale, and soft bureaucracy (post-bureau-cracy?) at the other, we will be better able to interpret, understand andexplain our empirical observations. Bureaucracy becomes a question ofdegree, not of ‘either–or’. Furthermore, since bureaucracy consists of severaldimensions, that is division of labour, hierarchy, rules, etc., it will also bepossible to identify different types of bureaucracy. Let me illustrate what Ihave in mind by combining two of the dimensions of bureaucracy: hierarchyand rules. Both dimensions are especially relevant for the agency reform.For the purpose of this study, these variables are operationalised in thefollowing manner: hierarchy as the number of managerial levels; and rulesas routines, procedures, contracts, criteria, etc., for regulating andcontrolling work, relations, processes, and performance. The number ofvalues on each of the continuous variables are collapsed into only twovalues; few (levels of hierarchy or number of rules) and many. This leaves uswith the following four-square table (Figure 1).
Although this specific figure simplifies empirical reality to a large degree,it helps illustrate the point that as an analytical approach it is more fruitfulthan the dichotomy of bureaucracy versus post-bureaucracy. By introducingmore variables of bureaucracy into the model, we can make it more true toreal life, but also more complex. How does post-bureaucracy fit into thismodel? One possibility is to put it into the square of soft bureaucracy. This,however, seems to run counter to Heckscher’s (1994) purist approach,although there are obvious similarities. If we take his arguments at face
Figure 1. A classification of bureaucracy based on two variables.
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value, post-bureaucracy is an organisational phenomenon completelyoutside this four-square table. Here, his vision meets the limits of myimagination. In my mind, any organisation is characterised by some kind oforder or system, regulating power, work, performance, remuneration,communication, external relations, etc. The system of regulation can becentralised, standardised, detailed, rigid and formalised, but it can also bedecentralised, tailored, general, flexible and informal. Without some kind ofsystem, it is difficult to talk in any meaningful sense about the existence ofan organisation. Therefore, as a concept, post-bureaucracy becomes littlemore than an empty negation of bureaucracy, or perhaps even oforganisation itself.
In this context, there is a need to impart some nuances into theconcept ‘rule’. It could be argued that while rules in the Weberian senseseem to be aimed at standardising work processes and perhaps also skills,rules in the contemporary bureaucracy are more aimed at standardisingoutput (Mintzberg 1983). As such, we are speaking about different typesof rules with different purposes, at least in the analytical sense. The firsttype of rules tend to regulate human behaviour more in detail, whileoutput rules leave more discretion to human agency. Rules aimed atstandardising skills could be said to form a bridge between process rulesand output rules. Recruiting people with specific skills for specific tasks isbased on the condition that process rules are internalised througheducation and training. But education and training are just as much, orperhaps even more, focused on producing output (i.e. service provision)as on regulating process. The professionalisation of local governmentservice provision is very much based on the standardisation of skills.Therefore, producing output is intimately connected to professional workprocesses. The paradox of today’s focus on output is that so much energyis invested in creating complex systems and routines of performancemanagement, introducing time-consuming and costly measuring andreporting mechanisms. So, while standardisation of output seeks towiden professional discretion, performance management tends to limit it.The intention of performance management, therefore, seems to be notonly to direct attention towards results, but to control and disciplinestrong professional interests. As such, this reflects an NPM-inspireddistrust in professional judgment and intent (Flynn 1999, Ferlie andGeraghty 2007). When the routines of performance management becomesufficiently detailed and demanding, they take on a rule-like character,making the de facto distinction between output rules and process rulesalmost negligible. What suffers is the room for professional discretion.
One further comment is necessary concerning rules. Traditional bureau-cratic process rules should not be seen as redundant or outdated in anysense. As a matter of fact, they are vital underpinnings of decision-makingprocesses in the contemporary democratic ‘Rechtsstaat’, giving substantialmeaning to values like predictability, accountability, fairness, equity and
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transparency. The criticism from the NPM tradition that process rulesdamage the flexibility of public sector organisations misses the point; if wewant to preserve constitutional government, these organisations should notbe flexible on all accounts. In other words, it is not only ends that matter,but means are also important.
This paper ends by pointing to two supplementing explanations as to whythe agency reform, inspired by the post- or anti-bureaucratic rhetoric ofNPM, has led to more formalisation of local government, not less.
First, an important aspect of the reform seems to be its ambition to builda new class of professional managers, managers who should be able andwilling to take full responsibility for the activity and the performance oftheir respective agencies. This project for increasing professionalism in localgovernment management also means professionalising the managerialrelations of the organization. Traditional trust has been and still isimportant, but in the era of NPM it is no longer considered enough; trustis not sufficiently reliable, precise or efficient. Explicit performancestandards, incentives and regular performance measurements should beinstalled. Professional managers now have to prove their performancecapability through hard facts, beyond trust. Trust is good, but account-ability in terms of facts and figures is better. Consequently, the managerialrelations of local government are being formalised as part of the agencyreform. As I have mentioned earlier, the increased formalisation is not onlya result of the NPM-inspired drive for professional management, but isperhaps just as much a practical consequence of the increased span ofcontrol for municipal CEOs in the wake of removing middle managementand making hierarchy flatter. Formalisation is a way of compensating forthis decline in direct contact and communication between the strategic andoperational managerial levels.
Second, reforms generally mean a change or shift in the regulative,normative and cognitive institutional elements of an organisation (Scott1995). Thereby, they challenge established routines, relations, values andknowledge. This creates different patterns of reaction: confusion, anxiety,fear, anger, resistance, ridicule, cynicism, apathy, etc. (Stensaker et al. 2002).The bigger the regulative, normative and cognitive incompatibility betweenthe old and the new, the larger the reactions will probably be, andconsequently the more challenging the implementation process. In thiscontext, formalisation can be seen as a strategy to bridge the gap betweenthe pre-reform and the post-reform organisation and to show the waythrough new and unknown territory. Formalisation thereby supports theorganisational learning process and helps implement the new regulative,normative and cognitive order. If this interpretation is correct, the need forformalisation will gradually be reduced as time goes by. On the other hand,the increased span of control will probably work in the opposite direction,maintaining the higher level of formalisation once it has been installed. Inaddition, if formalisation is seen as an expression of a low-trust regime, it
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might damage the traditional high-trust culture of Norwegian localgovernment, thereby making formalisation harder to reduce.
Notes
1. In this paper, the term agency is used. The Norwegian term for agency is ‘resultatenhet’. The
term resultatenhet may be translated in different ways, for instance as ‘service-providing
unit’, ‘cost unit’, ‘performance unit’, ‘agency’, etc. Whatever it is called, these units are
schools, kindergartens, homes for the elderly, home care, financial department, ICT
department, etc., providing services to citizens or internal support to top management, to
local political councils and boards and to service-providing units.
2. Only those municipalities were included where there was 100 per cent agreement among
the respondents that balanced scorecard is being used. As for the eight remaining
municipalities, the agreement ranges from 10 per cent to 67 per cent, a result which is in itself
fascinating.
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