CHAPTER FOUR

ANALYZING THE ENVIRONMENT OF PUBLIC ORGANIZATIONS

The historical overview in Chapter Two was intended to make clear why organizational environment became one of the most important concepts in the study of management and organizations. The early contributors to the study of organizations concentrated on the middle parts of the framework in Figure 1.1—on structures, mainly, with limited attention to certain aspects of tasks, processes, incentives, and people. They placed little emphasis on an organization’s environments or its managers’ responses to them. Contemporary researchers and experts now regard organizational environments, and the challenges of dealing with them, as absolutely crucial to analyzing and leading organizations. This is certainly true for public organizations, because they are often more open than other organizations to certain types of environmental pressures and constraints. Public organizations tend to be subject to more directions and interventions from political actors and authorities who seek to control them.

Management experts now exhort managers to monitor and analyze their environments, and consultants regularly lead executives and task forces through such analyses as part of strategic planning sessions (described further in Chapter Seven). In spite of all the attention to organizational environments, however, the management field provides no exact science for analyzing them, in part because the concept is complex and difficult in various ways. Public organizations are often embedded in larger governmental structures. The Food and Drug Administration, for example, operates as a subunit of the U.S. Department of Health and Human Services, which in turn is a component of the U.S. federal government. The larger units of government impose system-wide rules on all agencies in the government, covering such administrative processes as human resources management, purchasing and procurement, and the budgeting process. In many agencies, different subunits operate in very different policy areas and often have stronger alliances with legislators and interest groups than with the agency director (Kaufman, 1979; Radin, 2002, p. 35; Seidman and Gilmour, 1986). All this can make it hard to say where an agency’s environment begins and ends.

In addition, members of an organization often enact its environment (Scott, 2003, p. 141; Weick, 1979, p. 169). They consciously or unconsciously choose which matters to pay attention to and what to try to change. They make choices about the organization’s domain, or field of operations, including the geographic areas, markets, clients, products, and services on which the organization will focus. Decisions about an organization’s domain determine the nature of its environment. For example, some years ago leaders of the Ohio Bureau of Mental Retardation adopted a “deinstitutionalization” policy, moving patients out of the large treatment facilities operated by the agency and into smaller, private sector facilities. This changed the boundaries of the agency, its relations with its clients, and the set of organizations with which the agency worked. Organizations can sometimes create or shape their environments as much as they simply react to them. This complicates the analysis of environments, but it makes it all the more important.

These complications about the concept of an organization’s environment may explain the rather surprising disappearance of this concept from the work of some major organization theorists. Authors who developed and championed the concept (Aldrich, 1979) have more recently produced books that mention the term sparingly and do not treat it as a primary concept, with no explanation of its demise (Aldrich, 1999; Baum and McKelvey, 1999). The term organizational environment appears much less frequently in the titles of articles in prominent journals. In fact, as described shortly, most of the contemporary analyses of organizations and management employ concepts relevant to organizations’ relations with their operating contexts or environments. Authors may increasingly feel that new concepts—such as networks, stakeholders, and boundaries—discussed in this chapter have more value than the concept of an organizational environment. In addition, prominent authors still employ the concept of organizational environment in important ways (Daft, 2013, chap. 4, 5, and 6; Hall and Tolbert, 2004; Kalleberg, Knoke, Marsden, and Spaeth, 1996, chap. 6; Scott, 2003, chap. 6).

General Dimensions of Organizational Environments

One typical approach to working through some of the complexity of environmental analysis is simply to lay out the general sectors or clusters of conditions, such as those in Exhibit 4.1, that an organization encounters. Consultants and experts often use such frameworks to lead groups in organizations through an environmental scan (described in Chapter Seven) as part of a strategic planning project or in a general assessment of the organization. For example, the U.S. Social Security Administration (2000) used an environmental scan in their efforts to develop a major vision statement.

Anyone can provide examples of ways in which such conditions influence organizations. Technological and scientific developments gave birth to many government agencies, such as the Environmental Protection Agency and the Nuclear Regulatory Commission. Technological developments continually influence the operation of government agencies; these agencies must struggle to keep up with advances in computer technology, communications, and other areas. Congress passed legislation mandating vast changes at the U.S. Internal Revenue Service largely as a result of difficulties the agency had in developing and adapting to new information technologies for processing tax returns (Bozeman, 2002b). Demographic trends currently receive much attention, as analysts project increasing percentages of women and minorities in government employment. This raises the challenge of managing diversity in the workplace (Ospina, 1996; Selden, 1997). Mainly due to the increasing size of the population of retired Americans, the Social Security Administration (SSA) projected that between 1999 and 2010 the beneficiaries of its main programs will increase from about fifty million people to more than sixty million. Due to this increase and changes in laws about Social Security, such as legislation requiring more services to beneficiaries with disabilities, the agency projected the need for an increase of fifteen thousand to twenty thousand work years of employee effort during this period if the agency continued to use its current procedures (U.S. Social Security Administration, 2000, p. 6). Public administrators attend to legal developments, such as changes in public officials’ legal liability for their decisions (Cooper, 2000; Koenig and O’Leary, 1996; Rosenbloom, Kravchuck, and Rosenbloom, 2001; Rosenbloom and O’Leary, 1997). As for the political dimensions of organizational environments, much of the rest of this book, but especially this chapter and the next, pertains to such influences.

Another common approach to analyzing environments is to list specific elements of an organization’s environment, such as important stakeholders, or organizations and groups that have an important interest in the organization (Harrison and Freeman, 1999). A typical depiction of such elements of the environment might include competitors, customers, suppliers, regulators, unions, and associates. Similarly, Porter (1998) analyzed the major influences on competition within an industry: industry competitors, buyers, suppliers, new entrants, and substitutes. Consultants working with organizations on strategy formulation sometimes use such frameworks in a stakeholder analysis, to identify key stakeholders of the organization and their particular claims and roles (Bryson, 1995).

Research on Environmental Variations

Organizational researchers have also produced more specific evidence about the effects of environments. Selznick (1966; see also Hall and Tolbert, 2004) helped lead this trend with a study of a government corporation, the Tennessee Valley Authority (TVA). He found that environmental influences play a crucial role in institutionalization processes in organizations. Values, goals, and procedures become strongly established, not necessarily because managers choose them as the most efficient means of production, but in large part as a result of environmental influences and exchanges. The TVA, for example, engaged in co-optation, absorbing new elements into its leadership to avert threats to its viability. The U.S. government established the TVA during the New Deal years to develop electric power and foster economic development along the Tennessee River. TVA officials involved local organizations and groups in decisions. This gained support for the TVA, but it also brought in these groups as strong influences on the organization’s values and priorities. In some cases, these groups shut out rival groups, putting the TVA in conflict with other New Deal programs with which it should have been allied. Thus an organization’s needs for external support and its consequent exchanges with outside entities can heavily influence its primary values and goals.

Later research made the importance of the external environment increasingly clear. Prominent studies that led to the emergence of contingency theory found more and more evidence of the impact of environmental uncertainty and complexity (Donaldson, 2001). Burns and Stalker (1961), for example, studied a set of English firms and classified them into two categories. Mechanistic firms emphasized a clear hierarchy of authority, with (1) direction and communication dependent on the chain of command and (2) specialized, formally defined individual tasks. Other firms were more organic, with less emphasis on hierarchy and more lateral communication and networking. Tasks were less clearly defined and changed more frequently. Managers in these firms sometimes spurned organizational charts as too confining or even dangerous. The mechanistic firms succeeded in stable environments—those with relative stability in products, technology, competitors, and demand for their products. In such a setting, they could take advantage of the efficiencies of their more traditional structures. Other firms, such as electronics manufacturers, faced less stable environmental conditions, with rapid fluctuations in technology, products, competitors, and demand. The more organic firms, which were more flexible and adaptive, succeeded in this setting.

Lawrence and Lorsch (1967) studied firms in three industries whose environments exhibited different degrees of uncertainty as a result of more or less rapid changes and greater or lesser complexity. As changes in the environment became more rapid and frequent, and as the environment became more complex, these conditions imposed more uncertainty on decision makers in the organizations. The most successful firms had structures with a degree of complexity matching that of the environment. Firms in more stable environments could manage with relatively traditional, hierarchical structures. Firms in more unstable, uncertain environments could not.

In addition, different subunits of these firms faced different environments. As these different environments imposed more uncertainty on the subunits’ managers, the successful firms became more differentiated; that is, the subunits differed more and more from one another in their goals, the time frames for their work, and the formality of their structure. However, this increased the potential for conflict and disorganization. Successful firms in more uncertain environments responded with higher levels of integration. They had more methods for coordinating the highly differentiated units, such as liaison positions, coordinating teams, and conflict-resolution processes. This combination of differentiation and integration made the successful firms in more uncertain environments more internally complex. The authors’ general conclusion advanced one of the prominent components of the contingency idea: organizations must adopt structures that are as complex as the environments they confront.

As many studies of this sort accumulated, James Thompson (1967) synthesized the growing body of research in a way that provided additional insights. Organizations, he said, must contend with the demands of their tasks and their environments. They do so by trying to isolate the technical core—their primary work processes—so that their work can proceed smoothly. They use buffering methods to try to provide stable conditions for the technical core. For example, they use boundary-spanning units—such as inventory, personnel recruitment, and research and development units—to try to create smooth flows of information and resources. Yet environmental conditions can strain this process. In more complex environments—with more geographical areas, product markets, competitors, and other factors—organizations must become more internally complex. They do so by establishing different subunits to attend to the different environmental segments. More unstable environments create a need for greater decentralization of authority to these subunits and a less formal structure. The shifting environment requires rapid decisions and changes, and it takes too long for information and decisions to travel up and down a strict hierarchy.

Researchers have debated the adequacy of contingency theory (Hall and Tolbert, 2004), and many have moved off in other directions. Yet recent books still emphasize the importance and implications of contingency theory perspectives on organizational environments (Daft, 2013; Donaldson, 2001). An organization’s structure must be adapted to environmental contingencies as well as other contingencies. In simple, homogeneous, stable environments, organizations can successfully adopt mechanistic and centralized structures. In more complex and unstable environments, successful organizations must be organic and decentralized, partitioned into many departments with correspondingly elaborate integrating processes and processes for managing the organization’s boundaries and relation with the environment.

Scholars have also further developed contingency-theory concepts into carefully conceived environmental dimensions. Exhibit 4.2 illustrates prominent examples that researchers still use (Berman, Wicks, Kotha, and Jones, 1999). Clearly these dimensions apply to public organizations. Tax resentment and pressures to cut government spending in recent decades show the importance of environmental capacity (munificence or resource scarcity) for public organizations. The federal government has a regionalized structure, reflecting the influence of environmental heterogeneity and dispersion. Even organization theorists who attach little significance to the public-private distinction agree that public organizations face particular complications in domain consensus and choice (Hall and Tolbert, 2004; Meyer, 1979; Miles, 1980; Van de Ven and Ferry, 1980). Jurisdictional boundaries and numerous authorities, laws, and political interests complicate decisions about where, when, and how a public organization operates. Research strongly supports the observation that public status influences strategic domain choices (Mascarenhas, 1989), although later chapters show how public managers often gain considerable leeway to maneuver.

Turbulence and interconnectedness characterize the environments of most public organizations. Studies of public policy implementation provide numerous accounts of policy initiatives that had many unanticipated consequences and implications for other groups. Public managers commonly encounter situations in which a decision touches off a furor, arousing opposition from groups that they would never have anticipated reacting (Chase and Reveal, 1983; Cohen and Eimicke, 1998). Similarly, environmental stability, dynamism, and change rates have major implications for public organizations. Rapid turnover of political appointees at the tops of agencies and rapid external shifts in political priorities have major influences on public organizations and the people in them. For example, researchers find evidence that turbulence and instability in the environments of public agencies affect the morale of their managers and influence their acceptance of reforms (Golden, 2000; Rubin, 1985).

These environmental concepts are useful for enhancing our understanding of public organizations. As this discussion shows, however, no conclusive, coherent theory of organizations explains how these dimensions are related to one another and to organizations. In addition, organization theorists have defined these concepts at a very general level. Certainly they apply to public organizations, but to really understand public organizations we need to add more specific content to the environmental dimensions. There is a body of useful research and writing on public bureaucracies that can help in this task, to which this discussion will turn after a review of recent trends in research by organizational theorists relevant to the analysis of organizational environments.

Recent Trends in Research on Organizational Environments

Some of the most prominent recent research in organization theory concentrates on organizational environments and moves beyond contingency theory (Aldrich, 1999, chap. 3; Hall and Tolbert, 2004, chap. 12). Population ecology theorists, for example, analyze the origin, development, and decline of populations of organizations using biological concepts (Hannan and Freeman, 1989). Just as biologists analyze how certain populations of organisms develop to take advantage of a particular ecological niche, population ecologists analyze the development of populations of organizations within certain niches (characterized by their unique combinations of available resources and constraints).

Some population ecology theorists reject the contingency-theory depiction of organizations as rational, speedy adapters to environmental change. Indeed, they see environments as selecting organizational populations in a Darwinian fashion (Hannan and Freeman, 1989). The population ecology perspective analyzes how populations of organizations go through processes of variation, selection, and retention. Variation involves the continuing appearance of new forms of organization, both planned and unplanned. Then the selection process determines which forms of organization will survive and prosper, on the basis of their fit with the environment or their capacity to fill an environmental niche. A niche is a distinct combination of resources and constraints that supports the particular form of organization. Retention processes serve to continue the form through such environmental influences as pressures on the organizations to maintain past practices, and through such internal processes as employees developing common outlooks. Critics have raised questions about this perspective, arguing, for example, that its broad biological analogies devote no attention to human strategic decisions and motives in organizations (Van de Ven, 1979), and that its proponents have applied it mostly to populations of small organizations, leaving open questions about how it applies to huge government agencies and business firms.

Aldrich (1999) advanced an evolutionary perspective on populations of organizations that he described as more general and overarching than the population ecology perspective but that obviously draw upon it. He said that the approach also has important connections to the perspectives described later in this chapter. It includes the processes of variation, selection, and retention, with elaborations. All three of these processes can operate on organizations from external or internal sources. Variations in routines, procedures, and organizational forms can be intentional, as individuals seek solutions to problems, or blind, as a result of mistakes or surprises. In addition, there is a fourth process, struggle, in which individuals, organizations, and populations of organizations contend with each other over scarce resources and conflicting incentives and goals. Aldrich did not undertake to describe specific implications or offer advice for managers, but his perspective goes even further than the population ecology approach, providing insights about ways in which organizational populations (1) are integral to processes of social change; (2) show much more diversity of form than some research, such as the contingency approaches, has recognized; and (3) continually emerge and evolve. Both the population-ecology and the evolutionary perspectives, however, offer insights about historical and environmental forces that influence organizational change and survival, reminding us that any model for organizational analysis should remain sensitive to growth, decline, or other variations in organizational forms. For example, observers of very innovative public executives have argued that these executives appeared to engage in an “uncommon rationality” in which they “see new possibilities offered by an evolving historical situation” and take advantage of political and technological developments that offer such possibilities (Doig and Hargrove, 1990, pp. 10–11).

Resource-dependence theories analyze how organizational managers try to obtain crucial resources from their environment, such as materials, money, people, support services, and technological knowledge. Organizations can adapt their structures in response to their environment, or they can change their niches. They can try to change the environment by creating demand or seeking government actions that can help them. They can try to manipulate the way the environment is perceived by the people in the organization and those outside it. In these and other ways, they can pursue essential resources. These theorists stress the importance of internal and external political processes in the quest for resources. Chapter Six discusses how their analysis of resources in connection with internal power relationships applies to public organizations (Daft, 2013; Pfeffer and Salancik, 1978, pp. 277–278).

Transaction-costs theories analyze managerial decisions to purchase a needed good or service from outside, as opposed to producing it within the organization (Williamson, 1975, 1981). Transactions with other organizations and people become more costly as contracts become harder to write and supervise. The organization may need a service particular to itself, or it may have problems supervising contractors. Managers may try to hold down such costs under certain conditions by merging with another organization or permanently hiring a person with whom they had been contracting. These theories, which are much more elaborate than summarized here, have received much attention in business management research and have implications for government contracting and other governmental issues (Aldrich, 1999; Bryson, 1995). Yet they usually assume that managers in firms strive to hold down costs to maximize profits. Governmental contracting involves more political criteria and accountability, and different or nonexistent profit motives, to the point that Williamson (1981) expressed uncertainty as to whether transaction-cost economics applies to nonmarket organizations. Later, however, he examined public bureaucracy from the perspective of transaction cost economics (Williamson, 1999). He concluded that the public bureaucracy, like other alternative modes of governance (such as markets, firms, and hybrids), is well suited to some transactions and poorly suited to others. Williamson argued that public bureaucracy handles “sovereign transactions,” such as foreign affairs, more effectively and efficiently than other modes, such as firms and markets.

Studies of institutionalization processes hark back to the work of Selznick (1966). They analyze how certain values, structures, and procedures become institutionalized (that is, widely accepted as the proper way of doing things) in and among organizations. Tolbert and Zucker (1983) showed that many local governments reformed their civil service systems by adopting merit systems, because merit systems had become widely accepted as the proper form of personnel system for such governments. In addition, the federal government applied pressures for the adoption of merit systems. Meyer and Rowan (1983) argued that organizations such as schools often adopt structures on the basis of “myth and ceremony.” They do things according to prevailing beliefs and not because the practices are clearly the means to efficiency or effectiveness. DiMaggio and Powell (1983) showed that organizations in the same field come to look like one another as a result of shared ideas about how that type of organization should look. Dobbin and his colleagues (1988) found that public organizations have more provisions for due process, such as affirmative action programs, than do private organizations. These studies have obvious relevance for public organizations. Pfeffer (1982) suggested that this approach is particularly applicable to the public sector, where performance criteria are often less clear. There, beliefs about proper procedures may be more readily substituted for firmly validated procedures linked to clear outcomes and objectives. Public and nonprofit managers encounter many instances in which new procedures or schemes, such as a new budgeting technique, become widely implemented as the latest, best approach—whether or not anyone can prove that they are. In addition, some of the research mentioned earlier shows how external institutions such as government impose structures and procedures on organizations. Some of these theorists disagreed among themselves over these different views of institutionalization—whether it results from the spread of beliefs and myths or from the influence of external institutions such as government (Scott, 1987).

Partly to resolve such divergence in concepts of institutionalism, researchers drew distinctions between types of institutionalization processes that lead to institutional isomorphism—a wonderfully tortured bit of jargon that refers to organizations and other institutions becoming similar or identical to each other in form (Dimaggio and Powell, 1983; Scott, 2003, pp. 134–141). This institutionalization of similar forms can come from coercive isomorphism, in which they have to comply with similar laws and regulations. Normative isomorphism comes from compliance with professional and moral norms such as those imposed through accreditation or certification processes by professional associations. Mimetic isomorphism occurs when organizations and other entities imitate each other, on the basis of a prevailing orthodoxy or culturally supported beliefs about the proper structures and procedures. Frumkin and Galaskiewicz (2004) used the data from the National Organizations Survey, a nationally represented sample of organizations, to examine whether public, private, and nonprofit organizations tended to differ in the incidence of these types of institutionalization processes. They found that coercive, normative, and mimetic effects were stronger for government establishments than for business establishments.

These developments show how elaborate and diverse the work on organizational environments has become, and each one provides insights. In fact, scholars are currently arguing more and more frequently that there is a need to bring these models together rather than argue about which is the best one (Aldrich, 1999; Hall and Tolbert, 2004). Obviously they all deal with processes that influence organizations in some combination, and all are true to some degree.

The Political and Institutional Environments of Public Organizations

The work on organizational environments provides a number of insights, many of them applicable to public organizations. The preceding review of the literature on organizational environments also shows, however, why people interested in public organizations call for more complete attention to public sector environments. The contingency-theory researchers express environmental dimensions very generally. They pay little attention to whether government ownership makes a difference or whether it matters if an organization sells its outputs in economic markets. They depict organizations, usually business firms, as autonomously adapting to environmental contingencies. Political scientists, however, have for a long time deemed it obvious that external political authorities often directly mandate the structures of public agencies, regardless of environmental uncertainty (Pitt and Smith, 1981; Warwick, 1975). The most current perspectives on organizational environments bring government into the picture, but they also express their concepts very generally, subsuming governmental influences under broader concepts.

Major Components and Dimensions

Public executives commenting on public management and political scientists and economists writing about public organizations typically depict organizational environments in ways similar to the conceptual framework shown in Exhibit 4.3 (Brudney, Hebert, and Wright, 1999; Downs, 1967; Dunn, 1997; Dunn and Legge, 2002; Hood and Dunsire, 1981; Lynn, Heinrich, and Hill, 2000; Meier and Bothe, 2007; Pitt and Smith, 1981; Stillman, 2004; Wamsley and Zald, 1973; Warwick, 1975; Wilson, 1989). One also needs to recognize that the environmental pressures on public organizations, as with all organizations, are becoming more global in nature (Welch and Wong, 2001a, 2001b). The rest of this chapter discusses the top part of the exhibit, concerned with general values and institutions. The next chapter covers the bottom portion, dealing with institutions, entities, and actors.

General Institutions and Values of the Political Economy

Chapter Two defined public agencies as organizations owned and funded by government. They operate under political authority and without economic markets for their outputs. The political system of the nation and its traditions, institutions, and values heavily influence the exercise of this political authority. The U.S. Constitution formally states some of these values and establishes some of the nation’s primary public institutions and rules of governance. Legislation and court cases have further defined and applied them. Rosenbloom and O’Leary (1997) observed that the personnel systems in government are “law-bound.” That observation applies to many other aspects of management and organization in government agencies as well.

Other values and rules receive less formal codification but still have great influence. For example, Americans traditionally have demanded that government agencies operate with businesslike standards of efficiency, although the Constitution nowhere explicitly expresses this criterion (Waldo, [1947] 1984). Relatedly, the nation maintains a free-enterprise system that affords considerable autonomy to businesses and considerable respect for business values (Lindblom, 1977; Waldo, [1947] 1984). These values are not clearly and specifically codified in the Constitution. According to MacDonald (1987), the Constitution actually lacks some of the provisions necessary for a free-enterprise system, in part because some of the framers considered certain economic activities, such as trading debt instruments, to be immoral. Full development of the necessary governmental basis for a free-enterprise system required the actions of Alexander Hamilton, the first secretary of the treasury. Among other steps, he established provisions for the use of government debt as a source of capital for corporations. MacDonald, a conservative, would almost certainly disavow the conclusion that the private enterprise system in the United States was created largely through the efforts of a government bureaucrat, using government funding. More generally, however, these examples illustrate the existence, through formally codified instruments and less formally codified conditions, of general values and institutional arrangements that shape the operation of public authority.

These general values and institutional arrangements in turn influence the values, constraints, and performance criteria of public organizations. They sound abstract, but they link directly to practical challenges and responsibilities for public organizations and managers.

Constitutional Provisions

The Constitution places limits on the government and guarantees certain rights to citizens. These include provisions for freedom of expression and the press, equal protection under the law, and protections against the denial of life, liberty, or property without due process of law. The provisions for freedom of association and expression and freedom of the press empower media representatives, political parties, and interest groups to assess, criticize, and seek to influence the performance of government agencies, in ways discussed in the next chapter.

Such provisions as those for equal protection and due process also have major implications for the operations of public organizations. The equal protection provisions, for example, provided some of the underlying principles and precedents for affirmative action requirements. The requirement for legal due process requires administrative due process as well and acts as one major form of control over public bureaucracies and bureaucrats (West, 1995, chap. 2). Agencies are often required to give notice of certain actions and to adhere to disclosure rules, to hold open hearings about their decisions, and to establish procedures for appealing agency decisions. For example, the Administrative Procedures Act requires federal agencies to adhere to certain procedures in rule making (and other legislation has established similar requirements at other levels of government). When the Department of Education makes rules about student loans or the SSA makes rules about claims for coverage under its disability programs, the agencies have to adhere to such rule-making procedures. If the SSA denies or revokes an applicant’s disability coverage, the applicant has the right to adjudication procedures, which may involve a hearing conducted by an administrative law judge. These requirements strongly influence the agency’s management of disability cases and the work of individual caseworkers. In general, the requirement for all the appeals and hearings conflicts with the agency’s goal of minimizing costs and maximizing efficiency of operations. More subtly, it raises complex issues about how efficiency relates to the fair handling of individual cases by individual caseworkers (Mashaw, 1983). Chapters Eight and Ten show evidence that rules and procedures for disciplining and firing employees in the public service, based in part on due process principles, create one of the sharpest differences between public and private organizations confirmed by research. These examples illustrate how general constitutional principles that seem abstract actually translate into a set of immediate challenges in organizational behavior and management.

Democratic elections are another feature of the political system in the United States and other countries that has direct implications for organization and management. The electoral process produces regular, or at least frequent, changes in chief executives, legislative officials, and the political appointees who come and go with them. These changes in leadership often mean frequent changes in the top-level leadership of public agencies—every two years, for many agencies—and often bring with them shifts in priorities that mean changes in agencies’ focus and sometimes in their power, their influence, and the resources available for their people and subunits.

The Constitution also establishes a federal system that allocates authority to different levels of government in ways that influence the organization and management of public agencies. State governments require that local governments establish certain offices and officers, such as sheriffs and judges, thereby specifying major features of the organizational structure of those governments. State legislation may mandate a formula to be used in setting the salaries of those officials. Many federal programs operate by granting or channeling funds to states and localities, often with various specifications about the structure and operations of the programs at those levels.

A particularly dramatic example of the way societal values and institutions can influence public organizations comes from the provision in the Constitution for separation of powers. As indicated in Exhibit 4.3 and discussed shortly, government agencies face various pressures to provide efficient, effective operations. Separation of powers, however, represents a system that is explicitly designed with less emphasis on efficiency than on constraining the power of government authorities (Wilson, 1989). In the Federalist Papers, James Madison discussed the constitutional provision for dividing power among the branches of government as a way of constraining power. He pointed out that a strong central executive authority might be the most efficient organizational arrangement. But the government of the United States, he wrote, was instead being purposefully designed to constrain authority by dividing it among institutions. In one of the great exercises of applied psychology in history, he pointed out that if humans were angels, no such arrangements would be necessary. But because they are not, and because power can corrupt some people and oppress others, the new government would set ambition against ambition, dividing authority among the branches of government so that they would keep one another in check. Lower levels of government in the United States are designed with similar patterns of divided authority. For the organization and management of agencies, these arrangements have dramatic implications, because they subject the organizations and their managers to multiple authorities and sources of direction that are in part designed to conflict with one another. From its inception, the American political system has thus embodied a dynamic tension among conflicting values, principles, and authorities.

The controversy over whether this system works as intended never ends. Nevertheless, the political authorities and actors representing these broader values and principles impose on public organizations numerous performance criteria, such as those listed in Exhibit 4.3. Authors use various terms to express the diversity of these criteria. Fried (1976), for example, referred to democracy, efficiency, and legality as the major performance criteria for the public bureaucracy in the United States. Rosenbloom, Kravchuk, and Rosenbloom (2008) consider law, management, and politics to be the three dominant sources of administrative criteria. Putnam (1993) sought to evaluate the performance of government according to its responsiveness to its constituents and its efficiency in conducting the public’s business. Exhibit 4.3 uses Meier and Bothe’s (2007) distinction between competence and responsiveness criteria.

Competence Values

Public organizations operate under pressure to perform competently. Demands for efficiency come from all corners. Newspapers and television news departments doggedly pursue indications of wasteful uses of public funds at all levels of government. Political candidates and elected officials attack examples of waste, such as apparently excessive costs for components of military weaponry. The U.S. General Accounting Office (GAO), auditors general at the state and local levels, and other oversight agencies conduct audits of government programs, with an emphasis on efficiency. Special commissions, such as the Grace Commission (organized under the Reagan administration), investigate wasteful or inefficient practices in government. Similar commissions have been appointed in many states to examine state government operations and attack inefficiency. The Clinton administration’s National Performance Review (described more fully in Chapter Fourteen) emphasized streamlining federal operations and, as noted previously in Chapter Three, reduced federal employment by over 324,000 jobs. Inefficiency in federal operations served as one of the justifications for its formation.

But efficiency was not necessarily the highest priority in the design of the U.S. government, as just described. External authorities, the media, interest groups, and citizens also demand effectiveness, timeliness, reliability, and reasonableness, even though these criteria may conflict with efficiency. Efficiency means producing a good or service at the lowest cost possible while maintaining a constant level of quality. These additional criteria are concerned with whether a function is performed well, on time, dependably, and in a logical, sensible way. Government often performs services crucial to individuals or to an entire jurisdiction. People want the job done; efficiency is often a secondary concern. Also, in government the connection between a service and the cost of providing it is often difficult to see and analyze. Evidence that police, firefighters, emergency medical personnel, and the military lack effectiveness or reliability draws sharp responses that may relegate efficiency to a lesser status. In the aftermath of the September 11, 2001, attacks, federal spending for military action in Afghanistan and Iraq, and for homeland security, increased sharply even though a federal budget surplus turned into a deficit during this period. Clearly the imperative of security against terrorism outweighed considerations of frugality and efficiency.

Sometimes one element of the political system stresses some of these criteria more vigorously than others (Pitt and Smith, 1981). This can increase conflicts for public managers, because different authorities emphasize different criteria. For example, the judiciary often appears to emphasize effectiveness over administrative efficiency because of its responsibility to uphold legal standards and constitutional rights. Judges rule that certain criteria must be met in a timely, effective way, virtually regardless of cost and efficiency. The courts have ordered that prisons and jails and affirmative action programs must meet certain standards by certain dates. They protect the right to due process guaranteed to clients of public programs in decisions about whether they can be denied benefits. This increases the burden on public agencies, forcing them to conduct costly hearings and reviews and to maintain extensive documentation. The courts in effect leave the agencies to worry about efficiency and cost considerations. The press and legislators, meanwhile, criticize agencies for slow procedures and expensive operations.

Casework by members of Congress, state legislators, and city council members can also exert pressure for results other than efficiency. (In this context, casework means action by an elected official to plead the case of an individual citizen or group who makes a demand of an agency.) A congressional representative or staff member may call about a constituent’s late Social Security check. A city council member may call a city agency about a complaint from a citizen about garbage collection services. Although these requests can promote effective, reasonable responses by an agency, responding to sporadic, unpredictable demands of this sort can tax both the agency’s efficiency and its effectiveness.

Responsiveness Values

The responsiveness criteria in Exhibit 4.3 often conflict sharply with competence criteria and also with each other. Public managers and organizations remain accountable to various authorities and interests and to the rule of law in general (Radin, 2002; Rosen, 1998; West, 1995). They must comply with laws, rules, and directives issued by government authorities and provide accounts of their compliance as required. Rosen (1998) described a long list of different mechanisms, procedures, and institutions for accountability. In addition, Romzek and Dubnick (1987; also Romzek, 2000) pointed out that public managers and organizations are subject to different types of accountability that have different sources and that exert different levels of direct control over administrators. Hierarchical and legal accountability exert high degrees of control. The hierarchical form involves imposition of rules, procedures, scrutiny, and other controls from within an agency. Legal accountability, in Romzek and Dubnick’s definitions, involves high levels of control from external sources, in the form of oversight and monitoring by external authority. Professional and political accountability involve lower degrees of direct control over individual administrators. Professional accountability involves internal controls in an organization by granting administrators considerable discretion and expecting them to be guided by the norms of their profession. Political accountability also involves a lot of individual leeway to decide how to respond; that is, to external political sources such as legislators or other political stakeholders. The administrator decides whether or not to respond to an influence attempt by such a person or group. Obviously these forms of accountability can overlap and work in combinations, and the relative emphasis they receive can have dramatic consequences. Romzek and Dubnick attributed one of the worst disasters to befall the U.S. space program, the Challenger explosion, to a shift away from professional accountability in NASA to more emphasis on political and hierarchical accountability.

Public organizations and their managers are often expected to remain open and responsive in various ways. Saltzstein (1992) pointed out that bureaucratic responsiveness can be defined in at least two ways—as responsiveness to the public’s wishes or as responsiveness to the interests of the government—and that much of the discourse on the topic takes one or the other of these perspectives. These conflicting pressures sometimes coincide with accountability, in the sense of responding to directives and requests for information from government authorities. Yet public agencies also receive requests for helpful, reasonable, and flexible responses to the needs of clients, interest groups, and the general public. Because they are public organizations, their activities are public business, and citizens and the media demand relative openness to scrutiny (IBM Endowment for the Business of Government, 2002; Wamsley and Zald, 1973). For some programs, the enabling legislation requires citizen advisory panels or commissions to represent community groups, interest groups, and citizens. Administrative procedures at different levels of government require public notice of proposed changes in government agencies’ rules and policies, often with provisions for public hearings at which citizens can attempt to influence the changes. The courts, legislatures, and legal precedent also require that agencies treat citizens fairly and impartially by adhering to principles of due process through appeals and hearings. The Freedom of Information Act and similar legislation at all levels of government require public agencies to make records and information available on request under certain circumstances. Other legislation mandates the privacy of clients’ records under certain circumstances.

A related criterion, representativeness, pertains to various ways in which officials should represent the people and to another means of making government bureaucracy responsive to the needs of citizens. Representativeness is a classic issue in government and public administration, with discourse about the topic dating back centuries. The topic has taken on even more momentum recently, because of the rise of such issues as equal employment opportunity, affirmative action, and diversity. One view of representativeness holds that identifiable ethnic and demographic groups should be represented in government roughly in proportion to their presence in the population. The advisory groups mentioned previously also reflect representativeness criteria in another sense. One important and currently lively line of inquiry pursues the distinction between passive representation—which simply refers to whether members of different groups are present in governmental entities and agencies—and active representation. Active representation occurs when the members of a group actually serve as advocates for the group in decisions about programs and policies. Selden (1997, p. 139; see also Selden, Brudney, and Kellough, 1998) reported evidence that where districts of the Farmers Home Administration had higher percentages of minority supervisors, more rural housing loans went to minorities. Keiser, Wilkins, Meier, and Holland (2002) point out that passive representation has been found to lead to active representation for race but not for gender. They then report evidence of conditions under which passive representation will lead to active representation for gender in educational contexts. For example, in schools with more female administrators, female teachers were associated with more educational success for girls. Similarly, Dolan (2000) reports evidence that female federal executives express attitudes more supportive of women’s issues when they work in agencies with high percentages of women in leadership positions. Brudney, Hebert, and Wright (2000) report evidence that among agency heads in the fifty states, the administrators’ values and perceived organizational role sets influence their tendency to display active representation. Other researchers examined representativeness issues at local government levels as well (Miller, Kerr, and Reid, 1999; Schumann and Fox, 1999). These criteria add to the complex set of objectives and values that public managers and organizations must pursue and seek to balance. In federal agencies and many state and local government organizations, support for diversity is a criterion in the performance evaluations of many executives and managers, so representativeness in this sense joins the list of values and goals they need to pursue.

Later chapters describe additional examples and evidence of how conflicting values and criteria such as those just discussed influence public organizations and pose very practical challenges for public managers. External authorities and political actors intervene in management decisions in pursuit of responsiveness and accountability, and they impose structures and constraints in pursuit of equity, efficiency, and effectiveness. Sharp conflicts over which values should predominate—professional effectiveness or political accountability, for example—lead to major transformations of organizational operations and culture (Maynard-Moody, Stull, and Mitchell, 1986; Romzek, 2000). Before examining these effects on major dimensions of organization and management, however, Chapter Five considers in more depth the elements in the lower portion of Exhibit 4.3: the institutions, entities, and actors that seek to impose these values and criteria, and their exchanges of influence with public organizations.