Creating public agencies or reforming public bureaucracy?

In reading E. Fivat’s dissertation proposal, one wonders whether creating agencies (“agentification”) is the appropriate solution to make public organizations more effective and efficient. Public bureaucracies have been blamed for not being effective and efficient enough and many reforms have been attempted. It is argued that one of the causes of public ineffectiveness and inefficiency is the fact that bureaucratic constraints focused on due process (behavioral control in terms of the respect of rules) as well as the public servant status (permanent contract and limited variable compensation) impede individual innovation, flexibility and responsiveness in effectively and efficiently accomplishing public objectives and their associated tasks.

Inspired in part by agency theory, one of the solutions which have been explored is the creation of units (agencies) to which political authorities (their principals) give certain objectives through a contract but agency managers are left autonomous to execute such contract, in particular, being able to rely on employment contracts and not on public servant contracts. As a result, to a large extent agencies are supposed not to be constrained by public administration procedures and rules. However, some argue that this theoretical design is oftentimes not fully implemented. Whereas agencies do in fact use employment contracts, it is said they are often encumbered by a myriad of ex-post controls by their principals (i.e. minister and financial controlling organs) in the name of accountability (i.e. to provide an account of their behavior and performance).

Is there any empirical evidence that agencies are more effective and efficient than the former bureaucratic units which performed the same tasks? Should public bureaucracies be allowed to use employment contracts and variable compensation?

E. Fivat. (2011). Le rôle de la confiance et son impact sur l’autonomie et le contrôle dans différents modes de gouvernance. IDHEAP, Lausanne.

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