Transcript Background: What is meant by “market?”

Passage from: Hyde, “Pay for Results…”
Pay for performance systems based on results make several key
assumptions. First, that the organization has readily measurable results that
can be transferred from organizational levels to managerial levels and
ultimately work groups and individuals. Secondly, such systems assume that
managers can and will make both fair and brutally candid assessments of
their subordinates. Finally, they assume that individuals will be motivated
by pay levels that differentiate between those who carry the true workload
of the organization and those— recently identified by the Wall Street
Journal— as employees who are “actively disengaged” at work. The latter
concept is perhaps a new way of looking at the attitudes of those who once
might be called “poor performers” but are in fact individuals who see a job
as time spent on the job as opposed to time spent doing significant work.
These assumptions shed light on which issues
Important to agency theory? (next slide)
Agency Theory as the basis of Market Metaphor
From last slide
• Contract* between
principal and agent as
the focus of the
metaphor
– Contract can be real or
figurative (implied)
Question:
Does the length of the contract
(short-, long-term) matter in using
Agency theory in analyzing public
Organizations? Why/how?
Related Issues:
• Goal incongruity
• Information
asymmetry
• Cost of monitoring
• Shirking
• Moral hazard
• Adverse selection
• Incentive
• Behavior-based vs.
output based control
Prisons, Markets, Accountability:
Bazaar”
• “…Depending on whom
you ask, it was either
blackmail or the free
market's finest hour.
Holdenville and the state
struck a 20-year deal, and
in April 1996 the prison
began filling up with
Oklahoma inmates. “
To what extent are public officials
acting as “political entrepreneurs”?
Is that good or bad?
“The Prison
• Who is accountable to whom?
Which of these principal-agent
deals reflect accountability?
– State of Ok/Hold’le city gov?
– Other states/ Hold’le city gov
– Citizens of OK/Hold’le city
gov
– Hold’le city gov/vendor
– Citizens of other states/vendor
Other
accountability
issues?
Problems?
Chen, “Rethinking NPM:”
applications
• Some terms:
– New public
management
– (environmental)
determinism
– Dialectic logic
– Politicsadministration
dichotomy
– (strategically
crafted)
rhetorical
persuasion
•
•
Some terminology and
How would advocates of NPR principles
react to the “prison bazaar” situations?
[Assume you are a critic of the NPR in
general and of “prison bazaar”
situations in particular.
– How does the political metaphor offer
you ammunition to argue against this
arrangement?
–
Explain how the organic metaphor may
appear to support the arrangement, but
also point out the weaknesses in those
“organic” arguments
– Do the issues in “The Prison Bazaar”
speak to political problems or
managerial problems? Why is this
relevant to the dialectical metaphor?]
These questions are intended to help you better understand the Chen article
[Sample diagnostic question]
Thus far in the course, we have surveyed seven perspectives on
organizations
•1. machine,
•2. organic-internal,
•3. organic-open system and contingency theory,
•4. organic-natural selection,
•5. organic-shared futures,
•6. brain, and
•7. market-agency theory]
used to diagnose weaknesses as well as strengths of organizations in
particular situations.
Select TWO of these perspectives to diagnose the organization situation
depicted in “Can this Airport Be Saved?” For each, be sure to stress the
new or additional insight gained (or “value added”) after your more
basic justification for selecting each. 20 point total.
SCORING: justificationa (5 pts)
insighta (5 pts)
justificationb (5 pts)
insightb (5 pts)