Editorial: Amending organizations to advance good governance and inclusiveness

This edition of Public Money & Management is at first glance a diverse collection of papers. But it would be erroneous to view this as a flaw, an oversight, in our editing; on the contrary, we seek to bring together a group of papers that predominantly address ‘money’, budget and audit from a range of perspectives, then to allow readers to make connections (and see contrasts) from comparative examples and data. For example, to illustrate this, there is a medical condition known to doctors as an ‘iatrogenic effect’: this is when a physician causes an adverse reaction in a patient through their treatment or administration of a medicine. In public administration when assessing the effects (good and bad) of a new policy, we often refer to this as an unintended policy effect: the same problem, but a different label. Public sector reforms are replete with these unintended consequences and the imposition of new regulation and regulatory regimes is deemed a sufficient response in order to overcome this administrative iatragesis, but each regulatory body and set of oversights are geographically, temporally and politically structured (see, for example, Margetts et al., 2010). If the demands of stakeholders, policy-makers and citizens change, then so must the response of the public sector. In recent decades, an awareness has grown that merit-based systems for the recruitment and training of public officials also need to be corrected to take account of, and include, those individuals and groups who through their background and life opportunities are not appropriately represented. Similarly, in terms of the diversity of membership and stakeholder representation, the aims of reformers in restructuring procedures, approaches and institutions in order to make them more accountable and transparent in all manner of ways, have in the execution of the reform fallen short of expectations. The papers in this edition explore some of these issues.

Our first paper, by Johnston, delivers a systematic review of gender representation at senior levels in the UK public sector and compares it with global standards and examples. The paper refers to the theories of representative bureaucracy, arguing that with the move from simple passive representation into active representation (supporting the interests of all groups, especially disadvantaged ones) there is a rise in trust and legitimacy for public organizations. Furthermore, in terms of performance, that is, efficiency and effectiveness, Johnston uses data to suggest that representative bureaucracy improves the quality of organizational outputs as diverse bureaucrats contribute diverse skills, knowledge and experience.

Kline and Lewis address the thorny issue of bullying in the UK NHS. They adopt a novel perspective in that many previous studies have explored the impact of bullying from the effect on victims, or from a whistle-blower viewpoint. This paper analyses the impact of bullying from a financial perspective, not just in terms of payouts to victims, but how the effect of bullying in the form of sickness absence costs due to stress and depression is combined with the cost compensation, litigation, employee turnover and diminished productivity. The paper uses a refined methodology to put cost estimates on a range of elements that result from bullying, concluding the cost is in excess of £2 billion a year. The paper illustrates the need for managers to address the issue and delivers a clear guide as to the issues involved in this major British industry.

Most of the rest of the papers in this edition are located much more within the money part of Public Money & Management. Chow et al. deliver a comparative study (UK, Australia, New Zealand, Canada and Sweden) of consolidated government accounts, showing again the utility of cross-country comparisons when innovative accounting and or financial initiatives are introduced. They conclude that as part of the continuing reform process in governments, consolidated accounting, following on from accruals accounting reforms demonstrates a mix of benefits and contested issues, but that it does demonstrate ‘an undiminished universal appeal of NPM-led government accounting reforms’. Mafrolla takes us to Italy to discuss why government-owned firms engage in tax avoidance and whether this is to a greater extent than private firms. She concludes that one of the dynamics for this errant behaviour is the drive towards profit maximization as part of delivering a public service (especially at local level), even at the expense of causing damage to the country’s tax gathering ability. But most of all, she argues, it is ‘politics’ that explains these actions, with the owner (local of regional government) seeking to retain a greater proportion of revenue. It may be argued that she has identified an iatrogenic effect.

Chung’s paper takes us to a consideration of the budgetary process in infrastructure spending, using the case study of county governments in the state of Georgia, USA. It is a technical paper that discusses the premise that capital projects have been pushed by governments as a way in which to boost economic development. He explores a range of issues, but among his conclusions is the argument that ‘a separate capital budget in the formal budget process does not preserve capital projects’, and that the impulse to use capital projects as a form of economic development requires a more nuanced approach, one that takes into account the context of the local and regional situation in all its political and economic diversity. We continue with the finance and money perspective to public management with Bini’s paper that switches our focus from inputs (budgets) to consideration of process and outputs (audit) and, in using recent Australian examples, urges policy-makers to consider the effectiveness to follow the money and focus on the effectiveness of public audit legislation to audit public money and not just concentrate on the organizations that use it. It is a concern for accountability through a particular usage of accountancy and audit. Continuing the perspective of public finance from a sub-national governmental approach, Zhiling et al. debate the credit risk of bond pricing and local government in China, which may sound an arcane issue to non-Chinese readers, but has a potential knock-on effect of some global significance. While Lindblom et al. return us to consider exactly what we mean when we discuss ‘value for money’, reminding us that different stakeholders may well have different views of what is VFM. They use the pre-tendering phase of projects to explore this.

We conclude this edition with Parker’s new development article asking: what is the meaning of philosophy training for staff in central and local government? He discusses issues raised in a book by Ongaro (2017) that makes a case that the philosophy and theoretical imperatives of public administration have been neglected in the training of public officials. In other words, they need to understand the reasons why they do what they do and the way in which they do it. Not quite ‘what is the meaning of life?’, but certainly ‘what is the meaning of government?’