9 Coordination between public-sector organisations
9.1 Introduction
A key issue for the public sector in New Zealand is the need to generate greater coordination among a large number of public-sector agencies. The difficulties of generating innovative high quality policy advice on the big issues facing government, when that advice necessarily requires input from multiple public-sector organisations, is a theme in two recent reviews of the effectiveness of policy advice in New Zealand (Gill 2010; Scott et al, 2010). The tension has been characterised as being between the requirement for vertical lines of accountability (as established under the Public Finance Act and the State Sector Act) required for the machinery of the public sector to operate effectively, and the requirement for leadership and accountability across multiple public-sector organisations that is required to obtain work on the big, long-term issues facing New Zealand. Scott et al (2010:58-62) note that the coordination of policy development across multiple small public-sector organisations may be no more difficult than the coordination of policy advice across the divisions of a much smaller number of large organisations. They recommend that these issues be resolved by establishing a more direct mechanism through which policy advice can be driven by existing institutions (Cabinet Strategy Committee and the central agencies).
Much of the academic literature addressing the issue of coordination is in the context of consideration of a choice between a “divisional structure” and a “functional structure,” or a centralised or a decentralised allocation of residual decision rights within a hierarchical structure. Much of this literature can be applied to any situation inwhich organisations can either assign the full responsibility over a set of projects to individual groups or alternatively require groups to cooperate with one another in the execution of projects. To the extent that this literature focuses on the issue of allocation of residual decision rights, it takes a rather different perspective from the focus on accountability, monitoring and performance management that motivated the new public management and recent analyses of the New Zealand public sector.
We begin by considering the literature on divisional and functional structures, and then consider the literature on decision rights in hierarchies, before concluding with some suggestions about the ways in which an incomplete-contracts decision-rights perspective may be applied to thinking about coordination issues in the public sector.
