Effects of Budgetary Constraints on HR Reforms in Central Public Administrations and the Importance of Institutional Context

Abstract

ABSTRACTA standard criticism toward New Public Management has been its focus on efficiency and cost saving. As a consequence, other important reform objective aspects and administrative values such as quality, fairness, engagement, trust, and sustainability would be neglected. In the field of HRM, this again would result in many (un-)intentional reform effects, such as more demotivation, less engagement, and less trust of the workforce in leadership. Unfortunately, many of these claims have not been tested empirically.Especially in the field of HRM, there is very little comparative evidence on how costs are being cut on a grand scale in different institutional contexts, Human Resource Management policies, with regard to different HR instruments and how these cuts impact on Human Resource Management.This study investigates the current HR reforms in central public administration in 32 OECD countries. Using recent OECD data (OECD Data Set, 2015), the study analyses the impact of budgetary constraints with regard to 40 HR issues and HR instruments. These issues were grouped into different HR bundles. The analysis reveals a strong correlation between budgetary constraints and cost-cutting measures. As a consequence, HRM as such is changing dramatically in some countries. Whereas the past reform trends in most OECD countries were characterized by a move away from the classical bureaucratic model, the present focus is on the implementation of ad hoc reforms in order to save resources. Neither is there a common trend toward one alternative high-work performance model nor a reformed universal “bureaucracy-lite mode.” Overall, data show that HR management is not seen as a strategic factor in the reform process in many countries. In fact, most countries have focused on cost reductions and downsizing and not on responsible restructuring.