New Public Management (NPM) term coined in the late 1980s to denote a new (or renewed) stress on the importance of management and ‘production engineering’ in public service delivery.
The new term was intended to denote public service reform programs that were not confined to the ‘new right’ in a narrow sense, but also came from labour and social-democratic parties and in that sense could be considered as part of what was later labelled a ‘third way’ agenda.
Malaysian government has accepted the philosophy of NPM during the mid-1980s, with the purpose of improving their organisational efficiency, effectiveness and accountability in the provision of services.
Total Quality Management (TQM), Quality Control Circle (QCC), Malaysia Incorporated Policy, Service Recovery Systems, Client Charters, ISO 9000 Quality Management Standard (QMS), Public-Private Partnership, Privatisation, Outsourcing, and Online Public Services are some examples of the various practices and approaches introduced at all levels of government to re-engineer the public sector.
With the belief in the superiority of the private sector practices, it is not surprising that the fundamental concept of NPM is the conviction that the public sector should utilised the practices of the private sector (Hood, 1995).
One of those practices is the use of a performance measurement system, with its associated key performance indicators (KPIs) to improve the effectiveness and efficiency of the public agencies, delivery system.
A directive was issued in 2005 instructing all government agencies to use KPIs and their associated benchmarks. The use of KPIs is seen as one of the tools to strengthen the public sector’s institutional and implementation capacity, which is one of the strategic trusts of the 9th Malaysian Plan (EPU, 2006). As such, by 2010, almost all public agencies in Malaysia are required to implement the KPI system (EPU, 2006).
Broadly understood as the implementation of management ideas from the private sector into the public services has transformed how administrations work.
Globally, public organisations have adopted the two central NPM goals: efficiency and effectiveness. Regardless of the extent of specific NPM reforms, performance in the public sector is nowadays universally seen as output and outcome, instead of the previous view of performance as input and process.
