Pergamon

World Development, Vol. 25, No. 4, pp. 4$1-495,1997 0 1997 Elsevier Science Ltd All rights reserved. Printed in Great Britain 0305-750x/97 $17.00 + 0.00

PII: SO305750X(96)00123-4

Divergent Cultures? When Public Organizations Perform Well in Developing Countries

MERILEE S. GRINDLE Harvard University, Cambridge, Massachusetts,
Summary. - Throughout

U.S.A.

the developing world, there are organizations that perform relatively well, despite dauntingly unfavorable contexts and despite overall poor public sector performance. This article explores evidence from 29 organizations in six countries to suggest that the concept of organizational culture provides a useful hypothesis to explain why some of them performed relatively well while others did not. Organizational mystique, management style, and performance expectations contributed to positive organizational cultures in better performing organizations while some autonomy in personnel management provided a facilitating context for these characteristics to be developed. 0 1997 Elsevier Science Ltd Key words - organizational culture, public sector reform, civil service, management

1. INTRODUCTION Public sector organizations perform poorly in many developing counties; in some cases, they barely function at all. Poverty, economic crisis, corruption, and political instability afflict some countries so much that basic conditions of security and order have disappeared; states have literally collapsed, and along with them, the organizations charged with carrying out routine and development-oriented functions. In other cases, economic crisis, budget austerity, and poverty have caused public offices to crumble into disreputable slums and public sector morale to decline to unprecedented levels. In some situations, public officials report to work sporadically to collect even more sporadic paychecks that, in any event, provide family subsistence for only a few days.2 In still other cases, public officials without meaningful work sit listlessly in offices bereft of pencils, telephones, and light bulbs. Incentives are often perverse; many officials spend their days shuffling papers and inventing ways to obstruct the publics business. Pervasive corruption and rent-seeking characterize many public sectors around the world, but the crisis of the state is clear when even well-intentioned public officials find it extraordinarily difficult to attend to the public good. Clearly, the widespread existence of such situations calls attention to the need for reforms to increase the efficiency, effectiveness, and responsiveness of the public sector in developing countries. In the 199Os, in fact, a wave of second generation reforms followed efforts to implement the macroeconomic
481

reforms associated with stabilization and structural adjustment. Second generation reforms have generally focused on improving salaries and conditions of employment through civil service reform and reducing the size and responsibilities of the state sector. Experience with these macro-institutional initiatives has not solved the problem of poor performance, however. In a recent study, for example,
no conclusive evidence was found of better pay and leaner staffing alone leading to major productivity gains. This suggests that pay and employment reforms, although important determinants of performance, need to be supplemented with other measures. Macroeconomic policy reform cannot by itself foster the major changes in work attitudes, ethics, and organizational culture that are needed if significant performance improvements are to be realized!

The broad civil service and state downsizing reforms alluded to above seek to alter the negative institutional contexts within which many public sector organizations operate. Yet, throughout the developing world, there are organizations that perform relatively well, despite dauntingly unfavorable contexts and despite overall poor public sector performance. In this article, I advance a hypothesis about why some orga*I am grateful to Robert Taliercio and Bruce McKenney of the Kennedy School of Government, Harvard University, for research assistance in the preparation of this paper. I received valuable comments on an earlier draft from Judith Tendler of MIT. Final revision accepted: November 9,1996.

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nizations are able to escape the norm that characterizes the performance of many organizations in perverse institutional contexts. I explore evidence from 29 organizations studied in a six-country comparative research project and ask: why, when all organizations were embedded in difficult - even dysfunctional environments, were some able to perform relatively well while others performed poorly?5 In the cases studied, characteristics associated with positive organizational cultures, such as mission, performance-oriented managerial style, and autonomy in personnel matters differentiated those that performed relatively well from those that did not. Are these characteristics the missing ingredients in efforts to improve public sector performance in developing countries? This article indicates the importance of further research in response to this question.

nonexistent. These workers also often perform thankless tasks, go above and beyond the call of duty, and make virtual gifts of their labor even when the rewards for behaving that way are highly uncertain at best. Rational choice theorists who discount the possibility of public-spirited bureaucratic behavior are wrong, as are any who deny the capacity of agency leaders to create and sustain organizational cultures of principled agents.O Despite the implication that looked dimension in accounting culture is an over-

2. ORGANIZATIONAL CULTURE: ORGANIZATIONS AND THEIR CONTEXTS The concept of organizational culture is defined here as a shared set of norms and behavioral expectations characterizing a corporate identity.6 This definition focuses attention on the extent to which beliefs and standards of behavior are shared by individuals within an organization and the extent to which such factors are attributed to the organization itself (as in, for example, This is a hardworking and committed organization). It has been used to explain the performance of organizations, their success, and their ability to adapt to change. Shared norms and expectations have been shown to shape employee orientations toward work and determine the extent to which individuals direct their behavior toward achieving goals defined by the organization rather than to those that conform exclusively to self-interest.8 Although the concept has been most frequently explored by those concerned with private sector firms, it has also been used to analyze public sector organizations by James Wilson, Michael Lipsky, and John DiIulio, among others.9 Indeed, some scholars point to the importance of organizational culture as a major alternative to rational choice theory because of its ability to explain public-spirited bureaucratic behavior. According to John DiIulio, Jr., for example,
In recent years, the rational choice approach to understanding bureaucratic behavior has gained many adherents. So-called principal-agent models of bureaucratic behavior have considerable value. But they are far better at explaining why bureaucrats shirk (goof off on the job), subvert (commit acts of administrative malfeasance), or steal (use public office for private gain) than they are at explaining why bureaucrats behave as principled agents - workers who do not shirk, subvert, or steal on the job even when the pecuniary and other tangible incentives to refrain from these behaviors are weak or

for how and why organizations perform as they do, applying this concept to organizations is certainly not new. In the late 193Os, a human relations school of organizational management challenged the prevailing view that organizations could best be understood as machines or organisms. F. J. Roethlisberger and William Dickson alerted scholars to the importance of underlying and informal relationships, ideas, and beliefs within organizations, what Chester Barnard referred to as the spirit of an organization and what Philip Selznick later identified as the character of the organization. The concept was revived in the early 1980s by scholars attempting to explain differences among private firms in their ability to adapt to change and to be successful in the marketplace.2 In the 199Os, it was subjected to more critical assessment when researchers focused greater attention on the difficulty of studying the concept and the extent to which culture can create conflict and inhibit change as well as promote it. Indeed, those who criticize the use of the concept point to the fact that researchers often do not share a common definition of what it is they are studying and that there may be a variety of cultures within an organization that can hinder performance as well as enhance it.13 Despite debate about the definition and the use of the concept and a concern that it is often presented as a variable through which organizational leaders can manipulate their employees, in possible detriment to the latter, there is extensive research and analysis focusing on organizational culture in industrialized countries. The concept has not been systematically applied, however, in the analysis of organizations in developing countries, except in studies of how societal values affected the performance of organizations embedded within them.14 Part of the reason for this situation, no doubt, is that there is limited crossfertilization of ideas between those interested in industrialized countries and those who pursue research in developing countries, as well as between those who study private sector organizations and those who study the public sector. More tellingly, however, research in industrialized countries has generally assumed considerable organizational autonomy and capacity to adjust to a changing environment. That is, studies tend to treat the context within which organizations are embedded as either relatively benign or as a stimulus to organizational adaptation. When private sector firms are the focus of research, the expectation that they have relative auton-

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omy to shape their own performance standards, goals, and structures is particularly strong. The difficulties created by poor economic, political, and social conditions, however, caution against making such assumptions in developing countries. These factors mean that it is more likely that organizations will be creatures of their environments than masters of their own fates. Moreover, these environments are rarely benign.i5 It is hard to escape concern about context in developing countries, given problematic political, social, and economic conditions and the perverse incentives for performance that generally exist.j In contrast to the situation in industrialized countries, financial and skilled human resources are very scarce and individual organizations have relatively little capacity to overcome this generalized situation; lack of money and appropriate personnel can easily doom them to ineffectiveness. Similarly, it is difficult to insulate individual organizations from widespread political turmoil or the impact of events such as foreign exchange crises and episodes of hyperinflation. In contexts in which graft and corruption are normal modes of doing public or private business, insulation is also very problematic. Under such conditions, it is little wonder that many organizations perform poorly; their behavior is shaped by conditions over which they have little control.r7 When organizations are part of developing country public sectors, their context further constrains their autonomy. Civil service rules, procedures, and decisions are generally highly centralized, uniform, and rigid, limiting the extent to which public sector organizations can innovate or even motivate and discipline their employees. Public sector unions also set narrow limits on organizational autonomy. Where patronage defines who is appointed to office, organizations are susceptible to rapid turnover of staff and their leaders are highly vulnerable to political changes. Dependence on donor assistance and conditionalities set by international financial institutions also limit the extent to which organizations can define and control their own activities. In general, it is difficult for public sector organizational performance to rise above such system-wide conditions; current concern with civil service reform responds to this reality. Nevertheless, the importance accorded to the formative impact of context makes the question of how some organizations escape the norm all the more puzzling. Indeed, focus on the pathologies of develop ment can blind researchers to situations that do not conform to expectations about inefficiency, ineffectiveness, unresponsiveness, rent-seeking, and predation.

3. GOOD AND POOR PERFORMERS SIX COUNTRIES

IN

In 1994, nationals of six countries applied a comparative analytic framework to study public sector capacity.r8 The sponsors of the research, the United

Nations Development Programme (UNDP) and the World Bank, selected the six countries to be studied Bolivia, Central African Republic, Ghana, Morocco, Tanzania, and Sri Lanka. My colleague, Mary Hilderbrand, and I worked with country researchers and the sponsors to develop the analytic framework and a methodology for the study. The purpose of the six-country study was to assess this comprehensive and comparative framework for understanding the problem of state capacity, identifying capacity gaps, and designing strategic interventions to correct or compensate for them. More specifically, the research sought to understand the capacity of public sector organizations to perform concrete tasks assigned to them by governments, not only by investigating the structures, activities, and human resources of these organizations, but also by understanding the constraints on their performance set by a series of contextual factors.r9 To encourage comparability across cases, researchers in each country focused on the accomplishment of similar tasks by public sector organizations. First, we identified two broad functions that all governments are expected to perform - management of the macroeconomy and the delivery of services. Then, we selected tasks associated with these categories of activities - the capacity to formulate a budget as an essential task embedded in the macroeconomic function and, for the service delivery function, researchers in Ghana, Morocco, and Sri Lanka assessed the capacity to deliver agricultural extension services and those in Bolivia, Central African Republic, and Tanzania investigated the capacity to deliver maternal-child health services. The research was designed to study a range of tasks in order to test the utility of the framework as well as to generate comparative insights across a range of activities. It is important to emphasize here that research was not undertaken with the explicit purpose of exploring organizational culture. Rather, a set of factors emerged from the study to suggest that organizational culture was a useful concept for explaining the difference between organizations that performed relatively well and those that did not. Thus, the purpose of this article is to use these factors to propose some hypotheses for additional research that could be undertaken by studies designed explicitly to test them. The nature of the evidence limits the goals of the article to the exploration of initial evidence and suggestions for more focused study in the future. The research allows me to raise potentially interesting hypotheses, but not to assess them fully. At the outset of the field study, researchers developed a map of organizations associated with the accomplishment of the specific tasks we had identified. Then they assessed the contextual factors that affected how the task was performed by this network

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of organizations, including an analysis of the public sector institutional context and the broader economic, political, and social milieux. The third step in the field research involved studying a small number of organizations within each task network that were critical in accomplishing the task. Organizational research focused on how they functioned internally and how their human resources were recruited, trained, utilized, and retained. As a final step in the case studies, researchers refocused their analysis on the impact of contextual factors on the ability of the organizations to perform their responsibilities and effectively utilize their employees. Figure 1 presents the framework that guided the research. The studies used a variety of methodologies, including interviews with key informants, documentary research, and an organizational mapping technique. The research yielded 29 organizational cases that I am drawing on here to consider the applicability of the concept of organizational culture.*O These 29 organizations were embedded in public sector systems that didnt work very well, and in the case of the Central African Republic, that barely worked at all ? Moroccos public sector was the least problematic of the six studied; nevertheless, although it had considerable capacity to perform the functions assigned it, it was still characterized as ponderous, slow, and rigid?* Most organizations were also constrained by action environments that set extensive limits on the quality and sustainability of their outputs. As indicated, however, some organizations performed better than could be expected given these constraints; others performed as expected or more poorly than could be expected. For convenience, I refer to the first group - comprising 15 organizations - as the good performers and the second group - 14 organizations - as the poor performers.23 These labels are meant to imply relativity. That is, some organizations may not perform particularly well by more universal standards, but taken within their context, they clearly outperformed the average or norm for a particular country. In the following section, I present a series of hypotheses to explain organizational performance in developing countries. Some of these hypotheses are not supported by the evidence available for the 29 organizations studied. Others, however, find considerable support, and suggest that the concept of organizational culture should play a more central role in research and reform interventions related to issues of public sector performance in developing countries. After exploring the evidence in terms of this series of hypotheses, I present more qualitative information about the organizations studied to suggest how a series of factors identified in the next section work together to make a performance-oriented organizational culture possible.

4. HYPOTHESES

AND FINDINGS

(a) Task Arturo Israel has suggested that the type of task undertaken by an organization will determine its performance - organizations assigned technical, measurable, and specific tasks will perform well, while those with less technical and specific assignments will perform less well ?4 In our study, it could be hypothesized that the relative specificity of the budget task would result in good performance while the more complex and multi-functional goals of service delivery organizations would make it more difficult for them to perform well. Moreover, the budget organizations were the focus of donor agency attention and resources to upgrade their output because of their direct link to high priority stabilization and structural adjustment programs. Service delivery organizations might also be expected to perform poorly because of the extent to which their budgets have been cut by economic adjustment programs. Despite the reasonableness of the hypothesis, the type of task undertaken by the organization was not a good predictor of differences between good and poor performance. Table 1, showing a breakdown of good performers and poor performers by country and sector, indicates that quality of performance is not convincingly explained by the type of task performed, at least in the two functional areas we considered. Eight budget organizations performed relatively well and five performed poorly, while seven service delivery agencies performed relatively well and nine performed poorly. Among the service delivery agencies, those that dealt with maternal/child health and those that dealt with agricultural extension were evenly distributed between good performers and poor performers?

(b) Salary level Another possible explanation for differential output is salary level. Given the widespread evidence of public sector wage erosion and reform programs that seek to rationalize salary scales and increase them at least to a living wage, it can be hypothesized that the better performers will have higher salary scales than the poor performers. Figure 2 indicates that indeed, in the 14 cases of poor performance, all paid (generally very low) salaries that were set by the public sector for most organizations. Among the good performers, however, higher salaries were paid in only six organizations while eight conformed to general public sector remuneration scales. Thus, while higher salaries may have contributed to better performance in some cases, this factor did not strongly differentiate among the categories of performance.

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WORLD DEVELOPMENT Table 1. Organizational performance by sector Good Performers Poor Performers 14 5 3 6 external demand for their services and three of four unsuccessful organizations demonstrated external demand. In two of these latter cases, demand was so overwhelming on poverty-stricken and hopelessly understaffed and undersupplied organizations that it resulted in even poorer morale among employees and a greater propensity to shirk. In the third case, the external demand was for improper sale of organizational resources through corruption and bribery. In the case of one good performer, demand for good and timely information came from other organizations in the bureaucracy. These examples suggest that future research on client demand should also assess organizational capacity to respond in terms of having access to resources, as well as assessing the origin of that demand.

Total Organizations Sector budget formulation agricultural extension maternal/child health

15 8 3 4

(d) Sense of organizational mission In the literature on private sector firms and public sector organizations in industrialized countries, a broadly shared organizational mission has been associated with superior productivity.* Thus, it can be hypothesized that a widely held sense of purpose within an organization will differentiate good performers from poor. Although information is lacking on eight cases, the rest of the data are suggestive for future research. As indicated in Figure 3, 11 of 12 good performers had well-defined missions that were widely ascribed to by employees while the same could be said for only one of the nine poor performers. In some cases, the mission amounted to a mystique about the organization and the importance of the task it was performing. Employees internalized the organizations goals and saw themselves as vital contributors to its accomplishment.

YeS

No

No Info

Figure 2. Salaries higher than civil service scales? (c) Client demand A considerable body of literature suggests that organizational performance in developing countries can be improved through the creation of client demand and oversight. This approach is particularly recommended for service-providing organizations and as a way of limiting rent-seeking and improving transparency in government operations.26 Client demand is also suggested as a way of dealing with extensive principal-agent problems in order to make organizations, and government more generally, more accountable to poor and often powerless citizens. These concerns parallel the emphasis on customer orientation that has accompanied efforts to reinvent government in industrialized countries. The concept of customer or client can also be applied to organizations within the public sector, in the sense that the customers of a budget office are other units in the ministry of finance that require good information and timely analysis or legislative committees that must assess annual budget allocations. Unfortunately, in 19 of our 29 cases, we do not have information about the existence of demand for services. It may well be that the mobilization of external demand is important to good performance; with limited information, we can suggest little beyond the need for additional research. It is interesting, however, that only two of the six successful organizations for which we have information demonstrated significant

(e) Management style Often acknowledged but rarely studied in developing countries is the impact of management style on

01 Yes t-b

No Info

Figure 3. Strong sense of mission?

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organizational output. In industrialized countries, both private and public sectors have become familiar with emphasis on the quality of management and its relation to overall organizational performance?a Indeed, training for managers is considered the key ingredient in improving performance in the firm and the public sector organization; the best institutions for career training in business and public administration emphasize not only command of technical skills but also training in organizational and strategic management, negotiation, team work, decision making, and leadership. In developing countries, however, the state of the art in public sector training continues to revolve primarily around knowledge of systems, structures, procedures, rules, and legal precedents and pays much less attention to the importance of performance-oriented management styles that encourage participation, flexibility, teamwork, problem solving, and equity. Given the importance of such management practices in industrialized countries, it might be hypothesized that differences in management style would be found between good and poor performers. Indeed, in 12 of the successful cases, management style emphasized such practices. Moreover, 10 of the poor performers had managers whose style was characterized by top-down decision making, favoritism, lack of consultation, and poor capacity to organize or direct work. In these cases, then, management style appeared to be a factor in distinguishing good and poor performers.

l4 T
12 .. 10 .. 8 '. 6 .. . 4 . 2 .'

04
Ye8

No

No Into

Figure 4. Performance expectations?

(f) Performance

expectations

and autonomy

Similarly, clear and applied performance standards might also be expected to differentiate successful and unsuccessful organizations.29 Were employees given clear signals about how diligently they should work and about the quality of the work they were expected to accomplish? Were those who performed their responsibilities well rewarded with raises, promotions, study leaves, or recognition? Conversely, were employees sanctioned for poor performance? Much mainstream thinking in current development administration emphasizes incentive structures and the construction of impediments to rent-seeking.3O It could be hypothesized, then, that organizations differing in terms of whether they set and applied performance expectations for employees would also differ in terms of overall organizational achievement. As indicated in Figure 4,12 of 14 good performers set and applied performance expectations while 10 of 12 poor performers set no such standards for their employees. In these latter cases, employees were left to conform to the performance expectations for the public sector more generally - standards that were usually very low, as described by the researchers. Related to the existence of performance standards

is the capacity to apply them in personnel management. In many countries, rigid civil service systems assume centralized responsibility for decisions about job descriptions, hiring, assignments, promotion, and firing. They frequently use formalistic merit criteria based on paper credentials and seniority to make judgements on such matters. Elsewhere, patronage systems result in hiring, promotion, and firing practices that place and displace people for reasons of party affiliation and relationships to political godfathers. Public sector unions contribute to this set of problems by making it extremely difficult and costly for organizations to fire employees. In some cases, unions determine placement and salary levels. These practices place organizations under considerable constraint in finding the right person for a job and rewarding or punishing employees based on how well or poorly they perform their responsibilities. A reasonable hypothesis, therefore, would be that organizations with some autonomy in personnel matters would have greater capacity to set performance standards for their employees and hold them accountable to the organization for meeting those standards. Indeed, 12 of the 15 good performers had some such autonomy. In contrast, only five of the poor performers had any autonomy in personnel matters. Organizational autonomy, then, may be a condition that facilitates the capacity to encourage good performance (see Figure 5). Moreover, of the 14 organizations that held better than average performance expectations, 10 also had some autonomy in personnel matters.

(g) Combining

characteristics

The characteristics that appeared to differentiate good performers from poor performers in the above review are not independent of each other. In particular, strong mission focus, performance-oriented management practices, high performance expectations,

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16 16 14 12 10 a 6 4 2 0 Yes No No Into

qGWdPcl Poor Perlormen

Figure 5. Some autonomy in personnel matters?

and organizational autonomy in personnel matters tended to go together in ways that allowed some organizations to develop and inculcate a set of norms for organizational performance and individual and group behavior that consistently affected their ability to perform responsibilities more effectively than others. Of the 15 good performers, six exhibited all four of these characteristics, four demonstrated three, and five organizations showed evidence of two of them. In considering these characteristics together, mission, management style, and performance expectations can be understood as elements of organizational cultures that promote good performance. Autonomy in personnel matters can be understood as a facilitating condition that provided organizations and their managers the ability to build cultures that allowed particular organizations to rise above the norm for public sector organizations more generally. In what follows, I focus more fully on the good performers to suggest why and how these ingredients of organizational culture may make a difference to organizational output.

In this way, employee behavior is influenced and rational expectations shaped. Organizational culture helps explain how some organizations overcome principal-agent problems; it also provides a way of understanding how incentive systems within organizations shape the rational response of employees. Among the organizations that performed above the norm for the public sector in their countries, there is considerable evidence that an implicit contract between leaders and employees worked to foster positive output. Thus, the mission, which often amounted to a mystique about the organization, comprised its goals and set the standards of professionalism, commitment, and service-orientation that employees were expected to emulate. Managers used a variety of methods and incentives to promote widespread adoption of organizational norms of behavior. Teamwork, participation, flexibility, and problem solving were promoted and rewarded by the managers of the successful organizations. Performance expectations clarified to employees what they had to do to make it in the organizations; a variety of means was used to impress upon employees that their performance was being regularly assessed. A review of the cases demonstrates how mystique, management, and performance expectations, facilitated by autonomy in personnel matters, appeared to interact to create or inculcate effective organizational cultures. Although each of these factors can be understood in isolation, without invoking the concept of organizational culture, it can also be useful to consider how they may combine and interact as part of the implicit contract between organizational leaders and employees.

6. MYSTIQUE In Bolivia and Sri Lanka, a job in the central bank was highly valued. Employees were aware that they acquired prestige and a reputation for intelligence and professionalism when they held such positions. They valued the sense that their institutions were considered competent, respectable, and relatively free of the political entanglements characterizing most public sector organizations. They believed they were playing an important role in the economic management of their countries and a central role in the economic policy reform process. Similarly, the prestige associated with being part of the ministry of finance was important to a budget office in Morocco. In a poorly endowed agricultural extension institute in Ghana, and despite considerable resource constraints, workers believed that they were performing an important set of activities to train farmers and increase agricultural output. They believed that each person had responsibility to contribute to the overall success of the organization. In a research institute in that country, employees had a strong sense that being

5. ORGANIZATIONAL CULTURE: MYSTIQUE, MANAGEMENT, EXPECTATIONS, AND AUTONOMY In this article, I have defined organizational culture as a shared set of norms and behavioral expectations characterizing a corporate identity. When norms and behavioral expectations are widely shared within an organization, they act as an implicit contract between the leadership of an organization and its employees? In this contract, employees implicitly commit themselves to norms and standards of behavior that have been defined as valuable by the organization and agree implicitly to further the ends of the organization through their daily activities. In return, managers implicitly promise to encourage and reward those who conform closely to such norms and behavioral codes.

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a scientist was a special calling and that the institute itself was part of a wider international research community working on critical issues of agricultural productivity. A sense of mission was particularly strong in successful health sector organizations in Bolivia, where workers believed that their organizations were innovative, responsive to client demands, efficient, and providing a much better service than other organizations. They were particularly concerned about contributing to the quality of services delivered. An economic planning unit in Bolivia was characterized by a shared sense of youth, vigor, and professionalism among a staff convinced that they were working on the most critical issues facing their country. In each case, a sense of mission or a mystique about the activities of the organization was an important factor in accounting for the commitment of workers to the goals of the organization and in eliciting hard and consistent effort from them, even in the midst of often severe resource shortages and sometimes poor working conditions. The sense of mission appeared to have several components. - Employees believed that they were behaving according to professional norms and standards that had universal validity. They identified themselves with these norms and believed their organization was applying these standards consistently in its activities?2 - Employees believed that the organization and its employees were unique - they were particularly well trained or particularly responsive to the needs of sick people or farmers or particularly honest or particularly able to carry out activities better than competing organizations. - Employees believed that they had been selected for their positions because of their high level of competence or unique skills. In becoming part of the organization, their particular skills were being recognized. - The organizational mystique included a strong sense of service - service to the country in managing its macroeconomic performance, service to vulnerable groups of women and children, or service to farmers. - The mission was defined as an organizational one, but also as a personal one. That is, employees not only believed that their organization was contributing some good to the country, but also that as individuals they were assisting their organizations in making such an important contribution. Interestingly, a sense of mission seemed to be largely independent of salary scale or other remuneration. Seven of the 11 organizations with a strong sense of mission had salary scales that were the same as those of the public sector generally. As suggested in the case of an agricultural research institute in Ghana, the researchers are not so much motivated by the

mere love of money or the prospect of making more money, but commitment to the pursuit of research.33

7. MANAGEMENT An organizational culture did not exist simply because an organization had been successful in identifying a mission for its activities. Management contributed to the internalization of the mystique among employees. In one health program in Bolivia, managers asked employees to contribute to the development of monthly work plans and annual operational plans. In a policy research institute, managers worked hard to connect professional employees with high-level technocrats and international consultants. In Sri Lanka, the director of the Central Bank was credited with taking a special interest in the careers of promising officials and with using nonmonetary rewards such as trips abroad, participation in decision-making activities, and appointment to prestigious governmental oversight committees to promote a sense of commitment and teamwork. In Morocco, clear responsibilities for administrative units and efforts to improve coordination among them were important in a budget organization, as were informal efforts to resolve conflicts. A similar organization in Ghana also had a clear and structured work process and internal monitoring and evaluation procedures that were linked to performance assessments. In that countrys successful crops research institute, a multidisciplinary team approach to work responsibilities enhanced performance and professionalism among team members. Informal dialogue with management and encouragement of a problem-solving orientation were also important. In another agricultural extension organization in that same country, teams were consulted regularly by management about policy decisions, working conditions, client welfare, and maintenance issues. In Sri Lanka, a budget office that was required to conform closely to civil service norms and regulations boasted a manager who tried to relieve some of the excessive bureaucratization that resulted from the civil service system. Teamwork and flexibility were also stressed. The use of nonmaterial rewards was also an important aspect of the management of a budget office in Morocco. Across these organizations, several features of management style appeared to be relatively consistent. Managers set clear rules and processes, largely defined by the organization, that were systematically followed and used to evaluate employee performance. - Managers had relatively open and non-hierarchical styles for interacting with staff. They consulted widely and encouraged participation in decision making and problem solving. They appeared to take employee concerns seriously.

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- Managers worked to insulate their organizations from some of the disruptive aspects of working in public sector organi~tions, whether this be insulation from political interference, patronage demands, or rigid civil service requirements and regulations. - Managers consistently did what they could to reward employees for good performance. Where they could, they promoted good workers, Where they had control or input into professional development activities - opportunities for overseas or domestic study leaves, attendance at seminars, inservice training activities - they consistently used these to reward those who showed strong commitment to the organization and its mission and who performed their res~nsibilities well. They introduced rewards such as best extension worker and employee of the month to single out good performance and to motivate staff. They placed a high value on equity in allocating material and nonmaterial rewards. - Managers encouraged teamwork in carrying out organi~tion~ ~s~nsibilities and in solving organizational problems.

8. PERFORMANCE

EXPECTATIONS

A critical factor that contributed to the cultures of the good performers was a clear and consistent message: performance matters. Both mission and managers emphasized that quality of performance would affect the employees future and would determine the output of the organization. It is worth emphasizing again that these organizations were embedded in environments in which a very different message was conveyed. In civil service systems where people are hired on the basis of paper credentials and promoted on the basis of seniority, individual and organizational performance usually does not count for much. Neither does it usually count in systems in which political patronage determines who is hired, promoted, and fired. In such contexts, org~i~tions may have to work ~icul~ly hard to send a different message. Consistently, organizations that performed well adopted a variety of mechanisms to convey this different message. Many had open and competitive recruitment procedures. At times these procedures included examinations; most frequently they included a screening process and a series of interviews. Those who made it through these hurdles believed that they had won a competition to identify the best candidate and that their anticipated performance would be superior to that of other candidates.34 Many organizations also stressed the importance of the fit between the candidate and the specific requirements of a particular position. In this way, performance expectations were communicated in very

specific terms, related to the accomplishment of a particular set of responsibilities. In many org~i~tions, job descriptions and rules about hiring, remuneration, and promotion clearly communicated performance expectations by laying out what the employee needed to do in order to be retained and promoted. In a similar vein, some organizations used focused induction training to communicate desired norms about commitment, hard work, efficiency, effectiveness, and responsiveness. These norms were communicated at the same time that new employees were being taught about the specific requirements of the jobs for which they had been hired. Through this training, they were learning what to do and how to do it in terms of the expectations the org~ization had for them. The most successful organizations also had a probationary period, usually lasting three months, for newly hired workers. At the end of this probationary period, a serious assessment of performance at times ended with the dismissal of those who had not measured up to expectations. For those remaining, the message was clear. The use of timed contracts, often for as little as one year, followed by serious assessment of performance prior to renewal, carried the same message. When successful organizations had the capacity to manage incentives for good performance, they promoted and recognized the achievements of their employees. Some managers demonstrated considerable ingenuity in developing rewards and incentives even when promotion and salary scales were not within their control. Nonmonetary incentives played a particularly important role and were particularly productive when they were used to reward good performance among staff. Equally important, poor performance was singled out for punishment. In one org~ization, for example, employees who did not measure up to performance standards were reprimanded formally; three reprimands resulted in dismissal. More subtly, managers who themselves set high standards for their own performance encouraged staff to identify similar goals for themselves. In many other ways - performance reviews, unit and project evaluations, assessments of customer satisfaction the organizations that performed well sought to send messages about the importance of performing to standards set by the organization and its leadership.

9. AUTONOMY

IN PERSONNEL

MATTERS

At the outset of this paper, I argued that it is difficult for public sector organizations in many develop ing countries to escape the norm of performance. Contextual factors and institutional environments are particularly difficult and constraining in many countries; it may be that overall public sector performance cannot realistically be expected to improve until con-

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textual and institutional environments are improved. It should not be surprising, then, that effective organizational cultures developed in cases in which organizations had some autonomy in personnel matters. This autonomy meant that organizations could identify positions, advertise for candidates, establish routines for hiring people to fill positions, promote people on the basis of organizationally defined standards and priorities, and punish those who did not meet these standards. In industrialized countries, and certainly among private sector firms, considerable autonomy in these matters is largely taken for granted, even when options in personnel decisions are constrained by general civil service rules and laws related to fairness, competence, and process; it is much less apparent among public organizations in developing countries. It is, however, a characteristic quite consistently associated with good performance. It appeared to provide a medium in which mission identities could be established, managerial styles developed to support organizational goals, and performance incentives applied. Autonomy in personnel matters does not necessarily assure good performance; rather, it provides a facilitating context in which effective managers and management practices can encourage performanceoriented norms and behaviors.

10. BETTER BUREAUCRACIES? The demand for improving the performance of public sector bureaucracies in developing countries is extensive. These demands are not new, just as inefficient, corrupt, or arrogant bureaucracies are not new. But recently, there has been increased awareness that these bureaucracies need to be fundamentally altered if countries are effectively to introduce market economies, sustain democratic political systems, and address pressing social needs and new international conditions.35 In earlier periods, development and rehabilitation efforts focused on providing inputs (buildings, computers, budgets, staff training,etc.) to improve bureaucratic performance.36 More recently, efforts to improve performance have tended to focus more on material incentives for public servants and on reducing the size and the functions of public bureaucracies. Many initiatives have focused on improving salary structures and conditions of employment. Yet, while these reforms have put in place minimal conditions for the effective operation of the public sector - a living wage and basic decision-making procedures, for example - they have not necessarily translated into improved performance. In this article, I have offered a hypothesis about why some organizations appeared to be able to escape the norm that characterizes public sector performance in a large number of developing countries.

These organizations are characterized by cultures that emphasize commitment to organizational goals, a strong sense of professionalism, efficiency, elitism, and hard work. A strong sense of mission, effective managerial practice, and high expectations about employee performance were factors that led organizations to perform well, while some autonomy in personnel matters allowed a mission to be identified and enabled skilled managers to have some room to maneuver in setting standards for their organizations. Encouraging the development of characteristics associated with positive organizational cultures may be an important way of improving public sector performance where the broader economic, social, and political environment as well as the public sector in general are seriously detrimental to good performance. Clearly, building performance-oriented organizational cultures is not a substitute for civil service reform or for changes in the institutional context within which public sectors operate in developing countries. As indicated, however, promoting organizational characteristics that promote positive cultures may be the missing ingredient in the disappointing results of many civil service reforms. There is no question that we need more and better research to follow up on the ideas presented here. The concept of organizational culture needs to be the focus around which a research strategy is devised. As indicated above, the results reported here emerged somewhat serendipitously from research that had a broader focus. Moreover, while this article provides some ideas for further investigation, it does not deal with issues such as how good managers are trained, how they are effectively motivated, how performance orientation is embedded in organizations, and how autonomy can be increased without sacrificing accountability. Additional research might illuminate how organizational leaders and their staffs can receive more and better training in how performance-based management is best developed and practiced. Similarly, it might suggest how their own performance could be monitored, rewarded, and punished on the basis of their capacity to lead organizations toward greater efficiency, effectiveness, and responsiveness. Further research might also point to reforms that increase the autonomy of individual organizations without sacrificing their accountability to the public purpose of government. Of course, overall standards and regulations must be set and maintained for all organizations, but within such broad standards and procedures, organizations might have greater capacity to recruit, hire, promote, and fire personnel and to link behavior to clearly communicated expectations about performance. Reflecting on the importance of research into the cultural aspects of organizational behavior in the public sector, John DiIulio suggests the need to consider reform initiatives focused on the social and moral

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WORLD DEVELOPMENT have achieved recognition in reform initiatives in industrialized countries, they have yet to be widely considered in developing countries.

reward systems that make it possible for government agencies to tap the creativity, sense of duty, and publit-spiritedness of their workers.37 While such factors

NOTES
1. See. Zartman (1995), Wunsch and Olowu (1990). See also Lindauer and Nunberg (1994). 2. 3. SeeLindauerandNunberg(1994),Chew For a discussion, see Kiggundu (1990). 11. Roethlisberger Selznick (1957). and Dickson (1939), Barnard (1938), 9. 10. See Wilson (1989). Lipsky (1980). DiIulio (1987). DiIulio (1994, p. 227). See also DiIulio (1987).

(1989). chapter 1.

4. de Merode with Thomas (1994). For a discussion of various approaches to management improvement, see Esman (1991). chapter 7. 5. In the literature on economic and political development, only a few scholars have wrestled seriously with the question of the factors that account for why some organizations are able to produce outputs that arc superior to those produced by other organizations in the same environment. Some years ago, Samuel Paul pointed out the importance of studying organizational success and argued that strategic management interventions are the critical factor that allow organizations to bring coherence to environmental, strategic, structural, and process variables. See Paul (1982). Arturo Israel argued that organizations that typically performed their responsibilities well were characterized by the specificity of the tasks they were asked to perform and the extent to which failure was visible and consequential for the organization, its employees, and its clients. See Israel (1987). In exploring the exceptional performance of a health sector program in Northeast Brazil, Judith Tendler and Sara Fmedheim make a strong case for the importance of worker commitment and trust, as well as for demand-side performance expectations on public offtcials. See Tendler and Freedheim (1994). Pankaj Jain studied a series of successful organizations and concluded that clearly defined domains of activity, relative autonomy within an organizational hierarchy, and appropriate management systems contributed to positive performance. See Jain (1994). On the field of development management more generally, see Kiggundu (1989) and Esman (1991). 6. By focusing on shared tions, the definition avoids internalized notion of values other definitions. See for (1982),chapter2. norms and behavioral expectathe overly individualized and that is incorporated in several example, Deal and Kennedy

12. Deal andKennedy (1982,~. 15),deflne organizational culture as the system of informal rules that spell out how people are to behave most of the time and argued that values are basic ingredients of organizational culture. In a widely read book, Peters and Waterman (1982) linked corporate culture to corporate success. 13. Two books published in 1992 alerted scholars to the ways in which culture can both integrate and divide an organization and the differential impact of culture on output. See Martin (1992) and Kotter and Heskett (1992). Recent work on organizational culture has emphasized the extent to which culture is not uniform across organizations; in fact, an organization can encapsulate several different cultures in the sense that the marketing department can share a set of beliefs that differ considerably from those shared by the auditing department. Moreover, organizational theorists have noted the elusiveness of standard and reliable methodologies for identifying, describing, and studying culture. Conflict has emerged over whether those who study culture have placed themselves at the service of corporate managers by regarding culture as a variable that can be manipulated to improve productivity; some have argued that scholarship is better served if researchers assume the distance and objectivity of anthropologists. See Smircich (1985). 14. The impact of country differences in cultures was studied in private sector organizations by, among others, Hofstede (1980), and Inzerilli and Laurent (1983). For a discussion of how country differences in culture can shape an organizations culture, see Smircich (1983). Considerable work has also been done in terms of comparative bureaucratic cultures - that is, cultures that characterize the public sector generally in developing countries. Among early work in this vein is Riggs (1964) and Pye (1962). For a recent perspective, see Evans (1995). For a discussion, see Moore (1995). 15. In recent years, the rediscovery of the importance of institutions in economics and political science has reminded many scholars of the impact of the external environment on organizations, particularly regarding the institutional rules of the game that affect the costs of transactions between organizations (or their managers) and the environment. As a consequence, some researchers are newly concerned with the relative efficiency with which organizations adapt to institutional constraints and with the ways in which institutional contexts shape organizational behavior. 16. Economists often point to the problems created by

7. See for example, Kotter and Heskett (1992) and Deal and Kennedy (1982). The literature on organizational culture is extensive. Two useful critiques are Smircich (1983) and Martin (1992). See also Frost er al. (1985) and Denison (1990). Among the criticisms of the concept are that researchers do not have a common definition when investigating the link between culture and performance, that it does not derive from a consistent theoretical paradigm, that it suffers from fadism, and that it tends to focus on how managers manipulate workers. See especially Martin (1992). 8. See Schein (1992).

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inappropriate macroeconomic policies and governments that take on responsibilities for development far in excess of their capacity to manage them. See World Bank (1984, 1994). Theories about rent-seeking and predatory states provide related explanations. See especially Colander (1984), Krueger (1974), La1 (1984) and Meier (1991). Management specialists point to low and declining pay scales for public sector employees and to the impact of wage compression on relative reward structures. See Lindauer and Nunberg (1994). Chew (1990). Adamolekum (1993) and Hirschmann (1993). Political scientists decry the impact of patronage, spoils, corruption, kleptocratic leadership, dependency, and lack of accountability that are rooted in domestic and international structures of power and privilege. See, for example, Sandbrook (1986). Bates and Krueger (1993) and Chabal (1986). Many point to the impact of stabilization and structural adjustment packages on public sector budgets and functions. See Grindle (1996). 17. In explaining the success of a number of East Asian success stories in development, analysts have in fact argued that much of their success can be credited to the extent to which they were able to insulate state technocrats from political and social pressures. See World Bank (1993), especially Chapter 3. For a different perspective, see Evans (1995). 18. See Hilderbrand and Grindle (1994) and Grindle and Hilderbrand (1995). The country studies were carried out by Ghulam Adamu (Ghana); Abderrahmane Haouach (Morocco); Rwekaza Mukandala (Tanzania); Guillermo Pacheco Revilla (Bolivia); Andre Nzapayeke (Central African Republic); and Nimal Sanderatne (Sri Lanka): Each of the country studies is available from the Harvard Institute for International Development. The case studies are very briefly summarized in Hilderbrand and Grindle (1995). 19. See Bossert (1990) for a similar effort focused on sustainability of health projects funded by the US government in Central America and Africa. On the sustainability of efforts in agricultural research, see Brinkerhoff and Goldsmith (1990). 20. Twenty-seven of the cases were public sector organizations. Two were interesting cases of health service delivery services in Bolivia managed by nongovernmental organizations. Both organizations, however, were linked to the public sector, either through their salary systems or through contracts for the delivery of services. I have not excluded them from the discussion in this article because of these linkages and the interesting ways in which they provide insight into the concept of organizational culture.

21. 22.

Nzapayeke

(1994).

See Haouach (1994).

I use the terms successful and unsuccessful performers 23. interchangeably with good and poor performers. All organizations were assessed in terms of their ability to perform assigned functions efficiently, effectively, and responsively. Efficiency refers to the resources used to perform the tasks; effectiveness to the success with which they address a given public problem; and responsiveness to the capacity to meet customer demand. 24. See Israel (1987).

It is possible that Israels point is valid for these orga25. nizations if the good performing service deliverers have adopted measures to make their tasks more specific and their outputs more measurable and technical. We lack information on this point. See Tendler and Freedheim (1994). See also Bryant 26. and White (1982, chapter lo), Thompson (1995). 27. 28. See Kotter and Heskett (1992) and DiIulio (1994). See Senge (1990). Osborne and Gaebler (1993).

For a discussion of the literature on performance mea29. surement in US public bureaucracies and its application to developing countries, see Cooker al. (1995). 30. See Klitgaard Nunberg (1994). (1995), Dia (1993). Lindauer and

3 1. For a discussion of the contractual tional culture, see Taliercio (1995). 32. 33. 34. 35. 36. 37. See Leonard (1993). Adamu (1994). See Tendler and Freedheim ( 1994). SeeEsman(l99l),andGrindle(l996). See Moore (1995,~. 22). DiIulio (1994,~. 315).

nature of organiza-

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