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Citizens and Local Government

Christoph Reichard

The "New Steering Model"And the Citizen

1. Introduction
2. "NSM 1.0": Ten Years of Internal Structural Reform in German Municipalities
    Political Abstinence of NSM
    Dominance of Cost-Reduction Goals and Scepticism among Staff
    Lack of Interest in Market Mechanisms
    Neglect of the Citizen View
3. "NSM 2.0": Evolutionary Expansion of the Concept
4. Citizen Focussed Local Government
5. "NSM 3.0": Local Governance as a New Understanding of Municipal Management


Over the past decade, German local authorities have carried out far-reaching administrative reforms driven by the "New Steering Model" (NSM). The status of implementation and the results and effects of these reforms are described and critically assessed. Special attention is paid to the extent to which changes have come about for the citizen in his various roles. It is shown that NSM has brought limited progress in the quality of municipal services for the local "customer", but that it has set new directions neither with regard to direct-democratic participation nor to citizen collaboration in running the community. Finally, the vision of "local governance" is introduced as an adequate approach for the guarantor community which is linked into local production networks.


1. Introduction

In the rhetoric of local government reform, there has been much talk in recent years of a switch in local government from the public authority to the service enterprise and to the civic community. This invocation expresses a change that is supposed to have taken place in the relationship between local government and the citizen: a sovereign-authoritarian state stance towards the citizen being first transformed into a service relationship between the two parties and finally into a partnership in which citizens play an increasingly active role in shaping local policy and local services. The administrative reforms of recent years have been intended to promote this change. This article looks into whether and to what extent they have done so.

Three trends can be identified in the local government "landscape of change" in Germany and many other countries (cf. Naschold 1997: 20; Bogumil 2001: especially 108 ff.).

  • First, considerable efforts have been made to reform internal administrative structures, primarily following the so-called "New Steering Model" (NSM).
  • Second, there have been moves towards strengthening market and competition influences in the local government field, promoted especially by the deregulation aspirations of the European Union (EU).
  • Third, endeavours have been undertaken to improve the citizen focus of local authorities and to democratize and promote civic engagement.

These trends have been far from equally strong over the years. In the 1990s, the first trend predominated ("NSM"), whereas in the last five years the third has gained ground ("civic community"). Trend two ("marketization") has tended to be moderately represented in Germany throughout the period. These trends have been interrelated and interdependent. The NSM and marketization were both inspired by the international reform doctrine of New Public Management (NPM); the NSM and civic community approaches have both sought to improve citizen focus, although, as we shall see, NSM has been far less concerned with this goal. Our main focus will be on the last-mentioned aspect.

Taking as our point of departure the frequently invoked triangular relationship between politics, administration, and the citizen (cf., for example: Frischmuth/v. Kodolitsch 1999) we propose a quadripolar relationship matrix. It describes the interrelationships between actor groups that play a role in the current reform debate (see Figure 1). In the course of the reform processes of recent years, the following relationships have changed:

  • The relationship between the citizen and the market: owing to contracting out or privatization, citizens are increasingly being served by private enterprises.
  • The relationship between the citizen and politics: citizens are being more strongly involved through direct-democratic, plebiscitary elements.
  • The relationship between the citizen and administrative authorities. Administrative authorities have become more service-oriented; the citizen is being offered greater opportunity to participate.
  • The relationship between politics and administration: the NSM has given rise to new forms of political steering.
  • The relationship between administration and the market: services are increasingly being outsourced to private companies; public-private partnerships are becoming more frequent.
  • The relationship between politics and the market: the market is being affected by political pressure and decisions, for example in connection with regulation or privatisation.


Figure 1: Interrelations between actor groups in the reform processSource: Reichard

The interrelations between actor groups shown in Figure 1 raise the following question: in what roles and in the pursuit of what interests does the citizen as a private individual and as a member of economic organisations or interest groups confront the community, its administrative and political apparatus? The following interfaces between the citizen and the community can be distinguished (cf. also Bogumil 2001: 219, who stresses the three roles of the citizen as contractor, addressee, and co-producer):

  • the citizen as elector of political representatives (local council, mayor, etc.);
  • the citizen as (direct) co-decision maker on local policy issues (planning projects, user groups, civic action groups, etc.);
  • the citizen as co-producer and cooperator in the civic self-help or self-government process;
  • the citizen as service demander or customer (client, consumer) for public services;
  • the citizen as financier of local infrastructure and public services (through taxes, charges, etc.).

Distinguishing these roles and functions of the citizen is useful for the analyses to follow. It makes it clear that, although NSM reforms address the issues of the citizen as customer and the improvement of this interface with the administration, the other functions play less of a role in the model. The current debate on the civic community, in contrast, is primarily concerned with the citizen as co-producer and cooperator.

We will be focussing on how the relationship between the community and the citizen has changed through the introduction of the NSM, what effects of the reforms are perceptible from the citizen's point of view, what hoped-for developments have not taken place, what abortive developments have occurred, and what future requirements and developments are to be expected in connection with municipal management and the citizen.


2. "Soft" cooperation in networks

For a little more than a decade now, Germany's municipalities have been endeavouring to modernise their administration on NSM lines. Since the Association of Municipalities for managerial reforms (Kommunale Gemeinschaftsstelle für Verwaltungsvereinfachung - KGSt) issued its first report on the new management approach in 1991, and shortly afterwards the first pilot municipalities - primarily in North-Rhine Westphalia - began testing the NSM, unprecedented energy for reform has developed in the world of local government, which, according to the (larger) German municipalities themselves, had had spread to 90 per cent of local authorities by 2000.(1) The first version of the NSM, which diffused mainly in the first decade of the reform process in Germany, is referred to in accustomed software fashion as "NSM 1.0," although it doubtless does not constitute a completely coherent version of NSM in municipal practice, there being a range of variants. Nevertheless, common features in the reform "model" predominate, as propagated with missionary zeal since the beginning of the 1990s by the KGSt.

The NSM focuses on the following elements (based on the KGSt ten-year interim appraisal report; cf. Hilbertz 2001: 10):

  • "Clear division of responsibilities between the political and administrative authorities
  • Leadership by agreement on performance instead of by individual intervention
  • Decentralised overall responsibility in the competent organisational unit
  • New type of central control with controlling and reporting systems.
  • Output-oriented management
  • Competition."

The NSM-reforms are primarily concerned with the internal organisational and management structures of local administrative authorities. Particular weight is placed on reorganising jurisdictional and responsibility structures, firstly as regards relations between political and administrative authorities, secondly by integrating hitherto divided responsibilities for results and resources. The fragmentation of decentralised operative responsibilities was to be countered by strengthening centralised framework control by the top management and a supportive controlling service. Another central aspect is the emphasis on result-oriented management concepts, also expressed in the use of such instruments as cost-accounting, controllership, budgeting, etc. Although the KGSt names "competition" as the final core element of the NSM, there has been little practical engagement in this respect in the first decade of reforms except for certain non-market competition approaches like performance comparisons.

Although no useful nationwide evaluation of reforms has yet been carried out in German municipalities and - apart from a few case studies - research has to rely on the self-assessment of local authorities such as the regular surveys conducted by the German Association of Cities and Towns (DST) (cf. Grömig 2001), it is apparent that the "NSM" reform programme has found wide application in recent years in German municipalities. Almost all larger cities and all rural districts have had experience with at least some of the elements mentioned above. However, all communities are still in the "thick" of the reform process and none has "come to an end" - which is not surprising given the complexity of the reform programme. Typically for such complex projects, certain phases can be identified: a "bushfire" euphoria phase until about 1996 was followed by a consolidation and sobering-up phase in the reform process, which lasted until about 1999. Since then, enthusiasm in many communities has ebbed still further, and in some cases reform projects have even been (provisionally?) put on ice. Some municipalities, however, are working to develop NSM and to elaborate new concepts of modernisation (see below).

Scant empirical evidence and subjective individual impressions of NSM reform implementation yield the following findings: (2) 

  • At least some success has been achieved in restructuring municipal administration(flatter hierarchies, the establishment of responsibility centres, the integration of responsibilities for results and resources).
  • A great deal of effort has been put into describing administrative "products" without a significant benefit becoming apparent in all cases.
  • Much has also been done in the field of (input) budgeting and introducing cost accounting procedures.

In many other areas of reform, the success of implementation has been rather meagre. There has been a little experimentation with contract management, isolated efforts with performance indicators and the relevant comparisons; various quality management tools have been tried out, and some communities have tested personnel management tools. Overall, however, all this has tended to be marginal. In most cases, NSM 1.0 implementation has been restricted to a few selected management tools and to reorganisation measures. Other elements have not played a major role.

Furthermore, if one asks what effect NSM reforms have had, the answer is still somewhat sobering. At any rate, there seems to have been some gain in efficiency, largely due to budgeting but also to quite classical cost-cutting measures. Some success has also been achieved in citizen focus, but only partly thanks to NSM (for details see below). Finally, it appears that administrative processes and outcomes have become more transparent for both insiders and outsiders - e.g., for the public, too. Compared with the previous state of administration, this is doubtless to be seen as positive, but it cannot (yet) be considered a major breakthrough in the modernisation process.

A range of critical objections have been raised over the years with regard to NSM, especially in its first version (NSM 1.0) (see for example: Bogumil 2001: 124 ff.; Reichard 1997: 54 ff.; Wollmann 1999), which will be dealt with in detail.


Political Abstinence of NSM

An essential NSM demand has not yet been met: "new" political control of the community by the local council. The goal was to induce the council to concentrate on strategic-political framework control and to renounce detailed everyday invention in administrative proceedings. Success has been limited so far, the political system proving largely deaf to this appeal. At best, there have been minor adjustments, for example the adaptation of committees to changed municipal organisational structures or the introduction of council information systems.

There are various explanations for NSM political abstinence. First, one can take the view that NSM is fundamentally administration-driven and so far offers few attractive new options for political control. It can therefore be regarded as a "natural" reaction on the part of the political system not to renounce tried and tested control tools (even if they are judged inadequate) for as long as practicable new political control approaches are not available. On the other hand, it can also be argued that any change in controlling behaviour in the direction of framework control is generally rejected by politicians as unattractive because it does not harmonize with political rationalities, interests, and forms of conflict resolution. This is the view taken by, for example, Bogumil (2001: 171 ff.), who believes that the NSM demand for new political control inhibits competition between political parties and can contribute to a loss of power in the political system. Any way, politicians are unlikely to reap many votes with the issue of "administrative reform," so for this reason alone their interest is limited (cf. Röber 2001: 52; on this discussion see also the empirical findings of Brandel et al. 1999).


Dominance of Cost-Reduction Goalsand Scepticism among Staff

Given the growing financial crisis facing German municipalities, budget consolidation is becoming an increasingly urgent goal and has also played a dominant role in the reform debate. It has often claimed that the NSM would not only bring reforms but also cut costs. This jeopardized the credibility of reforms among employees. They had a growing impression that the NSM approach was a cost-cutting programme. They saw their jobs in danger, and consequently refused to go along with reforms (cf. Röber 2001: 50 f.). However, staff acceptance was also low because they were insufficiently involved in reforms in many modernisation projects (cf. also Kißler et al. 2000). According to DST surveys, almost 50 per cent of local government employees have reservations about reforms; clear evidence for this negative frame of mind (cf. Grömig 2001).


Lack of Interest in Market Mechanisms

In Germany, in contrast to other, especially Anglo-Saxon countries, reformers have taken little interest in introducing or strengthening market and competition elements. Although some effort has been made in recent years in the field of non-market competition to carry out performance comparisons and benchmarking (promoted, for example by the Bertelsmann Foundation and the KGSt "IKO-Netz" of inter-municipal benchmarking), directly market-related approaches (such as market tests or compulsory competitive tendering) have played hardly any role at all. This has certainly also been due to restrictive legal arrangements, like the public tendering regulations or the local government constitution, but it was primarily due to the unwillingness of (local government) actors to venture into the uncharted waters of competition. More recently, however, pressure from the EU to deregulate has provoked a certain dynamic.


Neglect of the Citizen View

The NSM has taken insufficient account of the citizens in their various roles. Although quality improvement is a marginal aim, only the customer role has been stressed, largely to the neglect of citizens' other functional relations. In its first phase, the NSM reform has, on the whole, concentrated one-sidedly on the internal structure of administrative authorities. The results of reform efforts have remained largely invisible to the citizen. Many observers have seen the reform as "an event staged by bureaucrats for bureaucrats" (Röber 2001: 56), with hardly any impact on the outside world.

The following section shows that the KGSt and municipal practice have reacted in various ways to the perceived shortcomings of NSM 1.0 and to scholarly criticism - but from the citizen's point of view this is unlikely to have sufficed.


3. "NSM 2.0": Evolutionary Expansionof the Concept

After about 1995, the KGSt began to supplement and expand the NSM concept by "building on" additional reform elements. This was primarily in response to suggestions from some municipalities, which, after first experience with NSM 1.0, had come to realise it was very restricted in range. For example, practice soon showed that the NSM affected various other areas of municipal management (e.g., organisation and human resources), and that the specific conditions of application for NSM needed to be more closely examined in certain local services like welfare and health. At that time very little input came from scholars, for the academic discourse on the NSM really only began from about 1994.(3) 

The modules developed in the second NSM phase to supplement core elements, "NSM 2.0," so to speak, can be described as follows (the current work programme of the KGSt provides a good overview of additions; cf. KGSt 2001):

  • Moves to develop municipal accounting systems: from the basic report 1/1995, which describes the fundamentals of the KGSt proposal for a resource consumption concept, and various supplements to the budgeting and accounting systems (reports 3, 7, and 9/1997 as well as 6/1998 and a cost accounting manual from 1999) to a trendsetting approach to strategic budgeting (10/2000). In the field of municipal accounting, recent years have seen almost revolutionary developments in local government practice, indicating a shift from cameralistic accounting to a double-entry, accrual, resource consumption system (cf. Lüder 2001, Bals/Reichard 2000).
  • Moves to develop quality management: here, too, the foundation was laid by a KGSt report 6/1995 for local government quality orientation; later reports went into greater depth on the subject (including 8/1997 and 2/2001). The sub-issue of "customer surveys" was also presented (13/1997). In practice various efforts were undertaken in this direction. There have, for example, been experiments with citizen surveys, with employees' improvement proposal systems including complaints management; call centres have been tried out, ISO or EFQM quality audits undertaken. Overall, however, quality was a marginal issue and tended to be treated instrumentally rather than holistically.
  • Attempts to achieve greater citizen focus: apart from the customer-related quality efforts mentioned, the KGSt also touched on other subjects concerned with citizen focus. In 1999 they published both an overview report on civic engagement (6/1999) and a materials volume on citizen offices. This was also about when local government practice discovered the "civic community" issue and launched the first projects. As shown in chapter 4, the subject of "citizen focus" was not raised in the NSM debate, it was a separate discussion string.
  • Moves to improve human resource management in municipalities: to begin with, human resource management was not an explicit element in the NSM (disregarding the impact of NSM reorganisation on responsibility structures). In the course of expanding the NSM, however, reports on human resource development (6/1996 and 3/2000), on leadership (3 and 4/1999) and on training (5/2000) were published in the hope of convincing municipal executives that the NSM had no chance of success if the personnel factor was left out of account. In the practical field, too, some effort has been made since the mid-1990s to improve human resource management tools (besides selection procedures and human resources development, experiments with performance bonuses), but they were only sporadic and not based on a workable personnel policy model.
  • Other supplementary approaches: the topic of "competition" was treated rather marginally in supplementary publications on NSM. There are two KGSt reports on the subject (8/1996 and 12/2000). In the non-market area there have been some activities in the practical field, e.g., the Bertelsmann Foundation performance comparison circles, which sometimes attracted more than 150 participant municipalities, and the numerous comparison circles of the KGSt inter-municipal benchmarking network (IKO-Net). There were also initiatives to create internal administrative markets by setting up internal service centres based on contractor/provider contracts. It was very late in the day that the KGSt finally took the initiative to expand the operatively oriented version of NSM into one that took more of a strategic-political management approach. At least six reports on strategic management have meanwhile been issued, the first four as a unit 8-11/2000).

Since 1995, NSM 1.0 has progressively evolved with the step-by-step addition of elements to constitute an expanded "NSM 2.0" version, which is currently being applied in many German municipalities. The overview of the supplementary elements shows that, disregarding certain elements concerned with citizen focus and competition orientation, the new version still concentrates on internal aspects. Despite much reform rhetoric, the NSM has thus not yet succeeded in opening up to the citizen.


4. Expansion of preventative measures

In Germany, the topic of "citizen focus" - especially at the local government level - has had its ups and downs. In the 1970s it played a considerable role. There were efforts, for instance, to promote "citizen-friendly behaviour" among staff, to establish citizen-focussed organisational forms, and so on (cf. the sound four-volume work by Grunow et al. 1978). The first "citizens' office" was set up in Unna at about this time. In the 1980s and early 1990s somewhat less was to be heard about the topic until it surfaced again in about the mid-1990s. To a limited degree, more recent moves towards citizen focus have been fostered by the NSM. As we have seen, in implementing the NSM certain efforts have been made to improve service to the "customer" for public services. They were concerned with demand assessment ("customer monitors" and the like) and with organisational improvements (e.g., longer opening hours, shorter application processing times, information and complaints facilities; cf. Bogumil/Kißler 1995 for a critical assessment of the actual implementation of such approaches).

But what really focussed local government on the citizen was not the NSM; it was an independent development, one that even ran counter to what was seen as a technocratic and one-sided ("customer view") NSM approach. Three main streams can be distinguished, depending on what role of the citizen is to the fore:

  • Improvements to service functions (the citizen as customer): activities to establish citizens' offices, , designed as one-stop offices offering the citizen simple, rapidly dealt-with services and avoiding tiresome orientation and jurisdictional problems (see the overview of the origins of citizens' offices in Lenk/Klee-Kruse 2000). In future, e-government will allow such facilities to deal with many more matters because virtual cooperation with different public and private back offices becomes possible.
  • Improved participation opportunities (the citizen as co-decision maker or political client): participatory and plebiscitary, direct-democratic approaches that have broadened citizens' scope for participation outside the usual electoral cycles in the form of referendums and popular petitions, for example, but which can also assume many forms of informal participation like civic action and user groups, planning cells, or round tables. Such trends towards strengthening participation and co-decision making are to be registered in many European countries as well as in Germany, especially at the local level (for an overview see Daemen/Schaap 2000: 180 ff.) (cf. Wollmann 2002; see Bogumil 2001: 174 ff. on how this impacts established representative political structures)
  • Improved opportunities for civic collaboration (the citizen as co-producer): approaches to strengthening civic engagement and volunteerism, which can draw on considerable engagement potential among citizens (cf. Klages/Gensicke 1999), which amount to a shift in emphasis towards civil society, self-help, voluntary engagement, activation, etc. and which can ease the burden of government (see the many proposals put forward by the Bundestag parliamentary commission of enquiry "The Future of Civic Engagement" 2002).

These three streams have produced a number of concrete moves at the local government level in Germany towards greater citizen focus. First, citizens' offices have been set up in many towns and cities and some districts, a first stop for the citizen performing a positive service function. Second, citizens' scope for direct-democratic participation has markedly improved, as regards both formal procedures and informal, volunteer participation. Third, there has been a perceptible trend towards the "civic community" in recent years, which has produced a wide variety of concrete models and procedures for involvement in local planning and service processes in a broad range of fields (e.g., sport and recreation, culture, welfare, youth work) (see examples in Dettling 2001 and empirical evidence Zimmer 2002).


5. "NSM 3.0": Local Governance as aNew Understanding of Municipal Management

For various reasons, local government needs a new "governance" approach that differs from the current version of NSM (2.0) in the following ways:

  • Larger municipalities, especially big cities, need a corporate holding structure, that is to say an overall management concept that allows them to control core administration, subsidiaries, utilities, corporations and (other) contractors of the municipality in accordance with a standard management logic. So far the NSM has generally been limited to core administration, while subsidiaries have been managed differently, an arrangement generally judged inadequate.
  • The different areas of local government responsibility, for example welfare, construction, registration, education, culture, make specific demands on management within the standard overall management system which need to be taken into account by sectoral management concepts. Experience has shown that social services, museums, schools, maintenance workshops, and public order offices have to be managed differently and cannot all be subjected to one and the same NSM formula.
  • The trend towards a "guarantor state" (see below) requires a distinction to be made between contractors (council, top management) and providers (own municipal services or third parties); the steering model must also take this into account, for example, in the context of contract management.
  • If local infrastructures and services are to be increasingly provided by local networks involving not only governmental providers but also private firms, civil society associations, and groups of citizens, this poses new sorts of coordination and control problems that cannot be adequately handled by the existing NSM approach with its internal structure orientation. A broader "governance" approach is needed.

These new demands cannot be satisfied by the current NSM version, which still focuses on internal structures. The vision for the future amounts to a "NSM 3.0" that can offer support in meeting the four challenges mentioned: managing the whole holding, sectoral subcontrol, a guarantor model, and a governance approach. No solutions of this type have yet been developed in concrete terms. The following three elements indicate what would have to be kept in mind in developing a future municipal steering model that takes relations with community stakeholders into greater account.

  • First, the perception of a local government as a "guarantor municipality". The community's politically legitimated decision-making bodies determine what local services are desired and can be afforded, thus "guaranteeing" or ensuring their provision by municipal services or private providers (including civic society). Consequently, the resulting organisational structures of a contractor/provider-split are to be laid down, the distribution of responsibilities is to be settled (responsibility for ensuring and for providing certain services), and the necessary criteria for making the make-or-buy-decision are to be determined (cf. Schuppert 2001 and Reichard 2002).
  • Secondly, the "civic community" element would have to be drawn on, which (again) assigns a central role and function to the citizen as co-decision maker, civic collaborator, and customer in the community. The municipality can promote the development of civic engagement by creating the appropriate enabling structures and providing the necessary human resources in the community. This could include local authorities providing the citizens with support and infrastructure in the way of acknowledgment, information, advice, and finance (specifically: volunteering agencies, citizen centres and the like; for details see Enquete-Kommission 2002: 333 ff. and 632 ff.). Furthermore, the citizen must be given more options for co-decision making, for example in the context of strategy development, planning cells, or of participatory budgeting ("citizen budget"; cf Herzberg 2002). This can redirect administrative reforms in German municipalities, which still focus primarily on internal modernisation, towards civil society solutions.
  • The third element that must be included is local governance; this means that the municipality is increasingly discarding the role of monopolistic service producer to become a network coordinator and facilitator. A municipal authority is then one member of a local governance network with the primary function of initiating, planning, coordinating, moderating, and controlling the delivery of politically desired local services (for details see Löffler 2001; Reichard 2002: 36 f.). It cooperates closely with other members of the network, e.g., with other public authorities (federal government, social insurance carriers, other local authorities), with private firms, with private charitable organisations and with citizens (citizen action groups). Such local service networks already exist, for example in local neighbourhood management.

In order to forge a proper steering concept for local government out of these model elements, a great deal of intensive development work certainly needs to be done, and other concept elements (such as outcome-related strategic/political control, corporate governance, leadership, etc.) need to be provided. Ultimately, however, the result should be a new version of a steering model for local government ("NSM 3.0") that is able both to control and coordinate internal administrative service processes - including those of municipal subsidiaries and contractors - and to devise purposeful relationships with stakeholders and partners in local service networks - including citizens in their various roles.



(1) On NSM see first the central reports of the KGSt from 1991 and 1993, second the scholarly debate on this concept. On the latter see, for example in German language: Bogumil (2001: 108 ff.); Jann (2001); Kißler et al. (1997); Naschold/Bogumil (2000); Reichard (1994; 1997); Wollmann (1999); also the debates in the multi-author works Reichard/Wollmann (1996) and Grunow/Wollmann (1998); for English language contributions see for example: Jann (1997); Reichard (1997b; 2003); Wollmann (2000). (back)

(2) Cf. Banner (2001); Bogumil (2001: 108 ff.); Jaedicke et al. (2000); Mäding/von Kodolitsch (2001); Reichard (2001a). (back)

(3) The beginnings of academic attention to NSM can be dated from the conference of the Local Policy Research working group in the German Association for Political Science (Deutsche Vereinigung für politische Wissenschaft - DVPW) held in August 1994 at the University of Potsdam, which found expression in the publication "Kommunalverwaltung im Modernisierungsschub?" by Reichard/Wollmann (1996). (back)



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