The 4th International Conference
on
Public Management in the 21st Century:
Opportunities and Challenges
第四屆 21 世紀的公共管理：機遇與挑戰
國際學術研討會
Wh e n P r i n c i p a l H o l d s t h e U p p e r
H a n d : C a s e S t u d i e s o f A u t o n o mo u s
P u b l i c O r g a n i za t i o n i n Th a i l a n d
Prakorn Siriprakob
(Chulalongkorn University)
22/10 – 23/10/2010
Macau, China 中國 澳門
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Thailand
When Principal Holds the Upper Hand: Case Studies of Autonomous Public
Organization in Thailand
Prakorn Siriprakob, Ph.D.
Lecturer, Department of Public Administration, Faculty of Political Science,
Chulalongkorn University
Mailing Address: Department of Public Administration, Faculty of Political Science,
Chulalongkorn University Henri-Dunant Rd., Pathumwan District Bangkok 10330
Thailand
Telephone: 662+218-7207
Mobile: 6681+442-6450
Fax numbers 662+255-2154,
E-mail address: [email protected]
Logistic Support Needed: Slide Projector
Paper prepared to present at The Fourth International Conference on
“Public Management in 21st Century: Opportunities and Challenges,” Macau, China,
October 22-23, 2010
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Abstract
The Autonomous Public Organization (APO) is a new form of public
organization in Thailand that is popularly used to transform public organizations that
are not profit-oriented to a more flexible and efficient organization by granting this
type of organization more autonomy and flexibility so that they can better perform in
a more effective manner. It is known internationally in the name of Quasi Nongovernmental Organization (Quango). The APO is based on the agencification idea
that is commonly used in developed countries, such as France’s Etablissement Public,
New Zealand’s Crown Entities, and British Executive Agencies etc. The APO hinges
on decentralization of functions and bases it idea on the New Public Management
(NPM), and Good Governance principles recommended by international
organizations, such as the World Bank, and the International Monetary Fund (IMF) in
order to help resolve the Thai economic crisis of 1997. Important theories
underpinning the NPM are the public choice theory and the principal agent theory. I
have argued in my previous paper (Siriprakob, 2010) that two out of three
Autonomous Public Organizations (APO) studied are not only agents but also
principals since the Public Organization Act of 2542 B.E. granted them much more
autonomy and flexibility to exercise power as they see appropriate. As a result, those
two agencies seem to place the interest of an agent ahead of the interest of the
principal by developing better benefits and well-being of organizations ahead of the
efficiency and effectiveness of organizations. In this paper, the research has explored
one of the three APOs previously studied that appears to be different than those
above-mentioned two APOs largely due to its leader. This is because if the principal
holds an upper hand; he/she will be able to control benefits provided to organizational
employees at an appropriate level as well as some management issues within the
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organization in order to increase effectiveness. For an organization to be able to do
this, it must have a very strong leader at its helm. However, Thai cultures still
influence the APOs to a large extent. Even though the leader can control the provided
benefits, he/she still has more difficult issues to deal with due to patron-client
relationships and the culture of deference. Those issues are performance evaluation
within the organization and regulation enforcement on other agencies that this APO
evaluates. In addition, agency funds are still the lingering problem due to the lack of
transparency and accountability. However, the usefulness of the finding has suggested
that having a good leader is extremely crucial, this is because a leader can at times;
direct an organization to behave the way he/she desires. The bottom line: decreasing
spending, which is one of the most important requirements in the NPM and Good
Governance principles, will be achieved to some extent and this would definitely be a
good place to start.
Keywords: New Public Management, Quango, Autonomous Public Organization,
Governance
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When Principal Holds the Upper Hand: Case Studies of Autonomous Public
Organization in Thailand
Prakorn Siriprakob
Introduction
Given the current state of uncertainty governing social, economic, and
political conditions, the traditional form of organization reflected in Weber’s Ideal
Type Bureaucracy (1958) (which emphasizes consistency through strict rules and
regulations) seem outdated because it is too inflexible to deal with an unstable
environment. Instead, the notion that another model is better suited for an everchanging world seems best reflected in the models described in Burns and Stalkers’
“mechanistic” and “organic” organizations (1961). For them, the “mechanistic
organization” is similar to the Ideal Type Bureaucracy of Weber (1958). While Burns
and Stalkers’ mechanistic organization (1961) seems better suited to deal with stable
environments, the “organic organization,” according to them, fits better with an
unstable environment. As a result, Quasi Non-government Organization (Quango) is
an attempt to turn bureaucracy, which is labeled as a “mechanistic organization,” into
an organic organization so that it can better deal with the unstable conditions created
by fluctuating conditions in social, economic, and politics dynamics.
Pursuant to the recommendations of leading international organizations such
as the World Bank, the International Monetary Fund (IMF), the Asian Development
Bank (ADB), and the United Nations Development Programme (UNDP), Thailand’s
Public Organization Act of 2542 B.E. (1999 C.E.) created the Autonomous Public
Organization (APO). APO is how Quango is called in Thailand. The recommendation
to create APOs arose from these organizations’ belief that the main reason Thailand
faced the hardships it did during the Asian economic crisis of 1997 was because of a
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lack of good governance. The remedy to avoiding this, according to them, lies in
decentralization. In essence, creating APOs is considered decentralization by function.
The creation of local government, in comparison, is considered decentralization by
area.
Another recommendation to resolve the economic crisis is to implement New
Public Management (NPM) concept as well as good governance principles in public
agencies. Pursuant to the recommendation, Thailand has applied those principles. For
example, the creation of the Office of the Public Sector Development Commission
(OPDC) aims to inject efficiency into public service by forcing public agencies to
create key performance indicators (KPI) that will measure achievement of stated
results. Moreover, OPDC has implemented several techniques employed in private
sectors, such as outsourcing work, downsizing, improving customer service,
decentralizing, etc. The OPDC also has the function of monitoring the APO.
It is common for developing countries to increase efficiency and effectiveness
in public service by creating an organization like the APO after implementing an
initial round of reform, which typically places an emphasis on putting market
mechanisms to work (Bresser Pereira, 1999 as cited in Peters, 2001). Unlike other
public organizations that are centralized under a “unitary administrative system,” the
APO is decentralized through “multiple administrative systems” (Bowornwathana,
2006).
The Public Sector Reform Plan of 2540-2544 B.E. is the starting point of the
creation of the APO and was enacted because the government felt the need to have a
third sector of organization that is more flexible and burdened with less regulation to
perform at least some functions that traditional bureaucracy and state-owned
enterprises do not perform well. This type of agency should be easily established
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through simply invoking the Royal Decree, which means it does not have to go
through the legislative process as other types of agencies must. Through the Plan, the
government also aimed to protect administrators from political interference by
ensuring more job security for them so that they can perform at their full capability
(Vejjajiva, 2000).
What countries’ Quango ideas was Thailand’s APO modeled after? The
answer is the French model and the Anglo-Saxon model. The primary characteristic
of France’s Etablissement Public is reflected in Thailand’s APO because the APO
does not perform core government functions, while the secondary characteristics that
mark the Anglo-Saxon model, such as that of New Zealand’s Crown Entities and
Britain’s Executive Agencies, is employed because the APO has its own authority
(Bowornwathana, 2004).
This third sector type of organization in Thailand can be divided into three
different eras as shown in table 1.
Table 1: The Evolution of Third Sector Type of Organization in Thailand
Era
Timeframe
1
1932-1989
Numbers of
Organization
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2
1990-1998
3
1999-present
Law
Important Issues
Some Acts and
Royal Decrees
-
27
Some Acts and
Royal Decrees
-
Additional
29 APOs
Public Organization
Act of 2542 (B.E)
-
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APOs are placed in the
same category with
state-owned enterprise
and thus have to share
the same budget,
personnel, and
evaluation system.
Status and regulations
are unclear over whether
they are eligible for the
same benefits as stateowned enterprises.
Clearer classification,
status and regulations
issues than those found
in the first two eras.
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Executive board has a
lot of freedom to
manage APOs freely; as
a result, APOs seem to
have too much
discretion over
regulations and benefits
Source: Summarized from Nitikraipot 1999 and 2000; Sawaengsak, 2006
Research Questions
This research posts the following questions:
1. What are the differences between public agencies and Autonomous Public
Organization (APOs) in terms of efficiency and effectiveness of organizations?
2. Has the flexibility given to APOs accommodated or hindered their efficiency
and effectiveness?
3. Do traditional values and cultures of Thailand have an effect on the
performance of APOs?
Literature Review
APOs are mainly created under the assumption set by the New Public
Management (NPM) concept mentioned above. Hood (1991) has posted seven
characteristics of an NPM as follows: (1) each individual is accountable for his or her
actions; (2) key performance indicators (KPI) should be used to measure results; (3)
emphasis on results not processes; (4) decentralization of power from the central
government should be encouraged to create more flexibility (5) more competitive
environments in public organizations should be fostered; (6) successful private sector
management and techniques should be emphasized in public organizations; and (7) to
caution should be exercised with respect to budget spending.
NPM is a concept underpinned by the public choice theory and the principal
agent theory.
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The public choice theory offers the idea that human beings are essentially selfinterested individuals. They are rational and they will select the most efficient option
if enough information is provided (Ostrom and Ostrom, 1971). This means that
human-beings will do whatever they want in order to pursue their own goal rather
than organization’s goals. The principal agent theory, in contrast, introduces the idea
of a contract agreement between a principal and an agent. The principal usually does
not have enough information about the agent; therefore, the agent will act upon his or
her own self-interest and will not disclose information fully to the principal. As a
result, agents might not work as hard as they are supposed to do due to the fact that
agents’ goals are totally different from the principal’s (Mahoney, 2005; Perrow, 1986;
Steinemann et. al., 2005; Weimer & Vining, 2005). In my previous paper (Siriprakob,
2010), I have claimed that when an agent becomes a principal, three events will
possibly occur (1) the principal will use their flexibility to benefit their organization
and officials, (2) the principal will not strictly evaluate their organization and officials
based on their performance as it is designed to be, and (3) NPM and good governance
principles acted by principal will be pretty much in doubt
Contrary to the above-mentioned assumptions, I contend in this paper that it is
not always necessary for a principal to act upon his or her self-interest to indulge an
agent and appease that agent in the above-mentioned scenarios. This is because if the
leader of an organization assumes the role as a principal who holds an upper hand,
he/she will then able to contain all of the above-mentioned three events under his or
her control and produce the following events instead:
Assumption 1: When a principal holds the upper hand, the principal is likely to
contain the benefits of the organization’s officials at the reasonable rate.
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Assumption 2: When a principal holds the upper hand, the principal is likely to
strengthen the level of performance evaluation of its officials at a satisfactory rate.
Assumption 3: When a principal holds the upper hand, NPM and good governance
principles will likely be better enforced.
However, when I have gathered additional in-depth information, I have found
out that Thai culture still has a tremendous effect on APO policy implementation.
Therefore, I have proposed two additional assumptions as follows:
Assumption 4: Even though a principal holds the upper hand, Thai culture still has an
effect on policy implementation enacted by the principal.
Assumption 5: Even though a principal holds the upper hand, agency funds are still a
lingering problem in APOs
Approaches on Values and Cultures That Influence Thai Bureaucracy
The influence of Thai culture and values on the behavior of Thai bureaucrats
has been mentioned by several famous scholars (Bowornwathana, 2007; Morell and
Samudavanija, 1981; Riggs, 1964; Siffin, 1966).
Riggs’ formalism (1966) referred to the idea that formal written rules are not
practically followed, but the old traditional Thai cultures are. Bowornwathana (2007)
indicates that even though the merit principles are supposed to be heavily practiced
after administrative reform, “spoils principles” still pretty much intervene in that
administrative system. Morell and Samudavanija (1981) discuss the value of
deference (greng jai) in the sense that a patron (boss) has to take care of his/her client
(subordinates) and vice versa in terms of a benefits-exchange concept within an
organization. This seems to go along well with Siffin’s concept of “personalism”
(1966), which refers to an idea that personal relationship is considered more important
than formal rules and regulations. Taken together, these above-mentioned values and
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cultures have somewhat obstructed and distorted the policy implementation of APO
as the findings will later show.
Transformational Leadership
Transformational leadership was the most influential leadership concept in the
United States during 1980’s and 1990’s (Linstead, et. al, 2009). According to this
concept, it can be summarized that importance is given to a leader who is able to
create a vision, make radical change, communicate that vision with his/her
subordinates, promote innovations, motivate and inspire his/her subordinates to
realize their full potential. At the end, all of these will lead an organization to achieve
a greater result. To better understand transformational leadership, it should be
compared to the concept of transactional leadership that marked former periods in that
the leader is not an initiator, but rather a person who supports, directs, and
coordinates his/her subordinates to achieve organizational goals. He/she therefore is
resistant to change (Daft, 2010; Gibson et. al., 2009, Linstead, et. al. 2009). The
reason I have used the idea of transformation leadership in this paper, because I
believe that Organization Sathorn director has possessed transformational leadership
quality through his visions, and inspire those visions to his subordinates and bringing
them to actions.
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Conceptual Framework
- Globalization
- New Public Management
- Good Governance
Economic Crisis of 1997
Mandates from International Organizations
Public Organization Act of 2542 B.E.
Studied APO Royal Decrees
Good Governance Royal Decree
Studied APO Executive Board Members
Studied APO Directors (Principal)
Traditional Thai Values
and Cultures
Administrative Policies
Personnel Policies
Evaluation Policies
APO Officials
(Agents)
Research Methodology
Yin’s case study method (1989) is employed in this study, because it is the
only methodology that allows a researcher to use multiple techniques, such as
interview, participant observation, archival records, etc. to collect data. As a result, a
semi-structured interview process (Berg, 2009) is used to interview key informants.
Semi-structured interview is an interview technique that allows a researcher to adjust
their questions as they see fit if additional information is obtained during an interview
process. Thirteen key informants from three APOs studied, such as directors,
executive board members, and APO officials in significant positions were interviewed.
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The interviews were taken place during August 2009 through January 2010. In order
to keep our promise to key informants not to reveal their identities, this research has
decided to use the famous street names of Bangkok, Thailand, such as Organization
Silom, Organization Sukhumvit, and Organization Sathorn, to replace the real name
of the APOs studied. Regarding archival records, Acts, Royal Decrees, annual reports,
and related documents were collected and analyzed through content analysis. Content
analysis is a study of communication among humans through several types of archival
records (Babbie, 2008).
The Difference between Traditional Bureaucracy and APOs
Table 2: The Difference between APOs and Traditional Bureaucracy
Autonomy
Rules and Regulations
Budget
Traditional Bureaucracy
Less
Strictly procedural control
Strictly procedural control
Procurement Procedure
Employment
Strictly procedural control
Mainly permanent
employment
Salary
Low
Benefits
Excellent with life-time
monthly retirement
pension
APO
More
More flexible
Executive Board’s
Discretion
More flexible
- Contract
- Outsource
- Part-time employment
Approximately 20-30
percent more than that of
bureaucracy
some are excellent and
some are market-priced,
and no life-time monthly
retirement pension
Source: Compared by author
Even though there are three organizations studied in this paper, the research
will concentrate on Organization Sathorn, because of the three organizations it is most
able to dictate policy implementation, especially on the matter of benefit provisions.
Organization Sathorn’s duties include evaluate other organizations’ performances. As
a result, government activities performed by Organization Sathorn should have more
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autonomy and flexibility, because the role of “an auditor” is supposed to be free of
political influence.
One of the issues that APOs enjoy more flexibility than traditional
bureaucracy does is in budget allocations. “The budget that we have is supposed to
employ only 64 officials, but we end up employing 80 officials,” said the president.
Thus, with this flexibility, Organization Sathorn can spend its budget as they see fit.
This concept fits with the structural contingency theory in the sense that contingency
factors, such as internal and external environment, helps determine the organizational
structure (Tompkins, 2005). Flexibility thus allows this APO to better structure its
organization structure as it sees fit. This would be better than having only one type of
organizational structure, as a traditional bureaucracy must deal with.
In the case of the difference between APO and other type of public
organizations, one of the Organization Sathorn officials said that “I do not see the
difference between APO and a private company that I used to work for. The only
small difference that I see is we have to be more cautious about rules and regulation.”
She also thinks that time spent on procurement procedure is no different from the
private sector. She also emphasizes that APO is known for “Bureaucratic heart, but
private sector work.”
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Assumption 1: When a principal holds the upper hand, the principal is likely to
contain the benefits of their officials at the reasonable rate.
Table 3: The Comparison of Officials’ Benefits of Three APOs Studied
Medical Coverage
Spouse’s Medical
Coverage
Parent’s Medical
Coverage
Children’s
Medical Coverage
Children’s Tuition
Fee (kindergarten
to undergraduate
level)
Dental Coverage
One-time
Retirement
Pension
Fitness Center
Benefit
Organization
Sukhumvit
(Thai Baht per
annum)
100% for public
hospital;
50% for private
hospital
100% for public
hospital;
50% for private
hospital
100% for public
hospital;
50% for private
hospital (no more
than 100,000 per
year)
100% for public
hospital;
50% for private
hospital
Organization
Silom
(Thai Baht per
annum)
Group Health
Insurance (up to
20,000 to buy
medical coverage)
(additional 20,000
can be reimbursed)
Organization
Sathorn
(Thai Baht per
annum)
Group Health
Insurance
(up to 8,000 to buy
medical coverage)
10,000 limit
Not included
10,000 limit
Not included
10,000 limit (first
three children)
Not included
9,000 to 20,000
(first three
children)
Not included
100% for public
hospital;
50% for private
hospital
Final monthly
salary x 10 (work
continuously no
less than ten years)
5,000
4,000
Final monthly
salary x number of
years worked (no
maximum)
No
No
Final monthly
salary x number of
years worked
(maximum of ten
years)
Yes
9,000 to 20,000
Source: Complied by author. As of September 17, 2010, 30.95 Thai Baht is equivalent to 1 US dollar.
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The majority of APOs that I have studied usually shows signs of putting selfinterest in front of the agency’s interest, which I have explained by using principal
agent theory. By looking at table 3, both Organization Sukhumvit and Organization
Silom officials enjoy a tremendous amount of benefits provided by their organizations,
because the benefits are essentially equivalent to that of officials in the traditional
bureaucracy, despite the fact that the implementation of contracted APO officials is to
remove costly benefits, such as parent’s medical coverage, spousal medical coverage,
and offspring’s tuition fee and medical coverage etc. in order to trim budgets and
create better financial disciplines. Yet these two organizations provide those abovementioned benefits.
On the other hand, the benefits of Organization Sathorn are somewhat more
reasonable. For example, medical coverage does not include coverage for spouses,
parents, and children. APO is designed to prevent its director and executive board
members from receiving the same benefits as their employees. This is to protect them
from taking advantage of the system by providing themselves excellent benefits. As a
result, the director is separately provided with a salary plus an extra thirty percent to
purchase his/her own health insurance and additional benefits. However, it turns out
that Organization Silom and Organization Sukhumvit officials still receive excellent
benefits. On the positive side, organizations with excellent benefits would definitely
entice competent people to work for the organization and retain excellent officials
with organizations for a long haul (Daft, 2010; Gibson et. al., 2009). However,
providing too much benefit would cost organizations in terms of budget spending in a
long run. On the negative side, excellent benefit provision is somewhat a benefit
exchange between superior and subordinate. This is because high ranking public
officials rely on junior public officials for their expertise, while junior public officials
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rely on high ranking public officials regarding their career advancement
(Bowornwathana, 1999). As a result, excellent benefits provided by their superior to
their subordinate are a form of reward that superior has for subordinate. The concept
that can also be used to explain this behavior is what Morell and Samudavanija (1981)
called “deference (greng jai)” syndrome.
“A man is reluctant to criticize his boss, friend, father, or prime minister. In
return, the superior is responsible for taking care of the subordinate in various
ways, protecting his interests through paternalistic reciprocity” (Morell &
Samudavanija, 1981, p. 28.).
In the case of officials’ dismissal, Organization Sathorn has dismissed some
non-performing officials, which is one function an APO is supposed to achieve more
quickly than the traditional bureaucracy. Yet Organization Sathorn has a few cases
pending before the Administrative Court because some of its former employees have
filed lawsuits against the agency because they felt that their dismissals were
inappropriate. “It is OK, I can defend myself. This agency is the APO, not the
bureaucracy one.” The president thus references the business-minded approach that
the APO is supposed to take in dismissing officials if their performances fail to meet
target levels.
Assumption 2: When a principal holds the upper hand, the principal is likely to
strengthen the level of performance evaluation of its officials at a satisfactory rate.
Organization Sathorn’s duties of evaluating other agencies force it to serve as
an example of accountability and transparency for other agencies to follow. As a
result, the agency has consciously engaged in a process of self-assessment by a third
party. As a result, Organization Sathorn is evaluated twice a year, and it publishes a
report annually. By the same token, each institution that has been evaluated by
Organization Sathorn is also required to publish an annual report regarding their
operations and make it available to the public. However, not many institutions act
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accordingly. Some institutions only report once every five years, because that is about
the time that Organization Sathorn is about to evaluate them.
For the case of individual evaluation, once starts working at Organization
Sathorn, there is a probation period of six months and it can be extended two more
times. Then, the contract will be renewed in the first phase for three years and every
five year afterward. During the year, there are two evaluations (every six month). The
first evaluation weighs 25 percent and the second evaluation weighs 75 percent. Each
APO official needs to receive at least evaluation score of 75 percent or more to
receive a “good” grade that will result to raises and bonuses. Organization Sathorn has
spent approximately 3.5 million Thai baht (approximately 112,900 US dollars) on
rewards alone. An evaluation score between 65 to 74 percent is considered an
“average” grade. An average grade will result in no raised and no bonuses and if any
officials receive an average grade for two years in a row, he/she will be dismissed.
Finally, an evaluation score lower than 65 percent is considered a “poor” grade, and it
will result to the immediate dismissal.
Assumption 3: When a principal holds the upper hand, NPM and good governance
principles will likely be better enforced.
Organization Sathorn believes in private business experience; executive board
members are appointed based on their proven successful records in private companies.
According to the president: “We avoid appointing retired government officials,
because we want quality, not compromise” The president believes that appointing
former bureaucrats to the post will likely result in a compromised culture that can lead
to inefficient operation.
With respect to executive board meetings, the director of Organization Sathorn
is extremely serious about meeting attendance. He wants all executive board members
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present at the board meeting and takes measures to emphasize attendance. For
example, he wrote a memo to the permanent secretary of the ministry (positional
appointment) that he/she is needed to be present at the executive board meeting or
he/she has to appoint a vice permanent secretary to attend the meeting (only one of
the two could attend.).
At this point in time, the president’s tenure is about to be finished, because this
is his second term (and there is a term limit of two, four-year terms). The organization
is performing a national search now. “I am the acting director, but I am still working
full-time. Other acting directors in bureaucracy do not work as hard,” he said in
emphasizing yet another difference between APOs and bureaucracy.
The director also indicated his son’s desire to work at this agency, but he told
his son to wait until his tenure at the agency is finished. “I do not want people to think
that my son can work here because of me. At the same time, I cannot prevent him
from working here based on the fact that he is my son.”
Recently, organizations subject to evaluation by Organization Sathorn have
expressed disagreement with the disclosure of their findings, which found that these
organizations did not excel in meeting their goals. “This is an excuse, they already
reviewed the results and defended their institutions, they already admitted the result
before we released to the public.” said the director of Organization Sathorn.
Assumption 4: Even though a principal holds the upper hand, Thai culture still has an
effect on policy implementation enacted by the principal.
The reason I claim that NPM and good governance principles “will likely be
better enforced” instead of “will be enforced effectively,” is because there are many
factors that contribute to the obstruction of NPM and good governance that prevent it
from working at full strength.
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“Thailand is a compromised society. Thai culture does not like to be
scrutinized. They do not like to be evaluated. As a result, most Thai agencies
have a culture of e-ap (concealed information behavior), they do not want
anyone to know anything about them,” said the president.
This sentence has been confirmed by the fact that stricter standards, such as
evaluation and certification, are not implemented. According to the president: “We
have to soften the criteria from evaluation to assessment and from certification to just
only evaluation.” This shows that it is extremely difficult for the government to fully
implement effective methods for evaluation because Thai culture obstructs it from
happening.
Even the director at times exhibits the influence of Thai culture. Recently, he
delayed release of evaluation results of institutions that graded below standard until
the “right time,” because he did not want the result to effect the people’s decisions
about those institutions. “Even though we like to have a good relationship with our
partners, we like to have a good relationship with the system more, because it is more
important” He said.
Regarding APO official’s evaluation, one official said “even though the
individual evaluation looks strenuous, it is not really like that. If some officials really
fail an evaluation, some extension will be granted.” This seems to go along with greng
jai concept mentioned earlier.
Assumption 5: Even though a principal holds the upper hand, Agency funds are still a
lingering problem concealed by APOs.
APOs are supposed to be non-profit entities; however, there are ways in which
they can earn extra revenues. Each APO studied seems to have alternate methods of
generating revenue, such as Organization Silom’s provided training programs and
Organization Sukhumvit’s charge of admission fees. For Organization Sathorn, extra
income is earned through their expertise in evaluation services and training programs.
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This income falls into the category of agency funds. Agency funds are income earned
by APOs that can be used at their own discretion under the authority of the Treasury
Reserve Act of 2491 B.E. (Suwanmala et. al., 2009) Additionally, clause 14 in Public
Organization Act of 2542 C.E. does not require the APOs to disclose those incomes to
the Ministry of Finance. Organization Sathorn has been employed by several public
agencies, such as the OPDC and the Office of the National Research Council of
Thailand etc. to perform evaluations of them. However, when APOs are not required
to report this income to the Ministry of Finance, it raises a question regarding
transparency and accountability posited by good governance principles.
Recommendations
The reason I have named this article when principal holds the upper hand is
because the director of Organization Sathorn by far provided the most reasonable
benefits compared to the other two organizations studied; as a result, I have
recommended the following recommendations:
1. It would be a good idea for an APO’s executive board to hire a director who
has had experience in the private sector, because the culture of business practice is
totally different from that of the public sector and because he/she will be more
cautious about budget spending, especially when it comes to benefit provisions. From
table 4, we can see that Organization Sathorn has provided less benefits compared to
that of the traditional bureaucracy.
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Table 4: The Comparison of Benefits between Bureaucrats and APO Officials
Medical Coverage
Spouse’s Medical
Coverage
Parents’ Medical
Coverage
Children’s
Medical Coverage
Dental Insurance
Lifetime Monthly
Retirement
Pension
One-time
Retirement
Pension
Benefits of Bureaucrats in
Traditional Bureaucratic
Agencies
100 percent for public hospital
100 percent for public hospital
Benefits of Organization
Sathorn
(Thai Baht per annum)
Group Health Insurance
(up to 8,000 to buy the medical
coverage)
Not Included
100 percent for public hospital
Not included
100 percent for public hospital
Not included
Included
Final monthly salary x number
of years worked / 50
Not included
Not included
Final monthly salary x number
of years worked (no maximum)
Final monthly salary x number
of years worked (maximum of
ten years)
Source: Complied by author. As of September 17, 2010, 30.95 Thai Baht is equivalent to 1 US dollar.
2. The OPDC needs to set up a standard to control benefits provided to APO
officials to meet the market-price standard rather than allowing each APO to provide
them freely. To this end, APOs should hire a consultancy company to survey the
benefits of their private company counterparts. I strongly believe that none of the
private companies provide benefits such as parent’s medical coverage and children’s
tuition fee etc. This way they will be able to eliminate some costly benefits that NPM
tries to get rid of from the beginning.
3. Even though Organization Sathorn has answered several questions
regarding benefits provision, it is still not able to answer the “agency funds” question.
Agency funds are still the lingering problem for APOs. In the case of Organization
Sathorn, there is one entity that earns extra income. Organization Sathorn does not
have to report this fund to the Ministry of Finance; therefore, they can exercise this
funding as they see appropriate. To put principal agent theory to work at full strength,
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the government (principal) should force all APOs (agents) to report these agency
funds to the Ministry of Finance in order to increase transparency and address
accountability issues posited by good governance principles.
Conclusion
The APO experience in Thailand is still at an early stage, and the government
still has time to find the right formula to put it to work. However, leadership seems to
play an important role in structuring benefit provisions for APOs as well as policy
implementation. The leader at Organization Sathorn has set a good example that
shows that hiring a director who has had experience in the private sector seems to
help allocate benefits at a reasonable rate and puts a result-oriented culture to work at
full speed. Public choice theory and principal agent theory are still extremely
beneficial in identifying problems existing in APOs, such as agency funds etc.
However, to fully better understand official behaviors in APOs, Thai culture is
extremely crucial to help explaining the phenomenon occurred in APOs.
Acknowledgement: The author would like to thank Thailand Democracy Watch
(TDW) at the Faculty of Political Science, Chulalongkorn University Bangkok
Thailand, who is the main sponsor of this project.
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