The reform initiatives in Pakistan seem to be preoccupation of interim governments who conduct them in a hurry. Most often the concentrati on is at a macro level so that key institutional reforms are missed. It is these institutional reforms that will allow a revival of efficiency in the provision of good governance. And we all agree that good governance is what need.

In our preoccupation with our own political and governance problems we have lost sight of the fact that most countries have undertaken substantial civil service reform. This includes England that we are so fond of aping. The modern civil service system is based on certain common elements and we should be aware of them.

The US administration is proposing to turn many federal agencies into 22performance-based organizations,22 or PBOs. The idea is to give these agencies far greater flexibility to manage their own budgets, personnel and purchasing, but in return to make them accountable for their performance.

The PBO proposals have already been successfully implemented in The United Kingdom by the Thatcher government. For 150 years, British leaders had commissioned study after study on improving the civil service. But Thatchers team did something no one had ever done: It asked the civil servants what they thought. The answer came back loud and clear: If you want better management, untie the managers hands and let them manage. Hold them accountable for results-not for following silly rules.

After spending two terms pushing privatization and downsizing, Thatcher remained unsatisfied with the level of efficiency in government. This forced her to look into steps to improve the civil service. She created and Efficiency Unit which in the late eighties developed a reform program which came to be known as the *Next Steps* initiative. It was based on the following principles: a. Separation of service delivery and regulatory functions into discrete chunks, each one called an Executive Agency. b. Agencies to have control over their budgets, personnel systems and management practices. c. Agency chief executive to be paid adequately to attract needed talent needed. Performance bonuses of up to 20 percent of their salaries could be paid but they must be forced to reapply for their jobs every three years. d. Agency CEOs to negotiate a three-year performance contract with their department, specifying the results they would achieve and the management freedoms they would be given. e. Setting of annual performance targets for each agency. f. All agencies on trial for their lives every three years.

The government later extended the time frame for performance contracts and agency reviews from three to five years. But the basic reform is now firmly in place. At 126 Executive Agencies, which employ almost 75 percent of all civil servants, CEOs now have the freedom they need to manage effectively. But both their pay and their job security depend on their agencys performance against quantifiable standards.

And every employee knows that if his agency doesnt perform, it may be abolished, privatized or restructured at its five-year review. Since 1988, the British have privatized about a dozen of these agencies.

The result is that even the largest agencies have increased their operating efficiency by at least 2 percent a year. On average, agencies got by on 4.7 percent less operating money in 1994-95 than they had the year before. Overall, the British have shrunk their civil service by 15 percent through the *Next Steps* process. Meanwhile, performance has steadily improved.

Agencies have used almost every tool in the reinventors kit: contracting out, public vs. private competition, performance bonuses, group bonuses, total quality management, customer surveys, business process reengineering, internal markets, 22one-stop shopping22 and more.

In 1991, the Labor Party pledged to keep Next Steps in place if it won power. And in November 1994, Parliaments Treasury and Civil Service Committee called it 22the single most successful civil service reform program of recent decades.22

The success of the *Next Steps* has established the PBO arrangement s as the most important way to manage public sector institutions. Many countries are now moving in that direction, leaving us in Pakistan with perhaps the most archaic civil service system in the world. New Zealand has already taken important steps in terms of introducing PBOs in virtually all government departments including the central bank. The central bank is given an inflation target for the coming year and the tenure of the central bank governor depends on the achieving of that target. Brian Mulroneys conservative government in Canada did a pilot program with about 15 22special operating agencies,22 but never gave them enough flexibility to make a real difference. Within the Clinton administration, Vice president Gore has been leading the effort to introduce PBOs and the accompanying ideas of Reinventing Government, the revolutionary book by Osborne and Glaeber.

May be it is time that we modernize our civil service and learnt from what the British are doing in this century instead of guarding their legacy from the past.