Reviewing the long-term manpower strategy of the Hong Kong Housing Authority: a prinicipal-agent modelanalysis

Abstract

The Hong Kong Special Administrative Region Government is definitely a typical example of a tradition bureaucracy which translates policies into actions. It relies on neutral and career civil servants working in the Weberian hierarchy to deliver public goods and services. The principal-agent theory may be used to study the contractual and hierarchical relationships in the public bureaucracy. It postulates that agents have conflicts of interests and information advantages over their principals and make use of opportunities to manipulate their principals and the political process for gains. Hence, an appropriate manpower strategy, either by external labour market or internal labour market, is necessary to ensure agents choose those courses of actions that produce desirable outcomes so as to achieve organizational objectives and operational efficiency.

The Hong Kong Housing Authority (“HKHA”), as a statutory body, is responsible for formulating public housing policies in Hong Kong whereas the Housing Department, as the executive arm of the HKHA and one of sixty-one government departments, is responsible for its implementation with the objectives of the Government’s Long Term Housing Strategy. In late 1990s, the Government embarked many public management reforms in which the fundamental ways in delivering public goods and services have been altered. Since 1998, the HKHA has introduced many substantial reforms in its core businesses, including an aggressive manpower strategy of employing contract staff and ceasing the recruitment of civil servants.

The HKHA’s original long-term manpower strategy which mainly relies on the civil service fits the Internal Labour Market model very well and promotion serves as an effective mechanism to achieve organizational efficiency. However, the employment of contract staff which introduced a number of efficiency features from the external labour market fails to appreciate the importance of promotion, and operational inefficiency was found as evidenced by various documentary sources and analyses from interviewees. The findings of this study are consistent with the Hypotheses and it is recommended that the HKHA explore alternative human resource management policies and practices, in additional to the existing ones, to cope with the rising public expectations and the increasing challenges for the years ahead.