McKinsey Report

In the late 1960s and 1970s, Hong Kong had one of the world's fastest-growing economies, with a population that had doubled from 2 million to four million between 1950 and 1970, leading to increasing pressure on public services. Governor MacLehose, who took office in 1971, had plans to reform Hong Kong's social policy and greatly expand the welfare system, which would place even greater pressure on the government. MacLehose, a former diplomat, bore a mistrust of the colonial government and found its bureaucratic machinery an obstacle to his proposed reforms. He subsequently commissioned McKinsey & Company in 1972 to produce a report on how the bureaucracy could be improved, without touching the colony's basic constitutional arrangements. The choice of engaging a "modern" firm of management consultants was a novel one; the usual practice would have been to appoint a high-level commission of senior or recently retired civil servants and distinguished citizens in Hong Kong, or to request the appointment of a royal commission by the British government in London. == Recommendations and implementation ==

In its first report in November 1972, McKinsey suggested that the biggest problem facing the government was its "fundamental difficulty of trying to expand services in the face of a continuing decline in numbers of skilled and experienced staff, and the resulting dilution of their efforts." McKinsey conceived that the policy branches would delegate much of their day-to-day administrative responsibilities to the departments, with the branches taking on the job of policy formulation. Implementation The six new policy branches created in 1973 were Economic Services, Environment, Home Affairs, Housing, Security, and Social Services, with the two new resource branches being the Finance Branch and the Establishment Branch. In 1974, the New Territories Administration was upgraded to become a branch, with the District Commissioner for the New Territories retitled as the Secretary for the New Territories Administration. The Colonial Secretary was retitled the Chief Secretary in 1976, with the Colonial Secretariat accordingly renamed to the Government Secretariat. In 1980, the Education Branch was created with the Secretary for Education as its head, with the Education Department coming under its purview. == Public response ==

The government's re-organised structure was often described at the time as being a miniature cabinet. Some observers noted that the new structure resembled that of a corporation, ostensibly bringing with it the efficiency of a business; the governor was compared to a CEO, with the Chief Secretary, Financial Secretary and Attorney General as his deputies, to whom the secretaries of the new branches were responsible, with the Executive and Legislative Councils playing the role of the shareholders. However, some within the government were critical of the way the reforms were carried out, with some senior civil servants feeling some unease at the break in tradition and the sense that they had been sidestepped. The reforms also shifted policymaking power from the Executive and Legislative Councils to the civil service, with civil servants having to adapt from their previous role of only having to carry out policy. == References ==