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Stephen Walker

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Polar opposites: Public and private sectors


Stephen Walker conducts a wide-ranging review of the differences in management between the public and private sectors.


In my childhood, maps of the world still showed a lot of pink – the British Empire. Apart from Canada, South Africa and Australia there was a rash of pink islands in the West Indies and the Pacific. Older maps would show India and much of the Middle East as pink and I have skipped over so many important countries.
The administration of all this Empire called forth an Imperial Civil Service. The Colonial Office begun in 1768 and finally merged into the Foreign & Commonwealth in 1968. The Colonial Office ran as 16 different services, from administrative to veterinary, in each colony.
Naturally, all that experience was very useful as the UK's public sector began its inexorable expansion in the middle of the last century.
Arguments over public and private sector skills have been around that long too. According to the Journal of Management Studies, in 1953 Sayre was moved to say that public and private organisations are "fundamentally alike in all unimportant respects".


So how alike are the private and public sector?

The public sector likes to say that private sector organisations are about making profit and nothing else. Whereas, the public sector balances competing demands from a wide variety of stakeholders. How does a hospital decide on a budget allocation between replacement knees or heart transplants?
My background is private sector. The profit/turnover thrust is there for sure. But it is something you achieve by carrying out all the other things you want to do. In business you are responsible for shareholder value. How much do you invest for the future and how much do you take as profit now?
To say the private sector doesn't have a wide variety of stakeholders is not right. Just ask BP.
Nevertheless the financial control strategy of public budgets has been deemed to be ineffective. Stories of hospitals running through their annual budget in nine months are quite shocking. I imagine if they re-scripted Oliver to a 21st Century hospital he would receive a lot more when he asked for it.
There is the rub. Who could reject Oliver's need for more in today's caring Britain? Public sector performance has moved on to the balanced scorecard approach, albeit with multiple targets. Which simply moves the question to what targets, who sets them, why these targets?
The targets are set by the political masters. The true difference between the private and public sectors is in control. If you want to tell who is in control of anything just follow the money. Customers give money to private organisations. Politicians give money to public ones.
The skills needed to be a successful politician are to be photogenic, charismatic and a good speaker. While some have solid work backgrounds, trainee chef (John Prescott) or insurance clerk (John Major), the route to the top demands a good showing in front of the media.
How do the political masters decide upon the multiple targets? Quite simply, in secret. If it is your mother that needs a new knee or your father a new heart you will complain about the target. Best to keep the decision-making process, the opinions and facts on which the decisions are made, well away from public scrutiny. Politicians would like to be re-elected after all!
Imagine trying to manage a public sector organisation where your outputs, your targets are at the whim of your political masters and subject to media frenzy. No wonder there is a desire for moral support. I described management to one public sector employee as "plan, do, review". She shook her head and said it is "plan, discuss best practice, do, review". While I am cognisant that how you get results is important it is shocking so much effort is spent on talking about how.
Surveys of public sector managers show them to value professionalism, the public good and to expect a comfortable work/life balance. It is not clear how the added pressure, pay and performance expectations of the last 10 years have worked through to more motivated staff.
Surveys indicate an increasing engagement with the organisation with seniority, but public sector managers consistently engage to a lower level than their private sector peers. If you mix the public sector values with the political need for secrecy and obfuscation the outcome is inevitable. A lack of accountability to the customers – that is you and me.


It's all about the targets

What are important are the targets. Performance-related pay, anguish from the politicians and a feeling of not being professional connive to make the targets the symbol of achievement. Am I wrong when I feel the NHS still cares for people but no longer about them? Have we become the vehicle whereby they meet their targets?
In any work situation, gaming is rife; make a target or determine a bonus by it and see what happens. Litter picking a few roads around the one that is used to measure litter for a target is small beer when set against what the bankers and politicians have been up to. And we haven't begun to look at expenses claims from Quangos yet!
Public sector management receives a lot of attention. Some research (in this case 'Public Administration Vol.84 - Public and private sector managers over 20 years: A test of the 'Convergence thesis'') draws this conclusion: " terms of public sector managers' attitudes and behaviour, the thesis of a straightforward convergence towards the private sector is difficult to sustain..." Whether public sector management should be different from private sector practice is moot. The fact is that it is different.

How would I make it better?

I vote for open government and freedom of information. Let's put the decisions underpinning the targets and all the data in the public domain. We need to recognise that with 20/20 hindsight some decisions could have been better and not blame anyone for making the 'best' decision at the time. Can we, the public, be trusted to be sensible? Or do we have the politicians and the public sector we deserve?
Stephen Walker has over 30 years of hands-on business and academic experience. He is the founder of Motivation Matters, a management consultancy focused on inspiring achievement in people. You can follow Stephen on Twitter and Facebook.


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