Public Sector Services Should Be Managed Just like the Private Sector - Essay Example

Public Sector Services should be Managed Just like the Private Sector The discussion on the management practices of public or private sector servicesleads to the discussion on the services to be considered either public or private. The distinction between public sector and private sector services vary from country to country. The distinction some times can not be made clear as the private sectors use state owned assets and provide public services and the state also lease assets owned and managed by private companies. But often a major characteristic difference can be seen between private sector services and public sector services. The public services are not usually sold to people to gain profit and are not withheld from the people who can not afford them (Flynn 2007). This difference though always not applicable to all public services, significantly affects the management practices in private and public sector. The private service is marketing oriented. Different services are provided to people paying different prices. The services and strategies are designed to offer customized and good services to attract people to the private service. The public services on the other hand are aimed to provide protection, education, care and help without taking into account the profitability. That is why the public services often face the problems with rationing and pricing as they treat all service users equally. As the need for marketing services or attracting people is minimal the profitability is often lowered too. While distinguishing the public and private services, it can be said that the public sector needs to provide services for public good where the market fails to do so. These services include those, which cannot exclude any individual, and a collective payment is needed for those services. The services, which are paid through taxes rather than through direct payment, are considered as public services. The armed forces, judiciary and police, civil services, local governments, essential infrastructure like road, welfare state like health, education, social security, housing, etc are generally considered as public services. Ownership of services also makes them public or private. But it is often seen that people are not much concerned with the ownership of the services they receive except when they consider employment. Public sector employments are often considered to be much secured but with low wage though there are jobs, which get better security and wage in private sector. There are certain practical arguments in support of the public services. There are services like armed forces or infrastructure in the country, which cannot be handed over to the private sector and the state, needs to control them in order to instill value and quality rather than profitability or business. Judiciary system or fire services need to be maintained as public services as the market is unable to provide such services. The services like health, education and housing can be provided by private sectors but complete privatization may not be desirable as it may attract perversity. But the health, education and housing services can be managed considering the positive parts of both public and private service management. These public services in UK have undergone a lot of privatization during last one or two decades. Outsourcing, private-public partnership, private finance initiatives, etc. have been considered in order to enhance service and lower the pressure on the state (Flynn 2007). The health service management as a public service attracts much attention as it is one of the most essential services having direct influence on public life. The National Health Services in UK faces huge demand of continuous innovation and service delivery for every patient always. The nationalized health services are the biggest organizations in the European countries employing about 1.3 million people with the ever-increasing investment since 1997 to 2008. The offerings from this sector are increasingly varying providing people with more and more choice and requiring the sector to improve their services even more. The organization of the publicly funded healthcare service in Europe, especially in England is divided into different tiers: Department of Health, Strategic health Authorities, Primary Care Trust (PCT) and NHS trust. The Department of Health sets the overall health policy. They coordinate funding, performance management and the overall improvement of public health. The Strategic Health Authorities integrate national priorities in local plans and look after the performances of the PCT. The PCT provide primary care services through interpretation of national policies. The NHS trusts provide secondary care services like hospital facilities and are paid by results from primary care trusts depending on the volume of work completed. The management of National Health Service bodies consists of CEO, medical director, nursing director and finance persons. The doctors head the clinical area in hospitals. Technical supports are also present. Under this huge organizational set up the management faces a lot of challenges in controlling the clinical governance under the supervision of the doctors. To increase profitability the sector needs to be competitive and improve performance and patient experience. Under the contemporary highly technical scenario, technical challenges are also the matter of concern. Changing priorities requiring to meet the latest requirement first often pose conflict. Managing this huge organization requires highly educated professionals. Evidence based practice is the paradigm for clinical profession. Professionalism is very weak in managers of health services and politicization is very dominant in management context. Under these circumstances management education becomes increasingly important for improving systems performance. The curriculum needs to reflect the wide range of experience offered by the health service management (Davies 2006). The private sector management practices can also induce innovation in practices and can please the customers. The private sector management practices help reducing wastage and inefficient money losing operations (Barkey, 2005). The management practices in public services like Further Education (FE) sector also gained significance with the enhancement in the number of FE colleges since the end of the Second World War. The FE sector has seen most radical changes since its establishment. In 1992 Further and Higher Education act transformed the FE colleges as corporate institutions funded by the Further Education Funding Council (FEFC). The initial organizational and administrative practices taken up by the FE sector resulted in failure of numerous institutions and their managements (Goddard-Patel and Whitehead 2000). There are about 390 FE colleges serving around 6 million learners. The colleges offer varied range of programmes including national vocational qualifications (NVQs); higher national diplomas (HNDs); General and Advanced certificates in secondary education (GCSE’s and A levels); access to HE; non-vocational adult education; Welfare to Work courses; modern apprenticeships and foundation degrees. The FE colleges provide education to the students between 16 and 19 years along with about 76% of FEFC funded students over the age of 24 years. The corporate status of the FE colleges made them independent and entrusted the responsibility of managing staff, finance and marketing on the college Principals primarily and encouraged them to follow the private sector management practices in terms of human resource management (HRM) and total quality management (TQM). These management styles borrowed from the private sector may help in budgetary control and performance accountability at local level leading to greater control over expenditure and improvement in quality. The managerial control and professionalism can be enhanced with participative management practices. Proper information flow and the involvement of lower-level employees in decision-making can induce the value based behaviour among the employees and reduce grievances. A non-participative management style can create problem for the functioning of the college as senior managers fail to draw on repositories of creativity and expertise lower down the organizational hierarchy (Humphreys and Hoque 2007). But there are also constraints in using participatory approach to management in FE sector. Funding in this sector depends on recruitment and retention attracting competition and the level of funding has dropped year after year. More aggressive management style along with increased teaching hour, more resource based learning, growth in agency or part-time based staff, increased administrative workload on lecturers, communication gap between senior management and lecturers, lack of management skill, etc. are the other constraints faced by the FE sector while using participative management practices. Public services and scandals are intermittently related. Financial irregularities and incompetence are often the major reasons behind public or private sector scandals. Increasing privatization of the public sectors also increased the opportunities for corruption. The public sector employees can often take advantage of their public position for personal benefit. While conflict of interest can not be eliminated completely the private interests of the public officials need to be identified and managed properly. The modern day cooperation between public and private sectors such as public-private partnership, sponsorship, contracts and self regulation often increase potential for conflict of interest. In health sector the scandals may often result in death. It is found very frequently that the lack of timely response from the management or inefficient leadership enhances the scandal in public sector and people often lose faith on public officials and internal inquiry procedures. The increasing demand for public inquiry reflects the lack of public confidence on the procedures available. To avoid scandal the aspects of investigation procedures in terms of lack of openness and public scrutiny need to be revised as soon as possible (Walshe and Higgins 2002). According to the Organisation for Economic Cooperation and Development guidelines (2005) expression of leadership qualities among the senior managers, demonstration of organizational culture and trusted relationship between employees can tackle the scandals to quite some extent. The need of a proper leader in public service management is inevitable. Leadership is a quality which is able to influence a group to achieve common goals. The leaders with this quality can define organizational reality through the articulation of a vision. The public services in the UK have drawn the concept of ‘transformational leadership’ from private sector. The public service leaders operate within a quasi market framed by performance indicators. The concept of transformational leadership fuses the perception of goal of the leaders and the followers and help to pursuit higher purposes. In the public service organizations the leaders have to face a number of dilemmas in terms of centralisation vs. decentralisation, economic vs. social facet, professional control vs. stakeholder involvement, entrepreneurialism vs. ethics, etc. The characteristics of transformational leadership dominated by single leader may be detrimental to the democratic governance in public sector. The generic organization and management concepts are also very difficult to transfer from private to public sectors. The public sectors thereby started to concentrate on a number of alternatives including managerial, professional, moral, distributed and contingent leaderships. The distributed leadership is gaining increasing importance in the context of modernized public service management. The distributed leadership is a set of processes or dynamics occurring among and between individuals, groups and organizations. The processes are widely distributed among individuals and at the same time are centralized in the hands of the leader (Hartley and Allison, 2000). The distributed leadership is characterised by shared responsibility and power, reconciliation of divergent goals, focus upon development of relationships, trust and mutual understanding between stakeholders, decentre-leadership and potential of others to make leadership contribution. The distributed leadership facilitates knowledge sharing inside the organization and employee contribution towards the development of strategy. It is completely suitable for network forms of organization, teamwork & empowerment initiatives. Strategy and planning are the major characteristics of management in any sector. Any business strategy identifies the purpose of an organization and sets the action plans required to achieve that purpose. The senior managers in the public service organizations are treated as strategists who set business plans, visions and missions and manage organizational culture in response to the long term direction of the organization keeping in mind the dominant political ideology, degree of marketization and availability of resources. Increased political intervention may result in short term decisions in public sector management. The education sector is an example of such high degree of political intervention resulting in centralisation, rapid changes, reduction in professional autonomy and unequal relation between stakeholders like the government, staff, students, trade unions and the employers. The government abandoned social partnership, introduced national curriculum with controlled design along with key stage test, established new inspection bodies, set regimes of target based funding and incorporated FE and polytechnics in education sector. The centralisation took place because of the failure to persuade key stakeholders, low level of trust with high demand of accountability and the effort to control previous interventions. This policy has resulted in permanent dynamism and due to the lack of any restraint on the government from the stakeholders the government has become solely responsible for policy setting and monitoring. Thus it has become necessary for the government at this juncture to lose some control on the education sector so that the other actors can take active part to build their capacity in managing the sector (Keep 2006). Public service management is hugely driven by the management of finance. Traditionally the National Health Services drew all the funds directly from the taxes. Other public bodies like education, police, social services, etc. all depended on mixture of local taxes and other charges. The concept of Private Finance Initiative (PFI) was introduced in 1992 in the UK. Under this concept the private sectors design and build schools, hospitals, etc. and run the same for about 25 years as per the Service Legal Agreements and receive revenue payments from the public sectors if the targets are met. At the end of the agreement the ownership reverts to public sector. The introduction PFI helped the public sectors to avoid making big payments and get funds easily through bank loans which is more difficult for the public sectors due to complex regulations. The risk of investment can be shared with the private sector and the expertise from the private sector can be used more efficiently. Improvement of infrastructure is also made easy and fast through PFI. But the concept of Private Finance Initiative also raises some controversy. It is said that the loans taken from the banks turn out to be more expensive as the private sectors borrow at a higher rate than the government. Accountability, staff security and interest of the consumers are also doubted in this concept. Pollock, Shaoul and Vickers (2002) argued that he private finance initiative (PFI) brings no new capital investment into public services. The government uses PFI as a value for money assessment skewed in favour of private finance. They also argued that many hospital PFI schemes show value for money only after risk transfer which are not justified and PFI nearly doubles the cost of capital as a percentage of trusts annual operating income. The present age public sector management policies gave rise to a number of structural reforms concentrating towards market driven economy. The modernization of public service management has brought about organizational network through leadership, management of knowledge, established professional roles and relationships. The networks find it difficult to coexist with hierarchies like centralisation and performance management as well as market fragmentation (Jackson and Stainsby 2000). Under the pressure of performance management the components of a network began to compete rather than collaborate. The professional and policy institutions do not support network structures and processes. Thus it can be said that the generic transfer of private sector management models is not possible without taking account of the public sector institutional context. In this context distributed leadership and knowledge management are the two most important factors. The failure to share knowledge and information has been the cause of serious public sector service failures. High-quality public sector leadership, which demands and rewards a culture of knowledge sharing within the organization and with other public sector bodies, is the key to good knowledge management (Bundred 2006). Knowledge sharing can be promoted through development of intranet, network of public services and other policy initiatives. Social interaction can also promote knowledge sharing. Political problems of inconsistent government policy, cultural problems like distinct perspective and language and sometimes mistrust pose problem for knowledge sharing. Information communication technology if accepted by cultural, political and social matters can help in knowledge management. HRM concept from private sector management is also helpful. Cultivation of informal, self-organizing within the organization can support knowledge sharing. Good knowledge management can be achieved through practice based peer supported learning under continual social relation. A wide range of reforms in public services has been experienced by the world population in the last few decades. In UK also the government under the leadership of both Conservatives and Labour Party has brought about a considerable change in the history of public services through increased expenditure in the health and education sector. But the services have not improved quickly enough to keep pace with the increased spending (Flynn 2007; Ferlie, Hartley and Martin 2003). The combination of market incentives in public service with more consumer power, higher public spending, work incentives and redistribution is quite a distinctive feature of public service reform and the changes observed can be stated to be the result of a fundamental shift in policy-makers’ beliefs concerning human motivation and behaviour. For further improvement of public services quality improvement of public managers in terms of professionalism, accountability and knowledge management is desirable. The managers need to have clear objectives and their performance should be judged based on the achievements of these objectives. Incentives can also be helpful to improve leadership qualities. Performance appraisal and incentive for staff as well as better training and development can improve the service outcome. Sharing of both financial and qualitative information within the organization is effective for better public service management (CBI 2006). Thus to conclude it can said that many of principles of private sector management like participative management, innovative practices for customer satisfaction, distributed leadership, knowledge sharing, etc. can be instilled in the management practices of public sector for betterment. But keeping in mind certain fundamental differences between both the sectors the complete privatization of public sector may not be helpful and the private sector management practices need to be modified properly to suit the public sectors. 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