Public and private management compared
The Malawi Savings Bank (MSB) saga must give us time to probe similarities and difference between management in the public sector and management in the private sector. The government is determined to sell MSB to the private sector because it believes where its own employees have failed employees of a private corporation will succeed.
While President Peter Mutharika’s suggestion that university dons should give more time to research was not well received in academic circles, I think our local pundits who teach public administration and business management, would do well to probe into the differences between managing a public sector income-generating entity and a private sector firm.
The rest of what I am going to say is based on research done in the United States of America (USA). Though the research was made exclusively on the American public and private sectors, the findings have some relevance to problems elsewhere in the world where there are mixed economies.
The researchers asked questions such as ‘Can the public sector be run like the private sector’? One authority on the issue called Waldo Sayre, after making extensive study, concluded that the public and private management systems are fundamentally alike in all unimportant respects.
The same sage goes on to say the notion that there is any significant body of private sector management practices and skills that can be transferred directly to public management is wrong.
This is the experience in the USA, but is this also the experience in France, South Korea, Taiwan and so on?
There are similarities between the work of chief executives of public and private sector corporations. Their duties are summarised in the acronym ‘POSDCORB’, meaning planning, organising, staffing, directing, coordinating, reporting, and budgeting. This is the list which appeared in a classic paper by Gulick and Urwick titled Papers in the Science of Administration. Other management gurus such as Chester Barnard and Peter Drucker have given almost similar lists.
Functions of general management can be further spelt out as follows:
- Establishing objectives and priorities for the organisation. This is based on forecasts of the external environment which contains opportunities and threats.
- Devising operational plans to achieve these objectives. These are what competent manager writes on his daily or weekly ‘to do list’.
- Organising and staffing. Here the manager establishes structures, units and positions with assigned authority and responsibilities.
- Directing personnel and the personnel management systems. Under this category, we have personnel management, selection training, rewards and punishments.
- Controlling performance. This is done through comparing what is budgeted and what is achieved , reports and statistics, product evaluation. All these assist in measuring progress towards objectives.
- Dealing with external unit of the organisation. Most general managers must deal with general managers of other units where larger organisations are concerned.
- Dealing with independent bodies. Agencies from other branches or levels of government, interest groups, NGOs etc.
- Dealing with the press and public whose goodwill matters.
- How are public and private management different? American scholars had these findings;
(i. Times perspective: Government managers tend to have relatively short time horizons.
(ii). Duration: The length of service of politically appointed top government managers is relatively short. Compare this to what happens locally to those politically appointed persons when there is a change of government.
(iii). Measurement of performance. In government performance is not easily quantified. In the private sector market share and profits attained measure a manager’s competence.
(iv). Role of press and media. Government managers must contend regularly with the press. The public pays for government operations. They demand transparency.
(v). Legislative and judicial impact. Government managers are often subjected to probing by the legislature. In the past, civil servants anonymity was emphasised, their minister had to face the parliamentary question. These days, principal secretaries are sometimes summoned by parliamentary committees to go and explain budgetary over-expenditures.
The above list of differences is by no means exhaustive. Another article will have to deal with why the professional manager hired to run a private corporation. Can the skills and motivations of staff in private sectors be transferred to the public sector? If not, why?
