Kay 235: Introduction to Management

Lecture 2

Subject: The public & private (business) administration difference

Reading: Graham Allison Article

Public and Business Administration: The Links Last week: Links between public and

private (business) administration A generic view of administration

No real difference between PA & BA- Wilson Universal principles of (scientific)

management- Taylor PA is a multidisciplinary field

Includes political science, management & law There are many BA courses in PA programs

Beginning Point for Allison

Wallace Sayre`s often quoted law/hypothesis: Based not on scientific analysis, but

on years of personal observation of governments.

Public and private management are fundamentally alike in all unimportant respects.

Allison`s objective

Answer Sayre`s invitation to research And write an article to examine and

discuss how PA & BA are similar and different.

Central question: In what ways are the jobs &

responsibilities of a public manager similar to and different from those of a private manager?

FRAMING THE ISSUE How is `management` different (broader,

narrower…) from administration? Management: Organization and direction of

resources to achieve a desired result. What is public management?

Minimal government PA borrowing from management strategies Detailed answer:

Laurence Lynn`s article next week

ANATOMY OF PA What?

Activities found in govt. and non-profits

Who? People who at all levels of

government Elected

Presidents, members of the Parliament, mayors…

Appointed Many levels of

bureaucrats like office directors, judges…

Contracted

Definition of PA Daily personnel management Workforce Planning Collective bargaining & labor-

management relations Productivity & performance management Organization/ reorganization Financial management Program and management audit

Similarity: General Functions

How are public and private management alike?

1. A set of general management functions: Famous acronym: POSDCORB

Planning Organizing Staffing Directing Coordinating Reporting Budgeting

Similar lists can be found in the management literature

Similarity: General Functions

A general manager is expected to integrate these general functions to achieve results. In real life situations, significant

differences may emerge More difficult execution in PM

The two sectors are interdependent

Differences

How are public and private management different? Identical labels take on different

meanings in public and private settings

People, who worked in both sectors judge that the two are different and public management is harder.

Difference 1: Time Perspective Public managers have relatively shorter

time horizons dictated by Political necessities Political calendar (e.g. elections)

Private managers have a longer time perspective oriented toward Market developments, Technological innovation and investment, Organization building

Example to Time Horizon Difference

The US President looks forward four years at most The fourth, even the third year is

dominated by the reelection issues and the campaign

President of a company usually looks forward a decade (Ten years)

Difference 2: Duration

The length of service of politically appointed top public managers is relatively short Averaging no more than 18 months

Private managers have a longer tenure

Difference 3: Successors

In private management, a successor and even several possible candidates are trained before leaving the job In public management, fostering a

successor can be perceived even dangerous

Difference 4: Performance Measurement

There is little agreement on the standards and measurement of performance in the public sector This has changed since late 1970s

Public management discussion in Lynn article Various tests of performance is

available in the private sector Financial return Market share Performance measures for executive pay

Difference 5: Personnel Constraints

Legal constraints complicate the hiring, transfer, and layoff of personnel in the public sector Private managers have greater latitude

in hiring, transfer and firing of employees Other important personnel issues:

Can government employees join unions? Can they strike and collectively bargain?

Difference 6: Equity & Efficiency

In public management the main emphasis is on providing equity among different constituencies

Private management places greater stress upon efficiency and competitive performance

Difference 7: Public vs. Private Processes

Public management tends to be exposed more to public scrutiny and claims of open government

Private management tends to be relatively more `private` and its processes are less exposed to public review

Difference 8: Role of Press & the Media

Public management must meet regularly with the press & the media Its decisions are often anticipated by

the press Private sector decisions are reported

less The press has a much smaller impact

on the substance and the timing of the decisions

Example to Press Relations

A CEO of a private firm rarely deals with the press Except for public relations purposes

The US President is routinely on display Continuously dealing with the White

House press, and with the wider circle of reporters, commentators and columnists

Difference 9: Persuasion & Direction

Public managers often seek to mediate decisions in response to various pressures They have to form coalitions of inside

& outside groups to survive By contrast, private managers risk

little contradiction And thus seek less consent

Difference 10: Number of Superiors

Public managers tend to regard themselves as responsive to many superiors This is a constitutional difference

Separation of powers

Private managers look more to one high authority

Difference 11: Legislative & Judicial Impact

Public managers are often subject to close scrutiny by Legislative oversight groups Judicial orders

Such scrutiny is much less common in private management

Difference 12: Bottom Line Public managers rarely have a clear

bottom line Social usefulness and public interest are many

times vague concepts, which are hard to define

The bottom line is very clear for private managers To maximize profits brings legitimacy To increase market performance and survive

Issues that Complicate Things

Blurring of differences between public and private management There are hybrid organizations

Government agencies that seek profits Private firms that seek to promote the

public interests A new category

Public-private partnerships

How to extend the discussion?

The article only provides One comparative example Several quotes from managers, who

worked in both sectors More systematic comparisons are

needed More case study research in PA to

examine similarities and differences with BA