Kay 235: Introduction to Management

1. Kay 235: Introduction to Management Lecture 2 Subject:The public & private (business) administration difference Reading:Graham Allison Article

2. 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

3. 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 alikein all unimportant respects.

4. 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?

5. 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

6. 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

7. Definition of PA • Daily personnel management • Workforce Planning • Collective bargaining & labor-management relations • Productivity & performance management • Organization/ reorganization • Financial management • Program and management audit

8. 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

9. 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

10. 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.

11. 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

12. 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)

13. 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

14. 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

15. 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

16. 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?

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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

25. 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

26. 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