Views of Bi-Career Managers on Public Versus Private Sector Management Practices

A three-member panel discussed their experences as administrators in the public and private sectors and the applicability of private sector management philosophies and approaches to the public sector.

Moya Greene, Managing Director, TD Securities.

§ The advantage of managers in the private sector is that they know specifically what they are supposed to do, i.e. make a profit, husband resources, minimize opportunity costs, and do better in the marketplace. Managers in the public sector have to deal with the public interest, and therefore are more constrained.

§ Because of the constraints on the public sector, it is more difficult to reorient a public sector organization for change.

§ In 1989/90, the role of public sector management and the fiscal situation changed, making public sector managers' jobs more difficult. A change also occurred in public sector management because of the media spotlight on the public service and Access to Information legislation. The public sector should expect another 8 to 10 years of continued change. Since 1985, working in the public sector has become increasingly difficult.

§ In the public sector, many issues must be mediated and balanced before decision-making can take place. A "defensive" strategy must be adopted, with awareness of media scrutiny and preparedness to defend decisions.

§ In the private sector, there is less defensiveness and there is a willingness to change and even reverse decisions.

§ Programs in the public sector take years to develop, with the responsibility residing with the Minister, resulting in rigidity. The private sector is based on competition and cannot afford rigidity. When the private sector decides to do something, it just spends the money to make it happen.

§ The private sector is not open to be told anything by the public sector. It sees the public sector as incompetent in the areas of downsizing, implementing new technology, and strategic planning. There is a general belief in the private sector that public sector managers do not know anything.

§ Although there are great differences in compensation for executives in the private versus the public sectors, the consequences for non-performance in the private sector are stark. Managers in the private sector are judged by how much they make for their firm. Performance bonuses are based on profit earned. Failure to perform well results in dismissal.

§ There are few ways to reward good performance in the public sector, but it is also difficult to penalize people, e.g. 18 months of grievance procedures.

§ The public sector would benefit from more publicity concerning the lower salaries for comparable positions in the public versus private sector. Currently, many young people in their first year of work in the private sector earn more than public service executives. Politicians should be better educated concerning comparable salaries.

§ The private sector needs and recruits lots of young talent, e.g. to compute derivatives risk. In the public sector, there is an aging population and it is difficult to hire young people.

Bryan Davies, Senior VP, Royal Bank of Canada.

Bryan was previously Vice-President of the University of Toronto, and formerly Ontario Deputy Treasurer and Deputy Minister of Economics.

§ There has been a continuing convergence between the private and public sectors. Both, for example, have been downsizing. The Ontario government has so far shed 20,000 employees, dropping from 90,000 to 70,000.

§ Like the public sector, many large private sector organizations suffer from the silo effect. Horizontal issues are often not handled well in the private sector, e.g. banks were not used to referring clients to other elements of their own organizations. To overcome this tendency, bank services are being physically clustered in one location.

§ In both the public and private sectors, there are managers who fail to provide employees with the big picture and keep them in the dark. The private sector has been hiring specialized consultants to get employees to embrace a common vision and direction.

§ The private sector can be just as bureaucratic as the public sector, e.g. many detailed procedure manuals in the Banks.

§ The demographic shift affects both the public and private sectors. The public sector will have increasing costs and decreasing revenues as the population ages and people retire. There will also be decreased revenue for the private sector.

§ Both the public and private sectors have focused intently on expenditure management. Contracting-out activities is a strategy adopted in both sectors to reduce costs. The public sector is also focusing on raking in more revenue, just as the private sector has always concentrated on maximizing income.

§ In the public sector, in the 1970s, "policy wonks" were promoted, i.e. central agency staff function types. Meanwhile, in the private sector, operational types were promoted. Now, in the public sector, there is a recognized need for managers who can "run things". In the private sector, managers now need more public policy skills because of increased regulatory requirements. They thus also must cope with a more complicated environment, increasingly like that of the public sector manager.

§ The lower public service executive salaries mean that few private sector managers are going into the public sector.

Eva Kmiecic, Vice-President, Public Policy Forum, Ottawa and Chairperson of the Public Service Institute of Canada.

§ There is much "employment cross-dressing", i.e. people moving between the public, private and third (not-for-profit) sectors.

§ The level of trust in the public sector continues to decline. Politicians and the media have been negative about the public service. At the top of the most-trusted list are: nurses, doctors and teachers.

§ The executive level of the federal public service is "greying", with proportion of the public service under 35 continuing to decline. Many senior public servants will be departing over the next three to five years. Many managers are "blocked". This bottleneck is expected to last five to seven years at the ADM level.

§ Focus groups among public service executives indicate that many stay in the public service due to satisfaction with the work. The "workaholic" culture derives from a commitment to fulfil their obligations. The ratio of work to leisure continues to increase. Downsizing and compression means fewer people doing more with less, for less money, over more time.

§ The consequences for the public service of current trends means a loss of the technical skills which are most easily transferable to the private sector.

§ There is widespread cynicism among federal government executives. Much discussion and consultation takes place without follow-up action. Many Regional federal government organizations are disconnected from Ottawa. The "grey-hair" syndrome involves an attitude among managers over 50 that they have out-lived their usefulness and should leave the public service.

§ A round table with 20 private sector firms revealed that the most valuable characteristics of public sector executives include: a capacity for strategic thinking, handling turbulence and ambiguity, and handling diverse interest groups. Although there are exceptions, public service managers lack "deal-making" skills, accrual accounting/finance skills, and performance measurement skills, i.e. managing for results.

§ Deputy Ministers tend to have good "horizontal management" skills, having moved through other organizations. CEOs in the private sector tend to be promoted from within a single organization and are specialized. They do, however, have more operational/field experience than Deputy Ministers, who are "policy wonks" and are creatures of headquarters.

§ Those public service executives who leave the public service tend to do so because they can financially sustain themselves outside of the public sector. They also usually desire to upgrade their skills. Suggested solutions to retain the best of the senior civil servants include: more exchange programs and increased partnerships between departments.