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Management: The Public Sector versus The Private Sector - Part I of II

January 21 2019 - by Dr. Kenroy C. Wedderburn, Associate Dean, Undergraduate Studies & Associate Professor, School of Business - Wayland Baptist University, also Alum of CLP's Leadership Development Programme.

Having had the distinct pleasure and privilege to work in both the private and public sectors, I will share from my experiences some of the differences between the two sectors from a Jamaican and Caribbean perspective. To provide some background, I was a senior manager at Scotiabank for the better part of a decade, a director in two different government ministries for four years (Ministry of Finance, and Ministry of Education), and I was CEO of a government agency for another four years. In this article I will look very briefly at two "Ps": People and Processes. In Part II I will look at the third "P" - Profit Motive - and the impact of these issues on managing in the two sectors.

People

There are many quality, qualified people working in government. However, there are many reasons why it is difficult to get the critical mass (from operational staff to top leadership) of really quality staff required to effect positive changes.

Let me highlight one of the obvious reasons from my own experience. I was a senior manager at Scotiabank and had applied for the CEO position at a public sector agency. I went through the selection process and was subsequently offered the position. When I was told the remuneration I was shocked, since it was about one-third my current salary at the time! I, therefore, wrote a kind letter declining the offer. The situation was subsequently resolved as I was able to take up the position with support from the bank. During the four years that I was there we received clean audits from the Auditor General, we won a national award for the most improved public sector agency for customer service, we dramatically slashed transaction times (one example is a reduction from 6-hour wait time to 90 minutes) among other accomplishments.

Now as much as I am a patriot, I was not willing to leave a job for another one paying me one-third of my current salary – that would be absurd! So I think you get the point – which is the challenge in the government sector to compete for quality personnel! One of my philosophies on organizational performance is that you get – by far – the biggest bang for the buck when you can get quality leadership in place. You must be willing to pay that leader, give that leader some autonomy, then hold that leader accountable.

Look at the flip side with the private sector. When I was at Scotiabank, I knew they were able to attract the best talents simply because of the competitive salaries! To compare with a first world country - on average, federal workers in the United States are paid 17% higher than private sector workers.

Processes

Based on my experience in Process Management, every single institution that has been in business for a while has some process issues. I found a lot of bureaucracy when I was at Scotiabank. However, the broken process issues I found in government were sometimes so stifling it is a wonder that anything at all got done. That is why when I had the autonomy to do so, I reduced some transaction times from six hours to ninety minutes!

When I started at the agency, for example, I noted that to enter a particular accounting transaction manually into the system required a four step approval process. What most people do not realize in the area of process management is the behavioral factor. You would think that with four people actively vetting a transaction that would mean less errors. In fact, there were more errors! The first two people did not ensure accuracy because they believe that the third and fourth persons would check and catch any errors, while the third and fourth persons did not check because they believed that the first two persons would catch errors! What was really needed was one person to do the transaction, and another person to verify. Then, one can hold both persons accountable for errors.

We will review the third "P" and conclude in Part II. However, in the meantime please share:

Based on your own experience, what are some differences between management in the private and public sectors in your country?

What management lessons can be shared between both sectors?

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