BS3914 Public Service Delivery


Lecture 4.   Distinctive features of public sector management


1.   ‘Management is management – wherever it is’


·        Each derives from same set of principles (Scientific management?)


·        Each has stakeholders which management must manipulate:





Stakeholder theory of the Firm


Governments                       Investors               Political Groups

                            æ                 â                å            


Suppliers              à          FIRMS           ß  Customers


                             ä                á               ã

Trade Associations             Employees              Communities


You can read about stakeholding here  

Definition of stakeholding

stakeholder theory

The theory that a firm should be run in the interests of all its stakeholders rather than just the shareholders.


Loaded term now widely used to mean someone who has a real or psychological ‘stake’ in an organisation: used to include anyone who has significant dealings with it, such as customers, employees, suppliers, distributors, joint venture partners, the local community, bankers and shareholders.  It is generally a normative rather than a descriptive term, implying that the user believes that a number of stakeholders have a right to determine what happens within an organization, and more particularly in a firm, rather than just the owners.” (Crainer 1995) 

·        In the case of public sector managers, the concept is the same but the stakeholders

·        Griffith’s enquiry view…(Management of the NHS)

’In many organisations in the private sector, profits do not impinge on large numbers of people below board level.  They are concerned with levels of service, quality of product, meeting budgets, cost improvement, productivity, motivating and rewarding staff, and the long run viability of the undertaking’


The case for distinctiveness


Market failure   Walsh, K(1995):Public Services and Market Mechanisms


·        Public goods                           (street lighting, higher education)


·        Increasing returns to scale        (provision of utilities such as water)


·        Merit goods                            (Provides benefits to society as a whole: education,


·        Information asymmetries          (health, welfare – professionals have the power to


Rose,A. and Lawton,A.(1999): Public Services Management


·        Distinctive purpose, conditions and task


Stewart and Ransom’s public domain model


Private Sector                                                Public Sector


Individual choice in the market              Collective choice in the polity

Demand and price                                            Need for resources

Closure for private action                                  Openness for public action

The equity of the market                                   The equity of need

The search for market satisfaction                     The search for justice

Customer sovereignty                                       Citizenship

Competition as an instrument of the market        Collective action as instrument of the polity

Exit as the stimulus                                            Voice as the condition



·                    Equity


The ‘equity of the market’ versus the ‘equity of need’ and the provision of service to all


·                    Distinctive public service ethos


This was claimed to be a big distinction – but is it now fading?


You can read the summary or, indeed, the whole Report


·              Public service organisations have complex and often competing objectives


Values of efficiency, robustness and equity  may collide. 


Even within one value system (efiiciency) we can have a collision between economy, efficiency and effectiveness ( we can teach more students efficiently but not as effectively)

·                   Public services are subject to high degrees of external controls


Inspection include central government, Audit Commission, Best value, Comprehensive Performance Assessment, locally elected members (councillors), the press.  Moreover, the legislative framework indicates what can/cannot be done but also how things should be done.


Transparency and openness are more apparent in the public sector than in their private sector counterparts


Other sources


1.   An academic’s view Public v. Private Management is given by Lynn (2001) and the
      whole document in Public Management


2.   A Management Today (Australia) article argues for increasing similarities between public
      and private sectors


3.   The financial rewards given to firms who supply services (not always efficiently!) to the
      public sector tends to outstrip those of their public sector counterparts
      (‘More money, less risk’)


4.    Customer Relationship Marketing (CRM) differences in the public v. private sector is
     discussed in CRM Hot Topic: Public Sector v. Private Sector