Leadership in the Public v Private Sector

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The need for speed in decision making in the public sector could be improved by bringing in leaders with private sector experience, but that might underestimate the complexity of working for an organisation that is answerable to politicians and taxpayers. In fact, there is plenty that leaders in the private sector could learn from those in the public sector as both achieve results in different ways.

Phil Smith, Vice President and Chief Executive for UK and Ireland at Cisco Systems, says: “Being in the private sector brings different pressures which can create a real sense of urgency for all stakeholders… [because] speed plays a major part in every business relationship. Likewise, the demands placed on achieving sales and growth targets means we often see a laser-sharp focus on the right outcomes and not just the inputs. The private sector also has a pragmatic approach to solving day-to-day business challenges and that often results in more innovation.”

In the public sector, tension still exists due to the time it can take to get things done. Sir Brian Bender, Criticaleye Board Mentor and Chairman of the London Metal Exchange, who was also Permanent Secretary of the Civil Service for almost a decade, says: “There’s now much more focus on leadership of the department/public body, and ensuring that it is equipped to implement the desired actions. That in turn has required the use of commercial skills, such as project management and procurement…

“Leadership in the public sector is more complicated as it combines the political and the administrative. There is a need to build coalitions of the willing and manage sometimes competing interests, so the probability, in my experience, is that the objectives are more numerous and complicated than in the private sector. [Therefore] the leadership skills which the private sector can learn from the public sector are ‘stakeholder management’ and managing complexity.”

For those coming straight from the private to public sector, it can be a shock to discover just how difficult it can be to change strategic direction and break departmental fiefdoms. Donald Brydon, Chairman of the Royal Mail Group, comments: “Leadership in the private sector is easier in that there is a clear unifying financial goal. This is often not so clear in the public sector where, as a result, there is a greater need for consensus building if decisions are to hold.”

Mary Jo Jacobi, Non-executive Director of Mulvaney Capital Management and a Criticaleye Board Mentor, says: “Ultimately being accountable to shareholders and the City for short-term results is different from being accountable to taxpayers for long-term outcomes. More public sector leaders are adapting techniques such as external stakeholder engagement, but there remains more command and control in public sector decision-making.”

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Within the public sector, it’s fair to say that there’s greater opportunity for leaders to end up frustrated and feeling like they’re banging their head against a brick wall. Tom Taylor, Chief Executive of the Agriculture and Horticulture Development Board, comments: “A multi-layered governance and communications structure results in a protracted decision-making process, and meetings held in public gives more opportunity for political point-scoring…

“The need for public consultation on key decisions is a vital part of the public sector stewardship process but it can hamper decision making when emotion, locality and the need to be re-elected are factored in.”

Jane Furniss, former Chief Executive of the Independent Police Complaints Commission (IPCC), says: “It’s important that the public trusts and feels confident in their public sector organisations and values the services they provide, because it will matter politically, too. For example, if the public’s lack of confidence in the IPCC grew to such proportions it would result in the politicians saying this organisation is not working and they’ll replace it with something else…

“The problem is that politicians, however good they are, will always focus on winning the next election and this drives short-term thinking rather than long-term strategic solutions, which doesn’t help those trying to tackle all the issues.”

Mary Jo comments: “The public has become less patient with the pace of change that the public sector can bring about; they don’t expect it to be quite quarter-to-quarter but certainly [within] the full five-year election cycle to which politicians and mandarins respond. The pressure to deliver demonstrable results is growing, as is the expectation of solid explanations of, and accountability for, those results.”

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Good leaders

In essence, the best CEOs or departmental heads will understand how to navigate the challenges regardless of whether an organisation is public or private. Phil says: “The austerity measures have brought a focus on radical cost-cutting and resource efficiency, forcing real choices which have probably been the norm for longer in the private sector.”

Graham Atkins, Associate Director at global management consultancy Hay Group, which has conducted research for the top 1,000 leaders across the NHS, comments: “The impact of leaders on organisational performance is up to 30 per cent on the bottom line. For example, one case study we did with NHS ward managers found that those who created a productive climate had 40 per cent fewer drug prescribing errors than those that didn’t.

“Furthermore, in the work we did with Arcadia, which is responsible for the fashion retailer Dorothy Perkins, the store managers that produced a productive climate had 40 per cent fewer staff absences in their stores.”

Sir Brian says: “I can think of numerous examples of people who have come into the public sector from the private sector and thrived, adding real value. Equally, there are people in the public sector who have moved very successfully into the private sector, or indeed, have had a spell in the private sector and returned to the public sector successfully using the experience they’d picked up.”

Mark Castle, Deputy Chief Operating Officer at international consultancy and construction company Mace, comments: “Modern leaders who have developed more inclusive styles of leadership, who are more democratic in their management approach can quite readily move from one sector to another.

“Whether it’s in the public or private sector, the demands of running businesses are the same. Leaders are judged on results and in the current economic climate shareholders and taxpayers will hold their leaders to account.”

In either realm, competent and trusted leadership will be much sought after. Kevin Murray, Chairman at PR concern The Good Relations Group, says: “It all boils down to how leaders inspire their staff… how they listen, have conversations, the signals they send, the things they choose to focus on and the vision they paint of the future. Those are the same challenges that face a leader in the public sector as one in the private sector.”

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