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Serving Two Masters

Serving two masters
Gary Sturgess
Public Service Magazine - May 2005

Gary Sturgess asks whether a public service ethos is reconcilable with the profit motive.

As the government looks to the private sector to assist in improving public services, a new kind of public servant is emerging: contract managers - in some cases people who have spent the majority of their careers inside the public sector - who have chosen to leave government and take up positions running a PPP or PFI contract in the private sector. More often than not this involves delivering a similar service but within a very different framework. 

Good people, good systems, a recent report by the Serco Institute based on interviews with former public officials, considers some of the issues facing these public service managers. It asks what it is like to make the transition to private employment and how do these managers reconcile their company's need to make a profit with providing a public service. 

These people find themselves in an anomalous situation. Even though they are employed by a private company, they still see themselves as public servants. A typical view is: "My bottom line is that I work for the private sector, but I would never erode the quality of the contract in order to maximise profit." So it is not surprising to learn that while they were obliged to manage to a budget, they do not see it as compromising their professionalism nor do they see it as being fundamentally different from the financial discipline they faced in the public sector. Another comment is that, "In the public sector I had to manage a budget and if I went over I'd be in trouble. I'm not here to make money. I'm here to run my contract and run it on budget, just as I've always had to." 

So why leave? Managers who had made the transition described their frustration with the red tape and constricting processes they coped with in the public sector, which made change management and people management very difficult. They see the private sector as a place that offers them greater freedom to do things differently. A number of them said they could see their future career lying inside the public sector, but because of the red tape and bureaucracy, others said that they would not like to return.

But what was it like to make the transition? Arriving in the private sector, in some cases after working inside government for more than 20 years, contract managers reported a sense of isolation from their former colleagues. There appeared to be an institutionalised fear of the private sector, which in some cases prevented the sharing of best practice. But contract managers also spoke of the managerial autonomy they had gained, where the devolved nature of contracting allowed them the freedom to respond to the local conditions facing their service, and the luxury of picking their own team. The contract not only provides them with a level of freedom and a greater clarity of purpose, it also protects them from external interventions.

An interesting paradox lies in the question of accountability. It is perfectly understandable to question whether this level of individual freedom might not lead to the loss of accountability.  Yet contract managers reported this as their biggest challenge. Not only are they accountable for delivering a contract to a customer and a service to an end-user, in line with contractual performance criteria, they are also scrutinised by the parent company and the financial institutions that provide its capital. An increased sense of personal accountability and the focus on outcomes also forces them to take greater interest in their management systems.

Former public sector managers also consider whether alternative business models are appropriate, which might help address the tensions between service quality and profit-making. For example, if a company is making excessive profits, there could be a mechanism to give up some of these in exchange for extending the contract

One key to reconciling the potential conflict between profit and service delivery lies in these managers' ability to deliver high standards, and this can be compromised just as much by severe cost-cutting. Perhaps this is where the challenge of public service ethos lies: in the hands of the commissioning agents.