The different faces of public mismanagement

Politics and public administration are rarely far from the headlines. From the ins and outs of policy development to the cut and thrust of the daily spin cycle, the key participants play out a seemingly never-ending debate that echoes from government offices to legislatures to the media - print, broadcast and social.

But away from the day-to-day ups and downs, public administrators are tasked with many an onerous responsibility, including the legal or even constitutional mandate that calls for the "economic efficiency of the state" - in other words, ensuring that resources are optimally allocated while minimising waste and inefficiency. Unfortunately, inadequate management information and the flawed organisation of the state itself - its systems and apparatus - frequently work against the realisation of this objective.

There is a widespread opinion, particularly among business leaders, that public administration has no interest at all in creating an efficient public sector, and that to tackle this issue is to tilt at windmills. There is also a widely shared belief that state services do not have a market and therefore cannot be benchmarked when compared to other services. But that's not necessarily the case.

Market manoeuvres

On the one hand, the public sector is active in many areas in which private markets already exist. In education, health and safety, IT, human resources and property maintenance, to name just a few examples, there already exists established private competition that could serve as a benchmark.

On the other hand, there undoubtedly remain sovereign services that are not represented on any private markets. Yet, a market does not have to be private. Markets can also arise between state-owned suppliers and their customers. This is the case, for example, if an efficient and competitive state unit from one region offers its services to a less competitive state organisation in another region.

Admittedly, to speak of an established market for state services would be presumptuous. However, there would undoubtedly be considerable potential for one to get up and running. After all, the range of services and activities offered by many countries is very similar, and this means that the argument of nonexistent comparability can be disregarded. Of course, there always will be some resistance from organisational units and their representatives to benchmarking. However, was this any different in the private sector in the 1990s?

It may be that politicians have no interest in an economically managed public sector and applying benchmarks for better performance. In any case, lack of sustainability has different faces, including corruption, waste, mismanagement and negligence, and the results are the same. This means that important elements of economic income and wealth are not being applied productively - to the detriment of sustainable growth, productivity and prosperity.

While a lack of economic efficiency due to, say, obvious mismanagement is met with vehement objections from the public, the issue of negligence is dealt with far more leniently - and even seems to be tolerated to a certain extent. But when half of the economy flourishes and the other half withers - due to negligence, for example - it does not take much imagination to understand the negative influences for all those involved.

Additionally, the greater the share of GDP the public sector takes up, the more urgent the issue becomes. Indeed, in some OECD countries this exceeds the 50% mark.

Shining a light on “negligence”

But what does “negligence” actually mean? An organisation becomes negligent if it becomes sluggish and ignores important correlations, insights, concepts and processes or does not implement them on an ongoing basis. This includes failing to question the economic usefulness of the organisation, manage assets efficiently, make productive investments, or collect important management information.

The public sector is essentially a cooperative society in which every citizen has a vote and a claim to ownership. This cooperative, like any other organisation, must ultimately meet the criteria of sustainability. If it fails to do so, future generations will have to pay the bill.

Unfortunately, all too often the public sector is managed negligently, despite well-known rules of good governance. We cannot afford this and we cannot expect future generations to accept it - we would be irresponsible if we did.

FURTHER READING

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• Bringing financial management to the fore. Few understand the complexities of financial management in government better than Ian Ball. He tells Adrian Brown about delivering radical reform in his native New Zealand and the enduring importance of new international public-sector accounting standards.
• Waste not, want not. Although the US government loses more than $100 billion in improper payments every year, these are not always the products of waste, fraud or abuse, explains former IRS chief Danny Werfel
• Accounting for value. Jeremy Nicholls tells us why a fundamental reassessment of ‘value' is the starting point for better decisions and then better citizen outcomes
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• Helping governments bridge the gap between intentions and performance. The ideal of good government is one shared by billions of people around the world but more needs to be done for it to become a reality, says Adrian Brown
• Focusing on the Fundamentals. The RSA's Matthew Taylor tells Adrian Brown about how the Public Impact Fundamentals has influenced his thinking and approach to a high-profile government review on modern employment.