Transcript Document

Private vs. Public Management:
Trends, arguments, responses
Discussion
16 July 2006
Five Little Words
“We’re looking at
Private Management.”
After the Shock
 Understand the political context
 Analyze what the public owner wants to
achieve
 Adapt … adapt … adapt
Public vs Private Management Realities
“Public and private
management are
fundamentally alike in all
unimportant aspects.”
Wallace Sayre
Convention Centres:
Public or Private Business?
Rationale for Public Involvement
 To generate tourism business
 To support tourism industry
 To stimulate redevelopment
 To promote regional exports
 To promote foreign trade
Public & Private Realities
Drivers
Public
Private
Political Authority
Profit
Public good
Market Share
Budgets
Competitive position
Balancing diverse
Customers
values/needs
Operating
Environment “Fishbowl” public scrutiny
Autonomous
Entrepreneurship is suspect Entrepreneurial
Red tape/Rules, policies
Flexible
The Political Climate
1. Fundamental pressures for change:
• Global economy
• Dissatisfied citizens
• Fiscal crisis
2. Public Mood
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Pressure to increase effectiveness
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Tax burden a major issue
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Non-government groups competing to provide traditional
government services
High customer expectations
Private sector values pervasive
Supportive of privatization
Business increasingly influential
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The Political Climate
3.
Common Public Perceptions
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Are responsible for inefficiency and waste
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Are ineffective an non-functional
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4.
Goal is to maintain status quo for types, standards of service
Process more important than results
Administrators, not managers
Government Responses
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Downsizing public service
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Examining what should/should not do or pay for (essential
services)
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Cost effective service delivery
Customer focus
Benchmarking and performance measurement
The Political Climate
5. Operating Practices of Governments
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Direct control / management
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Independent authorities or public benefit
corporations
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Contracting out (privatization)
It’s a New World
“It’s all so simple, Anjin-San,”
the confused captain in
Shogun, shipwrecked in a
strange land, is told by his
Japanese lover.
“Just change your concept of
the world.”
Today in Convention Centres
1. Forces Driving
2. New tools of trade:
• Efficiency
• Innovation
• Partnership
Forces Driving Private Management
in Convention Centres
Growth in supply—steady over past two decades
 Increased competition
 Downward pressure on pricing
 Increased operating deficits
Reduced government resources
 More competition for limited resources
 Benefits being questioned
Transition for Convention Centres
Objectives:
Economic Impact
Revenue gains
Protect Public assets
Market share
Provide community service
Reduced or
zero subsidies
Why Private Management?
 Creates distance from:
bureaucracy/government constraints
 Allows facility to be managed as a business
• Less public resistance to use of competitive
business concepts and practices
 Goals are:
• Reduced expenses
• Increased revenues
• Lower operating deficits
What Private Management Companies Offer:
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Efficient staffing
More customer focus (user friendly)
Corporate support (e.g. HR, marketing)
Value-added services
National service contracts for suppliers (bulk buying)
Revenue maximization—yield management
In-depth industry knowledge
Negotiation strength
Specialized management expertise
Benchmarking
Expansion and Building Services
Private Management is a Trend
 Rapid growth for two decades
 Current growth with new projects
 In existing centres: to improve performance
Example of Private Management Growth (SMG)
(North American public assembly facilities)
200
180
160
140
120
100
80
60
40
20
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Arguments Against Private Management
 Community needs not balanced with bottom line
approach
 Aggressive performance forecasts sometimes
not achieved
 Limited competition among management
companies
Can Public Managers
Achieve the Same Results?
 Professional management not unique to private
sector
 Management mindset must adapt to new realities
 Political constraints must be loosened
 Public trust must be gained
Final Thoughts
 Publicly owned organizations remain
public
 Public will must be clear regarding
goals
 Public must understand costs of any
decision
Some Questions
 Is the current trend toward privatization of management
healthy?
 Can public managers adapt to a private management
style?
 How do we know if a public agency is doing a good job?
 Can the bottom line be clearly defined?
 Can political authorities give public managers the latitude
to act like private managers?
“Many activities are in the public
sector precisely because of
measurement problems: If
everything was so crystal clear and
every benefit so easily attributable,
those activities would have been in
the private sector long ago.”
Henry Mintzberg