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
•
Pressure to increase effectiveness
•
Tax burden a major issue
•
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
•
Are responsible for inefficiency and waste
•
Are ineffective an non-functional
•
•
•
4.
Goal is to maintain status quo for types, standards of service
Process more important than results
Administrators, not managers
Government Responses
•
Downsizing public service
•
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
•
Direct control / management
•
Independent authorities or public benefit
corporations
•
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:
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