Tag Archives: government

What are Public ‘Services’

In a previous post I highlighted some of the challenges that are inherent in managing public services due to the nature of being ‘public’. However, there are also challenges that come with managing a ‘service’. These challenges apply across private and public services, and whether delivered by public, private or Third sectors.

These issues are quite important to recognise for all managers given the continuing rise of the service sector across the world. In fact services account for 62.9% of global GDP

The key characteristics of services are intangible, heterogeneous, inseparable, and perishable as defined by Zeithaml, Parasuraman and Berry 1990 (although some, notably Lovelock and Gummesson, 2004, have questioned this classification).

Intangibility

Services are largely intangible. They are about having an experience. Of course there are some physical characteristics associated with most services, such as the quality of chairs in a fine dining restaurant, but what makes services unique from goods is the extent to which perceptions of service quality are impacted by environmental factors and customer-provider interactions. These intangible factors are very difficult to control or manage.

Take, for example, a business offering guided bus tours of the Scottish highlands. There are a number of physical features of this service such as the comfort of the seats on the bus. But ultimately much of the service experience will be influenced by factors entirely outside of the control of the business – weather, the interaction with staff, the behaviour of other customers on the bus (to name but a few). These intangible factors make service interactions very unpredictable and difficult to control.

Creative Commons license: by Pedro Szekely

Perishability

The fact that services are intangible also means that they are not easily stored for future use. So if there is excess capacity this cannot be stored to be sold at another time. In other words, services are perishable.

Take, for example, a street performer. If they do not attract a significant audience for their performance that equates to lost income. They cannot get that time back. Hence the pressure within many services to get ‘bums on seats’. Consequently, pricing is key – particularly with services that have high fixed costs and a fixed capacity such as with cinemas, restaurants and bus tour companies.

Creative Commons license: by Trey Ratcliff

Inseparability of production and consumption

Most services are produced at the same time as they are consumed. So the street performance will be consumed at the same time as it is ‘produced’. This means that quality control is much more difficult than with goods. It also places significant pressure of service staff to always ‘perform’ at a consistent level. This requirement of service workers to perform is best described by the Hochschild (1983) concept of emotional labour. Numerous studies have shown that the strain of constantly having to perform can lead to stress-related illnesses. This blogpost by Flip Chart Fairy Tales highlights a number of other reasons why people in service occupations tend to have more sickness absence that in other occupations.

As an example of the inseparability of production and consumption take transplant surgery. The medical staff must perform consistently under the most extreme pressure with every single patient. Mistakes can cost lives and, unlike with manufacturing, are often not easily rectified. Yet quality inspection and control can only happen at the same time that the ‘customer’ is receiving the service. Furthermore the speed of service delivery is critical. Under these circumstances it is truly impressive what our health workers do on a daily basis. Hence those who use a service, such as the NHS are likely to be more satisfied with the service than those who do not as outlined in this Ipsos Mori report.

Creative Commons license: by Army Medicine

Heterogeneity

The intangibility and the fact that production and consumption take place at the same time means that the service provided may be slightly different every time. This has significant advantages in terms of customisation and innovation. But it is also costly and can lead to dissatisfaction if a minimum service level is not met.

So a service experience, like a rock concert, may be different every time. Take for example Bruce Springstein’s recent Hyde Park gig where he sung the song, Take Em As They Come, especially for one of his fans in the crowd. The flexibility of many services allows for this sort of innovation and customisation. However, this may be experienced by different people in different ways – even at the same time. The need for some control is also highlighted by the fact that the same Hyde Park gig ran over time to such an extent the organisers were forced to turn off the speakers in order to comply with the terms of their licence.

Nonetheless, the more a service is standardised (which improves efficiency) the less personalisation can be achieved (potentially affecting effectiveness). Imagine if a barber gave every customer the same hair cut. It might be very cheap and efficient but would almost certainly affect customer satisfaction. Given the increasing focus on efficiency over effectiveness it is perhaps not surprising that public attitudes towards the NHS are falling.

Creative Commons license: by Christian Holmér

Conclusion

These factors, when taken together, mean that services are very difficult to manage. When you include the publicness of public services, as well as the complex problems many such services have to deal with, it is perhaps not surprising that they are not always perfectly efficient. Indeed it has been pointed out on this excellent set of posts by Flip Chart Fairy Tales (Part 1; Part 2) just how difficult efficiency gains are in service industries. 

This is not to say that we shouldn’t even try to create efficiencies – but it might help to start with realistic expectations.

References:

Hochschild, A. (1983) The Managed Heart: Commercialization of Human Feeling. California: University of California Press.

Lovelock, C. and Gummesson, E. (2004) “Whither services marketing?”, Journal of Services Research, Vol. 7 No.1, pp.20-41.

Zeithaml, V.A., Parasuraman, A. and  Berry, L.L. (1990) Delivering Quality Service. New York: Free Press.

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The ‘publicness’ of banks

Wake up to the latest Rhianna single playing on your iPod through a Bose docking station. Go to the bathroom and brush your teeth with a Phillips Sonic Rechargeable toothbrush. Have a shower using Molton Brown Shower wash. Moisturise. Then go to your kitchen and have some Rice Krispies Multi-Grain Shapes with B Vitamins and Iron. Open The Guardian app on your iPad and think, “isn’t it terrible that banks have sold products to people that they don’t actually need”.

Why do we expect banks to operate in a moral way for the public good? Since when was making a profit for shareholders not enough? Anyone who has ever worked in sales or marketing will know the emphasis that is placed on ‘upselling’ – selling extra products or services to people that they don’t actually need. As Milton Friedman said,

…there is one and only one social responsibility of business – to use resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competitions, without deception or fraud.

(Friedman and Friedman, 1962, p. 133)

Of course, management thought has moved on somewhat since the 1960’s and I am not advocating a Friedman style of capitalism. It also cannot be ignored that action must be taken when businesses commit fraud or other illegal acts. But the question for me is what has led to such moral outrage?

And why is it, at a time when public services are being expected to operate more like businesses, politicians seem to be expecting businesses to act more like public services?

In 1986, the brilliant economist, Susan Strange highlighted the many flaws in the global financial system and in many ways predicted the financial crash of 2008. Strange also noted that it is governments and policy-makers, often misled by neo-liberal theory, who set the framework which enables such behaviours to take place. Anyone who has read either Casino Capitalism or the follow-up Mad Money would not be surprised at the behaviour of bankers at Barclays, RBS or any other bank. What is surprising is the extent to which politicians, who have allowed such behaviour to continue unchecked for so long, appear so shocked and outraged by the whole affair.

What seems to be going on here, at least in part, is that banks are becoming, in effect, a public service. In 1953 Paul Samuelson set out what he described as a collective consumption good. These are now refered to within economics as ‘public goods’ and consist of two characteristics: 1) Non-excludable; 2) Non-rivalry in use.

1) Non-excludable

According to the Collins English Dictionary a bank is,

an institution offering certain financial services, such as the safekeeping of money, conversion of domestic into and from foreign currencies, lending of money at interest, and acceptance of bills of exchange

It would be right to point out that access to banking services is a choice that consumers make. You are not compelled to have a bank account and banks are there to serve the interests of customers and shareholders. They do not serve a public purpose in the same way as national defence or national vaccination programmes.

But today to be included in society increasingly you need a bank account. State pensions and benefits are paid into bank accounts, mortgages are paid from bank accounts, wages and salaries are paid into bank accounts. To stop someone having a bank account is increasingly to exclude them from society. Of course, it is possible to exclude people from having a bank account. And people may choose themselves not to have a bank account (what is known as the power of exit). As such banking services are not a pure public good.

However, the importance of access to financial services was highlighted by the former UN Secretary-General, Kofi Annan, in launching the 2005 International Year of Microcredit when he said,

The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation in the financial sector. The International Year of Microcredit offers a pivotal opportunity for the international community to engage in a shared commitment to meet this challenge.  Together, we can and must build inclusive financial sectors that help people improve their lives.

What is more, is that the effects of a banking collapse, such as witnessed in 2008, are non-excludable. A banking failure does not just impact on shareholder and customers – it impacts on the entire economy. Banks are now such an important part of the economy, in a way they were never designed to be, that they are too big to fail.

2) Non-rivalry in use

The second key feature of a public good is non-rivalry in use. In other words one persons use of the good does not detract from another persons use. Compare, for example, a private good like a Mars bar, with a public good like street lighting. There is no rivalry in the use of street lighting, similarly my use of a bank account or mortgage does not detract from the benefit you may received from having a  bank account of mortgage. And such is the interdependency within the whole bank system, if my bank fails the impact of that is not just going to affect me but it is likely to cut across all banks.
Of course it is important to note that not all public services are public goods. Many are ‘merit goods’; where it is seen that there are significant benefits from public ownership of the product or service, or significant risk from private ownership, for example the UK National Health Service.
So we come back to the purpose of banks. If they are there to provide a return on investment to shareholders we should not be surprised or condemnatory when they use underhand tactics (which are legal) to meet that purpose. If the government are so concerned about ethics then why not speak out about the general rise of unethical business practices? And if we are coming to expect higher ethical standards from the private sector perhaps we should start with the arms industry? Or oil industry, food industry, alcohol industry, cosmetics industry…….
If, however, we recognise that banks are in fact delivering a valuable public service this raises much more fundamental questions about the organisation, ownership and delivery of banking services. An interesting perspective here might be taken from Bozeman’s (1987) book “All Organizations Are Public“. In relation to the banking sector perhaps the German system is worthy of some serious consideration as alluded to by Vince Cable. Moving beyond the current chatter about legislation and inquiries these structural issues are, I think, much more interesting.
References:

Bozeman, B. (1987) All Organizations Are Public: Comparing Public and Private Organizations. Jossey-Bass, San Francisco.

Friedman, M. and R. Friedman (1962) Capitalism and Freedom. University of Chicago Press, Chicago.

Samuelson, P.A. (1953) ‘The Pure Theory of Public Expenditure’, The Review of Economics and Statistics, Vol. 36, No. 4, pp. 387-389.

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What are ‘Public’ Services

Public service organisations are highly complex for many reasons. As such it is important that any education or training for public service workers is tailored to the public service context. One particular aspect of this complexity is the nature of the ‘public’ who they serve.

I was (along with others) really sorry when the excellent We Love Local Government blog was brought to a close. This blog was I think exemplary in its content and analysis of all things public service. It will remain a valuable resource to my students on the MPA programme and indeed also my PhD students.

One of my particular favourite posts on the blog was about the three publics. This highlights just one aspect of what it is that makes public services so complex and difficult to manage. What this blog post highlights is that private sector organisations deal with two publics – those who use their product / service and those who don’t but might in the future. However, public sector organisations have to serve the needs of three publics – users, potential future users, and non-users.

‘Private’ services

Take for example a builders. They will be responsible for ensuring that any building work is compliant with building regulations and as a business they must meet other statutory requirements. However, ultimately they are accountable to one public – their customers.

The builders might also offer free estimates for those who might use their service in the future. They might do some other targeted marketing such as putting flyers through doors. So they may engage with another public – those who may use their products / services in the future. But ultimately the builders only have to deal with one public – their customers.

‘Public’ services

In contrast, the public sector have to serve, and are accountable to, three publics. There are those who use the services, those who may use the service in the future, and those who will never use the service. Hence, the three publics. All three publics are important stakeholders and are not limited by voting patterns or payment of taxes. The public sector is there to serve everyone.

What does this mean for managers?

Well, one distinct feature of the public sector is that they cannot choose their customer in the same way that the private sector can.

For example, in the case of the builder, they have autonomy to choose their customer. They may, for example, provide an overly-inflated quote if they do not want or need the business. They may choose to work within a particular geographical area or indeed may choose not to do certain types of work or choose not to work for certain types of people.

This choice has significant benefits. It enables the private sector organisation to specialise in offering a particular type of good or service to a particular type of person. So, M&S will design their stores and select their products based on a very different rationale to say, Lidl. Both are very successful businesses but both are significantly enabled by this ability to discriminate. In particular the ability to discriminate helps to reduce costs by enabling the development of standardised systems which can help reduce errors and system failures.

On the other hand public services are there to serve the entire public. No matter who ‘walks through the door’ they must be served and their needs addressed as best as is possible. This means public service providers need to be highly flexible and adaptable to different user needs. Any attempt to develop standardised systems in public service environments restricts street-level innovation, often does not work and leads to failure demand. See this excellent blog post by Flip Chart Fairy Tales.

Implications for training and development

The need to be flexible and inclusive is difficult and expensive. Imagine, for example, a restaurant that tried to offer both fine dining and budget fast food at the same time – chances are that it wouldn’t work and all three publics would be left unsatisfied. Attempting to meet the needs of all of the people all of the time demands a particular skill set from public service workers. And with increasing change in society comes increasing change in public expectations and so public service requirements. This is why I believe the recent Christie Commission on the Future Delivery of Public Services was right to point to the need for better and more training and development. What is perhaps more questionable is the desire for a “single cross public service development programme” (Christie, 2011: 39) when there is so much variance in development needs.

On a traditional MBA course you would undoubtedly learn about the efficiency savings that can be gained from standardisation and removing variation from your business systems. This mantra fails to take account of the three publics and the complexity of public services. Hence training and development for public service professionals must be context-driven in order to be relevant to their needs. Public service professionals should be involved in the design of such training and development. Most of all, public service providers should not shy away from investment in training and development at a time when service improvements are so sought after.

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What is Public Governance?

NB: This was originally posted in 2012. As of September 2018 I no longer work at Queen Margaret University. As such some of the links on the below post may no longer work. For information about my current post please go to the about me section of this website.

Focus and purpose

Queen Margaret University has recently developed the first ever Postgraduate Certificate in Public Services Governance. This is due to commence in September 2012. But what is Public Services Governance?

In later posts I want to look at the question of why public services rather than, say, public sector governance. But right now I am going to look at the question of governance.

Why governance and not administration or management? And what does this mean for the philosophy and content of our programme?

The purpose of this blogpost is to outline how our Public Services Governance programme differs from the more commonplace Masters in Public Administration (MPA) or Public Management courses.

Definitions of Public Governance

One of the challenges in developing a programme in Public Services Governance is that there are a number of differing definitions and even a number of different labels such as Public Governance / Responsive Governance / Network Governance / Public Services Governance. I’m not going to try to provide a comprehensive overview of Public Governance within this blogpost. There are many excellent academic texts, some of which are listed at the end of this post, that are worth reading for a more comprehensive understanding of the subject.

In terms of policy the term started to gain prominence in the 1990’s within a number of World Bank reports (1989; 1992; 1994). In this context the term was used to refer to the importance of good governance in international development. The World Bank defined the term as “the manner in which power is exercised in the management of a country’s economic and social resources for development” (World Bank, 1992). What is interesting here is that the term is not specific to government or the public sector but involves all those with a role to play in international development.

From Public Management to Public Governance

The term public management, or New Public Management (NPM), is now a familiar term across academia and the public services. This term came to prominence within academia and policy-circles in the 1980’s and 1990’s. This period saw the fall of the Berlin Wall, publication of Francis Fukuyama’s (1989) End of History thesis, and the rise of a neo-liberal consensus across many western States. It was within this context that New Public Management emerged as a set of management tools (largely borrowed from the private sector) to improve efficiencies. Typically this consisted of:

  • emphasis on performance management
  • more flexible and devolved financial management;
  • more devolved personnel management with increasing use of performance-related pay and personalized contracts;
  • more responsiveness to users and other customers in public services;
  • greater decentralization of authority and responsibility from central to lower levels of government;
  • greater recourse to the use of market-type mechanisms, such as internal markets, user charges, vouchers, franchising and contracting out;
  • privatization of market-orientated public enterprises.

(OECD, 1993 as cited by Bovaird and Löffler, 2003: 17)

In education this led to the development of many public sector specific MBA’s (Masters in Business Administration) and MPA’s (Masters in Public Administration – though perhaps not so much in the UK.

Invariably these degree programmes consist of a number of generic management subjects such as human resource management and strategic management with some public sector examples tagged on. I certainly wouldn’t downplay the value of many of these degrees. But at Queen Margaret University we wanted to offer something distinctive which reflected the most recent debates in public service development and delivery[1].

Rationale for Public Services Governance programme

There are three key factors which have contributed to the design of our public services governance programme:

  1. There is an increasing recognition within policy and academia that public services are particularly complex. I will be posting more on the nature of public services later. In the meantime see this excellent blogpost;
  2. The prevalence of ‘wicked problems’ such as climate change, childhood obesity and population aging has led to the need for a notably different approach to the design and delivery of public services. Increasingly public sector organisations are working in collaboration (rather than in competition) with private and third sector organisations;
  3. Increasingly academics and practitioners alike are questioning the limits of private sector management techniques to address these ‘wicked problems’.

Elke Löffler summed up the rationale for a distinct public governance programme when she stated,

‘public agencies no longer only have to be good at getting their internal management systems right – financial management, human resource management, ICT and performance management – but they also have to manage their most important external stakeholders as well’ (Löffler in Bovaird and Löffler, 2003: 163).

This is not to say that NPM is no longer relevant. I share Bovaird’s view that the realms of public management and public governance are separate but interconnected (2003: 11). Nonetheless, in line with Osborne (2010), I do think public governance is worthy of study in its own right. It was this belief that led to the development of our Postgraduate Certificate in Public Services Governance – the first ever postgraduate course with a focus on public governance[2].

Programme Aim and Contents

Within our programme the key aim is to enable learners to:

  • Build on their professional experience by engaging critically with, and reflecting on, themes and issues in public services governance in order to better deliver public service outcomes

Modules are focused on themes and issues within public services governance – rather than focusing on managerial functions. Modules include:

  • Public Services Governance: Themes and Issues
  • Engendering Policy and Practice
  • Internal Communications
  • Leading Change in Public Services
  • Managing Customer Complaints
  • Public Finance

More to follow on these modules in later blog posts. In the meantime you can read about the rationale for inclusion of Engendering Policy and Practice.

UPDATE (Posted 04/02/2016)

Since first publishing this blog we have successfully delivered the PgCert Public Services Governance to many students. We have worked with Academi Wales to offer the programme to public service officials from across Wales (more on that here).

Subsequently it has become clear that there is significant demand from an international audience for Masters level programmes with a governance focus. Much of this experience has informed our development of the new Master of Public Administration (MPA) programme. For more on this programme see ‘What is an MPA‘; the course leaflet; and some further resources via FindaMasters.com.

Some Useful References:

Bovaird, T. and Löffler, E. (eds) (2003) Public Management and Governance. Routledge: London.

Fukuyama, F. (1989) ‘End of History?’, National Interest, No 16, pp. 3–18.

Osborne, S. (ed) (2010) The New Public Governance. Routledge: London.

Pierre, J. and Peters, B.G. (2000) Governance, Politics and the State. MacMillan Press: Hampshire.

Rhodes, R.A.W. (1997) Understanding Governance. Open University Press: Buckingham.

Stoker, G. (2004) Transforming Local Governance. Palgrave: Hampshire.

World Bank (1989) Sub-Saharan Africa: From Crisis to Sustainable Development. World Bank: Washington, DC.

World Bank (1992) Governance and Development. World Bank: Washington, DC.

World Bank (1994) Governance: The World Bank Experience. World Bank: Washington, DC.


[1] We also have an excellent MBA and MSc International Leadership and Management for those who are looking to develop their  understanding of generic management and leadership: http://www.qmu.ac.uk/assam/PostGradDegrees.htm.

[2] The LSE does have a MSc Public Management and Governance.

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