Public Sector Productivity

In Public sector on March 2, 2010 by Tim Aikens

Yesterday’s quick look at UK productivity wasn’t very encouraging. Behind the competition, boardrooms not very interested (except maybe manufacturing) and we’re not making much progress. A lot of hot air from politicians and yet little changes over time.

Compared to the Public Sector this is great!  According to the UK Office for National Statistics – a government body, Public Sector productivity FELL by 3.2% in the 10 years between 1997 and 2007. So despite being taxed more, investing more everywhere (or so the government would have us believe) we are actually getting less for more from our public sector.  For some reason not many folk appear to be concerned about this. If the trend continues we, Joe Public, will have to pay ever more taxes to employ more public sector workers to deliver the same level of service we get now. No wonder emigration is booming. Why is this, why does no one really want to do anything about public sector productivity or is it such an intractable problem that nothing can be done?

Well one aspect to consider is the nature of the business.  HM Revenue and Customs are not likely to go out of business if their productivity drops!  There is no incentive. For many if not all businesses, productivity is a survival issue. Productivity goes down, so do profits and eventually you go out of business.

I believe most people want to do a good job and want to be effective. Given half a chance they would leap at the opportunity to do their job more effectively. Do managers then hold everyone back?  Yes and no!  They are people and like most they are probably frustrated at inefficiency and ineffectiveness.  But there are two large barriers.  Firstly, the huge number of layers of middle management that often exists and strangles incentive and rapid reaction to problems. Secondly, the shear size and bureaucracy that exists in may areas of the public sector – often bound up by legislation.  Does this mean it cannot be changed?  I don’t think so.

Look at history over the last 30 odd years. British Airways has made huge leaps in productivity since privatisation (and still needs to).  Car manufacturing. steel, telecommunications are several other examples.  Large complex organisations can be more productive.  In the corporate boardroom there is incentive. AT one end survival and at the other big bonuses. Both can be made relevant in the public sector and some success has been achieved. What is missing is creating the ‘want’ in the organisations. Getting people to want to change and be more productive.  Its a BIG problem to address, but not too difficult. So today’s question:

How doe we get public sector bosses to start thinking and wanting productivity?


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