A9-Public sector governance

What is the 'Public Sector?

Agency in the Public Sector
Types of public sector organisations
Leadership & Strategy for Public Sector Organisations
Governance Arrangements

What is the 'Public Sector?

These deliver public goods and services, without using for profit businesses.
Often operated by the state.
A state has a government, a legislature, a judiciary and a secretariat (or
administration)
The states secretariat or administration is by far the largest of the four organs
and is responsible for carrying out government policy, typically including
education, health, defence, foreign affairs, etc
Public Sector organisations are funded by revenues from the state (mainly taxes)
and they exist to deliver public services that cannot (or shouldnt) be provided by
the private sector
Often the public sector is very large, employing thousands or even millions of
people.

Agency in the Public Sector

Public sector organisations (agents) work on behalf of taxpayers and those that use
the services (principals e.g.pupils in a school, patients in a hospital, etc).
Funders/principals (tax payers and service users) are sometimes the same people
(i.e. taxpayers placing their children in state school) but sometimes they are not,
and this can give rise to disagreements on how much is spent and on what
particular provisions.
In general, however, public sector organisations emphasise different types of
objectives to the private sector.
Whereas private companies tend to seek to optimise their competitive positions,
public sector organisations tend to be concerned with social purposes and
delivering their services efficiently, effectively and with good value for money.

A common way of understanding the general objectives of public sector

organisations is the three Es:

Economy, Efficiency and Effectiveness

Economy represents value for money and delivering the required service on
budget, on time and within other resource constraints.
Efficiency An efficient organisation delivers more for a given level of
resource input than an inefficient one.
Effectiveness describes the extent to which the organisation delivers what
it is intended to deliver.

Types of public sector organisations

FORMS OF ORGANISATION
The term third sector (after private and public) is charitable and nongovernmental organisations.
These dont exist primarily to make a profit nor to deliver a service on behalf of the
state.
They exist primarily to provide a set of benefits that cannot easily be provided by
either profit-making businesses nor the public sector.
Organisations delivering international medical aid are a good example of nongovernmental organisations (NGOs).
Well-known NGOs such as Medicins sans Frontiers (doctors without borders in
English) are large and well-structured organisations, delivering important medical
aid in war zones and the like.
They are often mainly privately funded (e.g. by benevolent individuals)
NGOs and charities may have an executive and non-executive board, but these are
subject to a higher board of trustees whose role it is to ensure that the NGO or
charity operates in line with its stated purpose
Here, the agency relationship is between the NGO (agent) and its donors
(principal).
When donors give to NGOs or charities, it is important for them to be reassured
that their donation will be responsibly used for its intended purpose and the board
of trustees help to ensure that this is what happens.
Sometimes governments may help fund an NGO but give it effective autonomy in
its decision making

These organisations are sometimes referred to as QuANGOs quasi-autonomous

non-governmental organisations.
QuANGOs are sometimes accused of being unaccountable for their decisions
because they only weakly report to the government (and the taxpayers) who fund
their decisions.
QuANGOs can be politically awkward and, accordingly, their use in the public
sector changes over time.
LOBBYING AND LOBBY GROUPS
These campaign to influence government policy, they lobby politicians to try to
get them to vote in the legislature in favour of their particular interest.
These lobby groups are legal, but some argue against them as the best funded
will be the most likely to be heard, and so may act against the public interest
STAKEHOLDERS IN THE PUBLIC SECTOR
Public sector bodies have a complicated model of how they add value.
Taxation is mandatory and may be paid against the wishes of the taxpayer.
People need to feel fairly treated and not being over-exploited nor badly served.
Because there are so many claims to balance, then, the stakeholder pressures on a
government are often very difficult to understand.
Some stakeholder claims are recognised by some but not by others, and this can
make for a very complex situation indeed when it comes to deciding which
stakeholder claims to recognise and which to reduce in weight or ignore.
Some stakeholders have a very weak voice, while others have no effective voice at
all in order to express their claim.
Part of the debate in politics is the extent to which these weaker stakeholders are
represented and how their assumed needs are met.

Types of Public sector organisations

At the national level

National government is divided into central government departments (e.g. a
foreign office, a defence department, a health service, etc)
These departments are led by a political minister from the governing
political party.
This is important in democratic countries because the policies adopted by
these departments affect many people and it is important that they are

subject to political change if the electorate changes a government at an

election (this being a part of the social contract between the government
and the governed).
National government policy is configured and coordinated centrally to
ensure that strategic policies are pursued and that departments work
together to ensure this.
The head of government (not to be confused with the head of state) is
responsible for national government policy and in a democracy, he or she
can be re-elected or defeated based on his or her performance in the role.

Below national level (subnational)

Some countries are organised into regional authorities, with some powers
devolved down to these subnational bodies, as they are best handled by local
people
For example, roads, utilities, local schools etc

Above national level (supranational)

These are a little more complicated.
National governments sometimes come together for a shared purpose and
form supranational bodies
These bring tension though, as each individual nation is subject to pressure
from its own people (eg. EU and UN)

Leadership & Strategy for Public Sector Organisations

STRATEGIC OBJECTIVES
While most private sector organisations are independent in that they are stand
alone companies answerable to their shareholders, most public sector
organisations are part of a larger public sector structure.
An army cannot act alone, it is funded and controlled by government
Each public sector organisation must still be strategically effective in carrying out
government policy.
They must also be efficient and theres an emphasis on value for money and service
delivery.

Governance Arrangements
There is no single way in which public sector organisations are governed.

Accountability is gained in part by having a system or reporting and oversight of

one body over others.
The oversight body may be a board of governors, a council of reference or a board
of trustees, an oversight board or similar.
In each case, it holds the management to account, acting in the interests of service
funders (usually taxpayers)
Oversight body roles include:

Ensure compliance with regulations

Ensure it meets any performance targets
Monitor performance against budget
Make senior appointments to the public sector body

There is an increasing move in some situations to run some public services along
similar lines to private companies.
This means they may have an executive board and also some non-executive
membership on the board also.
The contestable nature of public sector policy
Many wonder if public sector organisations are operated properly and even if the
power of the state is so big that perhaps they shouldnt exist at all
Some governments prefer a larger state sector, while others prefer more to be
achieved in the private sector and less by government.
As governments change, some public sector organisations grow in size and become
more important, and others become small and less important.
One upshot of this is privatisation.
Taking a public sector service and allowing it to be provided by the private sector,
hopefully leading to better value to the customer.
Opponents of privatisation argue that some strategic services, such as utilities,
water, etc, are too important to be subject to the market forces of private
enterprise.
Privatised businesses are often subject to a great deal of internal change including
changes in culture, structure, and governance.