Leadership in public and private sectors

Yesterday I gave a lecture at Middlesex University on Leadership. They asked me to compare my experiences and understanding of leadership in the public, private and charitable sectors.

<a href=’http://www.johnredwoodsdiary.com/wp-content/uploads/2008/02/picture1.jpg’ title=’Elizabeth I’><img src=’http://www.johnredwoodsdiary.com/wp-content/uploads/2008/02/picture1.jpg’ alt=’Elizabeth I’ /></a>

I did not approach the question from an ideological standpoint. I have visited enough bad private sector companies with poor employee relations to know that it is not always private sector good. No-one watching the bravery and professionalism of many in our armed forces could also say it is always public sector bad. I do, however, think there are serious problems with management in important parts of our public sector, which need careful analysis leading to reform and improved performance.

I do not for one moment believe Labour Ministers want our hospitals to be prey to such serious infection and hygiene problems as they currently experience. I do not think they wanted productivity to fall by as much as 10% when they decided to inject so much extra spending into the NHS. I have heard Ministers go hoarse explaining they are sorry and have learned the lessons from countless losses of laptops, CDs and other data from public offices.

Their response is always the same. They issue new instructions. They make changes to procedures. They issue a press release, and appear on the media. Their spin doctors let it be known how cross, upset or concerned they are. We are told the lessons have been learnt, that it is unlikely there will be another outbreak of MRSA or that data will be better protected in the future. We sit and wait for the next incident to occur.

There has to be some set of reasons why the best of the private sector does not infect its customers or lose its customers private data whilst the worst of the public sector does. At its best the public sector has a public service ethos which would be horrified at the idea that it had a part in the death of a patient or was responsible for putting someone’s bank account or personal security at risk. Yet all too often today things go wrong.

Let us take one recent example of how wrong things can go if leadership is lacking. Network Rail undertook major rail improvement works over the Christmas and New Year holiday. Its senior management chose to carry these works out through private contractors. They supervised the work of their staff, who designed the specifications, decided how much work could be achieved, let and supervised the contracts. It is a company wholly owned by the state, with access to substantial state subsidies to do its job. We now know they miscalculated how much work could be done, did not realise how few engineers would be available to turn up, and failed to motivate or supervise their contractors to do the job to time. We were then told that in future things would be different because they would do more in house! The problems were in house.

At the very least the Directors of Network Rail failed to assess the risks and to motivate the people involved. If you want engineers to give up their holiday period to go and work outside on railway lines, you too have to make an effort, to persuade them it is something worth doing, and to make it worth their while doing it. I don’t recall the Directors giving up part of their holiday to appear at the sites and to give encouragement to those working for them. There was no leadership by example.

Great leadership is about expressing a vision, telling people why they matter, getting them to believe the thing is worth doing and they can do it. Great leadership produces success and satisfaction. The satisfaction is not just or always a good financial reward – although that can help – but a feeling of a job well done, an important challenge surmounted.

In this government’s public sector they have aped some of the techniques of the private sector – targets, mission statements, bonuses, performance pay, use of consultants and external contractors – but in too many case they have not used them in a disciplined and convincing way. You use consultants for something you cannot do in house, precisely defining the task and ensuring the consultant or contractor can perform it for you. You set a limited number of targets that are stretching but possible to hit – not 200, many of which are contradictory or marginal. If you offer bonus you tailor it to the main issue that needs resolving. It should be easy to measure and the value of hitting it to the organisation made clear. Instead the public sector all too often uses consultants too often for vague assignments, fails to get the best out of external contractors, sprays targets around in a bizarre way, offers performance pay for poor performance and writes endless mission statements and documents on what is required that are too general and imprecise.

Above all great leadership requires great commitment. It requires leadership by example. Do not expect your staff to do things you would not do yourself. It often seems Ministers lecture the rest of us to behave in ways they do not themselves match. At its finest, in the case of the best of our military, the public sector in the UK is still good. At its average it is mediocre, offering too little for too high a cost, exploiting its monopoly position and its considerable powers.

<strong>Click on the link below to download John Redwood’s Middlesex University lecture on leadership.</strong>

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  1. newmania
    February 1, 2008

    The reason the Public sector is a waste of money is because it cannot go out of business, No new plan, no apology, no job. It has nothing to do with the quality of people although being subject to market judgement changes theculture .
    My brother worked for Paribas and finally went to teach economics at a N London Comp. What I have heard about the reality of education, for example, tells me all I need to know about how unlikely it is that any real progress is made until we have competition.
    In other countries that may not be so but I have doubts , here , it certainly is and some time there will have to be a battle with the NUT. Problems arise where there are natural monopolies or barriers to entry …but that another subject

    I `m not sure you have got to the heart of the matter here but it was for a specific audience. Incidentally I do not see why the army should be beyond criticism ,we made that mistake with the Police

  2. mikestallard
    February 1, 2008

    We had a meeting here in our village a couple of nights ago. There was a long lecture from a Police Sergeant who said how hard she was working with difficult teenagers in the town market place, two miles away, by sending them to the local leisure centre for free.
    It was quite obvious that neither she nor any of the other Police and Important People on the platform had any power. All they wanted was to see where we were hurting.
    And we told them too! – traffic! The lorries rumble through the village just at the time when Primary School children are coming in and out of school. Cars speed round the dangerous blind corner at 60 m.p.h. We often get serious accidents.
    We never see police here, except in times of crisis.
    Why had she come in a flak jacket with handcuffs? Why wasn't she in uniform? Did she think we were going to attack her? All these questions were asked by the people in the hall.
    At the end, she summed up what we had said. It was: more work in the market place. She never mentioned any of the points which anyone had made.
    This made everyone who had spoken simply livid.
    And that is really sad because when we had (in our village) a couple of armed robberies, the Police were simply excellent.

    I thought I would give you this story to show how lack of real leadership at the top (Cambridge/London) affects the wretched local Police in the villages.
    This one, female Sergeant, by the way, has to cover, I think, nine villages on her own. And there are quite a lot of criminals here in the Fens. always have been too.

  3. Neil Craig
    February 3, 2008

    "There has to be some set of reasons why the best of the private sector does not infect its customers or lose its customers private data whilst the worst of the public sector does"

    You answer your own questionn John. The best tends to be better than the worst. One of the many missing data discs went missing in a private company in the US.

    The ultimate & perhaps only reason the private sector is usually better than the public is that in the end if they are that bad they go bust whereas failing public sector groups get another chance & a bigger budget.

    Reply: Yesc – the main reason fewer discs go missing in the private sector is managements need to keep the customers happy otherwise they go elsewhere and they can no longer pay the wages.

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