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Private vs. Public Management: Trends, arguments, responses

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.

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Private vs. Public Management: Trends, arguments, responses

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  1. Private vs. Public Management:Trends, arguments, responses Discussion 16 July 2006

  2. Five Little Words “We’re looking at Private Management.”

  3. After the Shock • Understand the political context • Analyze what the public owner wants to achieve • Adapt … adapt … adapt

  4. Public vs Private Management Realities “Public and private management are fundamentally alike in all unimportant aspects.” Wallace Sayre

  5. 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

  6. Public & Private Realities PublicPrivate Drivers 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

  7. The Political Climate • Fundamental pressures for change: • Global economy • Dissatisfied citizens • Fiscal crisis • 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

  8. The Political Climate • Common Public Perceptions • Are responsible for inefficiency and waste • Are ineffective an non-functional • 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) • Cost effective service delivery • Customer focus • Benchmarking and performance measurement

  9. The Political Climate 5. Operating Practices of Governments • Direct control / management • Independent authorities or public benefit corporations • Contracting out (privatization)

  10. 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.”

  11. Today in Convention Centres • Forces Driving • New tools of trade: • Efficiency • Innovation • Partnership

  12. Forces Driving Private Managementin 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

  13. Transition for Convention Centres Objectives: Economic Impact Revenue gains Reduced or Protect Public assets Market share zero subsidies Provide community service

  14. 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

  15. 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

  16. Private Management is a Trend • Rapid growth for two decades • Current growth with new projects • In existing centres: to improve performance

  17. Example of Private Management Growth (SMG)(North American public assembly facilities)

  18. Arguments Against Private Management • Community needs not balanced with bottom line approach • Aggressive performance forecasts sometimes not achieved • Limited competition among management companies

  19. Can Public ManagersAchieve 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

  20. Final Thoughts • Publicly owned organizations remain public • Public will must be clear regarding goals • Public must understand costs of any decision

  21. 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?

  22. “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

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