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The Public Sector, why so ineffective?

July 15, 2012

People created our institutions.  Public or private, our institutions reflect human nature.  Public institutions start with real disadvantages in efficiency and effectiveness which require higher costs or innovative designs to overcome.  What are some of these real disadvantages?

  • In the world of public institutions, the choices are framed and the decisions are made in the political arena.  Most of us have noticed that the staffing of government bureaus is not designed to improve the citizen’s experience.  Political considerations rule.
  • Management in the public sector is denied many useful incentives.  Their ability to reward exceptional performance with a bonus, a merit raise or a promotion is very limited.  Their power to sanction poor performance with pay cuts, suspensions or termination is almost always zero.  Incentives matter and the lack of positive or negative incentives is a serious barrier to effective performance.
  • Even when the public institution does a poor job of delivering their service, force is frequently used to compel compliance.

Jefferson County, Alabama (where I live) has well documented financial issues which caused it to close all but one location for renewing auto tags.  Consequently the typical wait at has grown from one hour to four or more hours.  Every person in that line is waiting to pay for an expensive piece of paper.  Despite this clear failure to perform their defined “Public Service” you will still be pulled over and assessed a large fine if you choose to skip the line and fail to renew.

Imagine how your local grocery store would react to a four hour wait in their checkout line.  More lines would open, managers would run registers, breaks would be put off until the lines were gone.  They would react to the changing situation and quickly if they wanted to survive.

Having denied our public institutions so many tools that are needed to perform their job effectively, is it any wonder that they are less efficient than they could be?  The real question is how could we redesign a public sector institution to offer more choices so the public could pressure them to perform better.

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