Thought Leadership

Public sector expertise is vital in a private sector company……… Really?

No doubt the pure private sector professional is staring back at this title and thinking that I am crazy.  “What on earth can someone from the public sector add to my commercial enterprise?”

Actually, such default thinking (even prejudice) works both ways, for many folk in the public sector would turn the tables and say that people from the private sector couldn’t come in and do their job either!

In truth, there are many senior people in the public sector managing and responsible for much more complex outcomes than many equivalent people in the private sector will ever experience.  However, I suspect that few of the latter are likely to understand, acknowledge or appreciate this.

The third sector similarly and commonly displays prejudice towards people in the private sector – commonly questioning their values. And in the private sector, too often, prejudice is based on an assumption that third sector leaders are typically amateurs.

So each sector has a tendency to trash the other.

In reality though, never has the need for permeability and transferability between the sectors been more important for success.  I will write about the need for commercial skills in the public and third sectors at a later date, focusing on the brave new world of mutually transferable talent, but for now let’s concentrate on my challenge to the private sector.

The private sector has to work in an economy dominated by the public sector as regulator, as a customer, and as a provider of education and other key public services on which businesses rely.  Common and shared understanding between the sectors really does matter.

Some think that the public sector outsources the delivery of services merely as a means of cutting costs and expenditure.  In practice, this happens less than you would expect – with a key reason for ‘expectation missing the reality’ being a lack of understanding of the political, operational, cultural and financial environments in contemporary public sector organisations.

Public service outsourcing brings its challenges. All too often, the claim is that ‘partnership’ exists and yet: different world collide; different languages are spoken; risks are calibrated in separate ways; and expectations are not aligned. You only have to look at repeated press coverage of issues such as apparently badly negotiated, so called ‘rip-off’ PFI deals – or the fiasco over security at the Olympics.

And yet, organisations continue to compete aggressively for the right to manage public service contracts and for many, this can be big business with huge numbers involved.

The eventual outcome of these contracts can be very varied.  So what makes one successful whilst another will fail?  Perhaps, the key is something other than simply how the contract is written and that those involved rarely consider. 

Perhaps, in the end, the difference is people. 

You need to have the right people to deliver the operational requirements of the contract. And I don’t mean just the getting out and cutting the grass or cleaning the floors, but beyond that. You need people who can understand the contract, understand the ‘customer’ and get to grips with the ‘politics’.   You need people who can gain respect from and undertake dialogue with political and executive leaders.

Hypothetically, if a local authority is spending £1 billion on a 5-year contract to deliver part of its services, then that local authority has to be able to trust, value and understand what it is that is being delivered. It will expect the delivery ‘partner’ to understand its wider agenda, objectives, governance, accountability and ethos. Local residents have to be able to see the difference that is being made.  They will want providers to be visible and accountable. You need people that can deliver, that can manage the operations, be commercially savvy, but you also need someone that can understand the relationships and manage them effectively.  You need a key person  (or more, sometimes) within that team that understands: why it is important and how to engage with elected Members; the best way to communicate with them; and how the democratic system works and what role it plays in the project that is being delivered. Ultimately the politicians are in control and accountable. Private sector executives have to understand and respect this.

Some outsourcing providers try to address this by appointing a series of high-flying advisors or non-executive directors to their boards to help point them in the right direction, and advise as to the best approach.  All well and good – but the reality is that unless you have someone ‘on the ground’ on a day-to-day basis that understands that relationship and how to get the best out of it, you are unlikely to reap the rewards that could be available, and will always be at risk of relationships breaking down and the contract being derailed.  These key people need to be part of the delivery team; they need to be on site and accessible to the public sector client; and they need to have an incentive in delivering success. Critically, they cannot be successful if they are seen as peripheral ambassadors or diplomats.

It takes a certain skill and mindset to be able to operate across both the public and private sectors, balancing the demands and nuances of both. However, the cost of this person/this particular blend of expertise and skills is minimal when compared to the scale, cost and revenues of the project.  And when you look at the cost of failure and the potential benefits of success, can you truly afford not to find this resource?

And note: this is not simply about growing people who have transferred to a company under TUPE arrangements in previous contracts – important as this is. Rather, it is about recruiting senior people. The truth is that TUPE transferees will typically not have worked at the highest levels in the public sector and nor will they have had exposure to the political interface.  I am talking about a very different kind of skills – a skill set that enables senior stakeholder engagement to take place with gravitas and credibility.

“Do these people exist?” I hear you say.  Yes, they do – you just need to define the role differently, market it differently, and know where to look for these folk.  And commonly, they are in the public sector (and just occasionally, they are in major consulting firms, but came originally from the public sector). Recruiting them directly from the public sector can be challenging – there are barriers, including obvious ones such as pension arrangements but more significantly ones based on culture, behaviours and recruitment practices.  Too often, recruiters and their consultant advisors or headhunters fail to really ‘think’ and look outside the traditional silos and traditional backgrounds for this very different breed. And maybe that is one of the reasons that I chose to work here in my current organisation, where the focus is very much on doing exactly that; embracing and celebrating diversity with a firm belief that the best of talent in one sector is as good as the best of talent in another sector; challenging the briefs we are given and striving to work with our clients to think differently, define the roles differently, and search differently.

I am not sure that what I have said or proposed is a particularly ground breaking intervention. For many, I am sure the rationale behind what I am saying is obvious. The need for talent that can transit effectively and successfully across sectors is clear and it feels right – the real challenge is, of course, effective execution.

I also appreciate that the focus above has been very much about outsourcing.  Perhaps another question to be posed is whether outsourcing for the public sector is or should be the solution?  In recent times, we have seen a diminishing demand in relation to outsourced services, however, if the true extent of the proposed spending cuts across the public sector is to be believed and in turn delivered, we will inevitably see a resurgence in outsourcing activity of one kind or another.  That being the case, the central thrust of my thesis remains – in order for outsourcing and large scale externalisation of contracts to successfully deliver the savings that clients need them to, surely the way it is approached and managed, on both sides, has to change?

I wonder if what is needed is in fact a new cadre of ‘cross-dressers’ (and even recruitment consultants) who understand and can actually execute this? Perhaps they are even ‘cross dressers’ and ‘cross tailors’ themselves?

Michael Dobson, Consultant, Davidson & Partners

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