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Curriculum Center Browse Bibliography Build EPacket Pricing Structure Distribution Process Management Control in Nonprofit Organizations
Note on Management Control Systems in the Public Sector
Young, David W.
Functional Area(s):
   General Management
   Management Control Systems
Difficulty Level: Intermediate
Pages: 11
Teaching Note: Not Available. 
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First Page and the Assignment Questions:
  There is a broad consensus that public sector organizations in many countries are not well managed. Indeed, despite arguments from some quarters suggesting that there is a new public management (NPM) paradigm (Hood,1995), in which governments function as both leaner and more effective entities, practicing public sector managers generally have had a difficult time achieving some reasonable combination of efficiency and effectiveness in their organizations.

    What surfaces as a result of this gap between reality and the so-called NPM paradigm is the question “what’s so different about public sector management?” More specifically, since examples can be found in many industrialized countries of efficient and effective private sector management, are there any helpful lessons that can be transferred from the private to the public sector?

    In part, the difference between the two forms of management lies in the concept of a bureaucracy, where there is a good sized body of literature, beginning some 60 years ago with Weber (1947), and including such classics as Gouldner (1954), Blau (1955), Parsons (1960), and Crozier (1964). One aspect of this literature that relates to the theme of improved public management is the distinction between bureaucratic and managerial control. The distinction was described by Borgonovi and Rondo Brovetto (1987) using the five dimensions shown in Exhibit 1.
Exhibit 1. Bureaucratic Control versus Managerial Control
Dimension                                                        Bureaucratic Control    Managerial Control
Managerial focus                                                        Norms                            Results
Breadth of orientation                                                 Narrow                            Wide
Managerial latitude                                                       Rigid                            Flexible
Budgetary orientation                                          Spend completely        Spend efficiently
Adaptation to change in environment                        Little                                Much

    In light of these distinctions, most observers would agree that a change from bureaucratic to managerial control would be highly desirable in any public sector organization in any sort of economic or social system. The issue, then, is what prevents such a move? The purpose of this note is to discuss the barriers to such a move, and to suggest some ways to help overcome them.

    To fully understand the barriers, and to put them in an appropriate context for assessing ways to eliminate them, we must first recognize that the public sector comprises an extremely heterogeneous group of entities (especially if one broadens the focus to include organizations that function as private nonprofit entities in some countries and as public entities in others). They differ in terms of relations to clients (Exhibit 2), service customization and professional judgment (Exhibit 3), the nature of demand in relation to supply (Exhibit 4), the method of service delivery (Exhibit 5), and their capital/labor mix (Exhibit 6). Thus, managers of these organizations must be careful to apply the conclusions about barriers and steps to overcome them in the context of their own situations, since what works for one organization may not—quite likely will not—work for another.