Management of Public and Not for Profit Organizations
Private organizations are oriented towards generating profit
Public organizations are oriented towards generating value
Decision making principles within public institutions
Decision making principles: lack of resources, efficiency, economic rationality
The final goal of the decisions made by public institutions is generating public value
The final aim of private institutions is to satisfy individuals/groups needs and interests
Public sector institutions are operating in a non-market economy, can’t talk about prices
of products and services, creation of public value through delivering public benefit
Private sector institutions are operating in a market economy
Why public institutions:
Global issues (i.e. global warming, terrorism, migration, globalization, financial crisis)
have as key players public institutions and administrations, which:
o Generate a shared agenda of problems (policy issues);
o Define policies to tackle the issues;
o Manage the implementation and find the resources.
Public institutions define the rights (Vaccines are mandatory? Euthanasia is legal?),
regulate the economy (i.e. patents, monopolies, PPPs), build infrastructures (roads,
airports, railway), manage primary services (education, healthcare, energy, waste
management, public transportation), protect public goods (green, safety, heritage, etc.).
The quality and the effectiveness of public institutions are critical determinants of the
social, cutlural and economic development of nations.
The quality of public institutions depends on many factors (institutional capital, social
capital, etc.), but mainly on institutional arrangements and on the management skills
adopted.
Public institutions can be observed from three different perspectives:
Citizen: in order to better understand the system where we live, the logics behind it and
the actions taken by the public institutions.
Future private sector manager: public institutions not only manage the market but also
may be an important provider of business opportunties for private sector firms.
Future public sector manager: the public sector is an important source of employment
in most industrialized countries.
Public and private administration:
DECISION-MAKING PRINCIPLES:
o Lack of resources
o Efficiency
o Economic rationality
AIMS
o Public: general interest
o Private: individual/group interest
CONTEXT
, o Public: non-market economy (creation of public benefit; public authority; public
consensus and ideology)
o Private: market economy (price; creation of economic value; autonomy of the
subjects involved; consensus based on economic return; non-hierarchical)
Public management and business economics:
Some characteristics of the business economics applied to public institutions:
o Management as cross-cutting among the different types of institutions (private,
family, nonprofit, public);
o The management of private firms focuses on economic processes rather than on
political, institutional and social processes;
o Autonomy and unity of every single public institution;
o Public institutions as a system of different institutions which are autonomous
and have different functions and characteristics. The growth of the system is
based on the growth of each single institution.
Public institutions:
2 types of public inst= governmental public inst & specialized public inst
Governmental inst are more affected by politics because they are related to governing.
Ex: eu, nations, regions, municipalities. They are influenced by elected officials
Specialized inst deal with subjects, topics and policies that are of general interest. Ex:
research centers, transport authority. They generate public value like public cultural
institutions.
Characteristics of public institutions:
heterogeneity of the products
lack of price
administrative activities
management isn’t alone in decision making: political-institutional vs. management
announcement effect: public institutions are affected by politics
Heterogeneity of products:
HETEORGENEITY OF FUNCTIONS, PRODUCTS AND ACTIVITIES
The management is influenced by:
o Operational differences from one public institution to the other;
o Skills and professionals;
o Organisational models;
Different management systems and approaches
Different evaluation criteria.
the differences and the diversity of the public institutions different management
systems and approaches, different evaluation criteria. Public sector is acting as a united
body so one public institution’s decisions may affect the other.
Lack of price:
It implies that a good management (quality of the management) is not linked to the
financial performance:
o A good management might include deficit;
, o A bad management might have a financial equilibrium (low quality of the
services; generous public financing);
o The lack of price does not allow to clarify the public value created with the costs
paid by the public institutions (unlike private firms).
Self-selection of the demand:
o Larger accessibility but need to control the access;
o Tools to try to balance demand and offer: co-payment; selection of the user;
educating the demand
Consensus and the satisfaction on the institutions
on one side allows certain goods to be broadly accessible on the other hand
Administrative activity:
The administrative activity should be carried out according to clear and transparent
rules aimed at ensuring the community against the unfair use of power and public
resources
Two main reasons:
o Giving overarching power to public institutions
o Need for operational checks different from the market checks
Define which public institutions does what (i.e. ID and the Register office)
Define the rules of the game (procedures; timing; content; prerequisites; etc.)
Formal decisions with external validity (i.e. Ex. Order by the Mayor);
Define the elements to be considered in the formal decisions (i.e. reference to the law)
ensuring that there is clarity and transparency in the delivery and production of public
services and in the making of decisions. Public insts have authoritative power, in order
to counterbalance this power we make it clear through administrative activities how to
carry out certain activities. It must be ensured that these activities are carried out in a
fair way. Since public insts are not in the market economy there should be operational
checks on them.
Political-institutional cycle vs. management cycle:
Political-institutional timing (elections, institutional appointments, consultations, etc.)
impacts the management of public institutions:
o Public institutions are subject to political cycles;
o Pre-electoral times are subject to regulation which impacts on the functioning of
public institutions;
o Elections are critical for policy cycles and measurement of results.
they must coexist within public inst because they are affected by political decisions.
Management should be driven by certain criteria.
Announcement effect:
political announcements affect the perceptions of citizens. Announcing and
implementing isn’t the same thing.
Complexities in public management:
Balance between economic, political and legal model;
Manage at the same time all the different characteristics of public institutions;
, Bring together social/community objectives which are different and sometimes in
contrast, without a single and unanimous objective.
Considering these characteristics there are complexities in public management. Public
insts are not only affected by the management they are also under the influence of
economy, politics and legalities. All these different characteristics should be managed at
the same time. Public insts also should bring together social objectives which are
different and sometimes in contrast without a single unanimous objective.
Functions of public insts:
definition of the legal system and the protection of rights
regulation of the economic system and redistribution of wealth and opportunities
production of collective goods
production of public services
Urban and territorial planning, development of infrastructure and protection of the
environment and heritage.
Legal system:
It is a pre-requisite;
It establishes the legal framework and regulates the rights/duties of citizens, public
administrations and economic subjects;
It defines the scope of public institutions;
Laws, decrees, sentences, directives, decisions, regulations, executive decisions, etc;
Specific public institutions are dedicated to the monitor, control and administration of
the legal system (privacy authority; police; military; judicial system; etc.).
without it societies wouldn’t exist, they are basic rules that allow us to coexist within a
community. It gives a framework of rights and duties of the public and private sectors.
Determines who does what and how. It defines the scope of institutions: it tells public
insts what their role is within the community and what they have to manage and care
about. It is the pre-requisite to allow the functioning of public insts.
Economic regulation and redistribution:
Private organizations are oriented towards generating profit
Public organizations are oriented towards generating value
Decision making principles within public institutions
Decision making principles: lack of resources, efficiency, economic rationality
The final goal of the decisions made by public institutions is generating public value
The final aim of private institutions is to satisfy individuals/groups needs and interests
Public sector institutions are operating in a non-market economy, can’t talk about prices
of products and services, creation of public value through delivering public benefit
Private sector institutions are operating in a market economy
Why public institutions:
Global issues (i.e. global warming, terrorism, migration, globalization, financial crisis)
have as key players public institutions and administrations, which:
o Generate a shared agenda of problems (policy issues);
o Define policies to tackle the issues;
o Manage the implementation and find the resources.
Public institutions define the rights (Vaccines are mandatory? Euthanasia is legal?),
regulate the economy (i.e. patents, monopolies, PPPs), build infrastructures (roads,
airports, railway), manage primary services (education, healthcare, energy, waste
management, public transportation), protect public goods (green, safety, heritage, etc.).
The quality and the effectiveness of public institutions are critical determinants of the
social, cutlural and economic development of nations.
The quality of public institutions depends on many factors (institutional capital, social
capital, etc.), but mainly on institutional arrangements and on the management skills
adopted.
Public institutions can be observed from three different perspectives:
Citizen: in order to better understand the system where we live, the logics behind it and
the actions taken by the public institutions.
Future private sector manager: public institutions not only manage the market but also
may be an important provider of business opportunties for private sector firms.
Future public sector manager: the public sector is an important source of employment
in most industrialized countries.
Public and private administration:
DECISION-MAKING PRINCIPLES:
o Lack of resources
o Efficiency
o Economic rationality
AIMS
o Public: general interest
o Private: individual/group interest
CONTEXT
, o Public: non-market economy (creation of public benefit; public authority; public
consensus and ideology)
o Private: market economy (price; creation of economic value; autonomy of the
subjects involved; consensus based on economic return; non-hierarchical)
Public management and business economics:
Some characteristics of the business economics applied to public institutions:
o Management as cross-cutting among the different types of institutions (private,
family, nonprofit, public);
o The management of private firms focuses on economic processes rather than on
political, institutional and social processes;
o Autonomy and unity of every single public institution;
o Public institutions as a system of different institutions which are autonomous
and have different functions and characteristics. The growth of the system is
based on the growth of each single institution.
Public institutions:
2 types of public inst= governmental public inst & specialized public inst
Governmental inst are more affected by politics because they are related to governing.
Ex: eu, nations, regions, municipalities. They are influenced by elected officials
Specialized inst deal with subjects, topics and policies that are of general interest. Ex:
research centers, transport authority. They generate public value like public cultural
institutions.
Characteristics of public institutions:
heterogeneity of the products
lack of price
administrative activities
management isn’t alone in decision making: political-institutional vs. management
announcement effect: public institutions are affected by politics
Heterogeneity of products:
HETEORGENEITY OF FUNCTIONS, PRODUCTS AND ACTIVITIES
The management is influenced by:
o Operational differences from one public institution to the other;
o Skills and professionals;
o Organisational models;
Different management systems and approaches
Different evaluation criteria.
the differences and the diversity of the public institutions different management
systems and approaches, different evaluation criteria. Public sector is acting as a united
body so one public institution’s decisions may affect the other.
Lack of price:
It implies that a good management (quality of the management) is not linked to the
financial performance:
o A good management might include deficit;
, o A bad management might have a financial equilibrium (low quality of the
services; generous public financing);
o The lack of price does not allow to clarify the public value created with the costs
paid by the public institutions (unlike private firms).
Self-selection of the demand:
o Larger accessibility but need to control the access;
o Tools to try to balance demand and offer: co-payment; selection of the user;
educating the demand
Consensus and the satisfaction on the institutions
on one side allows certain goods to be broadly accessible on the other hand
Administrative activity:
The administrative activity should be carried out according to clear and transparent
rules aimed at ensuring the community against the unfair use of power and public
resources
Two main reasons:
o Giving overarching power to public institutions
o Need for operational checks different from the market checks
Define which public institutions does what (i.e. ID and the Register office)
Define the rules of the game (procedures; timing; content; prerequisites; etc.)
Formal decisions with external validity (i.e. Ex. Order by the Mayor);
Define the elements to be considered in the formal decisions (i.e. reference to the law)
ensuring that there is clarity and transparency in the delivery and production of public
services and in the making of decisions. Public insts have authoritative power, in order
to counterbalance this power we make it clear through administrative activities how to
carry out certain activities. It must be ensured that these activities are carried out in a
fair way. Since public insts are not in the market economy there should be operational
checks on them.
Political-institutional cycle vs. management cycle:
Political-institutional timing (elections, institutional appointments, consultations, etc.)
impacts the management of public institutions:
o Public institutions are subject to political cycles;
o Pre-electoral times are subject to regulation which impacts on the functioning of
public institutions;
o Elections are critical for policy cycles and measurement of results.
they must coexist within public inst because they are affected by political decisions.
Management should be driven by certain criteria.
Announcement effect:
political announcements affect the perceptions of citizens. Announcing and
implementing isn’t the same thing.
Complexities in public management:
Balance between economic, political and legal model;
Manage at the same time all the different characteristics of public institutions;
, Bring together social/community objectives which are different and sometimes in
contrast, without a single and unanimous objective.
Considering these characteristics there are complexities in public management. Public
insts are not only affected by the management they are also under the influence of
economy, politics and legalities. All these different characteristics should be managed at
the same time. Public insts also should bring together social objectives which are
different and sometimes in contrast without a single unanimous objective.
Functions of public insts:
definition of the legal system and the protection of rights
regulation of the economic system and redistribution of wealth and opportunities
production of collective goods
production of public services
Urban and territorial planning, development of infrastructure and protection of the
environment and heritage.
Legal system:
It is a pre-requisite;
It establishes the legal framework and regulates the rights/duties of citizens, public
administrations and economic subjects;
It defines the scope of public institutions;
Laws, decrees, sentences, directives, decisions, regulations, executive decisions, etc;
Specific public institutions are dedicated to the monitor, control and administration of
the legal system (privacy authority; police; military; judicial system; etc.).
without it societies wouldn’t exist, they are basic rules that allow us to coexist within a
community. It gives a framework of rights and duties of the public and private sectors.
Determines who does what and how. It defines the scope of institutions: it tells public
insts what their role is within the community and what they have to manage and care
about. It is the pre-requisite to allow the functioning of public insts.
Economic regulation and redistribution:
