Systematic research using large datasets shows that public sector organizations are associated with significantly worse management practices.[1] Public sector organizations are nearly as poorly managed as the worse category of private sector firms: those run by the heirs of the original founder.
In particular public sector organizations have significantly worse incentive structures, are much more likely to promote based on tenure rather than competence, and are much more likely to retain low performing employees.
> In particular public sector organizations have significantly worse incentive structures, are much more likely to promote based on tenure rather than competence, and are much more likely to retain low performing employees.
Have these practices been measured to cause worse outcomes? Not so long ago there was a paper here that said most companies would be better off promoting at random than the measures they actually use, and we all know how practices like stack ranking can destroy team cohesion.
> we define “best” management practices as those that continuously
collect and analyze performance information, that set challenging and interlinked short-
and long-run targets, and that reward high performers and retrain/ fire low performers
It appears that the purpose of the paper is to apply a set of normative judgements in order to validate at a shallow level the types of preconceptions that GP was questioning. It's not a surprise that government organisations aren't operating in a cut throat manner.
MBA students are going to be looking for specific indicators and terminology (OKRs, KPI dashboards, etc) and things like comp plans. That's not because they are stupid or evil, it's just their world. They aren't trained to understand performance management in an environment where collective bargaining gives employees due process rights, for example. Conversely, public sector leaders are going to struggle with Sarbanes-Oxley compliance or financial decisions that incorporate tax optimization.
Your state/local government isn't going to provide meaningful incentive compensation, for the simple reason that it doesn't work in most cases and taxpayers won't tolerate paying rewards to people for doing their job.
You also need to evaluate the effectiveness of governance differently, because management within an organization is not empowered in the same way. If Congress or a state legislature decrees that you must do X in Y way, you need to do Y, even if it doesn't make sense or is inefficient. Usually in a corporation business management is expected to own their P&L on a broader scope and optimize. Public sector managers can only optimize in the (more limited) scope they control, and only with the consent of the elected/appointed official or board.
Nick Bloom is a well-regarded economist. I'm not familiar with the others. He has a couple of papers on this theme that the advantage of some countries is superior management. I haven't read the papers, but people seem to not regard the idea as laughable.
The paper does rely data from McKinsey and Accenture, for what that's worth.
A study I heard discussed on a podcast once, and have been unable to subsequently locate, found that once you have accounted for failed private businesses the public sector was on par (and perhaps slightly better, though from memory they said it wasn't a statistically significant) with the private sector in terms of efficiency of output (i.e. what society gets for what is invested). If that rings any bells to anyone I would love to find the paper!
In particular public sector organizations have significantly worse incentive structures, are much more likely to promote based on tenure rather than competence, and are much more likely to retain low performing employees.
[1] https://www.nber.org/papers/w17850.pdf