Governement Operations as Professional Service Organizations

post # 407 — July 20, 2007 — a Managing, Strategy post

Here’s a reader question:

I work for a government department that has just re-organised into 30 unwieldy 30 directorates (on the recommendation of a famous consulting firm.)

I have been asked to develop an operating model that might help senior management plan for the deployment of the professional human resource at their disposal.

Our working assumption is that we have something to learn from the PSF model (as set out broadly in your book “Managing the Professional Service Firm”) but our project is veering towards a model based on time recording (a sort of “billable time” analogue) relating individuals’ efforts to one or other of the broad strategic objectives that our management board has designated as a priority.

I’d be interested to know whether you believe the material in your book is, in principle, adaptable for a government department where the drivers are in many ways very different. Actual profitability is not one, for example, but cost effectiveness and customer experience certainly are.

Other differences are that we have a much more static career structure where promotion and performance pay are often less important than pride, respect and “public service” as individual motivators.

Nor do we really have the types of leaders that seem to be the prerequisite for the working of your model. By and large they are not inspirational or dynamic strategic leaders, but are, more often than not, managers because they happen to have been in the department a while or have reached a certain level of seniority.

Hence, I’m sceptical about the notion that we can solve our problem of improving our effectiveness by developing another administrative layer of resource management. (I’ve tried unsuccessfully quoting chunks to them of your chapter on how managers really add value.)

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David replies: I have always had difficulty with the notion that there is such a thing as one unique “PSF model,” if that is taken to mean one clear set of policies, practices, processes, structures and attitudes.

Yes, I did try to offer some generalizations and insights that I hoped (and have proven to be) broadly applicable, but there is no one recipe that fits all situations.

I think the closest parallel I’ve seen to the government situation is the running of in-house service departments inside large for-profit corporations. They face similar issues that there is a more limited career path, they are often not profit-driven, and their mission is often less clear. If I were you, looking for comparable situations, I’d look at companies that have in-house legal departments, real estate or property departments, shared-service accounting departments, etc.

Using the for-profit model will, I think, be completely misleading. Even in the for-profit sector, some of the underlying assumptions that the traditional model was built on (and are described in my book) are proving to be untrue in the modern world.

Take, for example, a topic of promotion opportunities. In the traditional model I described, it was assumed that the vast majority of people hired at junior levels would want to become “partners”, and would be willing to work very hard toward that as a primary goal. As a counterpart, it was assumed that the organization wanted a high percentage to become partners, because what the organization provided to its market was the fully rounded, fully developed professional.

You point out that this is not necessarily the case in government: not everyone has the dynamism to want to move up, and top management doesn’t necessarily want them to.

Here’s my point: that’s actually the direction that many private practice firms are going in: Firms are promoting a smaller and smaller percentage of people to partners, because they can show more “profits per partner” by keeping partner numbers small. For these and many other cultural reasons, fewer and fewer younger people feel that it is worthwhile or sensible to compete in the “tournament” to become partner.

I would agree with two other points you make. The solution is absolutely not about structures (reorganizing) or systems (time-keeping.) You get better efficiency, quality, morale and everything else by having managers in place who now how to manage. Without them, the rest is truly irrelevant.