Management perspective of public, private and NGO sectors-I

24 Nov, 2007

Irrespective of the nature of organisation, management is essential in order to ensure productivity and effectiveness. The process of management includes setting objectives, designing the methods and creating an environment for the application of designed methods in order to achieve the set objectives.
The scope of management greatly varies because of the variations in the nature of organization - private, public and voluntary. Both the public and private sectors have a long history of management. The two sectors, on the basis of their distinct nature and role, have chosen different management systems; while the voluntary sector, however, after reaching the identity of the third sector, is still in search of management system of its own.
Since NGOs are supposed to be strategic organisations, they face more uncertainty in their environment than any other type of organisations. Besides, there are some distinct characteristics that necessitate distinct management systems for NGOs.
One of the important social activities has been 'managing since people began forming groups to achieve their aims and objectives which they could not get as individuals.
There are many similarities in managing organisations in the three sectors. There is a need of skilled managers; who can manage resources; work in team; have innovative ideas and leadership qualities; and are able to supplement their abilities with the mission and vision.
Public and business sectors are in search of increasing their effectiveness by building staff commitment to mission and values. The same is also needed in the NGO sector. However, the difference in all the three sectors' vision, mission and nature of transaction creates the basis of distinction in management system.
Hence, managing the third sector organisations becomes different from managing the business and public sectors. In this paper, the management theories and approaches of public, private and voluntary sectors are discussed to understand the systems in each sector.
MANAGEMENT DEFINED: Management has been defined differently by various management gurus although all definitions lead to the same objective of the subject that is improving efficiency, productivity and creating effectiveness in the organisation. John F. Mee defined the subject as, "Management may be defined as the art of securing maximum results with minimum efforts so as to secure maximum prosperity and happiness for both employers and employees and give public the best possible services".
This definition is comprehensive and elaborative, and seemed fit for all three sectors, but later on management scientists contributed more insights by studying the nature and characteristics of organisations. As a result of continuing research in this field, scholars suggest various management approaches that are applied in managing the public, business and NGO sector.
PUBLIC ADMINISTRATION: Public Administration is both an activity and a subject of study or intellectual discipline. As an activity, it is as old as social life. In earlier times, the management of the public concerns was synonymous with that of the private concerns of the head - leader or ruler.
Gradually, the formation of government and its operations were accepted as the part of political science and execution of the policies made by the state machinery was considered as subject matter of public administration. Hence, public administration is recognised as an activity, independent of rulers' personal activities.
The executive level management of state affairs is referred as public administration in political science. Public means people as a whole, who form government in a country in modern world.
Public, in generic term, is a constituency of a government, while administration is a Latin word, which refers to executive level management. So, public administration can be inferred as management of affairs of a government. Generally, it can be defined as a body of knowledge by which the public policies are executed.
Its often said that although as an activity, public administration has existed in human society from the time immemorial, however, as a branch of study and learning is not very old. It was not until the 19th century, that academic institutions started teaching public administration as a subject.
The credit for making public administration as a science goes to Woodrow Wilson, Goodnow, Willoughby, L.D White, Luther Gullick, Max Weber and Henri Fayol, in special, and many public administration scholars in general.
The public administration is defined in different terms. Wilson states, "public administration is detailed and systematic application of law". Simon is of the view that public administration covers the activities of executive branch of the state; national and local governments.
Mc Queen agrees with Simon by stating "It is related to the operation of government whether central or local". White has defined the subject comprehensively as "Public Administration consists of all those operations having for their purpose, the fulfilment or enforcement of public policies as declared by competent authority".
The above mentioned definitions carry a common theme by entailing that public administration is a subject that covers the functions of the executive branch of state. Pfinner and Merson represent a different school of thought where they have referred public to policies and their implementation being the subject matter of public administration.
In determining the subject matter of public administration, there are three schools of thoughts. The first school of thought is represented by Wilson, Willoughby, White, Gullick, Fayol and Urwick. They are of the view that public administration is a separate activity with its own well-marked field and principles.
This discipline covers the execution of public policies and cannot interfere in policy making, the policy making; falls under the subject matter of political science. The second school of thought is represented by Pfinner and Merson. They are of the view that anything like a complete divorce between the politics and administration is both impracticable and not understandable, because policy and administration are inextricably mixed up and act and react on each other.
It is also because administration is an instrument for fulfilling political goals and ends. Independent administrative goals such as economy and efficiency are incomplete, because the question that arises: economy and efficiency for what. This 'what' is always responded by the political scientists.
The third school of thought emerged out of the theory of need. This school is represented by the public administration scholars like Waldo and Merriam. They believe that the rigid and dogmatic separation between politics and administration should be given up. Recently, it has been recognised that administrative process is permeated with politics -- manipulation of power and formulation of policy.
From the above discussion, an important conclusion can be drawn: public administration is the management of executive level of government and, up to some extent; it provides assistance in the policy formulation of the government.
This is supported by Dimock who states "public administration is what and how of a Government" and according to Gullick "Public administration is that part of the science of administration which has to do with government". To have a better understanding of the public administration, or public sector management, can be better understood with its reference to the functions of the state.
The states' functions are to maintain law and order; to protect the life and property of the citizen, ensure the social order; protect the geographical and ideological boundary of the country; operate communication systems; run public enterprises to achieve the objectives of social welfare and economic prosperity of the citizens by providing employment opportunities to them; to promote trade and business and maintain economic prosperity of the people and state; and not with the primary motive of earning profits for the sake of wealth accumulation and capital formation.
Thus, public administration is to serve the people primarily on no profit no loss basis and to create surplus out of their operation is secondary and tertiary objective. Any profit made during the process is attributed to the welfare of the people and the development of the state.
PRIVATE (BUSINESS) SECTOR MANAGEMENT: Private sector comprises of privately owned and private business organisations. The primary objective of these organisations is profitability. Unlike the NGO sector they have a different vision and mission.
Along with creating surplus, and capital formation, social services and social well being are the secondary and tertiary considerations of the private sector. Hence, these priorities determine the modes and methods of resource mobilisation, human resource development, exchange mechanism, management style and organisational culture.
Davis comments that "Management is the function of enterprise which concerns itself with direction and control of the various activities to attain the business objectives". According to Weichirch and Koontz, "Management is the process of designing and maintaining an environment in which individuals working together in groups efficiently accomplish selected aims".
Mee defines the subject as "Management is an art of securing maximum results with minimum efforts, so as to secure maximum prosperity and happiness for both employers and employees and give people best possible services". Although the above definitions emphasised that the business sector management is concerned with achieving the goal of a business enterprise, but Mee has clearly mentioned the concept of maximum and minimum.
The concept of maximum gain by the minimum efforts and resources refer to efficiency and economy. Efficient organisations have maximum profit which forms the basis of their business; hence efficiency and economy are terms mostly used in the business sector.
In public sector, however, due to Weber's bureaucratic management rules and regulations and chain of command are the priorities in operation, profitability is secondary consideration. In business sector, scientific management, modern operational management theory, behavioural management and system theory have provided significant contributions to the development of business management.
NGO MANAGEMENT: NGO Management is a recent phenomenon. Over the last two decades NGO sector has been trying to design a distinct management system from the management of private and public organisations. In the last ten years significant amount of training materials and manuals have been produced by NGOs.
At the international levels ANGOC in Asia, IRED (the third world NDGO task force) in Latin America and the NGO Management Network and ICVA are publishing articles and organising seminars and workshops on the subject. Numerous NGO federations are also debating the concepts at various forums.
NGO Management definitions have been rare - the concept of general management still prevails in the sector. Campbell says "Management emphasises the concept of working with and through others and making effective use of the available resources in order to achieve the organisation's goals and objectives".
To synergize it into the NGO sector the definition can be further elaborated as "NGO management is forecasting with shared vision, planning strategically, operating professionally and leading people friendly".
The contributions of some eminent writers like Hudson, Handy, Drucker, Brown, Korten, Salamon, Smillie, Hailey and Campbell in their efforts to find a solution to the management crisis in NGO sector are significant. As a result of the continued research in the field, initial works in NGO management can be classified into the following three branches:
2.1 Trial and Error Practices
2.2 Strategic Management
2.3 NGO Management Models
TRIAL AND ERROR PRACTICES: In many ways, NGO management is far more complex than managing for-profit organisations. In for-profit organisations, the profit or loss yielding measures are considered as their success or failure.
Business tactics, diplomacy and cut-throat competitions are some techniques used to make organisations more efficient and productive. NGOs all over South Asia have managed their organisational affairs through a process of 'learning by doing.'
The basic difference between the two sectors' management is that the NGOs management, with or without defining, takes a human line, while the for-profit organisations prioritise the level of profit as a result in operation.
So far, NGOs in South Asia are encountering the problems of overall organisational management, which include all the components of the organisation, such as human resource; financial management; information; networking; resource management; and operations management.
To cope with these management problems, NGOs are heavily dependent on the corporate sector management which, most of the time, negates the values of third sector. NGOs are also taking disciplinary actions against the poor performance of their employees as corporate sector does.
STRATEGIC MANAGEMENT: Hudson is one of the advocates who are of the view that NGO management shall be on the basis of strategic management. Strategic management is a relationship between the organisation and its environment. In strategic management, organisation goes through an adaptive cycle to adjust to the environment in which it operates.
The degree of adaptation depends upon the understanding of environmental conditions and appropriateness of their decisions concerning how the organisation will cope with these conditions. In recent years, management experts have developed numerous ideas to help people understand organisations and manage them more effectively.
The strategic planning society alone recognises 200 strategic management concepts. Some of these important ideas are: management by objectives, critical success factors, zero-base budgeting, scenario planning, total quality management, corporate culture, business process reengineering, catastrophe theory etc.
Strategic management thinking ultimately found its way into developmental administration/social sector as means were sought to make the best use of scarce resources. Whereas strategic management analysis has been a valuable tool for public and private managers in the west, it has not proven so useful when applied to developmental or voluntary activities.
NGO MANAGEMENT MODELS: Various institutions are working on the management of NGO sector. Some management models have been developed and documented. The researchers and NGO managers are still viewing these models as theoretical proposition and these models are evolving and yet to be adapted in management literature. The four management models are discussed below:



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2.3.1 Hudson's Strategic
Management
Process Model
2.3.2 The Chakra Model
2.3.3 MAT Sections
2.3.4 Campbell's Simplified
and Complex
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PROCESS MODEL: This management model is based on three aspects, how objectives and corporate strategies are created and used; how service strategies and operational plans are devised; and how performance is measured and managed.
Hudson believes that practically a coherent philosophy for managing strategy in third sector organisations can be derived from the core concepts of vision, mission, objectives, strategies and performance management. When these core concepts are linked up into an overview, the management model for third sector is designed.
The strategic management process model moves under the broader outlines of the core concepts as follows:
-- The vision: what specifically our organisation wants to achieve in the next few years
-- The mission: how should we allocate resources among different objectives
-- The objectives: what quality standards should we want to achieve
-- The strategies: what have we learned from past experiences
-- Performance Management: what improvements are required to enable us to make better use of our resources
BENEFITS OF THE PROCESS MODEL: The benefits of this management model are as follows:
-- Everyone becomes clearer about his or her objectives and how they fit into the wider task of the organisation as a whole
-- It leads to more effective use of resources
-- It is an ideal way of building contract and motivation
-- Diverse constituencies can be brought together around a common purpose
THE CHAKRA MODEL: The AIT NGDO Consortium developed the Chakra model. It was designed as a management system basically for Non-Governmental Development Organisations (NGDOs). The word Chakra means cycle or roundabout in Sanskirit. The model comprises five circles with a core, providing a framework for organisational management.
THE CORE: The Core content of organisational culture is vision, as organisational culture plays an important role in motivating staff and guaranteeing commitment. A vision is a description of the future situation, which an organisation aims for. A vision can be a powerful motivator and inspirer to the people in the organisation.
CIRCLES: The first circle shows the characteristics of NGDOs as organisation and covers values, level of development, structure, mission, people and size. The second circle is about management approach; it includes management style, governance, leadership and organisation.
The third circle includes key management responsibilities as conflict and crisis management, finance and resource management, information management and communication, monitoring and evaluation, human development, and strategy development.
The fourth circle designs the general and financial sustainability. The fifth and outer most circle covers external environment and includes existing model of development: political, social, economic and cultural environment.
(To be concluded)

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