What happens when the private sector meets the public? Is it all about private sector efficiency versus public sector values or are other factors involved? Drawing on our experience of coaching in both sectors and coaching people who suddenly found themselves working in an organization taken over by the government, this article raises awareness of commonly occurring themes/challenges. By making the themes clear we hope that executive coaches and their clients can be better prepared for the challenges ahead and thus contribute to raising performance standards in these settings.
Banking is the latest sector to become involved in public-private partnerships; previous sectors include infrastructure and health. The current/recent global financial crisis created many new and unexpected partnerships. For example, in the UK we saw the nationalization of Northern Rock. Almost overnight, bank executives were thrown into cooperation and collaboration with civil servants. They were charged with achieving the best possible solution for the general public through the most appropriate allocation of resources, risk, and rewards.
However, what may sound fine and straightforward in theory is full of challenges for the executives working in these settings. To be successful, they need to understand the new culture in which they will be working and have a healthy appreciation of the themes that will be part of their daily working lives.
Over the last 18 months, during the economic slowdown and subsequent crisis, we conducted coaching assignments across industries and countries. We began to notice patterns and themes emerging. In all, we looked at 30 executive coaching cases. What struck us was the high degree of "convergent validity," meaning great similarity, of the themes irrespective of country or specific organizational environment.
We have grouped the most commonly recurring themes into seven categories. These are:
- Different cultures—behaviors and expectations;
- Greater complexity of stakeholder groups;
- Leadership and management style;
- Process versus purpose;
- Depth and breadth of subject matter know-how;
- Murkier measures of success;
- Language and vocabulary.
In this article, we look at the first three of these themes from the perspective of executives coming from the private sector into these new partnerships. In the June 2010 issue of BCW, we will explore the remaining four themes.
1. Different Cultures—Behaviors and Expectations
One theme that was common to all of our clients, regardless of country or sector, was that they had really underestimated the difference in working cultures and hence the differences in behaviors and expectations. Of course, they were aware of perceived differences between private and public sector organizations, but what they had not anticipated was that public ownership of a hitherto private organization could make such a dramatic and immediate difference. It was an experience that was not only organizational, but personal, and, as with any personal change, potentially a source of anxiety.
For our clients, there were two main elements to the meeting of private and public sector cultures. One is the nature of relationships, and how relationships work differently in the public sector. Relationships up, down, and across the organization can hinder management. For example, the established hierarchy and deference to those in more senior positions can make it difficult for executives to manage their teams if members of the team are used to acting on directives from the top. In addition, different functions appear to have different levels of power and influence.
The second element concerns the ability to act and make decisions. For the former private sector executives, there was much ill-disguised frustration with their lack of autonomy. As one of our clients said, "I'm used to getting the go-ahead from my boss or maybe one other. Now I have to submit a proposal which has to go through several layers and be referred to the project board. What used to take hours now takes days." Intense public scrutiny either via the media or through answering questions to parliamentary committees means that every decision is analyzed and agonized over before action is taken. Particularly in the UK, another new challenge is the responsibility to Ministers, which means that government policy and political imperatives will influence the direction in which the organization is travelling and may impact on priorities so that commercial considerations are no longer the only driving force.
Ministerial relationships provide a particularly interesting challenge as access to Ministers is closely guarded and very much regarded as the "turf" of senior civil servants. This severely impacted the decision-making process as the former private sector executives found that they had less time with the Ministers and therefore found it more difficult to incorporate their views into thinking. This lengthened the process and also meant that contact was brief and limited to crisis situations.
The significance of this is especially highlighted in an election year. In Germany, 2009 was a major election year with voting in local, state, and national elections. This means that issues which were at the heart of public attention, e.g., the state of banks and their stability and what was happening to state guarantees, emerged as key topics for politicians. The elections promised to bring a fundamental shift in Germany's political landscape, causing civil servants to slow or put off decisions until after the election in anticipation of changes in their political masters, and hence priorities. This in turn led to further frustrations for the former private sector executives. The situation in the UK is similar with a general election approaching in 2010. The government, and hence civil servants, have gone into a period of "purdah" where no new initiatives or schemes can be announced to prevent the current government from gaining advantage by announcing attractive policy changes. Again this will slow decision making.
The degree to which the new arrangements affected our clients depended on a number of factors, including how the civil servants responded to them personally. For us, it was initially difficult to find a way to discuss with our clients the cultural differences in these new organizations. We eventually used Geert Hofstede's cultural framework1 to discuss it in a more systematic manner. In this way we were able to help them gain an understanding of their own and the other culture and the impact this had on behavior and expectations. This enabled them to target their messages much better and proved to be an excellent preparation for negotiations.
2. Greater Complexity of Stakeholder Groups
The different culture of a public sector organization also involves a much wider stakeholder group. One executive from a private organization said he used to think it was "complex" when a private equity company entered the matrix structured organization he used to work for. Now that he is on the board of a bank where the state has given a guarantee and invested millions of taxpayers' money, he truly understands, "for the first time in my life what ‘complex' really means."
He described that his "mind was blown away about the arguments that were floating around in a meeting when different people described what they will have to consider before coming to a decision." In fact, at times the factors were so diverse that it really was impossible to satisfy the needs of all stakeholders and situational alliances had to be created to ensure that certain objectives were achieved. Whilst this is "normal" in a board setting, it was particularly delicate here and scorings about who does what for whom and when were carefully monitored and guarded.
A key stakeholder is the general public that is both customer and, indirectly, investor. Private sector executives are used to working within organizations that are very customer focused, but come from a background where the chief interest of the investor is usually the bottom line. Clearly there is still a major imperative to deliver value, but it is value derived in both monetary and social terms.
We found that what helped our clients most was a visual display and a very sound stakeholder mapping. Based on this, we developed strategies for specific people and/or target groups. From feedback we understood that clients felt that this provided them with a more solid foundation that led in turn to feelings of greater security and self-confidence.
3. Leadership and Management Style
Talking to our clients, it has become apparent that there is a move toward more collaborative leadership in their new environments. It would be simplistic to blame individualism and command-and-control approaches for the current economic situation. However, it is clear that working in partnership requires a much more cooperative approach where shared responsibility and accountability are embedded in the culture. Collaborative leadership is a process used in situations where there is a diverse group of stakeholders to find solutions to complex problems that affect them all. Inevitably, this also involves systemic change.
In both public and private settings, it has become increasingly common to use this more team-based approach to problem solving. Collaborative leadership requires people with differing backgrounds and perspectives to come together, discuss issues openly, and put aside their self-interests.
To achieve this type of leadership in their organizations, our clients found that they needed to use negotiation, persuasion, and patience to even greater degrees to see their ideas put into action.
It can take time to create alignment. Getting all parties on board requires time and patience. Our clients commented on the length of time required for decision making in the new environment. Of course, this is one of the fundamentals of the democratic process—making decisions collectively. However, for those new to the process, it can seem to be overly complicated and very, very slow.
From the analysis of our coaching cases and the feedback we received, we understand that the key strategies that helped our clients were to step back and "walk in the moccasins" of the other person, i.e., to take on the perspective of the other party. Once this was done, they then thought about how to incorporate this into their own arguments. The second strategy we identified was the skill to create and use alliances.
In the next issue, we will discuss the remaining four themes/challenges we discovered that people face when private meets public.
1 For a brief synopsis of this framework, please see http://en.wikipedia.org/wiki/Geert_Hofstede.