Wednesday, July 20, 2016

We need a different approach to run our public services

The following qualities are required for top management to run a big organization successfully:

a) Motivation
b) Competence

Some leaders, including our Singapore leaders, thinks that the best way to motivate a top manager is through an attractive remuneration package. They think that self interest, or greed, is the best way to motivate top management. This is also the approach taken in big international corporations.

They overlook the flaw of this approach when it is exercised in a near monopolistic situation, such as the delivery of public services in a small country. It is easy to generate large profit for these businesses by taking advantage of their market power or by cutting cost to deliver a poorer quality of service, such as over packing of trainings or hospital wards.

A better approach for the delivery of public service is to find top managers who have the passion to serve the public good and the public interest. There are many capable people with this kind of motivation that can be found in any society. They are motivated by public interest, rather than personal greed.

Is it possible to find competent people who are motivated by public interest? Can they run the organizations efficiently, provide a good quality of service and keep the cost at an acceptable level?

The answer is "yes". The managers can be measured based on performance other than the maximization of profit. Most workers are measured on their ability to meet the requirements of the job, rather than the profit that are generated. The same approach can be applied to the managers of public owned corporations.

It is appropriate to apply the private sector approach for businesses that operate in a truly free market where there are many suppliers and where consumers have the ability to judge the quality of the products and services that they buy,

The big problems faced in Singapore is that our government leader adopt the private sector approach for the provision of public services that have monopoly power. They encouraged the top leaders to maximize the profits of these "private companies" and their own remuneration package, and do not realize the long term damage that has been caused.

The problem with SMRT is just an example of this flawed approach. It also applies to other sectors of the economy. It is time to rethink the approach to run these operations.

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