Why is the public sector so complex?

Henley’s Professor Simon Collinson reckons that central government departments are 30 percent more complex than private companies. He has developed a methodology to measure the level of complexity in an organisation and has come up with the Global Simplicity Index. A certain amount of complexity, he says, is good and, to an extent, inevitable. As an organisation grows it needs systems and procedures to hold it together. But there can come a time when things just get too complicated and over-engineered, at which point, the complexity starts to eat into a company’s value. Over-complex organisations tend to be less efficient and find it more difficult to improve productivity.

It’s not really surprising that he has discovered relatively high levels of complexity in the British civil service. Government departments are full of clever people and, left to their own devices, clever people often make things complicated just because they can.

That aside, though, public sector organisations are always going to be more complex than those in the private sector. I wrote about this at some length last year. The public sector has a triple complexity whammy.

Firstly, it is made up of service organisations. It is more difficult to improve processes in service organisations than in manufacturing ones because the customer is part of the process. That’s why, in the decade before the recession, private sector manufacturing companies improved their productivity at twice the rate of private sector service firms. Furthermore, because of the services they offer, public sector bodies tend to have customers who are more difficult to deal with. Consider, for example, the process of receiving supplies in a manufacturing plant compared to the process of checking a new patent into a hospital. The former will be the same in most cases and take a similar amount of time. The latter will vary depending on the patient. Patients who are drunk, distressed or who don’t speak English will take much longer to check in. The neat box on the process map marked ‘receive patient’ conceals a process that can vary wildly in time and complexity.

Secondly, it is harder to nail down strategic goals and specific measures for public sector organisations. True, private companies can struggle with this too but, ultimately, revenues, profits and market share will tell them whether or not they have got it right. Public sector organisations, for the most part, have to work with more subjective measures of service quality and delivery. Trying to reach a succinct definition of what the organisation is for and how you will know when it has been successful is a lot more difficult. Public sector organisations therefore have a certain amount of inbuilt ambiguity, leaving much more scope for politicking and vanity projects which, in turn, create complexity.

Thirdly, it is impossible to separate the public sector from politics. To an extent, its priorities are always going to be governed by political expediency, which is why politicians’ promises to stay out of operational decisions don’t usually last beyond the election night party. The public sector distributes the government’s resources, or the taxpayer’s cash, so business decisions will be coloured by political concerns.  Organisations therefore find themselves caught between what makes operational sense and what makes political sense. On top of that, media scrutiny and the hysterical reporting of public spending can lead to some perverse decisions which actually increase costs.

As David Walker said, in the comments on Professor Collinson’s article:

But isn’t complexity causally related to accountability and hence to democracy. In other words, the trade off may be between cost/complexity and the maintenance of democratic responsibility as we know it. Are there other forms of acctability then becomes the question. But here there is a disciplinary problem. Business school thinkers can ‘do’ organizations but rarely are they up to speed with constitutions and politics. Until (intellectually) we bridge that gap, it’s going to be hard to follow Simon Collinson’s prescription.

He’s spot on. The oft-heard cry, ‘Why can’t we run public services like we run businesses?’, comes from those who do the organisations without doing the politics. Bringing in private sector providers would not change any of this either. They are still subject to the same organisational and political constraints.

None of this is to say that we can’t make public services less complex and thus more efficient. We can and we should. People have done it. But, however much we simplify public sector organisations, they will always be more complex beasts than their private sector counterparts.