Public sector is the part of an economy in which goods and services are produced and/or (re)distributed by government agencies. It corresponds to the private sector that is the part of an economy in which goods and services are produced and distributed by individuals and organisations that are not part of the government or state bureaucracy. Usually, public sector contains health care, housing, education, local government, personal social services, criminal justice, income maintenance, post, telecommunication and so on.
But it is different among countries from capitalism to communism, and from developed to developing ones. Public sector differentiates with public sector on governance structures and purposes as well as the environments and organisational characteristics. Public sector always uses committee as management group and utilise tender system to place orders. By this system, they invite tenders as formal offers from traders, negotiate, and select the lowest prices, which meet quality, deliver and other concerns.
Context operations in a private sector follow an economic-rational process, whereas in the public domain outcomes are transferred into political effects. Legislative decisions are affected by concerns other than just economic/fiscal effect in public sector. The funds of the public sector are taxes, fees, and other incomes. This is different with the market driven business that has to make the maximum profit for their investment. Furthermore, the internal controls are frequently less rigid in private organisations and that they, therefore, may have more opportunities to undertake productivity improvements.
The public sector now faces a changing and sometimes turbulent environment. First, greater competition to attract businesses and home buyers is putting pressure on elected officials to hold the line on taxes. Second, citizens are demanding a higher level of customer service from government than ever before. Thus, the increasingly volatile and unpredictable changing environment requires the public sector to provide high value and performance services.
A good government now means “producing public services that efficiently and effectively respond to the needs of an increasingly complex, increasingly interrelated society” (10) In the private sector, the primary measure of performance is profit; in the public sector, the outcomes must be measured against program goals. But often there are multiple goals (sometimes by design, in order to get enough support to approve the program), making measurement more difficult.
In general, performances of Public sector center around four central issues – 4 Es: economy (financial performance), efficiency, effectiveness, and expectation (user satisfaction). Efficiency is defined as the ratio of output to input, and effectiveness is defined as the comparison of output to standards, or expectations. The public sector model follows the same basic model of input-throughput-output but differs from the private model in terms of output effectiveness. The purpose established by the state legislature must logically be compared to the output achieved.
Lean administration including eliminate the waste and improve the quality can be applied to optimise the public sector performance especially on efficiency and effectiveness. For example, in local government, cost reduction can be achieved through substitution of paperwork, re-usability of data and procedures, and less benefits fraud.
Also concentration on core activities of government; utilization of market economy concepts like consumer choice, pricing, or competition (tendering, outsourcing, benchmarking etc.); or management of “fractal organizations” by delegating authority to fractals as units with self-control and by using contracts as informational interfaces between fractals are various ways to conduct public affairs in addition to laws and hierarchical regulations. By breaking down the costs to individual activities using financial management initiative or FMI, can make the managers accountable for those costs and then can evaluate and optimise them according to performance measurement.
Forming virtual partnerships among public sector or/and private sector, will help the organisation reduce the resources, human effort, space, investment, and work hours they used before. Keeping the public sector lean and trim as the long-term objectives of government budgetary policy can help to leave more manpower and financial resources for the private sector. Another application of lean, flexible and agile concepts is to flatten the bureaucracy by reducing the number of management layers between the top and bottom of agencies, and thinning the ranks of the managers who remain.
As the private organisations respond to customers’ demands with more speed and precision, people begin to expect better service from government as well. An example is the housing department of the government. To meet the various and special/ customized requirements, they have to make themselves agile: treating customer individually, delivering value to customer, being ready for variety, and having high velocity for the procurement.
The reduction cycle time, timely response have to be archived especially in hospital and police functions. To make the public sector more efficient and meet more various demands, flexible administration on personnel, facility and structure are essential. Using empowerment, multiunit (or cross-functional) work team, sharing facilities such as office equipment and conference room whenever necessary, applying flexible process such as budget approval in public sector will help the organisation more efficient.
As those interested in pursuing a college education already know, choosing a major is no different. Some will base their decisions on personal interests, while others will head for the money fields. In fact, people often change their majors. Besides this, the set-up of the subject, the course and the department have to consider the requirement of the students, the employers, and the whole public.
Thus, agile administration can help the schools and universities fit for the variety and dynamic environment. However, leanness, flexibility and agility are developed initially from the automation and metalworking industries for manufacturing. Key factors of these concepts such as prompting JIT to reduce inventory, using group technology to make the machinery flexible, developing new products in half time, eliminating the waste in materials, plant capacity cannot be applied in the public sector.
Furthermore, there is no market mechanism in the public sector, which is therefore inherently less efficient in deciding what to produce. Second, since no profits were made in the public sector, there was no reinvestment to produce goods and services for which there is high demand. Hence resources diverted from the private to the public sector are taken out of both the market for goods and services and the market for capital.
This leads to a reduction in efficiency and slower growth, which disobey the principles of lean and agile. Agility helps to treat the customer individually, but it is the government policy to attain full, open and equity competition. Another conflict is the globalisation of the business market while the government has to be limited within the country. Flexible facility is also hard to apply in the public sector. Because the hierarchy of the public sector is always complex and they have mixed attributions.