Abstracts: May 16th, 2012

In this article Simon Collinson reckons that central government departments are 30 per cent 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 is inevitable and 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.

Public sector organisations are always going to be more complex than those in the private sector, but there are reasons for over complexity.

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.

Secondly, it is harder to nail down strategic goals and specific measures for public sector organisations. 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.

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 previous decisions which actually increase costs.

The Complexity review can be downloaded here