Public Management and Administration - Owen E.hughes

Accountability 239
to this. First, the general movement to privatization in government was, at least
in part, related to improving accountability. Contracting delivery functions to
the private sector is arguably more efficient because private managers are more
accountable than public sector managers. In this way the private sector serves
as the model of accountability for the private sector. Secondly, and in part as
a result of the first point, private sector accountability methods are being introduced
into the public sector. This does not mean that public agencies should
sell shares or be subject to takeover. If this were true, they would no longer be
in the public sector, but it does mean greater effort in developing performance
indicators and formal contracting mechanisms as surrogate measures analogous
to those used in the private sector. The introduction of private sector
measures of accountability may also mean less security of tenure for employees
on the grounds that, as in the private sector, there will be greater incentives
for individuals to perform if they are not guaranteed a job for life. Again, the
private sector serves as the model of accountability. It is easy to see why some
might consider this desirable. Compared to the confusion of the public sector,
and its apparent failures of accountability, private sector accountability relationships
are relatively well known and straightforward.
Of course, the presumed superiority of private sector accountability is an
ideal that may not work perfectly in practice. Management may ignore shareholders
and treat the board as an irrelevance. The share price and credit rating
are imperfect measures of performance. There may be other goals being pursued
than profit. While the private sector has established procedures of
accountability there is usually some gap between the theory of accountability
and it being achieved optimally.
This gap has wider implications. Whenever there is some separation between
principals and agents, there are potential problems of accountability. However,
even given the accountability problems of the private sector, there are likely to be
greater problems in the public sector. As Vickers and Yarrow argue (1988, p. 27):
Compared with private ownership, the most obvious differences in the relationships
between managers and the immediate principals arise from the facts that (a) the principals
do not typically seek to maximise profits, (b) there are no marketable ordinary shares
in the firm, and hence no market for corporate control, and (c) there is no direct equivalent
to the bankruptcy constraint on financial performance.
It is often argued that governmental institutions are neither responsible nor
accountable when compared to the private sector, and that this is one reason for
reducing their size and influence.
Some parts of the public sector have greater accountability problems than
others. For example, public enterprises – those parts of the public sector most
comparable with the private sector – do seem to show accountability problems
when compared to private companies doing similar things (Chapter 5). It follows
that giving provision of that good or service to the private sector will improve
service delivery and efficiency by adopting the accountability mechanisms