Decoding the DNA of Public and Private Sector Leaders
Comparisons are often made between the public and private sectors. Differences in culture, structure, environment and talent management are usually highlighted. In general, the private sector is used as a 'benchmark' to evaluate the extent to which the public sector has evolved towards what is commonly considered as 'best practice'.
Given the current economic situation, and more specifically, the financial and economical crises, it is timely to question whether the private sector is the optimal benchmark. To the extent to which many private 'reference' organisations – many of the large financial institutions, for example – are now (partly) publicly owned, one could question whether the common assumption that private sector leaders are better than public sector leaders is fair.
In order to better understand what differentiates managers from both sectors, Hudson used its Business Attitudes Questionnaire (BAQ) to analyse the personality characteristics of 1,185 senior leaders in the public and private sectors in Europe. Of that number, 485 originated from the public sector and 700 from the private sector. Their results were compared to those of over 64,000 people from the global population.
It is clear that if differences between senior leaders in the private and public sectors exist, they are smaller than previously thought – but that they do have important consequences for organisations wanting to formulate a proper strategy to acquire and develop their future senior leaders.
- Leaders in the public sector are more focused on creating a long term strategy than on ‘winning in the short term
- Private sector leaders are essentially focused on the short-term and on quick results
- Public sector leaders are more inclined to 'control'; private sector leaders to 'believe and trust'
- Public sector leaders are less optimistic about the outcome of their actions, but they go for a more thoughtful approach.
- In the public sector, women leaders demonstrate a more outspoken profile
- Younger managers in the private sector get more opportunities and more room for self-development
Private and public leaders have more that binds them than that separates them
Public sector organisations are usually as complex as private sector organisations and it therefore is logical to find that the global leadership profile in private and public sector are similar to a very large extent. Leaders from the public and private sectors are indeed equally firm when it comes to making decisions, persuading interlocutors and leading and motivating teams. The differences observed are most of the time small, be it certainly not without some major consequences.
But small differences can have a major impact
Private sector leaders have a clear tendency to go for short term results, being prepared to take calculated risks and to be optimistic about the outcome they can expect. In contrast, public sector leaders take way more distance from the problems they have to face, look strategically at the longer term and opt for a thoughtful, innovative and risk-aversive approach of solving problems.
These differences are clearly linked to the typical contexts in which these leaders have to operate. The former are under a constant pressure from the stock market to constantly improve results and increase benefits, the latter are guided by a huge number of rules and regulations and are constantly involved in supporting political authorities in policy making. The former often have clear and measurable objectives and are judged on the outcome they produce, the latter often have unclear objectives and are constantly confronted with a range of stakeholders and pressure groups, ready to condemn every mistake or failure.
Gender differences, a common concern
In a previous study, we found that female leaders in the private sector tend to abandon part of their typically female characteristics in order to position themselves as strong leaders in the mainly male dominated board room.
This tendency seems to be even more evident in the public service, inviting women to even over-class their male counterparts. They certainly show some female characteristics but stay way below the level of their colleagues in the private sector. It is as if they have, more than in the private sector, to fight their way to the top and to abandon their female characteristics in order to cope with the pressure put on them. As in the private sector, one could ask the question whether they would not add more value to the organisation by being themselves and adopt a leadership style in which they would leave more room for a participative approach and a people-oriented attitude.
Age as a source for innovation and change
When comparing both our samples from the private and public sectors, it seems that in the private sector over 30% of the senior leaders are younger than forty, while in the public sector barely 10% is younger than forty.
When comparing their business attitudes it turns out that, younger leaders in the private sector show a very strong leadership profile, surpassing their more experienced colleagues on almost all traits. Young leaders in the public sector seem to be forced to adopt a more modest profile, although they clearly show to want to go for change, aspire for autonomy and critically look at the world they are living in.
Rule-following and monitoring compliance versus trust and participation
By the fact that public sector leaders often operate in an overly structured environment, governed by rules and regulations, it is normal that they essentially focus on monitoring what is going on and how things are happening, rather than on guiding and stimulating the teams they are responsible for.
This is probably not a major strength of leaders in the private sector, nevertheless it appears that private sector managers get more opportunities to grow in their career, and they more easily get greater responsibility delegated to them by their superiors. This gives them more chances to grow in their career and to develop their leadership capabilities.
Skilful exercise of influence versus wielding of authority
Due to the particular circumstances public sector leaders have to work in, they are almost automatically inclined to impose their authority in order to guarantee compliance with the rules and regulations. Private sector leaders appear to have learned already for a long time that it is better not to wield power but to build positive and motivating relationships with all stakeholders, whether they are internal or external to the organisation, whether they are direct reports or occasional contacts.
Lessons to be learned
There are undoubtedly differences between the public and the private sectors regarding the environment, the goals, and the structure which influences the leadership style and business attitude of managers. However, we must not be tempted to overestimate the difference in challenges senior leaders in both sectors have to face.
So the concluding question is not 'To what extent can the public sector learn from the private sector?' but 'To what extent can both public and private sector senior leaders learn from each other?'
What public sector managers can learn from private sector managers: wielding influence, not authority
What private sector managers can learn from public sector managers: mindful and instrumental leadership behaviour
Senior leaders must cope with confrontation without being confrontational. They must communicate effectively and quickly with large numbers of constituent groups to establish good working relationships with different kinds of people. This creates special challenges for senior leaders who lack authority over these groups.
There is room for improvement for public sector senior leaders when it comes to their capacity for building positive, motivating relationships with stakeholders.
This would help to meet the challenge of motivating, developing and guiding followers.
Public sector managers are more focused on long-term strategy and the creative process involved in building a conceptual vision.
Strategic leadership might facilitate the charismatic effect, because the identification of a deficiency in the status quo and the articulation of a vision that can project a better future is a function of a senior leader’s ability to use strategic leadership skills.
To a certain extent, public sector senior leaders could get more done by paying more attention to what and how they communicate, instead of focusing on what and how things need to be done.
Given the challenging economic situation we are facing, one could ask how the economy would look like if private managers had focused more on the long-term rather than on the short-term and had created and monitored regulations and rules rather than taking high risks - two typical aspects of the public sector managers?
One of the main findings of the study is that the private sector may not be the ultimate benchmark for the leadership style to be used in the public sector. It is the specific characteristics of the organisation that will determine what kind of leadership traits will lead to the highest return. To this end, the exchange of senior leaders across both the public and private sector can be extremely useful, especially if both types of leaders have the desired intention to learn from each other.
The full study 'Decoding the DNA of Public and Private Sector Leaders' is available from here.