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Train and appriase public sector employees on commercial practices

Comment 6th July 2010

1) The personal objectives of public sector administrators, junior managers and above should include how commercial they have been  

2) Basic online training videos should be provided for employees covering what the appropriate commerical cultural values are and technical awareness of best commercial practices e.g. how to manage supplier relationships, how to specify supplier requirements, how to conduct fair and open supplier tenders etc.

Nothing gold plated is needed – videos can be published on youtube  with a maximum budget of £100k (based on experience, this is enough to produce a series of training videos ).  It will pay back thousands of times over with results starting immediately.

Why does this matter?

I speak from somewhat selfish experience having learned how to work the system and using this to make money out of the lack of commericality of public sector staff.   I am not alone! 

It can be quite hard to initially get into the public sector because, although there are tender processes, in most cases client staff appoint suppliers they already know.  It artifically blocks out new suppliers even if they are the best value.

Once you can get a foot in the door with a local authority, department or public service then suppliying to them becomes a dream — they pay absolutely the top money and client staff have little expectations or controls so long as you perform to a minimum low level and give them a quite life. There is a huge difference in returns and effort required between supplying into the public sector and to private sector businesses.  It is not just one isolated part of the public sector but goes widely across the departments and across the country.  It explains the dependency which has grown of many private sector businesses on the public sector simply because the returns are premium.

The reason is that public sector employees who incurr costs are not appraised on it.  In fact they are given a budget and are expected to spend it all.  The appraisal of costs is at the senior level — where the discussion is 'this is how much it has cost my department to run the service, I did not go over budget, therefore this is how much budget I will need if you do not want the service cutting next year'.  In this way, inflated costs get justified and engrained by the process.

Once you have a foot in the door and get on with the client staff, they come back to you year on year when ever they need support and do not go to other suppliers.  It is then easy to grow a portfolio of services and goods supplied to them and to other public sector organisations through word of mouth. Client staff ALWAYS take the first retail price you offer them without negotiation a discount for further goods and services even when it pushes up volumes — if contracts specify a price then simply changing the specification to take it outside of the contract gets the full price. 

Because client staff are not appraised on costs but are exposed if there is a problem with the supply of goods and services it means they often are scared about upsetting suppliers.    Further, client staff who might need to have a difficult discussion with a supplier can easily  justify not doing so on the grounds it is too stressful for them and not part of their job description.

There is a wide appathetic culture in the public sector about continual improvement which is second nature to most private sector businesses => people are fiercely defensive about their commitment and pride in the public service they deliver.  But for many if it means them having to work after 5 O'clock then there is a radical shift and they are not bothered whether things could be done cheaper or better.

There are many private sector businesses exploiting this culture when supplying different public sector organisations all over the country. 

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