Introduction
The lean approach is developed in Toyota production plants which aims at eliminating wastes in the production according to the needs of the final consumer. This way production can be less costly by using less resources. This Japanese way of production attracts many institutions and they would like to employ this approach to their business. Furthermore, even the public institutions are interested in the Lean Approach.
A manager follows lean approach which brings the followings basically into organizations:
- Determining the value desired by the beneficiaries of a public service,
- Identifying the value line for each public good and service,
- Guaranteing a continuous flow of public goods and services,
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- Creating solutions in case of failures,
- Perfecting public goods and services provided.
The lean approach developed to business management in public institutions are distinctively different from private companies and more inefficient comparatively. Because public institutions are not elastic enough to change their processes or even it can be questioned that public institutions might create a soul to apply this approach to their business.
There are many reasons behind inefficient management in public institutions, however, the most essential one is that a business run by a public institution is regulated according to some legal documents and these legislations are mostly very much determining the business environment. Public institution responsibles, in general, care more about doing business compatible with legislations. This motivation leads them into a thinking of not taking major risks. The risk averse approach causes inefficiencies in business. As we know, to be able to get higher efficience or higher profits in any business, one should be able take higher risks under control. In another words, managing higher risks gives higher profits. On the other hand, the lean approach provides a certain way of management which might guarantee some benefits in public management.
In this essay, I will explain how legislations influence business management, how risk averse approach causes inefficiency, and how lean approach might cause some failures. There are some mechanisms which might cause inefficiency at public workplace due to some problems stemming from approach to business: risk averse approach of managers, defining vision and mission, defining work processes, improving processes, taking responsibility behavior, recruiting process, and motivating workers.
Risk Averse Approach of Managers
The managers of businesses belonging to a publich institution have mostly a risk averse approach because of high punishments and very tight legislations in public. The managers want to have a business running without any problem (Kaplan, 2012). In public institution, problem occurs when a manager tries something new in business or do something not very well defined in the legislations. Because making a distinct decision which is not mentioned in the legislations means taking higher risks. However, many public managers wages generally depends on number of problems occurred during his term. Thus, a public manager taking risks might be successful and he might receive some promotion, however, in case of any failure, he receives higher punishments relatively (Lee et al., 2008).
Taking risks and trying new things might be good for business, however with a high probability, expected value of taking risk for a public manager gives negative results due to higher punishments than promotions received in case of a success. This situation shapes public managers decision making processes and mostly they decide to be a risk averse manager. If only if a manager has very deep idelogical beliefs or he is very visionary, then he might try new things at workplace which occurs very rarely. Consequently, we can, in general, assume that public business managers are risk averse. They prefer continuing what has been happening before them.
Defining Vision
Assumption of risk averse public business managers is very strong and we can see that it has been verified by many examples. This situation causes many other problems in public businesses.
One of the most important problem in businesses run by a public institution is to define the right vision for the business. Defining vision for the business actually shapes the future of this business. Being visionary and putting high objectives for a business are mostly appreciated by people, however, defining a vision which might create high expectations from this business creates a high pressure on the managers of the public businesses (Rashid and Heravi, n.d.).
How does a risk averse public business manager defines a vision for a public business? The question actually has the answer in it. A risk averse manager is most probably would define a vision which is easy to reach, thus the manager does not have to face any risks with a high probability. In private businesses, the managers might choose a way of defining very hig visions to show off their abilities to get promotion, however, in public, taking high risks are appreciated in many cases; a secure manager is always preferred (Bahensky et al., 2007).
Under this conditions, the public manager follows the legislations influencing this business, and he tries to define a vision for the business which stays inside the borders determined by the legislations. In another word, the limits enclosed in the legislations shapes the vision statement of the business, and this vision does not lead this business into a competitive and a more efficient development path.
Defining Processes
Defining business processes is an important step for an efficient organization. Creating required steps, creating a working line, creating control points and creating a monitoring system in organization provide the organization an environment to run the business properly. Creating an organization might be a very complex task depending on the kind of the business, and even organizing a business in service sector can be much more complex because of using more labor than machinery. Using labor might seem to be less costly, however, organization cost can be higher thanks to complexity of workers (Holzer and Gabrielian, 2003).
A risk averse public manager mostly prefers organizing business in a way that the organization risks stay very low. Instead of considering efficiency, he prefers a simple organization with simple processes. That might be fine with some business types, however, creating an efficiently working organization, the manager might need develop some complex processes (Hupfeld, 2012). For examply, in a public hospital, you can create one registration desk and lead all service beneficiaries to this desk. At this situaiton, most of the patients might complain about waiting in a line, however, it has very little risk for the manager, because he can claim that he does what is necessary in the limits of legislations and most probably legislations do not determine how to organize registration. Untill a new legislation made instructing an online registration or a similar implementation, the manager continues registration desk application, even though he see the line in front of the desk (Dennis, 2002).
It is easy to see many examples on this. For instance, government owned banks are less efficient than the private banks and in the government owned banks have very traditional service steps. Considering private banks creating new services everyday, government owned banks can continue same kind of services for long years.
Improvement of Processes
A business run by a public institution might have difficult times to renew and improve its processes. This difficulty is most probably caused by the public managers. Continuing the same process is less risky for a public manager, because he learns everything about this process and even he knows what might happen in case of a failure. This information makes him feel comfortable in a less risky environment. However, changing a process without any instruction from above might bring many risks, even though improving process is very beneficial to everybody (Flumerfelt, 2008).
For example, in a public hospital, you can start a transparent management principles, thus patients can know how the hospital works. It might help the patients benefit from the hospital more efficiently, however, it might create a very high risk for the public manager. Any mistake by any worker at hospital can be easily conveyed to a newspaper, and the manager suffers a lot from this situation. The manager in this situation prefers not to start transparency applications, thus he can get rid of many risks.
The public managers, in general, become willing to change process if a new legislation is forcing them to do. In many countries, the studies show that online applications in public places have started after a legislation made forcing this (Hines et al., 2004).
Taking responsibility
The tasks are probably are determined by the management according to the relevant legislations and in case of any failure, none of the managers or the workers will be taken as responsible, instead the legislations will be questioned. Especially in the developed countries, people sue public officers even for little issues, the public officers become more alert about completing what is given (Hines and Lethbridge, 2008).
The most astonishing example of this is the universities in the developing countries. The professors in these countries prefer staying away from the industries, and they prefer teaching for long hours. Because when a professor involves with a company, many people and public managers might blame him for corruption. In this case teaching long hours is less risky. Even we see that the academic promotion system forces professors to stay away from industries. Writing a few article on theoretical issues and publishing them in international journals collects more points for professors more than advising a company. However, this kind of university system creates inefficient universities which cannot compete against international universities (Alp, 2001).
Recruitment Processes
In public business, recruitment process are done according to the legislations. Even a public manager wants to develop business, he might not be able to hire the workers he needs for the development. Instead, he has to work with the people hired out of his control. Another important problem with recruitments in public, even in some developed countries, is the recruitment policies not depending on workers' competencies. For instance, a diploma or a few certificate can be decision rule in a hiring process and many very well experienced workers might not be hired. In a private company, the manager can decide to hire a person with experience without any diploma and any certificate.
Another problem in recruitment process is a psychological one. Mostly managers in public does not want a possible manager candidate, and because of this, they might refuse hiring very high quality workers. Actually this problem has a reflection on workers' side: a high quality worker probably will not be willing to work under a manager like that, so he will not be a candidate for public jobs.
Considering risk averse public managers, recruitment processes, in general, does follow the legislations, instead of taking responsibility and hiring more competent people to develop the business.
Motivation at Workplace
The Result
Business run by a public institution might have many inefficiency problems because of how the public system works, and there is not much difference between developed and developing countries – maybe in developed countries, officers do less corruption. The way of thinking in public system works according to the legislations, and the legislations are political decisions. In a political system, the politicians on power (the government) becomes responsible for any failure. Because of this, the public managers follow the rules provided by the legislations, and they do not take any responsibility.
Lean approach might look inefficient in many ways, however, the lean management provides a stable path for public services and there is no surprise occurs.This way politicians can use political tools and implement their policies as the main responsible persons (Toyota, 2006).
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