The Main Differences between Private and Public Sector in Customer Service Provision: literature review

 Private and Public SectorAccording to Grigoroudis and Siskos (2009) as taken by Oliver (1997) “satisfaction is the consumer’s fulfilment response. It is a judgement that a product or service feature, or the product or service itself, provided (or is providing) a pleasurable level of consumption-related fulfilment, including levels of under-or overfulfillment” (Grigoroudis and Siskos, 2009, p.4)

The Business Dictionary (online, 2013) defines private sector as a part of national economy that consists of private enterprises including personal sector (households) and corporate sector (companies).

The definition of the public sector is suggested by The Free Dictionary (2011) as “the part of an economy that consists of state-owned institutions, including nationalised industries and services provided by local authorities” (The Free Dictionary, online, 2011).

Although the term ‘quality’ on its own is widely known and does not require further elaboration, some authors have offered their viewpoints regarding the definition of the term within the context of customer services. Specifically, it has been stated that, “quality of the delivered products or services is essential to achieving customer satisfaction. The quality concept embraces how to meet all customers’ requirements, including how they are greeted on the telephone or at the counter, the speed with which a query is responded, providing new services when required, and ensuring the delivered services satisfy the community needs” (Nagel, 2000, p.47).

Introduction

According to Grigoroudis and Siskos (2009) the advantages of private sector organisations over the public sector organisations include better level of the service, more information about various aspects of customer services, better management, market testing and rewarding performance.

Secondary data authors (Murley, 1997) argue that a part of the issue of effective customer service provision within public sector relates to the identification of customers in public sector in the first place. Discussing police services specifically, the author reasons that “their customers include those on remand, convicted offenders and their families, actual and potential victims, and the taxpayer, who is receiving insurance-type protection for free” (Murley, 1997, p.275)

It has also been stated that “as opposed to the business sector, public sector services are for the main part determined by the legislative norms. “Creativity” of public sector institutions in defining their services is very limited” (Wimmer, 2004, p.40). Moreover, according to the author the lack of creativity within public sector organisations compared to the private sector is primarily caused by the absence of competition.

According to Wirick (2009) public sector employees have strong group norms and desire to support their colleagues and they are also motivated by a concern for the public interest. Wirick (2009) further reasons that these traits can positively contribute to the reforms within the provision of customer services within public sector.

Moreover, Sims (2010) considers the reasons for organisational changes, as well as the manner in which changes are implemented as another substantial point of difference between public and private organisations. The author asserts that in private organisations changes are brought upon mainly by changing environment of the marketplace, whereas changes introduced in public sector are more complicated in terms of their reasons and means by which they are implemented.

Therefore, the author states that “historically, the dictates of various legislation over the years, provide the moving force behind change rather than inspiring the organisation’s members. For example, at one public agency, field executives had only minimal interest in a project that provided dramatic improvements in customer satisfaction” (Sims, 2010, p.16).

Stone and Gardner (1997) differentiate the key aspects of customer services between private and public sectors in following ways:

Policy attitude Private Sector Public Sector
Status of customers Customers are hard to attract and easy to lost due to the competition The level of interaction with customers is determined by relevant law regulations or historic practice
Customer feedback Considered to be the main indicator of performance Analysed only in occasions where the provision of the service is being reviewed
Output measurement Measured in terms of what customers are prepared to pay and actually do pay (i.e. revenue) Measured in inputs (such as manpower, equipment, buildings), instead of outputs (e.g. the level of health and education of citizens)
Costs and investments The assessment of costs and investments are done in relation to what customers are prepared to pay for the output created by inputs Cost control is done tightly according to the government budgets. The only factor to be taken into account is the needs for the service
The ability and willingness of individuals to pay for the services The main criterion in terms of the types of products to be produced and the ways they are going to be marketed and serviced Relevant only in a few exceptional cases.

 

Customer orientation 

The level of customer orientation as one of the main differences between private and public sector organisations has been highlighted by a range of secondary data authors including Beevers (2006) and Agness (2010).

Specifically, Beevers (2006) stresses that in private sector organisations the level of customer orientation is significant due to the fact that the level of achievement of organisational objectives is related to the level of customer satisfaction in a direct manner,

Windrum and Koch (2008), on the other hand, point to specific training and development programs private sector customer service representatives receive and state that such type of programs are not available for the majority of public sector customer service representatives mostly because of funding issues.

 

Queues 

Queues customers have to wait in present another point of difference between private and public sector according to Kamin (2006). It is important to note that by ‘queues’ authors refer to the actual queues that form in front of service desks of organisations, as well as, queues on the phone, i.e. the duration of time customers are put on the hold before their enquiries are answered by a customer services representative.

Bovaird and Loffler (2009) state that in both occasions queues in private sector organisations are more effectively handled compared to the queues in public sector organisations. The reasons for the differences offered by the authors refer to the level of funding, as well as, increased level of priority private sector organisations assign for customer experience management aspect of the business.

 

Speed of service

Another issue that causes differences between private and public sector organisations relate to the speed of the customer services provided. Bourn (2007) maintains that private sector organisations consistently strive to increase the speed of customer services provided not compromising the quality of service at the same time. The main objective of private sector – profit maximisation, has been highlighted by the author as the main driver behind the high speed of customer services provided.

Bourn (2007) convinces that high speed of customer services is closely associated with profit maximisation in two ways. Firstly, reduced amount of time spend to serve each individual customer would mean that less numbers of customer services representatives would need to be employed saving significant financial resources for the company.

Secondly, the speed of customer services has a positive correlation with the level of customer satisfaction, thus by achieving and maintaining the high level of customer services without compromising its quality business would be able to generate the level of their income through improved levels of customer attraction and retention.

Moreover, Flynn (2007) debates that the speed of customer services in public sector is negatively affected by the level of pay offered to customer services representatives in indirect way. In other words, the majority of public sector organisations are unable to attract the most competent customer service managers due to financial constraints, and this situation affects the speed of customer services provided in general. However, the validity of this claim is compromised by the fact that Flynn (2007) fails to provide any concrete research to justify his viewpoint.

 

Quality of the Service 

Zapico-Goni and Wholey (2007) conclude the quality of the customer services in public sector to be less effective than customer service experience in private sector in many levels. According to Raffel et al (2009) the importance of the quality of customer services has already been acknowledged by UK government and accordingly relevant programs and initiatives are being devised and implemented by the government. Authors maintain that “developing high quality services is now considered an outcome for many government programs, and agency managers survey citizens regarding their programs to determine citizen satisfaction and evaluation of the program’s quality” (Raffel at el, 2009, p.44).

References

Agness, L, 2010, Change Your Business with NLP: Powerful Tools to Improve Your Organisation’s Performance and Get Results, Wiley Publications
Beevers, R, 2006, Customer Service Excellence in the Public Sector, Northern Housing Consortium
Bovaird, T & Loffler, E, 2009, Public Management and Governance, Taylor & Francis
Bourn, J, 2007, Public Sector Auditing: is it value for money? John Wiley & Sons
Grigoroudis, E & Siskos, Y,2009, Customer Satisfaction Evaluation: Methods for Measuring and Implementing Service Quality, Springer
Flynn, N, 2007, Public Sector Management, 5th edition, SAGE Publications
Kamin, M, 2006, Customer Service Training, Elseiver
Murley, P, 1997, Gower Handbook of Customer Service, Gower Publishing
Nagel, SS, 2000, Training Public Administrators Around the World, Greenwood Publishing Group
Private Sector, Business Dictionary, Available at: http://www.businessdictionary.com/definition/private-sector.html
Public Sector, The Free Dictionary, Available at: http://www.thefreedictionary.com/public+sector
Raffel, JA, Leisink, P & Middlebrooks, AE, 2009, Public Sector Leadership: International Challenges and Perspectives, Edward Elgar Publishing
Sims, RR, 2010, Change (Transformation) in Public Sector Organisations, IAP
Wimmer, MA, 2008, Knowledge Management in Electronic Government, Springer Publications
Windrum, P, Koch, P, 2008, Innovation in Public Sector Services: Entrepreneurship, Creativity and Management,
Wirick, DW, 2009, Puclic-Sector Project Management: Meeting the Challenges and Achieving the Results, John Wiles & Sons
Zapico-Goni, E & Wholey, J, 2007, Monitoring Performance in the Public Sector, Transaction Books