What special features and challenges do consulting projects for public authorities and administrations entail? Professor Thomas Deelmann, economist and lecturer at the University for Police and Public Administration, spoke with Stefan Schult, Partner at Detecon, about this topic. The following (abridged) interview is taken from Dr. Thomas Deelmann’s book Verwaltungsberatung — Leitfaden für Consultants und Behörden [Consulting in Public Administration — A Guideline for Consultants and Public Authorities]. The publication can be ordered from Erich Schmidt Verlag.
Professor Deelmann: Mr. Schult, in your consulting career, you have worked both with companies in the private sector and with public authorities. What do you regard as the biggest difference between the two?
Stefan Schult: Viewed from the perspective of a consultancy, there is a noticeable cultural difference between working with public authorities and with companies. Although both organizational forms use predominantly the same hardware and software, the difference is one of mindset. The technology is highly standardized and has as a rule been adapted to the processes. The first step of consulting activities at a public authority focuses more on collaboration, soft power, and transparency. In a direct comparison, consulting at a company presumes agile and mixed teams with varying levels and areas of experience. Competitive pressure and the pursuit of profit in the sense of effectiveness and efficiency play a special role in this case.
And if we dig a little deeper — what impact does that have on specific projects?
Just like a company, a government authority must produce added value, but above all it must be judicious in its expenditures of taxpayers’ money and is fundamentally subject to budgetary and procurement law. In particular, administration principles must be — and are — realized efficiently. Methods such as program and project management, agile transformation management, and other creative techniques are especially suitable for this purpose
The key differences between public authorities and companies are found primarily in the following five points: the project maturity level of organizations, the availability of top project managers and experts, proactive resource management, the installation of virtual and organizational creative spaces, and the commercial framework, e.g., budgetary planning extending beyond periods of one year. Companies are typically a bit further along and more advanced in this respect — although some public authorities are catching up fast!
And what about the acquisition of consulting projects?
The classic means of acquiring a consulting project at a public authority is participation in an award/tender procedure. The content of these tenders is described by in-house technical experts, and the tenders are usually conducted by a contracting authority (national and European).
The cooperation during this phase is very formal, and clarifying queries are usually possible solely in the form of bidder questions. Any further interaction between the department (the project owner) and potential service providers (the consultant) is usually not desired. Contracts tend to be awarded on economic grounds, with price often carrying more weight than performance.
In comparison, the acquisition of consulting projects at a company is less complicated and involves more interaction. The tendency is for the conceptual phase in particular to be the subject of advance discussions with consulting firms in the sense of best practice logic or lessons learned and to be carried out in the form of a pitch or a round of presentations. Companies pay close attention to the experience, mindset, and soft skills of consultants and utilize interviews or team introductions as discovery instruments in this respect. The interaction is far more direct and personal.
What are the advantages and disadvantages of working with public authorities as opposed to working with companies?
Every collaboration, whether with a public authority or a company, has its advantages and disadvantages. The decisive factors are the defined focus and the determination of the desired goals.
One advantage in working with a public authority is the tendency of the relationships to be long term. They are based on framework agreements with service character in the public sector and often have terms of between two and four years. It should also be noted, however, that the allocated budget is tied to strict requirements (e.g., release of budgetary funds, budget planning on an annual basis).
In comparison, collaboration with companies has the advantage that private enterprises are not subject to laws governing procurement or price verification. The conclusion of contracts oriented to fixed prices, time and material calculations, or defined work results is more likely to be possible. Managing project activities commercially over the turn of the year tends to be easier. The lead times for project acquisition or contract conclusion are generally shorter in a company, and interaction and communication are faster.
Private clients often appear to be more interesting. How do you motivate your colleagues to work in the public sector?
There is a different focus in the public sector. The guiding principle here reads: “The common good takes priority over self-interest!” A similar attitude prevails in medicine. Emergency physicians in hospitals sometimes work 70 hours a week because they want to save lives; this dedication is an inherent part of their vocation. Similarly, anyone desiring to advance society and to be a part of something greater than the individual will be personally motivated to work in the public sector. This is a personal attitude that cannot be learned. The way people are raised and their personal environments are the source of their drive and prepare them to take this path. The issue of job security will also play an important role in the future.
In the private sector, competitiveness and the pursuit of profit are more pronounced, resulting in higher salaries and possibly greater motivation. The desire to engage in entrepreneurial activity, to accept risk, to work with an orientation to results, and to be rewarded for success with a higher monetary return — for example, from variable compensation — are elements that can spur certain individuals to greater efforts.
Would you like to conclude with a wish for the providers and clients of management consulting services?
My wish would be for government administrations to acknowledge more definitely the advantages, opportunities, and the added value of administration consulting.
There needs to be openness, more effective marketing, and a clear definition of consulting or administration consulting. At the moment, there is still a lack of common understanding that will be worked out in greater detail and internalized in the future.
In my opinion, public administration is not yet adequately structured for services such as administration consulting. In some cases, there is a lack of courage to tackle the required changes, even though they have been recognized, with the help of neutral experts. The demand from public authorities for the competencies that can be offered by consultants is growing and can be provided internally solely to a limited extent.
