The Right Kind of Accountability

Unlike the private sector, the public sector is accountable to multiple stakeholders with different priorities. John D. Donahue provides guidance on managing these competing demands.
by | April 16, 2008

There's just no accountability in government." This statement and close variants are heard frequently, but only from people who don't know much about government. Nobody who has seen (or even better, been) a governor announcing an austerity budget, or a defeated mayor on some Wednesday morning in November, or a corrections director pinned in the glare of a media investigation can truthfully say that people in the public sector aren't held to account for their actions.

Similar charges of a lack of accountability are often leveled against private-sector organizations. The automaker ignores the climatic havoc that its products slowly but surely wreak; the fast-food chain pays no penalty for the damage its products do to customers' arteries or its wrappings do to the environment; apparel manufacturers are oblivious to the squalid labor conditions their suppliers maintain. Yet managers in these companies can and do get fired over profit declines and stock-price slumps.

Sometimes, in either sector, there really are big lapses in accountability. But, most of the time, in both business and government, there are reasonably sophisticated and reliable mechanisms for holding people to account. It is not that one sector is systematically more accountable than the other. It's that the characteristic forms of accountability differ between the sectors -- and for mostly good reasons.

It is no slur against government to say that productive efficiency is not and should not be its strong suit. The public sector's cardinal virtue -- precious when present, crippling when absent -- is legitimacy in the eyes of its citizens. Public organizations, almost by definition, are answerable to a broad range of constituencies whose interests, on a wide spectrum of dimensions, must be taken into account. Let's call this "extensive accountability."

Private organizations, conversely, are characterized by what can be termed "intensive accountability." They are answerable to a narrower set of masters, but in a far more focused way. This intensive accountability is inherently more conducive than extensive accountability to pure productive efficiency -- rooting out avoidable costs, eking out each tiny improvement that might yield a competitive edge or add an extra hundredth of a percent to the rate of return, sweating every detail of the production process.

Government does the right thing, as the cliché goes, while business does things right. Despite the many vivid counterexamples one could cite on both sides, this remains a generally accurate summary of the differing incentives, constraints and pressures that shape the behavior of public and private organizations. Expecting government to match business on cost reduction or process refinement is as quixotic, by and large, as expecting business to respond -- without the prod of lawsuit or regulation -- to the complaints of an unmonied interest injured by its operations. There is a built-in tradeoff between intensive and extensive accountability.

Appreciating these two forms of accountability can help public managers anticipate challenges when building or shifting accountability arrangements. A school superintendent shouldn't be surprised when public schools -- adept at juggling competing demands from parents, local boards, federal overseers, teachers and students, as well as other constituencies -- are uncomfortable with the cold, inflexible intensity of high-stakes testing. An economic development director should anticipate that a firm negotiating a location deal could cope with tough targets on job counts and payroll but will quickly grow exasperated with requirements concerning the environment, local hiring or corporate philanthropy.

Understanding the difference between intensive and extensive accountability can also help managers understand both the payoffs and risks of outsourcing specific public tasks. For well-defined, relatively routine functions where the ends are established and it's down to a matter of means, outsourcing can offer big advantages for government -- much bigger than outsourcing within the private sector. Shifting some function from one private firm to another may generate gains from specialization, optimal scale and the spur of competition. Shifting some function from government to a private firm can do this, too, but it also transfers the task from an institutional setting in which productive efficiency is a secondary concern into one in which productive efficiency is the prime directive. But where means do matter -- where it isn't just a question of getting the work done well and cheaply -- engineering extensive accountability into the relationship with a private provider can be hard to do, and sometimes impossible.

The conversation about accountability in government would make more sense, and inspire more smart management, if it focused on "what kind?" instead of "how much?"

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