Managerial choice and performance in service management-a comparison of private sector organizations with further education colleges

The debate as to whether public sector organizations should emulate private sector managerial practices in light of contextual differences is long running. This paper reports the result of an empirical study comparing application of service management principles in one public sector area, further education (FE) colleges, with private sector service organizations. Although within our sample marked differences exist between the levels of service drivers and outcomes, our findings suggest that the same management model is applicable to both sectors. Based on a sample of 291 service organizations, we demonstrate that a managerial model, represented by the service profit chain, is valid in both our FE college and private sector sample. Specifically, progressive human resource management practices led to employee satisfaction, which in turn impacted both service quality and customer satisfaction in both the public and private organizations. The results indicate that the performance of FE colleges arose in part from the managerial choices made in adoption of practices, and that it is lack of employee focus that may be holding back performance. Relevant to both public and private sectors is that the research indicates that human resource factors have a stronger impact than quality procedures, on both service quality and customer satisfaction.