Abstract
Abstract Background: Transitions in the modern business environment cause significant organizational changes not only in private companies, but also in the public sector. Introduction of an adequate organizational model for the public sector could improve the quality level of public services. Objectives: This article aims to present general benefits of the application of the holding organizational paradigm in the public sector through a parallel analysis of several cases that were observed individually in our previous research. The goal is to suggest possible restructuring directions to policy makers in cities where the public sector has not been adjusted to the changes in the modern business environment. Methods: The case study research based on the documentation analysis, interviews and direct observation using the standard management consulting practice provided an additional and deeper insight into the functioning of public enterprises in one European capital and one small municipality. Results: The examples presented in this paper showed that the application of the holding institutional solution in the public sector leads to an improved command, an increased level of control, reduced management costs, better allocation of city resources and decreased overheads in the public sector. Conclusions: Switching from a functional towards a network model of the organizational structure improved the performance of public enterprises and increased the quality of public services
Highlights
The motivation for this paper was the research that the authors performed while being engaged as the business consultants on projects of public sector restructuring in one European capital and one small municipality
Some private company needs to be hired, usually at a higher price, so the costs are increasing. If this happens often, total expenses of the public sector are much higher than they would be if network organizational model was implemented
In this paper we will show that the implementation of holding approach is followed by forming a unique board at the head of the city holding, that would deal with strategic decisions on the top level, while operational activities would remain in the companies
Summary
The motivation for this paper was the research that the authors performed while being engaged as the business consultants on projects of public sector restructuring in one European capital and one small municipality. During work on these projects, we faced certain issues related to organization, performance and mutual cooperation of public utilities (Todorović et al, 2012b; 2012c). Methods: The case study research based on the documentation analysis, interviews and direct observation using the standard management consulting practice provided an additional and deeper insight into the functioning of public enterprises in one European capital and one small municipality. Conclusions: Switching from a functional towards a network model of the organizational structure improved the performance of public enterprises and increased the quality of public services
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