Management of public companies in Greeceby Fotis Fitsilis*
The economic crisis has turned upside down all areas of public administration inGreece. Publicly owned or controlled companies are not excluded from the frame of the attempted changes. Changes to their operation are based on two main pillars:Organizational restructuring and model of management.In this article we will refer to the need for changing the administrative model inpublic companies. First, we will define the entities we are dealing with. Then we willexamine the basic differences with their counterparts in the private sector. Finally,we will study ways to control the administration's acts and omissions.
Definition and characteristics
According to a recent recording from 2010 there are approximately 1000 publiccompanies. This number does not include about 1100 companies funded by thedecentralized state, e.g. municipalities; however this number has decreasedsignificantly with the latest administrative reform. Public companies mainly operateas limited companies, legal entities under public law or private legal entities. Asregards the types of public companies, these may be utilities, banks, social securityorganizations etc. The public nature of these companies is mainly assumed throughstate participation in their share capital (over 50%) or through appointment of theiradministrative body (e.g. board of directors).A private company usually aims to improve its products and services for itscustomers, while reducing operational costs, in order to increase its turnover and,ultimately, its profits. In theory, the goals of public companies may correspond withthose set by private ones. Reality, however, shows that during the last three decadesGreek public companies mainly acted as the long hand of the Government in itsdevelopment and social policies. The result was the accumulation of huge debts,which the state budget had to absorb.
Differences between public and private sector management
Running a company is a difficult task. But when it comes to a public company, itresults to additional degrees of difficulty. Many managers believe they can, in oneway or another, implement in full the management principles and methods from theprivate sector. Notable private sector managers have tried their hand at a publiccompany and have failed miserably. This can be attributed to the fact that they failedto take into account chronic problems and the specific internal conditions of publiccompanies. Freshly appointed managers are often taken by surprise once theyrealize the true dimensions of their work.