The Public Service Mutual: Theories of Motivational Advantage

• Author: Julian Le Grand,Jonathan Roberts
• Published date: 01 January 2018
• Date: 01 January 2018
• DOI: http://doi.org/10.1111/puar.12819

82 Public Administration Review • January | February 2018

Public Administration Review,

Vol. 78, Iss. 1, pp. 82–91. © 2017 by

The American Society for Public Administration.

DOI: 10.1111/puar.12819.

Jonathan Roberts is senior lecturer

and leads the development of teaching

programs in the Marshall Institute of the

London School of Economics, where he

earned his PhD in social policy. His research

interests include motivations and altruism,

trust in public services, and the role of social

enterprises and mutual organizations in

public service delivery.

E-mail : j.j.g.roberts@lse.ac.uk

Julian Le Grand is professor of social

policy in the Marshall Institute of the

London School of Economics. He has a

PhD in economics from the University of

Pennsylvania and is author, coauthor, or

editor of more than 20 books and more

than 100 refereed journal articles and

book chapters on economics, philosophy,

and public policy He has acted as a policy

advisor to the U.K. prime minister, the World

Bank, the World Health Organization, and

the president of the European Commission.

E-mail: j.legrand@lse.ac.uk

Abstract: Public service mutuals are a form of employee-led organization in which service workers spin out of

the public sector to form “mutuals” that contract back with government to provide a service. This article draws on

economic and psychological theory to demonstrate that mutuals can align both self-interested and altruistic or public

service motivations so as to serve the social good; moreover, by offering greater autonomy to public service professionals,

mutuals are predicted to encourage energetic and persistent behaviors. In both cases, there is an advantage over

alternative forms of organization such as the public sector bureaucracy, the shareholder-owned private firm, or the

nonprofit organization. The employee-led mutual form, however, may not appeal to risk-averse workers, its collective

decision-making systems may be inefficient, and external mechanisms may be required to ensure that organizational

outcomes are always directed toward the social good.

Evidence for Practice

• Public service mutuals—independent employee-led organizations delivering public services under contract

to government—can better serve the social good than more conventional organizations such as public sector

bureaucracies, for-profit corporations, or nonprofit organizations.

• The ownership structure of the mutual motivates both self-interested and altruistic employees to pursue

the social good. Providing employees with greater autonomy and control can encourage more energetic and

persistent behaviors.

• While the mutual structure promotes alignment between employee motivations and organizational outcomes,

competitive quasi markets or government regulation may be required to ensure that those outcomes always

align with the social good.

Julian Le Grand

Jonathan Roberts

London School of Economics

The Public Service Mutual:

Theories of Motivational Advantage

T he motivation of those who provide public

services is a key factor affecting the provision

of those services. In a well-designed delivery

system, public service workers will be energized to

work in a way that meets the objectives of policy

makers and the requirements of service users. But

a poorly designed system may lead to any of three

negative outcomes: workers are demotivated, they are

motivated to pursue their own interests (and those

interests are not aligned with the social good), or they

follow some individually defined vision of the social

good that is at odds with the preferences of policy

makers and users.

Policy interventions that attempt to strengthen and

direct motivations (either implicitly or explicitly)

have been applied at multiple levels. Much attention

has been focused on the overarching model of

service delivery: the provision of services through

a unitary state bureaucracy or a state-funded quasi

market. Interventions can also be focused directly

at the individual level, such as the introduction

of performance-related pay. This article explores a

policy initiative that has sought to intervene at the

intermediate, or organizational, level. The motivation

of employees and the incentive structures they

face differ among public, private, and third-sector

organizations, and we need to know more about the

motivational effects of the different organizational

forms.

Since 2008, the British government has attempted to

stimulate development of the “public service mutual,”

a private organization typically broken away or “spun

off” from the public sector that is characterized by a

significant level of employee control and provides a

public service under contract to a government agency.

These mutuals are a specific form of social enterprise:

organizations with the dual objective of profit and

social purpose (Besley and Ghatak 2013 ; Robertson and

Tang 1995 ; Waddock and Post 1991 ). They are similar

to private sector workers ’ cooperatives, types of which

can be found in most developed economies. However,

their focus on public services and their relationship

This manuscript was originally

submitted and accepted as an Public

Administration and the Disciplines

article. The feature editor, Rosemary O’Leary,

is gratefully acknowledged for their work

in soliciting and developing this content.

Effective with Volume 78, the Public

Administration and the Disciplines feature

has been discontinued.