The Role of Top Managers in the Public Sector: Evidence from the English NHS

Abstract

Governments have reformed public services by adopting private sector governance models that grant top directors greater autonomy, responsibility for meeting key targets, and performance-based rewards. We examine a central plank of this approach–that directors can impact the organizations they run–in the context of English public hospitals, complex organizations with multi-million turnover. Our findings reveal little evidence that top directors affect hospital production, although pay differentials suggest they are perceived as distinct by the market. The results question the effectiveness of blindly mimicking the private sector to bring about improvements in public sector performance. (JEL H51, I11, L32, M12)