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

Governments worldwide have sought to reform the delivery of public services by mimicking private sector governance models that grant top directors greater autonomy, give them responsibility for meeting key government targets and reward performance with respect to these targets. 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. We find little evidence of top directors’ impact on hospital production, though estimated pay differentials suggest that the directors are perceived to be differentiated by the market. These findings are not driven by endogenous sorting of top directors to poorly performing hospitals. The results question the effectiveness of blindly mimicking the private sector to bring about improvements in public sector performance.