There is a universal truth that the private sector is always more efficient than the public sector – that the profit motive drives efficiency.

Larger companies have the advantage of being able to negotiate e better prices with their suppliers and have the advantage of ‘economies of scale’ with their production and delivery processes

However, things are not always what they at first seem to be.

My personal observation, from working across the public snd private sectors  and across both small and large organisations, is that efficiency is negatively correlated with organisation size – large organisations are inefficient, small ones are generally efficient.

The reason is ‘engagement’.

In a small organisation, the owners/ managers are directly involved with all aspects of the processes involved in delivering goods or services to customers.   They see each step in each process and how different processes connect with others.  They know the other managers and often all supervisors and many of the staff. They communicate effectively because communication lines are short.

Similarly the workers are more likely to engage with the organisation. They know their role and how and where it fits into the overall process. They know the other staff, the supervisors and the managers. They know their contribution and performance can be judged. Issues cab be dealt with directly and swiftly.

Little of this applies in a large organisation. Relationships, performance and issues tend to drift and fester.

These advantages of engagement in small organisations can far outweigh the direct economic advantages of larger ones.