Controlling overhead in public sector organizations

Purpose – The purpose of this paper is to explore various mechanisms for controlling overhead, as informed by a framework based on transaction-cost-economics (TCE). Design/methodology/approach – Development of framework for controlling overhead and field study about Dutch public sector organizations for exploring and enriching this framework. Findings – Central steering with a provider-user interface was often seen as the most desirable control mechanism. Although central steering without such interface was used in about half of the overhead functions, their users argued that the priorities of these functions were insufficiently in line with their needs. There was little support for internal market control, because it would increase the administrative workload of internal calculations, and it could lead to undesirable differences in overhead use among the primary services departments. Moreover, line managers are often more focused service quality than costs. Research limitations/implications – The framewo...