LARNet; The Cyber Journal of Applied Leisure and Recreation Research

Privatization and Its Effect on Public Golf Employees
October 2002
Dr. Thomas F. Gustafson
Southwest Texas State University
Dr. Daniel D. McLean
Indiana State University

Thomas Gustafson
Assistant Professor
Department of HPER,
Recreation Administration Division,
Southwest Texas State
University, 601 University Drive,
San Marcos, Texas, 78666.

The purpose of the study was to examine the effects of privatization of public golf courses on employees of those courses. Five golf course managers who were employed by the city prior to, during, and after the privatization of the golf courses were interviewed. Their perceptions of the process and results were studied. The literature on privatization addresses employee issues in the context of downsizing (Box, 1999), cost savings, and reduction of the public work force (Jackson, 1997). Lacking are studies on the effects of privatization from the view of the employees. Qualitative case study methodology (Merriam, 1988) with purposive or purposeful (Patton, 1980) sampling was used to examine the phenomenon. That data was coded and organized by sentences to record the complete ideas expressed by the participants. Three categories of responses emerged from the data: change, learning and adaptation, and autonomy. Privatization of the golf courses required the employees to expand their responsibilities and direct the maintenance of the facilities. In addition, it gave them more decision making authority on day-to-day operations. After the initial adjustment period, they preferred the new service delivery system and wanted increased decision making authority and autonomy.
Keywords: privatization, golf, public employees

Much has been written about privatization as an alternate means of delivering public services. The literature is largely conceptual with few empirical studies, most of which deal with privatization as an administrative phenomenon. Topics discussed include decision making processes (Wallin, 1997), the use of public employees versus contract employees (Steel & Long, 1998), and public accountability (Dicke & Ott, 1999). The literature includes the advantages of privatization: competitive bidding (Pirie, 1985), streamlined decision making (Savas, 1987), increased accountability (Jones, 1980), and the transfer of maintenance and capital improvements costs to the contractor (Cowan, 1990). Also mentioned are the disadvantages: poorly written, managed, or negotiated contracts (Savas, 1987); the fact that the city may be required to wait until the expiration of the contract to remove the contractor (Morris & Stone, 1986); possible monopolistic behavior on the part of the contractor (Hartley & Parker, 1991); and the fact that privatization can be implemented to attain political goals (Dobek, 1993, Rains, 1993).

Lost in the discussion of privatization is its effect on the employees of the cities that privatize. The purpose of this study was to examine the effect of privatization on the employees of a United States city that privatized its public golf courses. The study focused on the effects of privatization on golf managers and provided an increased understanding of their perceptions of privatization. 

Review of Related Literature
Cities frequently begin to seek alternate means of service delivery because of financial constraints. Cowan (1990) suggested factors leading to the onset of privatization including the increased awareness of costs incurred by the subsidizing of programs, pressure to reduce government expenditures, and the need for additional revenue sources.  He added that the failure of state owned enterprises to meet the public expectations for product and service quality provided additional impetus to the movement toward privatization. In addition, privatization is a response to the demand for increased accountability by public service providers.

Privatization also draws support from other areas. The logic behind the commercial pressure to privatize is evident. Government workers perform many duties that are not unique to government. Commercial interests advocate privatization of these functions to promote competition in industries that may have previously been monopolistic. Savas (1987) noted, “Commercial pressures come from business leaders who see mismanagement, underutilized assets, and slothful practices in an environment sheltered from competition” (p. 9). Savas added the populist position suggests that the people should have greater choice in public service and should be able to define their common needs and address them without undue reliance on distant bureaucracies.

As previously mentioned, the plight of the employees is seldom considered in studies of privatization. That is not to say that labor and employee issues are not mentioned. However, these issues are mentioned within the context of downsizing (Box, 1999), cost savings, and reduction of the public labor force (Jackson, 1997). Indeed, Glover (1999) asserted privatization would lead to layoffs as contractors sought to reduce salary and benefit costs. However, that is not necessarily a result of privatization (Gustafson & McLean, 1999). Also within the context of the public work force, Jackson (1997) and Hodge (1999) asserted that privatization has a disproportionate affect on women and minorities in that they are more likely to be displaced by privatization. However, Jackson (1997) added, “There is little empirical evidence specifying the actual impacts of private service delivery on public employees. Some studies indicate that private service delivery creates as many jobs as it displaces” (p. 122).

Notwithstanding the possible negative effects, employees of privatized recreation services may derive certain benefits. Lankford, Neal, and Buxton (1992) found that employees of private/commercial sector recreation service providers identified receiving raises and awards, appreciation, and recognition from superiors among those factors that motivated them. Public providers listed wages and benefits, working conditions, and relationships with supervisors and co-workers as motivating factors. However, work place relationships, recognition, and appreciation have more to do with the personal qualities of supervisors and co-workers than whether or not the service is privatized. The fact that both public and private recreation employees mention compensation as a motivating factor seems to refute the notion that privatization substantially reduces pay levels of employees. Also, Yen and McKinney (1992) noted, “Job autonomy was of central importance for the private leisure managers in determining compensation satisfaction. Private leisure service managers rely on merit pay increases and demonstrated much greater satisfaction with the amounts of their pay raises than public managers” (p.32). Thus, despite the assertion that wages for private recreation providers are lower, employees of private providers seem happy with the idea that the quality of their work will warrant raises in the future.

Jurkiewicz and Massey (1996) listed “chance to learn new things, chance to use my special abilities, chance to make a contribution to important decisions, and chance to exercise leadership” (p. 132) among motivational factors for public workers. They examined employee “wants” and “gets”, concluding that public employee “wants” have changed to become more similar to “wants” in the private sector, while “gets” have remained the same. They suggested that, “municipal organizations need to assess the environmental and cultural factors that may be affecting the productivity of their largest single expenditure” (p. 136).

While studying risk taking, Bozeman and Kingsley (1998) noted that several studies found that public sector organizations emphasize controlling employees and going through proper channels. They added that public agencies have a greater concentration of authority at the top. They noted, “Risk taking requires some considerable level of discretion and an ability to approach decisions unencumbered by rigid structures and inflexible procedures (p. 112). They concluded, “If government can just be more entrepreneurial, can entertain proper risks, then many of its (presumed) managerial problems will disappear or at least be diminished” (p. 118). 

Qualitative case study methodology was used to examine the effect of privatization on the public golf course managers. According to Merriam (1988), “experimental research assumes, that the researcher can manipulate the variables of interest-that there is a great deal of control over the research situation” (p. 6). Since the research was descriptive in nature and it was not possible to manipulate variables, case study methodology was appropriate for the study. Majchrzak (1984) added, “they (case studies) provide for a more in-depth analysis… and a more complete understanding of a situation’s complexity by examining behavior in context” (p. 63).

Merriam (1998) suggested nonprobablistic sampling, a common form being purposive or purposeful (Patton, 1980). This is based on the premise that a researcher wants to gain as much knowledge as possible about the phenomenon and, thus, should select a sample that allows the greatest understanding of the phenomenon. Five employees of a major United States city that privatized its golf services were studied. The employees were selected based on their ongoing employment on the golf courses. All participants were employed by the city prior to, during, and after the privatization of golf courses. It was thought that employees who were present throughout the privatization effort would be able to offer detailed explanations of the phenomena. The city retained five golf course managers from their previous service delivery system and hired six new managers. The five managers who worked for the city previously were interviewed because their experience in the previous service delivery system, during the transition, and subsequently as contractors gave them unique insights into the differences between being public employees and contractors. They provided information about the change and how it affected the daily operations of the golf courses. The newly hired contractors lacked these insights. For the purposes of this study, the contractors will be referred to as operators.

Semi-structured interviews were the primary source of data. According to Merriam, “the decision to use interviewing as one’s primary mode of data collection should be based on the kind of information needed and whether interviewing is the best way to get it” (p. 72). The interviews began with a basic list of questions, but included additional questions that allowed the researcher to deviate from the original order based on responses. Archival data in the form of minutes of meetings, contracts, and newspaper articles supplemented the interview data. Although the archival data did not reflect their perceptions, it is worth noting that in all cases the archival data confirmed the factual information provided in the interviews.
The data was analyzed and coded simultaneously with data collection. This better allowed the researcher to, “focus and shape the study as it proceeds” (Glesne & Peshkin, 1992, p. 127). In addition to the data, the researcher maintained a field log and analytical files. Axial coding (Strauss & Corbin, 1990) was used to organize the data into categories that emerged. For the purposes of this study, it was determined that the data would be coded in sentences when possible to record the complete ideas expressed by the participants. Three categories emerged from the data: adaptation to change, autonomy, and learning.

Results and Discussion
The city privatized by contracting the 13 individual golf courses to 11 different Operators. Nine Operators were in charge of one course each and two were in charge of two courses. The city engaged in an open and public process prior to privatizing the golf courses (Gustafson, 1999). The move was prompted by the election of a new mayor who had a philosophy of smaller government that included privatization as one of the methods of reducing the size of government. The administrators, with recommendations from a committee comprised of representatives from the public and from government, considered and rejected three other options before deciding on this course of action. Those options were to hire a national management company, to retain the existing staff as employees of the city, and to create a not-for-profit corporation. The rationale for the decision to hire individual Operators for the golf courses was to keep the money and management in the city and to retain the current operators they deemed productive.

It was hoped that privatization would decrease the maintenance costs that were thought to be excessively high and develop a work force that would have an increased commitment to golf. At the time, the golf courses were already partly privatized. According to Operator 1, “prior to privatizing, we were the golf professionals with all concession rights on the facilities. We had no obligation for maintenance. We had no participation when it came to formulating a budget for maintenance.” Thus the main thrust of the privatization effort was to put the responsibility for the maintenance of the courses in the hands of the Operators, instead of park department employees.

Whereas they were not responsible for maintenance, they were the most visible and accessible people to the patrons. They were continually faced with comments, suggestions, and requests regarding the maintenance and condition of the golf courses. Operator 2 noted, “We heard all the complaints, yet we could do nothing about them. The people in maintenance worked according to a program set up by the people in the park department.” The work schedule of the crew made them inaccessible to people who may have complaints or suggestions and to the operators who heard the complaints. Suggestions for improvements to the golf courses were not being effectively transmitted to those who performed the maintenance. Operator 1 added, “That was always a sore subject. The Operator, being the one who is on the job day in and day out, would hear the complaints from the pubic about the conditions of the golf courses and he had no involvement.” Maintenance complaints and their inability to respond to them was a major source of frustration for the Operators.

Adaptation to Change
When they first heard about the decision to privatize, they were alarmed. When asked about his initial reaction, Operator 2 replied, “Fear! It got to the point where I didn’t want it to happen because I had been here 15 years and, all of a sudden, my job is going out for bids to everybody, anybody that was interested.” Operator 3 echoed that sentiment, stating, “I was scared at first because I was afraid of losing my job. I think that I had the most bids of all the golf courses.” Operator 5 took a philosophical view stating, “Naturally, you hear all the horror stories. My biggest fear was not getting the course, that someone of lesser qualifications, potentially might get the course.” However, the Operators changed their attitudes toward the process as they began to prepare their proposals. They realized that, with the knowledge that they had gained about their particular facilities, they were in the best position to bid effectively for the golf courses. Under any circumstances, it was very stressful for the Operators to face the possibility of losing their jobs because of an administrative decision to privatize over which they had no control. As the process moved toward completion, the Operators began to realize the strength of their position. After noting that he had more people bidding against him, Operator 3 added, “it’s because I did a good job. People wanted it. I attribute that to myself.”

Upon being hired, the Operators’ reactions could be viewed as a combination of a sense of accomplishment and relief. They now were back in control of their golf courses. However, they quickly moved to the daunting task of accepting the additional responsibilities. Some of the differences were reflected in the qualifications they needed to place the bids and others were reflected in their contracts. One of the requirements to submit bids was a credit line of $1,000,000. They had now incurred the additional responsibility of paying maintenance personnel during the winter months when there was little or no income. The requirement of the credit line was the city’s way of ensuring that the operators could pay the maintenance staff  to perform routine maintenance functions and prepare the golf courses for the season during times when there was little or no income. Without the credit line, the operators would suffer cash flow problems. The credit line requirement also demonstrated financial stability and, from the point of view of the city, decreased the likelihood of an operator defaulting on the contract.

Previously, the Operators were responsible for lessons, equipment sales and rentals, driving ranges, scheduling play, and the collection of green fees. The new contract stipulated that the Operators, “shall have immediate responsibility for and actively supervise and assist in all matters relating to the maintenance and condition of the golf courses and employees working on the golf courses.” In addition, the Operators were required to submit a written plan for that supervision and assume responsibility for hiring all persons employed on the golf courses.

The city hired the Operators on three-year contracts with an option for a fourth year to be exercised by the city. The Operators preferred a longer contract term to recover investments they were to make in the golf courses and the pro shops, to give them time to raise the maintenance standards, and for job security. Operator 1 noted, “the length of the contract did create a problem, it would take the full length of the contract just to bring the maintenance levels back to where they should be to be competitive with people that are in private business.” He understood the reason for the term of the contracts, adding, “I think the life of the contract is appropriate for the first time through so that the mayor, park director, and golf administration can review the individuals and not be stuck with someone that can’t perform.”

Autonomy represents the ability of an individual to act independently within an existing organizational system. Privatization altered the structure of the system replacing lines of control and authority. For the Operators, the change meant that they were now responsible for maintenance in addition to pro shop operations and programming. The net effect of the change was that they now had more control over their work environment.

However, the city did not want to relinquish all of the control over the golf courses to the Operators. In a pure privatization model, the city would contract the golf courses and allow the Operators to manage all aspects of the service. In this system, the city wanted to retain certain responsibilities including capital improvements to the golf courses. Operator 4 explained, “It’s like giving the keys to the car to your 16 year old. You still want to have some control.” Whereas the Operators wanted greater autonomy to manage the golf courses, they understood that the city had reservations about giving them too much.

The net effect of the added responsibilities was that the Operators had more control over their work environment. When they finally assumed their new positions with increased responsibilities, they were given the opportunity to implement maintenance programs and course improvements they deemed advisable. Operator 2 stated, “ In hindsight, it’s probably the best thing that ever happened to me in this job. I’ve always been the one behind the counter complaining about the maintenance of this golf course and how the city runs it and, now, all of a sudden, I get a chance to show what I can do.” The other Operators agreed believing that the new service delivery gave them increased autonomy and freed them to do their jobs.

Learning and Adaptation
Learning expresses the need for managers and employees to be able to analyze and synthesize issues in such a way that learning can occur. It allows individuals and organizations to express creativity in personal and organizational behaviors that contribute to performing a task or function differently.

The most immediate effect of privatization on the Operators was the increase in time spent on the properties and the corresponding decrease in time spent in their most familiar setting, the golf shops. Most of them elected to hire greens superintendents to supervise the maintenance function directly. However, it still required much of their time to learn how to manage the maintenance. Operator 1, whose wife was a professional buyer, felt fortunate to have someone readily available to whom he could delegate many of the shop responsibilities.  Operator 2 admitted that privatization had, “pretty much eliminated me from being behind the counter because maintenance takes so much of my time.” He indicated regret at not being able to greet the customers, but added that he enjoyed working on the golf course because, “it was new to me and I was learning a lot.” Operator 5 hired a greens superintendent and delegated the bulk of the responsibility. He stated, “I was fortunate to find a really good superintendent and, from that point, he actually hired all the workers on the golf courses and has been totally in charge of them. If I want something done, I work through him.”  However, it did not relieve him of all the responsibilities. He lamented, “The big difference, it seems to me, is that I’m continually pushing paper.” In addition, he decided to learn to operate the equipment and perform all maintenance functions. He explained, “I want to learn to use every piece of equipment and how much time it takes for every job.”  Thus the Operators were learning and demonstrating new skills. In addition to the actual time spent on maintenance, the Operators found themselves dealing with the peripheral tasks maintenance required, such as dealing with vendors and sales representatives.

The literature suggested that employees are motivated by the ability to learn and demonstrate that learning, by having input to important decisions, and by having increased job autonomy, (Jurkiewicz & Massey, 1996; Yen & McKinney, 1992, Bozeman & Kingsley, 1998). When the city privatized the golf course operations, these employees were given these opportunities.
Under the previous management system, the Operators were not involved in the maintenance and capital improvements of the golf courses. Operator 1 stated, “I enjoy the golf course construction, improvement, and maintenance more than anything else.” Operator 2 added, “I have a lot more leeway to do what I want to make an impact on the golf course. According to the players, it’s greatly improved in less than one year.”

Whereas the privatization effort increased the decision-making authority of the Operators, it had the effect of whetting their appetite for increased independence from the park and recreation department. Operator 5 stated, “From the day to day operations, the difference is dramatic.” However, he added, “In capital improvements, the city must still agree to it and we are still bogged down. I don’t feel as though there has been any improvement in that area.” Operator 4 noted, “There is no doubt that I have more autonomy. Do I have what I should have? The answer is no.”  Having been given a measure of autonomy and authority, the Operators now were interested in obtaining more.

The privatization of the golf courses put the jobs of the Operators  at risk. They responded by preparing bids and competing for their jobs, also learning experiences for them. The new management system also required them to take additional financial risks. As previously stated, one of the requirements was that they have a $1,000,000 line of credit. Several of the Operators went into debt making improvements to their facilities before beginning to realize income. Operator 3 emphasized, “I’m going in debt here $150,000. I used to worry about it. Not any more. It doesn’t bother me because I know it’s going to work.”

The autonomy and the risk gave the operators an increased sense of ownership of their jobs and professionalism. Operator 1 stated, “Privatization has made us more businesslike people.” Operator 3 added, “I’ve always liked coming to work. It’s a new job, now. There is more incentive.”  The Operators believed that they were more in control of their own destinies as a result of privatization.

It should be noted that privatization did not immediately increase the income levels of the Operators. Quite to the contrary, it left most of them with increased debt because of the money they invested in the properties. They hoped that the future would bring increased income for them, but that would depend on how well they performed. They now believed that the service delivery system would free them to perform at their potential. All five Operators retained in the process of privatization preferred the new service delivery system and believed that it helped them perform their job functions at higher levels. Moreover, the felt they were better able to meet the needs of their customers and provide better golf courses for their customers’ enjoyment. 

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