The BBC and bad public sector management In the middle of Lord Patten's more than usually dyspeptic interview on Thursday's BBC Today programme, he hit on a hard truth. Pay-offs to George Entwistle, the former director-general, and other senior BBC executives were "not as important as the management issues" raised by this week's review of the corporation's actions, he said. The BBC Trust chairman will have difficulty getting that point heard above the shouting over severance pay. Sorting out management of any organisation - let alone a deep-rooted, culturally important public institution such as the BBC or the National Health Service - is messy and long-winded. Pay, by contrast, seems a precise tool, with a measurable impact. When hiring leaders, it is easier to assume you will get great candidates - and a great outcome - by paying more and leaving them to it. If that means embedding perks and pay-off clauses in the contract, so be it. The Treasury is about to test that theory by granting Mark Carney, its dream choice as governor of the Bank of England, £624,000 - double the salary of the incumbent - plus a £250,000 housing allowance. Its decision is based on the logic of the private sector, to which governments assume all senior public servants will gravitate if they are not pinned to their seats by wads of hard cash. Such a pay-driven attitude is mistaken, on two counts. First, psychologist Frederick Herzberg established as long ago as the 1960s that pay levels were a "hygiene factor" - a basic requirement for turning up - while true motivation and satisfaction came from the sense of achievement, recognition and the work itself. A sense of duty used to be one such motivating factor for public servants. A moving passage in William Silber's new biography of Paul Volcker, for instance, recalls the moment in 1979 when the central banker decided he must accept the job of Federal Reserve chairman, despite a pay cut that he knew would make it harder to provide for his sick wife. Asked whether she had commented, Mr Volcker responded: "She said we'd manage." The second error is that relying on high pay to recruit, retain and reward individuals assumes they are individually capable of achieving change. Intelligent, inspirational leadership is important at any organisation, public or private. But even if boards persist in paying chief executives large amounts, it is at least a decade since most of them believed corporate governance and management would be improved by deifying them. The public sector has a lot of catching up to do. A report into NHS management for the King's Fund, a public health think-tank, pointed out that "the model of the "romantic" or "superhero" leader is ill-suited to current demands." Yet politicians continue to call for "super heads" in schools, elected mayors and miracle-workers who can turn round health authorities or public broadcasters. Miracles do not come cheap. The Pollard review into the BBC's decision to scrap a Newsnight investigation into Jimmy Savile suggests the broadcaster's behaviour was not down to conspiracy, but, "chaos and confusion," or, in Lord Patten's words, a series of "cock-ups." Not just leadership but "organisation" was in short supply; "rigid management chains" and a failure to share and co-ordinate information hindered the response. One surprising conclusion of last year's King's Fund report was that the NHS was under-managed but over-administered, with overlapping regulatory demands imposed by politicians and public. Similarly, Lord Patten said on Thursday the BBC was "both over- and under-managed." But when Mr Entwistle set out his plans in September, bureaucracy was one of the first things he tackled, uniting the BBC's operations and finance functions. The director-general's "editor-in-chief" role is now also ripe for reform. As the Pollard review says, it grants him ultimate responsibility without the practical ability to make a difference - the sort of halfway house most private companies would already have torn down. High pay at the BBC and other public bodies stinks, because it shows such organisations have quietly adopted the worst practices of the private sector - and ignored the best. But if the BBC's leaders wish to sort out the corporation, they need to hold their noses for now and concentrate instead on how to make it run better.