Public VRS Private Sector Management

 

A COMPARISON BETWEEN PUBLIC AND PRIVATE SECTOR MANAGEMENT Introduction  The issue as to whether there are differences between public and private sector management has engaged the attention of scholars and practitioners. While schol scholars, ars, especial especially ly those in public administration are of the view that, there are significant differences, public managers also perceive some differences between the two. Whatever one’s opinion is about the debate, one thing becomes clear after a close examination of the two sectors and that is, even though there are differences between the two sectors, the similaritie similarities s between them can hardly hardly be mistaken or gloss glossed ed over. Again Again,, whateve whateverr one’s opin op inio ion n is on this this ma matt tter er,, it ca cann nnot ot be gai gains nsai aid d that that,, co comp mpar aris ison on between the two sectors which has become a necessary academic chore, so to speak, among students of administration, provides the opportunity to gain more insights into the dynamics of the two sectors.

DIFFICULTIES IN APPLYING PRIVATE BUSINESS STUDY  TO PUBLIC ADMINISTRATION  The literature indicates that there have been difficulties in applying private priv ate busin business ess study to publ public ic admin administra istration. tion. This, as a matte matterr of  fact, is not surprising given the different environments in which the two sector sec tors s ope operat rate. e. Acc Accord ording ing to Bar Barber ber (19 (1972 72:22 :22)) the diff difficu iculti lties es in apply app lyin ing g su such ch stud studie ies s in the the pu publ blic ic se sect ctor or is du due e to the the fo foll llow owin ing g reasons: 1) 2)

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Th The e na natu ture re o offsubstantially th the e ba basi sic c ad admi mini nist stra rati tive ve p pro robl blem em o off th the pu publ blic ic sector varies from the basic problem ineprivate sector. Th The e gr grea eate terr em emph phas asis is iin n pu publ blic ic a adm dmin inis istr trat atio ion n is on llaw aw a and nd legal context within which public administration must function or operate. Th The e grea greatter re rela lati tion onsh ship ip be betw twee een n pub publi lic c ad admi mini nist stra rati tion on an and d publ pu bliic wel elfa farre an and d its co cons nse equ quen entt or orga gani niz zati ation onal al an and d operational ramifications. Th The e re resp spon onsi sibi bili lity ty of tthe he p pub ubli lic c adm admin inis istr trat ator or tto o the p pub ubli lic, c, a situation not matched in private industry.

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The difficulties of quantifying the goals of public administration in the absence of reliance on a pure profits test.

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Th The e di difffer ferent con onsi side derratio ations ns in de dete terrmini ining go goal als s in pu publ blic ic administration, which are much wider than those in private industry.

HOW PUBLIC AND PRIVATE MANAGEMENT DIFFER  The literature is replete with reasons why public and private management manage ment are consi considere dered d differen different. t. A summary of these re reasons, asons, as give given n by scholars and pract practitio itioners ners will definit definitely ely provide us with a general view on this issue.

Areas in which the two sectors differ Management in public and private sectors differ in a number of ways including the following.

Different Structures Responsibility in public administr administration ation tends to be blurred. Due to this, agency heads, compared to their counterparts, in the private sector tend ten d to be hel helple pless. ss. Thi This s is expla explaine ined d by the fact that that,, unli unlike ke the situat sit uation ion in the pri privat vate e sec sector tor,, no ind indivi ividua duall or ins instit tituti ution on is giv given en complete authority in the public sector. The authority in the public sector sec tor is dis distri tribut buted ed wi withi thin n the gov govern ernmen mental tal str struct ucture ure.. For maj major or issues approvals are are require required d from super superior ior bodies. The frustratio frustrations ns of  public officials over critical issues such as budget approval and related issues are mainly due to this phenomenon.

Different Purposes Unlike Unli ke the the pr priv ivat ate e se sect ctor or wh wher ere e the the pu purp rpose ose fo forr the the ex exis iste tenc nce e of  or orga gani niza zati tion ons s (b (bot otto tom m li line ne)) is stat stated ed cl clea earl rly y as prof profit it,, marke arkett performance and survival, public managers are mainly concerned with public good (commonweal). (commonweal). What this m means eans is tthat, hat, whereas private sector institutions are mainly concerned with the well-being of their employees and stockholders, public sector institutions are required to cater for the interest of the public or people outside the organization.

Performance Criteria Where Whe reas as rew reward ards to pri privat vate e bus busine inesse sses scustomers, are mai mainly nlyrewards bas based ed in onpublic the their ir performance ands how they satisfy their

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organizations organizatio ns are not tied dire directly ctly to perf performa ormance. nce. They are rat rather her tied to extraneous factors, which may not enhance their growth.

Greater Internal Diversity It is sometimes difficult to promote the much needed internal cohesion in public organizations due to a number of reasons including political and histori historical cal.. On the oth other er hand, priv private ate organiz organizati ations ons are bet better ter placed to develop the necessary internal cohesion.

Conflict Between Policy Makers and Public Managers  The administrative-political mix in public organizations, as a s represented by the positi positions ons of pol politi iticia cians ns and pub public lic manage managers, rs, ten tend d to bre breed ed conflict. confl ict. This aris arises es mainl mainly y from a division betw between een the two wher whereby eby elected officials or politicians are mainly concerned with policymaking while public managers are mainly glued to implementation functions and procedures. Even though a division may surface in a boardroom of  private-se priv ate-sector ctor organizat organization, ion, it hardl hardly y take takes s the chara character cteristic istic of the public sector as described above.

Scrutiny by the Media and Public Interest Groups Since they depend mainly on public funds to implement policies, public organi org anizat zation ions s ten tend d to be hea heavi vily ly scr scruti utiniz nized ed by the press and the public, publi c, who feel the they y have a righ rightt to know everythin everything. g. On the othe otherr hand, private organizations are not scrutinized as much.

Time Horizon or Duration of Office  The time horizon in public organizations tends to be short – i.e. from one election to another. The elected officers have a manifesto and a mandate within a specified time frame to deliver. This tends to create a lot of pressure on public managers who are required to demonstrate result. On the other hand, managers in the private sector tend to have a longer tenure.

Emphasis on Strong Individual Leadership  There usually is a lot of pressure on elected and appointed leaders in public publi c organizat organizations ions to demonst demonstrate rate thei theirr personal pow power. er. Under the circ circum umst stanc ance, e, de dele lega gati tion on of re resp spon onsi sibi bili lity ty an and d re reli lianc ance e on grou group p decisions are considered as weaknesses. On the othe otherr hand, business executives tend to be less visible and are therefore not subjected to that much pressure.

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Atmosphere of Control and Mistrust An atm atmosp ospher here e of con contro troll and mi mistr strust ust nor normal mally ly per pervad vade e in pub publi lic c organi org anizat zation ions s as a res result ult of rul rules, es, reg regula ulatio tions ns and str strict ict con contr trol ol on employees. Even though this may also exist in private organizations, they are usually not in the magnitude experienced by public-sector organizations.

Dealing with many Superior Officers Public Publ ic ma mana nage gers rs are are pl plac aced ed in su such ch a si situ tuat atio ion n that that they they hav have e no choice but to form a coalition of insiders and outsiders in order to survive. This is becau because se they are required to respond to the demands of their their bos bosse ses s wh who o tend tend to be man many. y. Priv Privat ate e ma manag nager ers, s, are by contrast, spared this ordeal because they generally look more to one higher authority.

Legislative and Judicial Impact Public Pub lics man manage agers rs often com come e und under erthe scr scruti utiny ny han of leg legisl islati ative ve ove oversi rsight ght group groups as well as oft theen judici judiciary. ary. On other hand, d, privat private e manager managers s are rarely scrutinized with the same intensity.

Differences in Status It is generally believed that, working for the government comes with it a lower status status com compar pared ed to wor workin king g in busi busines ness s and ind indust ustry. ry. The Ghanaian situation clearly testifies to this point.

WHICH IS MORE DIFFICULT TO MANAGE? It certainly will be interesting to take the debate to another level by askin ask ing g the the qu ques esti tion on wh whic ich h of the the tw two o se sect ctor ors s is mo more re diff diffic icul ultt to manage?  There appears to be a consensus on the answer. The general consensus is that, at, it more difficult ult to manag age e public sector organizations. Conclusions by administrators and managers who have had a stint in both sectors generally appear to support this point of  view. Certainly, the open socio-technical system in which public managers increa inc reasin singly gly find them themsel selves ves pose poses s a gre great at chall challeng enge. e. Bes Beside ides s the usual usu al ch chal alle leng nges es fr from om in inte tern rnal al so sour urce ces, s, pu publ blic ic ma manag nager ers s ha have ve to cont co nten end d wi with th ex exte tern rnal al fo forc rces es,, wh whic ich h are are mo more re co comp mpli lica cate ted d an and d

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therefore more difficult to deal with than what prevails in the private sector. Clearly, the points stated above testify to the fact that, managing in the public public sec sector tor can be more ex exact acting ing.. In givi giving ng reas reasons ons for this this,, Barber (1972:22) (1972:22) rightly points out that: Public administration, unlike private administration, operates in a “political framework” both in the sense of political responsibility and control, and in the sense that its objectives are necessarily based on different and wider criteria.  This sentiment has been echoed by Berkley and Rouse (1984:1 (1984:10) 0) who observe as follows: If the laws that govern the acts of public institutions were applied to private institutio institutions, ns, most of the manag managemen ementt and staff of the latter would end up behind bars.

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