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A COMPARISON BETWEEN PUBLIC ANDPRIVATE SECTOR MANAGEMENT

Introduction

The issue as to whether there are differences between public andprivate sector management has engaged the attention of scholars andpractitioners. While scholars, especially those in public administrationare of the view that, there are significant differences, public managersalso perceive some differences between the two.

Whatever ones opinion is about the debate, one thing becomes clearafter a close examination of the two sectors and that is, even thoughthere are differences between the two sectors, the similarities betweenthem can hardly be mistaken or glossed over. Again, whatever onesopinion is on this matter, it cannot be gainsaid that, comparisonbetween the two sectors which has become a necessary academicchore, so to speak, among students of administration, provides theopportunity 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 applyingprivate business study to public administration. This, as a matter of

fact, is not surprising given the different environments in which the twosectors operate. According to Barber (1972:22) the difficulties inapplying such studies in the public sector is due to the followingreasons:

1) The nature of the basic administrative problem of the publicsector varies substantially from the basic problem in privatesector.

2) The greater emphasis in public administration is on law andlegal context within which public administration must functionor operate.

3) The greater relationship between public administration andpublic welfare and its consequent organizational andoperational ramifications.

4) The responsibility of the public administrator to the public, asituation not matched in private industry.

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5) The difficulties of quantifying the goals of publicadministration in the absence of reliance on a pure profitstest.

6) The different considerations in determining goals in public

administration, which are much wider than those in privateindustry.

HOW PUBLIC AND PRIVATE MANAGEMENT DIFFER

The literature is replete with reasons why public and privatemanagement are considered different. A summary of these reasons,as given by scholars and practitioners will definitely provide us with ageneral view on this issue.

Areas in which the two sectors differ

Management in public and private sectors differ in a number of waysincluding the following.

Different Structures

Responsibility in public administration tends to be blurred. Due to this,agency heads, compared to their counterparts, in the private sectortend to be helpless. This is explained by the fact that, unlike thesituation in the private sector, no individual or institution is givencomplete authority in the public sector. The authority in the publicsector is distributed within the governmental structure. For majorissues approvals are required from superior bodies. The frustrations of public officials over critical issues such as budget approval and relatedissues are mainly due to this phenomenon.

Different Purposes

Unlike the private sector where the purpose for the existence of organizations (bottom line) is stated clearly as profit, marketperformance and survival, public managers are mainly concerned withpublic good (commonweal). What this means is that, whereas privatesector institutions are mainly concerned with the well-being of theiremployees and stockholders, public sector institutions are required tocater for the interest of the public or people outside the organization.

Performance Criteria

Whereas rewards to private businesses are mainly based on theirperformance and how they satisfy their customers, rewards in public

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organizations are not tied directly to performance. They are rathertied to extraneous factors, which may not enhance their growth.

Greater Internal Diversity

It is sometimes difficult to promote the much needed internal cohesionin public organizations due to a number of reasons including politicaland historical. On the other hand, private organizations are betterplaced to develop the necessary internal cohesion.

Conflict Between Policy Makers and Public Managers

The administrative-political mix in public organizations, as representedby the positions of politicians and public managers, tend to breedconflict. This arises mainly from a division between the two wherebyelected officials or politicians are mainly concerned with policymaking

while public managers are mainly glued to implementation functionsand procedures. Even though a division may surface in a boardroom of private-sector organization, it hardly takes the characteristic of thepublic sector as described above.

Scrutiny by the Media and Public Interest Groups

Since they depend mainly on public funds to implement policies, publicorganizations tend to be heavily scrutinized by the press and thepublic, who feel they have a right to know everything. On the otherhand, 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. fromone election to another. The elected officers have a manifesto and amandate within a specified time frame to deliver. This tends to createa lot of pressure on public managers who are required to demonstrateresult. On the other hand, managers in the private sector tend to havea longer tenure.

Emphasis on Strong Individual Leadership

There usually is a lot of pressure on elected and appointed leaders inpublic organizations to demonstrate their personal power. Under thecircumstance, delegation of responsibility and reliance on groupdecisions are considered as weaknesses. On the other hand, businessexecutives tend to be less visible and are therefore not subjected tothat much pressure.

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Atmosphere of Control and Mistrust

An atmosphere of control and mistrust normally pervade in publicorganizations as a result of rules, regulations and strict control onemployees. Even though this may also exist in private organizations,

they are usually not in the magnitude experienced by public-sectororganizations.

Dealing with many Superior Officers

Public managers are placed in such a situation that they have nochoice but to form a coalition of insiders and outsiders in order tosurvive. This is because they are required to respond to the demandsof their bosses who tend to be many. Private managers, are bycontrast, spared this ordeal because they generally look more to onehigher authority.

Legislative and Judicial Impact

Public managers often come under scrutiny of legislative oversightgroups as well as the judiciary. On the other hand, private managersare rarely scrutinized with the same intensity.

Differences in Status

It is generally believed that, working for the government comes with ita lower status compared to working in business and industry. 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 byasking the question which of the two sectors is more difficult tomanage?

There appears to be a consensus on the answer. The generalconsensus is that, it more difficult to manage public sectororganizations. Conclusions by administrators and managers who havehad a stint in both sectors generally appear to support this point of view.

Certainly, the open socio-technical system in which public managersincreasingly find themselves poses a great challenge. Besides theusual challenges from internal sources, public managers have tocontend with external forces, which are more complicated and

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therefore more difficult to deal with than what prevails in the privatesector.

Clearly, the points stated above testify to the fact that, managing inthe public sector can be more exacting. In giving reasons for this,

Barber (1972:22) rightly points out that:

Public administration, unlike private administration, operates in apolitical framework both in the sense of political responsibilityand control, and in the sense that its objectives are necessarilybased on different and wider criteria.

This sentiment has been echoed by Berkley and Rouse (1984:10) whoobserve as follows:

If the laws that govern the acts of public institutions were applied

to private institutions, most of the management and staff of thelatter would end up behind bars.

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