The economies of all countries in the world are composed of bothpublic and private sectors. Most of the time, these two sectors aredistinctive from each other due to their different missions, visionsand values. However, there are close linkages and relationshipsbetween the two sectors in terms of service provision andconsummation of activities via public-private partnerships. Forinstance, governments need public-private partnerships to fund keyeconomic activities in the country such as the provision of socialamenities, construction of residential housing schemes andinfrastructural development (Beckett 12). The public sector’s maingoal is to provide services to the people at a minimal or no cost atall while the private sector’s main goal is to make profits. Thispaper will analyze various differences between public and privatesectors and in this regard, the highlight of whether governments canbe run as businesses.
The public sector is composed of the government and publicly-ownedentities and businesses while the private sector is made up ofprivately-owned entities and organizations. In this view, thegovernment is usually the key element of public sector since it hasthe responsibility of owning and operating various publicorganizations at a federal, state, provincial, county and municipallevel (Van et al. 17). Various public organizations are createdthrough Acts of Parliament and are aimed at the provision of servicesto the citizens.
Some of the services provided include health care, infrastructure,education, housing, security, social amenities like water andsewerage systems, legal tender, correction facilities and transportamong others (Van et al. 17). A private sector on the other hand, iscomposed of privately owned entities whose ownership is strictlyreserved for the owners. They may provide services to the public, buttheir main aim is to make profits. Some of the key services providedinclude banking, transport, social amenities, and housing and privatesecurity services among others.
Public sector depends on the political environment in the country.Policies and decisions at a government are left in the hands oflawmakers and politicians and these laws become binding to governmentoperations. The public sector is therefore, controlled and regulatedby the political aspect of the country. For instance, the Canadiangovernment has three arms of which the legislative arm makes laws forthe country (Salisbury 34). These laws are implemented by theexecutive arm and checked by the judiciary. All public organizationsare headed by political appointees who are usually allies of theruling coalition. On the other hand, the private sector is notdirectly controlled by the political environment, but instead thepolicies and decisions made by government indirectly affect privatecompanies through various regulations and financial support. PrivateCompany Acts regulate the registration and operations of the privatecompanies but they do not dictate the internal operations of thecompanies in their profit-making journey.
Innovativeness is commonly conspicuous in the private sector comparedto public sector (Salisbury 56). Private sector strives to create newways of doing things based on the competitive pressures from rivalcompanies. They need to keep abreast of the changing environment,both in business and at a global level to remain relevant in themarket. As earlier said, private companies are profit-oriented andany backward step would land them into losses and insolvency.
Public sector on the other hand has no rivals and competitivepressures. Government agencies usually run as monopolies and thushave no room for creativity and innovation. For instance, theCanadian education and health care enjoy a dominant market positionand therefore, there is no meaningful thought of the competitivestance in these areas (Salisbury 56). Another disincentive toinnovation is the fact that public organizations are usually expectedto collaborate and create ties with other organizations which offersimilar services rather than compete with them. This leads toduplication of services a key element disapproved by private sectors.
Public entities are complex and bureaucratic in their organizationalstructure. They are answerable to many shareholders and stakeholderswho place demands and constraints to the managers. Governmentsusually operate via networks of other interdependent entities ratherthan one single independent organization (Beckett 67). The publicsector has many objectives spread across many departments to fulfillin response to the needs of the country. The private sector is lesscomplex and is usually guided by own independent objectives. Theorganization structure is well stipulated with each departmenthandling specific tasks and objectives. The end result is usuallyhigher productivity and profits.
The public sector is usually permeable and unstable. Public entitiesoperate as open systems which can easily be manipulated andinfluenced by outside events. Prevailing external economic turmoiland political environments affect the operations of the public sectorsince they are dependent on regulations from these external forcesunlike the private sector (Salisbury 78).
The public sector is dependent on the government of the day and thefrequent changes in government after every elective term createconstraints and managerial difficulties in this sector. It is theresponsibility of public managers to cushion such permeability andinstabilities for the interest of the public. The private sector isusually a closed entity with a stipulated board of directors whocontrol operations of the sector. The sector is resilient and noteasily manipulated by political changes or other external events.
At a managerial level, public managers have lower autonomy than theircounterparts in the private sector. They are usually under politicalpressure from various stakeholders and lack the freedom to executethe decisions they deem fit for the organization. Publicorganizations are usually pushed or pulled simultaneously by variousexternal factors such as politicians and international agencies thatplace red tapes and bottlenecks on public managers (Van et al., 15).These managers also receive lower remuneration. Private sectormanagers are usually autonomous and have the freedom to makedecisions that are deemed profitable for the organization. The onlypressure comes from the corporate governance and shareholders onlywhen they make losses. These managers are also likely to receive highremuneration and benefits for their successful operations (Van etal., 20).
Lastly, employees in the public sector are largely unionized. Theyare allowed to form national unions to cater for their needs. Forinstance, Canada has many unions such as teachers unions, healthpractitioners, unions, civil servants’ unions and social workers’unions to mention a few (Salisbury 73). Many of these professionalsare also organized and recruited through professional associations.
There are usually wrangles with the employer, the government, onissues like professional status, salaries and working environments.Private sector employees on the other hand have stronger unions(Salisbury 74). They usually form fractious or harmonious agreementswith their employers and are usually employed under a contractualbasis. Their grievances are usually handled internally with effortsto maintain the company’s image and customer relations. Most of theemployees’ motivations are economic through better remuneration.
From the various dissimilar perspectives of public and privatesectors discussed above, governments should not be run likebusinesses, but certain business policies and values can betransferred to public sector (Beckett 117). Businesses are usuallyguided by profit making as their main goal, but the governmentsoperate to enact public policies with the interests of the public atheart.
The government provides important services to the public, whether forfree or minimal charge such as security, infrastructural development,healthcare and education. These services are funded by the publicthrough taxation and therefore, it is the right of the citizens toget them (Beckett 123). If government were to be run as a business,all the services would be too expensive to afford, and sometimesunavailable. However, certain business traits can be borrowed toimprove public sector service delivery, such as technologicalinnovations, ethics and accountability, efficient managerial skills,lack of bureaucracy, good remuneration and public-privatepartnerships.
Beckett, Julia. "The “government should run like a business”mantra." The American Review of Public Administration, 2000,30 (2), 185-204
Salisbury, Jenny. "Political Acts and Public Voices: Paying Timeand Attention to The Public Servant." Canadian TheatreReview, 166 (2016), 72-77.
Van Dooren, Wouter, Geert Bouckaert, and John Halligan. Performancemanagement in the public sector. New York: Routledge, 2015, Print