The Principles of Management in the Private and Public Sector Essay

This paper is devoted to the analysis of the specifics of management in the public and private sectors. It discusses in detail the approaches to the definition of a general set of functions of management which are characteristic for both private and governmental organizations. A large part of the paper is devoted to the analysis of the distinctive features of management in the public and private sectors, the accentuation of differences in the views of researchers on the subject.
Private and public sector share serious differences in management types. First, it is the nature of organizations’ demand for goods and services. While in the private sector the objectives of organization management are the production of goods and services to meet the needs and wants of individuals in exchange for a fee (mostly for money), in the public sector they are the execution of programs or production of services, as a rule, for the society as a whole.
Second, these differences include the nature of the objectives. While private firms set and pursue their own goals, the government agencies serve the public interest, realize the goals set by the legislative bodies; their activities are regulated by government regulations or legislation. Therefore, the criteria for evaluating the effectiveness of these types of management are also different. In the private sector, the internal criteria are applied such as income and expenses, gains and losses, ROI, and the public sector applies a number of external criteria, such as social welfare, assessment from legislative bodies, courts, government, political parties and the society as a whole (Zeffane, 1994). Hence, the complex problems of public management like responsibility, measurability, accountability and evaluation of the effectiveness of the results.
Third, it is about the level of “competition”. Private organizations, by definition, operate in conditions of rough competition (with all its consequences), while many government agencies are monopolies (Zeffane, 1994). This is the reason why government (and public) organizations can exist for a long time not providing high quality services. With a relatively long pre-history, they eventually cease to be worried about the essence of the final results of their activities and are more concerned with the process of obtaining estimates of these results (Starling, 2003). In other words, a well-prepared report, memorandum on (or over) the result are often more important for them than its quality.
Fourth, there are differences in the scale of management. While the public management affects the whole society, the management of organizations in the private sector is in most cases limited by the inner frame and the closest elements of the external competitive environment (Zeffane, 1994).
Evaluation of the effectiveness is associated with the problems of accountability and responsibility. And they are mostly characteristic of the public sector and emerge from a conflict of values satisfied (maximized or minimized) in the process of management. Here there are difficulties with the measurability occur. Moreover, the existence of three branches of government and multiple hierarchical levels of government management, public institutions and civil societies (with their sets of values and means of control) significantly increases the “volume” of the measurement task and complicates the procedure of evaluating the actions of the government as the subject of management of the national economy (Starling, 2003). Consequently, to be more effective in their position, managers in the public sector should develop the following skills: the effective personnel management with considerations of the competence and motivation of each employee, the understanding of factors affecting the motivation of subordinates, colleagues, partners and senior management; the ability to act objectively and efficiently in force majeure situations.