Fundamental Management Functions
There are many similarities and differences in the administration of public or private sectors. These similarities begin at the mission level in which both sectors strive to achieve goals through the administration process. The largest difference between public and private sector, begin at this level with regard to the difference of management. Public sector is managed by government and private sector is managed by groups of individual owners or managers (Cunha and Cooper, 1998). This difference in management provides each sector with different mission priorities and slightly different goals, but the process of achieving these goals remain very similar.
The administration of private and public sector entities both involve the same fundamental management functions of organizing, planning, resourcing, and controlling. Both private and public sectors must abide by these functions in order to accomplish goals and maintain effective and efficient day-to-day operations (Cunha and Cooper, 1998).
Within these functions, the differences between private and public sector become visible. For instance, organizing in the public sector involves making optimum use of resources in order to accomplish projects or agency missions. This organization often requires the same use of personnel and resource allocation as in the private sector. The difference in this function really is a measure of success. The private sector measures the success of a project in terms of profit whereas the public sector measures success in terms of outcome (Cunha and Cooper, 1998). This difference while subtle is at the same time important because it affects each of the functions of management. For instance, the process of planning would include creating a budget for a project. The budget within the public sector would be designed to deliver service to as many people as possible for the amount of money allocated. While in the private sector the budget would be designed to deliver service to as many people as possible for the least cost possible in order to garner profits (Cunha and Cooper, 1998).
Another area of business function that exemplifies this difference between public and private sector administration can be seen in the resourcing function. As part of the resourcing function of any business, human resources must hire people to fill positions (Gomez-Mejia, et.al, 2008). The difference between seeking outcome and profit becomes extremely apparent in the instance of human resources. Managers in the private sector seek to maximize profit whereas their government counterparts have notoriously sought to maximize outcomes. Often this difference is seen as government individuals seeking to spend every dime in a budget and although this has an element of truth to it, it is a gross overgeneralization. The fact is that government administrators attempt to maximize outcomes and they do this by maximizing dollars. Because budgets are constantly scrutinized surpluses (profits) are often seen negatively because this could be seen by administrators as over budgeting and thus decrease funding. For this reason, the traditional human resource role in government has always been viewed in a negative light. The hiring of personnel has been fraught with issues concerning ineffective hiring practices, inefficient managers, and negative organizational cultures. In essence many government managers and workers were hired and simply become agents of spending for the government. These inefficiencies in public HR practices became an increasing concern throughout the latter part of the twentieth century because of the increasing demand for public services (Cunha and Cooper, 1998).
In 1993 the Government Performance and Results Act’s (GPRA) was passed in order to address and bring accountability to public human resource management. The National Performance Review also known as the National Partnership for Reinventing Government, began initiatives, such as downsizing, reorganizing, streamlining, and delegating HR authorities. The delegating of those HR authorities was intended to improve HR’s ability to focus on organizational issues such as mission and bringing efficiency back into the public sector.
This change was focused in this manner such that HR could focus on aligning human resources management with agency mission accomplishment. However, the disconnection between management and HR soon became apparent as project planning and inefficiencies continued to plague the public sector. The disconnection was soon recognized as a separation of ideology that strikes at the purpose of HR in the public sector. Management views of HR were as administrative and clerical in nature, whereas HR considered itself an integral part of supporting basic company functions. This view would have to change and in order to accomplish this HR would have to strategically partner with management in order to achieve the results demanded by GPRA (U.S. Office of Personnel Management, 1999).
Not unlike the public sector the private sector had a growing need to strategically partner with Human Resource management. However, in many ways the private sector lags also in the collaborative efforts between management and HR. “A Pricewaterhouse-Coopers poll indicates that although 75 percent of the responding 70 companies reported that HR’s effectiveness is measured by its contribution to business results, only 27 percent include HR from the beginning of the business planning cycle. Further, 43 percent rated HR’s planning and policy effectiveness as only average while a mere 6 percent rated it as excellent (U.S. Office of Personnel Management, 1999).” Simply speaking human resource management has suffered the same disconnect from project planning and management collaboration as the public sector.
Unlike the public sector the private sector has been able to flourish in many ways without the benefit of HR collaboration since private companies have the ability to judge performance through profits. This economic difference gives private sector an advantage in that it can pinpoint problems of inefficiency by virtue of financial losses. Although this seems to be an advantage, this word should be used in the loosest definition. Is it really an advantage to hire and then look for financial losses? Obviously the private sector could enjoy increases through collaboration in HR and management.
The interesting and odd part of the comparison of public and private HR is that the public sector has increasingly benchmarked its practices to the private sector. The public sector might actually be able to surpass the private sector in efficiency if the ‘best practices’ of certain firms are incorporated into the public sector collaboration. The public sector has the benefit of decades of private organization’s success, failures, and research to help fine tune the HR and management collaboration (Condrey, 2005).
But one conflicting element to benchmarking the private sector is that the public sector is typically nonprofit and as such does not have the ability to practice many HR management ideas that the private sector enjoys. For instance, the inefficiency of public agencies cannot be measured in terms of profit loss. The differing economics highlights the fundamental differences between these sectors. By virtue of these differences the public sector will have to continue to seek some practices that are original in nature and that are engineered from within the organization.
Condrey, S.E. (2005). Radical civil service reform: ideology, politics, and policy. John Wiley & Sons, Inc.
Cunha, R. and Cooper, C. Journal of Applied Management Studies, Vol. 7, №2, pp.201–211, 1998
Gomez-Mejia, et.al, Management: People, Performance, Change (3rd Ed). New York, New York USA: McGraw-Hill, 2008
Rainey, H. “Comparing Public and Private Organizations,” Public Administration Review, March-April, 1976
U.S. Office of Personnel Management. (1999, September). Strategic human resources management: aligning with the mission. Retrieved from http://www.opm.gov/studies/alignnet.pdf
Vincent Triola. Tue, Mar 09, 2021. Roles of Administrators: Public & Private Sector Retrieved from https://vincenttriola.com/blogs/ten-years-of-academic-writing/roles-of-administrators-public-private-sector