Most authors differentiate public administration and private administration by educational institutions (public schools vs. private schools). Although it’s a good example to provide a comprehensive analysis between the two sectors, I found it not the quintessence for a comparative analysis. Historically, in our country, public schools have a much higher quality education than private schools, and studying economics and public administration, it is not just the nature of bureaucracies, nor the scope of public administration that the case today was reversed. While some authors identified over a dozen factors that differentiates public to private administration, Denhardt only speaks of the three fundamental differences between the two. In this paper, I would elaborate Denhardt’s three points since, together with economist Boadway’s Difference between Public and Private Sector, I found these as the most undisputable and concrete comparisons.
The most apparent difference between the two sectors is their organizing principles or goal. (Denhardt) While private administration has a definite mission, which is the pursuit of profit or stability or growth of revenues, public administration, on the other hand, has ambiguous purposes. Furthermore, the dilemma in ambiguity of purposes is exacerbated by too many unnecessary and inoperable agencies, with purposes that overlap and bloated bureaucracies. One might say that the goal of public administration is to enact public policies, but the overlapping and the main ambiguity of most of these policies, and the vagueness of the enactment of these policies make public administration’s purpose to be more ambiguous. Nevertheless, the fact that public institutions are not profit driven, should not lead us to believe that public sector employees and managers are not concerned about financial matters. As is the case with private companies, public sector units and organizations fight for funding and influence.
Another factor that makes the public sector different from the private is decision making. (Denhradt) In public administration, the decision must be and should be pluralistic. The founding fathers intentionally created a democratic republic where all key decisions are made in politicized environment. This allows for maximum participation: open debate, multiple veto points – a decision making hierarchy where consensus must be achieved at each level, ideally, an informed decision. While private administration’s decision-making is much more simple- it’s monopolistic or close to monopolistic. This type of decision-making would avoid any conflicts in interest; hence, the goal is clearly defined.
The visibility of public administrators is another notable difference between public and private sector. While a manager in a private business may work in relative obscurity, the public manager must operate in the public eye. His or her actions are constantly subjected to public scrutiny. (Denhardt) The publicness of the work of the public manager doesn’t end in merely carrying out public policy, the public manager has to respond to the demands of the public. Denhardt speaks of the “inevitable tension” between efficiency and responsiveness, the pressure to manage effectively and to be simultaneously responsive to public concerns. This pressure often leaves public organizations in a “no-win” situation, trying to serve a public that demands effective government but balks at paying for it (taxes). The public also demands accountability in government, an assurance that those who formulate, implement and administer public programs will act responsibly.
One quality that makes public sector different from private is in the form of unit analysis. (Boadway) Apart from publicly owned-companies, most public institutions are part of a larger chain of command and control where it is harder to draw a line between the different parts of the system- and where legal frameworks provide little help in this. For instance: public agencies- like research councils or directorates of health- interact closely with ministries as well as subordinate institution and “users”. The innovation activities in these institutions are heavily influenced by decisions made above and below the chain of commands. The closest parallel to private sector will be large conglomerates or multinational companies. The complex system of organizations with various (and to some extent conflicting) tasks, is one of the reasons for the inefficiency of public administration. Although, some authors in public administration, such Woodrow Wilson in The Study of Public Administration, where he reiterated that the evolution of public administration together with its complex system and increasing number of bureaucracies is to complement the population growth, but a population with sufficient number of agencies to manage them and with high marginal productivity for each public employee, is better than a bloated bureaucracy with little or zero marginal productivity, and worse, unnecessary and redundant purpose.
Lastly, although political aspect is both apparent in public and private sector, political aspect is more important in the public than in the private sector. Policy decisions normally affect companies directly and indirectly, through laws, regulations and financial support. The public sector is at least formally controlled by elected politicians. The intimate link between this governance dimension and funding of current expenses of the activities implies a very strong link between ownership and control on the one hand and the growth strategies of the subsidiary organizations.