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Research
Paper on Public and Private Organizations
The Cambridge dictionary defines
organisation as “a group of people who work together in a
structured way for a shaped purpose”. (Cambridge International
Dictionary of English, 1995) It can also be termed as an
assemblage of people under the charter of government to
associate together for a common purpose called organisation. The
charter legally permits the organisation to buy and sell
property, enter into contracts, sue and be sued, and borrow and
lend the money. Its also entitle organisation to certain
privileges.
Organisations are of different natures and have their specific
aims and goals according to which they operate within their
jurisdiction. Modern day organisations operate either in public
or private sectors. The organisations working in private sector
are owned by a single proprietor or on partnership or a group of
directors. The public sector organisations are public limited
companies that are registered under a companies Act and invites
general public to subscribe its shares and debentures. The two
entities are defined in dictionary of Economics as:
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Public Limited Company
Public limited company is “An independent business organisation
owned by a government and subject to some political control”.
(Rutherford, 1992) Those organisations fall in the category of
public sector organisations where the government exercises some
level of control to check and stream line the affairs. Even the
limited interference enables the government to render this
sector service oriented, efficient and effective. Governed by a
board of directors in an independent manner makes the running of
organisation smooth. Despite this independence the government
keep a check under the umbrella of a set of business rules to
monitor the contra public interest activities and to calculate
its financial risks as well. (Public Corporation, 2002) In UK,
reforms have been introduced in public sector during 1980s
“sought to bring private sector disciplines to bear on the way
public services are run.” (British Council)
Private Enterprises
“Under private enterprises, the capital is owned principally by
individuals or non-governmental organisations and its major
decisions, especially on investment, the scale of production and
prices are chosen by the firm itself, with government providing
a framework for the activity of the enterprise rather than
participating in the firm’s decision-making”. (Rutherford, 1992)
Individuals are responsible to form the private sector
organisations. The sole aim behind the creation of this
organisation is to earn its share out of the market in a perfect
and imperfect competition. Private individuals and entrepreneurs
establish these organisations under a government prescribed rule
of business but free from government regulations, procedures and
interference. Cost conscious and profit oriented in nature these
are the most viable entities in today’s business run.
In the United Kingdom the Public Limited Companies is known as
nationalised industries or public corporations. The main aim of
taking firms in public sector is a result of the desire to
achieve a better allocation of goods and services the market can
produce, to alter distribution of income, to aid macroeconomics
policy by having direct control over basic industries, to
exploit for the country as a whole the benefits of natural
monopoly and to advance socialism. In order to encourage public
enterprises to be efficient, various goals are set for them. The
most common being the requirement to achieve a minimum rate of
return to capital employed and to price according to the
marginal cost of producing their goods and services.
(Rutherford, 1992) These companies are strictly regulated by
government Acts, “the main objective of which has been to
protect the public from fraudulent activities”. (Taylor, 1974)
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Similarities and Differences
Over the years the difference gap between the pubic and private
sector organisations has been diminished to a considerable
extent in all most all areas of activities. Huge in its size and
less efficient in performance, the public sector organisations
now with the passage of time have gone through tremendous
reforms and restructuring. The level of corrupt practices has
also been brought under significant check and control. The
lethargic behaviour and the bureaucratic delays in the name of
procedures now are under constant watch of the supervisory
bodies. Cost effectiveness and more friendly approach towards
the users of public sector organisation’s products and services
have elevated the image of these organisations manifold.
Competition with private sector has turned these public sector
entities more careful, sensitive and responsible. To secure its
stacks the lender financial institutions also lid down numerous
business procedure from time to time and forced public sector
organisations to reform it in line with these directives and
guide lines. These steps enhanced the efficiency and growth rate
of these bodies and brought them at par with private sector
enterprises. Since its very conception and inception the private
sector organisations were cost conscious and profit oriented and
therefore, did well. From the day one, they were enjoying an
edge over the public sector organisations in all areas of
exercises. Its employees were highly paid and more professional
and have been always treated with ‘carrot and stick’ philosophy.
On the job trainings and orientation proved useful in enhancing
the efficiency and response of private sector organisations’
professional lot. Easy procedures, quick decisions-making and
future vision remained the hallmark of the private sector
organisations. “Only a small number of people take part in
decision-making”. (Pitfield, ACIS. 1983) This edge always proved
a distinct feature between the public and private sector
organisations. The global economic slump, insecurities after the
11th black Tuesday and the laying-off of employees has shaken
the private sector adversely. “September 11 revealed major
recovery problems”. (The Bridge, Issue 5, July 2002) This
scenario has benefited the public sector organisations largely
in many accounts. The joining of private entrepreneur’s
professional of public sector organization on even lowest perk
and privileges has boosted its performance. A very classical
example of one such shift is enough to through light on this
phenomenon.” Debbie Ellis was not even trying to switch to the
public sector when she saw the advertisement for her current
job, executive director for customer and staff relations at
Surrey County Council. "It was not something I had consciously
thought about, and it wasn't that I was insecure in the private
sector or anything. What caught my eye was the advertisement
that said 'do you want to treat people in the way that you want
to be treated yourself?” says Ms Ellis, 41.
Before making the transition in January she had spent more than
20 years working in the private sector, most recently as general
manager of the Stansted Express and before that within customer
services at British Airways.
Her current job, which was a new position for the council, gave
her the opportunity to start with a blank sheet of paper, a
staff of 160 and a budget of about £5.5m. Her mission is to
create a new ethos.
The biggest difference is the fact that she reports to an
executive, in the shape of the council, rather than making
decisions herself. "To all intents and purposes you are in a
non- executive role, and quite rightly because the executive is
elected. That's a shift you have to make, and was not something
I had realised," she says. "But there are many more similarities
between the two sectors than I would ever have given credit
for."
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Although she lost the bonuses and perks she would have expected
if she had stayed in the private sector, the final salary
pension proved a real attraction. "The public sector is becoming
increasingly comparable with the private sector," she says. And
the more people who make the transition, the less unusual it
becomes. "I have just appointed a head of communications who has
come from Barclays. Part of the confidence factor for her coming
over was the fact that I was already there," she says.” (Paton,
Nic. October 5, 2002)
The tendency of this joining can be evaluated from the following
fact. “According to the latest quarterly survey from recruitment
agency Manpower, employment prospects in the public sector are
currently "buoyant", with health, public administration and
defence organisations all reporting record demand, while the
same quarter last year was a 10-year high. Official statistics
published last year showed the public sector creating more jobs
than the private sector for the first time since 1977”. (Paton,
Nic. October 5, 2002)
To reward the joined professionals and to attract more, the pay
structure is on constant revise. “While generally still lower
than in the private sector, public sector pay is currently
rising at around 3.5% to 4%, compared with 2% to 3% in the
private sector, according to Income Data Services. Top level
positions will commonly command six-figure salaries which, when
share options are worthless and this year's bonus is minuscule,
can be an increasingly attractive reason to move.” (Paton, Nic.
October 5, 2002)
This shift is more visible in teaching discipline. As this “One
area seeing a lot of private-public transfer is teaching. During
the summer teacher training colleges reported a 12% rise in
teacher training applications. Some 31,000 people started
government-funded courses last year, with more than 21,000 of
these coming in at postgraduate level.” (Paton, Nic. October 5,
2002) These continued shifts heralding a new era of economic
realisation and posing the question of survival of the fittest
to both public and private sector organisations.
Conclusion
The public–private sector tale is continued from the day one
when first man handed-over a fish to another fellow in return
for an apple which marked the barter trade system beginning.
The striking question of what will happen next and when, with
respect to these two phenomenon-public-private sector invasions,
which is continued on the round, bugs many minds. The answer is
not easy and neither has it rested on a single factor. Due to
the increasing global trade between nations and the ever-growing
political manipulation and influence of business tycoons, the
situation will tilt in the favour of private sector entities.
Private sector is another name of cost and profit philosophy
culture and its business leaders have a vision of future and its
rebound or its stability or to check the current trend is not
that much a difficult task to be tackled with. The basic
difference between the two sectors is the deference of nature.
Some time the public sector organisations proved as white
elephant and shield it’s self while labelling itself as service-centred
entities. “Performance review systems are not the underlying
cause of the differences in performance marks. The main issues
were how people were managed, valued and developed”. (Civil
Service Leading The Way On Diversity and Equality, 26 June 2001)
The conclusion we can easily draw is that the balance will shift
in favour of private sector entrepreneurs as soon as the global
political dusts settle.
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References
Cambridge International Dictionary of English, (1995) Cambridge
University Press,
Civil Service Leading The Way On Diversity And Equality, 26 June
2001, http://www.cabinet-office.gov.uk/2001/news/010626_leadingtheway.htm
Paton, Nic, (October 5, 2002) “The Guardian”,
Pitfield, Ronald R. (1983), Company Practice, Made simple books,
Heinemann, London.
Public Corporation, Encarta Encyclopaedia (2002), 1993-2001
Microsoft Corporation
British Council, Public sector reform in Britain, http://www.britishcouncil.org/governance/manag/reform/psref06.htm
Rutherford, Donald (1992), Dictionary of Economics. Routledge,
London,
Taylor, Philip A S. (1974) A new Dictionary of Economics.
Routledge and Kegan Paul, London,
The Bridge - Raising Issues for the Public Sector, Issue 5, July
2002, http://www.smsmt.com/articles/article363.asp
Office of Deputy Prime Minister, Working Together: Effective
Partnering Between Local Government and Business for Service
Delivery. 19 December 2001, http://www.local-regions.odpm.gov.uk/partner/02.htm
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