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:
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)
“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)
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.
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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."
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.
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.
- 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