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Primary Differences of the Role of Business Administration in the Public- Versus -the Private Sector

Role of Business Administration in the Public- Versus -the Private Sector, private versus Public debate, Role of Business Administration in the Public- Versus -the Private Sector, Has privatization and contracting out of government services had a positive or negative influence on the day-to-day operations of public administration entities?

Business administration is an important part of business structure which enables a smooth running of the business whether public or private in order to achieve its goals.

Business administration is an act of organizing people together so as to accomplish the desired business objectives (Rainey).

Business administration is the same as management and it entails organizing, planning, resourcing, controlling, and leading or directing people in a business in order to accomplish the set business goals and for effectiveness and efficient day-to-day operations.

Business privatization means transfer of business from public sector to private sector; business privatization creates more problems than it tackles. Contracting out involves retaining business ownership and overall control, but this employs operator from private sector (Cunha and Cooper, 201).

According to Cunha and Cooper, 1998 private and public business sectors are different in that business under public sector is managed and controlled by the government. Its policies are formulated and implemented by the government agencies and representatives unlike in private sector where policies are formulated and implemented by business individuals at the top who organize and manage the business (Cunha and Cooper, 204).

In public sector planning that entails deciding on what needs to be done in the future and generating plans for action is mainly done by the government while in private sector planning is carried out by individuals in the administration (Baldwin, 14).

Organizing in public sector business involves making optimum use of resources that are required for effective and successful business plans. This is carried out by the government unlike in private sector business whereby organization is done by individuals in the administration level (Rainey).

As argued by Gomez-Mejia, et.al, 2008 business administrators has the mandate of staffing by analyzing jobs, recruiting and hiring new individuals for the suitable job. In public sector, all this is done by specific government representatives from various government ministries unlike in private sector whereby individuals carries out these administrative duties, especially human resource manager who deals with this role of staffing (Gomez-Mejia, et.al, 89).
The primary role of business administration of controlling and monitoring business plans which requires modification in respect to the feedback in public sectors is done by the government while in the private sector it is done by individuals who are allocated the duty (Allison, 20).

As argued by Stinson (May/ June 2006) business privatization is a significant issue and has been discussed on journals, magazines and newspapers. Privatization of business is a complex, multifaceted issue and is often fraught with controversy making it a hot topic. Controversy of privatization has flared mostly in developing nations. Business privatization has both positive and negative influence on day-to-day operations (Stinson).

Privatization of business ensures that there is accountability of the locals with decision making at community level. Business privatization threatens advances towards women equality in labor market (Green, 640). Privatization results to low waged, few working rights, reduced health and welfare benefits, less predictable working hours, no pension coverage, more precious employment, heavier workload and generally there is more exploitative working conditions (Suggs, 154). Privatization transfers work from public paid realm to private realm of home. Privatization has low costs specifically labor costs (Green, 104).

According to World Bank, 1995 contracting also lowers the payment, it eliminates pensions, and vacations are cut off. Contraction results in heavy, exhausting and hazardous workload (World Bank). Privatization of business reduces drain of government resources leading to loss of state owned enterprise and it establishes greater opportunities for the private sectors in expanding and modernizing the business (Stinson). Private sector businesses are more efficient and effective than public sectors and the quality of competition improves invariably. Social impacts of privatization are appendage instead of being built into the public sector design of reform programs and specific measures from the start to the finish (Bishop, et.al, 128).

According to Ayres, 1995 business privatization serves at a strategic level whereby it helps business to work on the activities represented by its core expertise. Privatization is a better tool of eliminating Department from those activities that are inherently governmental functions thus improving management of the remaining activities, reducing business costs, shifting greater performances and financial risks to private sectors (Ayres, 37).

As argued by Johnson and Seidenstat, February 2007, utilization of private sectors in offering services is crucial in the movement towards government reformation and the objective is to contain costs improve quality and increase business productivity. Businesses make choices on the type of privatization to be employed. For privatization to work, various important factors should be present in optimization, bidding process should be competitive and the contract must be carefully structured. Contracting without careful specification of the service quality can result in poor services. If contracting out is properly managed, there is a strong force of delivering a greater efficiency and effectiveness (Johnson and Seidenstat, 231)

According to Hirsch and Osborne, 2000 even when efficiency gains are expected from contracting out municipal services, it rarely happens. Political pressure from interest groups, more so unions is usually assumed to be responsible. Services transparency is as a result of this pressure which determines voter’s knowledge on the quality and costs of the services together with tax burden (Hirsch and Osborne, 316).

The government produces nothing without contracting with private sectors. People are contracted to offer their services because they expect to better off than they would in an alternative job. This bureaucratic job has various benefits such as pleasure received from helping in producing what is perceived by bureaucratic to be public interest as well as a good living in supporting family, job security and perhaps pressure from being in a position of authority and power (Bruce). Contracting out services maximizes price for firms thus producing services at low costs but these firms may not be effective in allocating efficient sense (Kostadinov).

According to Pack, 1989 contracts of the local government are done in cutting out the cost of providing services and employing specialized skills and resources that are unavailable within the government (Pack, 11). Contacting affects only 5-10 percent of public employees and there are low public assistance payments that are laid off for workers. Private contractors pay lower wages and offers lower fringe benefits (Sclar, 102). It is not accurate to conclude that managers of private industries are held to higher standards of accountability than their counterparts in public administration. This is because after a cross view on private versus public sectors it shows that it is more lucrative to work in public than in a private company (Parker and Saal, 150).

In conclusion, Business administration is the same as management and it entails organizing, planning, resourcing, controlling, and leading or directing people in a business in order to accomplish the set business goals and for effectiveness and efficient day-to-day operations.

Contracting out government services has increased whereby government selects profit firm among the set bidders. Internal government agency competes with private sector to offer services. Privatization of business ensures that there is accountability of the workers. There is always a debate on how most government businesses are looking forward for privatization of their businesses.


Works Cited
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2. Ayres, Roy, (1995), “Privatization and Distributional Equity: the Case of Brazil”, International Journal of Social Economics, Vol. 22 No.12, pp.36-49, 1995
3. Bishop, Michael, Kay, John, Mayer, Charles, Privatization and Economic Performance, Oxford Press, Oxford, 1994
4. Baldwin Norman, “Perception of Public versus Private Sector Personnel and Informal Red Tape: Their Impact on Motivation,” The American Review of Public Administration, Vol. 20, No. 1, pp. 7-28, 1990
5. Bruce Benson, Privatization Versus Contracting out, August 19, 2007 accessed on September 3, 2008 from http://www.cato-unbound.org/2007/08/19/bruce-l-benson/privatization-versus-contracting-out/
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About the author or the publisher
-International Counsel & LAW SOCIETY OF UPPER CANADA and Ghana (Barrister - Solicitor)
-BA, BS, MA, LLB, LLD, MBA & PhD
President-Founder of NPPPC in D R Congo

www.npppc.org

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