What is the difference between public and private administration?
The foundational elements of administration (the running of an organization) are the same whether in the private or public sector. However, administrative form and style vary dramatically between these two extremely different spheres of operation.
Take the lead in administration. Central Michigan University offers both public and business administration majors. With our accelerated plan, you can earn your bachelor’s and MPA or MBA degrees in just five years.
What is public administration?
Because it involves the institution, integration, application and oversight of policies and programs formulated by a government entity, public administration performs governmental undertakings that assist citizens, maintain infrastructure and otherwise further the general public’s best interests. Public administration also regulates and governs activities in the private business world.
For these reasons, public administrators can benefit from a field of study that differs dramatically from the traditional Master of Business Administration. Central Michigan University offers a wide range of governmental and public service degrees through its Political Science and Public Administration departments, including a Master of Public Administration degree that prepares students for careers as public and nonprofit sector leaders.
What is private administration?
Carried out by private business enterprises, private administration is generally non-political in nature. While some public administrators may be concerned with collecting and generating monetary funds, profit is the primary motive of all private administrators.
Of course, private administrators cannot lead profitable businesses without considering the best interests of customers, clients, employees, partners and shareholders. While this requires significant attention to a range of service elements, the service motive is certainly secondary in the private sector. Many private businesses also operate under fairly strict operational restrictions, but regular governance is typically more prevalent in public administration.
What are the key differences between public and private administration?
Beyond the general conceptional and structural distinctions outlined above, public and private administration differ in these specific ways:
According to Key Differences, public administration is a political process for managing resources to achieve the government’s purposes. Private administration is a business activity dedicated to “the operation, management and organization” of a business enterprise.
Public administration should operate in the public’s best interest, while private administration is primarily geared toward the generation of profits and the financial health of a single company. This means that the primary purview and purpose of private administration is rather limited in scope. In contrast, public administration strives to protect and advance the welfare of all people within a specific governmental jurisdiction. This relatively broad perspective has far-reaching implications. In the words of the advanced public administration education group Higher Study, “the goal of public administration is to improve the effectiveness of justice, equality, public service and efficiency, as well as to strengthen engagement with democratic values.”
Although private organizations must operate within the law, the only internal rules governing these organizations are created and enforced by their administrators and can be relatively quickly amended and refined at any time. Public organizations, by contrast, are strictly governed by statutory law as put in place by a particular political authority. This statuary legal framework furthers ethical behavior and promotes transparency but can severely restrict administrative activities.
Private administrators have no inherent responsibility to act in the general population’s best interests. They are accountable to shareholders to generate maximum profits and serve their customers by boosting their financial bottom line. However, public accountability is, as the School of Political Science puts it, “the backbone of public administration.” The educational platform explains: “The government is accountable to the people for errors in public administration. The failure or success of the government depends on the failure or success of the public administration. Public administration is directly accountable to the government and indirectly accountable to the citizens.”
Succinctly put, public administration requires a bureaucratic approach, while private administration requires an egalitarian approach. The bureaucratic process organizes and manages operations using a hierarchical authoritative system that divides tasks according to expertise and stresses strict adherence to rules and procedures. Although hierarchies also exist in the private sector, they often adopt a highly egalitarian approach that can give the largest number of people an equal say in decision-making processes. The egalitarian approach benefits from a broad spectrum of ideas but risks falling into dysfunction due to its reliance on personal relationships that often falter.
Revenue or Income
Private organizations generate profits by selling products and services to the public. Revenue and income generation is their primary motive and reason for existence. Public organizations, by contrast, generally acquire or generate revenue as a secondary motive only. This revenue typically comes from public taxes, duties, levies and fees imposed on individual citizens and regional businesses.
Is there a single citizen who doesn’t benefit from the services of public administration? From the food we buy to the schools we attend and the roads we travel on, the scope of public administration is multifaceted and vast. In comparison, the scope of private administration is significantly more precisely targeted. In short, the leaders of private businesses are obligated to maintain a laser-like focus on sectors with significant profit potential. This generally means centering attention exclusively on goods and services that make money and the consumers willing and able to pay for them.
Freedom of Action
“Freedom of action” is defined by the latitude that administrators have to make decisions or respond to a given set of circumstances. Because they are so heavily controlled by statutory law and government policies and procedures, public administrators have relatively limited freedom of action. Private administrators, however, are largely unburdened by bureaucratic red tape. Therefore, they are free to make decisions relatively quickly and as they see fit.
The School of Political Science calls political character “the most important thing which differentiates public administration from private administration.” Primarily tasked with implementing public policies, public administration is almost exclusively driven by political direction and official regulation. Conversely, private administration is largely separated from and unaffected by politics. In fact, it’s connection to the political climate is restricted to the few policies and regulations that influence specific and relevant market forces.
Control by Economic Interests
In most cases, public administration operates independently of economic interests. Because defending and furthering public interest is its primary directive, it places no particular importance on revenue or income generation. On the other hand, profit-making and financial gain are of the utmost importance to private administrators. Therefore, private administration is beholden to a wide range of market concerns as well as the ongoing fluctuations of the economy as a whole.
While they may differ dramatically in terms of structural form and operational style, both public and private administration play essential roles in creating and sustaining a functional capitalistic society. Both also require special education and training. Contact Central Michigan University today to learn more about our comprehensive NASPAA accredited Master of Public Administration degree if you’re interested in finding out what it takes to succeed in public administration. If private administration is your goal, we also have an excellent AACSB accredited Master of Business Administration program.