Governmental Organizations vs Major Corporations - Why They Both Fail in the Same Ways - Literature review Example

Introduction

Both governmental organizations and large corporates across the world account for the better statistics in employment, income, and services among other economic development programs. However, behind the impressive image of the two types of organizations are significant management issues which have seen their failure in the recent past. Improper management has seen many corporate insolvencies and dissolution of government organizations since the late 20th century. The failure of organizations stems from development programs, which true to their nature usually attracts complex decision-making processes and precise allocation of resources, sometimes to meet short timelines in order to ensure the programs’ success. Both corporations and government organizations face multiple management problems related to strategic planning, allocation of finances, staffing, and management of these organizational assets to improve organizational growth.

Both organizations also struggle managing their relationships with other players in the market including the political establishment, the private sector, other organizations in the market and the publics. The relationships usually arise where the two types of organizations manage development (Reeves, Levin, & Ueda, 2016). The success of the organizations as players in development within society depends on effective integration of the input of both the internal and external players in development programs. Success of the organizations also depends on the articulation of pertinent issues affecting both their internal processes and the outside world. This paper will compare the failings of governmental organizations and large corporations while focusing on the mechanisms and inhibitors of failure and prescribe meaningful methods for change.

General operational issues

Organizational problems are the primary failing of corporate bodies and government organizations. Klein (2000) pointed out that decision-making processes present serious challenges to the two organizations, leading to inappropriate allocation of resources and slowed development. In both organizations, tensions usually occur between junior employees and senior executives because of failure to involve the former parties in important decision-making processes as they naturally expect. Whereas the spirit of inclusivity in decision-making processes is a vital element of good organizational governance, time constraints normally result in junior staffs being left out of the process. As a consequence they tend to resist change, hampering development.

Another failing of both organizations relates to the lack of cordial relationship between members of the board and the employees. The problem arises mainly from the inability of the boards to carry out their duties of administering the organizations based on proven methods. Board members are either preoccupied with other responsibilities or they lack the knowledge required to conduct these duties in an effective manner (Reeves, Levin, & Ueda, 2016). According to Hockerts (2015) most board members in both state organizations and corporates are former civil servants or politicians or church ministers or any other influential individuals in society who have very limited knowledge about the running of business organizations. As a consequence, senior staffs of both organizations are usually left to create policies whose implications they know very little about. The only difference between government organizations and corporates, especially when it comes to constituting the boards is that whereas the former tend to be political appointees, the bulk of the latter boards are constituted by company owners and their associates (Klein, 2000).

Reeves, Levin and Ueda (2016) pointed out that most large corporations are managed by self-perpetuating, mainly self-appointing directors. As such, balancing society interests and short-term gains contributing to the sustainability of the organization remains a major problem for both organizations. Interestingly, whereas government organizations tend to be more interested in investing heavily in social responsibility programs, doing so has reduced their profit margins leading to their failure. On the other hand, corporate executives are generally keen on advancing their profits, which has made them miss out on the opportunity to enjoy long-term gains of their businesses.

Staffingproblems

Staffing is also a major point of failure of both government organizations and corporates. If staffing is managed properly, it can be a major inhibitor or failure of both organizations. While corporates tend to hire the finest staffs on the job market and take them through constant training and deployment, the process is generally costly. Layoffs and constant reorganization of the human resources management to ensure that they are in tandem with current needs in the world usually eats into the profits that have already been made. In contrast, government organizations are poorer at staff enlisting and career development. Klein (2000) noted that apart from minimal staff transfers and higher level of job security in government organizations, most staffs in those organizations are less motivated because they earn less than their counterparts in corporates.

Lack of proper budgeting for employee training is also a major failure, especially in government organizations. While staff training is a major aspect of managing corporate staffs and that substantial resources are normally utilized to achieve the objective, the need to cut costs and higher pressure upon the staffs usually leads to higher likelihoods of employee loses (Hockerts, 2015). In contrast, in most government organizations the level of productivity is slowed by staffs that are not up to speed with current trends in the increasingly globalizing world. The latter organizations are however less worried about costly employee training and or turnover, hence their realization of higher level of consistency in the delivery of goods and services.

In circumstances where either the government or corporate organizations are undergoing rapid expansion, the less-skilled employees in government organizations and the better-skilled, but unstable staffs in the latter organization usually creates problems for both organizations in their respects (Klein, 2000). While the less-skilled and lowly motivated government organization staffs tend to be less enthusiastic about making adequate responses to the challenges of business in the current century, the better-motivated staffs of corporate organizations usually fail due to the uncertainty of their jobs. This is because their lucrative pay and expensive training programs are basically unsustainable in the long-term, hence leading to organizational failure (Hockerts, 2015). Despite the complexity of staff maintenance, organizations that allocate reasonable resources to employee staffing and remuneration programs usually stem most failures.

Revenue management

Revenue management is also a source of failure for both corporate bodies and government organizations (Reeves, Levin, & Ueda, 2016). Owing to the higher level of bureaucracy in government organizations and mainly centralized revenue management systems in corporate bodies, the lack of independence on policy issues relating to collection and use of revenues is a source of failure. This is especially true because in both cases, implementing decisions that require urgent responses is normally practically impossible at the lower levels of the organizations. As a consequence, field staffs working in both organizations usually feel neglected. They normally feel a lack of appreciation of the challenges they face on the field, which normally arises from inadequate budgetary allocation for field events among other issues. As a consequence, Hockerts (2015) suggested that they often find it hard to follow the directives issued by the head offices. Similarly, headquarter staff in corporates and members of the highest policy-making organs of government organizations feel that the staffs at the grassroots level have enough financial resources to utilize for in development programs undertaken by their respective organizations.

Funding large organizational networks which is typical of large corporate and government organizations demands substantial revenue collection efforts. While major sources of funding for government organizations originate from government grants and internal commodity sales, corporates depend solely on commodity sales for revenue. So while government organizations tend to struggle being sustainable because they expect financial support from government, which is sometimes inadequate, corporates usually fail because their products are usually avoided by consumers who believe they are too expensive to use (Reeves, Levin, & Ueda, 2016). Nonetheless, both government organizations and corporate bodies can inhibit their failings in revenue management by investing more resources in financial and management staffs, expanding institutional capacity, increasing the level of self-sufficiency, improving inter-organizational relations and coordination, and sponsoring more research on the wider social or economic issues facing the organization in question and the society at large (Hockerts, 2015). In addition, maintaining a close working relationship with field staffs through regular audits of their activities can effectively result in adequate budgetary allocations and greater level of accountability to curb organizational failure.

Partisan management

Both large corporate bodies and government organizations are failing because of problems with managing their growth. Once corporates or government organizations are successful, they usually face difficulties replacing the culture of one-party management with a more elaborate and institutionalized structure. In most cases, founders of corporate organizations tend to take total control of the activities of their business (Hockerts, 2015). In such situations, persuading the founder to set up an independent team of managers or to honor the mandate and independence of executive teams is normally difficult. Similarly, government organizations tend to be run based on the policies of the government in place, so they tend to struggle coping up when a new government assumes office.

In both cases the founders’ ethos or government policies and ideologies usually present severe challenges to the formal culture of organizations. Interestingly, whereas government organizations are naturally led by mainly political appointees, too much delivery on public interests may result in losses among many government organizations (Klein, 2000). For corporates, the problem lies in the lack of accountability among the highest decision-makers, which then results in policy decisions being forced upon the subordinate staffs and other stakeholders within the organizations. Regardless, conducting regular in-house audits of policy decisions and involving different stakeholders in decision-making processes can be an important inhibitor of organizational failure, especially in corporate organizations (Hockerts, 2015). On the other hand, detaching government organizations from political influence can substantially inhibit failure by cushioning the organizations from rapidly changes in policies and overwhelming public interest.

The appraisal problem

Many organizations fail because of poor appraisal mechanisms for their processes. The appraisal problem is relatively easier in government organizations because: they usually conduct routine activities; the goals of the business are limited and clear; there is semblance between short-term outputs and long-term effects. In addition, outputs in government organizations are measurable relatively easily and consistently without any interference with the primary goals. Nonetheless, owing to globalization and the need to remain competitive, many government organizations which were previously simple are increasingly becoming more difficult to appraise, hence their failure. In contrast, corporate managers are increasingly facing even more serious challenges appraising their businesses whose activities are naturally new rather than unchanging. Gereffi and Lee (2016) noted that the intangible nature of the goals of current-day organizations such as altering consumer awareness or the varying ideologies of policymakers on how business should be conducted present challenges formulating new appraisal strategies that can reduce waste and enhance their productivity. In spite of the challenges, both corporate bodies and government organizations can inhibit failure arising from inappropriate ways of appraisal by establishing more effective appraisal mechanisms which support the capacity to work independently (Hockerts, 2015). The move would enable the teams to formulate unique ways to fast-track growth and limit any excesses in their respective systems.

The economies of scale issue

It is arguable that large corporations have access to easy and affordable expert knowledge they need to keep their internal processes beyond reproach. Government organizations also have access to a wide range of resources along that line (Ivanov, 2011). The problem then arises from the channeling of inadequate government resources towards business development and over-expectations of success. For corporations, the experimental culture usually blurs the line between the real organizational culture and the best ways to improve the economy of scale. Regardless, regular appraisals and the adoption of minimum modifications to proven strategies are the most effective ways to maximize the productivity of the experts and inhibit failure.

Solutions to the organizational problems

Despite the inability of many large corporate bodies and government organizations to remain sustainable, maintain a good public image and conduct effective internal audits of the processes, there are a number of solutions to the problems (Gereffi, & Lee, 2016). First, decentralization of the processes to the lower organizational levels is a proven way to enhance quicker decision-making at the grassroots level. The strategy also eliminates possible misunderstandings between field officers and members of the head office regarding budgetary allocations and accountability for the limited resources. Although decentralization of management can enhance the size of bureaucracies and open up new avenues to more expenditure, with fewer supervisors at the local level both corporate and government organizations can improve the productivity of their activities at the local level. The strategy can also balance the interests of the different parties who each believe they have a right to chart the destiny of the organization.

Secondly, although most government organizations usually enjoy better relations with government agencies than corporates by virtue of their founding, there is need to adopt confrontational, corresponding or collaborative strategic liaisons with government in different situations for greater sustainability (Ivanov, 2011). These strategic options determine how the revenues can be best managed and also which priorities should precede others. A confrontational relationship with the government, for example, can enable corporate bodies facing dwindling profits to continue providing quality goods and services at slightly higher prices in order to secure their sustainability.

Thirdly, institutionalizing decision-making processes is also a proven way to root out half-baked decisions on spending, revenue collection, expansion programs and unfair influence from founders or the political elite particularly for state organizations. Klein (2000) noted that institutionalization of organizations usually fosters the input of all stakeholders within society in practical decision-making and in supporting both inter and intra-business collaboration. Gereffi and Lee (2016) pointed out that with information exchange among key stakeholders, staff preparation and capacity building the organizations would overcome the bulk of failures, which may arise from improper engagement of key departments of the organization.

Fourthly, although centralization of authority is imperative to the formulation and implementation of consistent policies, both corporate and government organizations can maintain their consistency by setting up a network of offices across the market. These offices would operate in a complimentary manner with the coordinating head office in a manner that allows them the autonomy to operate more effectively without forfeiting the element of accountability (Ivanov, 2011). In addition, proper coordination of the assets of both types of organization cannot happen in vacuum; that is, every organization should take its staffs through regular training in order for them to contribute more effectively in decision making processes in a dynamic manner.

Conclusion

Both corporate and governmental organizations have become prominent organizational players in development programs and economic empowerment in the world. However, important questions are gradually being asked about their sustainability following the real risk of their collapse in the currently competitive business environment. Although, the functions of the two types of organizations are well captured in literature and known to the executives, many still struggle to survive due to inherent operational failures. Staffing problems, improper allocation of resources, lack of accountability and aloofness from the prevailing dynamics in the market are some of the recipes for failure. Improper allocation of budgets to short-term programs, for example, is the primary weakness of many corporates in the long-term. By contrast, government organizations mainly have routine processes, which place them on a higher pedestal regarding the pursuit of long-term gains and organizational sustainability. As such, effective running of both organizations should be based on strong internal institutions, effective organizational relationship with the publics and the government, proper accountability and performance appraisals, proper staffing, training and remuneration and institutionalization of decision-making processes.