Can Private Sector Accountability Mechanisms Be Applied Effectively to the Public Sector - Essay Example

Private sector accountability versus public sector Name Institution Introduction It is common knowledge that most public companies are not as well managed as most private companies are. There are many reasons that are attributed to this but the basic one is that most of the private companies are profit oriented. They care about making a profit and their combination of inputs is done in such a manner that will allow for maximum output. In other words, the private sector utilizes the resources that are at their disposal in such a way that would lead to availability of maximum utility from the same (Wilkins 2002, p. 115). The public sector on the other hand has a definitively different approach to the way that they conduct their affairs. Lin and Streck (2009, p. 13) state that in most instances, there is a lot of laxity that exists in various government departments that makes the concept of accountability for the various issues they have become very complicated and sometimes this aspect of accountability is not handled to perfection. Every nation in the globe has a mixture of both the private as well as the public sectors (Mulgan 2002, p. 2). However, the management acumen in both of these sectors is very different. The private sector is said to have a higher degree of management efficiency and accountability in comparison to the public sector. This paper takes an illumination into the accountability concept in both the private as well as the public sectors. The paper tries to determine the various forms of accountability that could be observed as being existent in the private sector and applying the same to the public sector. Definitions of private and public sector To enable a concise analysis of the accountability concept here, this section provides the definitive difference between the private and the public sector. The private sector can be viewed as that sector where the players are private entities, individuals as well as corporations who come together to form a certain organization geared towards the attainment of a certain set objective. The objective in this case could be the creation of a business form that is geared towards generation of profits or the creation of an organization that is designed to assist the society in some form as a charitable organization or an NGO. Private entities or corporations are managed by private individuals they do not have any affiliation to the government. On the other hand, the public sector, as the name suggests are institutions that occur within the spheres of governmental control. Most of the institutions and organizations that the government creates fall under this category, technically, most of the public sector institutions, organizations and various facilities follow a utilitarian approach where these facilities are shared out for the benefit of all members of the society (Tuohy 2003, p. 196). Kluvers and Tippett (2010, p. 46) argue that because of this utilitarian factor in most of the public sector, the profitability quotient is not emphasized upon. Rather, the efficiency of utilization of the resources that these sectors have is the basic factor in this case. Most of these public sector institutions are judged on their effectiveness following the capacity to be able to utilize the resources at their disposal. Most times, the institutions and organizations that exist in the public sector act as channels through which the government is able to distribute resources to various people (Mulgan 2000, p. 90). This public utilitarian concept of many organizations in the public sector make these institutions lose their profitability concepts and thus resources may be used in a wasteful manner. In fact, research shows that wastage of resources is more prominent in the public institutions as compared to private institutions. The issue of accountability is also a major factor in many of these public institutions as compared to private ones. The ensuing paragraphs show how accountability is achieved in private sector and how it can be applied to the public sector with similar results. Minimal bureaucracy in the private sector In most instances, the affairs of many of the various institutions and organizations that are present in the private sector have little or minimal levels and scales of bureaucracy. Bureaucracy and red-tapings only contribute to lengthening of the process of handling different affairs and this often results into a blatant wastage of resources and time. In most organizations that are privately owned, the avenues of bureaucracy are very limited. The communication is very open in these organizations. Unlike in the public sector where levels of management have to be followed very strictly, in the private sector most of the people have the capacity to interact with other senior officers without fear of being accused of insubordination (Nutt 2005, p. 290). The senior staff members are very approachable by all other employees of the company. In most cases, these institutions provide incentives to their employees to become innovative and innovativeness is rewarded. This ensures that every one of the employee feels appreciated in their undertaking and this translates to heightened levels of accountability and productivity in the organization. On the other hand, the public sector has been known to be riddled with a lot of bureaucracy, red tapes and checks and balances (Romzek and Dubnick 1987, p. 236). These only serve to make the process become slower and in many cases very inefficient. Sometimes you find that a process that would have taken a few days in the private sector takes even months to process in the public sector. Here, the senior staffs are very hard to access and their access requires one to have prior appointment arrangements. The staff is not particularly encouraged to be innovative and as such, most of these institutions stagnate in their delivery protocols and simulations because there are no new ideas being effected. If the public sector adopted the private sector’s format of minimizing the levels and scales of bureaucracy, they would definitely be in a position to ensure that they have utilized their resources in a very effective and efficient manner. Constant internal auditing in private sector For a company to be able to assess whether it is performing as expected or it is in the process of failure, it is important for them to conduct an internal auditing process. An internal audit process places the position of a company, both financial and otherwise, into perspective. Most of the organizations or institutions that exist in the private sector conduct a series of internal audit very frequently to be able to ascertain that they are in the right path (Lipsky and Smith 1990, p. 630). As indicated in the introductory portion of this paper, most of the institutions in the private sector are profit-oriented. As such, they must be able to make sure that every time they have what it takes and are in the right direction to achieve their goals. Even those organizations that are not profit-oriented conduct audit internally frequently so that they may be in a position to utilize the resources that they have in an efficient manner. Auditing places the expenses of a business versus the revenues of the same into perspective. In the public sector, auditing occurs mostly on a need to know basis. The demand for auditing process is done when either something has gone wrong or a certain new mechanism is needed to be established. The demand auditing does not synchronize itself with the various goals of the institution (Ryan and Walsh 2004, p. 628). When auditing is not done continuously, you may find that the managers in a certain public institution think that the institution is performing well while in reality it could be performing very poorly. The public sector should borrow a leaf from the private sector and offer internal auditing continually so that they can be able to ascertain themselves that they are indeed in the path towards accomplishment of their goals. Auditing increases accountability scales by ensuring that every person in the organization is it in public or private sector does what he or she need to do to ensure that the goals of the organization are accomplished. Auditing also takes a review of how resources have been utilized in the organization and it becomes easy to point out the various avenues where these resources have been used badly. Corruption in the public sectors In most nations across the world, corruption has become very prevalent in the public sector. In most cases, the corruption avenues open up when there are projects to be undertaken and tenders done. Many companies will gladly bribe government officials so that they can be awarded projects in the public sector (McDonald 1999, p. 35). When this is done, the concept of accountability loses meaning. Most times, the companies selected to undertake a certain project do not have the necessary qualifications that are needed to undertake these jobs. They are not selected based on merit but rather based on how fat their wallets are. More often than not, this results in jobs being done in a very shoddy manner or they are not completed on time. Some of the employees who are employed in most agencies and institutions in the public sector are not fully qualified for the jobs they do because in one way or the other, they used corrupt means to acquire themselves these jobs. In the private sector, the issue of corruption is not very common. Here, the contractors for various projects are chosen because of their qualifications. The issue of corruption is an issue that is highly avoided in the private sector. Most of the employees who receive jobs from the private sector find their way into these designations based on pure merit. Through this concept, these institutions are then guaranteed that they have workers who have the capacity to deliver according to expectations and hit the set targets. If the public sector followed along these lines, it would be possible for these institutions to deliver efficiency at low costs. Centralized decision-making in private sectors In the private sector, the way decisions are made is very different from the way decisions are made in the public sector. Though each of these sectors have their own reasons that relate to the way these decisions have been made, it has been proven through research that the private sector has a more established and more viable form of making decisions compared to the public sector. Most of the institutions in the private sector have a very centralized form of governance and the way they make their decisions is very centralized (Christine and Walsh 2004, p. 238). For example, the channels of communication are very open in most of the institutions in the private sector. Employees are encouraged to contribute to various affairs directly through airing their opinions. In most instances as noted previously in this paper, these employees are encouraged through rewards when they come up with innovative ideas. Policy making in the private sector is central. A majority of the employees are involved in the process of creating these policies. Through this format, these employees feel the connection that they have between them and the various policies that they have made. It becomes easier for them to own the system and implement the policies they have made collectively towards the attainment of a collective goal. The involvement of the employees in decision-making leads to these employees taking an initiative to develop themselves in their own individual capacities so that together they may be able to accomplish the overall goal of the company. In the public sector, the process of decision-making is different from that which exists in the private sector. Here, most of the institutions take policies and implement them. In most instances, the employees in the public sector do not have the capacity to engage directly in the process of decision-making (Buchanan nd, p. 3). Policies are designed from the top management of these institutions and then pushed down the pipe. Employees working in these institutions do not have the flexibility or the advantage of giving their opinion on these policies. They simply take what has been availed to them and implement unconditionally. Sometimes you may find that because the process of making these decisions was conducted by a small number of individuals, the decision does not have a utilitarian concept. Employees will feel as if their opinions are not respected and as such, they will be just implementing what their bosses have dictated to them without any sense of responsibility. When the approach taken by the private sector in this section is applied, employees have a strong sense and feel of responsibility and they are able to contribute effectively to the whole process without constraints. This leads to each one of them becoming accountable for their actions as individuals while working together to achieve a collective goal. Turnaround times In the process of pleasing a client, businesses strive to ensure that they have accomplished the task given to them at record time and at a much-heightened degree of efficiency. However, in the public sector, this is not usually the case. The turnaround time in the public sector is very slow as compared to most institutions in the private sector (Sarre and Prenzler 1999, p. 21). Though some connection can be made to the profit-oriented concept of the private sector, private sector in general has been observed to deliver faster and at a higher quality than the institutions in public sector. Managers in public institutions should borrow a leaf from their counterparts in the private sector and ensure that they deliver fast and quality service when required to do so. Management of wastage of resources Another concept that portrays the effectiveness of various sectors and institutions is the management of resource wastage. When wastage of resources in an institution is reduced, the institution is portrayed as being efficient and well managed. In the private sector where input is interpolated to output, waste management is a key concept. Managers in the private sector engage themselves wholly in the management of the resources so that they can be able to achieve maximum utility from the minimum of input. Private sectors on the other hand have recorded a very high degree of wastage of resources. This wastage should be minimized through ensuring that every person is accountable for the resources given to them. The public sector is the exact opposite and wastage of resources is a challenge that haunts many of the institutions in this sector (Parker and Gould 1999, p. 116). Conclusion The above discourse has highlighted the accountability concept through offering a comparison between the accountability that exists in the private sector and that, which exists in the public sector. As the discourse shows, the private sector is better managed in comparison to the public sector and the accountability concept in the private sector is regarded more highly. Various arenas of comparison have been established and discussed. These include Minimal bureaucracy in the private sector, Constant internal auditing in private sector, Corruption in the public sectors, Centralized decision-making in private sectors, Turnaround times and Management of wastage of resources. From this discussion, it can be concluded that public companies can indeed become accountable to the levels of accountability that exists in the public company. This can be achieved through treating various institutions in the public sector the same way as if they were existent in a private sector. References Buchanan, R nd, ‘Transparency and Accountability in Government Decision-Making: Devolved Service Delivery’, paper prepared for the Conferenz 6th Annual Public Law Forum, Retrieved from http://www.oag.govt.nz/reports/docs/transparency-accountability-paper-conferenz.pdf. Christine, R and Walsh, P 2004, ‘Collaboration of public sector agencies: reporting and accountability challenges’. International Journal of Public Sector Management, Vol. 17, no. 7, pp.621 – 631. Kluvers, R and Tippett, J 2010, ‘Mechanisms of Accountability in Local Government: An Exploratory Study’. International Journal of Business and Management, Vol. 5, No. 7, pp. 43-56. Lin, J and Streck, C 2009, ‘Mobilising finance for climate change mitigation: private sector involvement in international carbon finance mechanisms’. Melbourne Journal of International Law, Vol. 10, pp. 1-32. Lipsky, M. and Smith, S. R 1990, ‘Nonprofit organizations, government and the welfare state’. Political Science Quarterly, vol.104, pp. 625-648. McDonald, C 1999, ‘Internal control and accountability in non-profit human organizations’. Australian Journal of Public Administration, vol.58. no.1, pp. 11-22. Mulgan, D 2002, ‘Accountability Issues in the New Model of Governance’, Discussion paper No. 91, April, Retrieved from https://digitalcollections.anu.edu.au/bitstream/1885/41701/3/No91Mulgan.pdf Mulgan, R 2000, ‘Comparing accountability in the public and private sectors’. Australian Journal of Public Administration, vol. 59, no.1, pp.87-97. Nutt, P 2005, ‘Comparing Public and Private Sector Decision-Making Practices’. Journal of Public Administration Research and Theory, Vol. 16, pp. 289-318. Parker, L and Gould, G 1999, ‘Changing Public Sector Accountability: Critiquing New Directions’. Accounting Forum, Vol. 23, No. 2, pp. 109-136. Ryan, C M and Walsh, P 2004, ‘Collaboration of Public Sector Agencies: Reporting and Accountability Challenges’. International Journal of Public Sector Management, vol. 17, no.7,pp. 621-631. Romzek, BS and Dubnick, MJ 1987, ‘Accountability in the public sector: Lessons from the challenger tragedy’. Public administration review, vol. 47, no.3, pp.227-238. Sarre, R and Prenzler, T 1999, ‘The Regulation of Private Policing: Reviewing Mechanisms of Accountability’. Crime Prevention and Community Safety: An International Journal,  Vol.1,pp. 17–28. Tuohy CH 2003, ‘Agency, contract and governance: shifting shapes of accountability in the health care arena’. Journal of Health Politics, Policy and Law, vol 28, no 2, pp 195–216. Wilkins, P 2002, ‘Accountability and Joined-up Government’. Australian Journal of Public Administration, Vol. 61, No. 1, pp. 114-119. Read More