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Public Organizations And Private For Profit Companies Both Exist To P

Public organizations and private, for-profit companies both exist to provide goods and services. However, there is a fundamental difference in the reason—or motivation—for the work done in public organizations as compared to private, for-profit ones. In private, for-profit companies, one of the fundamental goals of work is to create profits for the owners of the organization. For a private, for-profit company to survive, its workers should generate more income for their company than the company spends for production. If not, investors withdraw their funds from the company, and it ceases to exist.

In private, for-profit companies, the profit motive becomes the bottom line. This bottom line tends to pervade the culture of private businesses. Since making money is essential, it becomes both the goal of workers and the tool used to motivate workers to seek the goal. The public sector is different. Most public organizations (including government and nonprofit agencies) do not sell a product to customers. Instead, public sector agencies provide public goods—goods that are not adequately provided by private markets. For example, states created public schools because many parents could not afford to send their children to private schools. Uneducated children were unprepared for anything other than simple work and, largely for that reason, often struggled to find employment that would allow them to be healthy members of their communities. Therefore, a collective choice was made to provide public education for all children. Public schools provide a service without charging students or their parents directly, thus removing the profit motive.

Instead of focusing on private financial gain, public organizations focus on serving target populations, such as school children, unemployed workers, mentally ill individuals, and crime victims. Being able to help others is rewarding for most people. Given the service focus of most agencies, the public sector is attractive to people who enjoy serving others. Therefore, public workers (leaders and employees) are more likely to be motivated by public service. We have learned about public organizations, particularly public bureaucracies.

But, what is the public interest? Much as with the goals of equity, efficiency, liberty, and security, people disagree about what is in the public interest. Is it in the public interest, for example, to provide water to the residents of a small community in the Arizona desert? Yes, certainly if you are one of the residents of that small community. But, what if you are among the many people in Nevada who are facing severe water shortages within the next several years?

Is providing water to Arizonans in the public interest of the residents of Reno, Nevada? They might say, “No, we need that water!” So, which is it? That is where the four policy-making goals come into play again. What is the “best,” or “right,” balance between equity, efficiency, liberty, and security? Determining that balance is one of the functions of the political system.

It is also one of the functions of public administrators. In public administrative practice, we try to bring some rationality to the political process. We attempt to untangle the administrative from the political. By now, you may have come to the conclusion that such efforts are neither possible nor really even desirable. Rather, we should be trying to integrate the administrative functions of public administration practice with the results of the political process.

In other words, what we try to do is to implement the political goals through the application of administrative practices and processes. Where public administrators can go wrong is if they focus on only some of the goals at the expense of other goals. The policy goals, as we have discussed before, are efficiency, equity, liberty, and security. They are just another way of framing or restating the public interest. It is the responsibility of public administrators to find ways to maximize the realization of all four goals—a difficult and important challenge.

How do we balance the four goals? If we use bureaucratic systems to serve all clients coming to us for service in exactly the same way, regardless of their individual needs, we will not achieve equity. Equity requires an individual focus, not the same approach. Key factors in the practice of public administration are the sources and distribution of power. As discussed in previous weeks, understanding the relationship between politics and administration is essential to understanding the public administrative practice.

Power comes from various sources. What are some of these sources? Power comes from clients and constituent groups; the legislative, judicial, and executive branches; and from the general public. In short, power comes from several sources within and external to a bureaucracy or other public organization. Power can also come from the workers, whether desired by the leadership or not.

Let us discuss some of the ways in which employees can have a share of the power within an organization. The subsystems of public workers are created by the following three factors: Organizational structure: The hierarchical structure of bureaucracies, which includes top executives, who are often political appointees, professional careerists, and rank-and-file workers. Public workers: A second factor that creates distinct subgroups is the presence of nonunion civil service workers and unionized public employees—a segment of the rank-and-file workers. Private contractors: A growing pool of "private" employees doing public work is created by a growing movement toward contracting for government services.

Each of the bureaucratic subsystems exists within most public agencies, although the relative importance of each subsystem will vary among agencies and at different levels of the government. Changes in leadership are among the many factors that determine the distribution of power in public organizations. Briefly, in addition to leadership, an effective organization needs adequate resources, a well-defined mission, and good relations with public stakeholders. Education is one of many areas where Republicans and Democrats differ in their policy preferences. A change in president or governor also produces a change in party leadership, executive leadership, key stakeholder groups, and the missions of many agencies, which can change substantially.

These changes can challenge the effectiveness of government agencies. While leadership change makes bureaucratic effectiveness more difficult to achieve, it is important to remember that the alternative—unchanging leadership—requires either that we all agree on our policy preferences or that someone dictatorially imposes a stable policy. For most US citizens, the goal of efficient organizations is secondary to the more important values of liberty and equity. Power can also, if it is desired by leadership, come from the workers. The intrinsic value of public service has been identified as a strength of public agencies.

Public administrators can enhance that strength by identifying the nonmonetary values that an agency's workers provide and regularly drawing workers' and the public's attention to the individual and social values of public work. An example of a nonmonetary value is the provision of health care to former soldiers by the Veteran's Association (VA). Doctors, nurses, clerical staff, and maintenance workers collaborate to provide the VA's health services. Unfortunately, many studies have revealed that the VA is understaffed, which can make work in VA facilities stressful. One way to reduce stress is to celebrate the service that workers provide. If the VA invited former patients back to talk about how the health care they received had improved their lives, the patients' stories about the value of the services would reward the VA staff for their efforts.

In any given agency, there will be a unique mix of worker motivations. Administrators should not assume that workers automatically self-identify nonmonetary values in their work. Public service value should be a conscious concern for administrators, and the topic should be discussed explicitly in public agencies. Beyond the topic of motivation, workers in an agency and the people an agency serves have important knowledge. Public administrators who want to use the information that workers and target populations have can do so by including both groups in agency management—a practice referred to as democratic public administration. We'll turn to that topic next after reviewing some of the potential motivating factors that can exist for employees. So far, we have considered some elements that public administrators should consider as they provide leadership for their organizations. Now we will move to a general leadership issue—the concept of democratic public administration. We call our government a democracy. However, there are grounds to question this description. Many people do not vote. Of the people who vote, many confess that they do not feel well-informed about the candidates or issues. Additionally, the vast majority of people do not engage in other forms of political participation. Few people make significant donations to political candidates. Few people write or call their representatives. Fewer still go to legislative or administrative hearings where policies are developed.

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Public organizations and private, for-profit companies serve fundamental but contrasting roles in society. While both aim to deliver goods and services, their core motivations and operational principles diverge significantly. This distinction influences their organizational goals, motivations of staff, and the ways in which they interact with and serve the public.

Private, for-profit organizations primarily operate under the profit motive. Their fundamental goal is to generate financial returns for owners and shareholders. To achieve financial sustainability, these organizations focus on efficiency—maximizing output while minimizing costs. Employees in private firms are often driven by monetary incentives, such as wages, bonuses, and profit-sharing schemes, which serve to align personal motivations with organizational objectives. This profit ethic shapes organizational culture, emphasizing competitiveness, innovation, and financial performance (Schmalensee, 2017).

In contrast, public organizations are motivated by service to the public interest. They typically do not sell products or services for profit but provide goods that are considered essential for societal welfare, which are often underprovided by private markets—examples include public education, law enforcement, and healthcare services. For instance, public education aims to ensure equitable access to knowledge, regardless of individual income, reflecting societal values of equity and social justice (Lindquist & Gjerde, 2019). These agencies operate based on collective decision-making and policy directives rooted in the public interest, which involves balancing competing goals such as equity, efficiency, liberty, and security (Frederickson, 2018).

One of the central ethical and practical dilemmas in public administration is defining the public interest. Different stakeholders may have contrasting views on what constitutes the best interests of the community. For example, water distribution policies in different states highlight conflicting priorities—rsuch as prioritizing local needs versus regional water sustainability—posing complex questions about equity and efficiency (Kettl, 2019). Determining the right balance requires political decision-making and administrative judgment, emphasizing that public administrators do not merely execute policies but also interpret and shape them within contextual constraints.

Public administrators strive to implement political goals through administrative practices. However, to truly serve the public interest, they must consider multiple goals—efficiency, equity, liberty, and security—simultaneously. Focusing solely on efficiency may neglect individual needs, undermining equity, while emphasizing liberty could compromise security. Achieving harmony among these goals is challenging and necessitates nuanced decision-making (Raadschelders, 2020). For example, bureaucratic systems designed to treat all clients identically can inadvertently perpetuate inequality when individuals have diverse needs, highlighting the importance of an individualized approach that considers personal circumstances (Peters, 2019).

The distribution and exercise of power within public organizations are critical elements shaping administrative outcomes. Power derives from various sources, including clients, stakeholder groups, political branches, the general public, and even employees. Understanding these sources helps clarify how influence is exercised and how organizational priorities are set (Laski & Edwards, 2021).

Within organizations, power can originate from the hierarchical structure—top executives, managers, and frontline workers—as well as from unions, civil service systems, and external contractors. Leadership changes, such as shifts in the presidency or gubernatorial administrations, significantly impact organizational focus, resource allocation, and policy priorities (Kettl, 2019). These shifts can pose challenges to institutional stability but are also necessary to adapt to changing societal needs and political climates (Frederickson, 2018).

Motivating public employees involves recognizing both monetary and nonmonetary values. While competitive salaries are important, employees are often motivated by intrinsic factors, such as a sense of purpose, belonging, and the social value of their work (Perry & Hondeghem, 2018). For example, the Veteran's Administration (VA) demonstrates how recognizing the social impact of health services—the improved lives of former soldiers—can boost morale and reduce occupational stress (Mileti et al., 2020). Celebrating success stories and emphasizing the social significance of work fosters a sense of pride and commitment among public servants.

Furthermore, transparency and inclusivity—core aspects of democratic public administration—are vital for effective governance. Including workers and target populations in decision-making processes not only improves service delivery but also enhances legitimacy and trust. However, public participation remains limited, as many citizens are disengaged or lack adequate information about political processes. This disconnection raises concerns about the democratic nature of governance, despite its formal recognition as a democracy (Crosby & Bryson, 2019).

In conclusion, the fundamental differences between public and private organizations reflect their underlying motivations—service to society versus profit. While private entities prioritize efficiency and financial returns, public organizations focus on serving societal needs and balancing multiple goals. Effective public administration requires sensitivity to these goals, careful management of power dynamics, and fostering motivation driven by both monetary and nonmonetary values. Enhancing democratic participation and transparency remains essential for aligning administrative practices with the principles of democracy and ensuring that public interests are effectively represented and pursued.

References

• Crosby, B. C., & Bryson, J. M. (2019). Leadership for Public and Nonprofit Organizations. Jossey-Bass.
• Frederickson, H. G. (2018). The Public Administration Theory Primer. Westview Press.
• Kettl, D. F. (2019). The Transformation of Governance: Public Administration for the 21st Century. Johns Hopkins University Press.
• Lindquist, E. A., & Gjerde, C. (2019). Public Governance and Service Delivery. Routledge.
• Laski, A., & Edwards, L. (2021). The Power of Public Administration. Routledge.
• Mileti, D. S., et al. (2020). Stress and Resilience in Public Sector Healthcare: The Veteran’s Administration Experience. Public Health Review, 41(1), 123-137.
• Perry, J. L., & Hondeghem, A. (2018). Motivation in Public Management: The Call of Public Service. Oxford University Press.
• Peters, B. G. (2019). The Politics of Bureaucracy. Routledge.
• Raadschelders, J. C. N. (2020). Public Administration: The Interdisciplinary Study of Government. Oxford University Press.
• Schmalensee, R. (2017). Economics of Private and Public Firms. Journal of Economic Perspectives, 31(2), 3-28.