Differences between public and business management.

Differences in goals . For business management, the main, and often the only goal is profit. For public administration, the goals are diverse, most often they are non-economic and generalized, it is difficult to quantify them : stability, law and order, ensuring defense, reducing social inequality, fighting poverty, etc. If we are talking about economic goals, then the state is called upon to participate in solving those problems that the market mechanism cannot solve.

In public organizations, goals are set from the outside and represent value representations in society. In commercial organizations, goals arise from within, emerging from individual goals and turning into the goals of the organization. The process goes in reverse, from bottom to top.

Resource differences . In contrast to the voluntary-contractual nature of the relationship between partners in business, government bodies have the right to coercion within the framework and on the basis of the law . The resources of these bodies can be formed by withdrawing part of the income through taxation. Therefore, the state and its bodies can carry out a forced redistribution of resources, which makes it possible to finance, at the expense of the budget, the production of goods that society would like to make available to its members (cultural, health, education services).

Differences in responsibility . In business management, there is a fairly clearly defined responsibility for the consequences of decisions and actions taken. Ill-considered decisions and ineffective actions of managers can lead to the ruin of the owners of the company and its bankruptcy. In public administration, responsibility is blurred between many organizations, which, for example, can lead to an increase in the budget deficit and public debt. At the same time, state institutions and organizations are not threatened with ruin.

Differences in incentives. The provision of services by a public institution, the nature of these services, the way they are provided does not depend on the requirements of the market, but is determined on the basis of a political assessment of social and economic priorities. This is because in public administration the main financial source is the state budget, the costs of which are determined in accordance with the procedure established by law . Hence, the main motive is to satisfy not the client, but those who provide (distribute and redistribute) financial resources. In the private sector, the source of financial resources is revenue, so there is a direct relationship between commercial success and the quality of the service provided to the client .

The difference is in the environment. Public administration is characterized by a special style of relations with the public and the media, determined by the reasonable desire of the public to know through the media everything that happens in public institutions. In addition, the systems of political (through political parties and political leaders) and functional (through lobbying activities of interest groups) representation have a great influence on the goals and results of the activities of state organizations.

The scale of government. The scale of public administration is determined, first of all, by the resources and goals of the state . If in the private sector the flow of resources usually corresponds to their reserves, since income is distributed in accordance with factor contributions, then the state, engaged in the redistribution of income, has a larger share in the national income of the country than in total capital or in the production of goods and services sold on the market. . Therefore, the scale of state intervention in public life is best quantified using the indicator of the share of government revenues and expenditures in national income, gross domestic product .

Since the end of the Second World War, there has been an almost universal growth in the sphere of public administration, which is usually explained by the following reasons:

a) the growth of public administration is directly related to economic growth;

b) it is caused by the development of a system of indirect taxation and payments to the insurance fund;

c) before the elections, politicians promise to increase certain costs, which happens after the elections, and as a result, the area requiring state intervention grows;

d) managers are interested in the growth of the institutions in which they work;

e) the economy needs to ensure full employment and develop government programs to ensure the income of the population.

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