Implications of differences between public sector and private sector organisations on organisational leadership in the UK

By John Dudovskiy
February 25, 2014

differences between public sector and private sector

Differences in Aims and Objectives in their Implications on Leadership Practices

Differences in organisational aims and objectives have been found to be a significant difference between private and public sector organisations. This difference has implications on leadership practices in public and private sector organisations.

In other words, usually there are clear performance indicators to assess the performances of organisational leaders in private sector and these indicators include company share prices, market share, and the levels of revenues.

In cases of public sector organisations, on the other hand, performance indicators are vague, because organisational aim and objectives usually involve qualitative rather than quantitative elements.

From this perspective, while the level of effectiveness of organisational leaders can be determined within a year or even shorter period of time on the basis of several quarterly performance of the organisation, longer period of time may be necessary to establish the level of effectiveness of leaders in public sector.


Differences in Organisational Stakeholder Expectations and their Implications on Leadership Practices 

The variety and role of organisational stakeholders have been found as another point of a vast difference between private and public sector organisations. Establishing strategic relationships with stakeholders and meeting their expectations at a reasonable extent in private sector necessitates organisational leaders to adopt various roles simultaneously.

In order to be successful, private sector organisational leaders need to be perceived as socially responsible by general public, they need to be perceived as dynamic and cost saving by shareholders, and at the same time organisational leaders need to be perceived as caring and motivational by the workforce.

Arguably, meeting stakeholder expectations in public sector is less contradicted compared to meeting stakeholder expectations in private sector from leadership viewpoint. This is because in most cases no stakeholder group expects profit maximisation from public sector organisations, and thus there is less contradiction amongst organisational stakeholder.


Public Scrutiny of Organisations and Leadership Implications

The literature review has found that public sector organisations are generally subjected to scrutiny to a greater extent compared to private sector organisations and this difference also has implications on leadership practices. Performances and behaviour of public sector organisational leaders are closely monitored by media and other government and non-government organisations, and organisational leaders in public sector should take into account this fact on their day-to-day performances.

It is important to note that the level of public scrutiny has been increasing for the private sector organisations as well, and this tendency reduces the impact of this specific point of difference between public and private sector organisations from leadership point of view.


Differences in External Factors Impacting Organisations and Leadership Implications

External factors impacting organisations have been found as another important point of difference between public and private sector organisations. Public sector organisations have been found to be greatly affected by political situation within the country in general, and policies of ruling government in particular.

Alternatively, private sector organisations are impacted by different external factors such as changes in competition, technological breakthroughs in the industry, moves of competitors, overall economic climate in the country and others.

Implications of these differences on external factors for leadership practices are significant. Arguably, a wider range of tools available to assess external factors to organisational practices are available for private sector compared to public sector. For example, Porter’s Five Forces, SWOT analysis and PEST analysis represent effective strategic analytical tools that private sector organisations can use in order to assess present and future implications of external environment in organisational performance.

These analytical tools represent highly valuable frameworks for organisational leaders in a way that they assist in leaders to engage in informed decision making with highly positive short-term and long-term implications.


Personality Differences between Public and Private Sector Employees and Leadership Implications

Personality differences between public and private sector managers also have direct and significant implications on leadership practices in many levels. According to the findings of the literature review, public sector managers generally express greater levels of concern and willingness for helping others, whereas private sector managers are found to be results-orientated, more outgoing and optimistic.

Among many other implications, this difference has direct implications on motivating employees in public sector and private sector organisations in a way that intangible motivational tools such as sense of contributing, making positive changes in society, and forwarding a public cause can be used to motivate public sector employees in an effective manner, whereas mainly tangible motivational tools such as money and other tangible benefits can prove to be the most effective when motivating employees in private sector.


Category: Leadership