Management Challenges: Government vs. Private Sector

 

 

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The following matrix provides a comparison between the challenges faced by government managers and those encountered by their private sector counterparts.

 

Issue

Private Sector

Government

Budgetary
Constraints
Budgets are tight at bottom of business cycle, but decisions can be flexible and rational based on the circumstances at any given time. Budget process starts 2 years in advance. Very inflexible; difficult to reallocate resources or obtain additional funding.
Hiring Managers can hire new staff quickly if business cycle dictates they need more personnel. It can take 1-2 years to create and encumber a new position and several months to fill an existing position that has become vacant.  In many agencies, managers are only allowed to interview the top 3 applicants (who are selected by OPM).
Firing Anyone can be fired at any time; severance packages are a cost of doing business.  Non-producers can be fired. Separation for poor performance requires extensive documentation over a long period of time.
Bureaucracy While bureaucracies exist in most large organizations, corporate bureaucracies tend to be smaller and less tradition-bound than those in government. Job security, stability, and sheer size of organizations tend to foster strong bureaucratic attitudes and resistance to change.
Procurement Companies can buy what they need, when they need it--provided they can afford it or obtain credit. Government procurement rules have been streamlined in recent years for small purchases, but larger acquisitions/contracts must usually be put up for competitive bid.  This tends to slow the procurement and/or contracting process significantly.
 

 

 

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