He’ll sit here… and he’ll say “Do this! Do that! And nothing will happen. Poor Ike – it won’t be a bit like the Army. He’ll find it very frustrating. Harry S. Truman. Quoted in R. Neustadt, “Presidential Power: The Politics of Leadership” (1960)
Have you ever wondered if choosing to work in the private sector is better than working in the public sector? Do people knowingly choose one over the other or is the decision merely a function of happenstance? Once a choice is made, do employees wonder if they would be better off in the other sector? The Bureau of Labor Statistics estimates that in June 2020, 108 million people were employed in US private sector (non-farm) jobs and 20.2 million people were employed in all US public sector (Federal, state, municipal government) jobs. Both sectors have their pros and cons and most people, for whatever reason, may be a better fit in one or the other. This is probably truer today for Millennials than for past generations.
The primary objective of the private sector is to make a profit. The motivation for working in the private sector is generally described as a desire to make money. Some benefits of working in the private sector include impressive compensation packages; faster promotions and salary increases; performance bonuses; additional perks like tickets to sporting events, concerts, and private suites; greater opportunities to be on the cutting edge and innovation; less rules, regulations and protocols; faster decision making; more opportunities for staff development and professional growth; and safeguard against media inquiries into employee salaries and benefits. This is all good if you are willing to work long hours in a competitive, fast-paced environment; always meeting challenging deadlines; and your value to and job security with the organizations is only as good as your contribution to the bottom line. The private sector is very susceptible to economic downturns, the inability to obtain contracts or project financing, acquisitions, market trends, technological advances, and low business performance. Although equal opportunity and workforce diversity are considered important as a marketing and customer services strategy, of greater importance is efficiency, effectiveness and productivity. It is very unusual for a person to spend 25 to 30 years with a single private company. Older workers who move up the management ladders and pay schedules become expendable as younger workers at lower pay schedules are willing to step up and take on greater responsibilities.
On the other hand the primary objective of the public sector is to establish laws, maintain order, provide security, and protect and serve citizens. The motivation for working in the public sector is broadly described as a desire to make a difference in the lives of people. Some benefits of working in government include long term job security upon completion of a probationary period; 14th Amendment due process protection against adverse job action; selection and promotions in accordance with merit system principles based on what you know rather than who you know; transparent personnel policies, practices, and procedures; market based salaries and benefits; good pension plans; planned salary step increases; flexible work schedules; and equal opportunity for protected groups. In most cases, the work tends to be less demanding and cut-throat than the private sector; there is less emphasis on long hours and paid overtime; and an emphasis on balancing the budget rather than profit. To promote regardless of how well you perform, employees are required to take competitive examinations and rank high enough to be selected for vacant positions. Although paid well, to hit the big paydays top management jumps to the private sector.
The public sector is considered to be very bureaucratic. Patty Mulder (2017) describes a bureaucracy as “an organizational structure that is characterized by many rules, standardized processes, procedures and requirements, number of desks, meticulous division of labor and responsibility, clear hierarchies and professional, almost impersonal interactions between employees”. I was once told by a large city CEO that he never feared city employees would do the wrong thing or put the city in jeopardy because all they did was follow the adopted bureaucratic rules and regulations.
As a result of President Garfield’s assassination by a disgruntled political supporter who was denied a job under the then Spoils System, Congress adopted the Pendleton Act in 1883. The Act shifted the hiring and firing practices away from a Spoils System toward a merit system. The merit system was to be an open and fair merit system for selecting and retaining employees based on a person’s knowledge, skills and personal connections. Jobs were classified; hiring practices codified; promotional opportunities created; and like-pay for like-work established. Public employees were given job security and protections against capricious political actions. This formed the foundation for what we now call either a merit or civil service system. Over time, the merit system became very bureaucratic and has been criticized for being inflexible, slow, cumbersome, unfair and discriminatory. The rules and restrictions designed to ensure fairness and equity and limit the discretion of government officials in the hiring and firing process appeared to have made government less efficient and very contentious. Despite varied attempts to reform the merit system to ensure equitable treatment of employees, little has been done to streamline the system, eliminate unnecessary rules and regulations, and mitigate criticisms and improve employee morale.
Donald Kettl in “The Merit Principle in Crisis” (2015) comments that “common differences in opportunity among groups in society and how people are perceived more broadly tend to be reflected (and indeed reproduced) in the workplace. This means it can be challenging to ensure there is a genuine ‘level playing field’ where merit can be applied in any reliable way. Stereotypical expectations and assumptions, together with common human biases, can operate to undermine even well-designed merit based systems.”
So what is really the difference and advantages of working in the private sector or public sector? Believe it or not, both are described in the literature as merit based. The private sector rewards employees who merit a salary increase or promotion based on performance and productivity; the public sector rewards people on the basis of how well they perform on competitive examinations. Unfortunately, we know there are certain individuals who are better test takers, may have access to information than others do not have, and/or are coached on how to look for and compete on examination. We also know that there are people who do not test well but who possess exceptional knowledge and skills to succeed on the job. The private sector has less rules and regulations and thus is capable of expediting the hiring and promotion of employees. To ensure compliance with merit system laws, regulations and procedures, the public sector hiring and promoting of employees can take anywhere from six months to a year. Private sector employees are “at-will” and “can be terminated any time for any cause, with or without notice.” As previously noted “due process” employees to be informed of any unsatisfactory performance, have a chance to defend themselves, and be given the opportunity to improve performance before an adverse employment action is taken. I think it is important to note that the number of ”at-will” employees in the public sector has steadily increased to circumvent bureaucratic red-tape and afford employers greater latitude in the selection process. Of course, these employees also give up protections afforded employees hired under a merit system. Private sector employees are rewarded for performance that exceeds expectations while public sector employees are rewarded with job security and guaranteed pension plans for satisfactory performance. I have found that people who work in the private sector tend to be risk takers and those in the public sector tend to be more risk averse. Teamwork and loyalty are demanded of private sector employees while teamwork and loyalty are expected of public sector employees. Finally, the public sector provides equal opportunity protection to those the Federal government designates as members of a protected group in accordance with Federal equal opportunity and non-discrimination laws and private sector employers may or may not provide such protection.
I can say that neither is perfect. Competition, backbiting, office politics, favoritism, cronyism and chauvinism exist in both sectors. I can honestly say that when I left the private sector, I truly believed there were six merit principles that guided public sector:
· Recruitment and Selection of employees based on their ability, knowledge and skills.
· Equitable and adequate compensation.
· High quality training.
· Retention on the basis of adequate performance.
· Fair treatment in all aspects of personnel administration.
· Protection against coercion for partisan political purposes.
I was disappointed to learn that, despite the rhetoric, these principles were not applied equally and everyone was not treated fairly. Personal biases and stereotypes were pervasive. The Personnel Department I worked for had taken a leadership role and worked diligently to practice and protect these six merit principles, with an emphasis on guarding against discrimination in its hiring and promotion practices. Unfortunately, many of the unfair personnel practices that were occurring could be attributed to an “underground merit system.” This underground system sought ways to circumvent laws and policies intended to stop unfair and discriminatory practices.
The enactment of the Civil Rights Act of 1964 that was enacted by Congress to level the playing field for potential job applicants and employees sent a strong message to both private and public employers. It is somewhat ironic that money became a driving force. Public sector compliance with the laws ultimately occurred when the Federal government threatened to cut off the Federal funding of projects to government if discriminatory practices continued.
In addition, on-going merit system reforms have been instituted and employees now have remedies through their employer, employee unions, and the courts. Workforces are more diverse, people have more career options available, and employer and employee values are changing. For that matter, long term job security, tolerance of non-performance, due process protection, guaranteed pension plans, and union contracts for public employees are vulnerable to change. Since we will never eliminate disparate treatment or prejudice, the best we can hope for is civility, respect, engagement, open mindedness, candid communication, tolerance, and fairness and justice for all.
Both the private and public sectors have key roles to play in the US economy. The private sector creates and provides jobs, delivers critical goods and services, and contributes to tax revenues and efficient flow of capital. On the other hand, the public sector provides a range of governmental services such as public works, public safety, public transportation, public education, public housing, health care, land use planning, environmental protection, community and economic development, and recreation and social programs. The public sector serves as a regulatory agency protecting the health and welfare of citizens, creates job training opportunities, and ensures citizens have access to needed water and power services that might not be affordable if provided by the private sector. Regardless of which sector a person enters, we need well trained, competent, and dedicated people whose focus is on quality and responsive customer service. The goal is to create employment opportunities that enhance and sustain the quality of life for all.
Knowing what you know, which sector would you feel most comfortable making a career? Like Millennials, would you be open giving up certain benefits for the sake of work-life balance and quality of life?