Discover how the differences within the public and private sectors impact your role as a non-executive director.
As a business professional considering their first non-executive post, one of the first decisions you may face is whether to take on a role in the public or private sector. Before we delve into what the key differences will be between your responsibilities in the different sectors, it’s important to first define what they each mean.
The public sector is comprised of organisations which are owned and operated by a governmental authority and exist to provide services to the general public. Like organisations in the voluntary sector, organisations in the public sector do not seek to generate any profit. Examples of organisations in the public sector include healthcare, emergency services and public transportation.
The private sector is comprised of organisations run by individuals and groups that seek to generate and return a profit back to their shareholders. Unlike public organisations, organisations in the private sector are free from any governmental control. Examples of organisations in the private sector include retail, food and beverage and large multinational organisations such as Disney, PepsiCo and Apple.
As a non-executive director, you are appointed to provide your independent perspective regardless of the sector, though the goals you will be expected to focus on are somewhat different. In the private sector, operations are profit-driven which means boards are expected to answer to their shareholders. Decisions need to be efficient and provide the private business with the quickest and most cost-effective of solutions. While, in the public sector, serving the general public and looking after their interests is the biggest focus. Suggested plans may take their time to come to fruition as the organisation will need to weigh up the social and ethical considerations before making a choice.
Different Procurement Processes
If you’re looking to suggest plans which involve funding, it’s important to be aware of the different procurement processes in each sector. Since public organisations are funded by tax revenue which is generated by the public, they do not have direct control over their funding. Procurement packages need to be approved by several governing bodies, suppliers often undergo background checks and other investigations, all of which slows down the procurement process. Meanwhile, private organisations can use their revenue from sales and investments to buy things as and when they are needed. These organisations are also less weighted down by regulations, dictating supplier relationships, which allows them to get better details and renew contracts to speed up processes.
Public organisations are subject to a higher level of scrutiny than private organisations. This is mainly due to the fact they are funded by taxpayers who hold these organisations accountable for how they address social equality and fairness. The public also have an explicit invested interest in the activities and accomplishments of these organisations. Leaders of private organisations are not accustomed to this level of scrutiny as they are accountable primarily to their own board of directors and shareholders. As a NED you should be conscious that your contribution will be evaluated and that your motivations should always reflect the ethos of the business you represent.
CTA: Think you know which sector is best likely to suit your experience? Once you’ve decided on a sector it is a good idea to consider how to tailor your CV so that you can secure the role you want. In Touch’s CV service is here to help you put together a winning document. Click here to learn more.