The ethical differences between the private and public sector

Ethics

The UK currently ranks 11th in the world for corruption within the public sector. This number may worry you, but the government is making leaps to focus on social values and ethical conduct.

There are many obvious differences between the public and private sectors, but what about their ethical standards? Integrity, ethics, values, and corruption are all concepts that need to be considered when looking at this topic.

This blog post will explore these ideas and look at examples from both sectors. We will also discuss the Social Value Model and its use in government procurement.

What is the definition of public and private sector?

The government controls the public sector part of the economy, while private companies typically have private owners. They may include a board, shareholders, or sole proprietor.

The public sector is responsible for crucial departments in our society. Departments like:

  • Healthcare
  • Education
  • Roads

While the private sector covers areas in commerce, these can include retail, hospitality, and manufacturing.

Of course, there are some industries where the public and private sectors overlap.

The ethical difference between private and public sector

Since both sectors have different goals, it is no surprise that they have ethical differences as well.

The main one is that public sector organisations have a duty to the public, while private companies only have a duty to their shareholders. This difference can lead to different decisions being made about things like environmental regulations or employee safety.

Shareholders often pressure organisations and businesses to focus only on profit. While profit is critical to commerce, if it is the main goal, some companies may need to cut corners on ethical issues.

While the public sector is not perfect, it is typically more ethical than the private sector. Even though they still have to work with budgets, the main goal is not to make a profit.

The public sector is accountable to the public and needs to maintain high ethical standards. If they do not, they can face investigations and lose public trust.

An example of this was the MPs expenses scandal in 2009, where it was revealed that some MPs had been claiming expenses for things such as personal haircuts. This led to public outcry and a loss of trust in MPs.

In contrast, private companies do not have the same level of accountability. They are only accountable to their shareholders and not the public. This can lead to some companies behaving unethically without any consequences.

The Volkswagen emissions scandal is a good example of this. The company installed software in their cars that would change the emissions levels when being tested. This meant that the cars appeared to be less polluting than they actually were.

The cost of a lack of ethics

A lack of ethics can lead to corruption, which can have a number of negative consequences.

It can lead to public funds being wasted or stolen, and it can make it difficult for the public to trust government officials.

However, corruption can also lead to a loss of public faith in private companies. This can make it difficult for businesses to operate, as they may have trouble getting funding or customers. It can also lead to social unrest and violence.

The social value model

By the end of 2022, the government wishes to implement the Social Value Model in all of its contracts.

The Social Value Model is a way of measuring the value of a project or contract in terms of money and the social, economic, and environmental benefits it will bring.

This means that when awarding contracts, the government will take into account things like how many jobs will be created, what the carbon footprint of the project will be, and how it will benefit the local community.

The Social Value Model is a way of ensuring that public money is spent in a way that benefits society as a whole, not just those who are directly involved in the project.

Comparison of the two sectors

The public sector is typically more transparent than the private sector, but there are exceptions to this rule.

The private sector is often quicker to make decisions, but it can be less transparent. Which one you think is more ethical will likely depend on your own values and priorities.

Below, we will take a look at where the two sectors differ in terms of integrity, ethics, values, and corruption.

Integrity

Integrity is the quality of being honest and having strong moral principles. As we mentioned above, the public sector is often more transparent, as it is responsible to the public. This means that public officials need to be honest about their actions and decisions.

The private sector is not as transparent, as it is only accountable to its shareholders. This can lead to some companies behaving unethically without any consequences.

Ethics

Ethics are a system of moral principles. The private sector is making great strides in being more ethical. The age of technology has made it easier for companies to be held accountable for their actions, using tools such as a dynamic purchasing system.

Values

Values are the principles that guide our behaviour.

The public sector is typically guided by public service values, such as democracy, equality, and human rights.

The private sector is often motivated by profit. However, there are a growing number of companies that are beginning to adopt sustainable and ethical business practices.

Corruption

A lack of ethics can lead to corruption, which can have a number of negative consequences.

Unfortunately, both sectors are susceptible to corruption. In the public sector, corruption can lead to public funds being wasted or stolen. In the private sector, it can make it difficult for businesses to operate, as they may have trouble getting funding or customers. To combat corruption, both sectors need to continue to work on being more ethical and transparent.

Public sector contracts: start today

The public and private sector each have their own strengths and weaknesses when it comes to ethics. Combating corruption is done by education, building ethical conduct, and transparency.

Are you looking to procure public sector contracts? Request a free demo today to see how Delta eSourcing can benefit you!