Managerial Problems Of Public Enterprises


Public enterprises are organizations that are owned and controlled by the government. They are established to provide essential services and to promote economic growth and development. Public enterprises play a significant role in the economy, particularly in developing countries, where the private sector may not have the capacity to provide certain goods and services.

Despite their importance, public enterprises face various challenges and problems that hinder their effectiveness and efficiency. Some of the common problems of public enterprises include poor governance and management, political interference, lack of autonomy, inadequate funding, inefficient operations, and corruption. These problems often result in low productivity, poor service delivery, financial losses, and a lack of accountability.

Addressing these problems requires a holistic approach that involves improving governance and management structures, reducing political interference, providing adequate funding and resources, implementing sound business practices, promoting transparency and accountability, and empowering employees. Effective management and governance structures are critical to the success of public enterprises, and addressing these problems will not only improve their efficiency and effectiveness but also promote economic growth and development.


  1. POLITICAL INTERFERENCE : Public enterprises often face political interference, which can have a detrimental effect on their operations. Politicians may use public enterprises for their personal gain or to further their political agenda, leading to mismanagement, corruption, and inefficiency. Political interference can also result in the appointment of unqualified or incompetent individuals to leadership positions, which can adversely affect the performance of the enterprise.
  2. INEFFICIENT MANAGEMENT : Inefficient management is a common problem faced by public enterprises. Poor management practices, lack of leadership, and inadequate training and development of staff can lead to low productivity, poor service delivery, and financial losses. Inefficient management can also lead to a lack of innovation and a resistance to change, which can prevent public enterprises from adapting to changing market conditions.
  3. LACK OF ACCOUNTABILITY : Public enterprises often suffer from a lack of accountability, which can result in corruption, waste, and mismanagement. The absence of clear performance metrics, inadequate oversight mechanisms, and weak governance structures can all contribute to a lack of accountability. Without accountability, public enterprises may not be able to fulfill their mandate and deliver on their objectives effectively.
  4. OVERSTAFFING : Overstaffing is another common problem faced by public enterprises. Public enterprises may hire more staff than they need, resulting in high labor costs and a low return on investment. Overstaffing can also lead to a lack of productivity, as there may not be enough work to go around. This can result in a lack of motivation among staff and a culture of complacency.
  5. FINANCIAL PROBLEMS : Financial problems are a significant challenge faced by public enterprises. Public enterprises may not have access to adequate funding or may suffer from mismanagement of funds. This can result in a lack of investment in infrastructure and technology, a lack of maintenance of existing assets, and a failure to pay suppliers and creditors. Financial problems can also result in a lack of investment in employee training and development, leading to a lack of skills and expertise among staff.


In conclusion, public enterprises face a variety of managerial problems that can hinder their ability to operate effectively and efficiently. These problems can arise from a lack of clear objectives, insufficient resources, ineffective decision-making processes, inadequate staffing, and poor communication within the organization. In addition, public enterprises may face political interference, which can further complicate their operations.

To address these challenges, public enterprises need to adopt effective management practices that prioritize transparency, accountability, and performance. This may involve implementing performance-based management systems, improving communication and collaboration within the organization, ensuring sufficient resources are available, and creating an environment that supports innovation and continuous improvement.

Ultimately, addressing the managerial problems of public enterprises requires a commitment to organizational excellence and a willingness to adapt to changing circumstances. By doing so, public enterprises can achieve their objectives and effectively serve the public interest.