Reforming a Public Sector Enterprise
What is a public sector “mindset”? In a monopoly situation, especially in an essential public service category, the customer is taken for granted – he really doesn’t have a choice, after all. He is supposed to chase you, not the other way round. In a public sector enterprise (PSE), employees are rewarded for longevity of service, not assessed against established benchmarks or key performance indicators (KPIs) – a performance culture is not embedded in the organization’s DNA. It is almost impossible to weed out the non-performer and the corrupt from within the system, given the overly complicated set of service rules, laws and regulations governing the employer-employee relationship. More often than not, a PSE is used by the ruling government as a political tool (through their in-house proxies) and a dumping ground to create employment opportunities for loyalists – having the “right number of right people at the right place” is a very alien concept. Very little, if any, long term planning is done, and most of the decisions are made on an ad hoc basis. There’s a budget but no concept of a “bottom line” – unlike a private company, there’s no Balance Sheet, P&L or Cash Flow Statement to manage because, in the end, the State will foot the bill and plug the hole. There’s absolutely no incentive to improve service or grow the operations. There’s little inclination to take a business or a commercial view on any issue. Political interference is tolerated by the top management since most of them owe their jobs to their political masters.
To the contrary, a private sector “mindset” is purely customer-centric, where every action of the organization is geared toward retaining and growing the customer base through improved products and service quality. Customer is the King, not to be taken for granted because more likely than not, he’d have a choice to switch to one of the competitors. A KPI-driven performance culture prevails within the organization, where there’s no such thing as job security unless the employee performs his job with integrity and passion and meets the set objectives. A private sector company focuses on its core competencies only and outsources all non-core functions to third parties that can provide the same set of services much more efficiently – it knows its primary purpose of life and does not venture into areas that can be better performed by others. To achieve the transformation from a public sector to a private sector “mindset” requires a reformist leader or leadership.
A reformist leader is never in a popularity contest; he seeks to do the right thing at the right time, always keeping the end goal and the bigger picture in mind, and not focused on the next day headlines or short term earnings as his guiding principles. History teaches us that all “transformative” ideas are met with skepticism and often downright hostility in the beginning, but are subsequently embraced as “thought leadership”.
The reformist leader believes in active communication, internal as well as external, but realizes that some information is to be shared on a “need to know” basis and that organizations are not “democracies” where the majority view is always deemed correct – which is why it’s indeed “lonely at the top” because the buck stops with him. He, however, inspires and builds an internal “coalition of the willing” to drive through the reformist agenda against the inevitable resistance from the forces of status quo.
He manages expectations by under-promising and over-delivering; he keeps emphasizing that performance improvement is relative and should not only be measured in absolute terms in a turnaround situation. He understands and actively communicates, without sounding defensive, that it is unrealistic to create an island of excellence in a sea of turmoil and chaos, but he never loses hope. He appreciates that there’s no magic wand or Eureka solution to the systemic/structural issues faced by the organization, but a clear vision/ mission/ strategy/business plan needs to be articulated and put into action through a consistent set of “roll up your sleeves” common sense actions, day in day out, and the results will inevitably start speaking for themselves.
He does not believe in spin doctoring, creating a false sense of success when none exists – indeed, he puts his head down, keeps at it, and let others start acknowledging (albeit belatedly and begrudgingly) the tangible signs of recovery and better performance. He does not hide the facts, challenges, and failures – and seeks patience from his stakeholders, especially the public at large that will judge him by his actions not words (any contradiction between the two, and he might as well join politics!).
A reformist leader knows that no organization can or should revolve around individuals or personalities – and unless the SYSTEM is fixed and put on a solid, sustainable foundation, the mission will never be achieved.
There is no substitute for passion and integrity. Competence can, however, be hired or supplemented by surrounding oneself with people who are more competent than the leader in various aspects of governance. Which is why, a reformist leader is never afraid of losing his job. In fact, he least cares about his chair and his only driving motivation is to make a meaningful difference and let
history judge him in the end. He has to be selfless; not in it for the perks, privileges, fame, social acceptability, networking, etc. For a reformist leader, it’s never a 9am to 5pm “job” but a life’s mission with an acute sense of public service responsibility; otherwise, it would be the most thankless job imaginable.
It is important for a reformist leader to personally see the ground reality within the organization – never totally rely on the advice and feedback from a kitchen cabinet or bunch of senior staffers. There’s simply no substitute to talking to and learning from the front line soldiers fighting the battle in the trenches; they are the real unsung heroes and their feedback reflects the true picture, not some glossy report or executive summary prepared in the head office with the help of outside consultants! Whilst this may seem a pretty obvious point, the reality is that it takes a lot of time and energy to tour the sites, etc. and most leaders tend to avoid that, at their peril.
Balancing the interest, needs, and wants of a diverse set of stakeholders is always a tricky proposition for a reformist leader but of paramount importance – it should never be a zero sum game. However; in other words, one stakeholder should not be willfully benefitted at the expense of another. Take a privatized utility company as an example, which would count amongst its stakeholder universe the following entities: (1) customers – residential, commercial, industrial, strategic, etc.; (2) shareholders; (3) employees; (4) lenders; (5) suppliers/vendors/ contractors; (6) federal/provincial/local governments and the regulator; (7) media – electronic and print; (8) political parties; (9) NGOs/consumer protection lobbies; and (10) law enforcement agencies – all of the above not in any particular order of importance. Trying to be consistently fair to all these stakeholders, especially in a turnaround situation, is basically a thankless job and whilst, there’s no prescribed formula or case study to achieve the right balance, all you can strive for is a degree of “fairness” that will always remain subjective and qualitative in its analysis. Having said that, every relationship ought to be a two way street – by way of example, political parties expect a lot from organizations providing essential public service but do very little (if anything) to reciprocate by helping resolve some of the key policy issues faced by that organization that are outside its reasonable control. Therefore, a certain level of tension will always remain in this equation, such that an organization is expected to give but equally entitled to receive its fair and due share from the other stakeholders.
In a rapidly evolving world, the only constant in life is change, so whilst sticking uncompromisingly to the fundamental values and principles, a reformist leader learns to adapt and is flexible enough to respond to external changes as they occur. He should play his innings to the best of his abilities, with passion, and not take himself too seriously! It’s really not about him, but about the cause he’s trying to champion. Respect does not come from titles but from actually making a meaningful positive difference in the lives of others, especially the “small guy”. There is no substitute for decisiveness, unwavering dogged determination, and bloody mindedness to achieve the objective against all odds and criticism – remember, it’s not a beauty contest, let history be the ultimate judge.
Bureaucracy is inevitable in a large scale organization, but a reformist leader doesn’t allow him to be a slave to it, otherwise, all he’ll get is more of the same. Having the right set of internal controls and processes is like car brakes that should allow the organization to drive faster; time is of essence;
In summary, there’s no reason why our bleeding public sector enterprises (Railways, PIA, Steel Mills, KWSB, WAPDA, to name just a few) cannot be revitalized under an able and empowered professional leadership team that has nothing personal to gain from it other than leaving a lasting legacy behind. Frankly, we don’t need imported ideas or indeed personnel to do that; there’s a wealth of talent, competence, and experience available in the country that can readily be utilized for the turnaround. One size definitely won’t fit all; privatization is not necessarily the solution in each case; but good governance has to be the common denominator and whilst that’s become almost a clichéd statement to make these days, it cannot be over emphasized.
Good governance is basically just a fancy phrase for doing the right thing! The PSEs need to run as businesses and grow, so that the size of the overall economic pie increases to accommodate additional white and blue collar workforce. The bureaucracy needs to understand that it’s not a sin to make a profit, and that their primary role is not just to regulate but also facilitate economic expansion and wealth creation. Ceding “control” is a difficult paradigm shift, so is change in mindset for both bureaucracy and the politicians alike, especially in a developing country like ours, but we need to develop a national consensus on it through an honest and open public debate. Productivity gains and accountability can only be achieved when there’s an effective “reward and reprimand” policy in place, applied consistently. In the end, it’s about having the right people at the right place and letting them succeed.