Public sector – Corporate leadership

(This is the FIRST in a series of TWO articles on the above subject).

All over the world, the business sector places great emphasis on Corporate leadership par excellence. The world’s business leaders are men picked for the astute vision, intelligence, integrity, knowledge and the capacity to lead by example. More and more, we see that the selection process is getting discriminating and exacting. Even Jardine Mathieson, which is the role model company for the saga “Nobel House”, has picked a 38-year American business executive to over-see a multi-billion dollar empire whose top leadership (TAI-PANS) have previously been drawn from the Kesswick family for the last 150 years.

One of the major reasons for the failure of the public sector Corporations all over the Third World has been the failure of management drawn from the bureaucracy. You cannot take a man used to years of playing safe and put him charge of a business house where every transaction is liable to be a calculated risk. It is neither fair to the man or the Corporate entity that he is put in charge of. Delay in decision making, which is supposed to be a bureaucratic strongpoint, is the perfect anti-thesis for a commercial unit. According to normal bureaucratic modus operandi, he cannot afford to make a wrong commercial decision and as such he plays safe, and in playing safe wrecks the basis of enterprise, which is the hallmark of commercial success.

One cannot disagree with the PPP’s sweeping nationalisation in 1972 considering that things had reached a stage where a group of “robber barons” were completely ruling the roost, having monopolised industry and commerce within a stagnant group of 2 dozen families. Something had to give and the result was a swing of the pendulum to the other extreme rampant nationalisation.

While in theory nationalisation was done for the good of the labour class in general, the fact remains that in fact all the taken-over industries suffered because of lack of professional management. The government had to fall back on its administrative cadre and though men with excellent credentials were sent to administer the industrial units, and were singularly sometimes above par, they collectively lacked commercial expertise and business acumen. No doubt the management showed great efficiency in administration but the business in all cases showed a sharp decline. Good management did not translate into corporate profit and the reason was that the very qualities that made the bureaucrat an excellent administrative manager also made him into a business disaster. The Government tried to set up a Corporate service but because it depended upon all the leaders to come from the public sector, the Corporate service envisaged never materialised and the quality of the personnel deteriorated alarmingly. From time to time one came across superb technocrats but not only were they few and far between but more often than not paid the penalty of commercial behaviour by being quartered and nearly hung. That is the essence of the dilemma, a virtual Catch-22 in that you expect initiative in all commercial activity but the moment it is less than successful in corporate behaviour, the penchant in the public sector is to come down on the recalcitrant like a ton of bricks.

There are at least three recent cases among serving CSP officers that one can mention as excellent examples of Corporate leadership, all of whom were individually almost sentenced to rigorous hanging for six months for various reasons.

Mr. M. Zafar Iqbal, presently Federal Secretary, Ministry of Production, made the National Development Finance Corporation (NDFC) into one of the finest investment units in Asia with Corporate management par excellence. This finance company, though Government-owned was lauded by foreign experts as an example of fine initiative coupled with imaginative investments that contributed significantly to industrial development in Pakistan. As soon as he left NDFC he was hauled over the coals for supposedly financial extravagance, allegations which on investigations were found patently false and without foundation.

Mr. H. N. Akhtar, presently Federal Secretary, Ministry of Communications can be called the real father of Pakistan Steel Mills. It is during his time that the obsolete monstrosity started to function, to produce for Pakistan’s economy the awesome gap that existed because of a lack of a credible steel sector. The management was streamlined, export and purchase procedures were modified in a sophisticated manner and a white elephant acting as an albatross around the neck of Pakistan’s economy was made to lay eggs. The reward for all this corporate excellence was to suffer the indignity of an enquiry against him and a stint in oblivion. The enquiry found nothing of any substance.

The last of the case-histories is that of Mr. Mohammad Yousaf, present Federal Secretary, Ministry of Religious Affairs. As Chairman TCP he oversaw the revitalisation of exports in TCP, the theory of which he had propounded as Vice Chairman Export Promotion Bureau for many years. The TCP in 3 short years was made into an export-oriented organisation, finding avenues for non-traditional items never even attempted before. He gave TCP a new life as an export house to its previous role as a leech on Pakistan’s economy in acting as an import house for sensitive commodities. The TCP was revitalised, rejuvenated and a functioning commercial home when he was promoted and posted to the next rank but jealousy and vindictiveness almost got him also and he also had to face the indignity of spurious allegations of dubious nature and origin from the FIA and the PM’s Inspection Commission.

These men have been mentioned because each has contributed in his own manner to overturn my basic theory that a bureaucrat is anathema to business. The problem lies in the fact that these men have been exceptions to the rule that square pegs cannot be put into round holes. Each has had brilliant success in the Corporate entity he was entrusted with and in his honest success has aroused the jealousy and vie of lesser mortals in superior positions. Has any move been made to find out the origins of the complaints against them or isolate the ones who acting as collaborators/lackeys of their masters in high places in orchestrating these false allegations? The long and short of it is that bureaucrats are shy to take risks because of good reasons and anyone reluctant to venture cannot indulge in business ventures. You cannot base a complete logic on exceptions to the rule.

On the other hand, the public Corporate sector in Pakistan suffers from a litany of woes directly inferable to the bureaucrats in the Corporation. Lacking business acumen, they usually manage to inculcate in themselves all the worst qualities imaginable in a human being in different permutations and combinations, the nett result is the decay and destruction of the commercial unit they are supposed to manage and make productive.

One should, therefore, take a case-history of a single faceless individual, without naming him to see how he operates once a Corporate entity is placed under his care and tutelage.

Having spent many years in administration where the luxuries of office and residence are barely comfortable compared to that of the average businessman in a cosmopolitan city, the bureaucrat arrives in a Corporate entity like a knife ready to go through butter.

The trappings of comfort and luxury are the first perquisites that he craves for and acquires. These include a few airconditioned cars, preferably including a BMW because that is a status symbol, and extra manpower at his residence in the form of house servants, driver, cook, gardener, etc. Most of his international telephone calls and local trunk calls are termed as official business calls and if he is constructing a house, then an official Suzuki pick-up is useful to fetch building material besides a person on official pay to act as purchaser extraordinary/supervisor. The Board of Directors, also composed of bureaucrats, some regular fawners, the others terrified because of the Sword of Damocles in the form of an ACR handing over their heads, are also coerced into “forcing” him to accept a higher rent, usually more than the authorised amount. If he is the owner of the house he is living in he will also “reluctantly” accede to the advance of 2 years rent that the Board of Directors will “force” him to graciously accept. After all it is public money. His lunches and dinners will be spent entertaining friends, relations, cronies among other colleagues besides pandering to his own personal PR with the “powers that be” at the most expensive restaurants or prestigious clubs in the city. As far as medical bills are concerned, the less said the better.

Next the bureaucrat will turn to the organisation that he unfortunately heads. He will create his own circle depending upon his personality but mostly of some ethnic origin. The gentleman will then start a regular witch-hunt to rout out the “favourites” of his predecessor, relying on the information given by his intimate circle. Efficiency, honesty, and other qualities of the poor unfortunates do not cut any ice with him, he has a scalpel and he must wield it regardless of the consequences to the organisation. His minions fills his ears with the targets of the own personal vie so the list of bloody heads that will roll usually are long. While he is doing all this, he must make sure that the Internal Audit within his Corporation is staffed by personnel of his choosing so that any financial boondoggling that he attempts can be covered. The “file” must be kept clean.

The target of his anger then shifts to the “business favourites” of his predecessor particularly those who do not fall into line, the pattern used is the same as that for his employees except that the viciousness takes on a new level, no holds barred. No thought is given to the fact that these businessmen may have made significant contributions to enhancing the business of the Corporation. The only thought is to harm the individual businessman and his company somehow to withhold his genuine commissions on any pretext so that his cronies may ask for their “cut” and to humble him in front of his foreign principals hoping that they will terminate their agreements with him. Wherever and whenever he can he will at the same time proclaim his neutrality while bad-mouthing the unfortunate person in the same breath based on his ethnic, social or commercial background.

Now he will turn his attention to the business at hand. Having terrified and coerced his Board of Directors one way and then the other, he will proceed to indulge in only that business that suits his associates, in service and in business. The rule of the game is not Corporate profit but individual profit and if he gets Corporate profit, it all adds to his “honesty” and will mean two birds with one stone. Double-talk is the fact of the hour without any qualms whatsoever, even if it means lying through one’s teeth.

The tragedy is that such people survive for two reasons by (1) using their own contacts of years of service to the full (2) crying crocodile tears about their unfortunate position in life to sympathetic superiors and colleagues (3) using the basic sympathy, gullibility and gentlemanliness of a large majority of people in high places (4) using entertainment, etc at public expense for their own personal PR (5) spreading misinformation about extraneous reasons, usually about their predecessors (6) posing to high heaven to be honest and neutral in any affair rightly blaming it on another Director and his subordinates who make up the “files” (7) using the position of a relation in some position of authority to influence his superiors.

Of such people one expects Corporate leadership in the public sector. It would take a book to go through the misdeamenour of someone like the case history above. It would be proper while thinking of Provincial Ombudsman to give a serious thought to Commercial Ombudsman who cannot only provide a forum where honest commercial mistakes are recognized but quick, arbitrary justice is rendered to complaints against Corporate bodies. At the same time intentional “mistakes” must be punished without any mercy. In the meantime, as a private individual, if one files a suit against a particular individual during his term of office, the individual recalcitrant will probably laugh himself sick because he will be defended at public expense. The only alternative left is to wait until the individual retires and then file among other things a defamation case against him in a court of law. In the defamation case, one can produce as evidence all facts of wrong doing and let the court decide not only about the defamation but also whether the individual should be allowed to retire peacefully to live on his altogether ill-gotten gains unscathed by the harm caused to numerous individuals in government or private service or whether he should be prosecuted and made an example of, despite his acting as innocent as the Pope, and such an unfortunate wretch that everyone sympathise with him. Do not be fooled, his bite is much worse than his bark.

Corporate leadership has to eschew the basic qualities of a bureaucrat and if it cannot be achieved then there is no hope for the public sector that the man heads.

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