October 19, 2008: The “Roop” Economic Corner
Nowhere in the corporate world will you ever find a Chief Executive Officer (CEO) being hired without any experience in managing people and more importantly how to manage profitability of a company. I believe the mismanagement we have seen in the way our country has been directed over the last decade is a result of inexperience at the highest levels of Government.We have a President that never managed an entity in the private sector and most ministers that are in portfolios never had any experience.
You can judge which ones fit those criteria.This week we were once again humiliated by Suriname, demonstrating our lack of defence. We will have to sign the Economic Partnership Agreement that our President waited until a few weeks to realize that he did not agree, and again this week, after 16 years in government, realized that the Demerara Harbour Bridge was not meant to last to the 21st century.
COMPARISON OF MANAGING A PUBLIC COMPANY
One of the key focuses of any public for-profit company is revenue and shareholder value. All departments within the company are focused on the components that ensure a rising or stable stock price.
Metrics are developed, starting at the top and filtered down to every department. The sales funnel is constantly updated to look at the best few sales most likely to close and that will generate revenues, meet profit margin requirements and thus increase shareholder values. The company is well aware of the consequences from the board for not adhering to a plan but more importantly - from the shareholders.
Managing a company requires the development of a three to five-year plan that is constantly reviewed. Budget submissions from each department and the linkages to the company’s plan are reviewed and approved.
At every department meeting, the metrics are reviewed, updated and a determination is made as to whether the deliverables are being met within the budget. This cycle is recurring. External drivers can affect the plan, but adjustments are then made quarterly or at a mid-year review.
Each department head is constantly ensuring coordination with other areas within the company to be able to deliver a quality service or product to the clients or customers. Superior customer service is the desired outcome of this long and detailed process. If the company can produce happy customers, the chances of repeat business increase exponentially.
Successful companies are run on measurable indicators and sound management.MANAGING GUYANA – THE COUNTRYIn Guyana, the Government (President-CEO) typically presents a budget to Parliament (Board of Directors) for approval. Board Members contribute changes, but the CEO decides that no changes are allowed and thus leaves original budget as it is. In any other company, this practice is not allowed. Shareholders (population) look on in disgust.
The President then appoints his senior Vice Presidents to each of his departments (Ministries). They have all submitted some form of budget. At the executive meeting (Cabinet), there are no metrics on how each department will accomplish their goals or whether they had even developed any.
The broad budget submitted to parliament is now ignored at executive meetings.When it has become apparent that the customers are not at all happy with the services being rendered, the President then tells his senior officials they are incompetent and declares himself the sole owner of the money.He travels to his subsidiaries (communities) and doles out large amounts of cash for projects that were not part of his initial budget submission.
These expenditures bring the company margins to negative numbers. Shareholders now, not only have loss all stock, but have invested in a company that has gone bankrupt.The President went so far as to surprise his VP of Works during a visit to one of his projects (Demerara Harbour Bridge) by publicly chastising him, describing the neglect as being criminal.
Was there not an executive meeting (Cabinet) that would have gone over the projects, timeliness, metrics, budget etc.?The saga of the Management Team continues though. The VP of Tourism presents plan to increase visits, and thus create new revenues, but failed to implement any coordination with the Works Department to perhaps build a 5000-feet runway at Kaieteur Falls in order to attract regional carriers to fly direct.One of the Senior VPs of Agri has recently been faced with the loss of a major revenue generator (Sugar).
He works hard at retaining this vital source of income, but in the process he loses track on developing new sales to replace the revenues that will be lost. It would certainly seem as if his department could only do one task at a time.
Normally, this is a ticket to “You are Fired” . But with this “company”, no one gets fired, just moved to another position.
Continual, grinding poverty, corruption and a lack of jobs have all led to the current “failed state”, crime-ridden situation in which we now find ourselves. The “plunder” economy we witness daily is, however, the single major achievement of the last sixteen years. Shareholders may have given up on this company.
A campaign to re-engage shareholders must be waged. This is a company that must be saved.In this comparison, the management team of Guyana would no doubt receive poor customer ratings and could expect their company/country to go into bankruptcy. Which they do and which it has.
It is time to replace this management team with more competent players who have the capacity to get this country back on its feet and ready to provide the best customer service possible.The stock price is at its lowest, shareholders are dissatisfied. At the next major shareholder meeting in July 2011, it is the time we change management.
Until next time “Roop”.
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