Re: EOpriv: Developing competent management

["Don Ward" <donrward@hotmail.com>]

Dan: Getting management to change stripes is tough, particularly front line 
supervisors. They just, among other things do not trust their employees. 
Rather than  properly train the employee they prefer to stay on their case. 
It goes downhill from there. If they are replaced, the new supervisor will 
probably be just as bad. While I do not advocate trade unions as the 
solution to supervisory abuse, I have found that many times union stewards 
who are elected by their peers, are better leaders than their bosses. In our 
American Civil war, early on the soldiers, at least in the North  elected 
their officers. I am not certain that they lost any more battles than when 
the system changed and officers were selected. Are you aware of any ESOP 
companies  who elect their supervisors. In one ESOP company I visited in 
southwest Ohio, the employees had somehow interviewed and later voted on 
their new president, who was then hired from outside the company. Don Ward


>From: Dan Bell <dbell@kent.edu>
>Reply-To: EOpriv@cog.kent.edu
>To: eopriv@cog.kent.edu
>Subject: EOpriv: Developing competent management
>Date: Fri, 15 Sep 2000 15:29:12 -0400
>
>Here is another section of the paper. Comments are welcome.
>
>5.3    Developing competent management
>
>       A large part of the rationale for privatizing a state enterprise is the
>conviction that the state does not manage it as well as private owners
>would. The logical conclusion, then, is that original management is
>inadequate and either needs to be replaced or assisted. Where an entire
>economy is moving from state planning to market conditions, this challenge
>may be much more acute.
>
>       While the original managers should not be dismissed without review, it
>seems appropriate that their permanence in their positions not be taken as
>an a priori either. A reasonable amount of time should be dedicated to
>reviewing a number of management options including that of retaining
>current management.
>
>       In addition to the standard set of management skills (sales, finance,
>operations), values consistent with the ownership culture of an
>employee-owned company should be identified and used to screen candidates.
>Where corruption is widespread, another criterion may be the personal
>financial position of the top manager. Some advisors have even joked that
>one needs to find someone who has already stolen enough previously, that
>they are now willing to focus on making the company successful.
>
>       Another challenge for attracting good managers to employee-owned 
>companies
>is financial incentive. If the managers' stake is not sufficiently large,
>adding value to the shares of all the stockholders may not be an important
>enough priority for them. Designing an incentive strategy which is generous
>to managers who perform well for the benefit of all is superior to high
>salaries which drain much needed working capital and do not hold top
>management accountable.
>
>       In transition economies with very limited pools of ready-made managers,
>there will be some developmental needs. One way to address this is to
>create a matrix of all of the relevant skill sets. Not only can the matrix
>be used to assist in the selection process, it can also serve as a
>diagnostic tool to assess management developmental needs. Training
>resources to strengthen each skill set in the matrix can be systematically
>identified.
>
>       Privatized enterprises struggling to survive under unfamiliar market
>conditions do not have the luxury of waiting for their managers to gain
>sufficient market experience. During the first one to two years, these
>companies would benefit from the assistance of short term experienced
>managers. To make such people available, the privatization agency could
>establish a management intervention team which supported several companies
>at a time, or it could subcontract this task out to a network of employee
>ownership and turnaround managers. The cost for this could be rolled into
>the overall long term acquisition financing.
>
>       A lower cost alternative would be to bring networks of newly privatized
>enterprises together on a regular basis for in depth roundtable
>discussions. The group could share experiences and concerns with each other
>and also benefit from the input of a few experienced managers. The Internet
>can also serve as a networking tool; for example, a closed list serv which
>allows a select group of managers to query each other about periodic
>challenges.
>
>       Oversight of management is another significant challenge. The role of 
>the
>board of directors is an important check on management. Employee owners are
>not normally equipped with the typical board member skills needed to review
>management's operation of their company. Over time, this can change with
>the proper training. The natural divisions of opinion between management
>and labor can be more successfully resolved with the assistance of a
>mutually-selected outside board member with the power to intervene.
>
>       A transition board can be a good idea as well; one that serves as a
>guardian of the employee owners' interests until they are ready to play a
>more active role responsibly. Such a board may also be important for
>assuring that commitments made to the privatization agency about the
>continued use of the assets to benefit the local community are met.
>
>--
>Dan Bell
>International Program Coordinator
>Ohio Employee Ownership Center
>Kent State University
>Kent, OH 44242
>(330) 672-0333 << New direct number!
>(330) 672-4063 fax
>dbell@kent.edu
>http://www.kent.edu/oeoc/
>http://cog.kent.edu

_________________________________________________________________________
Get Your Private, Free E-mail from MSN Hotmail at http://www.hotmail.com.

Share information about yourself, create your own public profile at 
http://profiles.msn.com.