Re: EOpriv: Response to Wheatcroft: Developing competent management

[Shann Turnbull <sturnbull@mba1963.hbs.edu>]

Dear list readers.

The value of Non Executive Directors to improve management is highly 
questionable because they generally lack the information, will and 
capability to act to initiate management changes, especially when they are 
servants of the managers in an employee owned firm.  This problem and the 
solution is set out in my article on "The competitive advantages of 
stakeholder mutuals" in the COG library.

Regards

Shann


At 05:43 PM 21/9/2000, you wrote:
>Dan Thanks for your comments
>
>Non Executive Directors are people who do not work for the company but are
>bought on to the Board for their expertise in various fields. In a
>conventional company  they would be senior figures from Banking, Lawfirms
>and probably a Multinational Company. They bring breath and outside
>knowledge to the Board. In some cases they are the body that assess the
>executive directors and also acts as their salary review team. They are
>usually paid a retainer and are only expected to be active in the company a
>few days a month.
>
>In my present company Stagecoach we have 4 Non Executives out of a board of
>12
>
>In some UK Employee Owned Companies the Non Executives would also include
>members who are experts in EO. It is not uncommon for one of the non
>executives to be appointed chairman of the Board.
>
>Coming back to the main topic if I may
>
>The 2 key factors in management of an employee owned company is Transparency
>and Accountability, with out these 2 factors you will never win the trust of
>the workforce
>
>Regards Dave
>----- Original Message -----
>From: Dan Bell <dbell@kent.edu>
>To: <EOpriv@cog.kent.edu>
>Sent: Wednesday, September 20, 2000 7:53 PM
>Subject: EOpriv: Response to Wheatcroft: Developing competent management
>
>
> > Dave,
> >
> > Again I share your observation that if one can fix
> > a problem of poor management without privatizing, poor
> > management ceases to be a valid reason for privatizing.
> >
> > I think that state companies and publicly held companies
> > (ie, traded on the stock market) often share the same
> > problem, which is that the owners are too far removed
> > from the business. If managers can get away with wasteful
> > practices without being held accountable, they will.
> > Some of this waste may be in forms that enrich them
> > personally.
> >
> > Others, I believe, refer to this as the principal-agent
> > problem. Privatization is intended to align the interests
> > of the owners and the managers by making them one and the
> > same, or at least to create up-close (as Jeff Gates would
> > say) owners who are better able to keep an eye on their
> > managers.
> >
> > Certainly a possible alternative to privatization would
> > be decentralization into local autonomous units with
> > economic incentives based on local performance, while
> > retaining state ownership.
> >
> > Thanks again for your helpful comments. Could you expand
> > a little on what you mean by "Non executive Directors".
> > I was a little confused by the term.
> >
> > Dan
> > --
> > 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
> >