Techniques of Turning-around Businesses

inMaking Public Enterprises Work (MPEW): From

Despair to Promise

Address to MASTERS OF BUSINESS

ADMINISTRATION STUDENTS, Makerere University Business

School

1

Dr. William T. MuhairweDr. William T. Muhairwe

Managing Director, NWSC-UgandaManaging Director, NWSC-Uganda

October-2010October-2010

What are Public Enterprises?

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A Public Enterprise is a business organisation wholly or partly owned by the state and controlled through a public authority.

Some public enterprises are placed under public ownership because, for social reasons, it is thought the service or product should be provided by a state monopoly.

Utilities e.g Water, gas, electricity etc, broadcasting, telecommunications and certain forms of transport are examples of this kind of public enterprise

(Ref: Encyclopaedia Britannica, www. Britannica.com)

What is or has been the Problem?3

Poor Leadership. What is Leadership? – the process of social influence in which one person

can enlist the aid and support of others in the accomplishment of a common task. (Alan Keith, 2010)

What happens in Public Enterprises? Emphasis is put on managing, controlling and interference Visionary and focused leadership is non existent Organizations have no clear and motivating visions and missions Lack of leaders who can study and understand the existing performance

situation, set vision and bring turn-around solutions

What is or has been the Problem? …4

Poor ManagementWhat is Management? - a process of getting activities

completed efficiently and effectively with and through other people. (Gulick & Urwick, 1937)

Management Functions Planning Organising Staffing Directing Co-ordinating Reporting Budgeting

What is or has been the Problem? …5

Managemet also involves Goal setting Goal setting involves establishing specific,

measurable and time-targeted objectives "Goals provide a sense of direction and purpose" Goal Setting should be SMARTER

Specific Measurable Agreed Realistic Time Bound Ethical Recorded

What is or has been the Problem? …6

Poor managementAtypical Public Enterprise The BOSS Attitude / Scare The BOSS / Manager is always correct – no

consideration of staff views Bureaucracy Business as usual Attitude – No innovation Poor Time Keeping: Late Arrivals- Early Departures Individual Sketch Plans drive direction of work- No

common plan/ sense of direction Micro Managing

What is or has been the Problem? …7

Poor Accountability & Governance Lack of accountability frameworks - No

framework that clearly spell out each parties obligations to avoid overlapping of responsibilities

Poor governance and corrupt tendencies - everyone wants to be rich right from the time they are born

Technology slavery - perception that new technology is the solution to all organisation problems

What is or has been the Problem? …8

Poor Accountability & Governance Attitudinal problems - living with the status

quo (sit and do nothing syndrome) External interference – Political Interference,

global crisis external to the business Inadequate financing – is the problem availability or

leadership?

The list is endless ----------------

What are the Implications ?9

Financial crises for businesses – bankruptcy & deficits

Poor service delivery - rampant customer outcry

Management condemnation from the political and other oversight authorities

The sinking ship – restructuring and loss of jobs

Invitations/imposition of managerial ideologies, including those that are incompatible

Again, the list is endless ----------------

What next??10

What are the first things you would do if you were appointed Principal MUBS, Vice Chancellor Makerere University, Head of Department, Bursar, Dean of Students or even Head Master of Buddo, Director Mulago Hospital or MD Standard Chartered Bank??

What Next?? 11

In Theory, Any Manager would do the following1. SWOT analysis2. Formulate a Vision 3. Formulate a Mission4. Design Strategic Plans and Goals (Long-term and

Short-term) Performance Contract with GoU Corporate Plans (3-5 years) Annual Financial Budgets

5. Formulate Operational Plans/Programmes (short-term and long-term)

NWSC Case: SWOT Analysis as a first step of the Transformation Process

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NWSC SWOT Analysis as at 1998

Strengths: Sound infrastructure, abundant plant production capacity enabling legislative framework, well trained workforce, sound billing system, good corporate planning strategy, good financial budget planning policy.

Weaknesses: Low staff productivity (36 staff/1000 connections),high UfW (60%), Low Collection Efficiency - 71%, huge arrears of about 14 months of billing, high number of unviable towns.

Opportunities: Government support, relatively stable economy, donor support, abundant water resources,

Threats: Huge Debt and pending debt Servicing obligations, VAT law.

NWSC Case: Visions & Mission

Previous Visions of NWSC1. To be the Pride of the Water Sector in Uganda

(before 1998)2. To be the Pride of the Water Sector in Africa (1998-

2004)

Current Vision Statement3. To be One of the Leading Water Utilities in the

World

Mission StatementTo provide Efficient and Cost effective Water and

Sewerage Services, applying Innovative Managerial Solutions to the Delight of our Customers

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NWSC Case: Strategic & Operational Plans

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Formulated both Long Term and Short Term Plans

Policy level Strategic level, change in Board & Management First Corporate Plan 1997- 2000 Annual BudgetsOperational level Operational framework through Change

Management Programmes (100 Days, Service and Revenue enhancement project

(SEREP), Area Performance Contracts (APC), Stretch out programme Internally Delegated Area Management

Contracts (IDAMCS), One Minute Management Concept (OMM), Checkers system

See our Website for details: www.nwsc.co.ug

Key Lessons: Main Performance Drivers

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=>Autonomy■ Devolution of power from centre to areas■ Institution of Performance Contracts (APCs and IDAMCs)

=>Customer Focus

=>Team Work■ Collective participation in the development and formulation of the

programmes. ■ Work outs through the “stretch out programme” in which workers

were free to air out any of their grievances and needs.

=>Monitoring and Evaluation Systems■ Checkers un announced visits: both process ad outputs oriented

=>Appraisal system ■ Strong incentive systems and equitable gain sharing plans■ One Minute management system■ Performance Contracts for all staff■ Performance based pay■ Penalties

Key Lessons: How do you Manage Change?

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Ref Book: “How to be Brilliant; Change your ways in 90 days”-Michael Happell1. Positive Action2. Break out of Limiting Beliefs3. Think Differently4. Ability to Manage Stress5. Massive Action

Key Lessons: How do you Manage Change (Positive Action)

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“Attitudes that Attract Success”- Wayne Cordeiro

Attract Success1. Make your choice2. Believe you can change3. Train your eyes to see what is

good4. Practice, Practice & Practice5. Never Give Up

NWSC Key Achievements18

Performance Indicator 1998 2010

Service Coverage 48% 74%

Total Connections 50,826 246,459

New Connections per year 3,317 25,000

Metered Connections 37,217 245,199Staff per 1000 Connections 36 6

Collection Efficiency 60% 98%

NRW 60% 33.3%

Proportion Metered Accounts

65% 99 %

Annual Turnover (Billion Shs)

21 112

Profit (Before. Dep) (Billions Shs)

8.0 (loss) 25.4 (Surplus)

1919

Title: Making Public Enterprises Work From Despair to Promise: A Turn Around

AccountAuthor: William T MuhairweCo-Published by: IWA Publishing &

Fountain Publishers

Subject of MPEW20

Public enterprises remain the dominant medium of service provision both in developing and developed countries, MPEW;contains unique home-grown turnaround reform steps that can help to revamp under-performing enterprises. - It provides a response to roadblocks that slow reforms in most public enterprisesdemonstrates that performance contracts combined with incentives can work wonders in public enterprises. provides experience & lessons on how enterprises can work without industrial unrest in very difficult conditions. demonstrates how public enterprises that have been listed for privatisation can provide alternative restructuring steps.has tested lessons that any enterprise can benchmark to address its service delivery challenges.

What does MPEW contain?21

MPEW is arranged in Five Parts and is combined with facts, simplicity and fun, to presents a unique account of methods used for constructive engagement and dialogue with donors, government officials, workers, suppliers and, indeed, the public/customers.

All chapters are interspersed with tested lessons that any enterprise can benchmark to address its service delivery challenges.

Part One - Tough Job: Could it be Done? – explains how NWSC with a social mission objective was conceived and set-up. And how various teams tried their best to keep afloat, under very difficult conditions

What does MPEW contain?...22

Part Two – Down to Work: The Turnaround – discusses how the Author together with his Managers, mooted many ideas to turn the Corporation´s fortunes around. This part highlights the importance of team building and teamwork and underscores the importance of involving members of staff, from top to bottom

Part Three – So far so Good – provides a snapshot overview of the net effects of the various strategies implemented and how they contributed to the overall improved performance of the Corporation.

Part Four – Not Alone: Partners' role – recognises the important role played by the various development partners, civil servants, politicians, and business community to move the Corporation to the Top

Part Five – Yes We Did – answers the question posed in Part One and demonstrates that ideas which lead to development are not cast in stone

The targeted readership...23

Managing Directors/CEOs and top managers of Performance oriented companies/service organisations

Government officials

Development partners

Reformists of non-performing enterprises

Academicians – Students, Senior lecturers/professors in departments of engineering, business administration, economics and management, finance and administration, and researchers

In Conclusion 24

Public Enterprises can work with the right Leadership and Enabling

EnvironmentMPEW provides some practical solutions

Remember: “knowledge is power” and providing information to stakeholders disturbs the status-quo.

(Prof. Sanford Berg, 2010)

For more information & literature read: Making Public Enterprises Work, available at the http://www.iwapublishing.com