Sri Lanka - next “Enron” amongst nations
The nation’s leaders, including the President, Cabinet, Opposition, and Key Officials, must take lessons in good governance from successfully run private sector companies and adopt frameworks that strengthen the process of governance and associated principles, policies and practices.
To grow on a sustainable basis, business recognizes the primary need to safeguard and balance with equity, the varying interests of stakeholders. The Board is the “trustee” of the resources entrusted to them and is duty bound to ensure, that a competent and capable CEO and management, operate within set policies, guidelines and procedures, for the benefit of the shareholders recognizing the equitable interests of all stakeholders.BUT - The nation’s leader doesn’t appear to question at all decision-making points, whether the varying stakeholder interest are safeguarded and equitably balanced nor have they in place policies, practices and procedures to discharge the trusteeship with equity, transparency and due accountability!
With the concurrence and guidance of the Board, the CEO and management set strategy, agree structures, systems, resource allocations and implement action plans aimed at achieving set long term goals, operating within approved limits of authority, policies and procedures and take collective accountability. BUT - If such a process was in place could the recent fiascos involving the forcible eviction and transport of a segment of stakeholders, abductions and killings of innocent civilians and the vituperative attack at a meeting with a representative of the most powerful nation been possible?
The Board should have an approved policy and processes on public relations, issue of public statement, contingency plan related communications, etc with a designated spokesperson.
If so could the recent fiasco involving differing public statements be possible?
The CEO and top team members have clearly defined job responsibilities, scope, limits of authority and accountability with agreed delivery commitments for results. If so, there will be no room for officials to exceed authority and venture into areas of accountability of others as regularly observed recently with nationally detrimental results.
Successful companies have agreed codes of conduct and ethics binding the Board, CEO and management. These are widely publicized, committed to by all and strictly enforced with disciplinary measures when violated.
BUT - With “media exposes’ consistently showing examples of violations of principles of good governance with no apparent action, such practices do not appear embedded in the governance of the nation!
One or two competitors are selected for focussed targeting with specific strategies, in gaining market share, etc. Never target all competitors at the same time allowing them to gang up and target the business. If so, why does the nation target with vituperative attacks at the same time, all countries, international network alliances and development partners?
Business never promotes lower margin products and services, at the expense of the high margin ones. Never drive customers down market by corporate strategy. If this is so why promote Mihin Air at lower prices and margins and why yield to give it more popular routes and time slots in demand, all taken way Sri Lankan?
Resource allocations are prioritized and focussed to target the timely realization desired goals.BUT - If such a practice is in place within national governance can the waste, unnecessary expenses, subsidies and investments without foreseeable returns be possible?
Strategic, operational, financial, management, reputation, internal, external risks are regularly identified, evaluated based on probability and severity and mitigation action plans developed.
If so, should not such contingency plans in effective action be seen when breaches of security occurred with the LTTE air capability coming into reckoning?
Clear rules of transparency, strongly linked chains of internal control and independent reviews by internal audit and Audit Committee with policies in practice on adherence to business standards including whistle blowing are in place within role model private entities. BUT - The absolute opposite appears to prevail in national governance.
The Board, Audit Committee and management recognize the positive independent role of external audit. They diligently and with commitment support the external audit process and clear audit queries and strive to avoid audit strictures and qualifications. Why then is the Auditor General’s Report and COPE Report set before Parliament, reporting significant levels of fraud, losses, waste and mismanagement ignored by the leaders?
Successful private sector entities select, empower, promote and reward people based only on meritocracy, and with equity. But - In national governance it appears that selection, rewards and recognition are by family connection, friendship and political cronyism!
Delivery of consistent, extraordinary results with excellence of customer services are assured through competent and capable people subjected to appropriate training and development working with a high morale, duly motivated. BUT - The national level strategies in place governing education, university, training options are not designed to gain competitive advantage whilst identified essential reforms are in the back-burner.
Year on year deficits and negative free cash flows in business demand early change management strategic action and corporate restructure. BUT - The government boasts of growth in the face of year on year widening budget deficits with increasing levels of national debt.
Increased borrowings, especially long term, are always justified and are supported with clear cash flow projections showing ability to service interest and repayment capacity. In the case of foreign borrowings the ability to absorb exchange risks are also justified. BUT- The government appears to resort to short rated debt from local banks and foreign sources, sometimes to finance subsidies and current deficits and these commitments are without justification of debt service capacity.
The CEO or any single manager must not have disproportionate power allowing total control and accountability over resources. Equitable distribution with effective internal checks, limits of authority and other checks and balances are essential. Why then is over 70 % of the national budget allocations reported as controlled by the President and his siblings?
Benchmarking against best performing industry standards, assessments via market and perception surveys and regular review for corrective strategic action are key responsibilities of the CEO and management. BUT - The nation appears to slide down to the bottom quartile in every global and national index/ survey and none appears to care or act.
The Board and management use effective management information to evaluate performance and regularly subject their own performance to critical review for corrective action. BUT - Other than blaming the international community, external shocks, the actions of the opposition, those in governance appear to avoid performance evaluations and corrective action.
With the national governance framework in place as described above, diametrically opposite to good governance practices of successful business entities, with the business community and civil society as silent observers, Sri Lanka can be the next ‘Enron’ type failed nation!