A couple of days ago, sitting in the national airline's A320, waiting for it to take off from Islamabad and peeved by the condition of the cabin, impulsively retorted that if they gave me the airline it would become profitable within a couple of years.
Read a few books and you egoistically start believing you are the Batman! Fortunately, a wise man sitting next to me, my boss for multiple years cynically uttered these words of wisdom, "No man can".
Immediately reminded of the Witch King, Leader of the Nazgul, from the Lord of the Rings, and his utterance, "No man can kill me", just before a woman kills him, inquired from the wise man, what he meant by, "No man can".
"Imagine if you were the CEO, and you were displeased with the air hostess's conduct and corrected her, and then assume that she refused to listen to your edict, what could you have done" he asked and being greeted with a blank stare in response, continued, "Absolutely nothing, without the power to hire and fire no man can turn PIA, or any state-owned enterprise around".
He was right.
I am not against employees having unions, but when they become that powerful and political, it becomes impossible to fire any employee, and minus the fear of loss of job, it is improbable that any employee will ever give his best, let alone give anything at all; and they wonder why SOEs are unprofitable!
On the flip side, ever since it became a walk in the park to challenge any appointment in a public sector corporation, and the courts, even if reluctantly, were dragged into deciding who, how and at what pay, it is improbable, if not impossible, that the right man for the job would even offer himself for any such position; just not worth it.
And let's not forget the "If you pay peanuts you get monkeys" quote.
There was no point in defending my position with the wise man - basically elaborating the preconditions necessary for taking this particular responsibility - so the discussions moved on to jaggery, as the plane started taxing towards the runway.
With this not so brief origin of today's piece out of the way, which it was felt was necessary for explaining the context, let's get to the point; on the other hand perhaps the point has already been made!
During the period between January 2012 to August 2013, I penned a series of 26 articles on "Profit", all of which were published in Business Recorder; a journey which I thoroughly enjoyed and which, even if nobody read them, was enlightening for me at least. The first article explained that the objective was to start a debate on the importance of making profit at the national level - which debate never happened. But as the series progressed, the discussions evolved from national assets, the family silver, the perils of privatisation, monopoly rent, and ended up focusing on a fundamental question: "Why does the performance of the same professionals differ between employment with private sector and that with public sector".
The conclusion carried in the grand finale was simple - the fear factor.
For those seriously interested in the series on "Profit", kindly contact Business Recorder, who are likely to have the 26 articles in their archives somewhere!
The 26th article, the finale, began with a quote from Thomas Sowell, "It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong" - and it ended with the quote from Niccolo Machiavelli, from his master piece "The Prince", "Since love and fear can hardly exist together, if we must choose between them, it is far safer to be feared than loved".
More than six years later, I find that the conclusions reached back then were rather appropriate, in fact calling a spade a spade, correct; indeed a happy moment for this author.
If good performance is not appropriately rewarded by continuity of employment at the very least, and if bad performance does not result in loss of employment, if not transfer to Siberia, the best of the best will fail miserably, and repeatedly, in turning around state-owned enterprises.
Amusingly, and rather coincidentally, and I for one don't believe in coincidences, the example given in the finale back then was PIA! And what was said back then essentially holds today.
Somebody made bad decisions but nobody was held responsible by anybody.
The private sector is different, the moment you don't deliver, it is good bye, and if you make the mistake of being dishonest with the Seth, all hell will break loose.
To the question whether or not SOEs can be made profitable, the conclusion back then and the wise man's answer today, is the right answer - without the power to hire and fire, no man can!
(The writer is a chartered accountant based in Islamabad. Email: [email protected]. The views expressed in this article are personal. The views are not necessarily those of the newspaper)
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