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Feature Article of Monday, 3 September 2012

Columnist: Danso, Kwaku A.

How to Manage Government Agencies

: Ref: Ghana's Tema refinery shut after breakdown

By: Kwaku A. Danso

Fellow Ghanaians, this is another sad story indeed reported by Reuter (Wed Aug 29, 2012 5:57am GMT) and posted on GLU Forum. How is it possible that the only refinery in Ghana for petrol, a commodity nobody can do without and profitable, cannot maintain the equipment and facilities and pay people well and allow Engineers to leave en masse and then suffer to the point of closing down! This is a further example to demonstrate the failed State we are in now in Ghana and been in for some years now but deceiving ourselves of improved economic growth and being a middle-income economy!

No nation can claim to be middle income or developed when the evidence shows otherwise and resources are only found at the extreme end of the spectrum of the society, where most suspect there is unethical wealth distribution or corruption if not outright public theft.

Ghana has been ranked the 9th most mismanaged nation on earth by Forbes Magazine. This hurts. However, a good example of a failed and mismanaged State is that even when agencies of government are profitable and in such monopoly demand and supply situation as a refinery, we cannot use part of the money collected to service and maintain the equipment. Isn’t this the same reason all the more than 500 or so State corporations failed after the overthrow of Nkrumah? The use of common sense seem to have vanished when individuals, otherwise brilliant in school, took over the running and managing of agencies and corporations for the society, and nobody fired them for mismanagement or prosecuted them for improprieties.

Human beings can be corrupt but they can be managed. Most of the problems third world nations have had are attributed to corruption but that is not necessarily true from a leadership standpoint. Americans are no more pious than Ghanaians and there are crooks in every state. However the society is managed (to reduce, but perhaps can never eliminate) human greed, theft and corruption. The core part of this problem of State-owned agencies in Ghana and other third world nations unable to deliver top quality service and results, from the Management standpoint, is the centralization of power and poor or lack of executive decision-making. The final blame will have to rest with the President of the nation. Weak ineffective leadership has been the problem. A simple example may illustrate the point. Somewhere in the early 1990s my younger brother and I put money together to help covert our family house garage in Madina to a retail store on a street that today has become a major traffic and human walkway. The family members run the business down and all inventory and provisions were squandered. We the investors refused to replenish the inventory and the store remained vacant for years till my youngest sister, as she told me, had gotten tired of living poor with her children in rented houses. She returned home and turned a small loan from her husband into what is now a major retail store with women’s clothing, shoes and accessories. She bought her own car, and in 2010 when I went home she had upgraded it to a newer nice Toyota.

One of the secrets of sustainable and profitable and effective management is the sense of ownership. When human beings feel a sense of ownership in the entity that employs or sustains them, corporation or agency they are managing, they tend to manage it well as they would their own lives. Of course some people are irresponsible whether it is their own children or lives, and hence we expect some failures. This secret was implemented in the many Semiconductor, Electronics or Computer companies I was associated with in my career in the 1980s to 2000s and typical of what most California Silicon Valley companies do – offer stock options to key employees. Employees of successful companies like Intel, Apple, Yahoo, Google, and now Facebook, have become millionaires when their companies went public and succeeded. Similar techniques are used in other companies such as giving end-of-year bonuses to employees. Human Resources Management is a specialization in industry and Ghana must adopt and learn. Our Presidents must take responsibility for such failures and in my opinion, some of these leaders deserve to be prosecuted for this failure in their sworn duties.

The second and perhaps most important aspect is what I mentioned at the beginning about the excessive centralization of power. An alternate way of managing complex organizations is what is called “Profit Centers”, where each agency of Division of a Major corporation of Government agency can be made into a Profit and Loss center. Each is responsible for their own expenses of materials and human resources and balance that against the output of the organization. The hired executives are evaluated like any corporation would evaluate the people they hire to work for stockholders or owners. Their salaries should be based on the resources at hand and not like the Norwegian managers of Ghana Telecom were paid $150,000 per month on a corporation losing money. No way any reasonable person would run their own family business or affairs like that! For example, Ghana’s Electricity Corporation (ECG) and Ghana Water Services Corporation (GWCS) belong to the people and taxpayers of Ghana, and held in legal constitutional trust and managed by government. Under an effective leadership it can be given the mandate to run as a profitable utility corporation and hire the most competent and deserving managers from anywhere they can hire them, and with a Board that can fire the President and Executive as need be. Of course they can be given bonuses if they meet set performance criteria. Selecting such Board or executive under a politically tainted framework is total failure and unworkable.

If there is national goodwill, the National Development Planning Commission, for example, if well constituted and selected in impartial non-political manner, could possibly be the super-agency over the Public Utility Regulatory Commission (PURC) which would specify what standards and profit margins are allowed by ECG and GWSC. They would be run like any corporation and complaints are monitored by PURC and the NDPC and people hired or fired as needed to get the job done. Every agency must have a certain specified level of performance or allowable complaints beyond which people must be fired or lose their jobs. Salaries should be set based on what is in their account and not what somebody external is going to bring in later. This same method should be used for the Tema Oil Refinery (TOR) and could have been used for the other governmental agencies, hotels, factories, pharmaceutical companies, publishing companies, canneries, steel and plastic factories left by the CPP government under first premier Kwame Nkrumah. Smart people can convert family or government assets into long term sustainable corporations that can employ hundreds of thousands in Ghana. Lee Kuan Yew of Singapore did it and Ghana has no excuse except for criminal negligence of greed and selfishness. It is indeed sheer failure in management and leadership, what Prof. Ayittey calls stupidity, to shut down factories and import the same items such as canned tomatoes, soap, toothpaste and other foods that we need and use every day in Ghana. Tema Oil refinery should not be allowed to go down in shame as all governmental agencies in Ghana have been allowed to do. President Mahama, if he is serious about the job, will do this and do this within the next three months before elections. Failing that he leaves no legacy at all if he is defeated.

Kwaku A. Danso, M.Eng., PhD (Organization & Management/Leadership) Contact: dansojfk@gmail.com President - Ghana Leadership Union (NGO), Moderator-GLU and GLF Forums. Author: Leadership Concepts and the Role of Government in Africa: The Case of Ghana

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