Our “honorable” CA members, in their own words, are under a sacrosanct oath of writing the constitution of this country that witnessed over a decade of strife. But after the hard fought battle for a new Nepal, the country still remains mired in uncertainty and political discord. The political arena has been largely dominated by party conflicts and buck-passing. So, the question is, have we got the right people for the job? Can these same people deliver what is expected of them?
Let’s for a moment assume the CA is a corporate house responsible for “Constitution Promulgation”. We, the people, are the investors who have appointed a huge management team and have vested them with special rights to run this institution. Now, as this is a corporate world, the question is, as investors should we actually continue with the existing management structure or has the time come for some a reshuffle when the management has clearly failed to deliver appropriate returns on shareholder investment? For even as the investors have pumped millions of dollars into this project, the management has time and again failed to deliver.
Our management, by any standard, has failed miserably. In this situation, should we as the investors retain this inefficient workforce and continue to let them rake in high salaries? Shouldn’t there be a correlation between performance, management compensation and corporate success? I wonder if any of the members of this management team would have the fortitude and determination to say “No” to compensation until the job is done. After the global financial crisis started biting in early 2008, Citigroup CEO made a decision to cut down his salary to US $1 a year and avail himself no other compensation until Citi returned to profitability. Many other CEOs who are normally known for their relentless quest for wealth have settled for little or no salary until the time they are able to bring their companies back on track. Following the economic crisis, more and more corporate bosses are guided by the principle that pay should be linked to individual, team and organizational performance. Alas, our management is only concerned about making money for themselves. In their private quests, they seem completely oblivious of the need for vital reforms.
If the management is prudent and result oriented, there is a healthy and sustainable cash flow that results in dividends. There will be a constant rise in shareholder’s value. After all, the eventual measure of a company’s success is the extent to which it enriches free cash flow over time and delivers value to its shareholders through increased earnings, dividends and share price. But if our CA was a listed company, its shares would be trading below its par value. Our CA is a very good example of an inefficient management, a perfect case study of how frequent power struggle, lack of consensus, bad decisions stemming from vested interests, insufficient experience, sharp shortage of judgmental power, intellect and acumen on the part of the management can lead to the negative net worth of a company, eventually threatening the its very existence. But the people must also share some blame for this state of affairs. We made some grave mistakes in selecting the management team. We hired inefficient people, and far too many for the job at hand. We now have to pull off a Dunkirk to get out of this mess before the poor management results in complete wipeout of investor money.
A good management team works for its investors, its board; bad ones leave them out to dry. In a corporate setup, there is a reward/bonus for exceptional performance and correspondingly penalty for poor performance. As long as you can hook the company to profits, you are safe. But when company starts to stagger, the shareholders are quick to point at a close link between pay and performance. In this context, it would be interesting to know how much time the current crop of CA members have spent thinking up constructive measures to increase shareholder’s value.
Truth be told, they have been nothing more than a fainéant management team under whose rule the company has continuously languished. So, shouldn’t this richly remunerated management team have taken the moral responsibility for their complete failure and at least opted for a no-cost extension—if they at all deserved an extension. More importantly, what do we do now if their abysmal performance continues? Should we just sack them for underperformance or continue as we have in the past? I leave it to the investors (the people), the highest governing body, to decide. But remember, if this inefficient management team fails to deliver even after this extension and gets away with it, it would be a real insult to what we call “Principles of Management”.
The writer is a management professional
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