The Malta Independent on Sunday
Management styles differ. From autocratic to participative, from hands on to remote or detached. There are libraries full of management books and studies arguing which styles are most effective or productive.
Ultimately there are no blueprints. A management style has to fit the person and the person has to fit the culture of the organisation or be forceful, strong and resolute enough to change the culture to suit his management style.
In fact model corporate successful leaders, the likes of Jack Welch of General Electric and Paul O`Neill of Alcoa are examples of how strong character, business acumen, and sharp determination of such business leaders change the culture of a dormant organisation and take it to higher levels well beyond what anyone could have reasonably imagined.
One of the few things that everyone seems to agree upon is that management by hope is dangerous, unproductive and generally fails to achieve the stated objective, no matter how haughty and well-defined this could be.
Achieving set objectives depends on their being effectively communicated and widely accepted. But more than anything else achievement depends on a thorough analysis, study and choice of the most appropriate action plan to reach the objective, a route map with time scales and intermediate targets permitting the evaluation of progress and adoption of corrective measures for variances, and strong leadership to motivate and control the allocated resources in the face of all obstacles and adversities.
Yet we seem to be going about addressing the country`s macro-economic problems on a management by hope style.` This style pervades all levels of government.
Take just for example the budget deficit. How many times since 1996 have we heard governments profess that control of the public deficit is going to be a priority objective. Yet here we are 8 years later facing the highest public deficit ever, both in nominal and relative terms and getting the yellow card from the EU commission for being way way out of what is considered prudent financial management standards, irrespective of the need to comply with such standards if we aim to be admitted to ERM II initially and Euro membership eventually.
Why have we failed? Simply because we adopted a management by hope attitude. We never really adopted a feasible action plan to control the deficit. We just hoped that by talking about it and by making strong pronouncements of intent the problem will take care of itself. It just does not work that way.
Neglect of problems compounds and complicates their solution. Because we wasted eight years hoping to solve the public deficit problem without actually doing anything concrete about it, the situation has complicated itself and we now have a structural deficit of horrifying dimensions, we have accumulated debt levels which have absorbed most of our debt capacity, we have frittered away one-off funds generated by privatisations and dismantling of reserves like the sinking funds for public debt, and we have an economy which has not grown at all these last three years.
At the sector level we have loss of consumers` confidence, dearth of productive investment, tourism with stagnating numbers and contracting value added per available tourist bed, and a general feeling of helplessness. We know we have a problem but nobody seems to know what we ought to do about it other than hope, hoping that hope will change the tough reality.
Sometimes I feel that our political leaders, unable to put together a concrete action programme to offer an effective remedy to our weaknesses, rely on the supernatural to send a magical solution from heaven. Sometimes I feel that the events of 1996 - 1998 have ingrained in the mind of the nationalist government that problems can in fact be solved by hope and prayer.
The experience of seeing a Labour government crumble through internal dissent trying to address inherited problems for which it was not in any way responsible, sends a very strong message to those for whom political survival has priority over doing what`s right and what`s necessary. Seeing government fall back into PN`s lap after less than two years does in some way convince that management by hope and prayer does in fact deliver.
However there are limits to how much one can rely on one`s luck or on supernatural gifts. God helps those who help themselves.
So it is distressing seeing the country`s economy continuing to crumble while the government stands idle doing pretty next to nothing.
I have long maintained that any realistic solution to our economic problems has to stand on three legs ` it has to be a tripod of solutions. No leg of the tripod is effective on its own but together and coherently they collectively produce a stable structure.` So will a tripod of economic solutions - expenditure control, stimulus for economic growth and enforcement of existent fiscal rules produce a lasting and effective solution to our economic ills.
This week we had a timid effort to make a scratch-the-surface effort for expenditure control.` Government blocked certain budgets expecting to save some Lm10 million. Two of the organisations effected are Tourism and Heritage.` Government parried criticism that it is cutting the budgets of the most productive sectors (both Tourism and Heritage help to up-grade our tourist product to attract a more value-added type of tourist) by arguing that saving will come from operational/administrative budgets and not from marketing or projects budget.
No one seems persuaded that government is not purely taking the easy way out by cutting the two items, marketing and maintenance,` which are easy to cut as they create no short term ripples though in the long term such cuts will prove to be false economies that compromise growth.` In my experience in the private sector I had several duels with operating managers trying to make up for sales and margins deficiency in their budgetary performance` by economising on marketing and maintenance.` It is just counter-productive false economy that undermines the long term trend of the business and hides problems rather than addresses them.
True solutions in expenditure control cannot come through management by hope techniques or through scratch-the-surface measures like the ones announced for Tourism and Heritage.` If it is true there are economies to be made in the operating expenditures of these organisations than the saving needs to be invested in more marketing and more product development.
Expenditure economies can only be achieved by addressing the over-manning in the core of the public sector and the duplication of regulatory bodies that work for private sector salaries with public sector privileges. It means that any serious action programme has to provide for massive re-training programmes to make excess labour in the public sector mobile and employable in the private sector.` Which means that public finance may have to get worse before it can better and that plans for joining the Euro have to have realistic time-frames which take such problems into account.
Management by hope is only for the optimists for whom hope springs eternal. For those who believe in getting things done through maximum and efficient use of available resources, hope is meat only to protect from unpredictable risks that cannot be pre-managed.
Management styles differ. From autocratic to participative, from hands on to remote or detached. There are libraries full of management books and studies arguing which styles are most effective or productive.
Ultimately there are no blueprints. A management style has to fit the person and the person has to fit the culture of the organisation or be forceful, strong and resolute enough to change the culture to suit his management style.
In fact model corporate successful leaders, the likes of Jack Welch of General Electric and Paul O`Neill of Alcoa are examples of how strong character, business acumen, and sharp determination of such business leaders change the culture of a dormant organisation and take it to higher levels well beyond what anyone could have reasonably imagined.
One of the few things that everyone seems to agree upon is that management by hope is dangerous, unproductive and generally fails to achieve the stated objective, no matter how haughty and well-defined this could be.
Achieving set objectives depends on their being effectively communicated and widely accepted. But more than anything else achievement depends on a thorough analysis, study and choice of the most appropriate action plan to reach the objective, a route map with time scales and intermediate targets permitting the evaluation of progress and adoption of corrective measures for variances, and strong leadership to motivate and control the allocated resources in the face of all obstacles and adversities.
Yet we seem to be going about addressing the country`s macro-economic problems on a management by hope style.` This style pervades all levels of government.
Take just for example the budget deficit. How many times since 1996 have we heard governments profess that control of the public deficit is going to be a priority objective. Yet here we are 8 years later facing the highest public deficit ever, both in nominal and relative terms and getting the yellow card from the EU commission for being way way out of what is considered prudent financial management standards, irrespective of the need to comply with such standards if we aim to be admitted to ERM II initially and Euro membership eventually.
Why have we failed? Simply because we adopted a management by hope attitude. We never really adopted a feasible action plan to control the deficit. We just hoped that by talking about it and by making strong pronouncements of intent the problem will take care of itself. It just does not work that way.
Neglect of problems compounds and complicates their solution. Because we wasted eight years hoping to solve the public deficit problem without actually doing anything concrete about it, the situation has complicated itself and we now have a structural deficit of horrifying dimensions, we have accumulated debt levels which have absorbed most of our debt capacity, we have frittered away one-off funds generated by privatisations and dismantling of reserves like the sinking funds for public debt, and we have an economy which has not grown at all these last three years.
At the sector level we have loss of consumers` confidence, dearth of productive investment, tourism with stagnating numbers and contracting value added per available tourist bed, and a general feeling of helplessness. We know we have a problem but nobody seems to know what we ought to do about it other than hope, hoping that hope will change the tough reality.
Sometimes I feel that our political leaders, unable to put together a concrete action programme to offer an effective remedy to our weaknesses, rely on the supernatural to send a magical solution from heaven. Sometimes I feel that the events of 1996 - 1998 have ingrained in the mind of the nationalist government that problems can in fact be solved by hope and prayer.
The experience of seeing a Labour government crumble through internal dissent trying to address inherited problems for which it was not in any way responsible, sends a very strong message to those for whom political survival has priority over doing what`s right and what`s necessary. Seeing government fall back into PN`s lap after less than two years does in some way convince that management by hope and prayer does in fact deliver.
However there are limits to how much one can rely on one`s luck or on supernatural gifts. God helps those who help themselves.
So it is distressing seeing the country`s economy continuing to crumble while the government stands idle doing pretty next to nothing.
I have long maintained that any realistic solution to our economic problems has to stand on three legs ` it has to be a tripod of solutions. No leg of the tripod is effective on its own but together and coherently they collectively produce a stable structure.` So will a tripod of economic solutions - expenditure control, stimulus for economic growth and enforcement of existent fiscal rules produce a lasting and effective solution to our economic ills.
This week we had a timid effort to make a scratch-the-surface effort for expenditure control.` Government blocked certain budgets expecting to save some Lm10 million. Two of the organisations effected are Tourism and Heritage.` Government parried criticism that it is cutting the budgets of the most productive sectors (both Tourism and Heritage help to up-grade our tourist product to attract a more value-added type of tourist) by arguing that saving will come from operational/administrative budgets and not from marketing or projects budget.
No one seems persuaded that government is not purely taking the easy way out by cutting the two items, marketing and maintenance,` which are easy to cut as they create no short term ripples though in the long term such cuts will prove to be false economies that compromise growth.` In my experience in the private sector I had several duels with operating managers trying to make up for sales and margins deficiency in their budgetary performance` by economising on marketing and maintenance.` It is just counter-productive false economy that undermines the long term trend of the business and hides problems rather than addresses them.
True solutions in expenditure control cannot come through management by hope techniques or through scratch-the-surface measures like the ones announced for Tourism and Heritage.` If it is true there are economies to be made in the operating expenditures of these organisations than the saving needs to be invested in more marketing and more product development.
Expenditure economies can only be achieved by addressing the over-manning in the core of the public sector and the duplication of regulatory bodies that work for private sector salaries with public sector privileges. It means that any serious action programme has to provide for massive re-training programmes to make excess labour in the public sector mobile and employable in the private sector.` Which means that public finance may have to get worse before it can better and that plans for joining the Euro have to have realistic time-frames which take such problems into account.
Management by hope is only for the optimists for whom hope springs eternal. For those who believe in getting things done through maximum and efficient use of available resources, hope is meat only to protect from unpredictable risks that cannot be pre-managed.
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