December 1, 2003	Monday	Shawwal 6, 1424

It has been disquieting to learn that our power utilities are also being closely observed by the IMF and the World Bank. Mid-2003, the IMF released its sixth tranche of its 3-year $1.47 PRGF after granting a waiver to Pakistan for the non-fulfilment of Wapda’s performance targets (Dawn, 21-6-03).

The IMF’s board was strongly critical of the failure of power utilities to reduce line losses to agreed targets, collection failures, inability to recover costs through electricity tariffs, and the inordinate delay in breaking-up Wapda into 12 autonomous companies.(Ibid)

The criticism, however, falls on our power utilities like water on ducks. This is why year after year they have been able to take valid criticism “in stride.” As a result, during the first quarter 2003-04, “......the line losses, cash shortfalls, and financial losses of the two utilities have increased despite higher hydel power generation and non-payment of arrears to NWFP and the PSO” (Dawn, 23-11-03). The two power utilities have failed again on almost all major counts to achieve the performance targets set by the IMF (ibid).

Despite several changes in the top management of these two power utilities, they appear to be marking time, tall claims to the contrary notwithstanding. Despite tall claims of our policy elite, we have now reached a situation when the performance targets of our utilities are set by the foreign financier which alone speaks volumes about the performance of the power utilities. For once, it is the grievance of the domestic stakeholders of Wapda and the KESC that is inadvertently reflected in the requirements of the IMF.

While these two organizations would not respond on their own, it is interesting to watch whether the IMF’s whip will get them moving in the desired direction of reduced line losses, efficient collections, effective service and operations to the satisfaction of their stakeholders. Despite the IMF’s third waiver last month on targets set by it under the financial improvement plan (ibid), the performance of these organizations is not looking up yet. This calls for an examination of the means used to achieve the above broad goals on which there is consensus in the country. On the means though, there may be a diversity of opinion. The first assumption in the utilities’ reform strategy was that military officers would be able to manage a turnaround. Time proved otherwise. The assumption was flawed to begin with. For, an underlying assumption was that an authoritarian style based on a carrot-and-stick approach would do the needful as all power in an organization is assumed to be concentrated in power positions. Power is mostly with the people whether it is a nation or an organization. People not in power positions can still wield a lot of power by virtue of their skills, expertise, and technical knowledge that not many in uniforms could match in these two organizations.

This power is called “expert power.” Expert power can also, unfortunately, be exercised very negatively as is the case with Wapda and the KESC wherein expertise is used counterproductively to show why things cannot be done and to be able to get away with it when expert power should be used productively with a can-do mindset. It was assumed in their reform effort that this counterproductive disposition would be balanced by the uniformed who were assumed to be more honest than the incumbents. That this proposition could show only marginal results, if at all, is known to all. For, the uniformed could not possibly supplant the numbers and the skills of the incumbents. Nor could the ways and the mindsets of the incumbents be turned around by military management. The organizations, therefore, could not be turned around in the first attempt as there is a lot more to turnaround than improving collections marginally and setting up posh customer service centres.

For organizations like Wapda and the KESC, turnaround is about changing the behaviour of the people. So, while a change at the top is a necessary first step, it is by no means a sufficient step for organizational turnaround. And, if by change is further meant a change in the formal structure only, then that too is insufficient for as long as there is a powerful informal structure that remains excluded from formal decision-making and tends to thwart every step towards reform. If change further implies a change in the systems, then a powerful informal system too is in place in these organizations. Wapda and the KESC are known more for the power of the informal and the weakness of the formal structures and systems.

The organizations, therefore, coalesce around a set of “values” shared within the informal thereby throwing up an interlocking network of forces that resist change for the betterment of the organization as a “shared belief” is that they are in a zero-sum game with the organization. That is, the gain of the organizations and the stakeholders would be at the expense of their personal interest. This powerful informal set-up has maximized its collective gain for too long by operating synergistically. Their sympathy and empathy is, however, restricted to their own informal system and structure whose strength they keep reinforcing by demonstrating extra-ordinary interpersonal skills, empathy, social competence, and self-control that they exercise enormously every time there is a deviant practice that they would like to conform to in the highest level of “team spirit” that would not be too easy to build formally. At the centre of this informal interlocked network is a sense of “personal values” they wish to keep promoting for “personal ends” and which serve as the binding force of this informal organization.

The turnaround managers ought to, therefore, realize how an organization gets thrown up even if it is informal. Can this phenomenon be possibly replicated in a formal setting with “values” at the centre that are shared by all stakeholders in a win-win frame of mind instead? And, is privatization, downsizing, and termination the only response to the inability to harness the informal structure and system that rules the roost in these two utilities?

Taking up the second question first, gains from private sector’s role in power generation remain disputed especially after some recent experiences wherein efficiency did get emphasized but so did profitability whose maximization can work at cross-purposes with the interest of the consuming segments and that of the society. Unless private operations are able to juggle the interests of all concerned, their utility will remain controversial. Similarly, achievement of efficiency at the cost of greater unemployment remains moot in a society that fails to offer job opportunities at the time when these are needed.

To throw people out now and tell them that jobs will trickle up some time in the future when benefits will trickle down from the current macroeconomic stabilization and fiscal disciplining efforts is to postpone a current issue only rhetorically. For all practical purposes, the downsizing recipe will only add to the sea of discontent brimming beneath a superficially calm surface that “visionary” leaders ought to see and arrest instead of compounding a situation that can be averted through foresight and humane turnarounds.

That Wapda is to be split up into 12 companies is a decision taken already. This decision may need to be expedited as it is easier to change the behaviour of smaller groups of people than that collected in a huge organization. Delay on this front reinforces the belief of Wapda employees that nothing will change as the state is too soft to bring about a change effectively. This enhanced confidence in the softness of the state further reinforces their “self-confidence” in their own practices, however perverse they may be.

And, corruption continues to rule the roost. So, break-up into twelve units and re-assignment of Wapda employees would send a strong signal that there would now be a strong move towards change for improving the performance. Vibes would travel also into the KESC. This would amount to softening up the target. The employees would now know for sure that they were to either shape up or get ready to ship out which message was not communicated effectively either through military top management or through a change in structure because of which the employees kept hoping, “this too shall pass.” Splitting up of Wapda would communicate loud and clear that change effort was here to stay which would be the first key step in overwhelming the forces of resistance.

The informal networks that determine the dominant mood would then have to rethink their own modus operandi. Since they have been too focused on personal interest maximization, they will be forced to determine how the same might be achieved now that the rules of the game were changing towards primacy of organizational interest with that of employees subsumed under it provided the two converge. It will then also dawn upon the employees of both Wapda and the KESC that the day of divergence between personal and organizational interest was now over when they waited for messiahs to appear at the national helm before they would rectify their own behaviour.

Break-up of Wapda would drive home the point that reform effort is not necessarily sequential from top to bottom nor is it necessarily in parallel. Rather, it could start wherever pressure builds up for the same which, in turn, is a function of when the threshold of pain is breached. The stakeholders of Wapda and the KESC have cried

out for reform whose employees have to adjust if they wish to remain engaged in power generation, distribution, and transmission.

It is this message for change that needs to resonate loud in meaningful terms in our power utilities. Wapda’s break-up will be a step in this direction following which the new managements will find the staff more malleable whose intelligent cost-benefit analysis will enable them to play ball.

For, revised pay-scales, although less than what they made informally in Wapda, will still be better than no pay-scale or severance which is the next best option the government is contemplating seriously for many.

It is this revised mental calculation that Wapda’s calculating employees should be given a chance to make to decide their future course of action. If they will be better off carrying on in a new work environment, they should be allowed to continue.

Having surmounted the trauma of initial change, they will be more receptive now to the new set of “shared values” the new managements will promote as this alone will now help them achieve their personal goals revised to adjust in the new organizational climate.

If some of them still fail to enter into a win-win relationship with the organization, they will then themselves be “opting” for severance.

Such numbers will, however, not be too many as people are rational maximizers. This tendency, however, needs to be reined in through organizations that coalesce formally around shared goals that also enjoy societal sanction.