June 26, 2006	Monday	Jumadi-ul-Awwal 29, 1427

DESPITE all the reservations that had been expressed by independent observers against privatisation of sensitive utilities such as KESC in particular, the government went ahead and privatised KESC.

The worst fears of the critics are coming true, at least, for the time being even though the critics would much rather be proved wrong on this painful score in extreme weather conditions.

It had been argued that due to the predisposition of the new owner managers towards financial goals, the privatized utility will have difficulty maintaining equilibrium during this quantum change period.

The relationship between these two variables is not too complex to elude the management of the utility. The glaring symptoms of disequilibrium are the frequent power breakdowns that people in Karachi are crying out against to little avail.

The acid test in any transformational change effort is the ability to maintain performance, at least, at the previous level when the hoop is being jumped.

It is this test that the new KESC management has failed thus far to the extent that the city has to close shop. Due to the inability of KESC to jump the hoop smoothly, the city’s traders may suffer a sales revenue decline by as much as 50 per cent. And, the electricity supplier remains unruffled.

It was feared that the new owner managers will be primarily concerned by their near-term or immediate financial returns. In the process, they might focus too much on cost controls. This preoccupation might disenchant the stakeholders who are crucially responsible for satisfactory service delivery, that is, the employees. Disenchanted employees would cease to ensure satisfactory service delivery even at the previous levels.

Irate employees might even counter steps taken for providing acceptable levels of service. According to news reports, there is sabotage taking place too. Attempts have been made to steal copper wire.

A KESC spokesman says KESC’s security guards found 10-12 suspects trying to snap 220KV transmission line from the Bin Qasim grid to the KDA grid.

Reportedly, unknown persons snapped an extra high tension transmission line from the KDA grid to the Gulistan-e-Jauhar grid. KESC spokesman maintains that there is no load-shedding as KESC is getting sufficient supply from all the sources.

Are we being told that all the frequent power outages are acts of sabotage? If yes, who are the saboteurs? For, this was unheard of when the KESC was in the public sector.

KESC’s management is split between the corporate office and the contractor firm responsible for the management and operations of the power utility. This description of the management raises questions about the responsibilities of the corporate office as it is this office that should be responsible for overall corporate management.

Under the rubric of the corporate office, the contractor firm may be responsible for management of operations only but with goals that should be in line with the overall corporate goals and not divergent from them. Divergence is immediately visible when on the one hand the German CEO says that there is no surplus staff and there will be no retrenchment.

On the other hand, the word of mouth inside the KESC is that the “new management” would reorganise, restructure, and retrench. Who heads the new management? The CEO or the contracting firm?

According to the CEO, he cannot interfere in the affairs of the contracting firm, Siemens, as per the agreement and has no role in the operations and management affairs. What then is he executing of which he is the chief (CEO)?

The issue of power failures can only be taken up in board meetings, according to the CEO. For all practical purposes, are the CEO’s hands tied and is only the contractor running the show?

Reportedly, the contractor has reshuffled the administrative structure. The complaint handling systems too are being changed with the procedure made more long-winded by curtailing the authority of the complaint centre.

And, a major surgical operation is being conducted to cut back on medical expenditures. The above three steps alone are demoralizing in an environment rife with rumours about retrenchment.

Many might argue that public sector organisations’ personnel take undue advantage of their medical facilities. This may well be true. But, the question is that is this the first area that should be touched knowing how sensitive it is in an era of rising healthcare costs externally and growing insecurity internally?

If KESC employees have to spend more time taking their family members to far away panel clinics as their number is being reduced, they will obviously have less time and inclination left for providing service.

So, the privatisation critics had feared premature cost controls and thereby lost employee morale and this is precisely what appears to be happening. The new KESC management is out worrying about the trees without a clear view of the impact that will have on the forest.

So, even though the KESC was advised to be employee-centric if it had to be customer-centric, the KESC has embarked on a route to the contrary. Another manifestation of this is in curtailing the authority of complaint centres when service organisations improve effectiveness by empowering their front office employees. Only then are the employees involved enough to deliver effectively. In doing the opposite, the KESC thinks it can deliver when its frontline employees stand disarmed and de-motivated.

Yet another glaring error of judgment is to think that administrative “restructuring” is all there is to “reorganisation.”

“Reorganisation” is first about popularizing the values that should be shared in the organization around which the staff and the systems are then streamlined. Without building this value-base in KESC, the systems and staff are being reshuffled to which the employees cannot relate and thus the loss of morale.

Organisational structure is to be touched very deftly only after the new organizational direction is sold within successfully following which people will themselves propose structural changes. Right now, there are no shared values within.

People are hardly on board with the new management with whom, reportedly, the relationship is more adversarial than congenial when ideally it should move towards being collegial.

Already, the positions and interests of the employees stand threatened who are probably trying to find life vests to stay afloat. Where is the utility organization that should be able to deliver in the short-and immediate-term too? Presently, it seems like a weak marketing job being done by the utility both externally and internally.

Based on the reported internal information about hacking employee benefits, the KESC management started off with a lack of trust in the employees. It seems to be saving itself from the “excesses” of the employees when it should have been able to strike a partnership with them based on mutually agreed upon goals. Following this and much later after covering some ground towards the attainment of common goals, areas of disagreement such as medical expenditures and use of authority could have been taken up and ironed out with the consent of all.

That cost savings are taking precedence over direction-setting shows the primacy of financial goals of the new KESC management over the strategic goals.

The situation smacks of a dearth of strategic outlook as employees are not being taken on as strategic partners and assets. Instead, they are viewed as financial liabilities according to KESC’s current emphasis on first curtailing employee-related expenditures. If employees are viewed as a liability, then the organization might become a liability on the society that strategically driven organizations avoid.

No organisation comprises only of owners and shareholders for as long as they cannot run it on their own without the employees and other stakeholders.

KESC must, therefore, change its outlook immediately towards its internal environment from one of short-term financial returns maximization to strategic gains for all if the utility has to grow into an asset. It is this conceptual hoop that the KESC must jump if it is to become a vibrant utility that must exist only in the service of the city of Karachi in the immediate and distant future alike.