THIS article takes both a macro and a micro view of the “panacea” we call “privatization.” A popularly borrowed view is that if things do or do not go well in the public sector, the policy makers would like to privatize the businesses run by the state.

But good management comes to the private sector only if this sector too manages well which is not guaranteed. Does the so-called private sector comprise only big local or foreign investors?

Experience elsewhere in the world indicates that the private sector could comprise small investors as well as employees. So, if all hope is lost in the public sector, could options not be found in “popular capitalism” (small investors) and “labour capitalism” (labour)?

While a few examples of handing over to the employees may be found in Pakistan, a suggestion of this kind is mostly blocked or dismissed rather than considered. The assumption is that it is the petty and the small and at lower rungs who are sources of most inefficiencies and failures than the “high-born” and the “well-bred” who are also thought to be “born wiser.” Thus the rush towards severing most of those at the lower levels soon after privatization mostly through schemes dubbed as “voluntary.”

Such schemes are “voluntary” only to the extent that the victims are coerced to choose voluntarily from amongst the limited number of options made available to them. Otherwise, no one likes to give up one’s vocation voluntarily. At times, it is not just the staff that receives a blow but even the organization’s reason for being is amputated partially if not fully.

As for the macro reasons for privatization, these remain unclear or open to question in Pakistan. The concerted view in the branch of development economics is that privatization itself would not help much unless it flows from the overall national development goals and contributes to it. For, privatization is a policy means, if at all, and not the end of development.

So, if the end is development of already developed in the country and elsewhere, then certainly off-loading to big investors makes sense as they are sold to paradigms suited in developed environments which they try to extrapolate here without examining local suitability. For, their own ends stand served that may or may not be in harmony with public interest.

So, a privatization policy that ends up promoting some private interests more at the expense of the interests of the general public could not be a means to the end of our loudly stated development goals that profess to be all inclusive.

If our development goals are inclusive, then the means to it such as privatization should be inclusive also and not exclusive as is usually the case in this country. This discussion does not mean that the idea of privatization has been accepted by all as good managements could turn public sector around too.

However, if the die stands cast in favour of privatization, let us proceed from there and ponder upon how this could be made inclusive. That is, while big investors may be encouraged wherever needed or where small players are not interested, primary focus could be on “popular” and/or “labour capitalism.” For this, we could take a leaf out of Chile’s privatization experience.

About 20 per cent of sales to the private sector in Chile were made to small investors and labour during 1985-1990. Rest were sales through public auction, negotiations, and sales to pension funds. Popular capitalism ensured broader ownership amongst the people and included two major banks that were also privatized through this mode.

Labour capitalism involved 15 public sector enterprises out of which three became 100 per cent employee-owned. The upshot was better employee morale, higher productivity, higher share values, and even higher levels of employment and not less as is the case in our country after privatization. Workers were subsequently also allowed to use greater judgment on the job that is the state-of-the-art in management too but induces many a frown, if emphasized much in our country.

In line with inclusive development, therefore, would be a privatization policy that would tend to include as in “popular” and/or “labour capitalism.” While our privatization policy tends to exclude from the outset, situation is further aggravated when the lower rungs get the boot however it may be christened.

Whither “inclusive development” when the means too sidetrack the ones that had been in the mainstream thus far? The ranks of those “excluded” are likely to swell further through our privatization outlook. And, inclusive development will remain a distant dream if the means remain contrary to the goal.

Both the policy and the operational level outlook flow from a deep-seated lack of confidence in the lower organizational levels that are viewed as sources of all ills even if the cause lies elsewhere at another level/s and even if the lower levels had just been dribbling along in a directionless organization.

While this shotgun quick-fix style does emanate from our neo-colonial as well as a feudal mindset that pervades all societal layers, it ignores not only the successful experiences elsewhere such as the Chilean one or Mao’s dictum of “humblest most intelligent,” it also ignores the state-of-the-art in management which is “knowledge management.”

There is much talk of “knowledge economy” and the notion is to churn out computer experts only in order to be a part of the knowledge economy. Importance of information technology notwithstanding, it is imperative to be able to use this information for the benefit of the organization for which purpose an effective organization is needed to begin with.

Further and actually foremost, knowledge is not just about that of the external environment but also the work-related knowledge that is possessed within by none other than the employees at various levels. While performing organizations try to ferret out this “tacit knowledge” that abounds within organizations, we in our country tend to separate these sources of knowledge as a first step towards reorganization.

And, this is unfortunately policed by a function we call “human resource (HR)” in an environment where reorganization is just viewed as restructuring when reorganization is organizational overhaul beginning with the value system under girding the organizational framework.

The reactive approach is viewed as “strategic” when “strategic human resource (HR) management” is about creating a culture that fosters innovation, learning, and a spirit of enquiry that should build on the knowledge base available within the organization.

With voluntary retirement schemes (VRS), the danger always is that the more capable might avail the golden parachutes and leave. If modern management is about knowledge management, this approach is certainly weak as the more knowledgeable are allowed to leave through VRS. This is poor HR management too no matter what name the department is given.

If this department just watches this loss of knowledgeable human resource from the sidelines, it is certainly not “strategic” and most certainly not managing the human resource effectively enough to attain organizational goals which is another reason why it cannot be called “strategic.” For, an organization cannot be managing strategically if, as a scholar put it, “an organization does not know what it knows.” That is, the organization does not know the knowledge possessed by the workers, leave alone using it for organization’s sustainable growth through improved quality, productivity, efficiency, and less wastage, rework, and thereby lower costs to say the least.

The under-estimation of the capabilities of workers emanates from a mindset in which it is believed that all knowledge is possessed by the higher educated at upper echelons and can only be acquired in an elitist classroom setting. This is a traditional outlook as knowledge about one’s own work is accumulated and possessed by those on the job.

Managerial challenge lies in getting the workers to use this knowledge for improvement of work in their sphere of activity. Workers are now expected to be engaged on the lines mentioned so that they are able to directly make a contribution to organizational efficiency and productivity by taking fuller charge of the work they do.

As workers’ job is enlarged and enriched, their creativity will know no bounds and the workers’ will enter into a mutually beneficial relationship with the organization. The catch, however, is that organization is people-centric for it cannot be customer-centric unless people are happy. And, unless it is customer-centric, it cannot fulfil its reason for being.

So, for an organization to accomplish its mission, it must have the capacity to work with thinking, reasoning, aspiring individuals without which it cannot place people at the centre stage.

Challenge in Pakistan, therefore, is to cease operating on the basis of the assumption that all the muck is at the lower levels. Rather, there is a need to also determine whether the top layers have the capability to work with people who cannot “check their brains” at the gate. Only then will the organization move towards being people-centric, customer-centric, and strategically driven which jargon is all too familiar but calls for an ability at the top to translate these concepts into action.