IN the recent past, more than one attempt has been made to turn around the performance of Karachi Electric Supply Corporation (KESC). During mid-1990s, the board of directors of KESC was reconstituted for the purpose and some luminaries in management were brought on to provide broad policy direction to this organization. Despite the illustrious background of some of them, they could not make their mark on the performance of KESC.

In mid-1997, a serious-minded enthusiastic chief executive of KESC lost his life in the middle of one of his anti-corruption investigations. Later, military officers were posted to serve in KESC’s key positions.

While they claim to have improved recovery of bills, brought transmission and distribution (T & D) losses down by 11—30 per cent, and improved employee morale, the utility is still not profitable without government subsidy that still amounts to over Rs5 billion.

A main source of increasing expenditures is the rise in fuel prices. T&D losses of 30 percent are another source of loss in revenues. Recovery of bills is still unsatisfactory in the low-income areas of the city.

Further, even if recovery of billed amount has improved, it is unclear if the billed amount reflects actual consumption of electricity. Even though the KESC may claim to have curbed power theft, power is obtained informally by some in the powerful higher income segments too through tampering of meters on which more information is required.

Effectively then, the new management of privatized KESC will have to deal with rising fuel costs , T&D losses, power theft, and low employee morale due to an uncertain future. The employee factor will be interacting with the new management’s attempt to reduce T&D losses and power theft behind which there obviously is an undesirable involvement of some employees.

Usage of substandard materials will need to be curbed to reduce future T&D losses as well as breakdowns. These not only cause immense hardship to the consumers but also increase the repair and maintenance cost of the utility. This cost should be kept low through efficient operations, preventive maintenance, and usage of good quality standard materials.

Reduction of T&D losses and power theft as well as true billing and collection will not only require fresh financial and physical investment but injection of fresh ethics too into the organization. For, fresh investment, even if made, will not show lasting results until and unless it is coupled with ethical conduct that should be flowing from a sense of mission to serve the public. This sense of mission cannot, however, be built on a sense of deprivation that most employees have in public sector organizations.

Introduction of ethical work behaviour and conduct will, therefore, first require that employee earnings are matched and/or surpassed by a new compensation structure. Formal administration of an attractive compensation structure will serve to deter employee efforts towards maximizing individual income at the expense of organizational income. The basic personnel management practices need to be streamlined before the employees can be expected to fall in line.

Once done, employees should then be expected to perform and deliver failing which remedial action may be taken. And, to make the process transparent, it is important that the employees are directly represented on the board through their elected representatives. This representation is important also in view of the fact that employees are key stakeholders of any organization and should be involved in key decision-making anyway.

After taking the above steps, it will be possible to build a change coalition that will then drive the change effort. Otherwise, this change effort might also remain as lack lustre as the ones undertaken in the past that viewed employees as subjects instead of associates in organization building.

The danger, however, is that steps contrary to the above might be undertaken first in the wake of privatization. The danger is that in view of the losses and the investment in T&D that the new management may want to undertake soon, there might be an attempt to reduce the staff strength as a cost-cutting effort to begin with. And, there might be a further attempt to inject new blood at various levels to steer the organization in view of the declining morale and resistance from the old workforce.

Latter step, if undertaken, without identifying change agents from the old workforce will not allow an effective change coalition to come up. Throwing up of a parallel structure with a parallel compensation structure is likely to be as counter-productive as it was in the CBR not too long ago.

Whenever new managements take over in Pakistan’s public sector organizations, the first thing they do is to make the old workforce feel like deadwood and some even say it in so many words. They fail to realize two important aspects of human resource management. First, however old a workforce may be, there must be many amongst them who would want to take up the opportunity to change and would have many change ideas also.

These are the change agents that have remained hidden primarily because the organization has remained occupied with agents of status quo or engulfed with agents of change in a direction which they viewed as meaningless. The challenge for the new KESC management will be to identify such valuable human resources who will prove to be potent agents of change.

Second, no new management can take-off by itself or with fresh blood from outside unless it knows how to ferret out the tacit knowledge of the workforce that has spent a long period of time with the utility. To begin to offer golden hand shakes even before making a new start will be a folly that this city’s utility can ill-afford. Experience in Pakistan has been that the most capable come forth first to leave in periods of uncertainty and organizations lose precious human resource and with them the knowledge they possessed.

The fact that KESC is an electricity generation and distribution company means that it can ill-afford to lose its people with wealth of technical knowledge every bit of which will be needed to make the organization efficient and effective. In the knowledge economy, knowledge workers need to be retained by organizations for competitiveness. In a power utility, new management will need to retain and secure the tacit technical knowledge in KESC as it cannot be substituted with the explicit knowledge of glib diploma or degree holders many of whom are in the job market without having internalized their explicit knowledge much.

As KESC embarks on its new journey, the new management would need to ensure that it does not trade-off knowledgeable human resource with short-term improvement in the bottom line. And, it must commence this journey by first taking effective measures to carry its workforce along without which no top management can, by itself, effectively steer the course of an organization.

One of such essential measures will be a financial investment in the human resource that will begin to pay back in the near term as they will be charged up to then pursue the mission of the utility. This will further entail revamping of the system and addressing the issues of T&D losses, power theft, true billing, and recovery.

None of these fronts can be approached effectively unless the new management enters into a strategic alliance first with its own workforce. Otherwise, top management and workforce will pursue their goals separately in different directions. Unless the goals are made congruent first through good personnel/human resource practices, the top management will not be able to share the mission of the utility with the workforce.

And, unless this mission is shared throughout the length and breadth of the utility, we will not have a revitalized KESC for which purpose it has been privatized. Privatization is not the end but a means towards KESC’s turnaround for the better and should be seen as such by the new decision makers at the helm of KESC.

So, unless a long-term view is taken, we will have yet another experience in which yet another management will be shooting for short-term profitability. If the goal for the new management will be short-term profitability, then the utility and the society will have to brace for employee severance, social discontent, and frequent electricity tariff hikes that will be detrimental for household, business, and industrial consumers alike.

So, at the next higher level, the utility will need to have its goals converged with the members of the society for which purpose it will need to define and pursue organizational mission and not short-term profit maximization.

A visionary approach will require the new KESC to make investments in people, equipment, and systems alike for the first few years to then reap gains for a long time to come if it wishes to stand in perpetuity with the goodwill of the society whose thriving living organism it must emerge as for a long time to come.