Public Governance Directing public companies A practical approach
De Meerlanden • Public Limited Company • Shareholders – 7 municipalities • Waste collecting, composting, sweeping, other tasks in public space • 250 people; • Turnover € 45 mln. • Main objectives: - sustainability - profitable - governmental influence - market driven • Activities for 100. 000 households 4. 000 companies • Handling 300. 000 tons of waste
Directing public companies a current issue • Cost effectiveness • Risk avoiding • Complication of the specific task • Internationalisation (waste)
Partnership Model 1: Municipal Settlement Municipal settlement Specifics MS: - Legal status - Political responsibility - Performing public tasks Municipalities Board with politicians (aldermen) Executing organisation Performing Tasks: • Waste collection • Green keeping • Grit icy roads • Sweeping • Activities in public space
Partnership Model 2: Public Company Shareholders = Municipalities Board of governors Specifics Public Company - Legal status - Equity - Entrepreneurial responsibility - Performing public & private tasks Executive board Executing organization Performing Tasks: • Waste collection • Green keeping • Grit icy roads • Sweeping • Activities in public space - control - advice
Governance Public Company (1) Governance Two tier model Legal rights concerning the company Shareholders - Profit rights - Merger/ cooperations - Reorganizations - Investment Company • Company can follow a strategy • Which has to be approved by shareholders Shareholders: • In general: all decision which influence the character and identity of company are shareholders decisions
Governance Public Company (2) Governors • advisory & control • has a status towards ceo and shareholders • are appointed by shareholders • have dominating influence on strategy and management Board of governors Company
ROLE of Management-Governors-Shareholders Management develops strategy prepares investments or makes annual report Governors influences strategy investments or annual report (dividend) Shareholders approve or disapprove strategy, investments or annual report Advice & control
Directing a public company Two angles: 1) Influence on strategy and identity 2) Influence on the performance through SLA 3) 4) 5) 6) 7) Ad 1) - Highly regulated - Has a legal basis - Is a carrousel of meetings, responsibilities and reports Ad 2) - Entirely the opposite. Little is regulated. No long solid experience.
Influence on performances SLA Municipality A B C D E SLA SLA SLA De Meerlanden nv SLA contains agreements on - Quality - Results - Quantity - Responsibility & risks - Tariff/prices - Contract period - Future policies - Reporting (!) - Complaints Mostly 5 year period. Can also be indefinite. All municipalities have different SLA’s. Not Anyone is the same !
To handle a SLA (1) Two-sided issue 1: Principal 2: Public 3 perspectives: A) Strategic B) Organizational C) Operational
To handle a SLA (2) 1) Principal A) Basic assumption - how much influence - quality - costs Has to described carefully and from a long term perspective B) Set targets (not only on quality & costs) Also - innovation - substainibility - customer satisfaction - policy - flexible set of instruments C) Contract manager is key-function Has too have content, legal & financial knowledge, entrepreneurial empathy, practical, broad view. Also strong internal position. Access to specialists and aldermen. Persuasive qualities. Authorative.
To handle a SLA (2) 2) Public company A) Set your targets regarding to your function B) Organize the work according to requirements in SLA - cost effectiveness - quality - complaint handling - extra work - be flexible - be aware of political environment C) Contract manager is key function Qualities: Content, legal & financial knowledge, entrepreneurship, communicative abilities, practical, broad view. Access to operation & management. Persuasive. Spokesman. Authorative.
Waste policy Issue: who has the initiative to develop new policy. • Policy stays within municipality + direct + responsibility - lack of knowledge - public company pure executing, not gaining expertise • Policy at public company + expertise + interaction between different municipalities - indirect - no counterpart at municipality, communication Conclusion: both parties need policy makers. embed it in contract management operate closely together.
Some tips (1) Employees Bankers Lobby groups Company Financial constraints Legal issues Shareholders Company Politics Voters The rest of the world Lobbyists Politics Customers
Some tips (2) And - Be sharp & flexible - No long term contract without challenges - Organize mutual trust - Give public company room to act to achieve targets - It is a partnership
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