You know that situation: you’ve said something to your interlocutor that they disagree with, but they don’t know how to respond. Then comes a moment of significant silence. Then, in response to your statement, the most polite ones reply with an indefinite ‘Interesting!’, the less perceptive ones note that your statement could be debated, and the most open simply start with ‘Come on…’.
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This is happening to me these days when I am asked what the next conference organized by Lider is. I proudly announce that we will hold the second conference ‘State-Owned, but Efficient‘ on May 8 (so it survived its birth pains!). At that moment, there comes that moment of significant silence. For most, such a name is a typical example of an oxymoron, a figure of speech that combines two incompatible concepts. To them, ‘state-owned, but efficient’ is identical to the concepts of ‘wooden iron’ or ‘deafening silence’.
Deliberate Provocation
Are you rolling your eyes at the topic ‘state-owned, but efficient’? How about we talk a little? It is easiest to salon-style demand week after week that the state be removed from the economy. But politics does not relinquish ownership of strategically important companies. Therefore, it is useful to question and propose how that part of the national economy can be more efficient than before.
It must be acknowledged that the name of the conference is provocative. But sometimes provocation is necessary. Journalists and editors often accuse politicians of populism. Because they tell people what they want to hear while avoiding painful, riskier, but important topics. But then journalists and editors, especially the latter, when choosing topics to cover in their media, also flirt with populism. They think about what will please the readership and what might upset them. Of course, it is necessary to listen to the readers, listeners, or viewers. But there must also be the courage to open up unpopular topics. That is risky, but if it turns out that the editorial team was right when advocating for something, then its rating grows in the long term.
Of course, each of us can list a dozen examples of inefficiency in companies where the state is the sole, predominant, or minority, but important co-owner. The problem is not even in the thesis that private ownership of companies is more efficient than state ownership.
In such circumstances, it is easiest to salon-style demand week after week that the state be removed from the economy. The only question is how much benefit there is from that. Simply put, politics does not relinquish ownership of strategically important companies. If HEP, Hrvatske ceste, Hrvatske šume, Hrvatska pošta, Odašiljači i veze… will still be in state ownership for years to come, isn’t it useful to question and propose how that part of the national economy can be more efficient than before?
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At Lider’s conference ‘State-Owned, but Efficient‘, about ten CEOs of companies in which the state is a (co)owner will participate. The revenue of these companies is about 15 billion kuna per year, but the multiplicative effects of their (in)rationality are much greater. Plenković’s government, like those before his, approaches corporate governance of these companies superficially, politically, and amateurishly. One of the reasons for this is the lack of continuous public pressure to create an efficient system of control and management.
The first topic we will address will be seeking answers on what goals to set for the managements of state-owned companies, or what are the key performance indicators (KPIs). Should Hrvatske šume maximize profit or reward the management according to the finalization and export of furniture from Croatia? Should HEP maximize profit and pay it into the budget, or is it more important to offer the industry electricity at the lowest possible prices to make export production more competitive?
It is difficult to answer that, so colleagues from the Faculty of Economics in Zagreb are preparing an overview of how this is resolved in other European countries.
Austria is also seeking answers
At one stage, the Austrian state completely withdrew from overseeing the state holding, leaving everything to hired managers. Then they became a little ‘too independent’, and everything came under the Ministry of Finance. And that didn’t turn out well either. Now the new government is seeking the best solution.
The second topic we are opening, and we hope others will accept it, is analyzing examples of good practice in development and innovation in state-owned enterprises. Again, we will find dozens of examples of bad practice, but there are also good examples. From the struggle of Hrvatske Lutrije with private bookmakers to the successful rescue and privatization of Badel 1862 to new products offered by HPB or Odašiljači i veze. Then there is the question of how to implement the digital transformation of state-owned enterprises and a workshop on where the criminal liability of members of supervisory boards and management begins.
That a lot of conversation is needed is confirmed by information from Austria. We tried to get someone from their state holding, but we will leave that story for next year. The reason? They are also questioning the management model there. At one stage, the state completely withdrew from oversight, leaving everything to hired managers. Then they became a little ‘too independent’, and everything came under the Ministry of Finance. And that didn’t turn out well either. Now the new government is seeking the best solution.
