Monitoring Public Ownership

1
Monitoring Public Ownership

• Performance Measurement
• Corporate Governance
• Basel El Hini
• Senior Advisor to the Minister of Finance, Egypt

2
Monitoring Public Ownership
OECD
IFC
WB
EIOD
EU
ADB

• All agree with OECD
  guidelines
• The state should exercise its ownership
  functions through a
• centralized ownership entity, or effectively
  coordinated entities.
• The state acting as owner.

3
Monitoring Public Ownership
Most Effective Way
Performance Measurement
4
Performance Measurement
Profit Measurement
Performance Measurement

Only

• Measuring
• Financial Indicators
• Non-Financial Indicators

Performance Measurement

But
5
Monitor
Evaluate
Manage
You Cant
What You Cant Measure
Develop
Enhance
Change
6
Performance MeasurementSystems

?Activity-Based Costing
1
Economic Value Added
2
Quality Management
3
Customer Value Analysis
4
Balanced Scorecard
5
7
Balanced Scorecard

• ?One of the most widely adopted performance
  system used by governments to monitor SOEs.
• ?Provides a balanced measure between

• Financial Indicators And Non-Financial
  Indicators.
• Transition, Short And Long Term Objectives.
• Quantitative And Qualitative Data.

8
Balanced Scorecard
Frame Work
Companies Predefined Strategies
Translate
To a Balanced Group Of
Interrelated Objectives
Distributed On Number Of
Measurable Perspectives
9
Balanced Scorecard
Frame Work
Design
Implement

Strategic Goals Perspectives
Objectives Measures
Strategic Goals Perspectives
Objectives Measures
Balance
10
Balanced Scorecard
Frame Work
Financial Perspective
How do shareholders look at the company? How can
we succeed financially?
Internal Process Perspective
Customer Perspective
Balanced Perspective
What must we excel at to satisfy shareholders
and customers?
How do customers see us? How can we serve
customers to achieve financial goals?
Learning Growth Perspective
How can we improve? What can we do to develop
workers to achieve goals?
11
Balanced Scorecard Example
Strategic Goals
Achieve Social Objectives
Maximize Shareholders Value
Customers
Financial
20
40

• Increase customer
• satisfaction.
• -Improve market
• performance.
• -Acquire new
• customers

• Maximize cash
• flow.
• -Increase
• profitability.
• -Inc. financial
• Contribution to society.

20
10
10
5
Balance
10
5
Learning Growth
Internal process
20
20

• Improve project
• cycle.
• -Improve safety
• indicators
• -Improve innovation in
• products services.

• Improve employee
• Productivity.
• -Improve training
• investment.
• -Improve employee
• motivation.

10
10
5
5
5
5
12
Monitoring Public Ownership Initiative In Egypt
13
Monitoring Public Ownership Initiative In Egypt
Objective
Phases
14
Monitoring Public Ownership Initiative In Egypt
Objective
The State Acting As Owner
15
Monitoring Public Ownership Initiative In Egypt
Phases
Second Phase
First Phase
Review Organization Of The Ownership Function
Within The State Administration Of OECD
Non-OECD Countries.
Creation OF A Performance Measurement System
(Includes Designing A CGRI)
16
Monitoring Public Ownership Initiative In Egypt
Project Phases
First Phase
Create A Performance Measurement System
Egyptian Balanced Scorecard
17
Egyptian Balanced Scorecard
Governments long term strategic objectives
and goals for its SOEs
Translate
Into
Financial Objectives And Measures
Customers Objectives And Measures
Internal Process Objectives And Measures
Learning Growth Objectives And Measures
Assign
Weighting to each objective measure
Result
Creation of Egyptian balanced scorecard
18
Egyptian Balanced Scorecard
Strategic Goals
Goal 1
Goal 2
Customers
Financial






Balance


Learning Growth
Internal process
20

Corporate Governance (ECGRI)




5

19

• Egyptian
• Corporate Governance Rating Index

20
Corporate Governance Rating Index
CG Development
CGRI
Objective
21
Egyptian Corporate Governance Rating Index
Principal Sources
Egyptian Laws Law 203 Law 97 Law 61
OECD Guidelines On CG For SOEs
Egyptian Code Of CG For Public Enterprises Sector

22
Egyptian Corporate Governance Rating Index
Design
ECGRI
CG Principles
Focus on
Internal Process Perspective
Component
in
Balanced Scorecard
23
Egyptian Corporate Governance Rating Index
Design
Yes/No Questions
Quantitatively
ECGRI
Measures
Weighted Scoring
Level of CG Compliance
For Pilot SOEs
24
Egyptian Corporate Governance Rating Index
Advantages
Egyptian CGRI
Diagnostic Educational Tool For Management
Good CGRI System
Best Results For Shareholders
Good Governance
25
Egyptian Corporate Governance Rating Index
Structure
Scoring
Categories
NO Of Questions
CGRI Points

1-Board Structure And Policies 2-Audit 3-Fina
ncial Disclosure And transparency. 4-Stakehold
ers Relations. 5-Executive Governance
Provisions.
10
20
5
20
10
20
5
20
10
20
Total
40
100
26
Egyptian Corporate Governance Rating Index
Results
Establish CG bench mark for SOEs

• Government
• Policy Makers
• SOE Boards
• SOE Management

Identify trends/gaps/ areas need strengthening in
SOEs performance.

• Enables

• To

Take corrective actions

• To conduct business of
• the company in line
• with owners wishes

• Provides
• incentives to
• management

• Effective
• CGRI System

• Enables owners

• To hold management
• accountable

27
Monitoring Public Ownership Initiative In Egypt
Project Phases
Second Phase
Review Organization of The Ownership Function
Within The State Administration Of OECD
Non-OECD Countries
1
Review different models adopted by OECD countries
2
Analysis of pros and cons relating them to what
is revealed on the status quo in Egypt.
3
Suggested action plan for the Egyptian
Government to select a model for exercising
ownership function.