National carrier in a shambles

PIA is in trouble. Has been in trouble for some decades now. PIA’s boards almost always comprised the “usual suspects”, the faces and names changed but the backgrounds remained pretty consistent over the years. Most of the time the Defence Minister nominated the board members, while some other powers that be, not the board, parachuted-in the CEOs. As a result, the two almost equal forces did not have the cohesion to run a large organization like PIA. We have seen the fallout from this internal battle a few times in the past. In my view the two always lacked the “social contract” between them to form a strong and effective partnership, inevitably resulting in the downward slide of the organization. Whenever things went terribly wrong, CEOs alone were held responsible. The boards went scot-free as if they had nothing to do with it. No accountability means, no engaged and responsible decision making. A case in point is that of the missing PIA Airbus A310, allegedly taken to Germany by its former CEO Bernd Hildenbrand. It is inconceivable that the board at the time did not know of this incident or did not acquiesce to it. While we were quick to start criminal investigation against the CEO, no one bothered to investigate the role of the board in it.

During the financial crisis of 2008, Lehman Brothers, a financial institution founded in 1847, the fourth largest investment bank in the United States with 25,000 employees worldwide went down too. At the time, the question raised by the Wall Street Journal was, “Where was Lehman’s board?” The world wondered how and why did the board allow the CEO to preach hope and stay in power instead of removing him? Board, after all is the real boss of the CEO. The current CEO and the PIA Board are taking, again, the easy way out to get out of the red. Red has been there for so long that it has become a cliché and now when I see PIA’s color green I find blemishes of red in it. The poor employees have again been held responsible for dragging PIA in the red and offered a Voluntary Separation Program. In fact, the first payments after a lapse of some three months have started to pour in just last week. The question that needs to be answered is how did the successive Boards allow the CEOs and management teams to run a successful airline into the ground? It is easy to blame the political governments but I have never heard that a board member left because of disagreement on hiring or induction of new employees. So the question arises, what were they doing during all their meetings to oversee the running of PIA and why should they not be held responsible for this disaster?

Today, the Management team of PIA as shown on their website comprises 16 gentlemen, eight, including the CEO are or were in Pakistan Air force. This in itself is a pathetic situation for a state-run organization in a country with over 220 million people. Some of the Pakistanis have run organizations in responsible positions worldwide. Even Fortune rated companies at times, but they do not qualify to be a part of the management team of PIA. It seems only the present or retired PAF officers can fix the problem. And, by god, fixing they are by so-called rightsizing. Not surprisingly, PIA boasts of seven, rather longish, organizational values. Even the current management will be hard pressed to remember these values by heart. According to management experts and common sense any organization with more than three or four values is looking for trouble. Seven values sum up to having no values in my view. Because values are not for employees alone, they equally apply to all stakeholders—investors, owners, governing boards, management, clients, third parties and in this case much more. The founder of the Nation, Quaid-i-Azam Muhammad Ali Jinnah, gave the new state of Pakistan just three values—Unity, Faith, Discipline, in that rank order.  We made a mess of even these values, just imagine if he had given us seven values. What would have happened? Let’s leave values of Pakistan and it’s people for another time.

The founder of the Nation, Quaid-i-Azam Muhammad Ali Jinnah, gave the new state of Pakistan just three values—Unity, Faith, Discipline, in that rank order.  We made a mess of even these values, just imagine if he had given us seven values. What would have happened? Let’s leave values of Pakistan and it’s people for another time.

The problem with organizations here is that while they like to own MISSION (what we do), VISION (why we do this), they consider that VALUES (we succeed because we believe) are only for employees to follow and this has nothing to do with the owners or management. For example, Integrity, as a value, is found in 90 per cent of companies. And the companies expect employees to be above board in all matters, but it is fair game if they themselves fudge numbers, do not fulfill their promises to employees, evade taxes or do not follow the laws or accounting standards or make under the table payment to the government functionaries. This is especially true of our local companies, more “affectionately” known as “Seth companies.” Although, personally I do not subscribe to this definition and I think all companies in the world started as “Individual or Seth run companies.” It was only much later that they transformed into corporations or multinationals with great management systems. And that is why they progressed and are respected. I am sure one day, sometime in the near future, we will boast of several forward looking professional companies started by Pakistanis and transforming lives and livelihoods here and abroad.

Talking about values and their application, a case narrated by the great management guru Ken Blanchard in the book “Leading at a Higher Level” comes to mind.  After 9/11 attacks in USA, businesses suffered unexpected losses. The Ken Blanchard Companies were impacted the same way and lost $1.5 million in sales in September 2001. To end the year in the black, the company needed to cut about $350,000 a month in expenses. The Leadership team sought to take tough decisions and suggested to cut 10 per cent of staff. A typical knee jerk reaction, when faced with a situation like this. However, in this case and as with all major decisions, the leadership team “checked the decision to cut staff against rank-ordered organizational values of ethical behavior, relationships, success and learning.”  They discussed “Was the decision to let people go at such a difficult time ethical?” To several of the team members the answer was no. Then “Does the decision to let people go honor the high value that the organization placed on relationships?” Again the answer was no. But what could the company do as it was bleeding?

Following the principle that “no one is as smart as all of us,” the leadership team invited all employees and opened their books to show them how much the company was bleeding and how. This open-book policy at an all employee meeting opened a floodgate of ideas and suggestions to increase revenue and cut costs. This participation by the employees found great ways and means to support the company during this difficult time. Over the next two years the company started turning around and by 2004, the company produced the highest sales in its history. So in March 2005, as promised by the owner and Chief Spiritual Officer of the company, Ken Blanchard took 350 employees to Hawaii for a four days celebration. This underscores that when important information is shared with people, they act like owners and solve seemingly insolvable problems.

There are some similarities between this case and PIA.  I am not sure if the current Board and the management even considered PIA’s values which include, among others, “Integrity: Business ethics, accountability and transparency.” Did they look at accountability of the management and especially the Board? Is the process of Voluntary Separation Scheme transparent? Was their any other way to deal with the situation? Then there is the next value “Cohesiveness: Respect for individual, team work, effective communication.” Well was this considered too before proposing the VSS decision? How will VSS or other such steps planned for the later phase increase cohesiveness or respect for the individual? There are many unanswered questions.

Values are organizational values and are applicable equally to employees, owners, management, board, customers and even the community. So owners, the board and management must tread carefully when establishing values because they have to walk the talk and be role models to employees. Otherwise do not expect employees to believe in and follow the organizational values. The big question still unanswered is “Why did the successive boards of PIA allow it to bleed?” The buck stops with the board and the board is the boss of the CEO. So when an organization goes down we should look at the members of the Board too as they have an equal or a higher responsibility. So let us look at the successive boards of PIA and hold them responsible for its current condition. Then turn towards the employees. Also this seems to be the right time to reexamine the role of the board members of PIA and all other such organizations to explore how can they be more effective in achieving their role as the CEO’s boss?