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COMMENT

OWNER AND DIRECTOR




Belgrade, January 16, 2007 .

Everybody who viewed the strategy of development of Serbian economy for the period 2007-2011 could have found a chapter dealing with corporate management, appraisal of the situation in this field, as well as scheduled activities, in order to reach a corporate management level necessary for the economy and society in the time we live in presently.

The privatization model pursuant to the Privatization Law of 2001 resulted in having a majority proprietor and a major participation in managing privatized (bought) companies. For this reason, the basic problem of corporate management, i.e. separation of property and management, does not arise in the companies privatized in compliance with this Law. The buyers of public companies either manage directly a company’s business operations by themselves or they are, as majority proprietors, able to supervise hired managers directly. However, the problem is in that the buyers of public companies, especially those who bought companies at tenders, were often not competent enough either for direct company management or supervising managers.

A common problem of corporate management, i.e. separation of property and management and thereby a risk of unskilled management of operations or misuse, emerges in the companies privatized in accordance with previous laws. Petty shareholders, mainly employees, are owners of more than half of the shares and as such they can hardly supervise managers; in addition, the blocks of minor, often important shares, kept by the Share Fund presently, have not been privatized in these companies.

Moreover, all the companies that have been privatized so far, got the form of open joint-stock company after the privatization, which is, in most cases, completely inappropriate and makes difficult an efficient corporate management.

Finally, besides the stated ’’internal’’ obstacles for a good corporate management in privatized companies, the ’’external’’ factors also represent an impediment, which are relevant as for the entities in the sole companies so also for other interested, first of all, creditors: insufficiently established application of the new Business Company Law, deficiencies of the financial legislation, unestablished application of the Bankruptcy Proceedings Law, generally insufficient rule of law, corruption, etc.

Lagging of Serbian economy behind European standards relative to the situation in this country is usually measured by decades. In the area of management and corporate management we certainly fall behind for about one hundred years. The so-called managers’ revolution took place in the world a hundred years ago, which defined the trend and development of the entire world economy. Having skipped this civilizational managers’ step forward in the economy, a large number of ethno-managers being seized by the privatization process, remained somewhere in-between to hover in the air. The positions they had, and this meant unlimited power and privileges, were jeopardized by the appearance of majority owners, whose demands for work and responsibility and protection of their own interests adversely affected the habits and conduct of former socialist directors.

In our economy, the concept and knowledge that a manager must have, are not standardized, so we experience managers as the managers of soccer clubs and stage performers – ’’stars’’. Following the root of the word, which derives from English, we get an explanation that management is resourcefulness, finding a way out or managing. Finding a way out or finding a solution is not the same as performing illegal acts and violating a law, but it is often identified as a manager in our society. The thing we have to accept is that capital management has to be a manager’s job and that this is a profession implying multi-disciplinary knowledge, high level of professionalism and high ethical standards.

We, as the people, are known as innovators and creators who know how to acquire a fortune, but do not know how to keep and preserve the same. Capital management was a privilege of talented individuals and of those who commited themselves to management through a long learning process. It is important to stress that a manager’s job, as well as his relationship with capital owner has not been regulated at this time by any law, regulation or act. Also, a significant number of the so-called managers, usually without experience, use various facts justifying their own failure, such as external factors, bad laws, and even the privatization process going on, which just bring the concept of manager as one of the main novelties.

In our conditions, a manager is often considered as a hired worker, who, because of increased responsibility and specific behavior toward an owner, gets special remuneration by result and according to output. A manager is the one who has to cooperate with shareholders, Boards of Directors and supervisory boards of a company. The results and success are things based on which a manager is evaluated and paid. Unfortunately, there is a managers’ market in Serbia, in a certain way, of recent date, but also a dominant thinking of capital owners that managers are, in fact, successful cheats. In order to annul such contemplations, a sincere interceding of managers themselves is necessary that they contribute by their good and honest work that such characterizing by being cheats and illusionists must not be associated with their profession. The most important manager’s job is to manage company’s operations and form a successful team of associates, whose joint task will be to promote the business and achieve a favorable financial result. The capital owner has a natural right to define a company’s strategy, but this means everyday consultations and manager’s opinion. One thing is certain, namely, that a manager’s job is a high-risk profession, that it takes its tributes in health and lives and that a minor percentage of outstanding managers live up to retirement. All of these risks are usually contested by a fact, i.e. high managers’ earnings and enviable status in the society they live in. It would be most honest, and practice has shown, that managers’ earnings, status and position are defined relative to profit of the company they manage.

 
     
 
 
 
 
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