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: • Activities for 100.000 households 4.000 companies• Handling 300.000 tons of waste

- sustainability - profitable - governmental influence - market driven

Directing public companiesa current issue

• Cost effectiveness

• Risk avoiding

• Complication of the specific task

• Internationalisation (waste)

PartnershipModel 1: Municipal Settlement

Performing Tasks:• Waste collection• Green keeping• Grit icy roads

• Sweeping• Activities in public space

Municipal settlement

Executing organisation

Municipalities

Board with politicians (aldermen)

Specifics MS:- Legal status- Political responsibility- Performing public tasks

PartnershipModel 2: Public Company

Performing Tasks:• Waste collection• Green keeping• Grit icy roads

• Sweeping• Activities in public space

Board of governors

Executive board

Executing organization

- control- advice

Shareholders= Municipalities

Specifics Public Company- Legal status- Equity- Entrepreneurial responsibility- Performing public & private tasks

Governance Public Company (1)

Shareholders

Legal rightsconcerning

the company

Company

- Profit rights- Merger/ cooperations- Reorganizations- Investment

• 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

GovernanceTwo tier model

Governance Public Company (2)

Company

Board of governorsGovernors

• advisory & control

• has a status towards ceo and shareholders

• are appointed by shareholders

• have dominating influence on strategy and management

ROLE of Management-Governors-ShareholdersManagement 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 companyTwo angles:

1) Influence on strategy and identity

2) Influence on the performance through SLA

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

A B D EMunicipality C

SLA SLA 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- costsHas to described carefully and from a long term perspectiveB) 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 Contract manager is key function Qualities: Content, legal & financial knowledge, entrepreneurship, communicative abilities, practical, broad view. Access to operation & management. Persuasive. Spokesman. Authorative.

Waste policyIssue: 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)

Company

Politics

EmployeesBankers

Customers

Politics

Shareholders

Lobby groups

Company

Voters

LobbyistsThe rest ofthe world

Financialconstraints

Legal issues

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