By Frezer Debela
2 minutes read
What experience did you learn in your corporate management experience? This was a critical question that someone brought to me forward a couple of weeks before in one discussion session. I don’t think I gave him adequate answer at that time and I was wondering why? But after that striking enquiry I thought I could write something in the subject because of the peculiarity of business landscape in Ethiopia which may give some insight and ideas for improvement.
My country Ethiopia comes along two Commercial Codes. One that enacted 50 years ago around 1960 during the period of Emperor Haile Selassie I. This Code was among the long-serving commercial codes in the planet which operates for about 70 years. One can assume how this law suppressed the business growth of the country which naturally come across spontaneous growth within a single year. Thankfully, this code expired from operation with newly ratified Commercial Code in the year 2021. It is also in this code Article 9 sub article 1 that holding company is assumed as a trader in Ethiopia which was not the case before. Even if the implementation manual of this Article takes a longer time more than anticipated in relation with taxation issue, companies in Ethiopia did not stop from exercising corporate mentality which truly emanates from holding a financial resource by a certain conglomerate.
In Ethiopia companies (PLCs and Share Companies) with same shareholders like my case tried to be managed by one of their companies they assumed the leadership role. But the concept of corporate in Western world is a bit different, in which the holding company assumes all financial (50 plus share portion in operational companies) and leadership veto power under operational companies.
Given this background, the experience I learn in my corporate management is a mix of challenge vs opportunity. I know this is a scenario of all managers whether in a corporate or single company set-up. But the challenge is a bit different and some of them are below.
- Conflicting interest between a need for quick-win and working on Governance: – Most stockholders come along with passing instant decisions by their own across their business life. But when we come-up the issue of corporate governance, the major determinant to hold is having assigned Board of Directors (BoDs). In this case a stockholder who experienced to pass decisions instantly even without anticipation may forced to come along BoDs decision passing process. Taking a time to analyze ideas and come-up with a board’s approach of passing resolution considered as a bureaucratic approach by shareholders. In this case they may tempted even to dissolve the BoDs by wrongly understanding the BoDs as bureaucratic think-thank group. So, meddling between such issue one of the challenges of being a corporate management.
- Lack of Industry knowledge: – Even if we use less technical and more analytical skill when we climb upwards in leadership role, leading the industry that you know well is a plus. So, when you expected to manage g such business you miss the plus and expected to take a fast learning even if it with shorter curve. Therefore, leading diversified sectors is one challenge I witnessed.
- Contradicting interest by operational companies and corporate(assumed) companies: – A company assume a corporate is expected to fulfil all interest of shareholders by observing the business trend the entire operational companies. In this case a single operational company senior manager may come-up with an expansion investment request which may not deem a necessary priority as compared to other companies. In this case mediating such scenario is another challenge a corporate management face and expected to convince operational companies and sometimes working on shareholders mind to revert their original idea with some convincing analytical information is another challenge.
- Lack of understanding a matrix structure and working with it: – In corporate set-up one functional manager in an operational company let’s say a finance may expect to report for CFO of corporate companies. In this case, managing administrative issues of the manager and his/her performance will be controversial. Having this there should a clearly outline sort of rules to mitigate such case.
The above three are the major challenges that I consolidate you may add some if you are in set-up like mine.
After all the challenges, what would be an opportunity for a manager in a corporate set-up? I can simply say a learning experience one can take, which is a greatest of all.
