Corporate Management in Larger Organizations – Asrar Qureshi’s Blog Post #940

Corporate Management in Larger Organizations – Asrar Qureshi’s Blog Post #940

Dear Colleagues! This is Asrar Qureshi’s Blog Post #940 for Pharma Veterans. Pharma Veterans Blogs are published by Asrar Qureshi on its dedicated site https://pharmaveterans.com. Please email to aq.pharmaveterans@gmail.com for publishing your contributions here.

Credit: Anete Lusina

Credit: Brett Sayles

Credit: Markus Winkler

In this blog post, I shall present findings about corporate management or governance in larger organizations, be they private or public.

Corporate management is the system of rules, practices, and processes through which a company is run, controlled, and directed. The culture of the organization evolves from governance, not the other way round. Corporate management, as mentioned earlier also, must balance the interests of all stakeholders. The shareholders should get return on their investment, suppliers look for on time payment of supplies, employees look for safe environment and career growth etc. 

Due to inefficient governance at the country level, market forces have developed and been strengthened which do not reward good governance nor do punish unethical practices. Some issues may be listed below.

Lack of Compliance

In most instances, the absence of laws, rules, and SOPs is not the issue, the issue is compliance. When systems are corrupted, every good thing is also distorted. We can see several examples.

The government fixes minimum daily wage for all workers who work at least eight hours a day; presently it is Rs. 32,000 per month. The largest majority of organizations pay less than minimum wage. The labor department staff regularly visit industries and know this, but they collect their ‘fee’ and just look the other fee. Due to low wages, quality of staff is compromised, and they are further subjected to poor working conditions which no one notices.

Another glaring example is that of social security cover for industrial workers, and EOBI cover for all employees. Most organizations register 10-20% employees so that they do not have to pay subscription on behalf of employees. It is the job of labor department to check and get the compliance done, which they do not do as they receive their cut and leave. In fact, they encourage employers to get into this practice because it increases their income. 

Health and safety rules are now quite elaborate, and every organization is required to provide safe working environment to employees. Accidents such as Baldia Town Karachi fire tragedy show that the HSE rules are completely ignored. 

Health checks of employees working with hazardous materials are mandated on a regular basis. Either it is not done properly and periodically, or not done at all and fake documents are made.  

The above are some examples of non-compliance of rules which directly affect employees’ well-being. Other areas meet the same fate.

Environment preservation is required by law and the department of EPA – Environment Protection Agency is required to ensure that wastewater is treated properly before it is added to water reservoirs and streams, but millions of gallons of contaminated water is thrown out by industries every day, and EPA does nothing, of course against a ‘fee’. 

Payment of taxes issues are no secrets. At the import stage, customs department charges some, leaves some, and all this is done fully legally. Standard rates of ‘service fee’ apply and the business saves handsome amount of money. A huge amount of GST is paid but it does not reach the government treasury. Income tax is a heartbreaking story because only the salaried class in Pakistan pays correct income tax, all businesses pay a fraction and go scot-free. FBR – Federal Board of Revenue went under name change from CBR, got digitized, but nothing cured the endemic corruption in the department. It is one of the most powerful departments, and the utmost efforts of last caretaker finance minister, Ms. Shamshad Akhtar, were constantly thwarted when she wanted to break the department to spin off customs, sales tax, and income tax functions. She went to the extent of announcing the approval of the proposal, but it was never implemented. 

ISO certifications, and their preparation also leaves much to be desired. After an organizations receives certificate, they do not feel obliged to comply with its tenets. Certifying agencies maintain that their audit and recertification systems are strong enough to weed out non-complying organizations, but practically hardly anyone loses certification once having received it.

Wherever you look, you will find the same state of deliberate non-compliance, which no one is addressing. Raising rates, slabs and tariffs is not the solution, their correction is.

White-Collar Corruption

White collar crimes are rampant throughout the world, and most global firms and their employees have been implicated, indicted, and sentenced, but the power of money prevails as a superior force. However, in developed countries, the law takes its course and culprits are regularly caught.

Pakistan is among the high-ranking countries, and rightly so, because our regulatory infrastructure is deficient and inefficient, and therefore no one gets caught. The firms dealing corporate taxation, trading, and other corporate matters are there to facilitate undesirable practices in every which way.

Organizational Politics

Politics infests every organization, much more so where people work for long time, and where they rise through the ranks to reach important positions. They know the organization like their backyard, and they also treat it the same way. They actively sabotage all initiatives aimed at bringing change, fresh ideas, improvement, and progress, and keep the organization shackled into poor practices to keep their hold on it. 

Most senior people in larger organizations spend most of their time in running politics, building invincible silos, and fighting pitched battles against their opponents from the security of their bunker silos. They build armies of loyal staff through a process of screening, intimidating, incentivizing, and all other methods. The organizations stay stale, inefficient, and corrupt.

Inefficient Regulatory Structure

Regulatory infrastructure in Pakistan is inefficient, mainly due to corruption. The regulators invent and employ new weapons to extort money from organizations. Being in a position of power, they know they will not be challenged. 

Sum Up

Much more could be written on the topics above and related more topics. We live here and we know, see, hear, observe, what goes on every day. So, I shall leave the rest here.

Concluded.

Disclaimers: Pictures in these blogs are taken from free resources at Pexels, Pixabay, Unsplash, and Google. Credit is given where available. If a copyright claim is lodged, we shall remove the picture with appropriate regrets.

For most blogs, I research from several sources which are open to public. Their links are mentioned under references. There is no intention to infringe upon anyone’s copyrights. If, however, it happens unintentionally, I offer my sincere regrets.

References:

https://www.scribd.com/document/360271703/1719-pdf