Dear most honorable, most gracious, most industrious and most illustrious Member of Parliament. I lay prostrate before you, humbled by the power you (purportedly) wield over those that dare to whittle down your remuneration. So I salute you as I would anyone who earns my respect for demanding what is not rightfully yours and trying to hold 40 million citizens at ransom in the process. Buoyed by your churlish behaviour, you have now infected the county ward representatives with your reprehensible avarice as they are now demanding almost four times more than what their salaries are currently scaled at.

So I figured that perhaps I should undertake to impart to you two extremely rudimentary lessons in mathematics and English. I base my knowledge on the fact that I have been both an employer and an employee in my short lifetime and can thus speak with moral authority on the subject of employee remuneration. I will start with the easy one. I suggest you take out your pen and write the following word: “Pleonexia”. It is an ancient word that quite poetically does the linguistic work that simpler words like greed or avarice fail to capture. The word, according to linguists, is a diagnosis of a covetousness that is not healthy, actually quite abnormal. It is compared to anorexia which is the pathological extremity of a brand of asceticism. Sorry, have I lost you? I thought so. I’ll break it down for you: basic need morphs into desire, which can mature as greed, that graduates most ungraciously into pleonexia. And that is the end of the English lesson.

Now let us begin the mathematics lesson. I want you to know that I am writing very, very, V-E-R-Y, slowly. This is to enable you to understand the slightly relatively simple arithmetic that I want to share. I would like to draw your attention to the table above. The first think you will note is that revenue (that amazing thing that happens when one undertakes a productive, economic activity that generates a return, usually in the form of an item of value: in this case, cash) is lower than expenditure (that other amazing thing that happens when you have to spend revenue in order to obtain goods or services that you require). This is really not as rare as a sighting of Hailey’s comet or mankind landing on Mars. It is, quite extraordinarily, a very common event. In fact I quite reckon that this is a situation you Mr/Ms MP and you Mr/Ms. County Assembly Representative would be very familiar with.

The second item to note – I do apologize most profusely if I am moving too fast – is that the income taxes my fellow Kenyans pay from working hard at their places of economic production constitute 40% in the current financial year and almost 50% in the next financial year of total revenue. I can therefore say, with unapologetic conviction I might add, that I pay 40% of your salary from my salary. Interesting is it not? And this is probably where there is a divergence of our views. The Government does NOT pay your salary. WE DO! The Government is a post office of sorts; it collects our money and distributes it according to its budget. The government is an agent for channeling the revenue derived from the Kenyan citizen’s economic productivity. You should be well aware that the taxes we pay on purchase of goods and services (VAT and excise duty) and importation of goods (import duty) also contribute to the revenue. So even if Joe Blow dodges paying income tax, he will still generate revenue to the government

“Walalala! Eti now our Minister is coming from “private sector” to show us the “new” way of doing things?” John asked to no one in particular. He slowly shook his head and sat pensively staring at the television screen on the corner cabinet of the open plan office as the President continued to announce more names for his new cabinet. “It’s not Minister, John, it’s Cabinet Secretary,” growled Musa. John looked at his civil service colleague keenly. Musa was not one to talk much, and when he did it was usually when he was extremely excited, which was rare. However Musa’s facial expression and body language showed anything but exhilaration.

“Sawa tu,” Maria chipped in from behind her desk as she poured her third cup of milky tea from the office flask. “We will just work with whoever comes in, right?” She looked questioningly at John. “These private sector people don’t know how things are done around here,” he hissed. “The Minister-” he looked at Musa deliberately as he spoke, ” or whatever it is his title is, will try and change the order, sijui new policies, sijui performance targets….” Maria clicked under her breath. She knew exactly what John was talking about. They had all gotten comfortable in their jobs, in her case she had worked through ten years each of the last two presidential administrations and, like many of her colleagues, she knew what made a politician tick. After all, that’s what Ministers were in the past administrations: political animals first and managers second. Whatever they did always had a political agenda and once you had tapped into that knowledge, you milked it for what it was worth.

“I am not about to lose my job, John and neither are you,” the words slipped out of her mouth in between sips of tea. “These guys are new and they will take their time to find out how to get this serikali machinery working for them. We just wait and see. Remember, they need us to get their jobs done.” Musa stood up and walked to Maria’s desk frowning. “Maria, you think these guys will take their time? They read those fancy management 101 books about sijui first 100 days, sijui Good to Great……they will come here with the media nipping at their heels to see what impact they will make since they have taken huge salary cuts.”

John began pacing within the four foot square space between their desks. This was not good. An outsider would ask questions. Lots of questions. Which meant that many answers would be sought and the pressure for answers typically cascaded along ministry’s hierarchical food chain. An outsider, with a rock star addiction to media briefings and an ego the size of an Upperhill pothole would do anything to look good. “We have to make sure we protect our turf, guys. We don’t know if this guy will want to play ball or want to play savior-of-the-mwananchi’s-interests. We must assume, with his Mr. Clean background he will want to play the latter.” John looked at his colleagues, noting that he had their full attention now. “We can’t let him come and change the way things have been done for the last twenty years. We haven’t remained in this office by accident. We haven’t refused promotions because we are stupid. The past Ministers didn’t touch us because we did their “extra” work for them. And even those who didn’t know what “extra” was, quickly came to realize the benefits of “extra” when their constituents came to see them. Now we have nothing on this guy. Nothing.”

Musa sat at the corner of Maria’s desk, chewing on his lower lip. He started speaking softly, so softly that Maria and John had to lean in to catch what he was saying. “We need to cover our backsides. Swiftly. Judiciously. Efficiently. Maria, do you still keep that contact at that gutter newspaper, the Daily Roast?” She nodded. ‘Good. Get in touch with her, have her start digging around this guy’s family and former work background. There has to be dirt we can work with. No one, not even the Pope, is 100% clean. Once we get that information, we’ll decide what to do with it.”
Musa turned to John, “You’re cousin is still an IT officer downstairs right?” John nodded pensively, wondering where Musa was going with this line of questioning. “Get him to get Super Administrator status.We must be able to see everything that the incoming Cabinet Secretary receives and sends out on email as well as what he is working on his desktop. That shouldn’t be hard as we work off a Ministry LAN anyway.”

“And what are you going to do Musa?” John asked. “My friend is a private investigator and he was showing off some snazzy new hidden cameras with audio recording capabilities to me the other day. Some of them are hidden in the face of wall clocks, watches, pens……incredible. I’m going to replace the wall clock in the Cabinet Secretary’s office. Mary, the secretary, is…..it doesn’t matter… so it won’t be difficult to sweet talk my way into the office before he comes in next week.”

John looked at his colleague in wonder. For someone who hardly spoke more than four sentences a week, this was a lifetime of conversation from Musa in the last ten minutes. Funny how a man reacts when his back is against a wall, John thought. It never crossed his mind that what they were plotting was both illegal and immoral.

“Isn’t this going a bit overboard”, Maria voiced her fears out loud. Musa stood up, bringing the discussion to an end. “Sun Tzu, the wise Chinese military philosopher said ‘it is only the enlightened ruler and the wise general who uses the highest intelligence of the army for spying, and thereby they achieve great results’. Be under no illusions: a war is brewing, and all war is based on deception.”

[email protected]
Twitter: @carolmusyoka

Dear Mr. Governor-of-a-Kenyan-County,

You don’t know me, but I am a resident of your county and I must say that I have been watching you and your colleagues trying to settle down into your roles with much aplomb: from raising an absolute ruckus about the right to fly a flag on your yet-to-be-official mode of automotive carriage to your right to find offices befitting your hallowed status.

Mine is not to belittle such major causes of angst. Au contraire, mine is simply to share some unsolicited ideas on how to perhaps beat those Central Government fellows at their budget game. You see, I am equally as disgusted as many of you demonstrated last week regarding the attempts by the Central Government to micromanage the utilization of your county budgets. I mean, why in heaven’s name would those chaps imagine that for the first three years of your administration, you guys who have had zero public finance management skills would be unable to manage billions of shillings? The gall!

Anyway, here’s a quick and dirty way to raise your own financing without having to deal with those chaps. First off, plug all the income leakage that is invariably leaching its way through your coffers. Let’s start with the easiest: Rates. I’m sure you will find on the top shelf of the metal cabinet in room 201, your county valuation roll. Take out your calculator and start calculating the absolute minimum that privately held land should be yielding in annual rates. Discount that by about 30% for the invisible sticky fingers that swipe the funds when paid across your counters and another 30% for the funds that never even get to be paid. The figure you get should be equal to what your county collected last year. Now multiply that tenfold. Sorry, am I going too fast? Yes, I said tenfold. Because if you were to actually revalue the land to today’s valuation figures you will find that your county has grossly been allowing potential income to leak, right? No, my numbers are not based on scientific fact and are actually pulled out of a hat, but I trust you see where I am coming from.

Don’t get me wrong. There will be much gnashing of teeth and right royal screaming coming from your residents, after all there have been previous attempts to increase the valuation roll but there was significant lack of political will to fight the big landowners who shouted the loudest. Others will say no new rates with no new service delivery, so this would be a good time to begin collecting garbage, filling up potholes and getting street lights working with what little money you have left in the bank. You might just convince us that your broom is a new and effective one.

The second easiest income leak to plug would be parking revenue. I mean, let’s get serious here. Parking is a finite resource. There are only a defined number of parking spaces in the urban centres within your county. Now let’s assume that there are 1000 parking spaces and the daily parking rate is Kshs 50/-. Your basic daily revenue should be Kshs 50,000/-. But this would be too simplistic a target to give to your yellow-coated attendants. You see, you can gingerly make the assumption that at least half of the parking spots are turned over 1.5 times a day. That is to say that a parking may be used by up to three cars in a day or perhaps by one car the whole day. Averaging it out to 1.5 times will be a good start. Therefore your daily revenue for should actually be Kshs 75,000/-. Align all salaries for the parking attendants to a minimum daily or weekly collection. Do not under any circumstances give the same target to the clamper zealots or else your urban centres will grind to an absolute halt from their sudden “efficiency”.

The third asset that your county has is the air above and within it. What’s that, you say? You see, the outdoor advertising companies have demonstrated that you can pull a rabbit out of a hat and create advertising space out of nothing. That many of these billboards are now an environmental hazard and are a complete eyesore is irrelevant. Have one of the chaps from audit go round your county and take stock of the number of billboards and outdoor advertising gizmos that have been built. Then undertake reconciliation with the revenue collected for the same in the previous year. I rest my case. Of course the same can be undertaken for all the signposts and motor vehicles that advertise company logos and building addresses. We know this because we are constantly harassed by overzealous “askaris” who want to see payment for “advertising” ourselves even if it’s something as basic as telling the rest of the world where we do our primary business.

I could go on and on regarding areas of income leakage but you already know this. Your staff have become completely blind to seeing connecting the dots between revenue collection = topline and continued sustainability =bottom-line. We like your staff, they are Kenyans like us and they have families to feed…. at least the ones who genuinely exist on your payroll [let’s face it the ghost worker question is the elephant of income leakage]. Just like the rest of us who run our own businesses or who are employed clearly understand, you should demonstrate that service equates to customer satisfaction, which in turn equates to a willingness to pay for that service. We all know that if we don’t justify our existence by generating value for our employers or our customers, we are out of a job. Sadly, many of your staff have difficulty making that connection. Your role is to paint a picture of financial independence and connect the dots for your team. That will take leadership skills outside of flag bearing motorcades and snazzy red-carpeted offices. Let’s see what you’ve got.

[email protected]
Twitter: @carolmusyoka

Diary of a Kenyan Governor-elect

March 8, 2013
I’m in. I’m in. I’m in and I like to win. I received the winner’s certificate from the returning officer at 3:59 p.m. today. It has been a remarkable journey to get to this point but I had no doubt that I was going to win. Alright, I lie. I had serious doubts during that atrociously bungled nomination, but nothing that a few thousand shillings greasing the right party officials palms can’t cure. My name now starts with the title Governor. Wacha tu. Governor Tom. It sounds…..almost…..presidential. After all, since I am the senior-most elected official in the county it is not unreasonable to think that I am the president of the county, right? I thought so.

March 11, 2013
My supporters escorted me to the Town Hall. I took one look at that decrepit building and thought it was not befitting the stature of a Governor’s Headquarters. So I called the chaps at the Transition Authority and they told me that the plan was always for me to take over the provincial administration offices. The County Commissioner’s office to be precise. Well, not to waste any time we sped over there singing songs of praise, at least my supporters sang. I just nodded and looked the part…….presidential. Much to our surprise, we found the offices locked without a soul in sight. Curious. It was only 2 p.m. I addressed the rapidly thinning crowd and we agreed to re-group tomorrow. It seems one has to pay people to hang around singing your praises these days and my coffers are empty after that grueling election race.

March 12, 2013.
That **** nitwit of a county commissioner has refused me to take over her office. Does she know who I am? Governor! First of all, I have more bodyguards than her – or at least I will when the Provincial Police boss sends them across. (For some strange reason I’m getting the distinct feeling that he is avoiding my calls) Second of all, the people elected me, my mandate comes from them, and they WANT me! Mine was not a one o’clock radio announcement followed by a notice from the Head of Public Service. Thirdly, the letter G comes after the letter C. G for Governor, C for county commissioner. It follows therefore that C is less than G. Right? Wait, I will give her a presidential dress down!

March 15, 2013
That County Commissioner is really dancing on my last nerve. She ordered a Fundi to change the locks on her office door, added two bolts, four padlocks and the only thing missing is a retina recognition security system to open her door. She’s even welded her swivel chair and table to the floor so that I don’t even think of moving the furniture around. I called the Transition Authority folks and they told me she was being unreasonable and she should stop it. I told her the same, in slightly more flowery terms through the window of her office where she had barricaded herself. I have ordered for a blowtorch, a crowbar and a tractor with chains. This war has to be taken to the trenches. Anyway the good news is that I went by the State Lodge earlier today. It would make for a good Governor residence, after all if it’s fit for a president it’s fit for a Governor. Now if only I can convince those Transition Authority folks the same. To look presidential, I have to live presidential, right?

March 20, 2013
I was just about to detonate a homemade incendiary device at the County Commissioner’s door when a chap from the Transition Authority drove up looking quite flustered. It seems that they actually never had the authority to allocate the County Commissioner’s office to me. Pardon? He gave me a blank look, shrugged his shoulders and drove off in a cloud of dust that ruined my brand spanking new Governor-strength Jionjio Harmani suit with the label on the left sleeve for people to RECOGNIZE! I drove slowly back to the Town Hall, with its peeling paint, blocked toilets, hanging ceilings and two working light bulbs. This is not presidential. I thought my supporters would have been by my side singing war songs against this devilish injustice, but there was no one, again. I have to pay to get support and I haven’t even earned a salary yet. Nkt!

March 25, 2013
I’m getting dizzy with excitement. The swearing-in is this week…..this week!!!! My Chief Campaign Manager got me a new suit, Hubo Goss original! I’m telling you I look presidential when I wear it. He whispered to me that he wants me to make him Head of Public Service-County Level. As if! That job belongs to Bigshot’s son, after all he didn’t finance my campaign for nothing. I got some fundis to make me a number plate – “Governor One” – which I will put on my car and “Governess” which I will put on my wife’s car. My first order of business when I officially take office will be to storm the County Commissioner’s office with my blowtorch, crowbar and tractor with chains. It is one thing arguing with a Governor-elect, but it is another arguing with THE GOVERNOR.
My second order of business will be to appoint my cabinet. What’s that? I don’t have a cabinet? This is my show, and I will do what I want. My third order of business will be to get a direct line to the central government, we need our county budget allocation pap! I have very many ideas of how this county’s services can be improved especially if there are contracts involved. My fourth order of business will be to ensure that my first order of business is complete. Without fear or favor. Without a shadow of a doubt. With utmost certainty. After all, people need to know me: I-am-the-Governor!

[email protected]
Twitter @carolmusyoka

“He who thinks he is leading and has no one following him is only taking a walk.”
Malawian Proverb

What this country has witnessed in the last one year of political campaigning, coalition building and horse-trading shenanigans will fill a political science class with case studies for the next few years. But it should also make for an interesting marketing class discussion on two critical marketing elements called brand awareness and brand affinity.

Brand Awareness is the extent to which a brand is recognized by potential customers, and is correctly associated with a particular product. Expressed usually as a percentage of target market, brand awareness is the primary goal of advertising in the early months or years of a product’s introduction.
Brand awareness is the extent to which the consumer associates the brand with the product he desires to buy. It is the brand recall and the brand recognition of the company to the consumers. Brand recall is the ability of the consumer to recollect the brand with reference to the product whereas brand recognition is the potential of the consumer to retrieve the past knowledge of the brand when enquired about the brand or shown an image of the brand logo. A brand name that is well known to the great majority of households is also called a household name. Thus, in the case of mobile telephones, Nokia, Samsung, Blackberry and Apple have strong brand awareness associated with them. When Joe Blow walks into a shop and wishes to purchase a phone, he will typically recognize any one of the abovementioned brands as they stand out as household names in the mobile telephony field. Similarly, as we walk into the voting centre today, there will be eight presidential candidates of whom we have to select one. Prior to the presidential debates last month, perhaps only six names had brand awareness. However, following the wide-ranging and massive exposure on national television and radio, we were made aware of two more. But the same cannot be said of the candidates for Governor, Senate, Member of Parliament, Women Representative and County Assembly Ward Representative. The candidates for these positions have had an extremely limited platform to raise brand awareness and have relied largely in part on their own financial capacity to raise their profiles through road shows and campaign rallies in their respective localized domains. I speak very honestly when I say that as I wake up this morning in the county of Nairobi where I will vote, I am only aware of three Governor candidates, two Senator candidates and two Women Representative candidates.

I have absolutely no idea who is running for a position in my constituency as neither Member of Parliament nor County Assembly Ward Representative. I’m I proud of my ignorance? No. But the fact is that the brand awareness for these positions is sorely lacking again primarily due to the lack of financial capacity required.

Brand affinity, meanwhile, is about a consumer having an emotional connection with a brand. And as it goes with emotions, these feelings aren’t always logical – but are certainly real and strong. Think also of brands like Apple or Harley Davidson – while these brands stand for well understood attributes such as innovation, and freedom of personal expression, people often buy these brands because they identify with them and want them to be part of that shared identity. They perceive the brand as representing or complementing some highly personal aspect of their persona, or their values – or believe being associated with these brands makes them more “cool.” Thus the same Joe Blow who walks into a shop to buy a mobile phone will have a high brand awareness about four brands but may have an emotional connection to just one because it’s the in-thing at his place of work or amongst his peers and he wants to be associated with that brand. Having said that, Joe might have a brand affinity for one brand, but his pocket may have an affinity for another!

Similarly on the election front today, there may be some candidates that we have an emotional connection to. Perhaps it is their values that we passionately subscribe to, their work ethic, their historical performance or the fact that they have personally and positively touched our lives in some shape or form. Sadly, as has been oft described in the media, the affinity to many of the candidates today will come primarily from tribal affiliation, as that is a very strong Kenyan emotional connector. The feelings aren’t always logical, but they are certainly real and strong! The frightening thing about emotions is that they can drive humans to do stupid things. Affinity for any of the candidates today, illogical or not, should not drive us to become belligerent in the case of their loss at the ballot.

The candidates today are a product like any other. They have steadily built their awareness, some more successfully than others. They have the power to raise our emotions and take a firm stand in favour of or against some of them. Nokia and Blackberry have strong brand awareness but rapidly diminishing brand affinity due to failure to successfully innovate in the smartphones arena. They are both gasping for air to survive in a declining sales environment. They may even be kicked into the annals of history as has-beens. Their customers will not riot, sulk or kick up a storm in the streets consequently. They will more likely shrug their shoulders and move on to what other products remain in the market. Their purchase of other products may not be driven by brand affinity, but by brand awareness alone.

We have many products on the balloting box today. We are probably aware of only a few of them and have a very strong affinity to even fewer. If our product choices don’t win, we have to shrug our shoulders and deal with what the majority of the market has chosen. Vote wisely today.

[email protected]
Twitter@carolmusyoka

Fund a woman: Enrich a society

Following her husband’s death, his relatives claimed all his assets, throwing her out of their home with only her children and one cow to keep. Traditional custom dictated that women had no claim on land or property and widows were expected to fend for themselves. Not to take challenges lying down, she began leasing out the cow to neighbors who needed milk as she did not have any funds or property to use as collateral to start a business. Slowly but steadily she began to get a regular income which she channeled into a microfinance institution aimed at empowering widows and young girls to build up their own income generating asset bases.

That is how in 2002 Dr. Victoria Kisyombe began Selfina, a microfinance institution in Tanzania that specializes in micro leasing. By providing loans to women to purchase anything from agricultural power tillers, animal feed mixers, catering equipment, tailoring equipment and office equipment such as computers and photocopiers, Selfina empowered women to acquire assets without a history of credit, little or no financial literacy and absolutely no collateral.

The two critical elements in the Selfina proposition are financial empowerment and dignity to the woman. I learnt about this organization at a workshop in Dar es Salaam last week that put together banks providing women specific product offerings as well as women entrepreneurs. I came away with one validation that I have previously written about. Customers talk and talk and talk. Bankers selectively hear what they want and deliver what they can. There were brilliant presentations from many banks around the world that are taking women’s banking seriously. Royal Bank of Scotland, for example, through its Emerging Innovations team, provides bespoke financial solutions to its female entrepreneur clients. By understanding that the key to a successful borrower is financial literacy in the first instance, they provide business training to would be borrowers. They also provide loans to several start up businesses for women, despite the fact that one in every five start ups collapse in the first eighteen months. When a start up potential borrower passes the business training she then qualifies for a business loan as she has been educated on how to manage financial accounts as well as the lifeblood of any business: cash flow. As a result 21% of the portfolio income comes from start-up businesses whose success is also wind assisted by the bank’s online portal that showcases the borrower’s products and provides linkages to potential buyers.

There were several case studies from around the world’s developing economies such as Lebanon, Turkey, Kenya and Tanzania all of which came to four key elements required for a successful women’s banking proposition. The bank should provide access to finance through unbiased loan decisions, access to information through financial education to its female borrowers and deeper product understanding, access to markets through linkages to buyers and finally access to networking where peer to peer collaboration and mentoring programs are well embedded. There was unanimity around the fact that women faced biased lending assessment due to mistaken assumptions about poor repayment potential and their business acumen but it is important to note that women by their very nature, unlike men, have no problems stopping to ask for directions when lost. Consequently, women are happy to jump through whatever educational hoops it will take to get them to improve their own businesses and handling of financial transactions. They are also far more averse to undertaking unnecessary risks in their business as their primary concern is always ensuring that there are enough funds available to feed, clothe, educate and shelter their dependents.

Banks today constantly seek new customers who unfortunately have to fit within their own assessment of risk criteria. There are very few banks in East Africa, a handful really, that have taken this lucrative customer segment and given it the due attention it deserves. But these are mostly banks that started off with a social agenda from the outset. Often the women’s banking proposition you find in the mainstream banks is geared towards the salaried professional and the product push tends to veer towards encouraging consumptive behavior through credit cards and access to furniture and car loans. The salaried professional is a safe bet, with healthy cash flows that provide good repayment records and less stress around default. This is a pretty lazy approach to ticking the box that says “we help women achieve their dreams”.

Providing a sustainable (there, I did it, I used a civil society buzzword in a for-profit media!) but profitable solution to female entrepreneurs can alter a bank’s approach to corporate social responsibility as this has a direct impact on communities within which the banks operate and their standards of living. It also provides an excellent way to deepen their share of customer wallet as the cross sell opportunities for other bank products such as savings accounts for children, insurance, term deposits etc are very high if leveraged well (very, very few banks do cross sell reasonably well largely in part to a massive beast called “silo thinking” that traverses the length and breadth of their organizations).

Westpac Bank in Australia, we were informed, currently has 2.5 million women customers earning the bank close to US$ 91 billion annually. Over the course of servicing this segment, they have found that women have higher average balances in the bank accounts than men and that women are more likely to repay loans. Furthermore women are twice as likely to recommend the bank to someone else than men, meaning that they have higher Net Promoter Scores if satisfied.

When you empower a woman, you empower a family. When you empower a family, you empower a community. When you empower a community, you empower a nation. Women are central and key to our most basic social unit – the family. If we get their financial empowerment right, we get ourselves as a society right.

[email protected]
Twitter: @carolmusyoka

Human Resource Strategists.

“Sadly, HR has very little power in an organization, unless the real executives are on vacation, and then watch out, because a lot of *****s are going to get fired. There are three types of people who choose a career in HR: sadistic ******s who were probably all tattletales in school, empathetic (and soon to-be-disillusioned) idealists who think they can make a difference in the lives of others, and those of us who stick around because it gives you the best view of all the most entertaining train wrecks happening in the rest of the company.”
Jenny Lawson: Let’s Pretend This Never Happened (A Mostly True Memoir)

I haven’t read Jenny Lawson’s book yet, but the hilarious excerpt from Chapter 15 which gives details Lawson’s bizarre experiences working in a corporate HR department, coping with the terrible behavior of the employees, the awfulness of the corporate bureaucracy and the absurdly bad job applications she received put it in my top ten books to read in 2013. (Needless to say I’m still plowing through my top ten books for 2010, 2011 and 2012 with no end in sight.)

An interesting – and fairly common- view of Human Resources is that it is the department that keeps staff records, processes payroll and files away warning letters, in other words: the archaic “personnel department”.

Some bright spark years ago woke up to the fact that employees in organizations are not just the proverbial bums on seats, but are actually a critical resource to the company, just like working capital or raw materials. So abracadabra, all organizations got into the nomenclature groove, scraped out the old “personnel department” title from the door and replaced it with Human Resources. But as Shakespeare so poetically posed, a rose by any other name smells just as sweet. In many cases there was no paradigm shift, no revving of engines and no mottle to the throttle. HR as it has now widely known still does payroll, files employee records and makes statutory returns. Very rarely does the head of HR sit on the left side of the CEO when the right side is occupied by the CFO. Yet the two seats are the absolutely most critical support roles that a CEO cannot do without. One keeps a keen eye over the financial capital while the other takes watchful care over the human capital that generates those numbers, whether on the revenue or the cost side.

The head of HR is a strategic rather than a transactional role. He designs a growth plan for his assets ensuring that they are well utilized, appropriate for the job they are slated to do and avoids obsolescence by mapping out a well designed machine life that makes the best out of them. He then assigns a business partner from within his department to each of the company’s divisions to act as the dedicated HR support, helping with recruitment, talent and performance management and all that internal HR gobbledygook. But this is the clincher. The HR business partner usually sits – wait for it – in the HR department. Which usually has double glazed glass and security coded doors to pass through. So how does a business partner who doesn’t physically sit at the business he is supposed to be partnering with get to know the business? How do they recruit the best fit of people for their assigned businesses if they don’t observe their internal clients first hand on a daily basis and figure out what are the softer, non-technical qualities required for the job? Ahh, of course, they rely on the job description designed with the input of the head of department right? How would they recommend a talent program or career path for a staff member if they are not aligned to what the specific business needs are based on its current operational reality? Which only comes from a deep understanding of the key performance metrics rather than a cursory hour-long discussion with the relevant department head.

On a recent assignment with banking executives, I shared the challenge of banks creating products that they think customers want rather than immersing themselves into a day in the life of their customers and observing how their customers went about their daily lives with a view to designing products that eased customer pain points. Many banks suffer from a distinct disdain for their customers preferences and a strong predilection for dictating what they think customer needs are. I place a number of HR business partners in this same category. You cannot know what your client requires if you do not immerse yourself in your clients’ business. You can come up with all manner of pie-in-the-sky solutions for their issues, but they tend to be short term in their outlook sort of like placing an Elastoplast on a gashing wound. People management, just like business management is not about moving chess pieces around a square. It requires a wider understanding of what the client business needs are from external customer challenges, the key drivers of the department’s P&L, the department’s sub-culture occasioned by the head of department’s leadership influence, the working habits of the best and the worst performers and a myriad other factors that one can only cotton onto if one is seated within the department he services.

A good HR business partner would have his clients saying: “he knows my business better than I do,” or “she provides a level of objectivity which I lack” or “he is a trusted adviser for my business”. This is rarely the case. But it can happen. I have worked with good business partners in the past. They knew the pain points in managing my business and as a result knew the right incentives to include in the performance contract which would ensure that the right behaviours were driven which reduced the pain points. It is only the HR Head himself who can determine the critical role his department plays in an organization: strategists or mindless paper pushers.

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Twitter@carolmusyoka

The problem with armchair clairvoyants such as myself is that when a random prediction becomes true, we nestle deeper into our armchairs and smugly grin at the world around us. On July 26th 2010, I wrote the following in my Monday column:

“We can now pay our utility bills using a mobile phone and can get instant mobile phone pre-paid credit in the form of Okoa Jahazi, which can easily be translated into a formal loan product using our top up history as evidence of “past payments”. Call me a raving loony, but by 2020, it may be domestic institutions and perhaps a mobile company that make our top ten financial institutions!”

This raving loony just got vindicated. On November 27th 2012, Safaricom and Commercial Bank of Africa jointly launched the M-shwari product. Essentially the product allows an M-Pesa customer to move funds into a virtual bank to earn interest or to borrow funds as and when needed. With savings interest rates ranging from 2% to 5% p.a. on whatever balances are in the account [including one shilling!], I finally figured out that instead of keeping funds lying idle in my M-Pesa account as I tend to do I could move them into my M-Shwari account and make my money work for me. As a trained banker the first rule of thumb I was taught is never to let your free cash flow sit uselessly in a current account (unless of course your creditors are after your neck and/or various other body parts). The fact of the matter is that those who are ordinarily cash flow positive M-Pesa users have graduated from using it simply for money transfer to having it as an electronic wallet with “float” in the very real case that you have that one payment that needs to be made suddenly to a person who is not physically near you. [If you are over fifty and have difficulty understanding the concept of mobile money transfers please stop reading from this point on.]

But this is the interesting phenomenon. The product was launched a little less than two months ago and to date has 1.2 million members and growing. Let me put these numbers into perspective. Using Central Bank of Kenya’s most recent data from the 2011 Annual Banking Supervision Report, Kenya had 14,250,503 formal bank account holders as at December 2011. 78% of these account holders sit in four banks namely Equity Bank at approximately 6.5 million, Co-Operative Bank at 1.8 million, KCB at 1.6 million and Barclays Bank at 1 million. Four banks with about 500 brick and mortar branches between them control over three quarters of the banking population in the entire country!

Turning back to M-Shwari: what is driving the rapid uptake? Access to financial services without the hassle of filling innumerable and exasperating forms, explaining [and defending] your entire life besides that of your progeny and ancestors as well the convenience of doing it from wherever you are situate be it your office, your house or your favorite watering hole if you are spiritually inclined. The fact that you will be set up as an M-Shwari customer faster than the time it takes to negotiate your way through the security doors and un-occupied Customer Service Representative’s seat at your preferred bank branch plays a big role in the early adopter mentality that Kenyans have displayed for this product.

M-Shwari, in the space of less than two months, currently has 240,000 loan accounts in a country that by December 2011 had 1,450,642 personal loan accounts in the entire banking sector. The average loan amount is the princely sum of Kshs 1,087/- with a thirty-day repayment period where a borrower is charged a flat facility fee of 7.5%. Now before you keel over into snorts of derision, picture this: the loan applicants are not necessarily your typical microfinance borrowers looking to finance their business. It is Kerubo sitting at home who gets unexpected visitors, has run out of gas to cook a meal for them and has insufficient cash in her handbag to buy the much needed replacement cylinder. It is Juma who is at the supermarket buying a few items and realizes that he left his wallet at home.

Your M-Shwari borrower is you and I, the average person who needs a temporary loan for an unexpected emergency. With no manual intervention and a completely faceless back end processing mechanism, one can gain instant credit access [assuming one’s “credit history” on record is acceptable] in less than five minutes which is why they are currently processing no less than 6,000 applications a day and have an 88% repayment rate within the first thirty days.

What does this portend for our financial institutions? I’ll probably be hung, drawn and quartered if I say what my crystal ball shows me so I won’t. But the early adoptive capacity of the Kenyan mobile subscriber should inform any industry: financial or otherwise. The fact that your product or service offering requires reams of paper to access, tens of people to process and a harassed, disembodied voice at the end of the telephone line to inquire from may very well be an image of Tyrannosaurus Rex in the next ten years. Your customer wants convenience when accessing, dignity when being turned down and most importantly, rapid results when being processed. You can take that to the bank – pun fully intended.

This product should be an indicator of the direction Kenyan consumers want to go in the future and may actually push the financial services sector be it mainstream banking, insurance or stock brokerage kicking and screaming down the path to a painless and virtual service delivery. It is not Kerubo – the reluctant hostess- who will drive this revolution, it is the makers and users of the cash that drives the wheels of Kenya’s economy who will force this change. It’s time to put back the cloth over my crystal ball, sink deeply into my armchair and watch.

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Twitter: @carolmusyoka

The Good, the Bad and the Ugly.

A knight and his men return to their castle after a long hard day of fighting.
“How are we faring?” asks the king.
“Sire,” replies the knight, “I have been robbing and pillaging on your behalf all day, burning the towns of your enemies in the west.”
“What?!” shrieks the king. “I don’t have any enemies to the west!”
“Oh, no…” says the knight. “Well, you do now.”

The jury is back and the verdict is in. On Monday December 3rd 2012, the Kenya airways retrenched staff won the battle, but not the war. If anything, the war is far from over and this sordid labor relations dogfight will trundle along as both sides dig in their heels, lick their festering wounds and strategize on what steps to take next to entrench their respective positions.

In my view, there was no clear winner or loser who emerged from Industrial Court Justice James Rika’s judgment. What has resulted is a mish mash of the good, the bad and the ugly side of industrial relations.

The Good:
Justice was dispensed swiftly. Whether it’s because this case filed by the Aviation and Allied Workers Union has generated an inordinate amount of attention and public interest or whether it’s because the Industrial Court has wind beneath its wings, the matter has been dispensed with relatively quickly within less than four months compared to the mind numbingly slow pace that court cases tend to endure. The clear message being sent here is: “there is a new dispensation in town; workers’ rights will no t be trampled upon while we twiddle our thumbs and watch from the sidelines.

The Bad:
1. A man throws his wife out of their home. She goes to court to order reinstatement of her rights to live in her matrimonial home. Court grants her prayers. She goes back. What will the man do? He will make her life utter and living hell. Since he cannot defy a court order, he will simply frustrate her efforts to live comfortably and peacefully through psychological warfare, all of which can be done without any physical assault. For her own sanity, she chooses to move out voluntarily after a few years. The staff that have been reinstated should not belabor under any delusions that life will be hunky dory once they go back to the Embakasi area code. They’ve thrown their toys out of the cot and mummy is not happy. They should brace themselves for everything to be thrown back at them including an extremely stringent application of the performance appraisal tool. Once you have taken your employer to court, all bets (and gloves!) are off and the relationship is often irretrievably broken down.
2. A man throws his wife out of their matrimonial home. Present during the unpleasant exchange is his mother who opens the door wide open to allow for the wife’s safe passage outside the threshold as she is being evicted. Mother:in:law has given her tacit approval. Justice Rika is quoted as saying that alternative avenues were not considered, adding that even when the government, through the office of the Prime Minister, called for further consultations, the advice was ignored by the management. I’ve opined on this before, the board of Kenya Airways has two senior government representatives in the Permanent Secretaries of transport and Finance. They gave their implicit, nay, explicit approval of the redundancy exercise when the program was rolled out and cannot claim to have been ignorant of the potentially explosive consequences of that action. From the management’s perspective the government was involved in the exercise from the get go and it is surprising that the judge allowed a political person’s interventions to be viewed as anything along the lines of bridge building initiatives when it is public knowledge that the government sits on the board of the airline.

The Ugly
These are tough times for companies that have unionisable employees. The ruling will give a very strong impetus to worker’s unions to fight the good fight, finish the race and keep the faith. The unions will fight back against any attempts to maintain labor costs at sustainable levels regardless of companies’ economic (mis)fortunes. What the ruling has done is to essentially inform corporate Kenya that the Industrial Court will question any labor reduction strategies that take into account current and projected operating environments which, in the court’s informed opinion, are strong enough to sustain “cyclical down turns”. The court is essentially a better judge of a company’s assessment of its operating environment than the company itself. That is enough to send jitters down the backs of current and future investors in this country.

Corporate Kenya will be willing the airline to appeal the Justice Rika ruling as it sets a dangerous precedent for industrial relations in Kenya. The sad fact of the matter is that it is largely the insensitive manner in which the retrenchment exercise was conducted that caused the initial angst amongst the workers rather than the actual act of retrenchment itself. Corporate Kenya is replete with examples of mass redundancies that were handled with dignity, inclusiveness and large amounts of empathy. And that should be the lesson to be learnt by shaky investors: Not only should rightsizing take into account the letter of the law, but there should be some humane method to the madness that is bound to emerge once the decision to terminate is made. There is no need to make enemies to the west where none existed before.

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twitter: @carolmusyoka

I write this with my teeth clenched and eyes closed in fervent prayer for the ubiquitous “journey mercies” that all spiritually inclined mortals routinely ask for. I am about five to ten thousand feet above some Dar es Salaam outskirts where exactly an hour ago the captain’s disembodied voice crackled over the radio, ” Er..ladies and gentlemen, we have a problem with the landing gear which has refused to retract making our flight impossible to complete. We are turning back to Dar es Salaam airport to have the engineers have a look at what the problem might be.” Even the chap in seat 20A who had been snoring way before the plane taxied to the runway for take off was bright eyed and bushy tailed by the time the captain signed off. I guess even the deepest slumber is impervious to the stealthy scent of danger.

Return to Dar we did and after much personal hemming and hawing about how no one was telling us anything – upon which I turned to my very cathartic Twitter to vent my tribulations – we were put on a different plane within thirty minutes of landing with the same crew. So here I now am praying that I never get to hear the Captain’s voice until we start our descent into Nairobi. He is the leader of this flying metal tube in whose hands my fate lies. He is a positional leader in my case. I didn’t choose to follow him, he has just assumed a position of leadership over me, granted by his employer whose service I have chosen to utilize.

I have absolutely no idea what he looks like nor his level of training or experience. But he managed a difficult situation very well. He a) was open and honest about the fact that the plane had developed a problem b) told us the solution which was to turn back and have engineers look at the plane c) got off the radio quickly enough to attend to the business of getting the plane back on the ground safely.

In January 2009, US Airways’ fifty seven year old Captain Chelsey Sullenberger, shot to global fame when he made a technically difficult landing with a damaged airplane. The plane had developed problems after both of its engines were hit by birds and burst into flames seconds after take off from New York’s La Guardia Airport. Captain Sullenberger was faced with the most defining moments of any pilot’s career. Crash or land. He knew he had to land the plane but there was no time to make it back to La Guardia. The nearest potential landing space that was wide enough to accommodate his plane were the frigid cold waters of the nearby Hudson River. With 155 souls on board, he brought the plane to a shuddering halt on the water and nearby ships and tugboats rushed to the rescue of passengers who were rushing off the sinking vessel. The captain did not leave the vessel until he walked the length of the plane twice to make sure that absolutely everyone got off.

Sullenberger’s leadership abilities in making a instant judgment call to make a river landing rather than waffling with indecision have earned him a place in the airline industry’s hall of fame as there were no fatalities and relatively few injuries. Of course, the outcome could have gone horribly wrong and the plane could have broken on impact as happened to the 1994 terrorist instigated sea landing of Ethiopian airways in the Comoros Islands.

Earlier this year, my significant other and I made a trip to Guanghzou, China following the well-trodden footsteps of thrill seekers and curious tourists of the mysterious orient. As we took off from Guanghzou, the plane undertook a very labored ascent and seemed to come to an excruciatingly slow glide over the twinkling city lights below us. We looked at each other not in wonderment at the crystal clear view of the soaring buildings and insidious network of roads crisscrossing the metropolis. No, we both sensed deep within ourselves at exactly the same time that there was something manifestly wrong with the plane. There was not a word from the captain of the plane. We limped along and somehow the plane managed to get a bizarre sudden burst of energy that propelled us southwest to Bangkok where a completely new crew came on board, led by the very capable Captain S. to take the plane on its final journey to Nairobi. As the plane was being pushed back from the terminal it made a sudden stop and we found ourselves moving back to the original parking spot. Captain S. immediately came on the radio “Ladies and gentlemen, I have made a decision to stop this flight as there is a problem in the engine that I am not comfortable with.” Turns out that it was a major problem and the part for the engine had to be brought from Nairobi the next day meaning we had to stay in Bangkok for another 24 hours.

Three completely unrelated situations with three similar positive outcomes. Leaders are thrust, nay, imposed upon us in our ordinary daily lives. Quite often we have a choice to walk away from bad leadership in our work places or in our places of worship by finding other jobs or places to worship. But we can’t walk away from our political leaders, just as we cannot get off a plane mid air when a technical problem has arisen which requires a calm temperament and rationale decision making. As we head for voter registration this week, we need to ask ourselves whether the names on the ballot papers next year are ones we would be comfortable with in a captain’s seat. Can they make difficult decisions with the best interests of passengers (citizens) at heart or will they waffle with indecision? Can they make an expensive judgment call to stop a flight and instead put passenger safety first? Frankly, I don’t just know.

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Earlier this month, this newspaper reported that SASRA (Sacco Societies Regulatory Authority) had undertaken a supervisory inspection of Harambee Sacco’s operations and found that “the Sacco is facing acute liquidity problems and possible financial distress, which may impair its stability and existence in the long term, unless quickly and effectively addressed.” The newspaper article further reported that SASRA found that Harambee Sacco operated without an internal audit function and the current internal auditor is not registered with the Institute of Certified Public Accountants of Kenya.
The inspectors believe the management deliberately falsified or expunged crucial records with the intention of concealing the true financial condition of the Sacco. As if that is not enough, about 30% of Harambee Sacco’s portfolio was non-performing as the loans in question had not been paid for more than a year, contrary to SASRA prudence guidelines which provide that the level of non-performing debts should not be more than five per cent.
Trust me, if the Central Bank of Kenya had made any such findings on a bank licensed by it, a statutory manager would have been appointed even before the ink dried on the inspection report. Why? A bank uses customer deposits to make loans. When 30% of a loan book is non-performing, then you face a corresponding risk on the equivalent amount in funds within the organization’s deposit book being unable to be repaid on demand to depositors or to lenders who have provided funds for on-lending. The statutory manager zooms in to staunch the bleeding by stopping any more deposits being taken and loans being given out, with the ultimate aim of recovering the loans to repay depositors. That’s how depositors are protected. Back at the Harambee Sacco ranch, it boasts – on its very colourful website – of having over 93,000 members: “Indeed, Harambee Sacco continues to enjoy a customer penetration level that goes way down into the minute administrative level in Kenya with chiefs and sub-chiefs in the locations and sub-locations being members of Harambee Sacco.”
What we have here is a very delicate situation. The biggest sacco in the country, whose membership is made up of government employees across the length and breadth of this country, is facing a potential financial crisis. Why potential? Because the financial industry is one that is rooted on the principles of trust and integrity. If just a few members decide to demand their savings back, or stop their salaries going through the sacco (since we know very many employees have their salaries directed straight to their saccos rather than a bank as they can withdraw using the Front Office Services or ATMs), then other members hear that there is a potential of losing their money and take similar action, we have the makings of a “run” on this sacco which will cripple it and force it to shut down. Once it shuts down, we have a large number of Kenya’s civil servants with no access to their savings and therefore a very disgruntled lot. They will “omba serikali” to step in or else they down their tools and the rest as they say, is history. Our government machinery slowly grinds to a halt.
In light of the potential “flight” risk that his sacco is facing following the publication of the stinging indictment of an inspection report, the Harambee Sacco CEO publishes a half page report and gives members watery comfort statements such as: “Harambee Sacco is the biggest shareholder of Co-Operative Bank and Co-Operative Insurance Company…which not only shows economic strength but also viability as a business enterprise.” How does an investment in two successful companies ensure that the Sacco is not running significant financial and operational risk in its own operations? Investments and operations are absolutely exclusive of each other. Your investments will most likely be used to pay off creditors if your operations are run to the ground. So yes, I guess that does demonstrate viability as a business enterprise – that can collapse. The inspection report stated that 30% of the Sacco’s loan book is non-performing. The CEO explains it thus: “At the time of inspection, there had been a delay of remittances from Government ministries of up to three months by the Office of the President and the Police Department. These departments form the bulk of the Sacco’s loan portfolio. Non-perfomance is a matter of timing differences between the Sacco loan recovery turnaround periods and the SASRA recommended classification and not an issue of bad debt.” So a delay of up to three months or 90 days in receiving loan repayments explains why 30% of your portfolio is overdue by 360 days. That makes a lot of sense. In fact, it provides great comfort. Finally, the CEO states that whereas they are supposed to be providing for loans that are non-performing according to SASRA, they do not have control over the payrolls which effect deductions for the loan repayments. Dear Sir: you are running a financial institution like any other. No one financial institution has control over the payroll deductions of its loan customers. That is the single exclusive preserve of the borrower’s employer. What financial institutions do is take prudential steps to ensure that they are covered for non-performing loans by setting aside funds in the event of non-payment, which funds are charged to the income statement.
The CEO’s half page advertisement is very worrying and should worry the SASRA and the Central Bank of Kenya in equal measure. If it walks like a duck, talks like a duck and shakes like a duck, it most likely is a duck. Saccos in this country, especially those providing front office services are essentially banks and should be held to the strictest banking standards with regards to asset and liability management, credit and operational risk as well as technical capabilities of senior management. When the top manager of the biggest Sacco makes light of a very serious situation, a Sacco whose membership is made up of the oil that greases the government machinery, someone needs to wake up and recognize a crisis before it spills out of control.

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Passengers on a Pan Am flight heard this announcement from the captain, “Ladies and Gentlemen, I am sorry to inform you that we have lost power to all of our engines and will shortly crash into the ocean.” The passengers were obviously very worried about this situation, but were somewhat comforted by the captain’s next announcement. “Ladies and Gentlemen, we at Pan Am have prepared for such an emergency, and we would now like you to rearrange your seating so that all the non-swimmers are on the left side of the plane, and all the swimmers are on the right side.” 
After this announcement, all the passengers rearranged their seating to comply with the captain’s request. Two minutes later, the captain made a belly landing in the ocean. 
The captain once again made an announcement, “Ladies and Gentlemen we have crashed into the ocean. All of the swimmers on the right side of the plane, open your emergency exits and quickly swim away from the plane. For all of the non-swimmers on the left side of plane… “Thank You For Flying Pan Am.”

Last week, our national carrier Kenya Airways had an investor briefing to announce its half-year results. From my Twitter feed, it was obvious that the left side of the room remained totally stunned by the Kshs 4.8 billion reported loss while the right side fumed at what was obviously going to be a clear defensive strategy for the job redundancies made earlier this year. So I waited to see the results that were published the following day in the newspapers and read the publication with much consternation. The consolidated income statement was not the cause of my dismay, rather the consolidated statement of cash flows was. Cash is the lifeblood of any business, whether it is the maize roaster at Dagoretti corner or the supermarket chain with 50 branches across Kenya.

Cash generation is the oil that greases the operating cogwheels of any business. It is required to pay suppliers and overheads such as rent, labor costs and utilities. If your business does not generate enough cash to run its operations, it then has to be drip fed intravenously through [the very] expensive overdrafts and lines of credit from bankers and suppliers. This in turn eats at the operating profit by reducing the profit margin of the goods and services produced. So judging from Kenya Airways’ half year results, it generated only Kshs 252 million from its operations in the half year ending September 30th 2012 compared to Kshs 4.1 billion in the same period last year, a 94% drop. This was caused largely in part by the significant drop in revenues from Kshs 54.9 billion to Kshs 49.8 billion [9.3% drop] coupled with a marginal increase in expenses of Kshs 1.4 billion or 2.6%.

The cash flow reduction is clearly illustrated as Short term borrowings have gone up by Kshs 1.4 billion (although this figure could include the current amounts due for long term borrowings) while supplier payments are clearly being stretched as the trade payables have increased by another Kshs 2.4 billion.

The timing of the rights issue in April this year was ostensibly to raise the equity for the airline and improve its debt to equity ratios for the further leveraging the airline needs to undertake to grow its fleet for its future expansion. However, looking at the airlines’ statement in changes in equity, if the rights issue had not happened when it did, Kshs 6.2 billion would have been wiped out from the equity arising from the operating losses as well as losses from the cash flow hedges that have caught the airline on the wrong side of the very necessary derivative bet for a few years now.

The rights issue may have been driven by their long term funding plan, but it provided a shot in the arm both from an equity deterioration buffer perspective as well as much needed cash in the bank. That may not have been the aim at the first instance, but given the airlines’ current situation, that has been the inadvertent result. But it remains a shot in the arm, an alleviation of the symptom but not a cure for the cause.

The overall costs will not reduce with the fleet expansion and the accompanying operational costs for new destinations. The airline will be forced to find smarter ways to not only remain competitive but to also stay afloat. The fat, which is not apparent to the naked eye in the published accounts, exists somewhere within the direct costs as well as overheads and does not simply end with this phase of the staff rationalization program. As the airline utilizes the available room on its debt equity ratio to borrow for capital expenditure and cannot turn to shareholders for more capital in the short to medium term, the only way to free up working capital is through deep cuts on both its fixed and variable costs.
The labor protagonists will continue to push for reinstatement of retrenched staff, but will have a big hill to overcome in convincing stakeholders that the airline can continue to sustain a high wage bill. Hiring new staff on cheaper contracts and automating as many ground functions as reasonably possible might be the start of a leaner airline, but a beginning that is fraught with labor issues that will not go away in the short term.

The airlines’ management should brace itself for the unwelcomed greater scrutiny on its network planning, procurement processes and labor policies. The route expansion will have to deliver revenue diversification potential that ensures single regions do not generate a 30% revenue impact that Europe has on the airline. Delivering growth in a shrinking revenue and high cost environment is not for a non-swimmer management. It will take a strong team of swimmers on the right side of the limping plane to get the airline out of this morass over the next couple of years.

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Twitter: @carolmusyoka

You drive into a shopping mall in Gigiri on a cold morning to park your car as you are headed for a visa appointment at the neighboring US Embassy. The guard asks you where you are going. You say you are going to the US Embassy. As you drive out of the mall after your visa appointment you find the guard waiting for you with a receipt book to charge you the princely sum of Kes 300/- for three hours of parking. You grit your teeth, pay and leave. This is called income collection. You drive into a shopping mall in Gigiri on a cold morning to park your car as you are headed for a visa appointment at the neighboring US Embassy. The guard asks you where you are going. You remember the last Kes 300/- that you paid so you say that you are going to the new outpatient hospital within the mall. You park your car, sneak past the guard who is busy asking another driver where he is going, and go to the US Embassy. As you drive out of the mall after your visa appointment you find the guard waiting for you. You tell him you were at the Nairobi Hospital “ala!” He lets you drive off since you used the parking to visit a tenant. This is called income leakage.

You drive into Warwick Centre on a cold morning to park your car as you are headed for a visa appointment at the neighboring US Embassy. You know the drill by now. As you leave, you tell the guard “why don’t I give you Kes 100/- and we kill this story?” The guard accepts your offer, puts the money into his pocket and cheerfully waves goodbye to you. This is called income redistribution.

The Daily Nation on October 8th last week ran with an interesting headline: “Counties face Shs 133 bn budget crisis, MPs warn”. The report was issued by the Parliamentary Budget Office and essentially highlighted what we have always known. The counties cannot sustain themselves in the short term with their own county generated revenues. The report says that on average, counties need to raise between two and seventy times their current revenue potential. On the lower side of two times is Nairobi which, according to the report, has a revenue capacity of Kes 6.9 billion but requires Kes 12.8 billion to serve its 3 million residents. On the higher side of seventy times is Tana River County which has a revenue potential of Kes 25.5 million but requires Kes 1.8 billion to run.

No way! There is no way the chaps who sneakily awarded themselves an obscene it-was-nice-doing-business-with-you-folks bonus could come up with a rational document that questions how revenue (read: blood, sweat and tears of the mwananchi) can be collected and distributed (read: into-the-big-fat-stomach of the MP). So I did a little bit of a fishing expedition of my own. First off, not a single MP wrote the report by the Parliamentary Budget Office. The Parliamentary Budget Office describes itself in the report as a non-partisan professional office of the Kenya National Assembly whose primary function is to provide timely and objective information and analysis concerning the national budget and the economy. In the acknowledgements section of the report the core team of writers and junior fellows who contributed to the report are dutifully named.

Secondly, delving into a little bit of semantics, these hard working professionals interchangeably use the words revenue potential and revenue collected. The mixed, and therefore erroneous, use of the terms should be amended. Revenue Potential means what can “possibly be raised” while Revenue Collected means what has “actually been paid” to the Collector. The report then publishes a table attributed to the Ministry of Finance and Commission on Revenue Allocation that shows actual revenue collections from the counties. So I will safely state that according to this table, revenue collected in Nairobi is Kes 6.9 billion, rather than conjecture as the newspaper article did, that Nairobi has a potential of the same.

Nairobi’s revenue potential, quite simply, cannot be quantified. Why you ask? Well, we know what the total land under the county is and, subsequently, the potential rates that can be collected therefrom. Easy as pie. What we don’t know are the numbers of businesses that are in existence and the potential licence fees that can be collected. We can hazard a guess, obviously, but in an environment where what we pay for is not translated into what we should be getting, licence fee evaders in the form of informal businesses will continue to flourish. In an environment where Lucifer’s sidekicks – sorry – City Council askaris are loathed, abhorred and detested in equal measure rather than viewed as enforcers of the law, local tax evasion will continue to flourish.

More importantly, how much income leakage occurs within the offices of revenue collection at City Hall? You know what I am talking about: income that is not collected because the “collectors” have been asked to look the other way and appropriately rewarded for their blindness. How much income is “redistributed” to pockets other than the rightful institutional ones: income that never finds its way into City Hall’s accounts and is never reconciled during the monthly reconciliation cycle. It is highly likely that because of the income leakage and redistribution, Nairobi’s actual revenue potential is double the actual revenue collection. If we turned the screws more tightly to seal the income gaps, Nairobi – and other counties as well – could raise sufficient revenue without reaching out to the Central Government. The irony is that the report by the Parliamentary Budget Office, if used appropriately by members of parliament, could actually force greater scrutiny on the checks and balances within future county governments as far as revenue collection is concerned and maybe leave more money on the table at Central Government level for worthy redistribution as end-of-service-bonuses for members of parliament! How’s that for income redistribution?

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Twitter: @carolmusyoka

Last week’s column generated a lot of feedback from readers, many of whom were recent university graduates who had undergone less than pleasant interviews, fought the good fight, finished the race but were struggling to keep the faith. I did come to one conclusion though: most of our universities are NOT preparing their fourth year classes for the recruitment process. They are throwing the graduates out to the job recruitment sharks and hoping that they will sink or swim. The solution is simple as pie: universities should link up with organizations in both the public and private sector and get their Human Resource teams to come and run a mandatory minimum of 5 hours course for the final year students on how to prepare yourself for the job market. It will be a win-win scenario for both parties: for the universities they will get actual practitioners who will provide valuable education on exactly what it is they are looking for while for the organizations they will get a chance to begin to influence the kind of output that is being generated by the universities as it will be made fit for interviewing purpose.

Based on the feedback I received, I realized that some of the recruitment train smashes occur begin even before the actual interview takes place. A good place to begin would be your email address. For purposes of your CV please get a simple professional private email address that reflects your name and not your flavor. For instance [email protected] or [email protected] is pretty straightforward. [email protected] or [email protected] is…well….nothing short of very unserious. Most email addresses are free and cost just a few minutes of your precious time. Secondly, always assume that the recruiters will do a background check on you if they like what they see on your CV. The first point of entry will be to “google” your name. It would be advisable to “google” your own name and see what turns up in the search. It is noteworthy that the electronic age we live in ensures that even criminal or civil cases that we may have been involved in and that may have been published either in the media or in law reports will appear in a google search. Your Facebook profile or Twitter posts will also appear in a google search and be under no illusion that a recruiter will not proceed to view your Facebook page or Twitter profile both of which are open to the public (unless you have put in privacy settings). So all those posts of the last all night drinking binge that you took part in will show up to a nosy recruiter doing due diligence. This would be a good time to “untag” yourself from any photos which you have been tagged in including those where you were member number five at a strip poker game. On that note, any abusive, foul mouthed tweets that you may have posted regarding any topical issue should be deleted particularly where you may have ranted and raved about the very organization that you are applying to work in or its affiliate.
If you have put your telephone number on your CV and are expecting recruiters to call you, for the love of God and country do not have some popular rap, genge, gospel, mugithi mix, ramogi special ringtone running off your mobile phone. Why? Well, I understand that you feel it shows your unique music tastes to which you are entitled, but it does not reflect the professional side that is required to be seen during a recruitment process. Always assume that you are trying to woo a partner (employer) and just like in any romantic liaison, you only show your best side during the first couple of dates.

Now in the event that you do get past the due diligence as described above and get called to an interview, other than what I indicated in last week’s column, one should also be very careful not to reveal insider information about their current employer. So if an interviewer asks something along the lines of “What is your current employer’s strategy regarding customer acquisition in Nyeri county?” you should not have a problem telling the interviewer that it’s not in your best interests to reveal internal company information due to the confidentiality clause in your employment contract. Yes, you are entitled to push back in an interview if you feel that the questions are infringing on confidentiality or becoming too personalized beyond the professional realm (questions along tribal or racial lines fall into this category). I personally underwent an interview where the interviewers began asking me questions about the other candidate as they knew that I personally knew the candidate and I pushed back by saying that I would not be drawn into discussions about said candidate as it was neither fair nor professional of me to do so. But one of the interviewers was like a dog with a bone and kept wheedling at me to reveal information because in her opinion, it was important to the interview, which -in my opinion- it was not. In the back of my mind I knew that they might draw the opinion that I enjoy slagging off the competition, or that I have a loose tongue, but more importantly I actually thought it was in bad taste for them to try and get information about a candidate from another candidate. A sober minded panel chair brought the discussion to an end when he saw that I was not about to budge. While I did get the job, the experience left a very bad taste in my mouth and I never trusted that interviewer during the tenure of my employment. Talking about the competition during an interview whether it is an organization or an individual is highly unprofessional. But as I concluded last week, common sense good people, is not common to everyone.

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Critical Assumptions for A Budding Interviewee:

Assumption One: Your Interviewer is not an illiterate twit.
A fundamental error I see with many interviewees is the response to the question: “Tell us a little about yourself?” For some very bizarre reason, interviewees fall back to the assumption that the interviewer wants to know what is already stated on the CV. Thus very often the response will be: “My names are Mary Kerubo Juma, and I went to University of Nairobi to study a Bachelor of Arts.” Fact number one: Your name IS Mary Kerubo Juma. You only have ONE name, one identifying moniker that describes who you are as an individual and differentiates you from the billions of other mortals on this earth. “My names ARE” means that the A in English on your KCSE certificate is highly doubtful. Fact number two: The interviewer wants to know more about you the individual, what puts a pep in your step, what floats your boat, what rocks your frock. The interviewer is not remotely interested in hearing anything that he can already read in the two stapled A4 pages in front of him that make up your CV. So look your interviewer in the eye and say: “My name IS Mary Kerubo Juma, a vibrant 25 year old female lover of South African Kwaito music and I love to play football with a girls team at our church every Saturday afternoon.

What has Mary done? She’s opened up a whole new conversation about what Kwaito Music is and how she long she has been playing football for. Mary will tend to relax as she will be talking about something she is passionate about while her body language, tone and energy will reflect positively on the interviewers. Interviewers tend to start with this particular question as a way to relax the interviewee with soft, non-job related questions before moving to the hard, technical questions. You should take advantage of this opportunity to display your social side. Please note however that clearly stating that you are a Man U fan -without having done any due diligence as to whether your interviewer never walks alone in a Liverpool jersey on Saturday afternoons- is nothing short of a train smash. Avoid English Premier League soccer discussions and political party affiliations in equal measure.

Assumption Two: It is better to be over dressed than to be underdressed.
The professional dress code for men is suit and tie. The extremely fortunate thing that the male gender experiences other than the fact that they can perform natural drainage functions while standing is that they can rapidly reduce the formality of their attire just as efficiently. Thus if they go for an interview and find that the dress code is smart casual all they have to do to adopt to the environment is to ditch the jacket and tie and open the first two buttons of their shirt. Sadly, ladies can do nothing of the sort without creating a crime scene. That said, interviews that take place on Saturdays do not mean that weekend attire should be worn. Au contraire. An interview is an interview is an interview. I have witnessed interviewees who come for Saturday interviews completely dressed down (one was wearing a pair of jeans and was promptly chased away like a rabid dog). Your interviewers will NEVER forget it and you will start your interview from a complete disadvantage – assuming you were allowed into the room in the first place.

Assumption Three: Your references will be called.
No, don’t roll your eyes on this one. You will be surprised at how many people do not expect the organization to call the references you have listed on your CV. I was once involved in an interview process for an organization in a certain industry where a potential candidate put the name of his neighbor as his referee simply because the neighbor worked in the particular industry. When the neighbor referee was called his reaction was a) utter confusion as the only way he knew the candidate was as a drinking buddy at the local bar and b) utter shock as he knew the candidate did not know the first thing about the industry. So much for that reference! The other faux pas is putting your current boss or human resource manager as a reference, again a bizarre occurrence in the interview process. I watched one candidate turn completely pale (a significantly difficult exercise given the not-so-delicate nature of our chocolate skin tones) when we told her that we had spoken to her boss who she named as her referee the day before the interview and the boss had expressed surprise that the candidate was looking outside the organization. The interview went down hill from that point on, which was quite sad as she had been a strong candidate up until that point. Why in the name of Moses would you put your boss’s name as your referee if you have a) not informed him/her and b) you are looking to move outside your organization without anyone knowing? Please read the Idiot’s Guide to Interviewing before you go to sleep tonight. References are not a placeholder in a CV template. They are used to verify the personal details as stated on the CV particularly with regard to the professional and social background of the candidate. Often organizations will call referees before the interview as part of the due diligence as it reduces time wasted interviewing candidates that have put absolute hogwash in the form of professional credentials on their documents. The referees should obviously be people who know you, can vouch for the credibility of your stated experience and ascertain your integrity and record as a good worker or colleague. Your references are NOT required to describe neither your absorptive capacity for alcohol nor your predilection for quarter ng’ombe fry.

Common sense, good people, is an oxymoron as it is not common to everyone. Always seek feedback from your interviews. You will be surprised at what you will learn.

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“When a man blasphemes what do we do? Do we go and stop his mouth? No. We put our fingers into our ears to stop us hearing.” Ibo Proverb

Last week this newspaper reported on the outcomes of the Global Competitiveness Report 2012-2013. Kenya’s ranking as the most competitive economy moved from position 102 last year to position 106 this year out of 144 countries surveyed. The reasons given for the fall are several, but one is particularly pertinent for this column: Strength of Investor Protection (actually in our case, it is lack thereof). Two news items in the previous week provide classic cases of the clear and present danger that lurks within the investment environment in Kenya.

Exhibit A: “In this regard and in the public interest, the Rt.Hon. Prime Minister has directed that the planned retrenchment of Kenya Airways workers be suspended pending consultations within governments and among management and staff at Kenya Airways” Statement from the Prime Minister’s office 31st August 2012. Dear Mr. Prime Minister, the last time I checked, Kenya Airways was a publicly listed company. A publicly listed company is defined as a company that has issued shares, which are traded on the open market on a stock exchange. Individual and institutional shareholders constitute the owners of a publicly listed company in proportion to the amount of shares that they own as a percentage of all outstanding shares. Therefore shareholders have the final say in all decisions taken by a publicly listed company and its managers, especially through its annual general meeting. So, unlike a parastatal that swishes and sways to the moves of its line ministry puppet masters, a publicly listed company dances to the tune of its executive management who are responsible to only ONE entity: the shareholders of the company. The only “directive” that the company can receive from an external party would either be through the regulator of the Capital Markets Authority for breach of CMA regulations or from a court of law after an aggrieved party against the company has taken a dispute there for adjudication which already occurred when the airline workers union rightly took the matter to court.
Any other party would really have no locus standi in the matter. What the Prime Minister did, other than playing to the gallery as per chapter one of every politician’s play book, was to send a shiver down the spine of any potential foreign investor who might be thinking of laying roots in this here our great country. The government, which is a 29.8% shareholder, has two representatives on the Board of Kenya Airways. The Permanent Secretary in the Treasury and the Permanent Secretary in the Ministry of Transport. Assuming that proper corporate governance was followed and the board of directors of the airline was duly informed of the impending retrenchment, it goes without saying that there was tacit approval from the largest shareholder (Government of Kenya) and any ‘directives’ or such like utterances by a member of the same government that go against the grain of an existing decision makes the government look messy, unprofessional and completely at odds with itself. More importantly, it sends the wrong signals to foreign investors: come invest in Kenya, do whatever needs to be done but if you even think of touching workers in an election year, we will stick our noses into your private business even though you have used all legal routes to undertake the same. (But please note that all bets are off in non-election years!)

Exhibit B: Finance minister Njeru Githae has asked Parliament to decide whether it will censure Central Bank Governor Njuguna Ndung’u over his failure to reopen Charterhouse Bank” September 6 2012. Entering into the fray was the House Speaker Kenneth Marende who shortly thereafter said that Parliament may take unspecified actions against the Central Bank of Kenya Governor Njuguna Ndung’u if he fails to implement recommendations of a parliamentary committee that Charter House Bank be reopened. Marende ruled that though CBK as per the new constitution is independent, it is obligated to implement the resolutions of Parliament.

The last time I checked, our regulators, be they the Central Bank, the Capital Markets Authority or the Insurance Regulatory Authority were independent actors who are appointed to oversee their respective dominions. Within these regulatory bodies are professionally trained experts who supervise, monitor and govern the activities of their licensees. It cannot be that a body charged with making laws can go beyond its mandate and try and execute the very laws it has made. No. Separation of powers dictates that lawmakers are clear distinct and separate from law enforcers. It’s great that Parliament has the time to sniff around and look for trouble in the form of regulatory malfeasance, but it is a travesty when Parliament shrugs upon itself a cloak of authority to do the regulator’s job for them. The result: you scare the living daylights out of foreign investor who starts to think that a mischievous parliamentary committee can stick its reasonably philanthropic fingers into its business regardless of the presence of a legally constituted regulator. It shows that a regulator’s word is not considered final and can be overruled by Parliament. Hmm. That creates a legal conundrum of fine proportions.

Conundrums aside, these two mutually exclusive events are more damaging than they are entertaining. They demonstrate executive and legislative offices that are willing to bend the rules to suit their political needs. They depict an economic environment where an attempt can be made to mold the situation to suit the needs of the ruling elite at the expense of the genuine investor. It demonstrates that the bodies duly charged with regulating their respective dominions can be interfered with purportedly within the letter of the very shaky law. These are economically blasphemous statements coming from the people entrusted to provide leadership in this country. We can only put our fingers into our ears to stop us from hearing.

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Twitter: @carolmusyoka

In the sunset years of the 19th Century, the eating habits of British colonialists who lived and worked in Mumbai gave rise to what is now one of the world’s recognized logistics operations. Since the British palate was unaccustomed to the spice driven culinary base of the local Indians, they required their lunch to be brought to their workplace straight from home. This initiated the service of dabbawalas started by Mahadeo Havaji Bachche who began a lunch delivery service with about 100 men. The 120-year-old service evolved over the 20th century to begin providing fresh home cooked hot lunch deliveries for local Indian workers as well as school going children. The Marathi word “dabba” means a cylindrical tin or aluminium box or Indian style tiffin box while ‘wala” is a doer of the previous word. Thus Dabbawala means “lunch box carrier”.
Today 4,500 dabbawalas collect and deliver 175,000 packages daily within hours with an error rate of less than 0.3%. The food is served hot at the customer’s desk by 12:30 p.m. The mostly barefoot delivery men, majority of whom have not gone past standard seven, succeed in a complex delivery system via the use of a simple color coding system on the tiffin box provided by the dabbawalas which identifies the destination and the recipient. Once the tiffin box has been collected from the customer’s home, the dabbawala delivers it expeditiously using a combination of bicycles, trains and his own two feet.
The delivery system relies on diligent teamwork and sense of timing. Tiffin boxes are collected between 7:00 a.m. and 9:00 a.m and are taken to the nearest railway station. During the course of the travel they are hauled out onto station platforms and sorted for area distribution, so that a single tiffin box could change hands three to four times in the course of its daily journey. After lunch, the whole process moves into reverse and the tiffin boxes return to their suburban homes by 6:00 p.m.
A sense of ownership is deeply ingrained in the dabbawalas as members of the Mumbai Tiffin Box Suppliers Association, where each member is required to contribute capital in the form of two bicycles, a wooden crate for the tiffins and their uniform consisting of white cotton pyjamas (kurtas) and trademark white Gandhi cap.
In what is very similar to a co-operative model, earnings from the service which charges from 150 to 300 Rupees (Kes 225 to Kes 450) per month, are distributed equally to the dabbawalas in each group, which typically consists of 20 members. Thus a dabbawala would earn about 2,000- 4,000 Rupees (Kes 3,000-6,000) per month while contributing 15 Rupees per month to the association for community improvement and loans.
Quite obviously the Tiffin Box Suppliers of Mumbai have received global acclaim for the simplicity of a very complex process which has essentially achieved very high standards of precision for a business driven mainly by primary school education level workers. (In 2002, Forbes Magazine gave it a six sigma standard for reliability)

They have been studied by various business schools including Harvad Business School who undertook a case study on the business model and visited by dignitaries including His Royal Highness Prince Charles, who apparently had to fit into the schedule of the dabbawalas as their timing was too precise to permit any flexibility!

There are a few lessons that can be drawn from the Tiffin Box Suppliers. Firstly,
the organization has a relatively flat structure with only three layers of management consisting of the governing council (consisting of the president, vice president, general secretary, treasurer and nine directors), the mukadams and the dabbawalas. This totally eliminates organizational politics and internal posturing. Secondly, the business model demonstrates that technology does not necessarily provide an all-encompassing solution to all businesses. For Paul Goodman, a professor of organizational psychology at Carnegie Mellon University who has made a documentary on the dabbawalas, this is one of the critical aspects of their appeal to Western management thinkers. “Most of our modern business education is about analytic models, technology and efficient business practices,” Goodman says. The dabbawalas, by contrast, focus more on “human and social ingenuity”, he says. The teamwork that would be required to get the entire process moving would be of enormous proportions and therefore the process is made simpler by using teams of between 15 to 25 members each. The teams are each supervised by four mukadams who are experienced old timers familiar with the colours and codings used in the logistics process. The mukadams play a critical role in resolving disputes, maintaining records of receipts and payments, acquiring new customers and training junior dabbawals on handling new customers on their first day. While each group is financially independent, it is entirely dependent on the other teams for deliveries. As a result, the role of the mukadam is fundamental both as a mentor and as a quality controller as they carry years of institutional knowledge in their heads. Consequently, the human side of the business is the cornerstone of its success. Thirdly, the dabbawalas do not consider themselves employees, nor do they consider the Mumbai Tiffin Box Suppliers Association as their employer. The dabbawalas are shareholders and entrepreneurs, albeit all earning the same amount of money every month within their respective teams. This does demonstrate the paradox that exists in the socialist nature of this intuitively capitalist venture. Ownership inherently drives behavior. Finally, the dabbawalas rely on referrals to grow their customer base. They actively encourage existing customers to introduce friends and relatives to the service. Happy customers (at least 175,000 of them daily) translate to an extensive, cost effective and experienced based word of mouth marketing structure.

Who would ever have thought that preferences for hot, familiar home cooked meals would give rise to a globally recognized, extremely manual success story?

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The writer would like to acknowledge the following sources of information: Pradip Thakker, Triarchy Press and Smart Manager Magazine, India .

Why I want to be a Parastatal CEO.

This year has been replete with jaw dropping, atrocious public sector boardroom shenanigans. From the very unhealthy National Hospital Insurance Fund drama, the media frenzy for corporate blood and gore was further cemented by the East African Portland Cement disaster. The drama then witnessed the take off of the Kenya Airports Authority jet sized skirmish.

In all of this mess, I hope anyone who is even thinking about taking on a CEO role at any of these organizations, or any parastatal for that matter has a steel lined stomach for all the bile that will be formed during the natural course of a day, a forked tongue for all the boots that need to be licked and a rhino skin leather girdle for the protection of his loins that will get kicked every now and then. One does start to wonder who would apply for the position of parastatal CEO in the current political environment.

So for what it is worth, I believe that the next job advertisements for public sector CEOs should clearly state the following:

ABC is the leading organization in its mandated area of jurisdiction. As a parastatal we do not have to worry about market forces or shareholder expectations. We rule the market and we run to court whenever the shareholder tries to flex their muscle. As a public sector organization, we are expected to play by the rules, but every now and then we push the envelope a bit and make our own rules. Speaking of envelopes, there are plenty to be found here in all shapes and sizes. The Board of ABC is happy to announce that it is looking for a victim – sorry- a CEO to come in and maintain the status quo. No bright ideas, no blue sky thinking, no things-to-change-in-100-days mentality please.

1. Position: The position is primarily horizontal as the role holder is expected to lie flat on his or her stomach as they dodge the myriad bullets that fly around the war zone of an office.

2. Reporting Line: The role holder is expected to report to the Board. Wait, actually the role holder is expected to report to the line ministry. Stop! It is the Board. Ermmm….look ,we’ll get back to the role holder during the course of his or her (short-lived) contract as we’re still trying to get that figured out ourselves.

3. Educational Requirements: Undergraduate Degree in any field of specialization (holders of degrees in law, business, economics, all engineering disciplines, accounting and medicine are discouraged from applying as they tend to ask too many difficult questions.) A masters degree would be a plus but really, in the greater scheme of things, that would mean that you are far more educated than most of the board members so we would prefer that you keep it simple and limit your educational background to a basic degree.

4. Professional Requirements: At least seven years experience working as a senior manager in an organization of your choice. Self employed candidates are strongly encouraged to apply as we note that they are typically very grateful for landing a salaried job after years of struggling in entrepreneurship. Internal candidates are also strongly encouraged to apply as they know who rules the roost in this town [they also know the importance of having board sitting allowance envelopes ready to be distributed at every board sitting]. International applicants are NOT encouraged to apply.

5. Primary Duties and Responsibilities:

(a) To provide leadership to the organization and to deliver on its core mandate, which mandate is one thing on paper and another thing in reality;
(b) To drive the institution to deliver on its yet-to-be-signed performance contract with the government. Don’t worry; those performance contracts are simply a public relations exercise. The Board will protect you if anyone from Serikali comes after you;
(c) To procure large contracts with the sole approval [and silent involvement] of the board. No one else. Not the line minister. Not his henchmen. Not the tenderpreneurs that are sure to circle around your office. Those babies are ours. OURS!
(d) To oversee the creation and execution of the organization’s budget. To ensure that said budget has sufficient padding for “competitive” procurement.
(e) To do all of the above, particularly and especially (c ).

6. Key Competencies
a) Proficiency in using a shredder and leaving no evidence behind you;
b) Proficiency in multi-tasking and taking orders from different people in one board [By the way, on this board, Chairman’s word is not always final];
c) Proficiency in forging ahead even though you have left a trail of destruction behind you;
d) Proficiency to find places abroad for the board to do at least three investigative trips a year on how to better the organization locally. Such trips should permit spouses to accompany board members with no requirement for such “spouse” to provide evidence of marriage;
e) Proficiency in sitting in four board committee meetings a month to discuss strategy for the organization and not complaining that the board is becoming more operational than supervisory;
f) Proficiency not to complain, period.

7. Application Deadlines
If you think you are suitable for this job, please submit your written application accompanied by your CV and copies of your educational certificates to the Company Secretary whose address appears below. We warn you that we do know that the current Company Secretary is harbouring desires to apply for this job too so don’t be surprised if you do not find your name in the short list as your application disappeared in the pile that made it to the Board Committee reviewing this process. We therefore suggest that you get your Member of Parliament involved in the process too as he will definitely have one of the board member’s numbers on his fast dial. Deadline for this job is September 10th 2012. What? It’s today? Uh-oh!

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Twitter: @carolmusyoka

Bryan Marsal was in his living room watching a Giants football game the night of September 14, 2008 when the phone rang. On the other end of the line was the board of directors at Lehman Brothers. The reason for the call: would the co-head of turnaround firm Alvarez & Marsal would be willing to take on the job of taking the firm through bankruptcy? The Federal Reserve had already refused to bail out the bank as it had done for Bear Stearns and the end was near.
“My first question was ‘how much planning have you done?’”
“‘You’re it,’ they told me.”
The next question: “How much cash do you have?” “None.”
“How much time do I have?” “Two hours.”
Despite the ugly situation Marsal said he’d take the job as chief restructuring officer of Lehman Brothers Holdings Inc, and just a few hours later, at about 2 a.m. on Sept. 15 Lehman Brothers filed for bankruptcy. A member of the audience at this week’s event asked if there was some way Lehman’s board of directors could have headed this off, or if there weren’t other signals that this was going to occur.
“Corporate governance is a joke,” Marsal said. “To spend four or five days a year at a company [as board members often do] …. and really believe you can know what is going on with that company is suspect.”
Boards of directors are more useful at giving advice to executives and guidance, but the notion they can really serve as watch dogs and know the workings of a firm and its risks is unrealistic.
But once there is a problem good boards act decisively and aggressively. Despite the awful start to Lehman’s bankruptcy Marsal said the board has since “really earned their money.”
(Extracted from business blogger Tom Fowler’s blog)

The Central Bank of Kenya (CBK) has published a new set of Prudential Guidelines that will be taking effect from August 2012. A key precept of the new guidelines is the rule defining Independent Non-Executive Directors (INEDs). As with any new law, the first question a legislative drafter asks is “what is the mischief we are trying to cure?” The mischief that the CBK is trying to cure is undue influence of majority shareholders within bank boards. The prudential guidelines require that the minimum size of a bank board should be five directors of which the CEO should be one. Three fifths of the members should be non-executive directors. So let me use a practical example here. Assuming Bank XYZ has a board with ten directors; six of them have to be non-executive. Great, we have room for a CEO and three of his executive team.
The prudential guidelines then provide that of the six non-executive directors, the majority has to be independent. So we have four out of the six non-execs as independent. This is where it gets interesting. The guidelines define what “Independence” means which definitions are pretty straightforward and self -explanatory. The seventh definition begs some indulgent retrospection. It defines an independent director as one who is not a direct or indirect representative of a shareholder who has the ability to control or significantly influence management or the board.

Board appointments are a tedious process beginning with the nominations committee identifying a candidate, raking them through the coals in a semi-traumatic due diligence process, submitting the names to the larger board for approval and then ratification at an AGM. That of course is what is supposed to typically happen. What often happens is that members of the nominations committee tee off, have a good round of golf and by the sixth hole have pretty much decided which of their buddies is taking the vacant non-executive director slot. But how does the outside world determine if this INED is a direct or indirect shareholder representative? If Bank XYZ receives a formal letter from the shareholder asking for said person to be appointed to the board to “represent my interests” then this person would be a non-executive director and take up one of the two slots in the above mentioned example. This is because while banks are regulated institutions, they are also incorporated as companies under the Companies Act, Cap 486, which Act enables a company to describe the constitution of its board within its Articles of Association. So if Bank XYZ’s Articles of Association state that the majority shareholder will have the right to appoint at least two fifths of the board members, he can well appoint the CEO, CFO and two non-exec positions and still be within the prudential guidelines.

But if there is no formal appointment, no visible blood or marital relationship, then how is one visibly perceived to be representing direct or indirect interests of the shareholder? The same Articles of Association describe how directors are to be appointed to the board. The appointing authority is the shareholders, through election and ratification at the annual general meeting. Hence if an individual has been elected as a director at the AGM, then that individual owes allegiance and duty of care to the collective shareholder body and not just to specific shareholders. It matters not whether the words non-executive director or independent non-executive director are stitched in bright yellow thread onto their briefcase or handbag. The fact is that they are jointly and severally liable to the shareholders for the actions of management. Sadly very few directors are aware of the severity of their liabilities and responsibilities and frankly speaking, the mischief that should be cured is lack of awareness on the part of directors and stiffer individual and personal penalties for bank boards that allow their institutions to breach regulatory requirements. You can neither legislate good behavior nor can you legislate integrity. What you can legislate are consequences for lack of either. The result is a body of bank directors in the country that are in it to win it and who know that their reputations will be hung, drawn and quartered if their institutions go down. It then speaks to the need to recruit bank directors that completely understand operational and credit risk, asset and liability management and robust loss provisioning. It speaks to the need to have continuous training on the same and regular assessment of the directors’ capacity to oversee those aspects. It therefore begs the question: should we focus on quality of directors or quantity of independents? Trust me, shareholder buddy or not, it will be a tenacious individual who agrees to put their John Hancock next to the words director (independent or not) of a bank.
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Revolving Board Room Doors and Hoodies.

The beginning of this month provided a front row, edge of your seat and whodunit suspense in the Kenyan production of “Now You See Me, Now You Don’t”. In case you missed it, the twists and turns were worthy of inclusion in the Safari Rally circuit and would have been aptly played out in a two-part episode of the local television drama Vioja Mahakamani. It was mesmerizing watching the board room politics of a public institution called the National Hospital Insurance Fund dragged in front of television cameras, allowing the general public a peek into what should never have been exposed to our blissfully ignorant minds. Truth be told, it was not mesmerizing. It was sordid, ghastly and abominable. Just like parents never allow children into their bedroom after hours, a board of directors should never allow outsiders into their inner sanctum no matter how toxic the air is within it. Even if it means asphyxiating themselves on their own noxious fumes, they should only come out for air long enough to bring in a higher authority to help detoxify the situation.

That higher power never has been, and never will be, the media. That higher power is the appointing authority, which has its own channels of communication that do not require Bright Lights -Camera – Action. Sadly, all the players in this sorry saga know the corporate governance drill. But once the saga dies down and the media gets the next “hot” story no one will remember who was speaking on the side of good governance or who was blowing the whistle. All they will remember were puffed chests and a revolving CEO door that couldn’t rotate fast enough to keep up with the ejections. I wish all the actors within that board room the very best in proving to anyone who cares enough to listen that they are worthy of maintaining confidentiality in a professional setting. As they set off through the spinning exit door, now would be a good time to sign a tell-all book deal with a publisher with a title along the lines of “Loose lips sink ships”.

In other completely unrelated news, Mark Zuckerberg the 27-year old illustrious founder and CEO of Facebook had a corporate equivalent of a wardrobe malfunction during the pre-IPO roadshows with investors. The young chap wore a “hoodie” (a sweatshirt with a hood), sneakers and jeans to meetings with potential investors in the $5 billion IPO of Facebook, currently valued at around $100 billion. Michael Pachter, Managing Director of Wedburg Securities – the first company to issue a buy rating on the Facebook stock in the United States- called Zuckerberg’s choice of attire as “ a mark of immaturity”. Waxing puritanical Pachter stated, “I think he has to realize he’s bringing investors in as a new constituency right now, and I think he’s got to show them the respect they deserve because he’s asking them for their money.”

Now this is a quintessential chicken and egg situation. Zuckerberg needs the capital that will be raised from the IPO, but the investors need Zuckerberg and his team to drive the performance and deliver the revenues that will guarantee a payback on the investment being made. Clearly Zuckerberg will not deliver those revenues dressed in a silk tie and black leather brogues. Conversely, these investors seem affronted when he comes to request for money dressed in his work duds, the very attire that spurred him to oversee the building of a $100 billion company. Maybe it was the springy rubber soles that fired up his cerebral spark plugs. Or the relaxed blood flow from his heart to his head, unimpeded by that self-strangulation device masquerading as a tie. Whatever the case, perhaps some numbers may help you to see Zuckerberg’s point of view. Age of company: Eight years. Number of active users as at April 2012: 845 million. 2011 Turnover: $3.7 billion yielding earnings of $1 billion. Whether you call him immature or disrespectful, this young man brings home the dollar bills in the billions. Which then begs the question: who should set the dress code, the investor or the investee? Who plays the music and who dances the tune? If demand for the share outstrips supply by the time the proposed IPO date of May 17th comes around, well Zuckerberg can go dressed in nothing but boxers and socks come the day for ringing the bell at the New York Stock Exchange. Not even a hairy chest will distract from the fact that a virtual social network has iconoclastically changed the way humans socialize forever. If appetite for the share is depressed or dampened for any reason however, a three piece Savile Row suit might come in very handy for hiding the licked wounds.

Zuckerberg’s attire might appear as immature but he has $100 billion reasons why investors should look past his outward appearance and into what he has delivered in the past. It should also cause some reflection on the widening gap of perception and value systems between the three age generations currently in the working environment today. At the end of this technologically driven day, money talks and stuffy formalities walk [or so say the Gen-Y’s!]

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Twitter: @carolmusyoka

8 WAYS TO KEEP YOUR BOSS HAPPY – ACCORDING TO YOUR BOSS
Last week, the Time Business online had a great article by Geoffrey James titled “8 Ways To Keep Your Boss Happy.” The tips are very practical and for all intents and purposes should be instinctive for any good employee. I thought I would share the same here, but with the added advantage of emphasizing what I think your boss REALLY wants you to do. Here goes:

1. Be true to your word . What your boss REALLY wants you to do though is deliver when you say you will deliver and when you don’t, just fire yourself and make life easier for both of you.
2. No surprises, ever. What your boss REALLY wants you to do is keep her informed about everything going on in the business. The good, the bad and the ugly. She never wants to go in front of her own boss and be floored by information you knew and should have told her. If, by the way, you knew and did not tell her, fire yourself and make life easier for both of you.
3. Be prepared on the details. What your boss REALLY wants you to do is always be prepared for a surprise test, a snap check, an unholy communion where mind meets memory with shaky results. He needs to know that you know what you say you know. He doesn’t want you to make him look bad in front of clients or his boss. If he gets to know that you don’t know what you say you know, fire yourself. It will really make life easier for both of you.
4. Take your job seriously. What your boss REALLY wants you to do is to take your job seriously. Yes, your job. Not the monthly TGIF “drinkathons”. Not the staff Christmas party “after party” that happens when the CEO leaves. Your boss knows that you take drinking seriously. And dancing. And flirting with the girls – or the boys – whatever your inclination. Seeing you bleary eyed and dry mouthed from retching your dinner in the bushes outside is not a pleasant sight, but I daresay it is a memorable one. So memorable that it is the only picture your boss will have of you when doing your performance appraisal at the end of the quarter. The ONLY PICTURE. So do yourself a favour. Fire yourself. It will make life easier for both of you.
5. Have your boss’s back. What your boss REALLY wants you to do is cover her when she looks bad. When she makes a presentation full of mistakes, don’t point them out. Just smile and nod furiously while surreptitiously jotting down a note alerting her of the mistake. And as Geoffrey James writes, if your boss is about to make a foolish mistake it’s your responsibility to try and convince her to do otherwise. But make no mistake, if she’s headed to hell on the non-stop Orient express, by all means jump off the train and take care of yourself. If she survives the trip to hell and back realizing that you jumped off the train, be ready to fire yourself. It will make life easier for both of you.
6. Provide solutions, not complaints. What your boss REALLY wants you to do is stop being a whiny namby-pamby and man up. It really gets old when you keep complaining about the same thing over and over again and don’t want to provide a solution yourself. In fact, here’s a solution: fire yourself. It will make life easier for both of you.
7. Communicate in plain language. What your boss REALLY wants you to do is speak and write your emails in the Queen’s English that you were taught in both primary and secondary school. Not your coded slang or your SMS abbreviated language. And just in case you had a business law elective in your university education, showing off that Latin gobbledygook that you crammed into your over stimulated mind doesn’t help either. In fact, you should look up the words “fire yourself” in Latin. It will make life easier for both of you.
8. Know your real job. I like what Geoffrey James says about this objective. He writes that your real job is to make your boss successful and that there are no exceptions to this rule. What I think your boss REALLY wants you to do is make him look successful. From A to Z. Alpha to Omega. Sunrise to Sunset. Your job is to make him rise up the corporate ladder. And rise. And rise. And if you are really good at your job, he might let you ride on his coattails and drag you up with him. However, if you make him drop, look bad, or get creamed by his superiors he will kick you like a rabid dog. He will chew you up and spit you out. He will wipe the floor with your face and pour fire and brimstone on your head. Well you know the drill by know, after removing the wheels from his swivel chair when he takes a bathroom break, fire yourself. It will make life easier for both of you.
Geoffrey James ends his article with a great parting shot. Your boss’s real job is to make you successful. What I think your boss REALLY wants you to know is that indeed his job is to make you successful. Successful at doing your work on time. Successful at getting to work on time. Successful at working all the time without those incessant bathroom, coffee and lunch breaks. Your boss wants you to be successful all the time. But if you can’t be successful then you need to, you guessed it, fire yourself. It will really make life easier for both of you.

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Twitter:@carolmusyoka

My copy editor and I have an unwritten pact. I am only to submit business related articles as this honorable newspaper is suitably titled “The Business Daily” as he noted some tendencies to political leanings on my side. Well, today I want to opine on the business of appraising employees and how to view a Member of Parliament as your employee, since you the tax payer are paying his salary, ergo, you are his employer.

Last week’s Daily Nation of Thursday, April 26th had a news story that caught my eye and made me realize that performance appraisals of members of parliament are desperately needed. The story, titled “MPs want taxpayer to foot Kshs 18 billion bill” made me want to gag. Actually – truth be told – I wanted to vomit all over the MPs shoes, in the famous words of the former British High Commissioner Sir Edward Clay. Anyway back to the business part of the story. So the honorable members of the tenth parliament –who, by the way, mysteriously passed the Finance Bill 2011 in April 2012 (!!) only after their retirement packages were included therein – have asked the Treasury to set aside Kshs 500 million to cover their taxes between July 1st 2012 and January 15th 2013 when their term expires. Added to this trifling amount, is the miniscule Kshs 868 million to be used to cater for the payment of winding up allowances and gratuity for the MPs at the expiry of their five-year parliamentary term. I looked out of my office window as I read this story. Life was moving along swimmingly. There were no placard and tree branch waving activists on the streets complaining about this travesty. Kenyans seemed to have gasped inaudibly to themselves, shrugged their collective shoulders and moved right along. So I decided to do the same. But I wrote this piece first.

In my former life, one of my previous employers had a very simple but effective performance appraisal system known as the Five C’s. One was appraised on five core objectives of the company that all started with the letter C: Company, Customer, Colleague, Controls and Community. Simply stated, an employee was rated on how he had contributed to the Company’s financial bottom line, what he had done to improve the Customer experience, what he had done to improve the life of his peers or subordinates – Colleagues, how he had kept his function in Control by managing risk well and, finally, what he had done for his Community through charitable work. For me to even begin negotiating for a salary increase or to pray feverishly for a good bonus at the end of the year, I would have had to score highly on my five C’s. If I ever asked my employer to pay my taxes for me or set funds aside for me without any contribution on my part as gratuity, well, put it this way, I would have been shown the front door faster than you can say “you need to stop sniffing those drugs.”

So in keeping with the business standards of this newspaper, I will promptly give the MPs an appraisal as the taxpayer and employer that is going to pay these ridiculous sums on their behalf. Company will of course be replaced by Country while Constituents will replace Customer. Here goes: Country : you have contributed positively to this country’s bottom line. You have created and passed legislation that has singularly driven GDP growth by increasing factors of production that translate into lower unemployment, more locally produced goods and services and less taxes to the ordinary citizen. Your rating: Excellent. Constituents: you have served your customer the constituent well by always being available for meetings, harambees, funerals and who knows what else. Your constituents see you every weekend and you take particular pleasure stepping out of your public coffer funded motor vehicle to walk the trenches with them and understand their problems. Your rating: Superb. Colleagues: you are well respected by your fellow MPs, and the bonhomie as well as collegiate spirit that you share especially when pillorying people who have been summoned before your select committees is commendable. The fact that you rest your head on your colleague’s shoulders at times when you occasionally take brief naps during parliamentary sessions to recharge your batteries is very sweet. The staff in your local CDF office also say that you are the paragon of leadership and that you have personally mentored them on how to keep good financial accounts and undertake strategic planning for projects. Your rating: Terrific. Control: you are in control of the country, the constituency and the Executive’s coffers. Completely. Totally. Unassailably. Your rating: First-Class. Community: Remember that time when you were feeling reasonably philanthropic and paid your…oh well…forget about it. You care about your community and that’s why you represent it in Parliament. Your rating: Generous.

Your overall rating is an A+. As a result, this country will pay your taxes for you and will also pay you money to see you leave your gracious office. On a parting note, I would like to share five of my favorite previous comments made by other supervisors about their employees during appraisal time. These have absolutely no bearing on your appraisal and are merely included here for their entertainment value. Number 5: “He would be out of his depth in a parking lot puddle.” Number 4: “Works well when under constant supervision and cornered like a rat in a trap.” Number 3: “He sets low personal standards and then consistently fails to achieve them.” Number 2: “When she opens her mouth, it seems that this is only to change whichever foot was previously in there.” And the Number 1 appraisal comment that has absolutely nothing to do with your MP appraisal is: “This employee should go far – and the sooner he starts the better.”
See you next year for your annual appraisal, assuming that you’ll be back in Parliament.
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Twitter: @carolmusyoka

MILKING ABANDONED ASSETS FOR FREE
What is the difference between democracy and capitalism? In a democracy you have two cows. 
Your neighbor has none. 
You feel guilty for being successful. 
You vote people into office that put a tax on your cows, forcing you to sell one to raise money to pay the tax. 
The people you voted for then take tax money, buy a cow and give it to your neighbor. However, in a capitalist society you have two cows. 
Your neighbor has none. 
So?

Our government has a new milk cow and it’s being called the Unclaimed Financial Assets Authority (UFAA). You may or may not have heard about it and if you haven’t, you might want to know a little more about this organization. You see, if you happen to die without letting your loved ones know about your little stash of cash, shares, insurance policies or National Social Security Fund (NSSF) contributions, your property would typically sit in banks, listed companies, insurance companies or the NSSF forever. While your beneficiaries languish and suffer for lack of financial security, those named institutions would turnover the cash year in and year out, getting an income from interest on the cash, which would go to the bottom line and be distributed to shareholders as profit. In the case of listed companies, the undistributed dividends in many cases sit in the account of the shares registrar and should ideally be held “in trust” for the claimants when they eventually materialize. Someone in government finally wisened up to the fact that these unclaimed amounts were only making shareholders of the holding institutions richer and that these funds would be an excellent source of revenue in a period of widening budget deficits. The numbers as estimated are mouth watering: Commercial banks are said to hold about Kshs 7.4 billion, listed companies are said to be sitting on Kshs 1.4 billion of unclaimed dividends, the NSSF Kshs 243 million in unclaimed contributions and insurance companies with about Kshs 200 million in unclaimed life policies.

The UFAA has been created under the Unclaimed Financial Assets Act, 2011 (one of the most speedily passed bills in the current parliament) to create an avenue for all the above named institutions to send the property that remains unclaimed after a period of between two to seven years depending on the type of asset. (Oh, did I mention that the Act came into effect retrospectively so all of the unclaimed assets as at the date the Act came into effect -16th December 2011-essentially qualify?) Well, for all the folks who love to bash banks this may come as good news. For now. But fact is that you now have to jump several more hoops to get your loved ones’ property as you have to deal with a government agency and all its attendant bureaucracies. Yes, I’m sure you’ll feel a lot better as the Act requires the UFAA to pay your claim together with any accrued interest thereon. But what if you never get to claim? The Act under Section 19 requires that the original holder of the assets should first make a reasonable attempt to locate the original owners through the last known address. If this fails then the assets are handed over to the UFAA within the statutory period. Section 35 of the same Act says that UFAA shall also make reasonable efforts to locate the owner. Don’t hold your breath and expect that you’ll have someone knocking on your door with the words “Surprise!” anytime soon. These reasonable efforts (which are not defined) will probably be no more than a letter sent to the same postal address that the original holder of the asset communicated to.

Enough said. Back to the numbers: a quick back of the envelope calculation puts the current estimate of abandoned assets at about Kshs 9.2 billion. Assuming that UFAA places these funds in a bank deposit and short-term government securities today, the average blended rate of return would be approximately 15% p.a. Thus in one year, the income from these assets would be Kshs 1.3 billion. And, pray tell, where does that income go? The Act is silent on this. Stunningly, stupendously silent. Of course they’ll tell you that this income is due to the claimants of the assets. Remember, the folks who got the mysterious knock on the door and found a smiling civil servant with an envelope in his hand shouting “SURPRISE!”

But perhaps there’s hope. The Act stipulates who shall sit on UFAA’s board and makes all the necessary attempts to define five knowledgeable people who are not public officers, plus the Permanent Secretary to the Treasury and the Chief Executive Officer. The five should consist of a banker, an insurer, a lawyer/accountant/business manager, an expert in unclaimed assets and a representative of financial consumers. In other words, as the nursery rhyme goes: a butcher, a baker and a candlestick maker. These five independent folks will have the less than Herculean task of getting the UFAA to fulfill its mandate. Whatever that mandate is be it to trawl the bowels of Kenyan villages looking for beneficiaries of abandoned assets or to generate noteworthy income from assets that are currently being utilized by institutions for the ultimate (and some may say immoral) benefit of shareholders. Rather than legislating that the income from these funds should be channeled to health, education or charitable causes, our parliament and executive have created a dark, cavernous hole with nothing at the bottom of it but the virulent Kenyan vultures we have come to associate these milk cows with.

I’m not sure which is the lesser of the two evils between banks or insurance companies keeping the abandoned assets or UFAA swallowing them up, but I can say this with much certainty: Mama’s got a brand new bag of tricks and has ensured that she doesn’t have to account for it. Why buy a cow when you can get the milk for free?

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