Governance in State-Owned Enterprises
    Category: Column By : Andrew Tani Read : 950 Date : Saturday, October 12, 2013 - 07:17:43

    “Only after you have convinced this panel will I open up any of my SOEs to your proposed intervention,” explained the then-SOE Minister Sofyan Djalil. A week earlier, his senior staffer, Alex Rusli, now Indosat CEO, had arranged my presentation to the minister and all his deputies as a way to understand and manage the interpersonal dynamic that fueled recurring BOC-BOD scuffles at the SOE Ministry. I told myself I had to explain the proposal without sounding condescending. The adrenaline was pumping. I was nervous.

    The panel consisted of serving commissioners of government-owned corporations, all honorable men, namely, Telkom Chairman Tanri Abeng, PT Pos's Faried Haryanto and Garuda Indonesia's Adiwoso. These gentlemen were management heavyweights. 

    “Gentlemen, I will make two statements. If you disagree with any one of them, then I shall pack my things and go back to my office,” I began. They nodded their heads. The air was thick with anticipation. “Statement one,” I declared, “Business results are to a large extent influenced by the quality of cooperation among members of the BOC and the BOD, and the quality of collaboration between the BOC and the BOD.” One by one they commented and scored that declaration with flying colors.

    “Statement two,” I continued, “The group cohesion that drives quality of cooperation among members of the BOC and the BOD, and collaboration between the two boards, cannot be left to chance—expert facilitation is essential in some cases because not all BOC and BOD members share a common understanding of team playership, and the need for the BOC and the BOD to become thinking partners when they exercise their corporate governance and corporate management duties.” It proved wise not to generalize that observation—the panel agreed unanimously even as they labored to explain what they had already done to build cohesion in their respective boards.

    “Thank you,” I told them. The minister smiled at me, and so I proceeded to present my analyses and recommendations for program including good corporate governance (GCG) called, “Managing the GCG Dynamic in State-Owned Enterprises,” which was subsequently approved—a day to remember indeed.

    Indonesia has long asked its state firms to practice good corporate governance. So why do boardroom scuffles continue unabated? Indonesia's corporate law clearly prescribes that the BOC oversee and give advice to the BOD, while the BOD executes the business. Yet members of both boards often encountered problems in the subconscious interpersonal realm, triggered by differences in perception and interpretation of the various governance statutes—and their members did not always have the competence to exchange views, manage their differences, and make and execute their decisions in a spirit of professional cooperation and collaboration.

    We proposed to help the BOC and the BOD, right after they are appointed, to build and nurture a common language, shared values, and shared practices needed by any group who must work together as a solid team. We also recommended that the SOE Ministry review its corporate staffing practices. The composition of many SOE boards was more based on political bargaining and compromise than on competence and fit. This has since been remedied by the current Minister, Dahlan Iskan, who allows board leaders a voice in forming what he calls the “Dream Team” for each SOE.