Leadership Training Toolkit for State-Owned Enterprises (Soes) Boards and Owners Ii Leadership Training Toolkit for State-Owned Enterprises (Soes)
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Part I Introduction i Leadership Training Toolkit for State-Owned Enterprises (SOEs) Boards and Owners ii Leadership Training Toolkit for State-Owned Enterprises (SOEs) Disclaimer © 2021 International Bank for Reconstruction and Development / International Finance Corporation The World Bank Group 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank Group (WBG) with external contributions from PwC. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank (WB), its Board of Executive Directors, or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. 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[email protected] Part I Introduction iii Acknowledgements This Leadership Training Toolkit for State-Owned Enterprises (SOEs) was prepared by an interdisciplinary WBG team led by Fabian Seiderer (Lead Public Sector Specialist WB and Task Team Leader) with input from PwC. The core team comprised Sarah Cuttaree and Lopa Rahman from IFC; Alexander Berg, Natalia Manuilova, Manela Karunadasa, Asif Ali and Twity Mueni Musuva Uzele from WB, Ranen Banerjee, Bruce R. Macqueen, David D. Brunell, Anjan Kumar Roy, Harsh Vardhan Kabra, Paridhi Kothari, and Agastya Yeachuri from Price Waterhouse Coopers Private Limited (PwC). The team would like to thank Alexandre Arrobbio, Adrian Fozzard, and Martine Valcin for their overall guidance and review. The team would also like to thank James Brumby, Tatiana Nenova, Sunita Kikeri, and Henri Fortin for their review and advice. Priyantha Jayasuriya Arachchi provided administrative support. The team is grateful to the Australian Department for Foreign Affairs and Trade (DFAT) for their support. iv Leadership Training Toolkit for State-Owned Enterprises (SOEs) List of Abbreviations Acronym Description BSC Balanced Scorecard BCP Business Continuity Planning Central Public Sector Enterprise CPSE (Government of India) CVC Central Vigilance Commission CEO Chief Executive Officer CFO Chief Financial Officer COO Chief Operating Officer CRO Chief Risk Officer CSO Civil Service Organization CSR Corporate Social Responsibility DFI Development Finance Institutions ERM Enterprise Risk Management Environmental, Social, and Corporate ESG Governance EC European Commission EU European Union XBRL eXtensible Business Reporting Language FASB Financial Accounting Standards Board GSM General Shareholders Meeting Generally Accepted Accounting GAAP Principles GRI Global Reporting Initiative GRC Governance and Risk Management GCG Governance Commission for GOCCs GHG Greenhouse Gas GDP Gross Domestic Product HR Human Resource HRM Human Resource Management IAS International Accounting Standard International Accounting Standards IASB Board IDA International Development Agency IFC International Finance Corporation PartBoards I Introduction and Owners v Acronym Description Acronym Description International Financial Reporting NGO Nongovernmental Organization IFRIC Interpretations Committee Organisation for Economic Co-operation OECD International Financial Reporting and Development IFRS Standards Political, Economic, Sociological, PEST International Integrated Reporting Technological IIRC Council Political, Economic, Sociological, PESTEL IMF International Monetary Fund Technological, Environmental, Legal International Organization of Securities PricewaterhouseCoopers/ IOSCO PwC Commissions PricewaterhouseCoopers Private Limited Intergovernmental Panel on Climate PAC Public Accounts Committee IPCC Change PIM Public Investment Management IPO Initial Public Offering PMA Performance Management Agreement International Public Sector Accounting IPSAS Standards PSA Public Service Agreement International Public Sector Accounting PSO Public Service Obligation IPSASB Standards Board PPP Public-Private Partnership IR Integrated Reporting RFP Request for Proposals International Organization for ISO RFQ Request for Quotations Standardization R&D Research and Development ITB Invitation to Bid RBF Results-Based Financing KPI Key Performance Indicator SOW Scope of Work KRA Key Result Area SME Small and Medium Enterprise LDQ Leadership Dimension Questionnaire SPV Special Purpose Vehicle LTA Long-term Agreements Specific, Measurable, Achievable, Results Management Commentary Practice SMART MCPS oriented, and Time-based Statement SIC Standards Interpretations Committee MD&A/ Management Discussion and Analysis MDA SOE State-Owned Enterprise MfD Maximizing Finance for Development SBU Strategic Business Units Strengths, Weaknesses, Opportunities, MoA Memorandum of Association SWOT and Threats MOU Memorandum of Understanding SAI Supreme Audit Institution MoF Ministry of Finance TOR Terms of Reference Ministry of Industry and Minerals, MIM Government of Iraq UN United Nations United Nations Conference on Trade and National Voluntary Guidelines on UNCTAD NVG SEE Social, Environmental and Economic Development Responsibilities of Business WBG World Bank Group NPSV Net Present Social Value WTO World Trade Organization vi Leadership Training Toolkit for State-Owned Enterprises (SOEs) PartBoards I Introduction and Owners vii Foreword During the unprecedented COVID-19 pandemic, the state has become more prominent and its role has been tested. By necessity, the entire public sector mobilized to respond to and mitigate the severe socioeconomic impacts of this global health emergency and to support the recovery. In many countries, state- owned enterprises (SOEs) are at the forefront of this response, given their important roles in key public service and infrastructure sectors such as health and education, transportation, energy, and finance. Public health actions and travel restrictions affected not only SOE revenues but also expenditures, as a result of state fiscal relief and stimulus measures. This has had an adverse impact on the financial situation, and sometimes the viability, of many SOEs, thus exacerbating fiscal costs and risks already affecting governments and their stretched balance sheets. The COVID-19 crisis has also tested the state’s ownership THE SOE LEADERSHIP TOOLKIT, role and the effectiveness of SOE management teams by exposing the underlying weaknesses in countries’ and SOEs’ DEVELOPED JOINTLY BY corporate governance frameworks and capacity. The call THE WORLD BANK AND IFC to “rebuild better” post-pandemic will increasingly obligate SOEs to demonstrate sustainable approaches that take into THROUGH A MULTIDISCIPLINARY consideration the management of environmental and social TEAM, LEVERAGES BOTH risks as well as the impact of their economic activity on climate change and communities. INSTITUTIONS’ COMPLEMENTARY PERSPECTIVES, RESOURCES, Silver linings of this crisis include increased recognition of improved corporate governance standards, and practices and AND EXPERIENCE IN WORKING a sense of urgency to strengthen the performance of SOEs, WITH THE SOE SECTOR AND THE to ensure their sustainability and mitigate mounting fiscal risks. The World Bank Group’s new Integrated SOE Framework STATE AS AN OWNER. (iSOEF) responds to these developments and provides a holistic approach to SOE reform. It is essential that the capacity of SOE leadership, as well as the capacity of policymakers and regulators be strengthened. Yet most developing and middle-income countries are not equipped with established SOE-specific training or capacity-building programs. Boards and senior management of SOEs require contextual training to help them effectively manage crises, improve the performance of their company, navigate the multiple principal-agent challenges, and balance competing commercial and noncommercial objectives in a transparent manner. There is also a pressing need for capacity building of government ownership and oversight entities and their staff, which often do not have the relevant business experience to effectively steer and supervise the SOE portfolio. The Leadership Training Toolkit for State-Owned Enterprises (SOE Leadership Toolkit) serves to meet this growing demand for a practical SOE-specific training curriculum and teaching methodology. The SOE Leadership Toolkit, developed jointly by a multidisciplinary team of the World Bank and IFC, leverages both institutions’ complementary perspectives, resources, and experience in working with the SOE sector and the state as an owner. The SOE Leadership Toolkit was designed with a variety of training needs, priorities, and sponsoring organizations in mind. Using an experiential-learning delivery model, it offers executives