Public Governance Directing public companies A practical approach

De Meerlanden Public Limited Company Shareholders – 7 municipalities Waste collecting, composting, sweeping, other tasks in public space 250 people; Turnover € 45 mln. Main objectives: Activities for households companies Handling tons of waste - sustainability - profitable - governmental influence - market driven

Directing public companies a current issue Cost effectiveness Risk avoiding Complication of the specific task Internationalisation (waste)

Partnership Model 1: Municipal Settlement Performing Tasks: Waste collection Green keeping Grit icy roads Sweeping Activities in public space Municipal settlement Executing organisation Municipalities Board with politicians (aldermen) Specifics MS: - Legal status - Political responsibility - Performing public tasks

Partnership Model 2: Public Company Performing Tasks: Waste collection Green keeping Grit icy roads Sweeping Activities in public space Board of governors Executive board Executing organization - control - advice Shareholders = Municipalities Specifics Public Company - Legal status - Equity - Entrepreneurial responsibility - Performing public & private tasks

Governance Public Company (1) Shareholders Legal rights concerning the company Company - Profit rights - Merger/ cooperations - Reorganizations - Investment Company can follow a strategy Which has to be approved by shareholders Shareholders: In general: all decision which influence the character and identity of company are shareholders decisions Governance Two tier model

Governance Public Company (2) Company Board of governors Governors advisory & control has a status towards ceo and shareholders are appointed by shareholders have dominating influence on strategy and management

ROLE of Management-Governors-Shareholders Management develops strategy prepares investments or makes annual report Governors influences strategy investments or annual report (dividend) Shareholders a pprove or disapprove strategy, investments or annual report Advice & control

Directing a public company Two angles: 1)Influence on strategy and identity 2)Influence on the performance through SLA Ad 1) - Highly regulated - Has a legal basis - Is a carrousel of meetings, responsibilities and reports Ad 2)- Entirely the opposite. Little is regulated. No long solid experience.

Influence on performances SLA ABDE Municipality C SLA De Meerlanden nv SLA contains agreements on - Quality- Results - Quantity- Responsibility & risks - Tariff/prices- Contract period - Future policies- Reporting (!) - Complaints Mostly 5 year period. Can also be indefinite. All municipalities have different SLA’s. Not Anyone is the same !

To handle a SLA (1) Two-sided issue 1: Principal 2: Public 3 perspectives: A) Strategic B) Organizational C) Operational

To handle a SLA (2) 1) Principal A) Basic assumption - how much influence - quality - costs Has to described carefully and from a long term perspective B) Set targets (not only on quality & costs) Also- innovation - substainibility - customer satisfaction - policy - flexible set of instruments C) Contract manager is key-function Has too have content, legal & financial knowledge, entrepreneurial empathy, practical, broad view. Also strong internal position. Access to specialists and aldermen. Persuasive qualities. Authorative.

To handle a SLA (2) 2) Public company A) Set your targets regarding to your function B) Organize the work according to requirements in SLA - cost effectiveness - quality - complaint handling - extra work - be flexible - be aware of political environment C) Contract manager Contract manager is key function Qualities: Content, legal & financial knowledge, entrepreneurship, communicative abilities, practical, broad view. Access to operation & management. Persuasive. Spokesman. Authorative.

Waste policy Issue: who has the initiative to develop new policy. Policy stays within municipality + direct + responsibility - lack of knowledge - public company pure executing, not gaining expertise Policy at public company + expertise + interaction between different municipalities - indirect - no counterpart at municipality, communication Conclusion: both parties need policy makers. embed it in contract management operate closely together.

Some tips (1) Company Politics Employees Bankers Customers Politics Shareholders Lobby groups Company Voters Lobbyists The rest of the world Financial constraints Legal issues

Some tips (2) And - Be sharp & flexible - No long term contract without challenges - Organize mutual trust - Give public company room to act to achieve targets - It is a partnership