ABOUT two weeks ago, Andrew Sheng, chairman of the Hong Kong                                                                                          
Securities and Futures Commission, spoke at MIM's Tunku Abdul                                                                                         
Rahman Lecture. Among the points he stressed was the                                                                                                  
importance of management: that they should not be practising                                                                                          
self-interest; instead they should take care of their                                                                                                 
shareholders, while serving the interests of the community.                                                                                           
                                                                                                                                                      
What are management responsibilities? A brief look at                                                                                                 
management history would help. Early businesses started very                                                                                          
much as owner entrepreneur ventures. The need to maximise                                                                                             
profits, coupled with the improvements, occurred through the                                                                                          
Industrial Revolution and led to the growth of many                                                                                                   
enterprises.                                                                                                                                          
                                                                                                                                                      
Some of these became public companies, which meant that they                                                                                          
now had shareholders and often borrowed from banks and other                                                                                          
institutions. With increasing competition and the importance                                                                                          
of branding and marketing, customers came into play.                                                                                                  
                                                                                                                                                      
A growing awareness of the environment led to the concern of                                                                                          
the larger community. Of course, good companies knew that                                                                                             
people were their backbone. Thus we see an increase in the                                                                                            
parties involved in a business.                                                                                                                       
                                                                                                                                                      
In today's setting, the responsibility of management is to the                                                                                        
shareholders, the customers, the people in the organisation                                                                                           
(workforce), the suppliers, the financiers and the community                                                                                          
at large. Let's see what some of the good companies are doing                                                                                         
about this.                                                                                                                                           
                                                                                                                                                      
Company leaders like General Electric's Jack Welch, ICI"s John                                                                                        
Harvey Jones, SAS's Jan Carlzon, and Nissan's Yutaka Kume have                                                                                        
increased company profits by many folds and thereby increased                                                                                         
shareholder's value and profits.                                                                                                                      
                                                                                                                                                      
Yutaka Kume took over Nissan in 1967, when it was riddled                                                                                             
with, as he put it, "big corporation diseases" - parochialism,                                                                                        
sectionalism, labour problems, among others. By 1990, he had                                                                                          
moved up the company's earnings from US$167mil to US$940mil.                                                                                          
                                                                                                                                                      
Although he took over a large, mature organisation, Sir John                                                                                          
Harvey Jones altered ICI's business mix, structure culture and                                                                                        
morale within a span of five years. Profits moved upwards by                                                                                          
more than 500% to E1,11-2bil. Jack time, increased GE's                                                                                               
profits from US$1.5bil to US$4bil.                                                                                                                    
                                                                                                                                                      
All these corporate captains improved shareholder's value                                                                                             
significantly. Shareholders had trusted the management and                                                                                            
invested in the company, and they were duly rewarded.                                                                                                 
                                                                                                                                                      
Ask successful companies about customers and they will tell                                                                                           
you how important customer loyalty is. Co-Bank, the National                                                                                          
Bank for Co- operatives (USA) is a good example. This bank                                                                                            
goes the extra mile to serve its customers.                                                                                                           
                                                                                                                                                      
A case in point is when they helped customers in international                                                                                        
trade. This business involved massive communication and great                                                                                         
attention to details. It did not give a good return, either.                                                                                          
However, since its customers need the service, Co-Bank more                                                                                           
than willingly provided it.                                                                                                                           
                                                                                                                                                      
The bank made sure its top four people call on its 200 key                                                                                            
customers. They obtain customer sensing through surveys; they                                                                                         
were told that customers valued quick service most. The bank                                                                                          
also preached to its staff that the bank's success depended on                                                                                        
its customer's success.                                                                                                                               
                                                                                                                                                      
There was "interdependency," they said. The bank also made                                                                                            
efforts to know the customers' business. Because of their                                                                                             
customer care, Ocean Spray, a customer of Co-Bank with annual                                                                                         
sales of over US$1.5bil, gave them a lifetime achievement                                                                                             
award. By the way, this attention to customers helped Co-Bank                                                                                         
grow with assets, increasing from US$10bil to US$20bil by                                                                                             
2000.                                                                                                                                                 
                                                                                                                                                      
Companies that forge ahead pay close attention to their                                                                                               
people. This is more so given today's fast-paced business and                                                                                         
multi-disciplined and specialised nature of the workforce.                                                                                            
Many top companies consider themselves learning organisations,                                                                                        
with some even having a "learning" officer.                                                                                                           
                                                                                                                                                      
Consultancies like Ernst and Young and McKinsey practise it.                                                                                          
'Motorola considers training so important that it has kept                                                                                            
this function centralised. They have a policy that calls for                                                                                          
minimum staff training of 40 hours a year, and it includes the                                                                                        
CEO.                                                                                                                                                  
                                                                                                                                                      
Motorola's "Individual Dignity Entitlement" calls for                                                                                                 
supervisors to interview and receive feedback from staff                                                                                              
quarterly. Negative feedback may require supervisors to                                                                                               
reeducate" themselves.                                                                                                                                
                                                                                                                                                      
Besides training, a modem company must also get constant                                                                                              
feedback from all members of its staff.  Therefore, it should                                                                                         
have both formal and informal channels open.                                                                                                          
                                                                                                                                                      
Toyota's relationship with its suppliers is well known.                                                                                               
People often speak about Taiichi Ohno's "Just in Time" and                                                                                            
"Total Quality Control" in Toyota. With the help of suppliers,                                                                                        
Toyota successfully implemented .  its JIT programme.                                                                                                 
                                                                                                                                                      
We now hear of companies providing training and assistance to                                                                                         
their suppliers. In the end, both the supplier and the                                                                                                
purchaser depend on each other; they are, in fact, "linked" to                                                                                        
the same chain. It works out that one can also look after                                                                                             
one's interest by looking after that of one's suppliers.                                                                                              
                                                                                                                                                      
Relationship with a company's lenders and financial                                                                                                   
institutions is important. We have seen many Malaysian                                                                                                
companies restructuring their loans with the bank's                                                                                                   
co-operation. Jan Carlzon of SAS did that when he took over as                                                                                        
CEO. An American wine producer convinced his suppliers to give                                                                                        
him an extended credit line till he could show profits.                                                                                               
                                                                                                                                                      
The larger community of the company is important. Nowadays,                                                                                           
some companies are undertaking social audits. They realise                                                                                            
that being a good corporate citizen is not only the right                                                                                             
thing to do, it also makes good business sense.  Corporate                                                                                            
governance would also fall into this category. The Edge rates                                                                                         
Public Bank highly: "The bank had one of the lowest                                                                                                   
percentages of non-performing loans," and it "also ranks high                                                                                         
with regard to disclosure and fairness."                                                                                                              
                                                                                                                                                      
Management in many ways is much more demanding now than                                                                                               
before. We see that management responsibilities span a wide                                                                                           
area.  Management, therefore, has to be up to date, savvy,                                                                                            
balanced, caring and practical. It needs to constantly remind                                                                                         
itself of its various responsibilities and obligations. It                                                                                            
lives in two dimensions, as it were, today and the future.