The predominant part of the privatized enterprises are managed
directly by their new owners which is largely determined by the
employed privatization techniques. I.e., the selected approach to
privatization in this country leads to the creation of real owners
immediately involved in the management of their enterprises. Their
direct participation in the management is also conditioned by the
character of the privatized enterprises. It also follows from their
legal status - mainly limited liability companies, partnerships and
sole merchants, where executive power is generally directly
exercised by the owner. In the privatized joint-stock companies
there predominates a one-tier system of management with the major
shareholders once again exercising executive power.
In this sense the management of the privatized enterprises
reproduces the predominant mechanism in the private sector for
immediate management of the enterprise by the owner as opposed to
the public or anonymous management by persons appointed by the
owner in the state-owned enterprises.
One of the principal shortcomings of the adopted market
privatization model in Bulgaria is the limited participation of
management in denationalization. The preparation of privatization
is reduced to the preparation of the legal analysis and asset
valuation, without any promotion campaign within the enterprise
itself aimed at involving the personnel and the managers in the
process. Privatization is not preceded by financial recovery and
actual commercialization. A formal transformation is carried out of
the enterprises into companies as defined by the Commercial Law
without this being related to specific measures for stabilization
of the market positions and restructuring of the state-owned
enterprises subject to privatization. This further limits their
liquidity.
According to the Privatisation Law, the management of the
enterprise is not treated differently from the personnel and there
are no additional conditions attached to their participation. The
ministries, which exercise the property rights on state
participation in the respective sectors, tend to have a distrustful
attitude to privatization through management buy-out. Managers are
isolated from the preparation of privatization and the procedure
for its implementation. In this way, privatization is deprived of
technical and managerial experience, the managers assume a negative
attitude to the process and therefore very frequently create
problems regarding the provision of information and the access to
the enterprises.
Of all privatization transactions concluded by the end of
December only 4 enterprises were bought by managers. In the
remaining cases managers are frequently "concealed" behind
personnel buy-outs, which, as becomes evident from the case studies
rise to postprivatization problems in the management of the
enterprises. The equal treatment of managers in the course of
personnel buy-outs makes both the rationalization of the
organization and management structure of the enterprise and the
investment policy difficult to implement. The personnel are
typically inclined to reinvest a smaller part of the profit,
leaving a larger part aside for incomes and social benefits. This
gives rise to difficulties in the restructuring of the privatized
enterprise.
When the personnel buys the enterprise it usualy keeps the
executives acting up to the privatization, regardless of the former
conflicts between managers, workers and employees, and their
trade-union organizations. It is not by chance that opinion polls
among managers of state-owned enterprises about their preferred
privatization technique indicate a decided preference for personnel
buy-out.
This tendency finds its explanation in the active role of the
management of the enterprises subject to privatization. The studied
cases indicate that it is the executive management of the
enterprise who not only initiate, but actually direct the entire
participation of the staff in the privatization. There are only
isolated cases of open efforts by individual members of the
management to buy out the enterprise independently without
involving a larger part of the staff. This is accounted for by the
management's fears of possible tension and opposition from the
staff and the union organizations, both during and after
privatization.
There is a general tendency in the privatized enterprises
towards active efforts for the simplification of the management
structure and functions, as well as towards discharge or
reorientation of part of the administrative staff. In all five
cases the financial and accounting departments were abolished, with
only a chief accountant remaining in their place, often assuming
the duties of a paymaster as well. That is a typical phenomenon in
the presence of direct management by the owner. In the same
direction, efforts are being made for certain typical
administrative and managerial activities to be detached in economic
and organizational terms or moved out of the enterprise altogether
on a contractual basis.
On the whole, privatization leads to an imperative
rationalization and simplification of management in the direction
of greater pragmatism and economy.
Top
of page
|