LAHORE: Though, the number of companies incorporated by the Securities and Exchange Commission of Pakistan (SECP) continues to increase, something is amiss in our corporate sector that routinely results in the closure of both big and small entities all year round regardless of the state of country’s economic affairs.
As on June 30, 2014-15 (FY15) the SECP had incorporated a total of over 67,000 companies – 5001 in the year 2014-15. The details of next two years are not available but the pace of past incorporation shows there has been a progressive increase every year. We can safely say the number of the incorporated companies must have crossed 77,000 by now. New entries should have resulted in greater economic activity but it did not happen. Only a few out of a number of promising enterprises leap forward to challenge the established players.
The failure of corporate sector and even the non-incorporated medium-sized firms is more due to a lack of planning as well as the tendency to siphon off profits for luxury when the going is good and continuing with the luxurious lifestyle even when the chips are down. Even when the companies are unable to pay salaries to their employees, they continue lavishing fortunes on luxurious foreign trips and other extravagant activities the top brass loves to indulge in. Some argue that they have wealth from other sources which supports their lifestyle.
They conveniently choose to ignore the business they are running not only needs their money but time as well. They disregard the fact that by withholding the salaries of their employees they are sowing seeds of discontent among them. Employees mostly hold their companies in high esteem as that’s where their bread and butter come from. In most of the cases, strapped staffers are not afraid of drowning when they find the owners are also in the same boat, but feel betrayed when they see proprietors cruising in the Caribbean having fun. Nobody likes to be left in the lurch. The businessmen do not analyze the reasons for failure. When the going is not good they shy away from their offices. They do not realize that their presence is more needed in times of distress. They sit down with their staff and find out ways to cut costs both by streamlining processes and reducing input costs. It has been observed that when the going is tough the wastages increase in companies where the owners are not present. These wastages further multiply the losses of the company. The negligence on the part of owners forces the most efficient staff members of the company to search for jobs in other companies. The best human resource is immediately hired and the company is left with less efficient employees. This further puts pressure on the finances of the company.
It has been observed that when the times are good and companies earn handsome profits most of the sponsors do not reward their human resource accordingly. Instead they improve their lifestyle. The employees do not feel themselves as part of the organization. There are few entrepreneurs that know the importance of their human resource.
Their motto is that anyone who joins them as a junior executive with a motorcycle should own a small car within first five years of his/her service and a medium-sized vehicle after another five years. They give their employees yearly target which if achieved are handsomely rewarded. They do not upgrade their lifestyle but instead build up company’s reserves to upgrade both technology and human resource. This investment pays them in long run. The employees remain loyal and feel themselves one of the owners and the new technology reduces the cost of production.
Many successful young entrepreneurs who are in their mid forties say they set very high but achievable targets keeping in view the market realities. They said since the staff is duly rewarded they give their hundred percent to achieve the targets. One such enterpriser said sometimes a target is narrowly missed in that case the reward is not withheld if it is established that it was not missed because of lack of efforts but due to reasons beyond the control of the employee. Urewarded, unappreciated, and unmotivated staff only works, while well remunerated, highly valued, and sincerely-cared-for workforce delivers. Employees are any company's most important asset. They are, in fact the competitive advantage of a company. Thus, companies need to draw and keep the best of them and provide them with fosterage, reinforcement, and make them believe they are the constitutional part of the company's core values and vision.