The peaceful Rose Revolution of 2003 brought a change of power to Georgia, but PA Consulting Group was already at work in the former Russian republic's power sector.
By European standards, Georgia is a desperately poor country and PA was given the task of transforming the bloated and corruption-ridden state-owned electricity company to provide better access to electricity and raise living standards.
In 2002, the Georgian administration of the time asked the US government for help in running the United Energy Distribution Company (UEDC), which was so indebted that it couldn't pay its taxes, borrow funds or even use a bank account. Employees were paid erratically and often had to pay bribes to their supervisors to keep their jobs. Some customers had no electricity for most of the winter.
The US Agency for International Development contracted PA to sort out the UEDC's commercial and technical operations, bring its financial management, accounting, billing and collection systems up to scratch and help the Georgian government prepare the utility for privatisation.
In a very hands-on project, PA took control of the top three layers of management within the UEDC, drafting in five of its experienced consultants with unique knowledge in areas ranging from criminal justice and human trafficking to forensic auditing and engineering. The firm recruited another 30 managers locally. Using established management approaches with an understanding of Georgian culture and conditions, PA successfully introduced communal electricity metering (it is taboo in Georgia to steal from your neighbour). The firm replaced an extremely hierarchical management system with clear levels of responsibility and reporting. It also rebuilt the UEDC's inadequate IT systems. The workforce has been slimmed by a third, and in the past year alone, UEDC has initiated 30 prosecutions for corruption or theft and pursued more than 600 cases of electricity theft. Several former managers and employees have been jailed.
On average, 30% more electricity is being delivered to customers, and privatisation is a possibility at the end of this year. 'PA took on the challenge of reforming a company that many felt was impossible to turn around,' says Georgian minister for energy Alexander Khetaguri. 'We consider the reform of the UEDC to be one of the most, if not the most, important successes to date in our energy reform programme.'
PA Consulting battled corruption, improved performance and secured electricity supply for the Georgian people (an average 30% more electricity), proving that proper management can turn round any troubled organisation.
- Blend best practice with understanding of local cultures and conditions.
- Combat corruption by rotating staff regularly - dishonest employees prefer to stay in position to avoid detection.
- Transfer management responsibilities back to locals as soon as possible to improve the likelihood of sustained success once you have left.
THE PLATINUM AWARD winner was picked as the outstanding entry across all 18 categories in the MCA Management Awards 2006. The overall winner took the gold in the International section for its Georgian project (see below for Highly Commended and Shortlisted in this category).
INTERNATIONAL CATEGORY: HIGHLY COMMENDED
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