I recently completed a study on state enterprises in Latin America, PEMEX in Mexico being a large example, from a investment point view. Specifically, I asked whether or not these firms would be good investments if they are privatized. As a second issue, I looked at the benefits of doing business with these firms. While many of my conclusions were obvious and known to most of you who successfully work with these firms, my sources pointed out one thing which had not occurred to me: the importance of employee attitudes.
The post office, not a firm. Most employees of these companies view themselves as state workers. This is not to say that they are lazy or inefficient--not at all. The problem is their mental framework and the pressure points they respond to. For example, they spend more time worrying about political trends in the ruling party because this drives much of what they do. Middle and senior managers are also following the same political hot button issues, and are frequently respected by rank and file employees for their political connections and not their ability to deliver results (and consequently more money). The market indicators we are used to following rarely grab their attention.
Conclusion: I finished this study thinking that firms who lack this experience with parastatals should tread cautiously when considering business in this area. My sources told me these firms were surprised, time and again, at the mentality they faced and were not well-equipped to maintain a long-term relationship. Stick to what you know.
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