Management
1. Selection of managers: Good management is critical to project success. Managers should be selected transparently (possibly with IFC help). The following attributes are important: relevant experience, flexibility, knowledge of the region, willingness to train staff.
2. Incentives: Management commitment to operation success requires appropriate incentives. These should be linked to company performance.
3. Local vs. foreign management: Although sometimes appropriate, foreign managers may not fully understand local conditions and may lack flexibility. It may be better to train local managers without prior sector knowledge than to have foreign managers unfamiliar with local conditions.
4. Sponsor/management relationship: Company management should be independent of sponsors. This applies both to project execution and company operations. For the construction phase, intragroup project management can result in the lack of an arm's length arrangements and incentives. In such circumstances, a lender's supervisor can help ensure execution per covenanted undertakings and help protect IFC's interest.
5. Management information system: Before disbursing, IFC should ensure that the borrower has an adequate management information system in place and is able to comply with IFC reporting requirements.
6. Long-term strategy: For existing companies, management should have a long-term strategy that goes beyond concepts into the details of implementing these concepts.
7. Management transition: Caution is needed when there will clearly be transition in a family-managed organization during the early stages of a project's life. Transition can result in a lack of continuity and diversion from our operation's objectives.
8. Simple objectives: It is often preferable to start with simple and focused business plans, particularly with fledgling managements.
The above lessons are based on 118 lessons from past IFC investments.
Last updated September 1998.
