GOCC means Government-owned and -controlled corporation. That ownership and/or control gives rise to proprietary rights, which include financial returns but, much more than these, the right to demand that the mandate for which the GOCC was created is fulfilled. The ownership rights are, as well, accompanied by ownership obligations.
For this reason, it is important to measure GOCC performance, which in turn, must be based on relevant and acceptable performance standards. These standards establish in concrete terms the work objectives that drive the whole GOCC organization to perform.
It is easy enough to appreciate the general concept for these premises, but to implement the concept poses challenges when we consider that GOCCs are so much of a diverse nature, whose different corporate mandates give divergent expectations of what is “good” or “bad” performance. Consider: What common performance standards should we apply to the Development Bank of the Philippines and Philippine Deposit Insurance Corp., or to Home Development Mutual Fund and Philippine Health Insurance? or to the Light Railway Transit Authority and the National Food Authority? Or the Development Academy of the Philippines and National Tobacco Administration?
The answer, of course, is that there can be common performance standards applicable to all, more easily achieved by using financial metrics that measure financial viability. In fact, Republic Act 10149 that reforms the GOCC sector says it all in its title: “An Act to Promote Financial Viability and Fiscal Discipline in Government-Owned or -Controlled Corporations…”
But differentiation in performance standards should be made based on the “essential nature and purpose” of the GOCC, if these standards are to be useful and meaningful in application. So the Governance Commission for Government-Owned or -Controlled Corps. (GCG) which is the main implementor of RA 10149, has very perceptively classified GOCCs into eight major sectors:
Government Financial Institutions
Banking (7)
NonBanking (16)
Social Security Institutions (6)
Trade, Area Development and Tourism
Trade (4)
Area Development (9)
Tourism (2)
III. Educational and Cultural Sector
Educational (2)
Cultural (2)
Gaming Sector (2)
Energy and Materials Sector
Energy (7)
Materials (3)
Agriculture, Fisheries and Food Sector
Agriculture and Fisheries (7)
Food (2)
VII. Utilities and Communications Sector
Utilities (14)
Communications (4)
VIII. Realty Holding Companies (5)
A second set of performance standards common and applicable to a sector or even a subsector could be established, and that would be useful. But eventually, the most relevant and useful performance standards are those that are company-specific, developed according to the peculiarities of the GOCC’s specific mandate.
One major reform that the GCG has accomplished is to establish a system by which each GOCC enters into a negotiated Performance Agreement with the GCG, by which the GOCC imposes performance targets for itself, including a Performance Scorecard to be used.
This Performance Agreement is a serious document signed by all the GOCC’s members of the Board of Directors and the GCG Commission. The agreement documents the performance commitments of the GOCC, and full compliance is the basis for Performance-Based Bonuses or Performance-Based Incentives. Or continuance in office.
That’s commendable corporate discipline.