The leadership challenges faced by Alaska Natives who worked on implementing ANCSA were really quite unique. They had to start work in reverse, controlling corporations with operating mandates and large numbers of shareholders but no businesses to run. People were thrust into high level management positions with no prior experience and had to make decisions that had lasting effects on others. They had to deal with a wide variety of misconceptions about ANCSA that came from both shareholders and non-Natives.
Learning Objectives:
Upon the completion of Module 9 a student will be able to
- Describe the personal perspectives of at least two Alaska Natives regarding ANCSA.
- Identify at least two common misconceptions of ANCSA corporations.
- Contrast the differences and identify the similarities of at least two corporation leaders during the early implementation period.
- Identify at least one success and one failure in the early ANCSA implementation phase.
Module 9 reading assignment:
- Mitchell: “ANCSA,’ pp. 418-493.
Lecture Notes:
We know that the way the ANCSA corporations (ANCs) came into being was very different from how a mainstream corporation gets its start. Now we will consider shareholders and look at the differences between ANCSA shareholders and those of a corporation such as British Petroleum (BP) or Archer Daniels Midland (ADM). Shareholders of BP obtain shares in one of two ways; either they purchase them, or they receive them from someone else (usually a deceased family member) who purchased them. Either way they receive them as the result of a purchase.
The shares represent an interest in a company, and in return for their investment, shareholders receive dividends, usually on a quarterly or sometimes an annual basis. Depending on the class of shareholder it may or not be possible to vote on company decisions as a result of share-ownership; larger shareholders may be able to exercise a lot of influence by threatening to buy or sell shares at an inopportune time for the company.
The vast majority of shareholders own shares with the goal of accumulating wealth. A few people purchase shares in a company with the intent of then voting those shares and controlling the direction the company takes in doing business but these are a minority of shareholders; purchasing shares for any other reason than making money requires either a tremendous amount of disposable capitol, a very high level of commitment to a specific cause or goal, or both. Occasionally shares in a corporation may represent an interest in real estate, usually when a housing cooperative is involved, but when this happens the interest is in access to a building which is worth a certain amount of money.
It is highly unusual for shares to represent an ownership interest in vacant land which a majority of shareholders do not want to see developed in any way, or that is not suitable for any kind of economic development at all. When people want to protect vacant land from development they usually create some form of trust. The people who participate in these arrangements are trustees, and they don’t make money out of the deal. The average shareholder would consider purchase of this kind of land this to be a very poor investment indeed.
Most people who purchase shares in a corporation have both disposable income to invest, and a reasonable level of financial literacy. It is unusual to find people from low income and rural backgrounds having either the expertise or the money to personally invest in the stock market. Buying and selling shares requires that a person understand the stock-market and know how to operate in that kind of financial environment.
When people do purchase shares in a corporation they usually have no other connection with it unless it is their employer. The corporation has nothing to do with local government or community affairs; it may not even be located in the same state. The shareholder does not have any expectations of the corporation other than that it pay them the largest and most frequent dividend possible. The corporation probably does not own the land where the shareholder lives, and it has nothing to do with the day to day welfare of the shareholder.
When we look at ANCSA shareholders we find almost the complete opposite profile to that of the BP or ADM shareholder. ANCSA shareholders received their shares because of an Act of Congress. They all received the same number of shares, and none can sell them. With a very few exceptions ANCSA shareholders did not have disposable income to invest, and had no history of accumulating large amounts of wealth. Very few had the level of financial literacy one would find associated with the BP or ADM shareholders. ANCSA shares represent interest in corporations whose largest asset, in most cases, is the land where the shareholders live and work. When ANCSA shareholders received their stock the corporations were not operating successful businesses and some still do not today so it was years before corporations started paying out dividends and some village corporations have never done so.
Many shareholders view the land as very important for subsistence purposes and don’t want to see any form of development take place, but at the same time would like their corporations to pay them dividends. There is often a lack of understanding that the corporations may have to develop the land if larger dividends are expected. Where a main stream corporation would sell off land it didn’t need or couldn’t anticipate a profit generating use for (and would avoid acquiring such lands in the first place) very few ANCSA shareholders would countenance the selling of ANCSA lands. This places ANCSA corporation managers in an awkward position; some land they own is not really fit for any kind of development, and the kinds of development that could be profitable like mining and oil and gas extraction are often strongly opposed by shareholders.
While some mainstream shareholders may work for a corporation they hold shares in most do not. On the other hand many ANCSA shareholders have a high level of expectation that their corporations will provide them with employment opportunities. Some of the ANCs have done well in this area; others have decided that they must choose between creating shareholder jobs, or paying dividends that come from profit generating businesses that do not focus on shareholder hire, and chosen the later. This often results in complaints from shareholders who do not understand that the businesses that the corporation needs to invest in to make money for them may not also be able to hire them.
BP and ADM shareholders do not look to these corporations to provide any government or social services, but ANCSA shareholders often expect these kinds of services from the ANC and are disappointed and frustrated when they cannot obtain them. While this situation has improved over the years as the capabilities of tribes and non-profit consortiums have increased and better services are provided, initially this was an ongoing problem for managers whose shareholders wanted things the corporation was not equipped or allowed to do. ANCSA corporations were not intended to be governing entities but they received the assets needed by tribal governments to effectively serve their people.
Learning how to share responsibilities and assets so that all Alaska Natives benefit from ANCSA was a complicated process that is still ongoing. The Unit 9 speakers shed some light on just how difficult it was to get the corporations up and running, observe laws and regulations, please shareholders and still make money. Some initial failures were turned around into the successful businesses we see today and small successes grew into large ones. Leadership requirements changed overtime and Unit 9 examines these changes as well. Leaders in different regions experienced different kinds of challenges but a common theme throughout was the need to interact effectively with the mainstream market economy and the resulting financial ups and downs that often cannot be controlled locally.
Study Questions:
Unit 9 talks about misconceptions about ANCSA corporations that existed from the very beginning. Discuss misconceptions you may have had before starting this course and how they have (or have not) changed during your study of ANCSA so far.
Video & Audio for this unit are located here
Images:
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