Political activism and corporate management require two different sets of skills. Some of the Alaska Native leaders involved in the ANCSA negotiation phase then had to change hats and fill the newly created management and directorship positions. This was not an easy task and some moved on to other tasks leaving room for others to take up the reins. Several of those leaders who had worked on getting ANCSA through Congress stayed involved, moving into boardrooms and offices and learning the intricacies of corporate finance, business management and investment. Younger Alaska Natives who had been observers during the settlement negotiations now came forward to work for the corporations and make them successful bringing with them much needed skills.
Learning Objectives:
Upon the completion of Module 8 a student will be able to:
- Identify at least three Alaska Native leaders that emerged soon after the passage of ANCSA and were instrumental in forming corporations.
- Recognize at least two general differences between the new corporate Native leaders and those that pursued the land claims settlement.
- Describe at least two examples of challenges new corporation managers faced in the 1970s.
- Compare the roles of management and boards of directors in ANCSA corporations.
Reading assignment:
- Arnold: Chapter 21, “Land and Money.’
- Arnold: Chapter 22, “The corporation as vehicle.’
- Arnold: Chapter 23, “Alaska Native Corporations.’
- On-line at: https://www.alaskool.org/projects/ancsa/landclaims/LandClaimsTOC.htm
- Gallagher: “The New Harpoon: An Essay’ by Charles Edwardsen, Jr., pp. 251-257
- “Change,’ by William L. Hensley, pp. 258-259
- “Epilogue,’ pp. 259-260.
Lecture Notes:
To understand the issues that Alaska Natives faced in establishing business corporations under ANCSA it is necessary to know a little about corporations themselves and how they usually come into being. Mainstream businesses are generally incorporated when one or more things happen. Perhaps the business started as a sole proprietorship (one person owns the business) and has been very successful. The owner wants to expand and take on partners, or to allow others to invest in the business. Sole proprietorships are not a good way to own a large business with several partners; the owner takes on personal responsibility for all the liabilities attached to the business and can also be sued by the partners if the business loses money. When corporations fail investors lose their money, and employees lose jobs but no-one is individually responsible for all the debts of the corporation. Incorporating the business removes personal liability from the owners because a corporation is viewed as a “person’ under corporate law. It also allows the business to function more smoothly and makes it easier for it to work with other businesses because some form of incorporation is the norm for larger businesses.
Sometimes a group of people will come together to form a business; they have a good idea they think will work, experience in the field, probably a location and some equipment, a strong business plan and investors, and a customer base lined up. Again the best form for this business to take will be some form of corporation; if they form a general partnership each partner will be liable for all the debts of the business. Perhaps an existing business wants to buy one or more other existing businesses; for all the reasons listed already the best route for the owner or owners of the first business to take is to incorporate.
One thing that all these examples hold in common is existing business infrastructure. They have some or all of the following in place:
- An existing business ready for expansion or merger
- A business location
- A market for their product or services
- Experienced management and employees
- Equipment and furnishings
- Background in the area they plan to do business
Businesses that do not incorporate are generally small, one owner or family owned operations and people who are just starting out in a small business of their own. Even these people are advised to have the attributes listed above although many try to start out without them. Corporations are not started by people with no business experience and no existing business to incorporate… but this is exactly what ANCSA required of Alaska Natives!
ANCSA essentially gave money to the corporations and told people with no experience and no existing markets to go out and start businesses. In addition it placed some unusual restrictions on how these businesses could be run that we will look at in later units. It is not surprising that some of the village corporations failed, and the regional corporations struggled for a number of years while people tried to learn how to run them effectively. The early leaders learned politics and activism in a hurry and some were extremely good in that field, but this did automatically translate into business acumen. In the mainstream business world people don’t walk into the doorways of successful enterprises and take over the CEO’s position with no prior business experience, but this was the burden placed on Alaska Native leaders. Somebody had to run the new corporations and do so in the best interest of their Native shareholders.
Unit 8 introduces some of the people who moved into the new positions of business leadership created within the ANCSA corporations and discusses the ways in which management skills were developed.
Study Questions:
Unit 8 finds that there was a lot of confusion about the roles and duties of corporation managers and board members. Put yourself in the position of either a new board member or manager (with no prior experience) and discuss how you might have felt about trying to sort out your duties and perform them effectively.
Video & Audio files for this unit are located here
Images:
Please click on a thumbnail to start a slide show.
