LITERATURE-LIGHT AND DELIGHT 70. ENLIGHTENED MANAGEMENT

LITERATURE-LIGHT AND DELIGHT

70. ENLIGHTENED MANAGEMENT

Public Sector , as a concept, fills a vital gap in our system. There are areas of economic activity which the private sector will simply not enter- as we see even now. No private sector unit will enter the area of public utilities. It is easy to talk of privatisation of Railways, but will the private sector operate the non-remunerative lines? We have seen what they could do in air travel! 

But the public sector proves unmanageable, not just unprofitable. In areas where both operate, the public sector falters, while the private sector flourishes- as in the telecom. Just today, (23 Jan 2015) we read that BSNL has incurred losses of Rs.7000 cr. If some unit had to go because of losses, it should have been BSNL, not HMT watches! Masani used to say that the Public sector looks a fine horse in the stable but proves to to be an arrant jade on the journey.

Masani has been one of my idols, ever since I read his old book "Our India", his other speeches  and writings. But here he is not entirely correct. The horse is still fine, but the jockey is unfit. I have worked in the public sector and know that the jockeys of PSUs are useless, as a class. The system is such that only the useless can survive. Or, there is personal profit in public misery!

Human Resource: Development or Destruction ?

Management is difficult in PSUs. In the govt the question does not arise at all- the concept does not exist. The private sector can get ruthless- they cannot survive without profit- real or engineered and no one can  run them if they are not 'efficient'- however defined.

Efficiency, private style.

Just one small example will do. I knew a petrol dealer who were also dealers for the Hindustan-J6 trucks. I One day, as I sat talking to him, a customer came, complaining about a truck he had purchased. He said that the chassis had bent! It seems this was a regular complaint about those trucks. The manager was concerned, and asked the assistant to bring the file relating to that sale. The boy went to the store and returned with the file , taking about 15 minutes. After the client left, he called the boy again and told him bluntly: 'You had to just bring the file, and you took 15 minutes and made the customer wait! We can't afford to keep an employee like you.You may collect your dues in the evening and need not come to work from tomorrow!' I do not know how the boy took it, but I felt bad, as I was handling personnel matters then in my own organisation. I told the manager that he was harsh; even  water gave 3 chances to a drowning person! He was a boy and would improve with time. He at least deserved a chance.

 But the manager would not hear me. He said I was not running a business; my job did not involve customers on whose patronage my job or income depended. So I did not know the realities of the harsh business world. He could go on giving chances to the boy, but who would give the business a chance if such delays occurred even over simple matters? He was not running a charity business. Of course I could see that the manager himself was vexed: probably, he had had a complaint too many in the matter, the manufacturers had not been helpful in solving the problem, and he took out his frustration and helplessness on that hapless and luckless boy that day. Incidentally, the J6 trucks disappeared from the market soon!

This may be a small example, though extreme ,of how the idea of efficiency is understood and implemented in the private sector in the junior echelons. The idea of efficiency  does not simply exist in the vocabulary of bureaucracy. Bureaucracy has administration, not management. Management means using resources to achieve results, always improving the through-put. Bureaucracy has no constraint of resources, nor concern for goals,or results.

PSUs are caught in between. They often have 'mandates' as specified in some legislation. But they do not have means of fulfilment. They do not have freedom or even manoeuvrability in respect of the four or five Ms of management- men, material, money, minutes, methods,etc. Even if someone had some idea of efficiency, it could not be implemented. No inefficient employee could be touched, leave alone summarily dismissed, in the above manner.

Whatever may be the demerits of the instance shown above, and its harshness and may be unfairness in respect of the individual, it would have had a salutary impact on the establishment- more effective than a 100 sermons and directives. In that sense, it is not bad at all!

Fish rots from the mouth!

It is said that the fish rots from the mouth. The problem with PSUs often starts with, lies at and flourishes at the top-very top. The appointment is political; reward for loyalty, or licence to get something done. He is never independent- he has to defer to the ministry. He cannot choose his team, or make changes. The hierarchical structure is so complicated that wheels run within wheels, loyalties exist at different levels and to different authorities. The organisation is no one's baby. 

Some times, the top is fine and fit. But the govt. will not allow him to function.I will give a concrete example. I withhold names to protect the privacy of the individuals.

In the late 60s and early 70s,  a large PSU was facing great trouble from the militant Naxalites-influenced CPM controlled trade union in Calcutta. Every day they were demonstrating in front of the building, preventing the loyalist workers from entering, and even manhandling them. Once, they entered the telephone operators' room and stripped the woman naked, because she had dared to defy the dharna and work. Such things will not be openly reported. The executive managing the unit was a strict disciplinarian and a good man. He took up the matter with the higher-ups and said the situation was getting nasty and out of control, and something had to be done. The top management gave him a "blank cheque" to go ahead and take all necessary steps. He approached the Calcutta High Court, and obtained an injunction order, restraining about 1500 employees, listing their names, from demonstrating within 50 metres from the main entrance. This was such a huge achievement  in those days and circumstances. The CPM did not take it lying down. They approached the PM- Indira Gandhi. Indira Gandhi had split the Congress then, and needed support to strengthen her position. She summarily called the Top man of the organisation and asked him to get the case withdrawn! The order was conveyed to the Executive at Calcutta. He refused to withdraw the petition, saying that he had signed the affidavit, he had sworn it as true, and it was true and in all conscience , he could not withdraw his own petition. He was told to either withdraw the petition, or he would be sacked. He stood his ground, and was shown the door. Those were the days, when there was not even pension in the organisation! You can imagine the man's stuff and his mettle, but also his plight! And you can see the hollowness of the Top Management and the political leadership! It is an irony that the same Indira Gandhi imposed Emergency and hounded the leftist leaders, many of whom went underground. If the PSUs have to work under such circumstances, how many top executives will have the courage or conviction to act independently? This is how true morale has been broken in the entire PSU set up.

Bureaucracy is not management

The bureaucracy runs on firm lines. They have power at every level. A deputy secretary can decide the fate of a bank chairman. A Govt nominee can veto the majority directors. He would not only ride rough shod, he would override the entire board. I know instances when the govt nominated director, a deputy secretary,who could not attend the board meeting, called the chairman on phone during the meeting and asked him to clear a particular large loan proposal. It was done, but the loan went bad. It was the chairman who was hanged (of course there were other things too) The deputy secretary got promoted as Jt.secretary! The chairman did not even have the courage to disclose the facts!

 The rules governing the bureaucracy are fixed and normally no one is superseded. No one's promotion is held up for want of efficiency or  mistakes or even misdeeds.. Usually, bureaucrats subserve the political class and do not defy orders. (Yes,Minister!) But I know two cases of IAS officers who took premature retirement, rather than obey the unjust dictates of the CM in a State. Such cases are rare, and they face real hardship later, as no corporates would also like to take them, since they need govt patronage. If possible, they would try to get to the Centre or some other assignment. 

In the PSUs, all these conditions are absent. The cadres- other than the workmen category protected by the trade unions- are usually demoralised. Promotion is based on seniority cum performance. A performance appraisal system exists but it is neither scientific nor fair.When tasks are not objectively defined,parameters of performance not laid down, how can performance be assessed?  And it is not all. A grapewine operates , officials often spy and report on each other and impressions are recorded as appraisal.Facts are omitted, and things wrongly recorded or interpreted. Many actual cases could be cited.

  Most officers at all levels feel dejected , dissatisfied, frustrated in the PSUs. The clerical cadre alone is happy since they are protected by the trade unions, and they do not seek promotion.You can neither threaten them, nor motivate them: neither carrot,nor stick will work.

The new IT revolution has of course rendered  all such classifications meaningless. It is nice to read theories in management textbooks; they cover private  corporations- never the PSU. Let the famed private sector legends come to the PSU and turn one around! One may wake up from theoretical dreams and see reality for what it is.

Parkinson, Bagehot.

C.Northcote Parkinson.1961
By Rossem.Win van/Anefo
CC BY-SA 3.0 creativecommons via wikimedia commons.

Rajaji brought Northcote Parkinson to the attention of students of our public affairs in 59 0r 60 . Parkinson had been a student of history and political science and had studied the British bureaucracy- the mother of all bureaucracies- extensively and had understood historical processes well. He observed how the British Colonial Office had expanded and assumed its largest size, when the colonies had declined! In his most famous book 'Parkinson's Law', or The Pursuit of Progress, he proposed his most famous dictum:

Work expands so as  to fill the time available for its completion ie work is elastic in its demands on time. Officials make work for each other.

There is no other law on earth which explains what happens in the public sector and bureaucracies all over the world. Parkinson estimated that bureaucracy expanded by 5-7% annually, irrespective of the state of work.Even Soviet President Mikhail Gorbachev acknowledged in 1986 that 'Parkinson's Law works everywhere.'  

There are other ancillary laws such as:

• Expenditure rises to meet the income available.
• Expansion means complexity; and complexity,decay
• If there is a chance to delay a decision, it will be delayed by the good bureaucracy.
• The number of people in a working group tends to increase, regardless of the amount or state of work.

The law about public expenditure alone is somewhat debatable now. Govts do not have income and then plan for expenditure. Govt. first determines the expenditure: oil, defence, development, subsidies, doles and sops to the electorate and then proceeds to meet it somehow: taxation, debt, deficit financing, some other manipulation.

But this is true in the case of individuals and private sector. If one gets a promotion, or a bonus, or a raise, there surely is some expenditure waiting to catch up: bigger accommodation, a new car, new gadget, holiday, foreign travel. Not many think of saving.

The corporates will inflate the expenditure to reduce tax liability, as income increases. But in many cases income itself is inflated to keep the shareholders happy. Reality catches up after a gap of some years, when the old executives have left, after enjoying their inflated remuneration on the basis of the concocted income!

One way to avoid or delay taking an important decision is to appoint committees, which was also noted by Parkinson in a chapter under " comitology".
This insight had been gleaned earlier by Walter Bagehot, the 19th century British political thinker and famed editor of the London "Economist" when he said:

When something has to be done, and you do not want it done, then appoint a committee.

We have seen in India how many committees and commissions were appointed on many subjects and how it all came to mere sound and fury signifying nothing. 

Walter Bagehot.
Public domain.


But people in India have another reason to remember Walter Bagehot- though not feel happy about it! The profligate Nehruvian dispensation survived on the Treasury Bills and their clone, the Ad-hoc Treasury Bills , quietly dipping their hands into the deep pockets of the RBI to sustain their mindless ways! And Bagehot had been the author of the Treasury Bill scheme in the Victorian era! He meant it to help the Chancellor  tide over the temporary mismatch in revenue-expenditure flow,but would have turned in his grave to notice how Indians had misused it! Who said Indians cannot be innovative? They engineer their own misery quite well!

Autonomy/ Discretion 

Public sector executives often complain about lack of autonomy. I have often felt that this was silly. The legislation creating the PSU itself often spells out the mandate, mission, objectives, etc . The chairman and board are appointed by the govt, but they are not held on a tight leash all the time. After all, even in the private sector, the promoters or majority shareholders would like to get things done their way, and in that sense no CEO or board is totally autonomous. 

In the PSU, autonomy has to be taken ie exercised, not given on a plate. No bureaucrat will willingly give up his chance to control and manipulate PSUs, but it is entirely up to the PSU executives to stand up to this and assert themselves. That they do not do so is because they are eager for the loaves and fishes , even after retirement. What can you expect in a country where retired bureaucrats become Governors of States, retired judges get to head committees or commissions, now even Governorship! Even top journalists wait for some official favour!

I have asked some executives what they meant by autonomy, and what they wanted it for. Not one of them could give a clear answer. I was often reminded of the proverb about the bad workman quarrelling with his tools. Or the more 'native and raw' Tamil proverb about the bad dancer complaining about the inadequacy of the floorspace! P.V. Narasimha Rao as P.M provided the best example of a model  chief executive in recent years. Without a majority in parliament, without a base in his own state, not belonging to one of the powerful communities with fancy labels and claims, not endowed with charisma, with no coterie of his own,  with enemies and detractors all around, with the powerful dynasty hanging over his head like the Sword of Damocles, he managed a full term, running the country and rescuing it from the economic morass. Yet people here talk of Reaganomics or Thatcherism or even, shamelessly, Manmohanomics- though the  good for nothing fellow did nothing, literally and figuratively!

Since I was a student of economics, and used to follow developments from  theoretical interest, I found that Dr.Rangarajan, as Governor of RBI articulated the concept of autonomy for the RBI quite well- sensibly and seriously. He used to talk of de facto and de jure autonomies, but in the end clarified that for RBI, autonomy meant the freedom to pursue monetary policy. He was , I felt, crying for the moon, and talking without a sense of history! Freedom for RBI in matters of monetary policy meant that the govt ( politicians and bureaucrats) should commit itself to fiscal discipline! Will any popular govt, in a country like India, and its bulging bureaucracy do that? Will the bureaucracy or political class commit hara kiri? The last Governor of RBI- its greatest till date- to assert his autonomy- was Sir Benegal Rama Rau in the late 50s. And that against giants like Nehru and TTK! But he had to quit! The other governors have been pigmies in comparison, men of straw! The only exception is S.Venkitaramanan, who is, alas, unrecognised and unsung! 

On the whole, there are enough powers already, and if the executives mean business, and not mind their post-retirement placement and bonanza, they can do things, if they know! A Seshan showed how! Only a blank-headed bureaucrat or executive will blame the environment or lack of autonomy.

 Peter Drucker!

When we study world history, we are struck by a remarkable fact: three communities have shaped the modern world: a tiny bunch of Greek Philosophers and writers, rediscovered after a thousand years of neglect; Great Britain, a small island, ridiculed by Napoleon as a 'nation of shop keepers'; a handful of Jews- Moses, Jesus, Marx, Freud, Einstein! Most people are not aware of Peter Drucker, another remarkable Jew. In the end, he may be the one we have to be most thankful for!

Picture from:http://knowlegdecompass.files
wordpress.com/2010

People usually take Drucker as a management guru- but the word guru has lost all meaning-like the word God- and is just junk. Most management experts and leaders have only invented some formula or catch phrases or slogans. They were bandied about for some time, the darling of the business schools, and disappeared without a trace, often disproved, or disapproved, discredited.

Drucker was a thinker. The range and variety of his background interests , exposure  and experience are stunning. He contributed to management theory and Philosophy- in fact the modern 'science of management ' is his sole creation. Others had written about practices- but he explained the philosophy. Most people have no idea that most of the things taken as the fundamental management concepts today are his contribution. Just consider some of them:

• he invented the concept of  MBO-management by objectives
• he first laid stress on corporation as the form of modern business enterprise.
•  We have become a society of institutions
• he said that a business could survive only by contributing to society
• he said that profit was not the goal of the organisation, but a condition which enabled it to achieve the goal
• he predicted the decline of the "blue collar" worker
• he invented the concept of the "knowledge worker" (1959)
• he predicted that information society would be the new management frontier
• he talked about the "learning organisation"
• he predicted the trend of privatisation
• he stressed the importance of marketing
• he said customer was the foundation of a business and kept it in existence
• he predicted the rise of Japan as the new economic power
• he stressed the importance of life-long learning in the new business environment
• he stressed the importance of innovation and enterprise, echoing the thought of his illustrious Austrian savant-Joseph Schumpeter
• he predicted the practice of 'outsourcing'
• he spoke about planned abandonment of old ideas, methods, practices - in a world which was wedded to old idols, ideas
• management is responsibility 

He was the first great thinker from the business world to question the wisdom of economists and the status of economics as a science! He distrusted the claims of macroeconomics and pointed out that economists generally failed to explain satisfactorily what happened in the economy!

He was a thinker who eschewed the 'tunnel vision' of narrow specialists. He studied the commercial business, govt-bureaucratic and the non-profit forms of enterprise and came out with new insights, and guides for practical action. I will just give one example of particular interest to Indians.

The civil service in India of the British times, the ICS was reputed as the 'steel frame'. ( It is a different matter that  steel is thoughtless stuff). Some of this later rubbed of on the IAS-though we know them to be no more than 'tin horns'. But how did the civil service acquire such a reputation in the first place?

In chapter 32 of his magnum opus, "Management-Tasks,Responsibilities,Practices", Drucker provides some remarkable insights. It requires quoting in extenso, as I am incompetent to summarise.

Politically,the history of the British rule of India is a history of muddle,indecision,lack of direction and in the last analysis,failure. What kept the British in control and power for two hundred years was, in part, India's weakness and disunity.But above all, the British stayed in power because of a supreme administrative accomplishment: the Indian Civil Service. 

In its greatest period, the second half of the nineteenth century, it never numbered more than a thousand men. Most were very young,mere lads in their early twenties,.......

          Most of these young men of the alien race who administered the huge subcontinent were stationed in total isolation in small villages or on dusty cross-roads in which they did not see for months on end anyone who spoke their language and shared their concerns. Only a few survived long enough to retire, with a modest pension....

These young men who administered  British India were rather dull and uninteresting. After a short apprenticeship they were put into an assignment of their own to sink or swim. These were younger sons of poor country parsons, with no prospects at home and little standing in English society. Their pay was low;and such opportunities for loot or gain as their predecessors had enjoyed in the swashbuckling days of the East India Company a hundred years earlier had, by 1860,been completely eliminated by both law and custom.

These untrained ,not very bright, and totally inexperienced youngsters ran districts comparable in size and population to small European countries. And they ran them practically all by themselves with a minimum of direction and supervision from the top. Some, of course, became casualties and broke under the strain, falling victim to alcohol,to native women, or -the greatest danger of them all- sloth. But most of them did what they were expected to do, and did it reasonably well. They gave India, for the first time in its long and tragic history, peace, a measure of freedom from famine, and a little security of life,worship and property. They administered justice impartially, and as far as they themselves were concerned, honestly and without corruption. They collected taxes, by and large,impartially and equitably. They did not make policy; and in the end they foundered because they had none. But they administered and administered well.

 This remarkable administrative achievement,the achievement of a middle management which, for two hundred long years, could in large measure offset the top-management failure of the system - or rather , the fact that there was no top management- rested on exceedingly simple foundations.

Drucker then goes on to indicate the factors responsible for the success, and the lessons it holds for job-design even today.

But read the above long passage closely- almost every sentence requires annotation, to explain the context and significance. But over all, we can see why the system succeeded then and how the much pampered and self-aggrandising IAS outfit is so supremely incompetent, corrupt and bungling. I really call it the INDIAN ATROCITIES SERVICE. Almost all the failures of modern India rest on their shoulders. The politicians may be looters, but the bureaucrats are effective planners, partners, participants , executors and beneficiaries. But this is an aside.

The main point is that Drucker has studied all aspects of management of all types of enterprises and made fundamental contribution to our knowledge base and fund of wisdom. He has enriched society, and endowed  it with fountains of perennial inspiration.

I regard him as a modern Rishi, on par with Einstein. What Einstein said has gone over the head of most of humanity- including the so called science fraternity. They pay him homage, but do not reflect on the implications of what he said, and act on it. Drucker has been even less lucky. Most people- even so called management people- do not know enough about Drucker to realise his greatness. I often feel that he has cast pearls before swine.

I have always said that literature need not be confined to or confused with what the so called academics say- fiction, prose,etc. Great writing, graceful writing, which elevates our thinking and contributes to our welfare is literature. The writings of Peter Drucker constitute a special genre of supreme literature. No one who reads them will fail to aspire higher and achieve greater heights in whatever field he is engaged. Is not Drucker then a true teacher, a true educator, a civilising influence? Whence comes another?

me

mere lads