The final frontier - once more

Committee on civil service reforms must design a machinery in tune with the times

Last week, I saw a news item referring to a committee that had been set up by the Government of India to go into the question of civil service reform.

Over three years ago (July 24, 2000) I wrote a column on exactly the same issue, in response to a news item of similar nature. I periodically heard from people I talked to that the process was still on, so I am not sure what to make of this latest announcement "" is it a reinforcement of the ongoing process or is it something new entirely?

Even in the last four years, the compulsions for change and the social costs of not doing so have become hugely magnified. In 2000, I had argued that the entire reform process had put enormous pressure on the private sector to restructure itself, often at great cost.

This has not spared the public sector; banks went and reduced their workforces by over 10 per cent through voluntary retirement schemes a couple of years ago. The process has now become entrenched; continuous improvements in productivity and efficiency are essential to survival.

For employees right down the line, direct accountability for performance has cut down margins for error, incompetence or indecisiveness to the barest minimum. Rewards for success have risen dramatically, of course, but so have penalties for non-delivery.

To the extent that the gains in competitiveness that have resulted from this restructuring are being offset by inefficiency and even non-delivery of various public services, the private sector has an absolute right to insist on change.

And not only in principle; having been through its own upheaval, there are valuable lessons to be learnt from its experience about organisational structure, performance benchmarks and incentives and disincentives.

One can only hope that the process of civil service reform is wide and deep enough in scope to bring it into as close an alignment as possible with its 'consumers' in the private sector.

But, beyond the private-public balance argument, there are internal compulsions for reforms as well, which may well render this the make-or-break opportunity. The government's commitments under the Fiscal Responsibility and Budget Management Act require it to eliminate its revenue deficit in five years.

A significant implication of this is that the productivity of the public service delivery mechanism must improve by a huge margin; the government must cater to a growing number of claimants and users without being able to put more resources into play. Either the system has to change to get more bang for the buck, or the government has to declare its inability to deliver.

There are three objectives, which, I think, are critical to the reform strategy. They are quite generic in nature in the sense that they are inherent in all attempts at organisational restructuring. However, to translate them into specific contexts is a challenge, and this is what the committee or whatever process it sets in motion is going to have to deal with.

The first is the objective of decentralisation. One of the most significant changes in corporate structures over the last few years has been the elimination of various levels of middle management, whose function, in broad terms, was to maintain the information flows between the strategic level of management and the implementers, or business units.

As people who performed this intermediary function leave through scheduled or early retirement, the organisation simply accommodates their absence by more direct communication between the two levels.

This is, of course, facilitated by IT, but IT alone is not enough; there has to be a change in culture, which enables the two extreme ends of the hierarchy to talk directly to each other.

This achieves at least two things. It gives the strategists a far more direct, and therefore clearer, view of what is happening at the point of delivery. And, it empowers the deliverers, presumably giving them a lot more discretion to optimise their tactical and operational decisions in response to local conditions.

At this point, the balance of manpower appears to be overwhelmingly concentrated in the 'intermediary' function relative to the 'strategist-deliverer'. Tilting the balance in favour of the latter is absolutely essential from the perspective of improving efficiency.

The second objective is what I would call career path flexibility. As things stand, upward mobility is defined fairly rigidly. People move to the higher echelons of either the central or state governments, where their primary responsibility is either strategic or intermediary.

Dealing with the consumer is typically for the lower levels of the hierarchy. This is particularly problematic at the level of local government.

Except for the largest metros (and even here, the numbers are small) upwardly mobile managers spend short tenures early in their careers before heading on to greener pastures. City management is a specialised job, with lots of potential for learning and growing. Instead of being one stop in a career, interested and capable people should be allowed to make their entire careers in the discipline.

The broader point is that career paths should change from being uni-dimensional to accommodating the complexity of functions inherent in a multi-tiered system of government. All levels of government should have the flexibility to designate and pay people at levels appropriate to their responsibilities and performance.

Restrictions imposed from above in a centralised system are not consistent with the increasing emphasis on delivery and sensitivity to local conditions.

The third objective is to maximise the availability of skills by facilitating open entry, and by corollary, exit. The government has been open to lateral entry in specialist positions, but it has not taken full advantage of the potential that such a system offers.

To make the most of outside expertise, people have to come and go. Giving someone permanent status freezes the expertise he brings in to a particular context.

In a rapidly changing environment, the need to jettison obsolete skills and induct relevant ones is critical to the sustaining the quality and efficiency of services. A proactive system of contractual employment is necessary to achieve this balance.

To work, it must differentiate between 'permanent' and contractual employees in terms of compensation, the latter being paid amounts somewhat more in tune with the market conditions for their skills.

There are several issues relating to recruitment, training and so on, which the committee certainly needs to go into. The important thing is that it should start with a clean slate and design a government machinery which is in tune with the times. Without having this to work towards, the temptation to engage in ineffective tinkering is all too great.

The writer is chief economist, Crisil. The views expressed are personal