Public enterprises play an important role in the development of a nation. Where the interest is not just commercial, they have been accepted as viable alternatives. They evolved in an environment protected by the State and developed into loss-making organisations. In a changing political and economic environment, the role of public enterprises is now being questioned. With the policies tilting in favour of privatisation, the focus is now on public enterprise management. This book is an outcome of one such programme organised by Indian Institute of Management, Ahmedabad and the Management Development Programme of Commonwealth Secretariat, London.
Organisational change for improvement and adaptation is driven by change in the top and middle level management and the work environment. Since most of the public enterprises operate in a State-regulated non-competitive environment, there is no catalyst to initiate change. In such a situation, the top and middle level management can bring about a change. The top-level management consists of professional managers, government administrators and political executives. This composition has a strong bearing on the decision process which is quite different from that in the private sector. A study conducted amongst public enterprises has highlighted certain areas of concern. However, the reasons for non-performance to effect change have not been specifically addressed by the authors.
Public enterprises are often confronted with a dilemma with respect to organisational objectives and the government policies. The authors have emphasised the need to understand both these aspects then evolve strategies to achieve financial and operational autonomy. Profit-making enterprises are better placed compared with the socially-oriented organisations as far as autonomy is concerned.
Following the principle of "Thriving on Chaos" propagated by Tom Peters, CMC is one organisation which nurtures innovative ideas and encourages initiatives in an open work environment. It has relegated financial function to a lower level to take decisions in the best interest of organisational goals. Thus, as a successful public enterprise, CMC is unique in many ways.
Anand is yet another case of innovative management. Its management is sensitive to the needs of farmers. It is not only a financial success but has also fostered a complete socio-economic change that has made it one of its kind amongst public enterprises. The Anand experience shows that the government's objective of social development can be best achieved if the organisation is less governed by the government.
Management of public enterprises involves an endeavor to uphold public interest while maintaining efficiency. Although the task is difficult, innovative approaches by CEOs have shown positive results. Therefore, the selection of a CEO is a very important decision. Though Malta Dry-docks Corporation is still not out of crisis, the turnaround is attributed to the leadership of its CEO. Carpets International Malayasia Berhad made a comeback from a stage where it had no money to even pay salaries. A good marketing strategy and sincere efforts put in by the CEO restored faith amongst financiers. Although the performance of the organisation centered around the CEO, efforts are on to institutionalise the improvement process.
Agricultural Finance Corporation of Zimbabwe too reorganised itself to decentralise and reach out to the people. It reoriented its workforce towards customers through training. The organisation now contributes significantly to nation building.
With the development of a country, privatisation is bound to take place. While reasons for privatisation cannot be ignored, it is necessary to look into the results. The authors argue that "efficiency has nothing to do with the sector. It has to do with competition". In India, there are many examples to show that the private sector took advantage of the monopoly situation. Therefore, the authors have recommended an appropriate privatisation strategy and an institutional framework to ensure that public interest is not overlooked in the long run. The books also discusses the role of performance contracts, the evaluation system, including MoUs.
While stressing the need for training, the book suggests that it would be useful to provide exposure to CMDs, who generally consider training necessary for lower levels only. It emphasises the need to focus on financial strategies, human resource management, marketing strategies, management information system, corporate planning and cost-effectiveness. It gives a good exposure to various experiences and the case studies form which there is a lot to learn.
Strategic Management of Public Enterprises S Ramnarayan & I M Pandey Vikas Publishing House Rs 495/326 pages
