Questionnaire

Questionnaire*

Reform of Public Sector Undertakings (PSUs) in India Today: A Study based on a Survey of Top and Middle Level PSU Managers for middle and top level managers of PSUs in India The study is being carried out by Profs. Sebastian Morris and SK Barua of the Indian Institute of Management, Ahmedabad and is supported by the Shastri Indo-Canadian Institute, New Delhi

Please do read the instructions carefully and after filling in the schedule kindly mail to

Prof. Sebastian Morris Indian Institute of Management, Ahmedabad Vastrapur AHMEDABAD 380015

*

Ph: 079-6306896 (FAX) 079-6307241 (PBX) 079-6306380 (D) 079-6308093 (R) email: [email protected]

website of IIMA’s SOE REFORM STUDY http://www.iimahd.ernet.in/psuindia You may download this schedule from http://www.iimahd.ernet.in/psuindia/shastri/questionnaire.pdf

Survey of PSU Managers, December 2000

1

INSTRUCTIONS Dear Manager, Since the ‘liberalisation’ of the economy, the environment of PSUs has undergone substantial change. Given the stated objectives of government to divest and privatise, entry of private firms into markets earlier reserved for public sector, many PSUs would have responded to these changes in some manner. Currently the government is pursuing disinvestment, which is driven more by budgetary considerations. It is not yet clear as to how strong is the intention of the government to improve the task orientation and performance of PSUs through increased autonomy to the managers. This study is focussed on managers of PSUs, with a view to understand how they have understood, and interpreted the changes. Managers’ views and diagnoses as regards the public sector situation and the remedies have not yet been a focus of serious analyses. As a result, little is known about this aspect in a formal and statistically reliable manner. As academics in the field of management we do think that your views and opinions are most important in the construction of an overall strategy of reform and change. We are therefore concerned with your views, feelings and opinions, however different they may be from conventional wisdom or from those of your organisation or government. The study is motivated by the belief that true change can occur only when a critical mass of top and middle level managers internalise a particular form of change and push it through. Such change would of course presume that managers have the autonomy or the space to push through the changes. We urge you to respond freely. Your response would be kept completely confidential. It would be used only for academic purposes, and never in way that reveals either the identity of the company or the individual. The survey is planned to cover a fairly large number of managers and board members in PSUs, and we hope that the analysis would be useful to the government and policy makers in their design of programs for change including privatisation and disinvestment. The analyses and findings would also be useful in our research and training. The schedule of questions and issues that we have raised in the survey would require about an hour of your time. We have gone ahead with a rather detailed schedule, so that we can understand your responses holistically. Your cooperation is the key to the success of the study, and we thank you in advance for your response. We promise to make available the findings of this study as soon as we are ready. The study has the formal approval of the government of India, and is being sponsored by the Indo-Shastri Canadian Institute. The project team consists of S. K. Barua, and Sebastian Morris (coordinator). We have set up a website, which ought to evolve into a resource for those concerned with the reforms pertaining to SOEs. Please do visit the site: http://www.iimahd.ernet.in/psuindia. We will be putting the principal tabulations on this site for your convenience. We would be obliged for your comments. Our deepest thanks for taking time off to respond to this schedule.

Sebastian Morris SK Barua

2

Indian Institute of Management, Ahmedabad

Reform of PSUs in India Today: A Study based on a Survey of Top and Middle Level PSU Managers (QUESTIONNAIRE)

1.

Your name

2.

Organisation where you work presently

3.

Years of work in the present organisation

5.

Description of present position (b)

6.

How many years have you been in your current position?

7.

Functional experience in middle management levels and above. Based on your own assessment and past experience, in which of the following areas have you had adequate experience? (You may encircle /tick more than one option if you think you have diverse experience).

8.

4. CEO

Description of present position (a)

board member/ director

Line

top management

Staff

other

middle management

General management

Finance/audit/ acounting

Production/ engineering

Commercial/ marketing and advertising

HRD/personnel/ labour management

Purchase/ vendor development

R&D/design and development

Computers/ MIS

Law/ company secretaryship

any other

Your background. Please feel free to encircle/ tick as many of the items below as apply to you. graduate/ post graduate in Engg.

doctoral degree in Engg./ Science

other doctoral degree

belonged at one time to the IAS/Central services cadre

belonged at one time to the Indian Management Pool

continue to be part of IAS/ central services cadre

management/ MBA degree

Chartered Accountant degree/ ICWA etc

have other technical/ professional degree

have significant experience in the private sector

worked in three or more organisations

have significant experience of working in government

worked only in the PSUs

Survey of PSU Managers, December 2000

any other aspect? (Please write)

3

Please read all the options under a topic and then tick in the appropriate column to reflect your view/opinion/feeling. You may avoid answering some of the options only if you have absolutely no familiarity with the underlying issue. Objectives “Objectives” of an enterprise go far beyond those that are actually stated, many may not be truly intended and the “top management” could deviate from them with time. How important are the following objectives in actual practice (as you have inferred or sensed)? (Tick any of the options from very important to Not at all) In what manner have the following objectives changed over the nineties: Has the importance attached to each of the following increased (+), remained unchanged (0) or decreased (-)? (Please use the last column marking +, 0, or - as your response may be). Very

1.

Financial performance

2.

Achieving dominant position through higher market share

3.

Being in the forefront of technology

4.

Maximizing shareholders’ value

5.

Providing employment

6.

Serving the needs of the governing political masters

7.

Serving the needs of the governing bureaucracy

8.

Serving the needs of the top management

Quite

A little

Hardly

Not at all

+/0/-

Functioning of the board We would like to have your impressions about the working of the boards of PSUs. It is not necessary that you should have been part of the board of any PSU at any point of time. Rather, your impressions and feelings are important. How do you feel about the following statements? (Tick any of the options from strongly agree to strongly disagree) Strongly Agree

1.

The boards of PSUs have little independence.

2.

The government nominees on the board, in a situation of conflict between the government and the company, would typically go against the interests of the company.

3.

Appointment of independent external directors has served a very useful purpose.

4.

The nominees of financial institutions and joint venture partners play a positive role, which is in the interest of the company.

5.

The board is only a mask and the real power lies elsewhere — with the concerned ministry.

4

Agree

Neither

Disagree

Strongly disagree

Indian Institute of Management, Ahmedabad

The PSU as “State” Some observers have argued that entities with major government ownership being treated as “State” constitutes a major drag on the performance of PSUs. (Tick any of the options from strongly agree to strongly disagree) Strongly Agree

1.

Although courts have ruled PSUs to be state, there is scope for commercial orientation within this constraint

2.

The status of state constrains PSUs in the settlement of labour related disputes in relation to similarly placed large private corporations

3.

Observers contend that disinvestment below 50% will free the PSU of this constraint and would bring autonomy in decision making. Do you agree?

Agree

Neither

Disagree

Strongly disagree

The Bureau of Public Enterprise(BPE)/Dept of Public Enterprise(DPE) Your impressions about the influence of BPE/DPE on the working of PSUs. It is not necessary that you should have personally dealt with BPE/DPE at any point of time. But impressions and feelings are important. (Tick any of the options from strongly agree to strongly disagree) Strongly Agree

1.

While the BPE/DPE has no authority, its involvement in a staff capacity in activities like project clearance and the MoUs result in delays in decision making.

2.

Cash rich and large PSUs, PSUs with greater bargaining power or with a powerful CEO were never constrained by the BPE guidelines.

3.

There is no justification now for BPE’s role in an advisory or policymaking capacity, since most large PSUs have boards with external directors

Agree

Neither

Disagree

Strongly disagree

Vigilance Your impressions about the vigilance inquiries faced by managers in the PSUs. How do you react to the following statements? (Tick any of the options from strongly agree to strongly disagree) Strongly Agree

1.

A vigilance inquiry adversely affects a manager’s self esteem even when he/she is not corrupt.

2.

Vigilance inquiries on managers are part of the routine, and they need not affect careers of managers if they have not deliberately made a mistake.

3.

Vigilance inquiries are sometimes politically motivated to punish particular managers and could derail the careers of bright managers.

Survey of PSU Managers, December 2000

Agree

Neither

Disagree

Strongly disagree

5

Strongly Agree

4.

Fear of vigilance increases risk-avoiding behaviour of managers.

5.

Many PSU managers use vigilance as an excuse for their own lack of initiative and dynamism.

6.

Most vigilance inquiries have proven to be correct ex-post, in the sense that the concerned managers were corrupt or had gained personally.

7.

Most vigilance inquiries look into situations of oversight or neglect of rules and procedures rather than intention to defraud or gain personally.

8.

Many vigilance inquiries are pointless in the sense that many managerial decisions could result in superficial loss, which the vigilance may fail to understand.

9.

Vigilance has rarely uncovered any important case of fraud and corruption by powerful managers and civil servants.

Agree

Neither

Disagree

Strongly disagree

10. Fear of vigilance in restricting managerial performance has declined in the 90s 11. Politically motivated vigilance inquiries have declined in the 90s. 12. The number of vigilance cases has increased in the 90s.

The Auditor and the PSU Your impressions about the appraisal of companies by the Auditor. How do you feel about the following? (Tick any of the options from strongly agree to strongly disagree) Strongly Agree

1.

Statutory Audit (SA) exists only to appraise the PSU’s performance.

2.

SA is the only way by which ‘moral hazard’ or adventurous behaviour in PSUs can be curbed.

3.

SA has been able to prevent corruption in PSUs.

4.

SA is entirely ex-post hoc, so it is not useful to management in decision making.

5.

In many PSUs there is a supra-CEO authority in the Statutory Auditor.

6.

Audit queries lead to risk-avoiding behaviour of managers.

7.

‘Audit constraint’ does not exist for the truly dynamic managers who can always work around audit with appropriate explanations.

8.

The fear of audit has declined in the 90s

6

Agree

Neither

Disagree

Strongly disagree

Indian Institute of Management, Ahmedabad

The Concerned Administrative Ministry Your impressions about the influence of the concerned ministries on PSUs. It is not necessary that you should have been personally interacting with the ministry officials rather your feelings about them are important. How do you feel about the following: (Tick any of the options from strongly agree to strongly disagree) Strongly Agree

1.

Administrative ministries wield much power over PSUs.

2.

Administrative ministries are generally staffed with people who do not have the requisite skills or experience to deal with PSUs.

3.

The administrative ministry also interferes in administrative and operational decisions, employment rules, labour relations.

4.

The concerned ministry interferes much more today in the working of the PSUs than what it did in yesteryears.

5.

The ministry’s involvement in PSUs has become far more functional and restrained in the nineties

Agree

Neither

Disagree

Strongly disagree

The PSU and Parliament Questions about the working of PSUs are often raised in the Parliament. How would you react to the following statements? (Tick any of the options from strongly agree to strongly disagree) Strongly Agree

1.

Parliament is truly concerned with the functioning and efficiency of the PSUs

2.

Top management has to devote considerable time and resources trying to provide answers for the frequent questions raised by the parliament.

3.

The administrative ministry/holding company usually answers all questions on behalf of the PSU.

4.

Many of the questions raised by Parliament are part of routine and call for information, which is anyway publicly available/or made available with little effort.

5.

With proper information gathering and retrieval systems, as well as Management Information Systems (MIS), parliamentary questions should not take up much time.

6.

Without the pressure of parliamentary questions, many PSUs would drift away from their social goals.

7.

Parliamentary questions do not directly affect managers, so they don’t have to worry about them.

8.

Parliament is today concerned more with debating privatisation rather than worrying about performance improvement.

9.

The fear of Parliament questions can be used by managers to thwart dysfunctional interference by politicians and civil servants.

Survey of PSU Managers, December 2000

Agree

Neither

Disagree

Strongly disagree

7

CEOs of PSUs The question of what type of CEOs have been able to deliver thus far in the Indian public sector system remains little known and is controversial. How would you respond to the following statements? (Tick any of the options from strongly agree to strongly disagree) Strongly Agree

1.

CEOs have to be very politically savvy to be able to manage civil servants politicians and board members.

2.

CEOs have a great deal of responsibility without having the requisite power to deliver.

3.

The task of PSU CEOs is typically more challenging than that of similarly placed private sector CEO.

4.

The power the CEO commands vis-à-vis the government depends a great deal on the performance of his/her company.

5.

The power the CEO commands vis-à-vis the government depends a great deal on the size of his/her company.

6.

Managing the external boundary of the organisation (esp. with the Administrative Ministry) becomes the chief task ot the CEO.

Agree

Neither

Disagree

Strongly disagree

Privatisation There is a lot of debate amongst policy makers, managers, government on the advantages and disadvantages of privatisation. How do you feel about the process of privatisation? (Tick any of the options from strongly agree to strongly disagree) Strongly Agree

1.

Privatisation will result in efficient and effective use of resources.

2.

Proposal of divestment is meant only for increasing the revenue of the government and not for any serious operational improvements.

3.

MoUs or contract plans could have worked well had government given the PSU the required autonomy.

4.

Government will never really give the PSUs requisite autonomy.

5.

Privatisation is the only option which will result in greater autonomy and responsibility at all levels.

6.

But it might take away job security.

7.

Work culture will change drastically with Privatisation.

8.

PSU are inefficient because they are cash strapped. Instead of Privatisation availability of more funds will increase their efficiency.

9.

Social objectives of the PSUs will be ignored .

Agree

Neither

Disagree

Strongly disagree

10. Prices of goods and services provided by PSUs will increase with privatisation. 11. Monitoring by shareholders will be more effective with Privatisation. 12. The existing monitoring system is adequate enough although it sometimes leads to delays. 13. PSUs are not particularly slow in decision-making and also implementation compared to leading large private corporations. 8

Indian Institute of Management, Ahmedabad

14. Involvement of external consultants (to benchmark functioning of the PSUs and to determine strategies) will be more effective than any change in ownership 15. It is important that the correct mode of Privatisation be pursued for it to lead to better performance 16. Without Privatisation PSUs will not be able to respond to the challenges of Globalisation. Sources of Constraints Today Since the many changes in policy and environment in the nineties, the constraints to good performance and growth could possibly have changed. What are the constraints today? How significant are the following in constraining PSUs today? (Tick any of the options from very important to not at all important) A relaxation or loosening of the constraint over the nineties we would call improvement (+), no change (0), and a tightening of the constraint (-). Please respond in the last column bringing out the change in the constraint over the last few years. (Please write in the last column +, 0 or -) Very imp. const.

1.

Internal procedures and processes

2.

Procedures insisted upon by Government

3.

Interface with the bureaucracy

4.

Interface with the administrative ministry

5.

Politicians and powerful civil servants

6.

Vigilance

7.

Statutory Audit

8.

Parliament (Committees and Questions)

9.

Legal status of PSUs being “State”

Quite imp. const.

somewhat imp.

Hardly

Not at all a const.

+/0/-

10. Labour inflexibility 11. Quality of management 12. Lack of resources to modernise 13. Lack of resources in general 14. Continuing price controls 15. Corruption within the organisation 16. Govt policies /controls 17. Inability to retain highly skilled managers and technicians 18. Any other? (Please mention if selected) 19. Any other? (Please mention if selected) If you were forced to pick the two most important constraints that effects most PSUs today then what would those be? (Please enter serial no from the previous question) Survey of PSU Managers, December 2000

First

Second

9

Dimensions of Autonomy Rate the folllowing aspect /dimensions of decision making in terms of the autonomy that managers of PSUs actually have today. (Please tick selecting from a great deal to nothing at all). Also indicate whether on that aspect there has been an improvement (+), no change (0), or a deterioration, over the nineties, in the autonomy that managers have over that particular aspect. (Please use the last column to enter +, 0 or -). a great deal

1.

Recruitment of managerial staff

2.

Recruitment at senior top management levels

3.

Labour administration in general

4.

Performance incentives for labour

5.

Performance incentives for management

6.

Pricing

7.

Financing in general

8.

Raising capital from the market

9.

Technology and equipment choice

much

some autonomy

hardly any

nothing at all

+/0/-

10. Joint ventures and tie-ups 11. Investments and projects 12. Locational choice of projects 13. Contracts and purchase 14. Managerial remuneration 15. Workers remuneration 16. Diversification, expansion 17. Disinvestment decision

N. A.

18. Any other? (Please mention) Ownership Structure and Management Control What in your view is the desirable ownership structure in general after reform? (Please encircle /tick at best two options)

10

majority with govt; with little disinvestment

majority with govt; with significant ownership by other parastatals of govt. and FIs

bare majority with govt; with the rest largely disbursed among small shareholders

bare majority with govt; with the rest largely held by a private partner

large minority govt. holding with sign. holding by private groups

large minority with govt; with much of the rest disbursed among small shareholders

very little govt holding; and generally disbursed

very little govt holding but rest with single/ few large private parties

Indian Institute of Management, Ahmedabad

In a situation where the majority of PSUs are privatised, in your view it would be desirable (in most cases) to (choose from the options below any one): retain govt majority

retain dominant holding of govt so that govt has veto power

govt holding such that it would necessarily have to share power/control with other groups

govt holding small so that it has to give up nearly all control

Please choose one of yes, no or can’t say to the questions /statements below: (Please chose can’t say only if you really cannot chose either of yes or no) Non govt. shareholding in PSUs after disinvestment should be sufficiently dispersed /held by FIs /workers such that the threat of management takeover is minimised. Do you agree?

yes

no

can’t say

Shares at discounted prices should be sold to workers and employees to create a positive interest among them towards privatisation.

yes

no

can’t say

A golden share for government would become necessary in many cases.

yes

no

can’t say

A golden share for government would arise only in a rare situation.

yes

no

can’t say

Multinationals must be kept out from the disinvestment process.

yes

no

can’t say

Multinationals must not be allowed to control PSUs after they are privatised.

yes

no

can’t say

While MNCs should be allowed to participate in disinvestment, but a ‘handicap’ should be provided for domestic buyers.

yes

no

can’t say

There should be no restriction on MNCs buying up stock of privatising PSUs.

yes

no

can’t say

The surpluses from divestment of profitable PSUs should be used to pay off employees in other firms for which only asset sales are possible.

yes

no

can’t say

In disinvestment, the entire portfolio of PSUs should be considered, so that the value realised for the portfolio as a whole is maximised.

yes

no

can’t say

In many sectors lack of regulatory institutions and policy (especially with regard to competition) stand in the way significant disinvestment.

yes

no

can’t say

Profitability and current cash flows should be the principal basis in valuation for offloading the shares.

yes

no

can’t say

Capital market valuations of the stock should be an important guide in pricing of shares offered for sale.

yes

no

can’t say

Govt should go ahead with disinvestment without waiting for a clear cut and acceptable policy for labour especially as regards retrenchment.

yes

no

can’t say

No serious restructuring is possible without a clear cut retrenchment policy that has the acceptance of unions.

yes

no

can’t say

For significant and transparent privitisation it would be necessary to set up a constitutional and expert authority.

yes

no

can’t say

Survey of PSU Managers, December 2000

11

Government has to keep itself off from the operational aspects of privaisation, once it defines the strategy and policy

yes

no

can’t say

Privatisation in India would only progress in fits and starts

yes

no

can’t say

Today there is a consensus among the elite for privatisation

yes

no

can’t say

Privatisation in India has little chance of taking place in a transparent and corruption free manner

yes

no

can’t say

Your own statements on disinvestment: 1. 2. 3. Groups /forces for disinvestment or privatisation From which quarters /factors do the pressures for disinvestment and privatisation arise? Please rate the following factors /quarters: (Please tick choosing from predominantly from to never from against each group of force). predominantly from

very much from

in some manner from

hardly from

never from

Workers and unions Junior managers Supervisors White collar workers All empoyees Administrative Ministry Politicians and senior civil servants Top management Middle level management Dependent businesses like subcontractors, dealers etc Mass media Foreign Financial Institutions Multilateral Agencies Finance Ministry Declining budgetary resources Low internal generation of resources

12

Indian Institute of Management, Ahmedabad

Groups /forces acting against disinvestment /privatisation From which quarters /factors do the pressures against disinvestment and privatisation arise? Please rate the following factors /quarters: (Please tick choosing from predominantly from to never from against each group of force). predominantly from

very much from

in some manner from

hardly from

never from

Workers and unions Junior managers Supervisors White collar workers All empoyees Administrative Ministry Politicians and senior civil servants Top management Middle level management Dependent businesses like subcontractors, dealers etc Mass media Foreign Financial Institutions Multilateral Agencies Finance Ministry Declining budgetary resources Low internal generation of resources

We would like to have your response to the following questions/ statements which finally confirm and summarise your views. agree

disagree

a)

There is no need for privatisation of most PSUs

b)

Reform and restructuring by giving more autonomy to PSUs is politically, legally and administratively possible

c)

Labour retrenchment is the in the reform of PSUs

d)

Significant privatisation would require setting up of a special constitutional body.

most important

Survey of PSU Managers, December 2000

one of the many

agree

agree

not significant

disagree

disagree

problem/s

can’t say

13

e)

The particular privatisation process followed by the government would necessarily be in the national interest

most certainly

to a large extent

to some extent

f)

Would you like to receive a copies of the studies based on this survey ?

g)

Any other comments / statements thay you would like to make?

marginally

yes

not at all

no

Thanking you Professor Sebastian Morris Professor SK Barua Indian Institute of Management Ahmedabad

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Indian Institute of Management, Ahmedabad

Indian Institute of Management, Ahmedabad (IIMA) was set up by the Government of India in collaboration with the Government of Gujarat and Indian Industry as an autonomous institution in 1961. The Institute provides education, training, consulting and research facilities in management. The major programmes conducted by the Institute are as follows: •

Two-Year Post-Graduate Programme in Management (equivalent to MBA)

•

Fifteen-month Post-Graduate Programme in Agri-Business Management

•

Fellow Programme in Management (equivalent to Ph.D.)

•

Management Development Programmes (MDPs) for industry, business, agriculture and rural sectors, and public systems covering health, education, transport and population. In the last 36 years, over 30,000 persons have participated in these MDPs

•

Faculty Development Programme for teachers in universities and colleges

Disciplinary Areas : Business Policy, Communications, Economics, Finance and Accounting, Marketing, Organizational Behaviour, Personnel and Industrial Relations, Production and Quantitative Methods Interdisciplinary Centres and Groups : Centre for Management of Agriculture, Centre for Regional Management Studies, Computer and Information Systems Group, International Management Group, Public Systems Group, Ravi Mathai Centre for Educational Innovation Shastri Indo-Canadian Institute The Shastri Indo-Canadian Institute (SICI) is a unique educational enterprise that promotes understanding between India and Canada, mainly through facilitating academic activities. The Institute funds research, links institutions in the two countries, and organizes seminars and conferences. It is named after Lal Bahadur Shastri, the Prime Minister of India from 1964 to 1966 and a distinguished mediator and statesman. Founded in 1968 with a grant from the Indian government, the Institute began by encouraging Canadian teaching and research on India. Focussing on the humanities and the social sciences, it funded fellowships and distributed books and journals to the libraries of its Canadian member institutions. The Institute’s success in sparking interest in India studies among Canadian academics led to a greater interest in Canada among Indian scholars. In the early 1980s, SICI began to promote Canadian studies in India and, in the late 1980s, it expanded its activities into development studies. Shastri membership has expanded from four to twenty-one Canadian universities and the Canadian Museum of Civilization; its scope has expanded as well to include law, management, education, and the arts. Recognizing the importance of reaching a broader public, the Institute has launched summer programmes for Canadians in India, binational conferences, a project for microfilming historical and cultural documents in India, and a programme that sends distinguished speakers to both countries and more recently an International youth Internship programme as well as programme which brings members of the media from India to Canada and from Canada to India.

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Indian Institute of Management, Ahmedabad