International Workshop on ‘Performance Evaluation and Management of State Owned Enterprises Culminates

International Workshop on ‘Performance Evaluation and Management of State Owned Enterprises Culminates 

Ajit Kumar Seth Stresses the need to Institutionalize Idea Exchange of Informations About Policies and Practices Through an Appropriate Forum 

The day long international workshop on ‘Performance Evaluation and Management of State Owned Enterprises’ culminated here in New Delhi today with a remark of hope of institutionalization of mutual idea exchange of information about policies and practices through an appropriate forum by the Cabinet Secretary, Government of India Shri Ajit Kumar Seth. 

In his valedictory address Shri Seth said efforts are on to build a culture of performance management not only for SOEs but also within government. Referring to the appraisal made before the international participants in this workshop by Performance Management Division (PMD), Cabinet Secretariat of its role as an oversight agency responsible for establishing mechanisms for performance monitoring and performance evaluation in Government departments on a regular basis he said the Results Framework Document (RFD), which highlights the departmental objectives and priorities for each financial year as well as reports achievements of the department against pre-specified targets indicated in their RFD at the end of the year. 

Shri Seth said SOEs have played an important role in the development of national economies and their importance has been underlined in the aftermath of the global financial crisis. At the same time, the continuing trend towards liberalisation combined with efforts to control volatility in capital markets and budgetary pressures have led to a sustained and emphatic focus on improved performance of the SOEs. On the views expressed by host (Indian) participants about the two pronged strategy to improve performance namely enhanced autonomy accompanied by higher accountability he said the empowering of Boards of profit making enterprises by delegation of financial and operational powers and the implementation of the Memorandum of Understanding (MoU) mechanism are key elements of this strategy. From the presentation made by the DPE on the deliberations of the workshop, it appears there has been interactive and informed discussion on various macro and micro aspects related to the two broad themes of performance evaluation and management and a number of innovative ideas have emerged. He hoped that the Department will take this forward . 

On the issue of corporate governance Shri Seth said performance of a CPSE to a large extent depends on the functioning of its Board. A Board needs to be efficient as well as effective. Having Directors including Independent Directors , with the requisite skills, knowledge and experience is the starting point. This implies that effective succession planning practices are adopted by SOEs so that talent is nurtured and mentored to take up Board positions. It is equally important that discussions in the Board are informed and transparent. He said it is our endeavour to do this for both the public and private sector through incorporating appropriate provisions in the recently enacted Companies Act, 2013. In the context of the public sector, having a proper risk management and mitigation policy is of utmost importance considering that worldwide SOEs including CPSEs from India, are amongst the largest investors . We have a lot to learn from the private sector as well as from each other in this regard, he added. 

An important aspect of transparency is having strong internal and external control mechanisms as well as disclosure requirements. CPSEs are presently subject to external oversight by institutions such as the Comptroller and Auditor General of India, Central Vigilance Commission, regulatory agencies including the Stock Exchange Board of India. They are also under the purview of the Right to Information Act. To ensure that the intended outcome of empowerment of Boards through enhanced delegation of financial and operational powers is realised, we need to be on a continuous learning curve to ensure accountability to the shareholders and other stakeholders, he further added. 

Shri Seth said one of the greatest challenge is to strike the right balance between long term and short term goals. In the context of MoUs, though we follow a balanced score card approach giving equal importance to both financial and non-financial parameters for most enterprises, the tendency is to look at indicators which reflect the current priorities rather than the long term interests of the CPSE as well as the country .In this regard, having a strategic plan and keeping that in mind while selecting performance indicators and fixing their target levels, is important. The Administrative Ministry has an important guiding role to play here as they are aware of the bigger picture and the national priorities. The other important aspect is that of using national and international benchmarks while fixing targets. While we are cognisant of the differences in the operating environment of SOEs and that of private sector, yet there is scope of suitably calibrating the benchmarks. This is an area of further research and exchange of learnings. 

The other more complex issue is that of linking performance evaluation with the right type of incentives. It has been very interesting to hear about the different practices followed in other countries and CMDs of our CPSEs have shared their experiences of the Indian system with you. To design a transparent and fair system by which performance evaluation at the organisational level can be translated into performance evaluation at an individual level is by no means an easy task. In an environment where majority of the employees have considerable security of tenure, it may be worthwhile to look at systems based on both monetary as well as non-monetary incentives. 

Shri Seth expressed his appreciation to the organisers of this workshop including the UNDP and World Bank and IPE as the knowledge partner. He expressed confidence that the discussions held during the workshop would have triggered some rethinking amongst the participants and hoped that mutual exchange of information about policies and practices would be institutionalised through an appropriate forum. 

The vote of thanks was given by Ms. Deepti Gaur Mukherjee, JS in the Deptt. of Public Enterprises. 

The workshop had 06 Plenary Sessions in all. 

The speakers in these sessions included: Mr. Alexandre Arrobbio, Practice Manager, Governance, South Asia Region, World Bank; Mr. Bruno Cirilo Mendonça de Campos, COPAR, Brazil; Dr. Ravi Ramamurti, D’Amore-McKim Distinguished Professor of International Business & Strategy; Director, Center for Emerging Markets, D’Amore-McKim School of Business, Northeastern University, Boston, USA; Prof. Junki Kim, Professor of Public Policy, Graduate School of Public Administration, Seoul National University,– Mr. Rajan S Katoch, Secretary, Department of Heavy Industry, Government of India; Prof. Rehman Sobhan, Director, Centre for Policy Dialogue, Bangladesh ; Dr. K.R.S. Murthy, former Director, Indian Institute of Management, Bangalore; Mr. Richard Ndubai, former Head, Public Sector Reforms Unit, Office of the President, Kenya and currently Consultant – implementing Performance Management System in the government of the Kingdom of Lesotho; Prof. Gelase Mutahaba, Professor of Public Administration, Department of Political Science and Public Administration; Tanzania Dr. V. Gopal, Dean, Indian Institute of Management, Tiruchirappall;i Dr. Damber S Kharka, Director, Corporate Performance Department, Druk Holdings and Investments (DHI), Bhutan; Mr. Wonhee Lee, Director, Research Center for State-Owned Entities, Korea Institute of Public Finance (KIPF) Dr. G.P. Pokhariyal, Professor of Mathematics, School of Mathematics, University of Nairobi; Ms. Sheoli Pargal, Lead Economist, World Bank Group; Mr. Liu Yuan, Deputy Director General, Bureau of Performance Assessment, SASAC/China; – Dr. A.K. Rath, Chairman & Professor, Centre for Corporate Governance & Social Responsibility, IMI; – Dr. R.K. Mishra, Director, Institute of Public Enterprise, Hyderabad; Prof. M. Panduranga Vithal, Professor of Finance and Strategy, Indian Institute of Plantation Management, Bangalore; Mr. Chongmin Du, Director, Bureau of Enterprise Remuneration, SASAC / China and Chairmen & Managing Directors of Bharat Heavy Electricals Limited: Shri Mr. B.P. Rao; National Thermal Power Corporation Limited: Dr. Arup Roy Choudhury; Hindustan Petroleum Corporation Limited: Ms. Nishi Vasudeva and Hindustan Aeronautics Limited: Dr. R.K. Tyagi. 

The sessions were chaired by Mr. Anil Razdan, former Secretary to Government of India, Ministry of Power; Mr. R.C. Panda former Secretary to Government of India, Ministry of Heavy Industries & Public Enterprises; Dr. Ajay Dua, former Secretary to Government of India, Ministry of Industry &Commerce; Prof. Junki Kim, Professor of Public Policy, Graduate School of Public Administration, Seoul National University; Mr. Richard Ndubai, former Head, Public Sector Reforms Unit, Office of the President, Kenya and currently Consultant – implementing Performance Management System in the government of the Kingdom of Lesotho and Mr. Alexandre Arrobbio, Practice Manager, Governance, South Asia Region, World Ban 

The issued covered during the workshop included the following: 

Existing Models of Governance of SOEs, Structure of Performance Contracts in SOEs, Measurement of the Performance of SOEs vis-à-vis targets given in Performance Contracts, Methods of Progressive yet Realistic Target Setting and Linkages of Performance Outcomes with Incentives. 

These sessions will focus on issues of enabling environment including the policy environment, the various ownership models of SOEs, inter-relationship with administrative ministries/regulating institutions/audit institutions, accountability and corporate governance issues etc. Also, Issues like scope of performance contracts in SOEs in various countries including the performance indicators in the financial and non-financial parameters, institutional structure for performance monitoring, the actual process of contracting and frequency of reviews etc will also be given pondering. 

Moreover, there will be issues like measurement methodology, scale of measurement, scoring/grading, measurement of non-financial parameters, types of evaluation – self-evaluation, 360 degree evaluation, balanced score cards, third party evaluation, techniques for inputting findings from evaluation for system improvements etc for consideration. 

In addition, issues like methods of target setting for SOEs, benchmarking techniques, alignment with national priorities/state priorities, compare and contrast with issues of target setting in private sector etc will also be discussed. 

The focus was how performance evaluation and outcomes are linked to incentives which may be monetary/non-monetary in nature, challenges in implementing incentive systems, successful practices in this area, leveraging technology etc. 
International Workshop on ‘Performance Evaluation and Management of State Owned Enterprises Culminates International Workshop on ‘Performance Evaluation and Management of State Owned Enterprises Culminates Reviewed by Ajit Kumar on 6:48 PM Rating: 5

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