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MANAGEMENT DEVELOPMENT
OF
PUBLIC ENTERPRISES IN KERALA

Report of the Committee
Appointed by
The Government of Kerala

THIRUVANANTHAPURAM
1979

The management development programme for the State can be achieved only through the initiative of the government and the collective efforts of government, the joint, private and public sector undertakings and universities. A co-ordinating agency to bring all these forces together will have to be autonomous body of some stature. This is the proposed Centre for Management Development.

At present, courses in business management are offered in the School of Management, University of Cochin, Department of Commerce, University of Calicut, and by some private bodies. Such training imparted by these agencies play a useful academic role. The role of the proposed Management Development Centre will be oriented more towards planned practical training. Its bias will be more towards actual management problems in the State. It is necessary that universities are closely associated with the working of the Centre in the same way as professional bodies like the National Productivity Council and the Management Associations are also associated with the working of the Centre. Such close association is necessary, especially in view of the fact that there is a severe dearth of trained people in the field all over India.

The various tasks that could be undertaken by the Centre are the following:-

The Management Development Centre may start with a six to nine months training programme for fresh management trainees selected from the universities and professional institutions and also short term programmes, extending from one to twelve weeks for managers at other levels.

They should run a few basic courses in areas such as finance, production, marketing, personnel and materials management, frequently. There should also be a regular mechanism for communication between the several business organisations in the State and the Management Development Centre.

The faculty members should be recruited very carefully. They need not all be full time to begin with. There should be a good mixture of academicians and practising managers. An intermingling of the two types will add to the efficiency of the Centre. The Centre could be formed as an independent trust and could be registered under Act XXI of 1860 for the registration of Literary, Scientific and Charitable Societies. The constitution and bye-laws of the Administrative Staff College of India, Hyderabad will be a good model for this purpose. The Governing Body may be constituted as follows:

There should be a Chairman who will be a person of eminence and reputation in the field. The Staff College had eminent persons like Dr. John Mathai, Dr. C.D. Deshmukh, etc. There should be two industrialists of standing, three representatives of the three universities in Kerala, five chief executives of public sector undertakings and three senior Secretaries to Government. The Director of the Institute shall also be a member. This will take the number to 15.

The initial funds required for organising the Centre may have to come in as grant from the Government. There will also be institutional members from among the public and private undertakings in the State. For running the various courses fees could be collected from the organisations sponsoring the candidates.

We envisage the Centre not only as a training school which will run a few short term courses in business management. We also envisage it as an active agency for undertaking regular consultancy work for existing and new ventures. Neither in the public nor in the private sector do we have at present a full-fledged agency to undertake this job for the government. It could, in other words, be an active participant in the industrialising process of the State and be an effective agency for bringing about the much needed transformation in our thinking about and practice of management.

Para 11	1.	Manpower planning, with reference to managers or staff has not been attempted on a systematic basis in most organisations in Kerala. It is necessary for Government to ensure that every undertaking, in which it has a sizable investment, establishes a cell which would deal with manpower planning covering both managers and staff. The chief executives of the companies are to be made responsible for establishing such cells and reviewing their findings periodically.
Para 15	2.	Manpower planning has to be integrated with the budgeting process in an undertaking.
Paras 17 & 23	3.	Career planning and succession planning of managerial personnel should be integrated with manpower planning. Every undertaking may be asked to prepare an inventory of its managerial team, an assessment of its managerial requirements, training requirements, etc.
Para 18	4.	It is also necessary that Government should have an apex organisation which is concerned with the compilation of plans of individual organisations and initiation of proper plans for meeting current requirements and future demands of managerial manpower. The apex manpower cell is best located under the direct control of the Chief Minister. Prima facie, the Planning Board of which the Chief Minister is the Chairman, would be the appropriate agency for nursing and developing this apex cell.
Paras 20 & 21	5.	During the Fifth Plan, a total investment of Rs.600 crores in the State by the Central and State Governments, financing institutions and private sector in the large and medium sectors is anticipated. For an investment of this order the managerial manpower requirement will be about 1200. The small scale and cooperative sectors will also require managers at different levels in equally large numbers. In addition, for existing public sector units, which number about 40, existing requirement of senior managers will be about 200. Further, they will require a large number of junior managers also to begin with, at least 500.
Para 22	6.	It is also necessary to develop a proper succession plan not only at the Chief Executive level, but at other levels also.
Para 23	7.	There is urgent necessity to bring in competent men from outside the existing team to establish and develop management in the neglected areas and to tone up the management in areas where the existing arrangements show deficiency. A review of the performance of the existing managerial team in each Government controlled unit is called for.
Para 30	8.	The desirability or otherwise of creating a separate management cadre is a vitally debated question today. What is required in Kerala now is not the creation of a formal management cadre, but an informal arrangement whereby various organisations develop their own managers over a period of time.
Para 31	9.	The strategy for management development could be briefly described as follows:-
	a)	Large organisations should have their own management development programmes;
	b)	Small organisation - private or public - are not in a position to embark upon their own management development programmes. These companies have, therefore, to work in close collaboration with Management Development programmes organised by other agencies. One possibility in this context is to bring them under a holding company which will take the responsibility for management development also.
	c)	The need to set up a common centre for management development which will be of use to all these several types of organisations, is imperative in our present context. Such a Management Development Centre will be able to render assistance in the private, joint, and co-operative sectors. The proposed Centre can also play a creative role in the evolution of good management in other sectors of the economy, like farming, housing, hospital administration, plantations, etc.
	d)	We will also have to evolve a strategy regarding the induction of managers at different levels in the various organisations;
	e)	The junior managerial level has to be filled in by promotion as well as by direct recruitment. Promotion should be through a rigorous selection on merit;
	f)	In Kerala Government undertakings, we will have to induct persons not only at the junior levels, but practically at all levels.
Para 36	10.	The selection of managers can be done in the following manner:-
	a)	From among the Government services, whether all India Services or the State Services;
	b)	From within the organisations themselves;
	c)	From the open market from among those who are already in different professions; and
	d)	From among fresh graduates from Universities
Para 36	11.	A top level committee will have to assess the aptitude and competence of the persons who want to come in from civil service. The present practice of making ad hoc decisions in deputing personnel to different organisations is totally unsatisfactory. The top level committee could have a panel prepared after thorough examination of all aspects. This has to be a continuous process and their training and development will also require great attention and care.
Para 36	12.	As we have an inherited situation in which the existing management team is weak in many organisations, there is urgent need to review the performance of this team by a properly constituted independent committee from outside such as the expert committee referred to above.
	13.	Managers could be recruited from open market by advertisement and informal contacts.
Paras 36 & 37	14.	A steady intake, in the light of manpower assessment, through an executive selection programme, is perhaps, the only long-term policy which will solve the problem of managerial manpower shortage. This could be taken up on a regular basis by the Management Development Centre. Such a programme is one where the better products of universities are taken at a fairly young age and are trained and developed over a period of time. These persons would be coming from various disciplines. The general pattern of selection is to have a written test followed by personality tests, group discussions, and interviews.
Para 38	15.	An appropriate procedure will have to be developed for selection of managerial personnel from several sources. The basic guidelines governing such procedures may be as follows:-
	a)	Selection of persons for such posts as chief executives and top level managers including full-time directors may be made by a committee of experts. The committee may prepare a panel from which Government could make appointments;
	b)	Selection to posts of middle management may also be done by the same expert committee, but associating the chief executives of the companies concerned with the selection process;
	c)	The committee of experts for selecting the chief executives and top level managers, may be appointed by the Chief Minister.
		The composition of the committee may be as follows:-
		From industrial and business community - 2
		Secretaries to Government concerned with Ministries dealing with industries, economic affairs, planning, etc. - 2
		From the proposed Management Development Centre - 2
		From existing public sector undertakings - 2
Para 39	16.	All new managerial recruits will require some formalised training. On completion of their formal training the committee including the chief executives of companies could interview them and select persons for each organisation.
Para 40	17.	Before and after the recruits are put on the job, they must be subjected to a comprehensive programme of training oriented towards the problems of each company.
Para 41	18.	The proposed Centre for Management Development will be a co-ordinating agency to bring together collective efforts of Government, joint, private, and public sector undertakings and universities.
Para 42	19.	The responsibilities of the Development Centre will be oriented towards planned practical training. Its bias will be more towards actual management problems in the State, Universities and professional bodies like National Productivity Council and management associations associated with the working of the Centre.
Para 43	20.	The Centre could undertake the following types of tasks:-
	a)	Organising training programmes;
	b)	Assisting companies in the selection of personnel;
	c)	Studying organisational and managerial problems of the companies; and
	d)	Providing management consultancy services.
Para 44	21.	The Management Development Centre may also offer training programmes for fresh management trainees and short term programmes for managers at other levels. They should also render a few courses in the different areas of management education.
Para 45	22.	The Faculty members need not all be full time to begin with. There should be a good mixture of academicians and practising managers.
Para 46	23.	The Centre could be formed as an independent Trust. The constitution and bye-laws of the Administrative Staff College of India, Hyderabad will be a good model for this purpose.
Para 47	24.	The initial funds required for organising the Centre may have to come in as grant from the Government. There will also be institutional members from among the public and private undertakings in the State.
Para 48	25.	The Centre will also function as an active agency for undertaking regular consultancy work for existing and new ventures.
Para 49	26.	Necessary environmental and organisational climate must be provided for even the best system of management to realise these objectives. These can be ensured through the following:-
Para 50		The organisational set up in which managers have to function is critical in this respect. The structure and composition of the Board of Directors must be properly planned. The Board of Directors of large companies and of all the holding Companies ought to include full-time functional directors, besides Chairman and Managing Director. Part-time directors will bring to the Board professional competence and wider understanding of industrial management.
Para 51		The Board of the Company has to be an active body before which all major issues should come up regularly for decision making. The chief executive and his functional co-directors will be obliged to place before the Board all strategic questions. There should also be provision for supply of meaningful information to full-time and part-time directors.
Para 52	27.	It is desirable that all civil servants from the level of Deputy Secretary upwards in the Secretariat and officers of equivalent grade in the various departments, undertake training to enable them to appreciate problems of industrial management. This is necessary as they are bound to occupy positions of responsibility in Government Departments and Ministries which are concerned with economic and business matters. The proposed Development Centre has to organise appropriate programmes for this purpose.
Para 54	28.	It is desirable that several companies that now exist under the Government owned sector are grouped together under holding companies so that the planning and development of these companies are in the hands of better and well trained professionally competent men.
Para 55	29.	Each public sector undertaking may be asked to clearly define, according to the perceptions of its management, its objectives and targets. These should be considered by Government and finalised promptly. In addition, every manager should be asked to define his own objectives in terms of the general objectives of his company. His own performance should be evaluated with reference to these objectives, jointly arrived at by the individual manager and top management.
Para 56	30.	Substantial delegation of powers must be made to large companies and the Holding Companies. Such autonomy is best assured by having an approved budget and correct objectives and targets. When once these have been determined there should not be interference by Government with day to day management. In this context, it is also necessary to develop a proper communication system between the companies and the Government including the Minister.
Para 58	31.	It is necessary to have certain minimum norms regarding salary scales and other monetary rewards, even though it is not possible to have uniformity for all companies. We have, therefore, suggested a general frame work for remuneration taking into account the pattern adopted by the Government of India.
Para 59	32.	Proper methods of performance appraisal should be developed and established in each undertaking.
Para 61	33.	A system of purposeful rotation of managers must be developed between allied functions in a company and between companies under a holding company in order to enable the full development of individual managers and to avoid inter-departmental rivalries.
Para 61	34.	Good managers come out only from good organisations. Attention has to be paid to the promotion of appropriate organisational climate.
Para 62	35.	Public accountability, when exercised without restraint, may inhibit management development. In the same way as management of public corporations should remain sensitive to the need for public accountability, those who represent the public should also remain sensitive to the peculiar problems of management in the public sector. Public accountability is best served when this is demanded with reference to the basic objectives of the public corporations.