March 04, 2012

[In]Efficiency in Public Sector Educational Institutes

Government funded institutes and colleges in India are certainly far from being in the pink of health. Even the premier institutes of technology and management fall far short of international standards but if one were to say so in public, as only well known people like Narayan Murthy and Jairam Ramesh can afford to do, he or she will be mocked, humiliated and shouted down.

But why do we say this ?

The fame of the IITs and IIMs rests neither on the faculty nor on their research output but on the students and alumni.  In fact the only real value that these institutes bring to the table is the rigour of their admission process, namely the JEE (now discredited because of coaching classes and being discontinued ) and the CAT. Not much value is added after that. In terms of research, the less said the better.

Even a cursory investigation into this unfortunate state of affairs will reveal that the real problem is the poor state of the underlying management and administrative mechanism that governs these Public Sector Educational Institutions (PSEI). Given the rigid, anachronistic and inefficient processes under which they operate,  it is no wonder that these PSEIs have no chance of competing with world class institutions in other countries.

There are five major areas of immediate concern.

  1. Human resources : We take it for granted that competent people will leave lucrative corporate careers and join PSEIs at Government salaries but in reality this never happens. As a result we have a majority of employees -- both faculty and staff -- who are there as a necessity and not out of choice ! This is tragic because we would want the best people to be here. Obviously salaries cannot be hiked across the board. Instead we must have a well designed HR mechanism that seeks out competent people, induces them to join PSEIs, help them manage both their careers and their personal life and ensure that they are well looked after in terms of accommodation and other perks. In parallel there must be an annual performance appraisal that rewards good work and punishes the laggards. In short we need an active HR function and a corporate style Compensation and Benefits policy that is significantly different from the take-it-or-leave-it, one-size-fits-all salary structure that is doled out by the 6th Pay Commission.
  2. Financial Accounting : Most PSEIs have very weak financial management systems and there is no clarity on where the money is being spent. There is clearly no shortage of money and neither is there any allegation of blatant theft but because of the large granularity at which expenses are tracked there is significant scope of inefficiency in the usage of funds. A simple enforcement of the generally accepted accounting principles that mandate a highly granular set of cost codes and charge accounts followed by a thorough statutory audit would easily unearth vast amounts of ill-spent money that can be diverted for useful activities.
  3. Procurement : While tracking money is difficult, spending money is even more so. Being government organisations, these PSEIs have to follow the rigid L1 tender process and there is the perpetual fear of investigations by the CAG, the CBI and the Vigilance Commission. This does not deter unscrupulous deals -- any vendor is more than happy to provide the three mandatory quotations -- but it introduces an intolerable delay and difficulty in any genuine procurement process. For example, attempts to buy low value products and services over the web using credit cards and then seeking reimbursements are simply not possible. A simplified procure-to-pay cycle that will reduce costs and yet ensure compliance with appropriate approval procedures will introduce a great deal of flexibility and efficiency in the system.
  4. Asset Management : PSEIs sit on vast assets but most of these are ill managed. Civil and electrical infrastructure is maintained poorly as there is no clear cut demarcation of authority or accountability. Equipment is bought and not used because of lack of training or compatibility. Non functioning equipment is not repaired or cannot be repaired because of procedural issues. Junk piles up in dusty store rooms but cannot be disposed easily because of outdated audit mechanisms. A smart and modern asset management policy will ensure that the public funds are used much more effectively.
  5. Enterprise Information Architecture & Culture : It is indeed a paradox that even though these PSEIs are supposed to be thought leaders in technology and management their own usage of the same is woefully low. Other than archaic and chronically unreliable email systems, none of the modern tools and practices that are taken for granted in corporates are available here. Email is for broadcast of information, not for interactive discussion. Peons still carry paper documents, through proper channel, to people across the floor and get acknowledgements of receipt in “peon books”. Tele  and video conferences are unthinkable, social media is something that we read about it in newspapers and mail based approvals -- for even mundane matters -- are not acceptable. So if anybody is not physically available, all decisions are held up indefinitely.
Technology, or its cost, is not a bottleneck here. People are simply not willing to experiment with new technology or new ways to manage accounts, handle procurement, manage assets or adopt any widely used business process from the corporate world. In fact this leads us back to the first point, the HR issue,  because there is no incentive to improve anything nor is there any disincentive for staying with the status quo.

If we wish to improve the internal efficiency of our public sector educational institutions we should first be show our eagerness for Process Enhancements in Non Teaching Activities (PENTAgraha ?) in these five areas. This will automatically lead to the induction of better faculty who would be able to teach better and to do better research, leading to a better return on the investment made by the tax payer.

originally published in

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