Industrial sickness is not limited to the public sector. The world over, commercial enterprises fall sick. However, sickness in PSEs has received adverse publicity, affecting the image of the sector.
Significantly, many sick companies were taken over from the private sector out of compassion and the social obligation to avoid mass lay-offs.
Businesses also follow Darwin?s theory that only the fittest survive. In a demanding and rapidly changing environment, no organisation is immune to rough weather. In a liberalised economy, only those shall survive which are ready to change, transform and promote excellence on a daily basis.
Many prestigious PSEs like HMT, HEC and ITI fell sick because they did not innovate and change with time and technology. In fact, R&D and innovation should form part of the activities of any competitive and progressive enterprise. Probably the lesson has not been learnt even today as R&D activities are still not taken up in its true spirit. The recent introduction of five points under the MoU system is a welcome step but the same should be converted into real applied R&D activities to establish new technologies based on innovation, and not adoption. It is, therefore, necessary that all enterprises should go for regular health check-ups to diagnose problem areas and take remedial actions.
A composite plan of action is needed for the prevention of causes of sickness and revival of companies that are sick or are on the way to sickness. Revival packages should be exclusive, tailor-made and self-contained in all respects.
It is important for a sick enterprise to have a good and stable management i.e. a full time chief executive and functional directors for finance, marketing and HR etc. An empowered and effective board is essential to ensure the turnaround of an enterprise. Further, equity in salary and wages is also necessary to motivate the management.
Care should be taken to ensure that turnaround is holistic and based on addressing both strategic and operational issues in short and long-terms. Mere cost cutting is not the solution. Uncontrolled and unreasonable downsizing should not be encouraged as a lean organisation may be good but never a limping organisation. It is a matter of satisfaction that the government has set up the Board for Reconstruction of Public Sector Enterprises (BRPSE) with a mandate to advise the government on ways and means to strengthen PSEs and make them more autonomous and professional. The board?s task, however, shall remain incomplete unless some more drastic steps are taken for the revival of sick units.
Even though the number of sick units have come down in the last three years, some chronically sick units are on the path of decay. Such units would require time-bound revival packages with full financial support and tailor-made technology, which would act as a major surgical operation rather than a pain killer administered on emergency. The BRPSE also requires more empowerment and sufficient financial strength. Financially better companies, particularly Navratna and Maharatna companies, have a special role to play in the revival of sick units. They could very well examine the possibility of adopting some of the units if not wholly but partially so that they could merge with the mainstream and contribute more in changed circumstances. The revival of sick units in Kerala is an example.
The Standing Conference of Public Enterprises (Scope) is ready to play a crucial role by initiating steps to harness the synergy of PSEs and organise their operations for mutual benefits. Meetings can be organised by Scope in collaboration with the DPE for business tie-ups between well-off PSEs and financially stressed PSEs, particularly those operating in similar fields. An early action will be in the larger interest of the financially stressed PSEs which were once blue chip companies and part of national growth.
The writer is director general, Scope