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Reformatting Government operating system

Comments / {{hitsCtrl.values.hits}} Views / Wednesday, 8 January 2020 00:00

 There are legal bases for the current set up of line Ministries and Departments. However, it is the Parliament which formulated the legislation and set up this governance system. Hence, there should be a bipartisan agreement among Members of Parliament to allow the review of governance structure in line with the national election cycle and offer their support to the elected Government to set the revised structure within three months of the election. The election manifesto of each political party could have its draft Governance Structure ready for public scrutiny

Sri Lanka has a newly-elected President and an interim group of Ministers, Deputy Ministers and State Ministers. The Secretaries to the Ministries have already been appointed and the Chairpersons and Board of Directors are being progressively appointed for State-Owned Organisations. 

This writer has previously commented on the best practice processes and procedures for such high level appointments. A few more articles appeared in Daily FT on the same subject, after my article was published and in general, my opinions were reinforced with further practical actions proposed by those writers. I agree with the majority of their ideas. 

However, a recent such article proposed that the appointees to high positions in State Owned Enterprises (SOEs) must be ready to serve without monetary rewards. This suggestion was based on the premise that potential appointees should already be financially comfortable as high performers. 

In principle, this writer does not agree with such an approach and presumptions. All high performers are not necessarily rich people due to various personal commitments and social reasons. A handful performing in the private sector could fall into the ‘rich’ bracket. There could be an unemployed or an under-employed person who has excellent capabilities and waiting for an opportunity and recognition. Hence, it is unreasonable to challenge a person to serve without pay to display his or her model citizen character. 

Also, there is a legal requirement to offer an equitable payment for a service. This compensation is to prevent someone later disowning a disastrous result declaring “I provided my service free of charge and you cannot question quality of a free service”. Of course, the appointee can decide to transfer the payment to a charity organisation or to any other public entity if his or her moral ethics prompts a noble service. 

In Australia, local city councils allocate some of Council buildings to social groups to run their not-for-profit social services, under written agreements. To make these agreements legal, the social groups must pay one dollar annually to Council. Basically, the buildings are given to them free of charge but one dollar symbolises a legally enforceable financial agreement. 

My opinion is to get the right person, compensate him/her with a right monetary amount and demand the right service. The efficient management of the organisations would yield profits and overall reduction of overhead costs.

 The mess

There was a Gazette Notification 1A – G 31476 — 417 (12/2019) outlining the allocation of Ministries, Departments, Statutory Boards, Institutions and Government Corporations for each Minister. It also had references to respective Statutory Instruments for the operation of legal entities under each Ministry. Hence, the Minister is supposed to abide by the relevant legislation, when fulfilling the duties.

When studying the gazette notification, this writer was alarmed by the sheer number of organisations allocated to each Ministry. It seems that successive governments have formed these organisations without reviewing the role of existing. Some were politically flagged organisations. 

It was also noted that these organisations are scattered across Ministries, defying any scientific logic in allocation. The National Building Research Organisation was listed under the Defence Ministry. There were numerous research organisations listed under different Ministries. 

The writer understands that different former ministers might have initiated the establishment of research organisations for their own ministries with narrow aims in mind. However, the officials should have advised the Ministers to view the needs laterally and holistically. It is high time to review the common purposes of these research organisations and how the operations of such organisations could be linked to the national economic development framework.

From the Presidential Secretariat website, this writer downloaded a copy of Public Enterprises Circular Number PDE3/2015. It had a broader categorisation of State Owned Enterprises (SOE) such as the Regulatory, Promotional, Research and Development, Educational, and the Other. This writer was amazed to find out that the Urban Development Authority was categorised as a Promotional SOE, along with the truly promotional Institutions such as Sri Lanka Tea Board. The Category “Other” State Owned Enterprises had been overloaded with around 145 organisations and it was essentially a mixed salad. While this writer is not a legal expert to comment on legal basis of such categorisations, his common sense suggests that there should be a better way of categorising SOEs rather than putting a heap into the “Other” basket. 

To be fair to the current Sri Lankan President, he has not initiated this categorisation and this Circular has been issued in 2015. However, the advertisement appearing in Presidential Secretariat website calling for Expression of Interest to appoint Chairpersons and the Board of Directors, had a web link to this Circular to outline the remuneration basis.

Apparently, the new President has decided to appoint a single Chairperson for a cluster of Government organisations which are strategically connected. This is a good move. The rationale may possibly involve promoting a common direction for similar organisations and cut the management cost. However, this is only part of the solution to remedy the flawed setup. Similar organisations must come under a single roof and technical resources of each must be shared with the others. Most importantly, each business plan must be shared, compared and re-oriented to establish links to a single Strategic Plan which in turn should have permanent links to the national economic and social strategic plan, if such a plan exists. 

Hence, there should be a methodical approach to review, reduce and merge similar organisations and also streamline operational activities of State-Owned Enterprises and other Statutory Boards and Institutions.

Governance structure

Private sector organisations survive by constantly analysing their economic viability and customer expectations. Failure to do so would deliver disastrous results. This was quite evident when the business giant Kodak failed to transform its film-based business model to digital photography model in time although it had own research findings suggesting to follow that path 10 long years, in advance. 

The same transformation needs are applicable to the public sector organisations. Social needs and expectation change constantly and the Government must respond via the public sector service organisations. When the titles of the Ministers is one metre long, one can understand something is wrong. Why not the Sri Lankan Government introduce clear and short titles for the Ministers and restrict the number of Ministers to maximum 25? 

Having shorter titles such as Finance, Defence, Homeland Security, Foreign Affairs, Trade, Education, Public Service, Energy, Agriculture, Health, Transport, Sports, Environment, Science and Technology, etc. would send a clear message to the public which subject area the relevant minister is responsible. Detailed accountabilities under each ministership could be provided as an accountability statement, available for public. These accountabilities could be reviewed annually and updated as the country progresses along a set strategic path.

Ministries and departments

There are legal bases for the current set up of line Ministries and Departments. However, it is the Parliament which formulated the legislation and set up this governance system. Hence, there should be a bipartisan agreement among Members of Parliament to allow the review of governance structure in line with the national election cycle and offer their support to the elected Government to set the revised structure within three months of the election. The election manifesto of each political party could have their draft Governance Structure ready for public scrutiny.

The scientific approach

Prior to forming a public sector organisation, there should be a ‘Need Analysis’. To understand how ‘Need Analysis’ should be done, one has to borrow concepts from Social Science. Needs are multifaceted and can be viewed at four fronts as suggested by the Social Study Scholar, Professor Bradshaw. (Ref: A Taxonomy of Social Need). He suggests that the Normative Needs are decided by legislation, standards or by the experts and the Comparative Needs are developed by comparing similar services, situations, competitive service and provisions, etc. Bradshaw goes on to talk about the Sensory needs which are based on what the receiver feels or says and Expressive Needs which are based on observing the receiver’s behaviour by the provider.

This analysis would form the list of “Community Needs”. To fulfil the community needs the Government can develop a range of “Services”. It is important to define “Service”. The generic definition of a service is “an interaction between a provider and a receiver which creates a value for both and captures the value by both”. If both parties do not benefit from the interaction or the transaction, it is no longer considered as a service. Both parties must create and capture value. It is easy to understand this when a fee is paid for a service. 

However, this definition is still valid for an unpaid service. Suppose a Grama Sevaka Niladari has provided a free service to a resident by issuing a Character Certificate. For the resident, this action has obviously created ‘value’ and the resident captured it in the form of a certificate. The Grama Sevaka has fulfilled his assigned duty, created self-satisfaction ‘value’ as a respected government officer. The receiver has also transferred his/her appreciation of service as “value” to the officer to capture. 

The ‘Service’ aspect exists everywhere within public sector organisations. Some of the services are exchanged between divisions or teams within an organisation. Still, the basic concept remains valid. It has a provider and a receiver and also a value is created and captured. 

Suppose an officer develops a draft report for the senior management of an organisation. Here, the officer provides a service to the superiors. So the receiver is the Senior Management. The senior management would receive (capture) a quality report (value) and use the report for making important operational decisions. The officer, as the service provider earns ‘value’ in terms of ‘experience of writing quality reports’ and ‘skill recognition’ by the management, as well the salary as monetary compensation. 

A Government does not have adequate resources to provide ALL the services requested by the public. Hence, service provisions need to be prioritised. How do we decide on one service against another? This is done by assessing risks to the Government not providing a particular service. The Government’s first priority should be the legal obligations. This means either Government provides it or else face legal consequences. 

These obligations are associated with highest risks. These services have minimum ‘Standards’ to comply with. Services such as Health, Education, Legal, and Environment would come under this. Then, the second priority is the provision of common services to display ‘Duty of Care’. The service levels common services and the range of such services would show the public, how the Government behave as a responsible governance body with genuine care towards the people. Housing Programs, Social Grant programs, providing school books and uniform are prime examples of such services. 

The final priority would the “added value services” which are provided to demonstrate competitive leadership. These services are very often political in nature such as ‘Free Wi-Fi’ services in town centres. So, the approach is “what should be done”, “what could be done” and “what would be nice”. Hence, services are categorised under three headings; legislatively compulsory; morally responsible and value adding.

It should be noted that services are live and dynamic. It passes various stages within its service life; Development, Delivery, Review, Change, Demise and Revive. The service providers must constantly manage this life cycle.

Services can be further subcategorised in terms of delivery mode. Direct delivery refers to where the Government directly provides the services to the targeted recipients. Outsourced Delivery refers to the Government obtaining a service from an external service provider and then transfer the service outcomes to the targeted recipients. Facilitated Delivery means that the Government facilitates an environment (such as Tax relief) so that external service providers emerge and provide services to the targeted recipients. Whatever the delivery mode is, the services must create and capture value for both the provider and the receiver.

Direct delivery of services

The Sri Lankan Government needs Ministries, Departments, Statutory Boards, Institutions, and Corporations to deliver the identified services directly to public. If a Government has the luxury to start from scratch, targeted lean organisations can be formed. However, no government has that kind of freedom and all governments should contend with the organisations already created by the previous regimes. Hence, the present government has to critically examine all existing organisations to understand their respective roles. 

The first question that should be asked is whether a particular organisation is really needed to deliver the identified service/services. If an expert committee cannot find valid reasons to justify the existence of a particular organisation to deliver a service and if there are better alternative delivery options, then that organisation should cease to be operated. 

If the existence of a set of organisations is justified, then all such organisations must be further analysed to decide which organisations should be merged, reformed and eliminated. This is the only way to increase efficiency, effectiveness and profitability of organisations, assuring quality service to the public. Built-in service automations and internal auditing mechanisms can serve as deterrents to the undesirable human interventions such as corruption, nepotism and favouritism. 

As an example, there are many Research Organisations listed in the Gazette Notification 1A – G 31476 — 417 (12/2019). These organisations are allocated to different line ministries. Even if a single Chairperson is appointed for a cluster of these organisations, that Chairperson is answerable to a number of Ministers. Hence, it is logical to allocate all research and development organisations to the Minister-Science and Technology and attempt to form a conglomerate of research organisations. 

Sharing the leadership, the resources and the knowledge is essential for success of research activities. The operation of all research organisations under a single strategic plan would be ideal for holistic quality outcomes. In Sri Lanka public sector, the research and development initiatives are currently isolated and there is no collaboration with the private sector to address their needs. 

The same could be said about the research initiatives in the State Universities and their research findings are purely aimed at enhancing academic credentials of University staff and students who pursue further studies. All government research and development activities must be overseen by an organisation like National Research Council (NRC) and the research directions must be set by NRC by analysing current needs of the Country. NRC should not just be an agency which maintains a catalogue of research and offers research funding. NRC has the responsibility to play a more active, strategic role.

Concluding remarks

The Government should appoint a professional expert committee to refine the overall structure of Ministry, Department, Statutory Boards, Institutions, Corporations and State Owned Enterprises. This would determine the minimum number of Ministerial titles. This committee must categorise all public entities in accordance with logical, internationally recognised subject disciplines. 

Thereafter, the merging of similar organisation must be considered, with a view of operating such merged entities under specific strategic plans to serve Government needs. This is the only way to effectively and efficiently use scarce resources and convert non-profitable government entities to revenue generation entities while proving ‘the value for money’ services to public.

(Eng. Janaka Seneviratne is a Chartered Professional Engineer, a Fellow and an International Professional Engineer of both the Institution of Engineers, Sri Lanka and Australia. He holds two Masters Degrees in Local Government Engineering and in Engineering Management and at present, works for the Australian NSW Local Government Sector. His mission is to share his 32 years of local and overseas experience to inspire Sri Lankan professionals. He is contactable via senevir15@gmail.com.)

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