PRIVATE SECTOR CEO TO HELP TRANSFORM PSUs?

By Ruma Dubey

Ratan Tata heading NHPC? Or maybe Anil Agarwal heading Coal India?

Sounds implausible, doesn’t it? Well, if the Govt has its way, it has mooted an idea – why not appoint private sector honchos to head PSUs, maybe starting with Coal India and NHPC?  Coal India is currently ‘headless’. The CEO of the company, Narsing Rao resigned from the post in May’14, as he is seeking to play a decisive role in the newly formed stated of Telangana. Currently, the Govt is desperately looking, first within and now reportedly, outside too, for a CEO. Why outside? Because they are not able to find the right candidate within. Sounds a bit like Infosys, right?

If this works out, there is news that maybe the Govt might consider getting in top talent from the private sector to head PSUs.

So what does this mean? PSUs simply do not have talent at all while the private sector is loaded with talent? And does this mean that by default, private sector CEOs are much better than PSU CEOs? What exactly is the message being sent here?

There is really no guarantee that getting a CEO from the private sector means success. There is simply no co-relation. In fact for a CEO from the private sector, used to the freedom and huge salaries and perks, working in a PSU could be pretty stifling, with limited space to maneuver and salaries would surely be no match at all. Maybe a sense of pride? Maybe but then the CEO has to operate like a fish in a bowl, always watched.

Russi Modi, the man who built Tata Steel, after he retired from the company (Tisco then), he was roped in to head Air India. But given the white elephant that Air India and Indian Airlines is, the complete lack of freedom to operate, he did not manage to make a Tisco out of Air India. Russi Modi was a brilliant man, with excellent management knowledge but the trade union, bureaucratic bottlenecks and giant size ego’s of the politicians left him disgruntled and he actually quit in utter desolation. So there is really no guarantee that a private sector CEO would work wonders.

It is truly a misconception that private sector is efficient and public sector is not. Look at LIC. Despite foreign insurers and private sector domestic players, it retains a 82% market share. PSUs can be efficient if brilliant minds are nurtured. Another risk of getting private sector CEOs is that of vested interest. There is sure to be some conflict of interest and the ‘connections’ made will prove to be significant for his group of companies, either directly or indirectly.

Narsing Rao, the retired CEO of Coal India is an IPS; are we saying that this is not brilliant enough or do we now need only foreign degrees? Also the CEO from outside, when he takes over, wont he be fed information by the second tier employees of the very same organization? So how can it be right to make decisions based on information from PSU employees while they themselves are not considered to be worthy?

Heading a PSU needs truly special talent and brilliance. There is no ad hoc hire and fire here. Dealing with a huge unionized work force is no small joke, while dealing with direct interference from politicians.

Ironically, the private sector consistently poaches on PSUs to attract best talent. Essar Oil CEO KK Sinha was picked up from Indian Oil Corporation.  RS Sharma retired as the chairman of India's largest public sector company, ONGC three years back. He then joined as the Southwest Asia head of Lloyd's Register and this was after being flooded with offers from the likes of Reliance, Essar and the Hindujuas.  Prabh Das who left as joint secretary (refineries) in the petroleum ministry, joined LN Mittal's energy business as MD of HPCL-Mittal Energy. Rajiv Talwar, Executive Director of DLF resigned as additional director-general in the ministry of tourism. Sushil Roongta, retired as Chairman SAIL to join as MD in Vedanta, Ravi Kumar CEO of BHEL is an independent director with Reliance Infrastructure and advisor to L&T. Chairman of Power Grid, RP Singh is now executive VC of Jindal Steel and Power. The list goes on and on.

Thus the question is not private sector CEO or public sector CEO. We in India have some brilliant minds which when given the freedom to think and move, can bring about transformational results. And that is the crux – what the PSUs need is not private sector chiefs but the freedom, the complete autonomy to work like a  private sector.

What the Govt needs to work on is making the PSU work like a private sector, giving it full freedom and making labor more accountable. Merely bringing in a brilliant CEO will not help.