THE ECONOMIC WEEKLY
Organisation and Management of Public'
Enterprises: Bangalore Symposium
The formation of the Industrial Management Research Unit for Planning means that the problem of indus-
trial management and organisation ir± the State sector is now recognised.
work would, therefore, be watched with great interest.
From the studies and discussions of the unit the Slate enterprises would no doubt derive considerable
benefit. But these studies and discussions would be useful even to the private sector of industry to which the
knowledge, may not be denied.
The utility of the work of the IMREP would enhance if selected persons from private industry are asso-
ciated with it and invited for discussion, instead of relying wholly on the experience of the executives of
State enterprises, it would be beneficial to draw on the experience of the private sector of industry as well
S I N C E the State has now set the
socialistic p a t t e r n of develop-
ment as its objective, it is ob-
vious t h a t its a d m i n i s t r a t i v e respon-
sibilities w o u l d r a p i d l y increase.
T h e field of these responsibilities
w h i c h has already extended far be-
yond 'bread' and b u t t e r ' a d m i n s t r a -
t i o n w o u l d also become diverse in
Character, I t w i l l cover a l l the
i m p o r t a n t aspects of economic acti-
v i t y such as transport, communica-
tions, trade and i n d u s t r y . In order
to c a r r y out these activities efficient-
ly it is imperative t h a t the State
should devote serious a t t e n t i o n to
the problems of management. The
success of the activities w h i c h the
State w o u l d be u n d e r t a k i n g w o u l d
be determined to a large extent on
its capacity to w o r k out suitable
organisations, select and t r a i n pro-
per personnel and evolve correct
procedures f o r the w o r k i n g of the
organisations. The object should
be to provide adequate checks wher-
ever they are needed w i t h o u t h a m -
pering the progress of operations in
any way.
Management Problems
The establishment of an Indus-
t r i a l Management Research U n i t
f o r P l a n n i n g by the I n d i a n Stati-
stical I n s t i t u t e since 1st of A p r i l is
not, therefore, a m o m e n t too soon.
Under the Second F i v e Year Plan a
large proportion of the investment
in the State sector is to be made
in i m p o r t a n t basic industries. The
management problems, w h i c h are
l i k e l y to become conspicuous almost
immediately a n d continue to acquire
greater prominence in future, as the
socialistic p a t t e r n of development
takes a concrete shape, w o u l d natu-
r a l l y be confined to the field of
Industry.
B r o a d l y speaking, the I M R U P w i l l
be concerned w i t h three groups of
June 28, 1956
Y S Pandit
The progress of the unit and its
i n d u s t r i a l management problems. filled. A v a r i e t y of interesting
F i r s t , it w i l l study and report on topics h a v i n g a v i t a l a n d urgent
the organisational structure most bearing on the efficient a n d success-
suited for the State enterprises. ful management of State enterprises
were t h r o w n up. B u t more t h a n
Secondly, it w i l l formulate me-
that, the symposium provided a
thods for the o p t i m u m u t i l i s a t i o n
golden o p p o r t u n i t y to the top exe-
of resources t h r o u g h the use of
cutives of State enterprises to com-
modern management tools such
pare notes in an academic atmos-
as work-study, statistical q u a l i t y
phere and to voice their opinion
control and incentive.
without i n h i b i t i o n of any k i n d . The
T h i r d l y , the unit, w i l l engage i t -
proceedings of the symposium in
self in e x a m i n i n g the various pro-
w h i c h a l l the participants freely
blems r e l a t i n g to i n d u s t r i a l plan-
n a r r a t e d their experiences a n d ex-
n i n g such as the economics of loca-
pressed their views, as reproduced
tion, mechanisation, nature of i n -
in the mimeographed report, are,
d u s t r i a l relationship, relative effi-
therefore, v e r y i n f o r m a t i v e so f a r
ciency of techniques, technological
as the w o r k i n g of the State enter-
ratios etc. and generally provide
prises is concerned.
technical intelligence necessary for
perspective planning. Allied-or Multi-Purpose
Corporation ?
The symposium was the first or-
ganised a c t i v i t y of the I n d u s t r i a l It is an index of the frankness
and Management Research U n i t for w i t h w h i c h opinions were expressed
Planning. It was designed to find a n d matters under consideration
out. in consultation w i t h the top examined, that, a l t h o u g h on the
executives of State Enterprises and topics to be taken up for detailed
others interested in the subject the study by the I M R U P there was
type of specific problems w h i c h the general agreemnt on the issues t h a t
unit should take up l o r study and were discussed the views expressed
to explore the ways in w h i c h the revealed interesting differences.
facilities offered by the u n i t could F o r instance, P r o f G a l b r a i t h h a d
be made use of by the State enter- suggested that the State should u n -
prises. A l o n g w i t h P r o f J K Gal- dertake the p r o m o t i o n and manage-
b r a i t h and Mr John Strachey who ment of industrial enterprises
were on a visit to the I n d i a n S t a t i - t h r o u g h multi-purpose corporations
stical I n s t i t u t e , and the Secretary like the Zaibatsu in Japan and the
to the M i n i s t r y of Production, some General M o t o r s Corporation a n d
top executives of the State enter- the Tennessee Valley A u t h o r i t y in
prises located in Bangalore where the U S A . The argument in support
the unit is established and where of the multi-purpose corporation was
the symposium was held, participat- t h a t an existing organization m a n a -
ed in the proceedings. A paper on g i n g one enterprise, if it undertakes
public organisation prepared by P r o f the promotion of another enterprise
G a l b r a i t h f o r m e d the basis of dis- whether in the same line of differ-
cussion' ent, w o u l d be in a position to take
On going t h r o u g h the proceedings the innumerable decisions neces-
of the symposium one finds t h a t the sary in the formative period
purpose for w h i c h the symposium of an industrial undertaking
was arranged was more t h a n f u l - quickly and w i t h confidence, and
757
JUNE 23, 1956

economise in the use of the a v a i l - tionship in the p r i v a t e sector was The f o r m a t i o n o f t h e M R U F

able m a n a g e r i a l talent a n d techni- better t h a n in the State sector b u t means t h a t the problem of indus-
c a l personnel. s u r p r i s i n g l y no comment was made t r i a l management a n d o r g a n i s a t i o n
W h i l e the Idea behind P r o f G a l - on this observation. in the State sector is now recognis-
b r a i t h ' s suggestion was generally ed. The progress of the u n i t a n d i t s
accepted, there was a s t r o n g c u r r e n t W h e n the issue of the w o r k e r s ' w o r k would, therefore, be w a t c h e d
of opinion t h a t instead of being p a r t i c i p a t i o n i n management f r o m w i t h great interest. F r o m the studies
multi-purpose, the organisation the point of view of the scope it a n d discussions of the u n i t the State
should be allied-purpose in the sense offered t o the I M R U P f o r c a r r y i n g enterprises w o u l d no doubt derive
o f m a n a g i n g a n d p r o m o t i n g units out specific studies, was under con- considerable benefit. But these
in the same i n d u s t r y . There was, sideration, references were made studies a n d discussions w o u l d be
however, a view expressed a n d a p p r o v i n g l y to the practice p r e v a i l - useful even to the private sector
s t o u t l y defended t h a t w h a t matters i n g i n Y u g o s l a v i a and Russia. I t of i n d u s t r y to w h i c h the knowledge
is n o t so much the type of organisa- was also mentioned t h a t the B o a r d m a y not be denied. The u t i l i t y of
t i o n as the personnel. of Directors of the State enter- the w o r k of the I M R U P w o u l d en-
prises in I n d i a include Labour repre- hance if selected persons f r o m
"The f o r m of an organisation Is
sentatives. N o l i g h t was t h r o w n private i n d u s t r y are associated w i t h
n o t one h u n d r e d t h as i m p o r t a n t
on the result of this association b u t i t and i n v i t e d for discussion. I n -
as the persons in i t . Y o u can p u t
In some cases the M a n a g i n g Direc- stead of r e l y i n g w h o l l y on the ex-
a good m a n in a bad set-up, he
tors are reported to have reacted perience of the executives of State,
w o u l d probably p u l l the whole
v e r y strongly when the suggestion enterprises it w o u l d be beneficial to
t h i n g t h r o u g h . Whereas y o u put
of w o r k e r s ' p a r t i c i p a t i o n was put d r a w on the experience of the p r i v a t e
a bad one in a line set-up, he
to them. sector of i n d u s t r y as w e l l .
w o n ' t pull t h r o u g h " .
R e g a r d i n g the a u t o n o m y of Corpo-
r a t i o n s it was revealed t h a t in one
case at least the a u t o n o m y was
g i v e n b u t it h a d not reached the
Corporation. F u r t h e r , i t was more
difficult to get a decision after auto-
n o m y t h a n before because the part-
t i m e directors h a d no time to m a k e
up t h e i r minds. "Unless y o u have
f u l l t i m e directors, w h o are devoted
to it y o u just do not get a quick
decision."
S i m i l a r l y , in regard to the scope
of i n d u s t r i a l engineering in the
State enterprises, it was held t h a t
the technique of i n d u s t r i a l engineer-
i n g should be made use of f r o m
the very start when p r o m o t i n g an
undertaking. However, it was
s t r o n g l y argued by some t h a t i n -
d u s t r i a l engineering holds scope
when an enterprise has g r o w n old
a n d inefficient, and that, since the
State enterprises w h i c h were a l l new
"had no time to g r o w inefficient''
i n d u s t r i a l engineering had no use
for them.
Labour-Management Relations
In respect of labour-management
relations it was observed t h a t the
State enterprises offered a great
o p p o r t u n i t y as the w o r k i n g of these
enterprises was m o t i v a t e d differ-
e n t l y f r o m t h a t of the private i n -
dustries. An interesting experience
of h o w workers in a Posts & Tele-
graphs factory were persuaded to
increase' production, agree to shift
w o r k i n p and introduce a number of
economies merely by t a l k i n g things
over w i t h them was narrated. One
of the participants who h a d expe-
rience of both the private and the
S l a t e sectors r e m a r k e d t h a t accord-
i n g to his experience h u m a n rela-
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