Strategies for making institutions efficient

Institutions within India require certain basic characteristics to obtain high level of efficiency. 

This week one more scheme, Pradhan Mantri Kaushal Vikas Yojana has been added to the long list of schemes in India. With the rise in the number of schemes being started by the government, it is high time we analyse the institutions being build to implement these schemes. The basic characteristics that any institution requires can be extrapolated from the 5 C ’s strategies as explained by David Osborne and Peter Plastrik in their book Banishing Bureaucracy. The 5 C’s are: Core, Consequences, Customer, Control and Culture. Osborne and Plastrik describe system’s purpose, its incentives, its accountability systems and its power structure as the “DNA of a public system”. The same can be used for institutions.

Institutions reduce uncertainty by providing a structure to everyday life’ as written by Douglass North in his paper Institutions, Institutional Change and Economic Performance (1990). He defined institutions as “the rules of the game in a society or, more formally, the humanly devised constraints that shape human interaction”. In simpler words, Institutions are the informal norms and formal laws of societies that constrain and shape decision-making. Hence, examples for institutions can vary from a convention of driving on a certain side of the road to organisations like Securities and Exchange Board of India (SEBI) that regulate the securities market in India.

In the case of social schemes, these institutions consist of bodies that are in charge of the planning and the implementation of the schemes. For instance, the two institutions responsible for the new Pradhan Mantri Kaushal Vikas Yojana are, Ministry of Skill Development and Entrepreneurship (MSDE) and the National Skill Development Corporation (NSDC). Since these bodies will play a vital role in the planning and implementation of the scheme, the effectiveness of the scheme will majorly rely on them.

Going by the 5 Cs explained by Osborne and Plastrik both the institutions would have to apply following strategies in order to be achieve efficient outcomes:

The first and the most important is the core strategy, which deals with determining the purpose of the institution. There are two important things that having a clear and well-defined purpose does- a) it directs the decisions and the functions within the institution and b) it eliminates functions that do not serve the core purpose. For instance, under Skill India initiative the aim stated to cover 40 crore people in India in different skills by 2022 should define the use of resources within the institutions.

The second is the consequences strategy, which determines the incentives built within the system. As per the authors, the monopoly or the semi-monopoly make the institutions set by the government incentivised to maintain the status quo and restricts innovation within the set-up. Therefore, empowering private sector to create skill-training institutes under their CSR requirements would bring some competition and keep the government institutes on their toes.

The third is the customer strategy, which focuses on accountability. To keep a check on the outcomes provided by the institutions, they should essentially be accountable to the recipients of the service. This will increase the pressure on these institutions and will give them the much-needed feedback. For instance, in the case of Skill India, the institutions are primarily accountable to the beneficiaries of the scheme. Hence, the institution would need platforms where the beneficiaries will be able to hold the institutions and the relevant people in power accountable.

The fourth is the control strategy which determines where the decision making power will lie. This strategy defines the power structure within the institutions. Usually the decision making power is held by the heads of the institution entirely. Thereby, leaving the lower level employees and the customers incapable of making decisions. Control strategy restricts this by allowing decision making to penetrate to the lower levels. The most effective way to do this will be by disseminating authority to the lower level employees. Therefore, to attain ground level success under Skill India appropriate level of authority will have to be disseminated to the lowest level officials that handle the customer interface.

The fifth and the last is the culture strategy. This includes the values, norms, attitudes and expectations of the society. It is highly dependent on the rest of the strategies and cannot be changed simply at the will of the leader. Beside the other four Cs, this strategy depends on the habits, behaviours and emotional commitments of the employees. Therefore, in order to attain a high level of performance within the government employees, an emotional bond needs to be created by sharing the vision of a Skilled India with them.

As per Osborne and Plastrik, the DNA of an organism provides “the most basic, the most powerful instructions for developing an entity’s enduring capacities and behaviours”. In applying these strategies, the institution within India will be able build the DNA of the institutions designed so as to attain maximum level of efficiency.

Devika Kher is a Research Associate at Takshashila Institution. Her twitter handle is @DevikaKher.

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