Corporatisation of OFBs: Transiting from Bureaucratic Functioning to Corporate Practices

Dr Subhas Pandey

It may be instructive to highlight the difference between the working of a government office and that of a smart, successful company though an example. I must caveat upfront that citing individual examples is not a good way to praise or condemn any side because there is always risk of biased selection. Best of one side being unfairly compared with the worst of the other side! With this caveat and understanding I am citing an individual experience to project it in the broader setting of operational functioning of different organisations to make my point.

Recently, I ordered an electric toothbrush online and the gadget would just not charge despite being plugged in for more than 24 hours. On their website I was expected to upload a photo of the defective item that I was seeking to return before establishing telephonic contact with customer care executive.

Obviously, an electronic item not charging would not show up any visible defect in a photo. There was no charging indicator and so even videographic evidence to back up the complaint would have been weak.

Nevertheless, the customer executive heard me and escalated it to supervisors a couple of levels higher. They trusted my version, accepted my complaint and approved the refund which was credited to my account within a few hours. Further, they told me to dispose off the defective item as nobody would come to pick it up for return. [It was not cost effective for them to send a courier to pick up a small value defective item for further ‘processing’! ]

Now suppose this item was purchased from a government organization. How would that organisation respond? What is expected of this organization to appease a dissatisfied customer? I would probably be expected to make an ink signed application to make a ‘prayer’ for consideration to seek return and refund. (Not in triplicate anymore and may be some organisations have begun to accept an online complaint)

Different offices have different nomenclatures for functionaries. Let me pick up a genetic nomenclature of general managers and financial advisors.

My application would most probably be processed on file. If it was addressed to the GM – he would imply pen down “please examine” to the AGM would pen  down “please examine” and so on to the lowest babu whose task would be to finally ‘examine”. After ‘examination’ a signed note will be put up by the Assistant GM to the Deputy GM who would in turn put it up for orders of GM. Thereafter, the file may be sent to finance division for concurrence if the item value is greater than some threshold amount. There, the assistant financial advisor, deputy financial adviser and financial advisor would similarly process the case for financial concurrence. As is the custom, finance will raise some queries, seek few clarifications and objections which would have to be satisfied before the Competent Financial Authority can accord approval. All these notings and written orders in files and letters/memos exchanged would be preserved in files maintained by each wing, to be preserved for audit later.

After this process should the refund be approved with financial concurrence, the file would be sent to the payment and accounts wing for making payment. There is an elaborate process of creating a Bill by a group of officials which will be scrutinized before being ‘passing for payment’. Then a cheque will be issued and sent by post to the customer or an electronic advice would be sent to the bank for online transfer of refund.  I may even be expected to submit along with my application certain solemn declarations of being truthful in making my claim and a pre-signed receipt with a Rs 1/- revenue stamp which would take me at least 1 hour to get from some Post Office, in advance of actually receiving money. Even after migration to digital payments, ink-signed ‘sanction letters authorising payments’ and Stamped Receipts are continuing in many organisations. Interestingly, the cost to government to process the application may exceed the refund sought!!

There is no exaggeration in this narrative and absolutely no ill will, no bitterness and no smirk. This is all pretty normal. The dozens of government officials involved in the process of authorizing and effecting refund are all doing their duty sincerely, diligently and presumably without expecting any bribe from the customer seeking refund. They are all bound by an ecosystem of rules and regulations; recording everything in black and white with ink signed signatures so that there is institutional memory available to their successors in office as to how similar cases were dealt with in the past and also with a view to allow auditors to examine their decisions may be years later ex post.

The above scenario is equally likely whether the customer is a private member of general public or another government department.

I have not factored but it is also possible that some government functionaries may expect palms being greased before they part with the money. It does not matter whether it is government money being paid to someone in return for some goods and services supplied or it is payee’s own money being returned to him. So even in respect of monies for which the government acts as a banker or trustee, it may not be unusual for the officials to expect a bribe.

Once some money comes to the government and is credited in government accounts, taking out money from government accounts involves complex processes designed with increasing mistrust because someone or the other has broken that trust and misappropriated public money in the past. The larger and impersonal an organisation, higher the risk of wrongdoing here and there.

Then there is risk of complete lack of application of mind. There are real life examples [not made up stories] where a pensioner submitting life certificate for current year was asked to submit life certificate for previous years and where an officer was denied the cost of back to office return journey because he lost the railway ticket!

The company that I dealt with however realizes that maintaining a large contingent of such file pushers is a cost to the company that can be avoided by approving the refund based on telephonic conversation and photographic video evidence uploaded. All that can be preserved for audit purposes. It is more so if they can verify that the complaining customer is a regular customer, a long standing customer who is not in the habit of returning items and not in the habit of complaining too much. That the price of the item being returned is rather small may also be a consideration in prompt approval of refund request. Also, there is a substantial delegation for taking these decisions for refund or return.

However, in governmental system, the cost of processing a case [manhours and overhead costs] is just not factored and not linked to the amount involved. In fact, the amount of scrutiny and paper work may be inversely proportional to the size of amount involved! Government may not mind spending lakhs to pursue a case involving a few hundred rupees.

I must hasten to add that companies are not all angels and not at all times. Of course, big companies can equally be bureaucratic, cussed, unhelpful, rude and downright idiotic in handling consumer grievances. Consumer courts are clogged with huge caseloads under the Consumer Protection Act – notably the Real Estate companies. The average customer care executive may be bringing delight to a disgruntled customer while big honchos of the company may be doing bigger transactions of questionable nature. Corporates have their own sets of wrongdoing, cheating taxmen and investors of their legitimate dues.

The only visible thing is that bureaucratic organizations fail to deliver and are overtaken by more efficient organizations unless the system permits continuance of monopoly of obstructionists/obscurantists.

In this specific case of the electric toothbrush – the company has benefitted  by earning my trust and has possibly made me a life time customer. The company will certainly benefit from back-to-back contracting features so that the cost is passed on to the supplier. This in turn will lower the suppliers grading and drive the supplier to perform better through what is called a Failure Reporting and Root Cause Analysis requirement. Progressive brand conscious companies may spend large sums investigating how a defective piece went to market undetected. They may review and tighten quality control systems. Theoretically, government organisations can also do the same but here the focus is more on ‘fixing the responsibility of errant officials’ rather than bringing systemic changes to prevent recurrence of defective supplies going out undetected. I do wish the Government also had such as system but unfortunately – except for a few organisations notably the Armed Forces, Railways – there is no lessons learnt or corrective system in place.

My pleasant experience may perhaps be because the customers are too many and statistically only a small fraction of customers may be complaining and seeking return refund. What if the matter concerned an item with very few customers and the company does not have this statistical comfort of a large proportion of satisfied customers.

My pleasant experience turned even more pleasant when a few days later I realised that the electric toothbrush that was not charging and for which sale price had been refunded actually started charging! The handle and the charging stand were somewhat misaligned and lacking in proper marking to guide the buyer. I informed them that the product was now functional and sought to pay but they not only declined to  accept payment  but also gave me a gift voucher!

So a small manufacturing defect or improper markings on the product to guide the users led to rejection of an otherwise usable product! Imagine if it happens with ammunition! You discard it in inspection and then it works! It explodes where it shouldn’t! In the specific case of the Corporatisation of OFBs the key culture change would be that there would be no more “indents” but “hard won contracts” no “captive customers” but “demanding  buyers” seeking value for money, on schedule delivery and the right quality and not just empty promises. This is not easy to achieve and will require much more than a “notification” to convert the OFB to a PSU and in some period over time into an efficient professionally managed corporate enterprise.