The Hindu Business Line : Wages of attrition

ONE OF THE paradoxes of India's economic reforms is that the reformer, in this case the Government, is most reluctant to practice what it preaches. While the waves of policy change batter the old walls of tradition in industry, finance and other sectors, the Government, still quite influential in the economy, seems blissfully immune to that change. But change it must if for no other reason than the threats its units on the `commanding heights' face from private organised industry. One of the biggest, and perhaps the most potent, threat is in the form of talent poaching, with the private sector constantly on the lookout for experienced but poorly paid talent in the public sector.

The tendency of the private industry to pick talent from the public sector has been in evidence for some time, most notably among scheduled commercial banks. The threat of attrition in the public sector grows in proportion to the reforms that unleash market forces. Sectors where once the public sector held monopoly are now open to the private sector and witness to intense competition for consumers on the one hand and for staff on the other. The latest PSU to publicly air its worry of attrition is the navratna Oil Natural Gas Corporation Ltd. Concerned about the increasing poaching of its middle- and senior-level officials, especially geophysicists, drillers, petroleum geologists and engineers — the most critical cadre for an oil exploration company — ONGC has sought autonomy to fix remuneration that is competitive enough to retain its pool of talent. Executive compensation is shooting skywards not simply in the financial sector but also in manufacturing. With foreign companies willing to pay globally competitive rates for senior professionals, only the private sector, it seems, can cope with the challenge of attracting and retaining talent. The public sector unfortunately cannot.

The ONGC request for autonomy to the Department of Public Enterprise and the Petroleum Ministry is worthy of serious attention and, more importantly, action. Permitting it to fix remuneration will align the entity with the ethos of private enterprise in which compensation and promotions are productivity based. Increasingly, domestic manufacturing enterprises are using this perspective first introduced in the IT industry to set pay packages. There is every reason to let PSUs reorient themselves to the new competitive paradigm.

Given its current dispensation toward pay packages for its own employees, there is no reason why the UPA Government should not agree with the ONGC request. The Prime Minister has stated that a new pay commission is being considered; but he would do well to remember that his Government is also committed to introducing good governance as a guiding principle for its employees and a committee is in the process of proposing an incentive structure for civil servants. Given all the noise about change in governance, the pay panel should see the light of day. But this should not deter them from granting ONGC and others, like the scheduled banks, the power to set standards of excellence for their employees and reward talent. That surely is what reform is all about.

More Stories on : Editorial | Human Resources | Petroleum

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Wages of attrition

Budget 2006: Fine-tuning the tax regime

The export growth story

Commanding, not demanding, respect

Exporting higher education — Dilemma of `to commit or not to commit'

WTO has not helped the common man

Beyond Davos

Sensex highs

B-schools

Business correspondents