Take five

One cannot quarrel with the idea of an organisation appointing a Chief Operating Officer (COO), who is responsible for its day-to-day operations as the effective No 2 after the Chairman and CEO. Among other things, it frees the latter from getting bogged down in the organisation’s day-to-day affairs and to focus on long-term strategy — the ‘big picture’, as it were. So what organisational harm could accrue if the Reserve Bank of India, which now has a Governor and four full time Deputy Governors, appoints a COO?

In principle, no harm at all. But the proposal for a COO — mooted by Governor Raghuram Rajan himself — seems to have ruffled feathers within and without the RBI. One reason is the belief that while the COO will be officially on par with other Deputy Governors, he or she, in fact, will be primus inter pares . But that’s not all. The RBI proposal reportedly envisages the COO as a fifth Deputy Governor whereas the RBI Act does not provide for more than four. Further, there is a tradition of two out of the four being from the RBI ranks, with the other two comprising an eminent economist and an ex-head of a public sector bank. A fifth Deputy Governor could be perceived as upsetting this fine balance between internal and external candidates. Talk that the fifth person will be recruited from outside and thereby lack familiarity with the internal workings of the organisation has been attended by speculation, which is almost certainly false, that Rajan wants Nachiket Mor, former ICICI Bank Deputy Managing Director, for the job. Employees unions, in particular, have opposed lateral hires, which they believe will reduce the representation of RBI officers among the Deputy Governors.

The issue, however, goes beyond institutional hierarchies or lateral recruitments. Outsiders often bring fresh perspective and serve as change agents: Sam Pitroda and Nandan Nilekani, who also faced resistance from entrenched interests, are cases in point. Rajan could well have a strong case for a COO of his choice. But in making one, the RBI must present it transparently and in a manner that explains why the RBI Act must be amended to enable the appointment of a fifth Deputy Governor. Of course, if the appointment of the COO is at the level of an Executive Director, it can arguably be done without statutory changes. But these are matters that require public clarification. Also, it is important to dispel the misimpression that the RBI is batting for the appointment for a specific person rather than for the creation of a post that will strengthen and improve its functioning. To do this, the role and function of the COO need to be clearly defined. The RBI should initiate a dialogue with all stakeholders, especially the Finance Ministry, on its organisational restructuring proposal. Tension between Mint Street and North Block is something the economy cannot afford — particularly today.

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