Tuesday, July 21, 2009

Governance issues at Delhi Metro

Delhi Metro has had more than one big failure. Since its CEO, E Sreedharan, is something of a folk hero, the general response has been to shrug it off as a failure on the part of people down the hierarchy. I had a post on this subject the last time. Again, putting on my B-school prof hat, I would argue that management failures that occur repeatedly or are significant point to governance failures. Sunil Jain elaborates on this point very well in his column in BS in which he also asks for Sreedharan to step down:

... it (the CAG audit of Delhi Metro) points to the novel 50:50 management structure to mean that neither of the governments is in charge, so the company is pretty much run by the management, namely Sreedharan. The company’s board doesn’t even have the token independent director. There appears no standard proocedure for evaluating contracts and several changes have taken place in contracts after they have been won. The CAG talks of testing standards being watered down to meet deadline, of tests being conducted in non-accredited laboratories, of these being done without DMRC staffers being present, and so on. To top it all, DMRC hasn’t kept any records of test reports since it ‘would involve additional expenditure’!

This is a danger we need to be alive to all the time, namely, that an individual can become bigger than the system - and no individual is infallible. It is the system that must loom larger and the individual must always be subordinated to the system. That, after all, is the principle of democracy. Unfortunately, despite enormous evidence to the contrary, there continues to be a strong preference for the dictatorship model in a corporate setting on the ground that it delivers results. It is forgotten that the results are always in the short-term and they arise from storing up huge problems for the future.


K.R.Srivarahan said...

Who is accountable for the present contretemps of Delhi Metro? When the CEO resigned, should the Chief Minister not have accepted it? If the Board members are weak-kneed, do we blame them or the CEO? The much-maligned CEO never claimed monopoly over integrity. He has not made any megalomaniac statements.
He took exception to the modus-operandi of Maytas Infra in the Hyderabad project. He was clairvoyant about the Satyam saga which exploded subsequently.
When the pillar mishap occurred now, he could have insisted on acceptance of his resignation thus retaining the moral highground.If others are pussy-footed, any decisive person appears as a dictator.

Anonymous said...

The author has rightly stated THE BIG PICTURE. We only see the success stories but forget to look at those who had to pay dearly for the success. The so called CEO of DMRC ordered to complete projects on time but forgot to see whether it is fully completed. All the projects were shown completed on paper and trains were run immediately. But still works used to go on simultaneously. There is a tendency of the management that "Someone must be blamed" and they put the blame on people in the lowest hierarchy. More problems related to HR policy exist which we don't want to disclose outside the organization. Large number of employees are quitting their jobs as the result.