‘Management from heart’
PSUs can be turned profitable, all you need is human touch, says RH Khwaja, IAS and former CEO, SCCL

By Jyotsna Singh
The intangibles in life are more tangible than the tangibles". This statement can come only from a writer, an author. I had gone to Paryavaran Bhawan to meet the co-author of The Acrobatics of Change. But the person I met was an author, a business leader, a visionary and a humanist. In fact he has proved that a thoughtful life is a pre-requisite to penning down a moving tale. Rajen Habib Khwaja is a 1976 batch IAS. He has held various positions in the government including the current post of additional secretary, ministry of environment and forest. One of his major achievements is the turn-around of Singareni Collieries Company Ltd. SCCL was a loss-making PSU till he took over as the CEO and the rest is history. In the times when private sector is seen as solution to all evils that have gripped the public sector, his phenomenal achievement gives hope to the government undertakings. And he did all this primarily by improving the working conditions and human touch. He is an environmentalist, fond of trekking, reading and photography. In fact, Khwaja’s office has many photographs of wildlife clicked by him, including pictures of ferocious tigers. He spoke to Management Compass about Singareni and its success story. Excerpts from the interview:

What inspired you to write your part of the book?
It was the persuasion of Moid Siddiqui, the senior co-author, who said that the story of Singareni should be shared with a wide range of readers. I was very hesitant as I believe the work one does should speak for itself. But Siddiqui said that public sector turn-arounds should be shared. Now if you look at the current global context you would understand the point clearly. Few months back nobel laureate Joseph Stiglitz said that we wish US had governor (YV) Reddy (former governor, RBI) as governor of banks in the US and this sort of thing would not have happened. We were thinking at one point of time that unabated and unalloyed capitalism is the best formula for everything. What we need to realise is that we must have checks and balances. Public sector in India is maligned but if the political will is there, we can definitely produce results. Coal industry is very difficult to manage, specially Singareni because of naxalism and the problems associated with low productivity. It was a loss making regime for a long time. Siddiqui’s insistence on sharing the story given the context was the final motivating factor.

How did you bring about changes in SCCL?
The first challenge was of the political will. We had to convince the political leadership of the immense potential that Singareni had. The situation was bad on that front. The company had been referred to Board for Industrial & Financial Reconstruction (BIFR) in 1992 and 1996. It would have definitely been closed by 1997-98. It would have meant rendering over 1,14,000 people jobless. We asked the government if they wanted the company to close. If the answer was yes, then nothing could matter. But the answer was no and we prepared a clear roadmap. We had to come out of losses and strike culture, ask for full backing of political executive, enforce law and order and the entire machinery at the district level had to be galvanised. We set some achievable milestones and began immediately to work on them. The process can be divided into labour relations, technology issues, improving the quality of production, marketing of coal and human resource issues. The last category received special focus from us and that, basically, changed things for the better. We started with the concept of golden handshake. We explained to people that we will give them good deals for health and age reasons and even to those whose productivity had declined. We gave preference for jobs to kith and kin of those who took voluntary retirement in SCCL. The minimum compensation was Rs 10 lakh to the retiring workers. That amount was invested in banks as security so that it will act as a long-term earning source. I believe in reforms with human touch. If you just start cutting down on manpower you are throwing people out of job. This creates great social turmoil.

In our colleges we introduced environment as a compulsory subject in 2002. There is a book called Eco-friendly Coal Mining: The Singareni Approach which SCCL published in 2005. There is a chapter on how environment awareness was revolutionised in Singareni. A survey was conducted by Intellects.biz and out of 34 factors they have mentioned about turn-around of the company, six directly related to environment. It’s truly a green revolution that we undertook.

What were the reforms undertaken?
More than 200 reforms were undertaken. Broad areas which were covered included technology, welfare of employees, customer satisfaction, information technology initiatives, energy conservation and improving safety and rescue services. But the core thing was change in mindset. We also applied what is called ‘script-writing’ in management. We called members from the management and asked them to write down what would they do if they were made CEO of the company. Idea was to encourage all individuals to think independently and out of the box. Initially they thought it was funny and strange. But over a period of time the realisation came that it was triggering one’s own thoughts and creativity which even they were not aware of. The essence of Singarenism is that fundamentally human beings are good but this goodness has to be aroused and sustained. Let me tell you something interesting. The number of strikes in Singareni touched 417 in the year 1991-92. In 2007
the number was zero. Even during emergency the number never came below 11!

In the times when the governments of India are disinvesting public sector units (PSUs), even the navaratanas, do you think it would have been better had SCCL also been disinvested?
I believe in a vision-mission matrix, which means we must be clear as to what we want, as a nation and as individuals. The public sector originally came up as part of the Nehruvian vision of Fabian socialism which meant that the commanding heights of the economy must work for the welfare of the largest number of people, especially in a country like India which is poor. That is how the public sector grew. But, unfortunately, it was not given the freedom to flourish. So, it was constricted and restricted. It became an employment generation mechanism and started working on unprofessional lines. Most of the PSUs became sick in 1970s and 80s. The government realised that if they are not revived, then the situation will go out of hand. So, reforms were undertaken.

In many areas private sector does well, but it is not true for all the areas. In coal sector, we can encourage some sort of entry of the private sector. But I can’t really assess whether they will out do the public sector in efficiency. There are success stories in both the sectors. One inherent strength of public sector is that we can not have a shocking Satyam scam there because we are under the control of comptroller and auditor general of India (CAG) and we are answerable to the State assemblies and Parliament. There definitely are scams and scandals within government too, but they can’t touch such a huge proportion. India has a balance between public and private sectors. In steel there is SAIL as well as Tata steel, telecom sector has both kinds of players etc.

What is the role of government and PSUs in the current financial crisis?
Balance is the most important thing. We should not go to extremes in life or any institution. If we become ideological and support or oppose things only for the sake of ideology, then we land into problematic situations. In the current crisis the PSUs have a greater role to play, because they can lead by example. They can pursue corporate social responsibility (CSR), take environmental concerns into account, and show concern for good accounting practices, transparency, efficiency and cutting down unnecessary expenditure.

Most of the CEOs and visionaries in the corporate world do not hold management degrees. Are management programmes still relevant?
There are two books I can recommend to read. One is Made in Japan by Akio Morita, co-founder of Sony Corporation, in which he has spoken about Japanese culture of management. The other is Iacocca: An Autobiography by Lee Iacocca, former chairman and CEO of Chrysler and former president of Ford Motor Company. It gives perspective on American management. Many of the top corporations in the world, right from 1980s onwards, have not been managed by experts. Management is all about common sense, leadership and, most importantly, leading by example. The top management team should be able to inspire the entire workforce. A degree provides certain knowledge, teaches methodology and gives certain skills. But in real life situation you have to be adaptable, a good listener, should have intuitive assessments and react timely in times of crisis. You have to have integrity. You can’t always command people; you have to inspire affection. US President Barack Obama is an example. He overcame many disadvantages to become the first Black President of the US. Obama may and may not have been to a management institute. What is important is that he has human touch.