Academic journal article Asian Social Science

Scope of Business Process Reengineering in Public Sector Undertakings

Academic journal article Asian Social Science

Scope of Business Process Reengineering in Public Sector Undertakings

Article excerpt

1. Introduction

There is a definite need for business organizations to improve performance by incorporating innovative ideas and the latest managerial techniques. In this competitive world businesses need to be efficient and effective to stay competitive. Organizations will find it difficult to survive unless they adapt to the fast changing business environment. This situation holds true for all forms of organization, with Public Sector Undertakings (PSUs) being no exception. In the case of adoption of modern managerial techniques, PSUs are found to lag behind, thus holding themselves at a disadvantage. In spite of poor performance of Indian PSUs, there has been no marked attempt towards implementation of BPR. Since there are possibilities for drastic improvement in performance of PSUs, it is of paramount importance to try implementation of BPR. Successful BPR implementation will definitely reestablish the premier role of PSUs in the development of the economy. The main question here is the suitability of BPR as a potent solution for the revival of PSUs.

According to Goksoy, Ozsoy and Vayvay (2012) if a firm wants to survive in today's hypercompetitive environment it needs to bring in moderate change every year and undergo a major change almost every fifth year. Cost and quality as the determinants of success have given way to flexibility and responsiveness. This necessitates a paradigm shift to process management. BPR is "the role that process management can play in creating sustainable competitive advantage" (Herzog, Polajnar, & Tonchia, 2007). This situation holds good for all forms of organization, including PSUs.

PSUs have a paramount role in the economic development of countries like India. However, performance wise, there is much to be done in the case of PSUs. In 2005-2006, 157 profit making enterprises earned a total net profit of Rs. 76 240 crores and 58 loss making units incurred a total loss of Rs. 5 952 crores. The Economic Review 2010 showed that many PSUs run at a huge loss. Loss making units rose by 36 per cent and loss amount by 375 percent during 2012-13. Recognizing the role of PSUs, Government of India has evolved a number of strategies for reviving and strengthening them. These strategies include revival of PSUs through the process of Bureau of Industrial and Financial Reconstruction (BIFR); financial restructuring wherever appropriate and formation of joint ventures with partners capable of providing technical, financial and marketing inputs. Certain other measures like infusion of fresh funds; organizational and business restructuring; human resources development including manpower rationalization through approved Voluntary Retirement Scheme (VRS); improved marketing strategies; modernization and technological innovations; and cost control measures were also invoked.

The State of Kerala has a significant number of State PSUs (SPSUs), which employed 132 677 personnel during 2012-13. Government of Kerala (2005) however, laments that SPSUs "in the manufacturing sector have been plagued by poor standards of Governance". Reasons adduced are: diffused nature of ownership, lack of synchronization of critical state sponsored interventions for improving its performance, conflicting objectives advocated by trade unions, inadequate incentives for competent personnel, delayed decision making, redundancy of manpower and improper person-task fit, outdated technology and unviable processes. Many SPSUs were closed down due to their inability to survive even after revival trial under the supervision of BIFR of Govt. of India. However, some sick units have been revived after implementing revival package under the supervision of BIFR. There is urgent need for implementing changes and reforms as the number of PSUs that face the threat of closure due to accumulated losses has increased. Mathew (1997) evaluated the performance of state PSUs in the manufacturing Sector of Kerala and found that out of the 47 manufacturing undertakings, only 18 enterprises made profits during 1992-93; while 29 made losses. …

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