Academic journal article Public Administration Quarterly

Evaluations Dilemmas in OD Interventions: Mixed Record Involving Indian Rural Credit Institutions

Academic journal article Public Administration Quarterly

Evaluations Dilemmas in OD Interventions: Mixed Record Involving Indian Rural Credit Institutions

Article excerpt

ABSTRACT

Evaluation of OD is always a difficult task. There are problems of weaknesses in method, measurement errors, far too many variables and difficulty in establishing cause and effect relationships between intervention and output. The present case study recounts the dilemmas experienced by Bankers Institute of Rural Development (BIRD) in evaluating OD conducted in a large number of small, statesponsored rural banks in India during 1995-1997. How to isolate the contribution of a state-sanctioned Organisation Development Intervention or OD to the changes observed when so many interventions were taking place? What was the "additionality" of OD? What is the authentic measure of evaluation: "hard" data or "soft" data? While quantitative methods appeared scientific, there were several fallacies in its assumptions. The donors might be interested in the hard financial data but they gave only a unidimensional view of the reality; it also ignored the fact that OD was primarily a process intervention and must be measured by process parameters. How much "process data" and "hard data" need to be taken for an effective measurement? Some of these questions remain unanswered.

A few lessons were also learned from the experience: need to lay down clear objectives before OD intervention, need for collection of pre-intervention data, choice of multiple methods for an effective measurement, and establishing a system of assessment and feedback as an integral part of OD design. These lessons may be of interest to OD practitioners and those evaluating OD.

INTRODUCTION

Organization development as a planned process of change to improve organizational effectiveness is being practiced all over the world in a variety of institutions and situations. OD intervention in 49 Regional Rural Banks (RRBs), small sized, state-sponsored rural banks in India, was conducted during 1995-1997 by Bankers Institute of Rural Development (BIRD), India's premier rural banking institute offering training, research, and constituency services.

RRBs, 196 in number, were set up between 1976-1987 as poorman's banks) to meet the credit needs of farmers, rural artisans, and landless labourers. As a group, RRBs, barring some exceptions, have been a story of failure in terms of their performance as sustainable financial intermediaries. They failed to provide efficient financial services to the poor, failed to sustain themselves financially, and became the problem children of the banking sector. Their malaise included low productivity, inefficient operations, low loan recoveries, inadequate outreach, inefficient financial margins, large accumulated losses, poor customer service, low staff morale, and chronic staff indiscipline (Basu, 1997), among other features.

The introduction of banking sector reforms in 1992-1993 with emphasis on productivity, efficiency, profitability, application of stricter income recognition and provisioning norms, and transparency in accounting, etc., posed a threat to RRBs' survival unless drastic remedial measures were taken. The reform package gave them more operational freedom and took care of relaxing earlier restrictions on RRB operations which had a stifling effect on their performance. Interest rates were deregulated, investment restrictions were relaxed, client selection was to a large extent left to the RRBs, and closure/amalgamation/shifting of branches in a limited scale was permitted. Thus, a policy environment was created to enable RRBs to compete with other commercial banks on a level playing field (Basu, 1997).

In the first phase, 49 RRBs were selected for capital assistance to cleanse their balance sheets. All RRBs were required to prepare long-range Development Action Plans (DAPs) aiming at financial turnaround within a reasonable period. Organization Development Initiative (ODI) was taken up by BIRD at the behest of the Government of India, Reserve Bank of India (RBI)--central bank of the country and NABARD--the country's apex Development Financial Institution in the rural development sector--as an HRD intervention to support a reform package in RRBs. …

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