Recommendations of Group 2 –Memorandum of Understanding

  1. Subsequent to the submission of the Report, DPE has already strengthened task forces with requisite financial and management skills. However, to enhance sector specific technical capacities, DPE may consider forming a pool of domain experts who may be co-opted on to the task forces wherever needed.

The dynamic changes in national and international economy and also in the related industry, government and society makes it obligatory that the task force members should update their knowledge continuously and develop a strong grip on the basics of the industry. A system should be devised which may ensure the updation of the concept and understanding of the task force members of the macro and micro environment seamlessly. For such exposure, appropriate training mechanism should be devised so as to equip the task force members with appropriate tool and techniques to measure upto expectations.

  1. In regard to social objective and service delivery targets, DPE have issued detailed guidelines for CSR, R&D and sustainable development. By indicating specific targets in measurable terms in these areas, it is now possible to hold management accountable while evaluating performance in these attributes.
  1. The internal control systems in public enterprises should be made compatible with the requirements of MoU and contribute to its sound formulation and implementation. Towards this end, the DPE should organize a one-day workshop every year.
  1. The present weightage system is over-weight in favour of financial attributes. The group is of the view that there is a need for correction having regard to balanced score cad approach of equal weightage to finance, marketing, internal processes, learning growth and the career opportunities of the employee.
  1. The group is of the view that the process of fixing targets (physical and financial) also needs a revision. The present guideline of minimum 10% growth over last year performance or previous year MOU whichever is higher as a basic target is not practical across the sectors. For realistic target fixation, projected sectoral growth numbers need to be factored in rather than “one-size fit all” approach.
  1. The Group also feels that the Government commitments / obligations in many cases have not been specific especially in areas where inter-ministerial consultations are involved. To take into account such obligations, it is essential that the concerned Ministries / Departments should have pre-consultations before meeting the task force and specify obligations and commitments they wish to undertake so that the same can be factored in while formulating the MOU as well as at the time of evaluating the performance of the CPSE.
  1. The Group agrees with the recommendation for including compliance of corporate governance as a criterion for evaluating and rewarding performance. DPE is in the process of issuing CG guidelines which would be factored in at the time of finalizing the MoU.
  1. The Group recommends that each MOU signing CPSE should put their MOU finalized with the Government on its website and also on the website of the concerned Ministry / Department.
  1. Regarding service delivery to customer, the Group is of the view that if proper “balanced score card approach” is adopted then the service delivery to customer, customer satisfaction and quality related to the service would get addressed adequately.