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Published on: Oct. 7, 2022, 5:35 p.m.
Rule by interim heads
  • ONGC: is the government not finding a candidate with the right political blessings?

By Rakesh Joshi. Executive Editor, Business India

The Modi government’s inordinate delay in appointing a regular Chairman-cum-Managing Director in ONGC, considered a crown jewel among Indian public sector undertakings and one of the 10 Maharatna companies, has left energy sector experts and investor bewildered. For the past 18 months, ONGC has remained headless. And for the third time in succession, after Shashi Shankar retired, the oil and gas giant has again got an interim CMD.

This, among other things, has taken its toll on investor wealth. In 1996, when the company was listed, the share price was Rs19.  Now the scrip is barely trading at Rs130.  The highest share price of ONGC was Rs314. The company produces 70 per cent of crude oil in India and around 84 per cent of natural gas.

This has raised questions on the government’s intent on the functioning of ONGC and also whether there are no suitable candidates within and even outside the organisation to take up the top job. There is also a view that if the government does not want ONGC to function as a public sector undertaking, then it should bite the bullet and privatise it. 

In fact, this is what the Congress has been alleging. Last month, Jairam Ramesh,  Rajya Sabha MP and party spokesman tweeted, “Just a few years ago ONGC was a crown jewel. Then came Mr. Modi. He forced ONGC to absorb GSPC, a scam-ridden company castigated by the CAG. ONGC is without a regular CMD since April '21. It’s being deliberately destroyed so that one of the ‘Humare Do’ takes it over. Atrocious!” 

According to RS Sharma, former Chairman and Managing Director, ONGC, “This reflects the mindset of the government about managing the affairs of a public sector undertaking... Many other PSUs are also in similar situation. Besides value loss for the investors, such attitude has a big demoralising effect on the workforce of the enterprise.”

No succession plan for CMDs

CMD and Directors are Board level positions, which are presidential appointments done through the Public Enterprises Selection Board process. Though internally, ONGC has been making a lot of staffing changes and today it has a structured approach to succession planning, the company doesn’t have a proper succession plan when it comes to CMDs.

There is lower-level succession planning which works through a programme which routes eligible employee nominations for senior management roles. This is via three sources. The first is a system recommendation programme which uses HIPO (identified pool of high potential executives) to nominate employees matching the senior role profile based on level, discipline, experience, performance score, ADC (Assessment Development Centre) score and sectors/locations covered.

The second source is nomination of successor for the position by the identified/nominated position holder, which is based on experience and interactions. The third is self-application by an executive who considers himself/herself eligible for the vacant position.

  • This reflects the mindset of the government about managing the affairs of a public sector undertaking... Many other PSUs are also in similar situation

    RS Sharma, former Chairman and Managing Director, ONGC

The Talent Review Panel (TRP), consisting of the Administrative Director, Functional Director and Director (HR), after evaluating the applications, selects the candidates drawn from various sources.TRP submits its recommendation to the Executive Committee for final selection of the successor.

ONGC has been working towards creating a strong cadre base through a programme called DEEKSHA, to identify and monitor critical talent pool within the organisation. Apart from that, ONGC has a mechanism of identifying high potential employees through ADCs, which is utilised for Chief General Manager (E7) to ED (E9) promotions, as well as flagship leadership development programmes for senior level executives.

To develop a robust leadership pipeline, ONGC has chalked programmes such as the Leadership Development Programme (for E7 level executives) and Advanced Management Programme (for E6 level executives) at the IIMs, and Young Leaders Programme (for E4-E5 level executives).

Besides this, ONGC has periodically reviewed its organisational structure to relook all the activity/positions (employee roles) in each of the business verticals and their present and future requirement, in consultation with business heads of each strategic unit.

So what has gone wrong when it comes to CMDs? The message that has gone down the line is that of insecurity and uncertainty. Possibly, the government is not finding a candidate with the right political blessings.

However, the government does not seem to be bothered by the fact that not having a regular CMD can create uncertainty within the organisation and affect the morale. The lack of continuity proves a deterrent for the interim head to take forward the vision of the organisation. Surely, feel old timers, a regular head has a tenure and better focus on long-term stability of the organisation.

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