Wednesday, July 18, 2012

Solution to Policy Paralysis

Equip bureaucrats to mitigate, rather than take, risks

There is a widespread perception that decision-making systems in the bureaucracy, at all levels, have become slow and inefficient. While public perception is linked to a multidimensional reality, it will be useful to look at these issues within a framework that focuses on the commonly held belief that even “good” decision-makers are no longer willing to take risks and that the passing of the buck and abdication of responsibility are reasons for the poor quality of decision-making. This framework, however, does not include cases where the decision-maker is fundamentally ill-motivated.

Any analysis of the risk involved in decision-making needs to begin by defining it. Here, the risk is that the decision may be “wrong”; and we broaden it by including a situation where there is a widespread perception to this effect. It goes without saying that if the risk is to be defined as, say, adversely affecting one’s career advancement, the results of the analysis will be quite different though, of course, equally illuminating. With respect to wrong decision-making, any analysis would reveal that some of the factors contributing to it are inadequate knowledge, particularly of the techno-economic-social-environmental interfaces; lack of clarity of the time frame, whether short term, medium term or long term; an understanding of the public purpose for which the private sector is a stakeholder; the possibility of crossfire in a corporate warfare situation; simultaneous media coverage hindering decision-making processes and, finally, the interface of Parliament and the courts or audit in relation to accountability incidentally impinging on decision-making in an unconnected matter. The recent cases related to the allocation of natural resources, mining, defence acquisition, among others, can be analysed from this perspective.

It is sometimes wrongly postulated that in such a situation it is necessary that key decision-makers are selected for their risk-taking ability, and that such risk-taking should be encouraged. In such circumstances, as in any “fog of war” situation, a high proportion of decisions could inevitably be perceived as wrong. What is really needed is to ensure that decision-makers know how to mitigate, that is reduce, risk and then manage the residual risk as best they can, using their manifest expertise. Broadly, risk-mitigation would involve risk-allocation to or risk-sharing with technical and regulatory agencies. Here risk-allocation and risk-sharing must be distinguished from buck-passing by ensuring that the responsibilities of the partners are based on the respective management or technical domain expertise; by developing and using systems and institutions to generate, manage and analyse techno-economic data; by creating more transparency in the system and disclosure from those in the higher echelons of decision-making; and, finally, by fostering an informed stakeholder community of experts, media, civil society organisations, industry or sector associations. A little reflection would show that the space we have created for ourselves for risk-mitigation is clearly insufficient and is a major reason why residual risk is still so high. Additionally, we may not have created enough capacity for residual risk-management.

The problem is compounded by the fact that the decision-maker is already immersed in a risk-averse environment, where even normal decision-making is often subject to prolonged, repeated or intense scrutiny, sometimes by people with inadequate knowledge of the relevant domain; where potential conflict-of-interest situations are embedded or non-level playing fields are created; or where analytical tools are used unpredictably (for instance, legal instead of economic, or social instead of environmental). In such a situation, when residual risk is high and managing risks require special skills that are in short supply, what is really required is to reduce risk-aversion at the systemic level rather than fire-fight at the situation level.

What can be done to reduce risk-aversion and ensure that residual risks can be well managed? Each sector will need to work its own way through the problem, but generic solutions include a few key factors.

One, encourage independent and semi-independent advisory bodies, techno-economic think-tanks, policy research institutions, sector regulatory bodies that can provide considered and attributable consultancies to departments, parliamentary committees, courts and civil society organisations.

Two, create internal institutional units in technical and regulatory organisations for better evidence-based policy analysis.

Three, have a stronger emphasis on creating competent HR. This has multiple implications in terms of the quality of recruitment, sufficiency of tenures, promotion of specialisation and facilitation of multidisciplinary expertise, among others. Today, those with technical expertise do not, in most cases, develop the ability to contribute at the highest levels of sectoral policy-making, preventing the use of credible techno-economic mechanisms to mitigate or manage risks, that too at a time when decision-making is increasingly technical and complex.

Four, have stronger engagement with parliamentary committees, including robust mechanisms to enable their secretariats to easily access technical and techno-economic analysis and advice.
Five, encourage serving and retired senior policy-makers and technocrats to appear or write in the media, explaining or analysing public policy.

Six, develop enterprise-level communication strategies as against programme-level strategies as at present, with professional inputs on an ongoing basis, so that the optimality of decisions can be seen in relation to outcomes and time horizons and as per the vision and strategy of the organisation or the department as a whole.

Finally, in high-risk situations, high rewards (recognition, advancement, etc) are required not to encourage people to unnecessarily take risks, but to attract people who have the skills, experience and expertise to be able to mitigate risks

By S. Vijay Kumar, from- Indian Express, The writer is secretary, ministry of rural development.

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