Status and Analysis of Formal and Actual Human Resource Management, Financial and Policy Autonomy of State-Owned Enterprises in Pakistan

Muhammad Zeeshan Hanif

doi:10.7176/ppar/10-1-01

Abstract

This paper studies the formal and actual human resource management (HRM) autonomy, financial autonomy and policy autonomy of the state owned enterprises (SOEs) of Pakistan and points out the differences that exist between them. It also identifies behind the lack of autonomy of SOEs and proposes multiple recommendations though which this gap can be bridged. Both quantitative and qualitative data was collected to carry out this study. Quantitative data was collected from 40 randomly selected SOEs using a close-ended questionnaire while 20 semi-structured interviews were carried out to collect qualitative data. Descriptive statistics was used to see the number of SOEs having different levels of HRM autonomy, financial autonomy and policy autonomy. It was found that a very less number of SOEs were completely autonomous in different aspects of HRM, financial management, policy formulation and its implementation. Excessive political intervention, dependence on government for resources, lack of power of Security and Exchange Commission of Pakistan (SECP) and poor performance of SOEs along with numerous other reasons were identified as causes behind this lack of autonomy. Multiple recommendations have also been proposed to overcome this issue. Keywords: Autonomy, State Owned Enterprises, Human Resource Management Autonomy, Financial Autonomy, Policy Autonomy, Task Autonomy, Securities and Exchange Commission of Pakistan, Companies Ordinance 1984, Public Sector Companies (Corporate Governance) Rules 2013. DOI : 10.7176/PPAR/10-1-01 Publication date: January 31 st 2020

Highlights

state owned enterprises (SOEs) are legal entities that are created by the government under some act or law so that they can participate in any business on the behalf of the government or perform regulatory function
The analysis of Companies Ordinance 1984, Security and Exchange Commission of Pakistan (SECP) Act 1997, Public Sector Companies (Corporate Governance) Rules 2013, and statutes through which statutory bodies are created, it was unveiled that a significant amount of formal autonomy has been granted to the SOEs
Sub-section 7 of the section 5 of Public Company Rules 2013, sub-section 2 (i) of the section 196 of the Companies Ordinance 1984 and sub-section 2(d) of section 196 of the Companies Ordinance 1984 show that maximum human resource management (HRM) and financial autonomy has been provided to the Board of Directors of the Public Sector Companies

Summary

Introduction

SOEs are legal entities that are created by the government under some act or law so that they can participate in any business on the behalf of the government or perform regulatory function. According to Boycko et al (1996), Wintrobe (1987), Labra (1980) and Khan (2007), SOEs can be created in both industrialized mixed economies and in developing countries to act as an important instrument of social and economic policy and help in increasing employment, generating revenue, achieving some social goals, ensuring economic development and keeping the control of state over economy. PIA alone loses around $305 million a year and instead of adding in to the national treasury, it is causing a constant drain (“Loss-making State-Owned Entities Pose Economic Challenge to New Govt.”, 2013). These SOEs, when fail to operate effectively, are either privatized or reformed

Literature Review

Research Methodology

Discussion and Conclusion