64
Asian Review of Public Administration, Vol. VIII, No. 1 (July-December 1996)
ASIAN REVIEW OF PUBLIC ADMINISTRATION
Organizational Restructuring for Administrative Reform:
The Nepalese Experience
DWARIKA NATH DHUNGEL, Ministry of Water Resources
Nepal
Introduction
THE OPTIMUM SIZE of the civil service very much depends on such factors as type of
functions, volume of work, and kinds of goods and services to be provided by the government.
The prolonged debate about the nature and scope of government functions is sustained by
proponents of a school of thought advocating for limited functions, and another school of
thought calling for the involvement of government in the delivery of basic goods and
services to its people and the performance of traditional functions such as maintenance of
law and order and revenue collection.
Government agencies, especially in the Third World, play important roles in delivering
goods and services to meet the rising aspirations of its populace. But due to various
limitations, the government alone cannot be very effective without involving non-governmental
agencies. The non-government organizations (NGOs) have to gradually share
governmental responsibilities relating to national development.
Like any other government of the Third World, His Majesty’s Government of Nepal
(HMG), in addition to performing traditional functions is heavily involved in the socio-economic
sector and there is hardly any sphere of Nepalese life untouched by the government.
Structurally, the HMG/N is organized into 28 ministries including the Cabinet Secretariat,
Office of the Prime Minister and the Secretariat of the National Planning Commission, 48
executive departments, 108 regional directorates/offices, and 9,203 district and field level
offices, beside other statutory bodies. In addition to the central government, there are local
government bodies comprising 75 District Development Committees (DDC), 36
Municipalities and 3,395 Village Development Committees. These bodies have their own
staff along with the officials deputied by the government.
There are about a hundred thousand permanent employees in the government service,
who are divided into ten service groups excluding the teachers, police, army and those in
parastatal organizations. In addition to these permanent civil servants, a substantial number
of non-permanent officials, whose exact count is still a matter of debate among the concerned
agencies, are working in development sectoral projects in different areas such as agriculture,
health, irrigation, drinking water, etc.
Presently, unlike in the mid-50s when the foundation of modern Nepalese public
administration was laid, local government units, NGOs and private enterprises are also
competing with the government in such areas as trade and commerce, industry and delivery
of goods and services. Local governmental and non-governmental organizations are especially
proving effective in the delivery of health services, education and community development.
This changed situation in every way, calls for review in the scope of government. As such
the 1991 Administrative Reforms Commission (ARC) suggested a new role for the.65 ORGANIZATIONAL RESTRUCTURING FOR ADMINISTRATIVE REFORM IN NEPAL
government and the establishment of a functional bureaucracy. Among other things the
Commission suggested that the government:
• Focus itself toward creating a conducive environment to enable the private sector
and non-government agencies to take more and more functions of the government
and limit itself to the basic infrastructural development for which any government
becomes solely responsible.
• Gradually curtail its involvement in those field of activities in which the private
and non-governmental sectors have acquired specialization; and
• Take appropriate measures to enable the non-governmental sectors to play a bigger
role in economic activities and in the operation of services of various kinds.
The emphasis of the ARC is thus on sharing of functions by the government with non-government
agencies, which will change the former’s role. In such context the government
may have to perform the catalytic role and create an environment so that other actors/
agencies could share some of its functions. Hence in addition to the maintenance of law
and order and management of other regulatory functions, the government has to limit its
function to sectors and areas where other service providers may/would not be interested.
The review of the role and scope of government functions has automatically had
implications for structure and size of the civil service. In order not to adversely effect the
size of those directly involved in service delivery, the ARC further recommended that the
permanent positions in central level agencies (Ministers, Departments, Regional Districts/
Offices) should be downsized by 33 per cent, (i.e. to 12,900 from the existing positions of
19,345). The strategies for achieving this target were:
(1) Review of government functions: functions to be performed by the government
alone; functions to be off loaded to the other agencies through devolution, contractual
arrangement or decontrol/deregulation of government controls;
(2) Amalgamation of offices performing functions of similar nature;
(3) Restructuring the size of government organization through:
• Process simplification;
• Identification and abolition of redundant positions and units within offices; and
• Strengthening of field level offices: decentralization of decision-making authority
from the central secretariat to the field offices.
With regard to the basis for restructuring of field level offices, strategies suggested
were: (i) identification of activities that could be devolved to local elected bodies, community
and non-governmental organizations; (ii) identification of activities that could be transferred
to other agencies through contractual agreement or matters that could be deregulated;
(iii) identification of functions of similar nature to be managed under one umbrella; (iv).66
Asian Review of Public Administration, Vol. VIII, No. 1 (July-December 1996)
ASIAN REVIEW OF PUBLIC ADMINISTRATION
identification of the districts where a district office can provide service to the adjoining
district; and (v) initiation of a system of providing a multi-purpose assistant at the support
staff level.
It was also indicated by the ARC that in delineating the service delivery area, factors
such as population to be served, the geographical situation and transport and communication
network and not the political boundary should be considered.
Restructuring the Nepalese Civil Service
The recommendations of the ARC covered all aspects of the public service, and it was not
possible for the Administrative Reforms Monitoring Committee (ARMC) follow-up body
created for dealing with the recommendations of the ARC to take up everything for
implementation. In view of the priorities fixed by the HMG to streamline the civil service,
the ARMC had to concentrate its activities mainly on the restructuring exercise. In order to
accomplish this objective the government decided on a temporary recruitment freeze to the
permanent positions.
ARMC Technical Teams for Restructuring
Considering the fact that knowledge of job and procedures is necessary to complete the
assignment, the ARMC requested the ministries to constitute departmental committees
consisting of senior ministry officers as its members. The teams were entrusted to review
departmental functions and suggest functions that can be divested, deregulated or
decontrolled. The ministries were provided with two sets of restructuring guidelines prepared
by the ARMC.
The ARMC on its part had constituted six Technical Teams for central level organizations
and four teams for the field level offices to provide the technical support and backstopping
to the ministries in their restructuring exercise.
Organizational restructuring was undertaken as a joint exercise between the ARMC
and the concerned ministry and completed in two phases. In the first phase, the central
level organization; Ministries, Departments, Central Offices and Regional Directorates/
Offices were covered. Offices other than these, i.e. field offices were included in the second
phase. It took nine months (December 1991 to September 1992) to complete the work.
Once the new organizational structure and the corresponding manpower were approved
by the ARMC, the concerned agencies submitted them to the HMG for final approval.
The Cabinet created a Standing Committee consisting of the Secretary of the Ministry
of General Administration as Convenor, and Secretaries of concerned ministries as members.
The Administrative Reforms Monitoring Committee (ARMC) was also created by the cabinet
to facilitate the concerned ministry to make the adjustment if necessary on the proposed
manpower and new organizational structure.
Civil Service Positions After Restructuring
The restructuring exercise resulted in the reduction of permanent positions by 10.04 per
cent of which 4.12 per cent was at the district and field level whereas the rest were.67 ORGANIZATIONAL RESTRUCTURING FOR ADMINISTRATIVE REFORM IN NEPAL
downsized at the central level. Thus the total number of positions approved after the
restructuring was 90,229. When considered from the point of view of specific agency, the
then Ministry of Education, Culture and Social Welfare surrendered the largest number of
positions, i.e. 2,052 posts, of which 2,021 were at the lower levels. Whereas the Ministry of
Forest and Soil Conservation surrendered the lowest number, i.e. 0.28 per cent of the
positions, the Ministry of Agriculture gained by 5.30 per cent.
Although the restructuring exercise abolished a number of units in some ministries,
none of the existing agencies was abolished or amalgamated. A number of new organizations
such as Jails Department, Electricity Development Center, Health Service Department,
Educational Manpower Development Center etc. are the creations of the restructuring work.
Altogether 5,045 positions turned out to be redundant at the end of the restructuring
exercise. Of these, 75 positions were at the gazetted level (i.e. 33 Officers of Class II level
and 42 Officer in Class III level). They mainly belonged to the administrative service.
Among the non-gazetted staff, MUKHIYAS (Non-gazetted Class III) and Bahidars (Non-gazetted
Class IV) to be totally abolished in phases as per the ARC recommendations were
the largely affected. At the levels of non-gazetted classes I and II 1,679 positions turned
out to be redundant, whereas 1,125 positions at the level of the peons and chaukidars were
affected.
A study of four agencies, namely the Cabinet Secretariat (CS), Ministry of Finance
(MOF), Ministry of General Administration (MOGA) and Ministry of Defense (MOD) was
commissioned by the ARMC in 1993 in order to find out the effectiveness of restructuring.
In accordance with its findings there were 6,513 positions in the said agencies at the time
of restructuring but had only 5,520 positions after the exercise indicating that altogether,
993 positions were affected. The detailed breakdown of post reduction in these agencies is
presented in Table 1.
Table 1. Change in Number of Positions in Selected Agencies After Restructuring
Total No. Total No. Difference in
of Positions of Positions Total No.
Agency Before After of Positions % change
Restructuring Restructuring
Cabinet Secretariat (CS) 89 59 30 37.7
Ministry of Defense (MOD) 137 108 29 21.2
Ministry of Finance (MO) 6005 5157 848 14.4
Ministry of Gen. Ad. (MOGA) 282 196 86 30.5
Total 6513 5520 993 15.3
*Adapted from a table in the Financial Analysis of Restructuring in the Government Organization of Nepal, ARMC,
Office of the Prime Minister, Kathmandu. n.d..68
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Lessons Learned from Restructuring the Bureaucracy
The total number of public positions including those of the civil service, army and police,
teachers and employees of the Civil Service; army and police, teachers and employees of the
corporate sector and temporary positions were about 450,000 which is about 2.2 to 2.8 per
cent of the total population. So taking this fact into consideration, the organizational
restructuring and downsizing exercise coupled with the review of the government functions,
were suggested as a strategy to address overstaffing of the total governmental organization
excluding those in other services such as teachers. As already indicated, the organizational
restructuring exercise has been completed by the Nepalese government. Having been
directly involved in the exercise, this author feels that one could learn the following lessons
from the Nepalese experience:
FACTORS OFF-LOADING GOVERNMENT FUNCTIONS
1. Unprepared Civil Service
With the emergence of other agencies in the field of service delivery, the central government
no longer remains as the only one involved in nation-building activities. However, there is
a general feeling among the government agencies that other agencies are not capable of
planning and managing services efficiently. Government agencies have yet to fully subscribe
to the idea that its counterpart could be equally efficient in managing services. Consequent
to such a feeling, the primary tendency of the government agency at the time of restructuring
was to safeguard its empire and not to loosen its grip on what it already had.
2. Less Cooperative Civil Service
If the organizational restructuring exercise and the review of the departmental functions
had gone hand in hand as anticipated, it would have been easier for the ARMC to identify
functions that got to remain with the government and accordingly determine the positions
required to perform such functions. The task of redefining the role of the government is not
an easy job as compared to designing a new structure. Also the ARMC was under time
constraint (as already indicated elsewhere) to complete the work within a period of nine
months. So as time passed, the review of the departmental functions and the identification
of the functions to be performed by the government got sidelined and the whole attention of
the ARMC got focused on the restructuring work.
3. Lack of sound scientific basis for measuring jobs
The field visit and survey of the volume of work of the concerned agency on a sample or
random basis would have improved the bargaining power of the ARMC with regard to the
type of functions to be performed by the agency concerned and manpower required. It was
anticipated that the new organizational structure and the manpower requirement was widely
discussed within the agency before their presentation to the ARMC. With this in mind the
new structures were discussed and they were recommended to the government for approval..69 ORGANIZATIONAL RESTRUCTURING FOR ADMINISTRATIVE REFORM IN NEPAL
However, after the completion of the work, it was found that in some organizations more
positions than required were recommended, while some agencies were granted less than its
required positions.
4. Limited Technical Knowledge of the Teams
As the restructuring work was initiated by a government agency through the technical
teams constituted mainly from the civil servants, the government agency would naturally
feel reluctant and apprehensive of the technical capacity of such teams to determine its
manpower requirement and organizational structure. Probably, such a feeling might have
encouraged the government agency not to loosen its grip on the type of organizational
structure and the number of positions it required. Hence, based on this experience, one
would think of having independent task forces with professionals as its members and
outside of the government agency for future restructuring exercise.
RIGHTSIZING EXERCISE VIS-A-VIS CREATION OF NEW POSITIONS
Prior to restructuring, it was not very easy to secure the approval of the government for a
new position as the concerned agency had to receive the prior approval of the Ministry of
Finance and Ministry of General Administration respectively. Because of the financial
implication, it was but natural for these ministries not to be too liberal towards the creation
of a new structure. In retrospect, it seems that the agencies were successful in capitalizing
on the limited knowledge of technical teams and lack of pre-developed parameters for
creation of positions. Consequently there was a general feeling that the bargaining strategy
of the agency rather than the actual need became the deciding factor in determining the
new size of the organization and the creation of corresponding required positions.
APPROPRIATE STRATEGIES FOR RIGHTSIZING EXERCISE
Definitely there was a directive for rightsizing the civil servants, (i.e. downsizing by 25 per
cent) within a period of three years. And the process towards the achievement of this target
was clearly indicated by the ARC. From the number of the positions affected, the exercise
could be considered encouraging. But the downsizing exercise in the long run without
proper home work and functions, process/procedures to be simplified etc. in a complementary
manner backed up by the positive political support would not serve the purpose of rightsizing.
Mere increase and decrease of positions in any agency would not serve the purpose. This
was clearly observed during the restructuring exercise. Therefore the exercise undertaken
could be better called the review of the manpower requirement of the government agencies
rather than a real organizational restructuring exercise.
UNFORESEEN CONTINUATION OF REDUNDANT PERSONNEL
As already stated elsewhere, the restructuring work resulted in the redundancy of about
5,000 positions mainly at the lower level. In place of the completely abolished positions,
new positions at the comparatively higher level, i.e. Non-gazetted Class II and I were.70
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created. As such a problem as to what to do with these officials came up before the
government. Had a redundancy package in the form of severance payment—payment other
than the gratuity of pension, been developed and the redundant staff were laid off, the
problem would have been solved. Instead, the redundants were allowed to continue till
their positions were left vacant caused by retirement or promotion or relocation. Also, no
recruitment freeze was made in the newly created positions. Naturally, the government was
obliged to continue payment of salaries and allowances to the redundant staff. Development
of a sense of apathy towards work among the redundant, who also suffered from an inferiority
complex in relation to the other staff, was the other problem. Although, the ARMC wanted
to address this issue by requesting the agencies not to hire for the newly created positions so
long as the redundant were not yet relocated or continued to be in the service, it could not
meet complete success. Ultimately the government had to decide to absorb all the redundant
employees in the agencies where they were working.
STATUS OF THE ARMC
As a result of the ARC’s recommendation, ARMC was first created by the HMG/N in the
office of the Prime Minister for a period of three years to assist the cabinet in the
implementation and monitoring of the ARC’s recommendation. It had a full time Chairman
and Member (both were retired senior civil servants) and the Chief Secretary. It had the
mandate to hire professionals from within and outside the government. From its attachment
to the office of the head of the government and the experience of its office holders, there is
hardly a place to doubt the capacity of the ARMC in managing the reform measures.
However, the experience has been different than what had been anticipated mainly due to
the fact that despite being part of the office of the Prime Minister, the ARMC has not been
able to assert itself as the integral part of said office. Furthermore, as per the Business
Allocation Rules of the government, the responsibility to look after the administrative
reform measures is with the Ministry of General Administration (MOGA). Therefore,
despite the serious efforts made by the MOGA to work in close collaboration with the
ARMC, it was found to be difficult for the government agencies to accept the ARMC as a
part of the office of the Prime Minister and take this agency seriously for reform-related
matters.
Conclusion and Recommendations
Conclusion
During the different periods of the modern Nepalese administration (i.e. since 1951) various
efforts have been made in the field of organizational restructuring. From this perspective,
the effort made by the ARMC can be considered to be the latest one, which has been
undertaken in a concerned and comprehensive manner. But the experience has indicated
that the efforts have not yielded the desirable results. However, as discussed above a
number of lessons could be learned from the Nepalese experience. The organizational
restructuring exercise needs to be considered not as a one-time effort, rather it has to be
carried on at a regular interval..71 ORGANIZATIONAL RESTRUCTURING FOR ADMINISTRATIVE REFORM IN NEPAL
However, the very purpose of the restructuring exercise should be the identification of
the functions to be performed by the government in the light of the functions performed or
can be performed by other agencies. The size of the civil service should be determined
accordingly. Rightsizing rather than downsizing should be the main consideration for
identifying the number of positions required to perform the identified functions.
With regard to rightsizing, the following section discusses specific recommendations
based on the problems encountered during Nepal’s restructuring of its civil service early in
this decade.
Recommendations: What Should Have Been Done?
Based upon the Nepalese experience, the following facts may be taken into consideration as
a total package while undertaking the rightsizing exercise:
1. Identification of the functions to be performed by the government alone and
determination of the actual number of positions required across the board in general
and for the agency in particular;
2. Preparation of the performance indicators for the positions required to perform the
identified functions by the government agencies;
3. Building up of a reliable data base with a clear picture of the different categories
(i.e. permanent, temporary etc.) of civil sevants including the number of positions
at the specific agency in its central as well as field offices;
4. Preparation of a redundancy package for getting rid of the fat and to provide
attraction to the civil servants to leave the service; and
5. Establishment of an agency that has the clout of the highest level political decision-maker
and commands the respect of all public agencies in general and civil servants
in particular in relation to administrative reform matters.