• The hidden cost of incompetent appointments in statutory boards and corps

The Government’s recent decision to reshuffle the heads and boards of statutory institutions represents a significant and long-overdue shift in Sri Lanka’s governance landscape. For decades, these institutions have suffered not from a lack of policy direction, but from a chronic lack of professionalism and competence at the leadership level. Political patronage, rather than merit, has dominated appointments, weakening the institutional capacity and undermining public trust.

The introduction of a centralised vetting mechanism for appointing chairpersons and board members marks a potentially transformative reform. By prioritising professional qualifications, technical expertise, and managerial competence over political loyalty, the Government signals an intention to restore credibility, accountability, and effectiveness to State institutions. This is not merely an administrative adjustment, but a structural correction to a deeply entrenched governance failure.

A bold reset for State institutions

For years, statutory bodies and State-owned enterprises (SOEs) have been treated as extensions of political power. Board positions were frequently allocated to defeated candidates, political allies, relatives, or individuals with little relevance to the institution’s mandate. While such appointees often demonstrated loyalty to those who appointed them, they frequently lacked the knowledge and capability required to manage complex organisations. Consequently, many boards became passive or ceremonial, failing to provide strategic direction or effective oversight.

This pattern of governance has had predictable consequences. Productivity declined, operational inefficiencies multiplied, and financial losses escalated. In many cases, board members limited their involvement to attending periodic meetings, treating their roles as part-time engagements rather than serious fiduciary responsibilities. The burden of management fell disproportionately on senior executives, often without meaningful guidance or accountability from the board.

The cumulative effect has been severe. SOEs in key sectors such as energy, transport, and aviation have accumulated massive financial losses, ultimately borne by taxpayers through subsidies, Government guarantees, and repeated bailouts. Weak governance at the board level has consistently been identified as a primary driver of these failures. In this context, reforming board appointments is not simply desirable — it is essential.

A necessary break from patronage

The Government’s reshuffling initiative must therefore be understood as a deliberate attempt to break from a discredited system. It reflects an acknowledgment that the longstanding model of politically motivated appointments has failed, and that meaningful reform can no longer be delayed. Importantly, this effort aligns Sri Lanka with internationally recognised governance standards. Global institutions emphasise the importance of independent boards, merit-based appointments, and a clear separation between the political authority and operational management.

Critics may argue that maintaining political neutrality in practice will be challenging. Sri Lanka’s history provides ample reason for scepticism. However, the risk of imperfection should not be used to justify the continuation of a demonstrably flawed system. Even an imperfect reform effort is preferable to the normalisation of incompetence and patronage.

Economic rationale

From an economic perspective, the urgency of reform is undeniable. Persistent losses in SOEs have constrained the fiscal space, contributed to macroeconomic instability, and exacerbated the country’s broader economic challenges. Numerous studies and audit reports have identified poor governance, politicised decision-making, and the lack of accountability as core issues. In such an environment, appointing individuals without the relevant expertise is not merely inefficient — it is fiscally irresponsible.

Performance based evaluation

A key element of sustainable reform is the introduction of performance-based evaluation. Leadership changes should not be arbitrary or politically motivated, but grounded in objective assessments of clearly defined key performance indicators (KPIs). These should include not only financial performance, but also operational efficiency, service delivery, governance compliance, and strategic execution. Such an approach would foster a culture of accountability and results, replacing the longstanding reliance on political loyalty.

Equally important is the quality of leadership required to revive struggling institutions. Many statutory bodies face complex challenges that cannot be addressed through routine bureaucratic reshuffling. There is a strong case for appointing senior professionals with substantial private-sector experience, particularly those with proven track records in restructuring, innovation, and value creation.

Restoration of public trust

Leaders with private-sector backgrounds often bring a results-oriented mindset, financial discipline, and a deep understanding of market dynamics. They are better equipped to implement reforms, improve efficiency, and identify new growth opportunities. Their ability to diversify institutional activities — both vertically and horizontally — can help transform loss-making entities into sustainable and competitive organisations.

Vertical diversification enables institutions to strengthen control over supply chains and reduce inefficiencies, while horizontal diversification allows them to leverage existing capabilities to generate new revenue streams. 

Deficiency in leadership

However, leadership reform must be supported by a robust governance framework. Transparent appointment processes, clear accountability mechanisms, and consistent performance evaluation are essential to ensure that reforms are not reversed or diluted over time. Public scrutiny and institutional safeguards will play a critical role in sustaining progress.

At its core, the issue is one of accountability. For too long, the costs of mismanaged State institutions have been quietly absorbed by the public through higher prices, reduced service quality, and increased fiscal burdens. 

The principle that “winning the Government does not mean owning the State” is fundamental to democratic governance. Statutory institutions exist to serve the public interest, not partisan agendas. Boards are meant to provide independent oversight and strategic direction, not political cover. Reinforcing this principle is essential for restoring public trust and ensuring the long-term sustainability of State institutions.

The Government’s decision to restructure leadership in statutory bodies is therefore both timely and commendable. It addresses a critical governance gap that has long undermined economic performance and public confidence. By moving away from patronage-based appointments and toward merit-based selection, the administration has taken an important step toward institutional reform.

Nevertheless, the success of this initiative will depend on its implementation. The credibility of the reform process will hinge on consistency, transparency, and adherence to the stated principles. Any perception of selective application or political interference could undermine public confidence and weaken the impact of the reform.

Private sector productivity and efficiency approach

Sustaining momentum will also require a broader commitment to institutional strengthening. Board reform should be complemented by improvements in regulatory frameworks, financial management systems, and the organisational culture. Capacity building, training, and the adoption of best practices will be essential to support long-term transformation.

The reshuffling of statutory boards offers a rare opportunity to initiate such change. It represents a break from a deeply entrenched culture of patronage and a move toward a more rational and accountable model of governance. While challenges remain, the direction is clear and necessary.

When political loyalty becomes the primary criterion for leadership, institutional failure is inevitable. Sri Lanka’s experience provides ample evidence of this reality. The Government’s current reform effort acknowledges this truth and seeks to correct it. The task now is to ensure that this effort is not temporary or symbolic, but sustained and substantive.

The time has also come for the President to review the performances of the Ministers and Deputy Ministers in charge of statutory boards and institutions. Ministers and Deputy Ministers who have not performed above the expectations during this initial period of two years should be shown the exit door, replacing them with capable Parliamentarians after a due vetting system. 

Knowledgeable sources say that highly competent chairpersons with exceptional performances have been allowed to retire on the expiry of their first year without extending their services. Trade unions (TUs) affiliated to the Government are reported to have carried tales to the Ministers and Deputy Ministers due to their utter frustration to achieve their parochial ends and have been instrumental in ousting these chairpersons with international repute. A mechanism should be devised at the Presidential Secretariat against the witch hunt of efficient chairpersons at the instigation of TUs and party loyalties. Similarly, a thousand professionals who worked for the party have been sidelined by the Government and the credibility of the Government will be at its stake, if this segment is not looked after.

In conclusion, the restructuring of statutory institutions is a critical step toward improving governance, enhancing economic performance, and restoring public trust. By prioritising competence over loyalty, introducing performance-based evaluation, and strengthening accountability, the Government has laid the groundwork for meaningful reform. The responsibility now lies in ensuring that these changes are effectively implemented and institutionalised, so that the promise of reform translates into tangible and lasting results.

The writer is a productivity and management consultant

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The views and opinions expressed in this column are those of the author, and do not necessarily reflect those of this publication