Employees' provident fund organization: Empowering members by digital transformation

• Published date: 01 November 2018
• Author: Joy P. Vazhayil,Ravichandran Narasimhan,Sundaravalli Narayanaswami
• DOI: http://doi.org/10.1002/pa.1844
• Date: 01 November 2018

PRACTITIONER PAPER

Employees'provident fund organization: Empowering members

by digital transformation

Ravichandran Narasimhan

1

|Joy P. Vazhayil

2

|Sundaravalli Narayanaswami

3

1

Production and Quantitative Methods Area,

Indian Institute of Management, Ahmedabad,

India

2

Chief Provident Fund Commissioner,

Employees' Provident Fund Organization,

New Delhi, India

3

Public Systems Group, Indian Institute of

Management, Ahmedabad, India

Correspondence

Sundaravalli Narayanaswami, Indian Institute

of Management, Ahmedabad, India.

Email: sundaravallin@iima.ac.in

Employees' Provident Fund Organization (EPFO) was established by the Government

of India with the purpose of ensuring financial and social security for industrial

workers and their dependents. With more than 150 million accounts of its members,

EPFO is the world's largest social security organization. Operational processes of

EPFO were riddled with over emphasis on rules and regulations but were weak on

transparency, accountability, effectiveness, and efficiency. Consequently, the primary

purpose of social security of industrial employees was compromised. Business process

reengineering combined with adoption of Information and CommunicationTechnology

(ICT) and social media brought a sea change to the functioning of EPFO. This paper

documents the transformation of EPFO from a bureaucratic, opaque organization to a

customer‐centric, stakeholder‐friendly, transparent, and accountable organization.

1|INTRODUCTION

Managing organizations and aligning them constantly to the purpose

for which they were created is a challenging task. Although the pur-

pose of an organization is clearly articulated when it is created, as time

progresses, the functioning of the organization slowly drifts from its

stated purpose. Several factors including the environment, leadership,

organization structure, processes, lack of ICT deployment, profile of

employees, incentive structure, organization culture, bargaining power

of the customers, and intensity of competition contribute to this drift

(Porter, 2008).

Employees' Provident Fund Organization (EPFO) was created to

provide social security and welfare for the economically vulnerable

workforce in India. However, over time, the organization engaged

itself with bureaucratic processes, nonvalue adding documentation,

inadequate supervision and accountability, and poor monitoring on

compliances. Adopting ICT, social media application brought in sea

changes. This paper documents this transformation (Table 1).

2|EMPLOYEES'PROVIDENT FUND

ORGANIZATION

EPFO is under the administrative control of Ministry of Labour and

Employment, Government of India. It was established soon after

Indian Independence with the purpose of ensuring social security for

industrial workers and their dependents. Today, EPFO in India is

one of the world's largest social security organizations; it

maintains more than 150 million member accounts. EPFO caters to

employees in public/private organizations with minimum employee

strength of 20. An employee earning a monthly salary of less than

Rs. 15,000 is entitled for an Employee Provident Fund Scheme 1952

(EPF) account.

The welfare schemes framed under the law are administered by a

set of local offices (Table 2) of EPFO across the country under the

overall supervision of the Central Board of Trustees (CBT). In the year

2016–17, 0.926 million organizations and 46 million contributing

members from 190 industries were enrolled with EPFO. Table 3 cap-

tures the growth in number of subscribers (employees and establish-

ments) over the years.

3|EPFO SCHEMES

The EPFO operated three welfare schemes: (a) EPF Scheme 1952, (2)

Pension Scheme 1995 (EPS), and (3) Insurance Scheme 1976 (EDLI).

The EPF scheme allows employees to save funds on a monthly

basis (which accumulated along with interest) and is payable in full,

upon retirement or death, whichever is early. The employees are also

entitled to partial withdrawal of funds for planned and unplanned fam-

ily financial needs such as children's education or marriage, buying

properties, and expensive medical treatment.

Received: 18 May 2018 Accepted: 10 June 2018

DOI: 10.1002/pa.1844

J Public Affairs. 2018;18:e1844.

https://doi.org/10.1002/pa.1844

© 2018 John Wiley & Sons, Ltd.wileyonlinelibrary.com/journal/pa 1of9