You have got it all wrong, Corporate India !

You have got it all wrong, Corporate India !
Time to sharpen knives, not twiddle thumbs.



The economists tell us we are in a recession --- by looking at the macro economic factors. The stockbrokers tell us we are in a recession --- by looking at the share price index. The banks tell us there is a recession -- by looking at their declining credit off-take. The industrialists tell us we are facing a recession -- by looking at their order books.

Indeed we must, therefore, be in the throes of a recession. Fine. So what do we do ? How do we combat this situation or manage ourselves during this period ? This article is restricted to the response of the industry.

As a consultant, I have been meeting various people in different industries in the course of seeking business or completing our on-going activities. I must confess to an eerie feeling of despondency that has engulfed me at the response that the senior managers of the industries have crafted for themselves, to face this situation.

The standard response has been : do nothing. Cut costs, which translated into action has meant, stop all recruitment, introduce VRS, stop all non-essential, unproductive activities (Unproductive has been literally interpreted to mean everything not connected to “direct production”. So all training, maintenance, essential repair, improvements, experimentation has been postponed / cancelled). Delay payments, avoid payments, deny payments. Do not initiate any new activities --- this is not the time for it. Factories have started working every alternate day or even just two days in the week ; those who do come to work, spend time idly, somehow passing the mandatory 8 hours before returning home.

This seems to be an odd way of tackling recession.

What we are doing is a sure prescription for “rusting”, not merely plant & machinery but our own managerial faculties and competencies. By not doing anything we may be saving some “money” today. However, at the same time we are also losing all preparedness for tomorrow. How shall we face the market when the boom time arrives, as it surely will -- if not tomorrow, then after 6 months or even after a year.

It will be tragic indeed that after a long lull when the market demands our product, we are caught with our socks down, unable to meet the demand because our plants, that have been idle for so long, are not able to produce well or enough. We are unable to respond because some of our most talented and key people have left us (many of them encouraged to do so by us, only in order to reflect savings in the wage-bill), because our suppliers have abandoned us since we stopped all dealings or drastically cut their business or inordinately delayed their payments.

How can industry, therefore choose this route as the way to face recession ?

Indeed this is the best time to do all that we always wanted to do, all that we always planned to do but never found the time for it. This is the time to attend to all those small, irritating pin-pricks and problems that hinder smooth work but which we always kept postponing since we were very “busy” during boom time. What are these things ?

The things that we can do today, could, broadly, be classified as under :

1. Catching up.
2. Repair, Maintenance, Rectification
3. Housekeeping, Cleaning, Beautification
4. Sorting out
5. Improvements / Experimentation
6. Getting ready



CATCHING UP

In every organisation there are always, at any given time, a number of things in backlog --- be it filing a report / return, carrying out some data collection, analysing some previously collected data, reading some technical articles, fulfilling some small but old orders etc. Some of these may actually be revenue yielding activities like (a) submitting some odd detailed information to get a refund or duty drawback, (b) fulfilling the last part of an order for a small item which will help obtain the payment on the full order. It may involve complying with some silly or innocuous but mandatory data provision to statutory authorities that has gone on being put off and may even result in some imposition of fine or “stop work” advice from the authorities. This is the time to tackle such matters and bring oneself up-to-date.

Another area to look into is implementing the “minutes of meetings”, which get dutifully recorded and as dutifully forgotten. Let a special task force be set up to systematically examine the minutes of all meetings held in the last 12 months and either implement what has not been done so far or determine and declare that some decisions have either become non-essential or irrelevant under the changed circumstances.


REPAIR, MAINTENANCE, RECTIFICATION

During the best of times it is difficult to carry out Repairs or Maintenance activities. Machinery will not be spared since there is (always) an urgent order to execute.

Today, when there is a “recession”, another heaven-sent opportunity is there for postponing repairs ---- need to cut costs ! Nothing could be more short-sighted. In fact, this recession is the best time to carry out all repairs / maintenance that one has been putting off for so long. The machinery can be spared much more easily ; engineers and technicians are more freely available since demand on them to “urgently” service some breakdown is far less. More people and time are available to chase and get municipal approvals. As for funds, it makes more sense that instead of investing in raw material and non-moving finished goods inventory, the same are diverted to such repairs & maintenance work which will make the machines fighting fit for tomorrow.

There is another major and important aspect to this effort ---- Safety and Pollution Control. Experienced managers will know that the Generator Set area is always surrounded with spilled diesel. The production discharge does not get effectively treated because of the inevitable problems in the effluent treatment plant. The compressed air and hot water / steam pipes inevitably have leakages resulting in heavy losses and high energy consumption. This is the ideal time to attend to these problems free from the daily pressures of fire-fighting and short-term, quick-fix solutions.

What about repairing damaged, unsafe civil structures ? Such measures can also prevent many tragedies of the likes of Poonam Chambers when a number of floors of an existing office in the posh downtown area of Mumbai collapsed like a pack of cards.

Yet another area that can be tackled is the strengthening and upgradation of other direct safety measures like Fire fighting facilities, alternative escape routes, particularly in multi - storeyed commercial buildings.


HOUSEKEEPING, CLEANING, BEAUTIFICATION

First and foremost, housekeeping. Let every factory take up a literal STF (sweep the floor) operation to make the factory shop floor spick and span. Let all oily floor be scraped clean and areas around the generator set room properly cleaned out. This is not merely for “good looks” but also from safety and accident prevention point of view. Another important fall-out of such a intensive housekeeping drive is that it will salvage a large amount of “lost / misplaced” materials which can be used for production and , of course, mean money.

Similar housekeeping / cleaning work needs to be carried out at Head Offices and other non-factory Offices (repair of Toilets, leaking taps, painting touch-up) and Branches. The upkeep of our physical assets have never received any proper attention in the Indian milieu except for the MD’s floor or sometimes, the MD’s route. For all other cases, it is simply a case of sweeping under the carpet and carrying on as long s possible. Today, customers, suppliers and even prospective employees give marks for and take into account this physical factor in their overall judgement of whether or not to join /deal with the organisation.


SORTING OUT

Tackle the “high mix-up areas” of Stores, Finished Goods Warehouse and the Scrap Yard. It is not uncommon that in these areas the BIN CARD Stock and the Physical Stock, often do n tally. This happens for all kinds of reasons. A common reason, very often, is the poor and haphazard arrangement of materials due to the perennial shortage of space that these sections face. (It is, of course, an unacknowledged truism that the shortage of space is not the cause but the effect of haphazard storage of materials !) What better time to do stores clean-up and sorting than today when the issues and receipts are perhaps at an all-time low and the stores and production personnel have a lot of time on their hands.

The Stores work need not remain confined to sorting and re- arrangement. There are a whole host of other measures that can now be taken up , precisely because the regular work load is low. These are,

1. Segregation & Classification of Slow-moving, Non-moving Obsolete Items
2. Perpetual Inventory Stock Taking and Reconciliation
3. Oiling / Greasing of Items prone to rusting
4. Re-inspection of existing “shelf-life” items to check how many need to be discarded e.g. items like rubber parts, paint, oils/greases, fibreglass items etc.


Similarly, a proper and thorough segregation at the scrap yard will not only give a cleaner and safer look to the scrap yard, it will also give a much better realisation from sale of scrap as prices can now be realised as per the “segregated” category. In a mixed category, one tend s to get only an average price or the price of the lowest category constituent.

What has been mentioned above for Factory Stores / Warehouses applies equally to Branch Godowns & Warehouses which get the least attention from top management during “normal” working. This is the only time and opportunity that companies have to clean up the huge mess that all Branch godowns invariably are in.

A proper cleaning-up exercise can help salvage saleable goods and prevent further damage to them through leaking drums or wrong stacking. At the same time, one can segregate the damaged stock which is falsely showing in the records as “available inventory” but in reality cannot be delivered to the customer. these can then be disposed off at the best price possible before they turn into completely worthless junk and fetch no realisation.

So much for sorting out physical goods and products. What about sorting out paper, records and files ? How many times have senior managers wished that they could get a full day or sometimes a full week to sort out all the confusion that has crept into their files where no paper can be located, bettered only by the file itself not being traceable !

This is the time to make a special drive to (a) segregate and destroy all outdated papers and (b) re-arrange and properly file and required papers so that they can retrieved quickly and easily. Mundane as this suggestion may appear, managers know only too well that almost 60 % of a “typical decision-making time is spent in hunting for the right file and the right set of papers !

IMPROVEMENTS / EXPERIMENTATION

Consider the factory first. Every Production, Process Planning, Engineering Manager has a number of “improvement” ideas in his mind which he is unable to try out, during normal working, due to lack of time or non-availability of facilities. Now is the time to try out all these ideas and adopt the successful ones for use when the full load working resumes. Otherwise these ideas will forever remain just that --- only ideas.

Once again, this is not confined to physical improvements in the production/testing process. How many time have you found that your procedures for “doing things”, be it a drawing release by R & D, or Sales Order confirmation or Purchase Order Release or Sales / Production Co-ordination Meetings, are rather long and complicated ? Why not utilise this low activity period to sit down and thrash out these issues without the pressure of time-shortage which inevitably makes discussions on these perfunctory and shallow and defensive ? A straightened-out procedure can give just as much improvement in output (by speeding up the decision-making bottleneck) as an improvement in the production process can.

There might be new practices, procedures, lay-out, even a new menu for the canteen, that you wanted to try -out but never found the time. Well, this is the time to do it. When the work load is low the consequences of failure are also low and hence there will be a greater degree of acceptance and co-operation from others who otherwise do not want to risk upsetting the apple-cart when things are going fine.

One major area of improvement that is the first victim in today’s so called “recession” is training. Once again a major area of improvement has been sacrificed at the altar of false economy. It is good to remember that if training your people is costly, not training them is even more costly. HRD chiefs know only too well how difficult it is to get the right people to attend training programmes because they re not released by their bosses or are too busy in some thing “important”. Well now is the time to really rev up your training activity when people are relatively free and in a better frame of mind to absorb new learning.



On the one hand we have all organisations shouting from the rooftops (certainly from their Annual reports and Chairman’s speeches) that people are their biggest assets and the organisation takes good care to provide an atmosphere where the individual can develop and grow. Indeed, people are talking of learning organisations where employees are constantly learning something new.

However, when it comes to putting this into practice then it is a different story. first of all they are not spared because they are busy. Now that people are free, we cannot do training as we cannot spend money because of recession. There cannot be a more myopic viewpoint than this. First of all, all training does not have to be expensive. Why not start with In-house training conducted by in-house faculty. Secondly have in-house training conducted by outside faculty which will be less expensive than a fully external programme. And, finally, where required, selectively nominate people even for outside programmes.

Nonetheless, any training will definitely have some expense ; but no investment in training can ever go waste. Organisations must shrug off this foolish notion that cutting down on training can save costs and boost profits ; the result may be quite the opposite. From people availability point of view there is no better time than now to train as many people as possible. What is being proposed, therefore, is actually, more training, not less, during the present “recessionary times”, blasphemous as it may sound in these “difficult times”.


GETTING READY

At any given time, if an organisation looks ahead at the next 3 months for the short-term and say 12 months for the medium-term, it will find that it has to get a number of things done to face the future when it comes. During normal times, this “getting prepared” activity only gets done as and when one finds time to for it ; in most case only the previous night e.g. preparing for the Corporate Plan Meeting tomorrow !

Today, when there is relatively more time available, some of the things for which the organisation can gear itself by getting ready are :

Preparing for

1. the forthcoming New wage agreement

2. the Corporate Plan / Annual Budget exercises,

3. proposed draft of new agreement to be signed on expiry of current agreement (collaboration, long-term loan, marketing tie-up etc.).

4. Y2K corrections

5. Euro - money conversions, particularly those companies which have a significant export / import activity

6. getting ISO 9000 certification

7. renewal of ISO 9000 certification

and suchlike.

The central thrust of all the above suggestions of utilising this recessionary period is to make oneself better prepared to face the market when it “picks up”. To do that , one will have to do whatever is necessary, in other words be prepared to incur costs, to keep oneself agile, fit and ready-to -jump at a moment’s notice.

The barrier to this kind of thinking has been the Indian management’s inverted and lopsided approach to effort --- they let the current actual earnings determine permissible effort costs. Actually it should be the desired revenues that should determine the required effort (revenue is used here in a generic sense to denote any desired measure of performance --- be it gross revenue, net earnings, market share etc.).


This logic of “effort as a % age of revenue” is like putting the cart before the horse. When costs that can be incurred are linked to the revenue volume then, in times of falling revenue, one invariably ends up making less effort rather than more ; and it is more, not less, effort that is required to retrieve the situation. If advertising is budgeted as 8 % of Sales and the revenue drops from Rs. 200 crores to Rs. 150 crores, then advertising costs are slashed to Rs. 12 crores or less, by an “alert and myopic” Financial Controller, as a response to the falling revenues, and dutifully approved by the “short-term, profit -centred” CEO.

Experienced Marketers know and aver that, actually, this is the time when advertising (i.e. effort to sell) should be increased rather than decreased to protect the current market share or even to increase it.

Indian industry has to shift from this logic of effort volume being linked as “ a % age of revenue” . Rather, the whole thing has to be turned on its head and desired Revenue should be defined and determined and then work out the effort required for achieving that revenue. In other words, the thinking should be --- what is it that I must do (effort) to achieve the desired revenue result.

This is a more action - oriented (what is it that I must do) approach, than the former which reasons, what is it that I must, now, not do to keep my cost within limits. Secondly, because I determine that this cost incurred must get me these results, it forces me to be more efficient in my efforts. Otherwise, I simply take the approach of cutting down my efforts, in an effort to reduce costs, (as most organisations are, unfortunately, doing today) and believe that I have done the right thing, whereas in practice, I am only perpetuating my declining revenue volumes.

There are two other important and deeper issues involved in the approach that is being advocated. When the industry response to the so-called recession is to shrink its own activities (in an effort to cut costs), it is only prolonging the recession and postponing revival. When faced with a fall in demand, instead of trying to find new avenues of achieving higher sales I start cutting down my production, selling effort, advertising etc. I bring about reductions in the activities of people who supply to me -- be it goods and services. If, in turn, they do the same thing with their own suppliers then this slowly sets up a self-supporting recessionary spiral which like a self-fulfilling prophecy indeed brings recession upon us.

On the other hand, when I take concrete and determined steps to combat recession, not only do I keep my activity pot boiling, I also generate work / activity for those connected with my business. When this approach is taken across the economy, it can have a significant multiplier effect. Most important, it can greatly improve sentiment. Most experienced commentators hold the view that there has been an over-reaction in the industrial circles to the drop in demand ; by behaving in this over-cautious and regressive manner, they’re not only affecting market sentiment but also affecting consumer sentiment, who is being silently pushed into being cautious about his purchases, simply because everybody is talking of “bad times”.

Finally, the decision to try harder instead of cutting down on one’s activities, will greatly boost employee morale. Today, when employees see cuts everyday in so called unproductive activities (training, maintenance, new experiments ---- which is funny considering that otherwise CEO’s do not tire of boasting how much they stress on these activities in their organisations), in addition to the reduction in the regular business activities, they too start acting and behaving as a demoralised lot. Their efficiency level goes down which only makes the situation worse.

To sum up, it is not the economy which is going to rescue our industries. It is our industries which have to rescue our economy. It is not the economy which has to be rejuvenated to revive the industries. It is the industries which have to rejuvenate themselves to revive our economy.

This can only be done by pursuing vigorously, in the present “dull” period, all activities aimed at improving one’s competencies ----- be it improvement or maintenance of physical assets, skill / knowledge upgradation of employees or process / procedure simplification in the corporate bureaucracy. All these must be done without slipping under the shelter of a blind-folding umbrella of cost reduction. These activities are recommended to be pursued distinct from, and in addition to, the need for making greater effort in the direct business-related functions of producing better, selling wider, delivering faster and servicing sharper.

This is the time to sharpen knives to get ready for the kill, not twiddle thumbs to get destined for the morgue.


Hemendra K. Varma
Mumbai
December 15, 1998

VRS -- the new quick fix

VRS -- the new quick fix
How quick is it, and what does it really fix ?

by hemendra k. varma



The most popular response to facing global competition in our country has been VRS --- lean, mean and thin. Pity, because that will still not solve the problem of poor systems, lack of innovation, sluggish response, narrow outlook, laid - back attitudes, insensitivity to customer needs & expectations, and an inexplicable divorce from changing market realities. Cutting the number of people only cuts the wage bill but it does little to cut waste, inefficiency & idle time which account for much greater costs.

Lashed and battered by the continuing recession for the past couple of years, senior management teams across the industry spectrum have been racking their brains to survive. The panacea, recommended, adopted and implemented (or under implementation) is VRS --- Voluntary Retirement Scheme. Under the scheme, employees are encouraged (sometimes cajoled) to voluntarily retire from the company under payment of attractive separation packages to entice them to take this “voluntary” decision.

How quick is it ? On an average, it takes 2 to 3 months to frame a “presentable” VRS, after collecting the data on VRS of “other” companies and fitting it to one’s own situation taking care to match the employees’ age and experience profile.

Once the scheme is framed & put up, it takes another 1 to 3 months for employees to be “persuaded” to “voluntarily” retire ! Depending on the relative negotiating strengths of the management & union, this period can even stretch more to allow for fine-tuning the VRS to save “Union Face” on the one hand, and keep the financial controller and “outside Board Directors” satisfied on the other .

The VRS now gets “implemented” ; despite the fine tuning and improvements, in 50 to 60 % of the cases the initial response is dull and sluggish and the formulators of the scheme spend nervous days, waiting for the clouds to part and the sun to shine again. In a number of instances the response is so poor that the scheme is scrapped with the management threatening action “as per law”

In other cases, where the responses is inadequate but not so small that the scheme can be withdrawn, the motions are gone through ; simultaneously, the whole rigmarole begins once again - formulation of an “improved scheme” & all the resultant action flowing from it.

It can be easily seen that this is nowhere the “quick” answer it is made out to be entailing anytime from 3 months to over a year for results to show. This does not include the time additionally taken up if legal wrangles arise.

It is not merely that this whole process takes considerable time. It has many other ramifications. For one, it takes up tremendous amount of top management attention --- the MD, Personnel & Finance Chiefs and the Functional Heads of Manufacturing & Marketing (if the VRS covers the sales/marketing employees also) are engaged in constant & continuous discussions during this period. This diverts attention from their regular work which suffers as a result. Indeed, if they could devote their “this” time to their normal work & responsibility, it would probably obviate the need for a VRS to a considerable extent !!

The full-time occupation of Personnel/HRD people on VRS exercise leaves them little time for any constructive and positive contribution to organisational overhaul, employee attitude correction / changes and development of morale and motivation.

Another effect that many organisation face, from the time the VRS idea is mooted to the time the last person leaves, is that the whole organisation goes in a kind of stupor or limbo with everybody’s mind focused on the “VRS in the company” with little or inadequate attention being given to their own jobs. This happens throughout the organisation, cutting across Management / unionised staff, long-serving/new/ young /old employees.

An atmosphere, not very different from “one day cricket matches” prevails with one group of people constantly “revealing / guessing” the new and additional incentives being thought of for people who opt for VRS while the other group is itching to “know/announce” the score ! Despite this excitement, however, there is a sharp drop in morale, for everybody knows that VRS is an admission of failure and helplessness ; this takes its own toll on motivation.

And what does it really fix ? The rationale for this scheme is that under these difficult conditions we cannot afford to carry any fat so let us shed this flab, at a price, which we shall more than recover in the “next so many months” by the savings on the wage bill. After that, it is pure profit all the way.

The underlying and unstated basic premise of this action is that “what is wrong” with the company is over-manning. Is that really true ? Is that what is wrong with all the companies attempting VRS ? Indeed, is that the only thing wrong with our companies ? What else can one conclude from this single-minded and single-point campaign in all organisations (big, medium or small) to apply this as the medicine for facing the recession.

How did people accumulate in the first place ? Must have been required at that time, is the answer. So what went wrong ? Technology made your products outdated ; your own systems and operating style made you inefficient ; failure to modernise and change with times made you uncompetitive.

In all such cases which account for over 95 % of the poor plight of struggling companies, it can be seen that “excess manpower” is not the real issue. Of course, shedding manpower has the dubious advantage of showing immediate results in terms of lower wage bills. It is, therefore, being touted as the best solution by, essentially, lazy and inefficient management who are out to protect their own skins and jobs by shifting blame on people who had nothing to do with decisions that brought about the original mess.

There is yet another and bigger danger to this VRS solution. First of all it diverts attention from the “real” problems. As a result, the “real” culprits go scot-free. Secondly, when this is universally accepted as the solution to the company’s woes, and because of its ability to show immediate results in terms of reduced wage bills, everybody heaves a sigh of relief on its successful execution and many genuinely believe that all the problems have been solved.

As a result the real problems are no longer the focus of anybody’s attention since VRS has been accepted as the answer to all problems. When people leave but attitudes remain, the old situation will come back very soon infecting the new set of people too. This only means that after some time, the whole process will start all over again -- one more round of VRS, bitterness, “stand-still” organisation and self-congratulation on completion of the exercise !

Does this mean VRS is wrong and should not be resorted to ? What about the companies that have successfully implemented VRS and, as a result made impressive recoveries ?

No, this article is not arguing that VRS should not be initiated ever. Not at all. My central thesis is that VRS is not the solution to all the problems ; there are many other problems that need to be tackled first and set right. VRS should be the last resort when all else has been tried and all possible improvements achieved and yet there is need for some more corrective measures. Instead, we all seem to be starting with it as the first solution, which, this article forcefully submits, is wrong.

In the same vein, my second argument is that when you do not tackle the “other problems”, adopting VRS will give you an immediate but short-term and illusory benefit which will soon get neutralised by the continuance of other problems.

Where, then, to start ? Find out what the real problem is, before prescribing VRS as the solution ! Is it that the company is not getting enough orders for its product ? Is that, in turn, due to product obsolescence, or poor product quality or customer dissatisfaction with service or poor /unreliable deliveries due frequent plant breakdowns / strikes / lockouts or high cost of your product ? Is it that you have a high turn-over of people resulting in relatively new and inexperienced employees manning your key positions ? Are you in a product category which is being lashed by heavy competition from cheap imports of superior quality products ?

How many of the above problems are traceable to “excess manpower ?” None, barring one, viz., high costs where excess manpower is but one, just one, of the cost elements. There could be so many others that could equally be contributing to high costs e.g. high material costs, high taxes/duties, high process costs due ageing plant & machinery, inefficient processes and work practices, high costs of major inputs like fuel / power, high rejection rates, unchecked wastages and leakages and so on.

Hence, it can be readily seen that shedding so-called excess manpower only addresses one part of just one of the reasons why the organisation is passing through difficult times.

What is the effect of VRS on people who remain ? In one word, devastating.

Some CEO’s & HRD Chiefs believe that once VRS is over and “we have trimmed our fat” we will be able to knit the remaining smaller number of people into a cohesive team. In practice, this never happens. Unknowingly, almost surreptitiously, all the remaining people become extremely suspicious about management intent -- the entire top management, in their eyes, loses credibility. They carry the nagging feeling that if this company can do it to so many people who have worked for so long - they can as well do it to us, tomorrow.

While this may not be their conscious thinking -- somewhere in their intellect lurks the fear that if the “trigger” for VRS is poor company performance then it can also happen at the next “hiccup” of the company, no matter how well or how long they have themselves been working. Many people, particularly the good performers, start looking for openings elsewhere and leave at the first opportunity that presents itself.

Another anomaly that is being noticed in a number of cases where VRS has been introduced is the re-employment of the “retired” people on contract basis at lower wages. Many companies pat themselves on the back for this “innovative” method of reducing the wage bill --- is it really so ?

First of all, the re-employment of “retired” employees gives a big lie to the contention of over-manning, thus knocking out the very raison de etre of the VRS. And if it is your wages that have overshot prudent limits, then it is not the employees’ fault --- why did you as a responsible management not resist it at the time these wage increases were agreed to, instead of taking the easy way out of “buying peace” when business was good ?

Indeed, a careful analysis shows that in many cases management has abdicated its responsibility to manage, being essentially led by the “current economics” of the organisation to take its people decisions.

Consider any issue, be it general discipline, employee flexibility for doing different kind of jobs when the need arises, adhering to production/work norms in the factories and offices. Managers are increasingly shying away from enforcing these aspects as it entails tough and trying negotiations and actions. Indeed, so long as the company’s earnings permit and there is no probing or pressure by top management, most operating level managers adopt the path of least resistance as their dominant operating style.

Thus problems are glossed over or ignored ; for those that have to be faced up to, “buying peace” is the next most-preferred option.

Little wonder then, that what plagues Indian companies today is a completely lackadaisical work-attitude and gross inefficiency, be it the factory or the office or the research lab. Is it any surprise then that a large number of erstwhile industrial houses are facing the spectre of complete annihilation ?

In such a situation, instead of doing a proper diagnosis and treating the root cause of the disease viz., poor management, such organisations are still viewing the situation in the classical hues of management versus union.

Owing to the “weak” position of the unions due to the shrinking employment opportunities caused by recession and cut-throat competition, management are revelling in “showing the unions and labour their proper place” for which VRS is a very potent and visible tool. Unfortunately in their eagerness to show “labour” or even any “employee” their place, what is being lost sight of is that the management, very soon, will be shown the door by the customer (!!), unless the organisation corrects its other deficiencies, primarily arising out of inefficient, ineffective and indeed impotent management.

Every organisation, faces cyclical ups and downs, some caused by changes in the environment, some due its own internal failings. In either case, companies that survive and grow are those that keep an unblinking vigil on their own performance and take early corrective actions.

Turning around a company does not necessarily mean turning out people --- this is often a symptomatic treatment that lets the disease continue undisturbed causing upheavals every once in a while. What it really calls for is turning over a new leaf in the way the company is to be managed.

VRS is no quick fix for today’s ailing organisations --- the truth is there are no quick fixes. Only organisations that are willing to go the long haul by firm, tough, bold and honest management practices will survive.

Mumbai
May 28, 1999

Why don't Indian CEOs build roads ?

Why don’t Indian CEOs build roads ?

by

hemendra k. varma



Really difficult to fathom but almost universally true – no Indian CEO (barring a miniscule number) builds roads. Go to any factory of an Indian company (barring that same miniscule number) and you will know what I am talking about. The journey from the gate to the main building, or wherever else you are going, will be as traumatic, or worse, as the one you have just completed on the public road you travelled to reach the factory. The roads inside any factory (barring the miniscule exception and the PSUs) are either non – existent or in such a bad condition that you would think that the public roads were a carpet drive, in comparison.

Whenever I have raised this question with factory owners,/ factory chiefs, the common refrain has been : we are currently doing some expansion and after all the work is over we will build the roads. How ingenious and how naïve !

The whole idea of good roads is to let you move your goods faster and safer so that your construction activity can happen quicker and smoother. But this just does not get into the heads of these CEOs and their “couldn’t care less” Project Managers. One large company, having turnover of thousands of crores, which is currently doing an expansion costing approx. Rs. 50 crores, continues to work with muddy roads which is now leading to frequent “truck – jams owing to wheels getting stuck in the wet mud of the monsoon”. But their Project in-charge has managed to mesmerize the owners that he is doing a good job because he is concentrating on the main thing i.e. building the shed. That poor fellow does not realize how much faster he would have worked if he had built the roads first and how much easier it would have been for people to move in the site area, even those that had to walk.

In another company which is doing a complete repair, refurbishing of its factory and factory office area, it has simply not budgeted for rebuilding and repairing its derelict roads on grounds of Fund allocation priority. They are going to spend close to Rs. 60 lakhs in this entire repair/restoration exercise but are unwilling to spend a few lakhs more to make pucca roads on grounds of saving money.

The fact of the matter is that owing to the apology of a road that exists, the lose earth and particles continuously generate dust and dirt which gets swept into that shop floor, not only creating a filthy working atmosphere but also affects the quality of output especially when such dirt gets into valves and pipelines during assembly. Over the years they have already spent and will continue to spend lakhs to clean the shop floor and the equipment or pay by way of replacing defective parts and equipment, but they simply will not build roads.

We do considerable work in the area of 5S -- a Japanese workplace practice that helps create world class workplaces. One of the points of emphasis in the 5S Approach is cleanliness as exemplified by a dirt free workplace. Whenever we come to this part of the implementation, I have all managers from the President to the junior-most executive explaining to me in a learned and condescending manner why this is not possible in India because in India we have so much dust.

And why do we have so much dust ? Because no factory has roads. The un-surfaced, un-tarred, un-concreted path that is the proxy for a road in almost every Indian factory is an ocean of dust ready to fly inside your works and offices at the slightest hint of a wind. Hence, this has got nothing to do with India ; it is simply that you have not build roads which would remove or substantially reduce the scope for dust generation because there wouldn’t be any uncovered dust, if the roads were tarred or concreted.

After all why is there so little or so much less dust in the developed countries. It is simply because they have so little uncovered areas - the open spaces are either concreted (or surfaced in some manner) or “lawned” (if I may be permitted to coin a word). Hence there is nothing inherent about dirt or dust being uniquely an Indian phenomena as all the Indian CEOs propound.

The truth of this can be easily seen if you walk through any PSU Plant or any Tata Plant or any Birla Plant. Barring these old warhorses which are often decried and disparaged for being old-fashioned and not sufficiently dynamic, all the new glamour boys are led by CEOs who don’t’ build roads.

Actually, the question is bigger and the malaise runs much deeper. It is not merely about not building roads. It is about a much bigger issue of not building or not investing sufficiently in “infrastructure” of which the road is a large, visible symbol. But there are so many more.

Some of the observations I have in this regard are :

1. Not only are roads poorly built and even more poorly maintained, they are narrow and clearly inadequate for the traffic requirement in the factory. This is supposed to be “saving of money” though these smart CEO’s do not seem to realize that for this supposed small, one – time saving in capital cost, they have perpetuated a costly infrastructure that will breed delay, accidents and mishaps for a life-time.


2. The same is the story with staircases. They are so narrow that not only is carrying of equipment and machinery a big pain every day, it is also very unsafe. Stupid architects who understand nothing about factories are called in to design factories and try to demonstrate their expertise by “showing the CEOs how they have saved money by not wasting it on wide staircases”, and making that “saved” area available for installing more plant and machinery !! Whereas engineers, who understand the business of factories better and more intimately than architects, are ignored for having no aesthetic sense and wasting space only so that they can work comfortably !

The same short – sightedness prevails here, too. These narrow staircases delay every subsequent movement of goods and people, lead to frequent accidents, big and small but since it “personally does not hit the CEO or owner” they are least concerned.


3. Take a look at the toilets – leaking taps, wet, dirty floors, dirty, stained urinals and pots, filthy towels (where provided) which you would dare not touch for fear of contracting a disease. This is the story of 90 % of Indian factories led by all these so-called dynamic new – age CEOs. But how can money be wasted on toilets in factories -- it will affect the bottom – line. Besides, as per the new-age philosophy of business, business should concentrate on its core business – the product or service that it sells and not waste time on silly things like clean toilets for its employees.

It is not just the “factory toilets” that are in this ghastly condition. Most of the “office toilets” are only marginally better – instead of being ghastly, they are merely horrible.

The CEOs are blissfully unaware of this, because they have ensured a private toilet for themselves. Indeed, most Indian CEO’s are unaware of anything because they rarely do the rounds -- be it of their offices, the reception area, the store-rooms, the pantry or the toilets or for that matter even of their factories and the various areas there. They are stuck to the air-conditioned comforts of their obscenely decorated “rooms” cut-off from the realities of the daily hardships their employees face on the entire infrastructure front.


4. Forget the condition of toilets, left to themselves, Indian owners and CEOs, would not even build toilets. A large company whose turnover exceeds Rs. 2000 crores has just completed a new unit which comprises two sheds over 200 metres long. It has been provided with just one toilet area having 4 urinals and 3 WCs and one basin. It takes a person working at the far end close to 5 minutes to walk to the toilet, with all the hindrances of plant and equipment, moving loads and narrow passages. It takes the same time to come back. And, often, the same time to wait for the use of the toilet facility !


5. In short, a “wash room break” can take as much as 15 minutes simply because of the inadequacy of the infrastructure. Multiply that time over hundreds of employees, every day of the month and year, and then one can easily realize whether the saving effected in having only one toilet can pay for the daily cost of the “productive time” wasted by employees in the use of this facility.


6. Go to any office toilet -- in the best of companies. You will invariably find the pantry right next to it or many times, even part of the same enclosure, part of which is the toilet area and the other part is the pantry. I refuse to have tea/coffee in such companies if I discover this arrangement before I am offered any beverage.

Why is this arrangement made ? Because, as the same stupid architect will explain, it saves on plumbing costs since both the pantry and toilet require water inlets and outlets !! Just look at the myopic thinking which is allowed to prevail over even simple hygienic considerations. Would you build a toilet in or next to your kitchen to save on plumbing costs ?

But, the Indian CEO is least bothered about such “infrastructure” considerations. He probably has his own private pantry or at least does not get to see the arrangement, since at least he has his own private toilet. It hardly matters to him what the rest of his employees & guests have to suffer.

7. Savings are made on telephone instruments ; just one or at best two instruments will be provided at the desk of the HOD or his assistant while the lesser mortals below them will have to walk a fair distance to take or make a call.

When I enquired of a CEO why more telephone instruments could not be provide, he was genuinely surprised - Do they really need one ? We can’t have a telephone for every employee (pray, why not. Office oriented companies routinely have one computer for every employee). What a waste of money ! Besides, what is the harm in walking up to get a call, he says.

What the poor CEO did not realize was the tremendous time wasted by his engineers, particularly the maintenance personnel, in attending to complaints or to communicate with other departments. The result was it took much longer to respond to breakdowns which affected production and output.

8. The same is true of Computers. There will be one derelict 486 machine for the department ; it will often not work, everything takes much longer and it often breaks down. It takes even longer to get the system chaps to attend to the fault, spare parts cannot be found easily but a new PC will simply not be sanctioned ! Why do they need a new computer when the old one is working, the smart alec CEO declares !

9. Look at the training facilities, be it in factories or offices. An old apology for a whiteboard exists in most companies. The white board marker ink will just not wipe off. It takes two to three wipes and a generous dose of water before you can clean the board for it to be ready for writing. Next, you will never find transparencies – it is a heavily rationed and restricted item -- another cost saving favourite. OHP markers are rarely available (I now carry my own set for giving to the participants) and when requested for, provided very reluctantly with always an unspoken message “this is really too much -- why do you ask for such expensive items ?!!”

In one organization where we have been working for over 4 years now, it took me two years to persuade the company to invest in a new white board !

However, two other training venues and one conference hall still make do with the derelict whiteboard since the company feels that it is not really necessary to spend money on white boards. Look at the irony of it all.

The CEO/owner tells me : “Mr. Varma, whatever happens I don’t want to stop training. I want all my managers to be trained by you.” On the other hand, there is a marked reluctance to spend a small sum to provide good, new whiteboard which will save considerable time in writing which in turn will make each training programme that much more productive and effective.

The story with the LCD Projector is no different. An old projector which has a limited throw and very poor illumination continues to be used. The result is that the rear rows cannot read or make out what is being displayed and naturally lose interest in the entire proceedings. And to add insult to injury, there is only one projector available between 3 training venues and 4 conference / meeting halls.

There have been a number of occasions when my training programme has been interrupted requesting for the LCD Projector since it is required in an “important meeting”. This is a company which has a turnover well over Rs. 1000 cores but cannot or will not spend a couple of lakhs to get 2 or 3 new projectors.

10. Rare is the company which provides a management library – we are not a college is the standard “no-brainer” from their CEOs. And yet when this same CEO steps into a public platform, he/she passionately talks about the importance of creating a learning environment, where employees can constantly upgrade themselves ! Where some books do exist, they are either placed in the CEO’s room or in the rack behind the HRD Chief’s chair so that no one can access it !! Oh, the innovations of the people who lead Indian companies today !!



11. Look at the Filing cabinets and space for filing - grossly inadequate, poor unfinished wooden cupboards, rusty hinges, almirahs with broken handles, torn file holding folders, and each such occurrence leading to time wasted whenever a file has to be placed or retrieved.


12. Consider the reception area – again that great architect, especially if he is from one of the metros, especially Mumbai -- will provide for just two or three chairs so that if you are the 4th person, you have to stand, Every architect and interior designer from the major metros is taught to measure everything in terms of “per sq feet cost” and squeezes everything except for the boss’s room to show “how much working area he has extracted from a given space”. The truth is that on paper this appears fine but makes life miserable for everyone all through their working life in the office or factory.

Have you noticed the lighting -- it will be so dim and dull (power saving, I am told) that you will get a depression waiting for your turn to be called in by the company official, who having given the time, is never free when you come.


13. If you visit a factory canteen, you will be appalled to see the filth in the kitchen, the leaking and cracked sinks, the creaky tables and the cracked sun mica. The condition of the walls and the whitewash is best not talked about. Recently at a training programme in a large company, I was told by their managers, and I quote their exact words “hamare canteen mein kutta – billi bhi khana nahi kha sakte hai, itna kharab hai !”


14. What is most amusing is that these CEOs who do not invest a single rupee in providing good infrastructure in their plants and offices cry themselves hoarse and lampoon the short-sightedness of the government in not providing good infrastructure --– i.e. roads, electricity, power, transportation, clean airports etc.


I would appeal to CII, FICCI and ASSOCHAM that whenever they hold their next “pontificating” seminar for preaching to the government on what it should do to improve infrastructure and why “infrastructure improvement holds the key to improving India’s economy and competitiveness,“ they should make sure that the speakers who come to preach are from organisations that have wide roads, clean factories, shining and dry toilets and wide and safe staircases.

If the speaker does not meet this criteria, strike him off the list and ban him from any public speaking on this topic. The Indian people can’t take this hypocrisy anymore and will certainly not tolerate it any longer !

In conclusion, to return to the beginning, why don’t Indian CEOs build roads ? I suspect it is because they really do not know how to build anything. They have only learnt how to make money (often due to the general boom in the economy rather than anything special or specific they have done) which has become the whitewash for all other failures and omissions.

They do not know how to build organisations, they do not know how to build systems, they do not know how to build teams, they certainly don’t know how to build roads. What a pity that the breed of Jamshedji Tata and JRD, G. D. Birla, Kamalnayan Bajaj and others like them have become such a rarity.

Dear Mr. CEO - please learn to build roads ; it is only then that you can reach somewhere.



mumbai
July 2, 2006

My first post

After a lot of dithering and planning, I have finally opened my blog and am making my first post.
Let me see how this looks.