Journey towards Organisational Excellence

Excellence means what ? The book that made the word “excellence” famous (if at all it required fame ?!) was Waterman and Peters’ book of the mid – 1980s “In Search of Excellence” That would be a good starting point as any to understand the meaning of Excellence.

According to the Authors, their qualifier for “excellence;’ was the following : “…. We reasoned that no matter what prestige these companies had in the eyes of the rest of the business world, the companies were not truly excellent unless their financial performance supported their halo of esteem (emphasis mine). Consequently, we chose and imposed six measures of long-term superiority. The six are : (1) Compound asset growth from 1961 to 1980, (2) Compound equity growth from 1961 to 1980, (3) Average ratio of market value to book as on Dec 31, 1961 to 1980, (4) Average return on total capital from 1960 to 1980 (5) Average return on equity from 1960 to 1980 and (6) Average return on sales from 1960 to 1980

Let us also look at a more recent book “Good to Great” by Jim Collins published in 2001. Here too, as part of identifying the “great companies” Collins applied the following criteria : “We launched a six-month “death march of financial analysis (emphasis mine),” looking for companies that showed the following basic pattern : fifteen-year cumulative stock returns at or below the general stock market, punctuated by a transition point, then cumulative returns at least three times the market over the next fifteen years.

As you can see, the focus is primarily financial or “result – oriented”. What is wrong with being result – oriented, one may well ask. After all this is not a charitable organisation ? (It is a separate matter of course that every business and industrial establishment begs for charity from the government, be it in land rates, tax and duty exemptions, tax rate reduction, non-application of prescribed penalties for non-fulfillment of statutory obligations, write-offs on unpaid loans and dues (now given a respectable cloak and called innovative financial re-structuring !!).

The objection is not to being result – oriented. The greater question, in my view, is “what do you call results ?” Is the financial result of the organisation the only result to be reckoned, measured and evaluated ?

Suppose, as a result of the company’s operations, the sub-soil water gets contaminated as was alleged to have happened with Coca Cola in Kerala, is this a result not to be considered in evaluating the organisation’s performance and/or its excellence ?

Suppose as a result of the organisation’s employment policy, many children take to work, as has happened in so many of our quarries and garment manufacturing units, which is a violation of the child labour act, is that not a result to be considered ?

Suppose as result of the business usurping, at throw-away prices, huge tracts of land to build SEZs, a large part of the indigenous population has lost its traditional and life-long means of livelihood, is it not a result to be considered ?

Suppose the installation of an industrial unit caused tremendous air and water pollution as has been caused by tanneries, breweries, cement and power generating units, is it not a result to be considered ?

The point being made is that unless we clarify and determine what is the parameter for judging excellence, we may well label something excellent on a narrow yardstick but which is criminal on another wider framework.

A classic example is Enron which won accolades for its financial performance as typified by its share prices and ROI but, subsequently, almost the entire management was labelled and eventually determined to be guilty of criminal infractions. There are many such examples in our country but I am afraid to name them for being the small person I am. May I submit, therefore that the “confinement” of excellence to figures and numbers is the first step towards its abandonment.

Organisations today are only focusing on their body - viz., financial health ; as a result, they have lost their soul ; it is the latter that I wish to focus on as an important objective in the journey towards organisational excellence.

Looking after your body can only bring about sustenance ; it is only the nurturing of the soul that can bring about excellence.

Some will argue that without financial health one cannot do anything else ; hence “financial health” or, very simply, profits or ROI can and must be the first, if not the sole objective of any organisation.

I hold that there is some confusion here as to which comes first. Proponents of the above view treat financial health as an a priori requirement for any organisation to survive and grow - I beg to differ because, in my view, financial health is not a “causal factor” but rather a resultant factor or an effect of the “other things that you do”. As somebody put it very succinctly, “The objective of business is not profits ; the objective of business is customer satisfaction, profit is a result.”

So if we are talking of the soul of the organisation, how does the soul of an organisation manifest itself ? According to me, it is reflected in the following :


• Fairness
• Politeness
• Responsiveness
• Respect for Laws
• Care for the Environment
• Contribution to Society



Fairness

What does fairness mean and fairness about what and to whom ?

I understand fairness as

• doing what you are supposed to do,
• not doing what you are not supposed to and
• making full disclosures about both so that the other side can take an informed decision about going along with you or not.




I will discuss this in respect of three major partners or associates of any organisational unit viz., employees, vendors/suppliers and customers.

Let us take the case of employees first. They are the most exploited lot today, particularly the managerial or the non-unionized category.

Employees are routinely made to work 12 to 16 hours a day, days on end ? Is this fair ? When a person is selected, it is for an “unstated” but legally and traditionally understood engagement of 8 hours of working (this is what was supposed to be contribution of enlightened management that hours of work should be shortened and regulated). How can the organisation then make him work longer than 8 hours every day or almost every day ? Once in a while a crunch situation demands working long or odd hours ; nobody can or does object to that ? But making it a regular routine - can that be called fair ? Not only he/she is not paid for that extra work, organisations do not even have the courtesy or the heart to offer tea/coffee or dinner for these long hours ; as a result the employees eat very late, or do not eat at all, resulting in complete breakdown of their digestive system and health. Is this fair ? The banking, finance, advertising, entertainment and, in a number of cases, even the manufacturing industries are the biggest culprits in such “unfair practices”

When I posed these questions to some such employers, their response has been --- we pay them well, in fact we overpay them so there is no reason for them to crib if they have to work extra hours ? The question is certainly not how much they are paid -- the “fairness” question is were they told that they are being paid more because they are expected to work ‘unreasonably” long hours ?


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Next, what is this style of working resulting into ? Distraught and overworked employees with their work-life balance totally skewed, their health shattered (acidity is rampant), a disconnect with family members who rarely see him/her during waking hours. Is this the hallmark of an excellent organisation which may be showing excellent working results because of this blatant exploitation of its employees ?

Making false promises to employees at the time of selection and recruitment is another common practice amongst ‘aggressive and dynamic” companies. This was brought home to me years ago when we were doing an organisation climate survey for a company. One of the employees had written in his response sheet that he didn’t trust the company. When I quizzed him during the personal discussion he explained that at the time of the interview, after the salary matter was discussed and agreed, he enquire about other facilities and benefits. He was told they are all standard as in other companies.

“On joining,” he said, “I found that this company had a six day week whereas I was coming from a 5 day working week organisation ; if I had known this I would either not have joined or asked for a proportionately higher salary. I also learnt that PF paid here was at 8. 33 % whereas I was getting at 10 %. This also they did not disclose to me. The super-annuation here is payable only if you complete 5 years of service whereas there was no such restrictive rule in my previous organization.”

His main grouse was not they had different or more stringent rules ; his point was why did they not tell him clearly and completely so that he could have taken a decision yes or no, taking all these factors into account.



Let us now turn to Vendors/suppliers.

This area hardly needs much elaboration as most readers will be familiar with how their company exploits and squeezes this class of business associates, common amongst which is delaying payments (to show improved cash flow or manage your own cash crunches), squeezing for un-remunerative prices to show your own purchasing efficiency, making the vendor make ten visits and go-around various departments to get a payment that is legitimately due to him, making arbitrary deductions on his bill just because you have the size and power to do so. The organization must ask itself the question, is it fair ?

Let us now turn to the holy of the holies, the customer in whose name all swearing is done, all visions envisioned and all missions undertaken !

Cheat the customer through the fine print is an old and well-honed technique mastered by various companies paying fat fees to lawyers to protect them on this front.

Suspend service to the customer for minor or alleged infractions so that he comes running back to you for restoration of service at which time you can extract your pound of flesh e.g. mobile phone companies, TV cable connection, electricity companies, equipment manufacturing companies for spares or service etc.

Cheat by doing creative billing. I have a mobile internet connection. Whenever they send a bill which has paise in the amount, they round it off – perfectly understandable. What is not understandable nor acceptable is that they round it off to the next higher rupee,; so whether the bill is for Rs. 810.37 or Rs. 810.76 paise, both are rounded off to Rs. 812/- ? Is this fair ? Is this right ? Is this legal ?

Any child who has done elementary mathematics knows that rounding off is done to the nearest Rupee and not the next higher rupee. Now, where the customer base runs into lakhs, such “unfair” rounding off means wrongful extortion of huge sums of monies from the customer ? Is this what you call a customer – focussed organisation ? The same technique is used by telecom companies and credit card companies in the “extra charges” they levy.

And if the above examples smack of unfairness then can an organization that indulges in them be called “excellent” even if it meets the “excellence” standards of the financial analysts ?



Politeness

What does politeness in an “organisational context” mean ? Exactly what it means in any other context. The major elements to keep in mind are welcome, greeting, courtesy and care.

Do you welcome them ? Do you greet your visitors ? The test of organisational excellence or maturity (if I may call it that) in this context is evident from the way the Security watchman or the receptionist treats you when you enter the office or the way the telephone operator talks to you when you call up the company.

Unfortunately, these are simply not factors that occupy the minds of the “dynamic, MBA mangers” who staff all companies and work 16 hours a day to change and conquer the world. None of them, may I repeat, not one of them, consider it necessary or even relevant to train their watchmen of receptionist or telephone operators on the elementary aspects of greeting and welcoming a visitor or a caller.

The result is every visitor is a victim of the company’s first line staff’s mood of the day !!

The managers of the company never know anything about it because the staff dare not treat them casually and the victimized visitor more often than not never complains about it. But an organisation that is striving to be excellent must necessarily be pro-active on this front and take its own initiative to train its people, to test how they actually behave with “outsiders” and counsel them wherever and whenever necessary.

What about courtesy ? An absolutely non-existent feature of any conventionally denoted “excellent” organisation. Such organisations are proud of their excellent performance, so there is no need to be a courteous, they feel. Indeed “arrogance” is what suits their personality better and they display it with a vengeance.

Call up any manager in such a company ; it will take you several attempts and many days to be able to speak to him, if you are lucky. Else, you will have to settle for getting an appointment only through his secretary or assistant. Once you arrive on the appointed day for the meeting, you are kept waiting, without any explanation, or told after a long interval that it is no longer possible to meet today because “the concerned manager” is going off to another meeting or as it also happens, you are told on arrival that the concerned manager is out of station !

If a person can’t keep his appointment, he probably cannot keep his word. Surely such a person, or an organisation where such people work, cannot claim the crown of “excellence”



Responsiveness

What does responsiveness mean ? It means Acknowledging, Listening, Replying, Resolving. It means acknowledging the presence of the “other person”, listening to what he/she has to say or show, replying to his/her queries doubts and most importantly resolving – to his satisfaction -- the problem that he has come to you with.

Most organizations fail the test in the first stage itself. Telephone any organisation -- they simply do not acknowledge your presence on the line. Almost 60 to 70 % have a machine answering you, guiding you through complicated buttons on your instrument, exhorting you to stay on the line because you are important to them but doing nothing to connect you to the person you wish to speak to.

Those that do employ human beings to answer your telephone calls behave in the most inhuman manner -- they will transfer you to an instrument that keeps on ringing ; when you are brought back to the operator and you mention that nobody is picking up the telephone they inform you with great perspicacity and insight that it means that the person is not on his seat and before you can say Hey presto, they will disconnect. You try again and repeat your problem and ask the person to locate the person you are looking for, they refuse to do so or put you on hold till you lose your patience and disconnect.

In the course of our work, we deal a lot with the HR function ; almost none -- of course there are some honourable exceptions -- of such worthies can be ever accused of replying to a letter, e-mail or telephone call that we make !! HR people never return a call, they never answer an e-mail. Which dimension of excellence does this behaviour demonstrate ?

Finally, we come to the issue of resolving the problem that the customer has brought to you. Whether it is the salesman in a retail shop or the Manager in a Hotel or an official in the Purchase or QC or Accounts Department, they are least bothered or concerned about satisfactorily resolving your problem. All that they will stubbornly quote is company policy that does not allow them to do what you are asking for, or simply express their inability to help you ; some are even more helpful -- they simply walk away or put down the telephone.



Respect for Laws


Laws are made by governments to codify “sanctioned behaviour” identify “unacceptable behaviour” and clarify the “grey areas”. They are made by our elected representatives and therefore need to be scrupulously respected, and adhered to. Every dynamic manager’s constant refrain is that but for these laws, and the restrictions they place on us, we would be doing so much better. What kind of thinking is this ?

Are you above the law or outside it ?

No, what I mean is, laws are good but they should not apply to me – I am so dynamic and after all I am not doing this for myself, I am doing this for my company so that it can become excellent by breaking the laws !

If you want to be termed excellent you must show your prowess in the “given circumstances” that apply to all players and not attempt to win by tilting the table. That is not excellence, it is pure and simple cheating.

Organisations that want to achieve excellence must have it as part of their explicitly declared mandate and equally scrupulously observed behavior that they will follow the law of the land or attempt to change it if they feel it is a millstone, but they must never circumvent it or try to violate it with the help of “excellent” lawyers gifted with devilish articulation.



Care for Environment

With the scientists warning us every day about the impending environmental crises be it the melting of Himalayan glaciers or the rise in sea level or the looming ware shortage leading eventually food shortage or the carbon dioxide emissions, it will be a tragedy if it has to be argued and proved that organisations owe it to the entire community as well as to themselves to “take care of the environment” ; unfortunately intransigent and powerful companies like soft drink manufacturers, various petroleum companies, breweries, tanneries, chemical plants etc just do not accept their responsibilities in this regard and once again make the time-worn clichéd arguments about how “their profits will be affected” if they were to adhere to all the laws regulating pollution and environmental hazards !

Organisations that aim for excellence must necessarily acknowledge their duty to preserve, protect and improve the environment in the areas of their operation. This means, essentially,

•controlling all “eco-damaging” discharge emanating from their production process, and adhering to all laws laid down in this regard

•avoiding excess or overdrawing of natural resources, particularly water,

•stopping manufacture of all petrol/diesel guzzling vehicles (even if it means stopping the offering of large and fashionable cars, just because somebody is willing to pay for it)

•Reducing noise in their operations,

•Removing debris and cleaning up the neighboring areas whenever they complete their construction/building work

•Ensuring that their is no choking or drains, nullahs and rivers because of their dumping garbage/rubbish etc. in the same



Contribution to Society


It is not the business of business to “contribute to society” or do any social work ; these are the duties of the government. We are in business to make profits ; what is wrong with that ?

This is what is wrong with this unabashed assertion of “profit being the only sensible, valid and acceptable” objective of any business. Let us start from the basics. How, and why, does any business start ? It starts with the identification of a need in the society/geographical area the business intends to serve. Thereupon a search ensues for a suitable location, keeping in mind RM proximity and Customer (market) proximity or access.

Thereafter people are sourced to “run the business” be it at the level of operatives or senior managers --- thus the entire business owes its genesis and existence to the society -- be it in terms of land, raw material, employees or customers. To then argue that we have no duty to society or the welfare of well-being of the society in which we are located, our only motive and “rational objective” is and can be to plunder society so tat the company makes profits is puerile, to say the least.

The issue is -- is an organisation bigger than the society which nurtures it (through RM supplies, people supply, commercial facilities and finally consumption of its products and services) ?

To argue that “company interest” comes above society interest is not only incorrect and laughable but also, to put it mildly, plain stupid.

Contributing to society, (beyond the employment you generate and the taxes you pay) should be seen as a Duty, and not the first “quid” of any quid – pro – quid arrangement with the government and authorities.

Hence, clearly one dimension of organisational excellence is, or should be, according to this author, the organisation’s planned and conscious contribution to society in which it is located, as well as those physical areas and communities from which it draws sustenance, by way of raw material supplies, workforce, vendors/suppliers and customers.

What can be this contribution ? It could be in various areas like, maintenance of and improvement in the environmental climate -- cleaner roads and drains, observation of pollution related laws and restrictions, school facilities for the community, parks and recreation grounds, support to community activities (sports, drama, music, health-care).

Wherever the local government or municipality is unable to (for any reason whatsoever) take care of the infrastructure, organisations in those areas must come together to do so -- particularly for things like, drainage cleaning or repair (to avoid flooding or spread of water-borne diseases and contaminated water flow), widening of roads (for which they should readily draw-back their boundary walls, instead of employing highly-paid lawyers to assert why their land cannot be taken up for road widening !).

In fact, one simple way, we propose, of doing this is for organisations to draw a circle of 100m radius around their location and then strive to make that circle “the best” on all infrastructure parameters like roads, drains, trees, gardens, parks, maintenance of public monuments & tourist interest areas, provision of public Amenities etc.

If this is widely adopted then there will be a visible upliftment of local area’s standards which benefit will rub off on the industries themselves by way of faster vehicular movement, less accidents, a more sophisticated workforce as also appreciation in value of the land and buildings in that area.

I know that many readers who have come up this point of this article will be still arguing – this is not our job, this is the government’s. Let us concede for a moment that your above formulation is correct. So what ? The government which is supposed to do all that is not doing it or is unable to do it. Mostly governments plead lack of funds for doing so. How do you think the government is going to solve this problem ? Simple, by way of levying taxes to collect funds to be able to do the above. These taxes will then be a permanent liability for you.

Is it not better that you do some (certainly not all) of these things yourself, using the obviously talented people you employ, who can do these tasks far more efficiently and cheaply and thus pre-empt the government’s tendency to increase taxes ?

However, there is a rider to all this ? What is the rider ? The important and non-negotiable rider is that you should do it without claiming any banner or acknowledgement hoarding ?

How will people know we have done it and why shouldn’t we get mileage for the community work we do ? The answer is simple. Once banners and hoardings declaring who has done what are permitted, not only will they make the entire project ugly, it will set off competing claims amongst organisations for size of acknowledgement etc.

This may ultimately result in many organisations trying to even grab that physical area as their own (as has so wantonly happened in case of public parks and open spaces taken up by Private clubs for maintenance in Mumbai ) and then treated as their personal fiefdom, denying access to the very public for whose benefit they were allotted such public place to maintain.

What about the question of getting mileage for our work ? How will the community know how much sacrifice we have made for them ? Of course they will know. Proclaim it though your media Ads ; announce it in your AGMs. Send mailers to your customers and shareholders. But do not plant boards. In any case, when you do projects of the above nature, everybody knows who is doing it and you will get the benefits of community appreciation, if the job is well done.

To summarise, the Journey towards excellence must take a broader view of “excellence” than mere financial performance – be it profit % age, dividend rate or number of bonus share issues. The “ignored dimensions” that should form the hallmark of any excellence journey, are the following :

I would like to term this as the “Excellence Star”. It is my postulate that if the above “excellence dimensions” are consciously striven to be achieved, (financial) performance will axiomatically result ; however, the reverse is not necessarily true. You can be a profit-making company using “unfair means”, violating various laws, destroying the environment and contributing nothing to the society.

It is for the managers to decide which dimension or dimensions of excellence they wish to focus on and attempt to achieve. Today it is a choice – tomorrow there will be none and those that miss out on their responsibilities,  will not only go missing, they will not even be missed.



Mumbai
June 10, 2008