Change, whose job is it? - Part 3

Change, whose job is it? –  A CEO’s reflection

Ravi was deeply emotional and in a reflective stage by now. He was a few drinks down and I could sense the anguish in his voice as he spoke.

Ravi: Oh my dear…, I did this to myself !!

Me: Don’t go there Ravi. You will get nothing brooding over this. Let us stay on the situation and learn what actually happened? Does that work for you?

Gathering his composure a bit, Ravi sat straight to take forward our conversation.

Ravi: yeah…, works.

Me: So what is your reflection?

Ravi: I guess to start with I got it all wrong. My global CEO probably did not share my vision….

I quickly interrupt Ravi here…

Me: Excuse me?

Ravi: Oh, ok. I guess I shared my global CEO’s vision and had my own vision for India aligned to his. I think he agreed with my vision and purpose. What I realize is that, he did not approve the way I executed it?

Me: Ok, what about the execution of it he did not approve of?

Ravi: You know what, my intention was good. I had nothing against anyone, especially the old timers. I just wanted to get the job done and make all of us successful. I still believe I had a compelling vision for India and we were on the right track. If I had 3 more years, I would have turned this place around. What I guess, I did wrong was I did not rally enough support for my vision. I thrust it on people around me. I should have been patient & worked with my MC to co-create the vision as a shared vision and not my vision. It might have worked better?

Me: That sounds like something insightful Ravi. A shared vision and not just your vision!! You mentioned you were not against the old timers? In hindsight, did your actions match your intent?

Ravi: I think I know where you are going? Since I was biased in my view of the old timers, I saw them more as road blocks than someone who could enable my vision. Probably Amitabh was right. He used to keep saying, turn a few old timers who have high credibility in the Org around and make them advocates of your vision. He felt that will enable what I was trying to do. I was impatient, a man in a hurry. I had set my own timelines for success.

Me: Whose success Ravi, yours or the company’s?

Ravi: This is getting painful now as I hear your questions…., let me drive through this though! I think my success. My global CEO had not set out the pace for change; I was the one who was anxious to make the change happen faster than what people around me were ready for. I did not take people around me along and build a compelling case for change which included their interests.

Me: Wow. , an interesting point you made Ravi – compelling case for change& others’ interests!  Did you consider looking around and evaluating who around you in your MC & beyond could have been your partners in enabling your vision for the company?

Ravi: I actually wrote most of them off. I recall Amitabh bringing me something like this on a piece of paper suggesting an approach to include a few old timers who he thought could be leveraged. He felt they were key stakeholders who could enable the vision & strategy. I did not heed to his view.

Me: So you missed an opportunity to include the key stakeholders who would have enabled the change you wanted to bring about? You said earlier that you replaced many of them with your new hires. Did these new hires embrace your vision?

Ravi: I think they did, but they were struggled to influence their teams well enough. In hindsight the old timers might have done a better job if only I had listened to Amitabh’s advice and been a bit more patient with myself & people around me.

Me: Ravi, don’t be harsh upon yourself. I heard from you that you missed a few key aspects, but you did communicate your vision & need for change across the Org. You talked to people & reached out widely in the Organization. I heard you then when I was around, you were clearly very passionate about your vision. It could have been more effective if your MC also had done the same and you had more partners.

Ravi: You know what Anand, I feel much lighter after this conversation. Over the last few years, I have been living in some kind of self-pity. This chat has helped me immensely. I have got an opportunity to look at this episode differently and I think there is terrific learning as I now move on from here. As a leader if I had a trusted advisor, I might have been better off.  eh..oh.., ok,.. I know what you will say next.., I know I had Amitabh. I realize I made a mistake. I think he was trying to help me, I did not allow myself to be helped. I realize I was stupid.

Readers – As I share this true story with you, here are some thoughts that I would want us to reflect upon.

As a professional I have had the honor of working with many great people and have learnt so much from their experiences.  They are senior leaders, high achievers, people with great vision, lots of passion and drive, they may appear to have their follies, but you know what they are human after all.  The issue here is not if Ravi is a great leader, even if he failed in this one company he still is a great leader. He learnt his lesson and has moved on. Today he leads India’s 3^rd largest FMCG Company with revenue in excess of $ 1.5 b and is doing a fine job last 5 years.

A big question that continues to plague me even today is “Change - Whose Job is it?”  People often walk up to me and talk about what does not work in the company - issues, challenges, how things should be different, what processes are missing etc.? The only question I ask them – what are you doing about it?

Somewhere deep within, it is my reflection that – Change is everyone’s job. It is not that of the CEO alone. The CEO may appear to be the visible face of it, may lead it, may advocate it, build a case for it etc…

However, each one of us needs to stand up and be counted. We have to be the change we want to see around us.

Change, whose job is it? - Part 2

Thank you for your overwhelming response to the first section of this post.

Why did the change not work? The CEO and I found ourselves a comfortable place in a bar and continued our conversation over a few drinks.

He drank and spoke; I chose to ask questions and listen instead of drinking. Here is how the conversation progressed.

The CEO – Ravi (name changed) said, “I was doing very well in Unilever successful with a big role. I was itching to run my own company. The opportunity seemed terrific.  The company, an MNC had promise, some good products and brands in its stable, a laid-back culture, moved slowly but had incredible potential. They got a new CEO globally and he hired me. He wanted to drive this company in India out of the woods and into growth. You know Unilever at that time was growing 18% YoY and this company was growing a mere 6% and losing market share in all key product categories.”

So I asked Ravi, “What was your mandate?”

Ravi: “I was told they wanted to shake up this place”.

Me: “What do you mean by ‘shake up’?”

Ravi: “My predecessor was an old hand. He had been around for 25 years. Was hard-wired in his thinking. He was not open to taking  on aggressive sales growth targets. He had a fixed way of doing things. He was not open to launching new products in India, which were successful in other markets. He was resistant to any change. They wanted a new man at the helm. They wanted me to take a hard look at the leadership, assess their capability and determine if we had the right horses in the stable. They were not sure who they could bet on. They did not trust my predecessor’s assessment of the situation and the leadership team. I was told I should do what it takes to grow the company at par with competitors, which means 6% to 18% annual growth. That is how the market was growing at that time.”

Me: “So after you joined what was your assessment of the situation & the leadership?”

Ravi: “Boy, a ton of issues. In most cases the global assessment was right. The company was truly laid back. They had no measures around performance. Starting with manufacturing;  factory productivity was low, poor quality processes, safety standards were pathetic, compliance was at bare minimum standards and much more. I was concerned that with these standards, scalability of output will be big challenge.   R&D ; had been pumping ‘000’s of $ into this thing and nothing had come out in the last 5 years. Can you believe it? The first time I reviewed R&D work and results, I decided – I have to shut this down completely. It is not worth the money we poured into it. There were positives – the  sales engine worked well, we had a strong distribution model and it made me happy. In product marketing and branding, there were a few good people but I knew we had to invest in this place. Therefore, I did invest and bring in some good people from Unilever.”

Me: “So what was your plan? How did you think about the change you wanted to see?”

Ravi: “I decided to approach it in three phases. Phase 1 – I went around the country and met all people. I reviewed all the work that they were doing, got to understand their issues and challenges. I also used the opportunity to assess the people and inform my thinking. So I met the factory and supply chain leadership, the sales and marketing teams, distributors and retailers, my own Management Committee (MC) and spent around three months doing just this. Phase 2 – I shared my vision and growth strategy for the company. I aligned my global CEO and his team to my thinking. I recommended that I will shut India R&D and I shall leverage global R&D to drive innovation in both product and packaging.  He agreed. I also shared my vision and growth strategy with my MC. Phase 3 – I identified people who might be challenged in executing my vision & strategy and decided to change them.”

My reflection: Wow, …, my brain began humming with questions & more questions. I am sure yours’ is also ….

Me: “So, Ravi did you execute on your approach?”

Ravi: “Yes, I did to the hilt. I had a plan, I worked very hard at it. We also made a lot of progress.”

Me: “What was the progress? How did you achieve the growth results like sales, market share etc.. for which you framed this 3 phased approach?”

Ravi: “We did reasonably well. We grew 5% in the first year but we bounced back to 8% in second year.  We had 6 new product launches, - The last time the company had a new product launch was 10 years ago. We did six in just 2 years. My global stakeholders should have been thrilled. They could never achieve any of this with my predecessor for the last decade. Our profits margins continued to be strong. I improved our net margin from 12% to 16%. We made the highest profits ever. I brought in some good leadership talent from outside and we had lots of people change in manufacturing and supply chain. You know more than 50% of the organization were tenured less than two years with us. From a slow lethargic set up with old fashioned people, we had a bunch of young and bright talent. I made that happen. They saw promise in my story – my vision & strategy.”

Me: “So what went wrong?”

Ravi: “My global CEO said I had not achieved what I set out to do? I had promised him 18% sales growth, but we did 5% and 8% over 2 years. He wasn’t satisfied. In his view, I missed my target. But you tell me, how can growth happen overnight? It would take 4-5 years for us to get there – right? We were on track. He said my MC was not happy with my style. They thought I was going too fast and not consulting them enough. Come on, I hired half this team! They knew my vision and strategy, they agreed in our MC meeting. We were losing share – did we expect the customer to wait for us longer? The third reason I was told that the employee satisfaction scores went down. This shocked me completely. I raised the compensation costs by 24%, hired smart people and I just can’t get to understand why would people be unhappy?”

My reflection: It was then that it struck me, Ravi is such a smart guy, high achiever, has the right ideas, great intent but the best of people can have blind spots.

Me: “How committed was your Global CEO and his team on your vision & strategy for India?”

Ravi: “Oh.., my boss said, it is for me to decide and drive India.”

Me: “You have not answered my question?”

Ravi: “I think he was committed, why do you ask?”

Me: “That’s ok Ravi. I just want you to reflect on it. My next question is how committed was your MC on your Vision & strategy?”

Ravi: “You know what? They were over-awed when they saw it? A few walked up to me and said, “this is the best strategy they ever saw in their careers”.”

Me: “Were they committed or were they just over-awed with YOUR strategy?”

Ravi: “Why do you ask that question…, I thought they were committed?”

Me: “You said you went around the country meeting people and sharing your thinking? Did your MC also do the same?”

Ravi: “eh..eh.., not really. I guess they left that job to me?”

Me: “Who did you work with to make your decisions around people, Org changes etc.?”

Ravi: “Ah.., I knew exactly what I wanted to do. A few of us from the MC like my Marketing and Sales Leads worked with me in defining these changes. Many others you know were the old timers, who did not quite understand what I was trying to do. Besides, they were always questioning and cautioning me.”

Me: “Did you ever consult Amitabh, your HR Lead? I think he was not an old timer. He had joined a few months prior to you.”

Ravi: “I did try to talk to him, but he sounded more of an old timer than the actual old timers. He was really an old school guy. He would often insist we move more cautiously. He wanted me to give more time for the old timers to change and improve. While he was one guy who voiced strong support to my vision and strategy, he often questioned my decisions on people. He felt many old timers could embrace change and align with the strategy. But I had my doubts.

He often came to me with feedback from my team. He would never tell me who? He seemed to be leading crib sessions and people tended to gravitate to him. They seemed to like him. He was a nice guy, probably. He would come and play that all back on me.  I had no patience for all of that. We were on a flying plane and changing engines while on flight. It had to be done ASAP. Change is the only constant. I was communicating that in all my town halls and country tours. I do not understand why can’t people just accept it?”

Me: “So what did you do?”

Ravi: “I fired Amitabh and got myself another HR guy. But you know what, later when I was asked to go and I was completely down and out, Amitabh got to know and he called me and spoke with me.  He was so professional. He had no hard feelings on what I did to him. He spoke so nicely to me. He was so concerned about me and inquired my well-being. His graciousness really touched my heart. I guess he was a nice man.”

Me: “Wow!! This has been some story Ravi. Do you realize what you did & what could have gone wrong those two years?”

Ravi gets into a deep reflection mode. He was a few drinks down and a bit emotional by now….. and after a few minutes of total silence he says…., oh GOD what a jerk I have been…!!

Let me take a last pause here and ask you my readers - what do you think was Ravi’s reflection?

Change, whose job is it? Part 1

Ever since I joined Industry 21 years ago, I was often taught by my mentors & coaches, there is nothing constant but change. Be adaptable, flexible, willing to learn etc., etc. if you wish to succeed in the corporate world. As a young professional I obediently listened to them and remembered the gospel of my seniors. You can see, I still remember it.

A few years back I used to work for a respected FMCG company with revenue of $250 mn. We had a new CEO join us from Hindustan Unilever Limited (which was $ 2b in revenue then), which had and continues to have a reputation of developing great leaders.  The FMCG company I worked for had a deep rooted work ethic, was in existence for more than 50 years, its culture was laid back, its market share was not challenged for many years, was steadily growing and was very profitable. The new CEO had a mandate from his global leadership to shake up the work ethic, drive aggressive growth and improve market share.

The CEO in his initial days went across the country, met various executives & leaders, heard their views about issues in the business and got a grasp of what were the challenges in the company. After his India tours, he called the Management Committee (MC), the highest leadership body in India for a meeting to discuss what he learnt. Interestingly the MC echoed the same issues/concerns that he had heard from the field. The CEO got excited and said to himself “I guess I understand what I need to change here”.  Next 2 years were years of rapid change, the CEO made big bold decisions, he led from the front, the company refurbished its brands, launched new products/brands, re-launched its old boring brands with new packaging, formulations etc., many heads rolled in various parts of the country, change was finally happening…..

2 years of pain-staking effort, the CEO appeared to be on a tread-mill and almost omnipresent in very meeting / forum.  All these efforts, more than 50% of the people in the company were < 2 years old, salaries grew, people were paid much better,  some product launches succeed, a few failed, company grew marginally in market share, revenue & profits but the employee morale dropped significantly. End result – the COE was fired !!

A couple of years later, I joined HUL and happened to meet this ex-CEO in an external event. We got chatting. He was still reeling under the scars of his past. We were reflecting on what went wrong – people needed the change, his MC needed the change, the global leadership needed the change, the desired change was brought in – why did it not work, why did employee morale drop, why did sales/margin not grow as expected etc.? It was a million dollar question in his mind.

I want to pause my story here and pose this question to the readers - What do you think appears to have gone wrong?

Why do I love to hate HR?

What is the role of HR and an HR Partner?

This question often comes up and the traditional answers have been – business partner, trusted advisor, people champion etc. What if your COO thinks none of this?

I worked with one such individual who hated HR, Rahul Sharma the COO of large credit cards company in India. An extremely competent leader but hated the HR function.

I wondered why Rahul disliked HR so much. One day I decided to walk up to him and asked, “What are your concerns with HR? It will be helpful if we can talk through them.”

He responded, “Really, you want to know? Everything in this company is wrong because of HR. Look at the people you hire. Standards are falling each day. This is impacting my ability to staff and has lowered utilization. Attrition is 64% annualized. How can I run a company with a new set of people each year?

What does HR get measured on? We promote people each year, but they struggle in their new roles. We need better quality training. We spend millions on training, where is the improvement?

In an attempt to understand his position on HR, I asked him, “As a COO, do you think a company requires an HR function? If yes, how would you engage HR? How will you empower HR and what would you them accountable for?”

This got him thinking. “I think we need HR but let me share my thoughts. While it appears we sell credit cards or loans or insurance products as cross sell, we essentially sell services to our customers and create stickiness through our product offerings. There is hardly any product differentiation viz. competition. Productivity and customer stickiness are the key differentiators, which are entirely people dependent. I need HR to understand this”, Rahul said.  

Ok, so how would you engage HR meaningfully, I asked?

“Most of the work you guys do is in my area of operations. I determine the direction of the teams you work with. First, HR needs to work with me to determine a process around on-boarding and integration of fresh talent. You do this currently but I need to hold my team accountable for adherence to the process to enable better results. HR can help me build metrics around this area and hold me accountable too.”

“Second, on skill building, HR should rework its training curriculum and align it to business needs. HR should share training need analysis and take my team’s inputs. Do you agree?” he added. “Yes, I agree”, I responded. The training attendance was an abysmal 43%. What if the training curriculum was customized to meet your needs? Would you support higher off-take, I asked. “Of course, I would”, Rahul responded.  

Third, I am designated a COO but I am a simple guy. I have my good & bad days. People read too much into everything I say or do. I should admit I am enjoying this conversation and it is helping me think. But how can I trust you? You are an HR guy and you have your own agenda.

Why you would think my agenda would be different from yours or that of the business? I asked.  Rahul with a smile on his face said, that is the image of HR.

Rahul’s words still ring in my ears; his thoughts about HR, doubts about HR partners etc. were not misplaced. So, what is the role of HR?

As I have tried thinking this many times over, I think HR plays the role of an ALCHEMIST. Someone who is inspired by the act of enabling the success of those who are chasing a dream; one who can feel fulfilled not by a share in the treasure found, but by enabling the discovery of the treasure; one who is motivated by a selfless pursuit to enable the potential of people around him.

What do you think?

Ethics - black, white or grey? Episode 3

I am doing a quick rewind here…., going back to some conversations around the KPL Bangalore Factory restructuring, eventually leading to its closure.

After the Management Committee (MC) of KPL made the decision on the closure of Bangalore factory and potential sale of land, Kulkarni summoned Swami to this office to discuss the strategy for closure. Kulkarni had no understanding of the Indian Labor Laws nor did he understand the psyche of blue collared workmen, as he had no past experience of having worked in India before.  As Swami reconciled to the decision, he laid out the boundary conditions for executing a quick closure. The conditions were:

1.       The management teams at Bangalore Factory, around 30 supervisors were the key to execution of the closure strategy. They needed to be provided a job guarantee at Gurgaon or a handsome severance package if they choose not to transfer.

a.      Kulkarni agreed to the job guarantee and a severance on a case to case basis.

2.       The 350 unionized workmen would not bite the VRS unless it was sweetened suitably to make it look attractive.

a.       Swami made a recommendation to facilitate quick closure. Kulkarni did some quick calculations to check cost and they mutually agreed to a figure Rs. X per person.

Armed with the assurances from Kulkarni, Swami and his HR team got to work, landed into Bangalore to execute their strategy. Every element of the strategy was extremely well planned and execution machinery was put in place. Swami was a seasoned HR professional with deep expertise in restructuring and labor relations.

Swami addressed the Supervisors in a closed door meeting and disclosed the management decision on closure. There was a bust of emotion and anxiety. He leveraged his personal relationships and those of his other HR & business colleagues to influence / assure Supervisors of a job guarantee and larger company need to drive factory closure. After some inspirational talk by Swami, the supervisor team fully rallied behind him & the HR team.

Swami very courageously summoned all the 350 workmen on the shop floor and made an emotive speech announcing the management decision to close the Bangalore factory with immediate effect. A wave of emotion swept the shop floor and a few workmen broke down inconsolably. A few supervisors rushed to those workmen to provide them support. Swami spoke in the local dialect, welcoming questions, addressing concerns and announced that a VRS will be pasted on the notice board in the next 2 hours for workmen to consider. He firmly stated that closure was imminent to save KPL’s business in India and was non-negotiable.

After Swami left the scene the HR team and Bangalore factory supervisors spoke with groups of workmen to help them understand the rationale behind the management decision. As Swami returned to his office, he got a message delivered to him as follows:

Kulkarni has been required to fly out to London on some personal exigency. He has asked me to communicate to you that the VRS is Rs. Y per person. He has wished you & your team all the very best in execution of this plan. He would contact you towards evening to know if the goal has been achieved.

Swami looked at the message, looked at Rs. Y per person and sank in his chair. It was exactly half of Rs. X, that Kulkarni had agreed upon with Swami. Swami wondered why would Kulkarni leave for London, while KPL had no office there, his family was very much in India and why did he not mention about it even at 10 pm last night when they spoke? Questions…, questions…, raced in his mind. He called Niket, the Director – Legal of KPL to ask him what was going on? Niket calmly replied, Kulkarni is the CEO, an NRI and could face legal risk of arrest etc., if the closure went wrong. Hence I advised him to leave the country till the job was fully done. Swami was aghast…. What!! So what about us, my team …, we are all at risk too? Niket replied, “all the best Swami” and signed off the call.

There was no time for Swami to evaluate what Kulkarni or Niket were up to? He had a situation on hand, the fire was lit…, the factory was burning with people’s emotions running wild, the workmen were agitated, the supervisors were supportive but worrying about their livelihood / future, Swami’s HR team was working as there was no tomorrow….., there was no moment to reflect. Swami had to rise to the occasion. He made up his mind.  

Swami called his HR team and told them that the VRS was Rs. Y. The team retorted, “Swami this will not sell, it is too little.” Swami asked them to try their best and leave the rest to him. The team was working hard to convince the workmen,…, the 2 hour time line was coming to a close.  

Half-an-hour before the deadline Swami calls the CFO in Singapore and tells him, “Anupam, I am unable to reach Kulkarni. Not sure where he is? I just want to tell you that the VRS is about to fail. The workmen have refused to take Rs. Y. They have threatened to block the closure and burn the factory down. What do you want me to do?”

Anupam was the CFO for KPL, APAC region. He panicked with this message and asked Swami many questions. Swami stayed calm and said, “Anupam I am just letting you know. In next 15 min if I do not see the workmen take the VRS of Rs. Y, I will ask all the 30 Supervisors and the HR team to vacate the factory and abandon the factory. My priority would be to avoid any violence and save the lives of the HR team and the supervisors. I will also inform the local police to take charge of the factory premises.”

Anupam promised to call Swami back in 10 min and requested him to hold fort till then. Swami left the office and walked to the shop floor to assess the mood. The workmen were very agitated. They were offended with the offer of Rs. Y and were shouting slogans against the management. They felt cheated and pushed towards the wall. Swami’s HR team and supervisors were looking up to him for direction. He asked them to continue to persuade the people and informed a couple of Sr. folks that he is trying to get the figure raised. These words from Swami helped hold the HR team’s wilting spirit a bit longer.

While Swami was on the shop floor, Anupam was trying desperately to reach him. Swami deliberately choose not to pick the phone. He let Anupam try a few times. He could sense the desperation after the 6^th missed call, as it never stopped ringing.

Swami picked up the 7^th call.

Anupam:  Is everything ok Swami?

Swami: Cannot get any worse. Anyway, what do you want me to do? I have just 5 minutes left. I have given a heads up to the team to be ready for my call to evacuate in the next 5 minutes.

Anupam: No no.., we should not do that?

Swami: I cannot risk lives Anupam. Why don’t you come here, the workmen will kill the management team. They are on the verge of turning violent and I cannot hold any longer.

Anupam: Oh.., ok, what amount do you think they will bite? I know you asked for Rs. X.

Swami: Yes, I had asked for Rs. X then. Now things have turned worse and beyond our control.

Anupam: Swami, I have convinced Kulkarni that we should give Rs. X. Can you make this work now?  

Swami: I do not think so. We have missed our opportunity. We may need Rs. 1.2X now. I will try my best to keep it between Rs. X  to  1.2X. But I cannot guarantee anything. The HR team and supervisors have lost trust in the management, so I am not sure if they will believe me anymore.

Anupam: No..no Swami. You should make this happen, we are relying on you. You know how important this is. I am approving Rs. 1.2X, please go ahead and close the factory. I will manage Kulkarni.

Swami: Please send an email and copy Kulkarni too. I will hold-off any further action till I see a written mail from you or Kulkarni.   

Anupam: Hang on… here it is…, I am just sending…,, there.. it’s gone. Please try to close the factory peacefully with no violence.

Swami received the mail from Anupam confirming the amount as Rs. 1.2 X (much more than the initial Rs. Y intimated by Kulkarni or the Rs. X he had initially agreed upon). He put up a VRS notice with amount Rs. X on the notice board. Since the workmen’s expectations were set at Rs. Y, when they saw Rs. X, which was twice the amount, everyone leapt in excitement. The HR team and supervisors were able to convince everyone to sign the dotted line.

All the 350 workmen took the VRS and left the same evening with cheques in their hands. They took a group photography with Swami , the Supervisors and the HR team as a parting gesture. Many workmen cried and touched Swami’s feet (a gesture in India of respect) thanking him for getting them a good severance package from KPL.

KPL closed its factory, separated 350 workmen in a record 8 hours voluntarily, probably the one of its kind in the Industry. Kulkarni and a host of leaders of KPL from US called Swami to congratulate him on the impossible task he achieved for KPL.

However, a few questions still remained unanswered in Swami’s mind as he reflected on what happened that night after the closure:

1.       Was Kulkarni an ethical leader? Did he run away or was this a strategy to save the CEO – what kind of leadership was this?

2.       Were Swami’s values different from those of Kulkarni, which led him to question Kulkarni’s actions each time?

3.       Was Kulkarni unethical as an individual leader or was KPL also an unethical company?

4.       Going back on his committed package to workmen - was this a mere negotiation tactic that Kulkarni deployed on Swami to pressurize him to get a cheap deal with the workmen?

5.       Was Swami himself unethical, in pressurizing the management at the final moment and made them succumb to his demands?

What do you think?

Ethics - black, white or grey - Episode 2

Episode No. 2

By Q3 of 2005, KPL was turning around. It was showing tremendous upward movement on profits. The US parent company put out an internal guidance around potential shortfall of $25m in profits across the KPL group of companies. For a $65 b global company $25m short fall did not appear relevant at least to India where India contributed a mere $100m in revenue and was tracking towards $7.5m in profits.

Kulkarni was an ex-pat and was assigned to India for a period of 2 years. His family was not stabilizing in India and he was keen to return to US in a year. Kulkarni made a proposition to the US parent on restructuring the India KPL operations and generate $18m through sale of assets (land & machinery). KPL had 2 factories in India – Gurgaon and Bangalore. Kulkarni recommended that Bangalore factory be shifted to Gurgaon and the land of Bangalore factory land in the IT hub of Whitefield be put up for sale. The entire project was to be completed before 31^st Dec 2005, as the profits had to flow into the books by that date.

There were exactly 4 months before close of the year, when the idea was mooted. The US parent jumped at the idea. The Indian KPL management protested against the decision as it was extremely short sighted. The KPL management team in India had put up the Bangalore factory in 1996 as a part of its growth strategy, to service south market, reduce logistic costs and also de-risk business from labor unrest which was very high in the Gurgaon belt. This decision they felt will mean putting all eggs in one basket, a congested Gurgaon factory with 2 large plants and also pose safety hazards to the environment (as residential blocks were coming up close to the factory due to growth of Gurgaon city).

Kulkarni refused to listen. He was single mindedly focused on getting the $18m from the sale of assets. The business decision was taken by Kulkarni and his US bosses but the people aspect needed to be executed. 350 workmen and 40 officers were required to be sent home for the Bangalore factory to be closed. Swami was part of the Management Team (MT) and like others on the MT his voice was also not heard. In order to meet the goal of 31^st Dec., Swami was given 72 hours to either voluntarily obtain retirement of 350 workmen (called VRS – Voluntary Retirement Scheme) or abruptly shut down the factory with 1 days’ notice. The action would have been patently illegal under the Indian Laws. Swami argued his case with Kulkarni and his supervisor in US. With $18m at stake, no one was willing to listen.

Swami faced another big predicament.

1.       Should I quit? If I were to leave KPL at this juncture, I will be seen as unprofessional and having run away from my professional responsibilities. A stigma that I will carry all my life.

2.       If I were to do what Kulkarni is asking me to do, I would be doing an unlawful & unethical act? I could however achieve a legal outcome by getting all 350 workmen to resign voluntarily, but that would be very difficult task to accomplish in 3 days-notice.

Swami chose the 2^nd route and in the 72 hours of given notice, he and his HR team persuaded 350 workmen to take VRS. Kulkarni and his US bosses were thrilled at the outcome. Swami was well appreciated for this work. Kulkarni told him, “I am glad to see you grow into a seasoned HR professional now.  You have done the unthinkable.”

Swami was not happy, he felt like he was carrying the moral burden what he thought were “the wrongs he had done”.  What were Kulkarni’s objectives – “delivering profits at a critical moment for KPL; his own aspiration to return to US quicker than scheduled; cut the stomach of the goose that was laying golden eggs to get all eggs at one time; position himself as a turnaround CEO, make KPL an efficient business machine…, what?” Questions galore in Swami’s head, the moral burden had turned into a deep ethical conflict in his head. He didn’t care about the results the business achieved, his moral burden was around the “What’s, Why’s & the How’s”?  

The 9 acres factory land was sold to a real estate builder over the next 2 months and the company made $20m in special income from sale of assets. Within 6 weeks of the financial results, Kulkarni departed back to USA (to the parent company) on a promotion. 

The two broad questions to my readers again are:

1.       Was Swami Naïve and seeing things as black or white? Was he getting emotional about business decisions?

2.       Was Kulkarni more pragmatic, who understood that ethics in business is about the way you look at it? If you think it is black it is black, otherwise it is white? Kulkarni was recognized and promoted, was Swami missing something?

Ethics - black, white or grey? - Episode 1

Mr. Swaminathan (urf. Swami), a seasoned HR professional joined KATRA Private Ltd.  (KPL) as Head – HR in Delhi in May 2005. This company was a world leader in Engineering & Technology, a $65b group globally with a $100m air conditioning business in India.  Prior to joining KPL, Swami had series of interviews with local and global leaders, visited the company website, and looked at its corporate values & ethical standards as stated on the websites. He was convinced he was joining a reputed MNC and was excited about his new journey.

As luck would have it, Swami left KPL in merely 7 months of joining. He was completely disgusted with what he considered were lack of ethical practices and mismatch of his personal values with those of KPL.

I would be narrating a series of 5 short stories describing some of Swami’s experiences and would look to hear your views on whether the issues in question were – black, white or grey from an ethical view point?

Episode No. 1

KPL in India was struggling to be profitable. On a $100m P&L, the company was making a mere $1 m in profits. Kulkarni joined as the new CEO (an Indian ex-pat from the parent company in US). He & Swami worked together to create an attractive Sales Incentive Plan to boost sales of Air conditioners in India. They came up with a strategy for both dealers & retailers. KPL had a tight C&B budget and no extra’s to pay in comp. raises. The formula arrived at was “profit share based incentive scheme”, in the form of variable pay as a substantial part of total compensation.  The variables for incentive payout were – sales volumes, margins, revenue collections on time & recovery against old bad debts.

This energized the entire sales force and the company grew 22% in sales for the first time and made healthy profits of $7.5 million (close to 700% increase over previous year). As the company revenues & profits leap frogged quarter over quarter, Kulkarni got a bit nervous about the “profit share based incentive scheme”. He suddenly started feeling that his sales force would get substantially benefited in terms of their sales incentive and started revising the targets upwards and making it more difficult for the sales force to earn the same incentive.

This peeved the Sales Director & the sales teams. They felt betrayed and raised the issue with Swami. Swami tried very hard to reason with Kulkarni, but Kulkarni (an ex-pat from US), felt cost of living in India was quite low and people will end up earning far higher incentive than what he believed, they deserve.  Swami argued that this was unfair as the incentives were looking attractive today because Kulkarni had not anticipated such fantastic turnaround by the sales team.  The sales team had out performed and it would be unfair to revise the incentive scheme downwards.

Kulkarni as the CEO of the business refused to heed to Swami’s advise and repeatedly tweaked the sales incentive scheme quarter on quarter to keep the payouts within what he considered was reasonable. Swami as the Head HR was the one required to communicate the changes to the scheme across the company and the people saw him as part & party to the decision.

Swami found himself in an ethical dilemma. He was finding it hard to sleep at night.

He walked up to Kulkarni one morning and shared his predicament. You are refusing to heed to my advice on not tweaking this incentive scheme each quarter. I am the one doing the internal communication as the HR leader. I am losing my personal & professional credibility with the people. 

Kulkarni said to him, “Swami, don’t be so emotional in business, be practical. There is nothing unethical about what we are doing. The sales force would have earned nothing if we did not create this incentive scheme. They are at least making some incentive. They should feel happy about it and so should you.

What do you as the readers think?

1.       Was Swami Naïve and seeing things as black or white?

2.       Was Kulkarni more pragmatic, who understood that ethics was about navigating in the grey?

How do I lead not being a Leader?

Sometimes, I wonder that a Leader is a title often over stated. Does it actually mean anything?

For most of us, a leader is one who is in the front, is the tallest amongst the pack, inspirational, role model etc. etc. Therefore, for me to be a leader, I need a title…, say Manager, Sr. Manager, Director, Vice President and so on. How can I lead unless I have the title, it is so difficult, I would not have the credibility, people listen to authority, position, power … ; a recognizable title is so important.

These emotional calls are fairly valid, for those who aspire to achieve these concrete goals in their mind. As I saw the Indian Premier League (IPL) unfold today and recent news in the press, Sachin Tendulkar gives up Captaincy of Mumbai Indians and hands it over to Harbhajan Singh, it got me thinking. The same Sachin gave up Captaincy for India almost 10 years back, to focus on what he does best – be a batsman and a team player.

As I reflected on the news today, it made me wonder how we think of our careers in industry. A young software engineer Ram joins industry, loves his craft, has huge passion for technology, works as a software engineer and excels. He grows from a Trainee to an Associate, Sr. Associate L1’s and L2’s. Now, he is at a cross road. Ram wants to continue to grow; he loves technology but is influenced by the environment around him. His inference is that people who make key decisions are those who are people managers and not technologists. These people managers manage me, my career and determine how far I will go. He is at cross roads on his career choice – technologist path or people manager path?  What choice do I make? His heart says technology but his mind says control your destiny, choose people management. What do you think Ram does, he listens to his mind – people management.

Ram chooses to be a people manager; he chooses to control his destiny and that of others. That is what he thinks people managers do J. He is surprised, it’s a lot of hard work; he finds the going tough; people come to him with issues / complains, which he feels incapable of resolving (as he does not have full authority); he needs to work with different teams / departments; people criticize him; give him on going feedback on how dissatisfied they are with him & his inability to resolve their issues; he feels for the people but feels helpless; he is disappointed with himself and in moments of reflection misses his craft as a technologist. He thinks he is managing his destiny and that of others, but in reality everyone around him is probably managing his destiny. He is demotivated. What is the result –a highly competent engineer shows up as a failed people manager. From an organization point of view, what was the result – the company lost a good technologist and got a bad manager cum a demotivated Ram. End result – Lose : Lose situation for both Ram and the company.

What is Sachin to do with all this? The sach (truth) is listen to your heart!! Sachin was being true to himself. He knew he was a gifted batsman, he loves his craft, he wanted to excel in what he did best, he chose to play to his strengths, he tested his skills at captaincy but quickly realized he did not have it in him to lead as a captain but he could lead as a specialist batsman and terrific team player. He truly controlled his career & his destiny. He still leads India in each game, as a batsman, as a mentor, as a guide, and as an outstanding team player. He is a leads, but is not an officially appointed leader.

One can be a leader in many ways and the one way I would like us to think about is in “doing what we are best at and playing to our strengths”.  Sachin could lead & be charismatic despite being surrounded by good team leaders like Sourav Ganguly and the Dhoni’s of the world.

We can lead despite not being the appointed leader.

What is your current role at Sapient, that of Ram or Sachin? What does your heart tell you……?

What are you chasing – profits or stock value?

It is always a mystery how the stock market functions for many commoners like us. When one analyses the stock market, you realize that the company with the highest profitability is not necessarily the one with the fastest growing stock price or even the most valued company in terms of value of its stock. One wonders why? Facebook is a great example of its perceived market value being multiple times its revenue, to unrealistic levels as some of us might think.

Vikram Pandit a young MBA from a regional B-School started his career with a Public Sector Undertaking (PSU) in early 90’s. He was a bright lad, gold medalist in his batch, got 2 jobs on campus while many went jobless in his batch (market wasn’t that hot those days) and started a career in Mumbai (then Bombay) as a Marketing Executive. His starting salary was INR 2250 per month (mere $43 per month). He loved his job, it gave him great learning, he worked with passion & dedication. After 7 years in the PSU, his salary rose to INR 7000 per month (mere $135 per month). He was married by this time. His batch mates had joined private firms, were earning 10-15 times Vikram’s compensation. They would constantly prod him saying, market is better now, why are you in a PSU, your compensation is so low, you were a gold medalist, you deserve much more etc. Vikram kept his head on his shoulders and continued to focus on his work and invest in his learning. After 7 years, Vikram made his first move to Private Sector. He spent the next 8 years investing in adding to his skills and capabilities grew gradually doing different roles as Brand Manager, Category development, Sales, Channel management, supply chain & logistics etc. His compensation was still far behind his batch mates and friends from his B-School. The gap narrowed a bit, but his not so accomplished batch mates in B-School still earned 3-5 times his compensation. Vikram’s close friend Gautam often asked him, what are you up to? You are a Sales & Marketing professional, so capable & competent but I do not see you manage your career as well as you manage your category. Vikram would calmly reply, I am heavily investing in my career, what makes you think I am not? Gautam would quote Vikram’s compensation and say, look at your compensation viz. others in our batch, look at me? You are much smarter, but I make three times what you make.

After 15 odd years in professional life, Vikram makes a big career move. He took an assignment as Sales & Marketing Head of a large MNC and 2 years thereafter becomes its CEO for India. Another 2 years later, 19 years into his career he grows to become the youngest CEO of the same company’s Global Operations. After these 4 years, Gautam meets Vikram. Here is how their conversation goes:

Gautam: Wow my friend; this is a meteoric rise for you in your career? You’ve made it BIG!! Many of us have been dreaming to get this far. What all did we not do – took a lot of risk, changed jobs, took pay hikes to get closer to the CEO role etc.., but my friend you made it really smooth.

Vikram: You often remarked that I was not investing in my career enough. I was always investing in my career, it is just that you did not see my strategy.

Gautam: What were you up to?

Vikram: While everyone else in our batch was busy running after higher paying jobs, I was investing in building my Brand.

Gautam: I do not get it…, what do you mean?

Vikram: You and other batch mates who you compared me with, were busy making higher compensation, which for me is akin to chasing higher profits; while I was investing in my capability and skills which for me is akin to creating Brand-Vikram or my stock value. I focused on balance between reasonable profits (good compensation) and heavier doses of learning / capability acquisition (building my stock value as a professional) and that has paid off. I waited patiently for 15 years and took the plunge when I was ready. I built my Brand and here I am.

Gautam: You often mentioned this to me Vikram, but we all thought short term. We did not invest in ourselves; we were in a hurry to reach to top; we kept trying to out run each other and we are still doing the same. You picked your own race, you determined the rules and you led yourself past the finish line. You built your BRAND, your STOCK VALUE. I see that profits are also handsome now.

As I reflect on this true story of a friend, career is a marathon, not a sprint. In a marathon it is about building a brand and creating longer term value for oneself.  Profits will come more consistently and predictably if there is a recognized BRAND. Two thoughts to ponder about….

1.       What are you chasing - profits or longer term stock value?

2.       What is your BRAND that you are building?