Friday, August 18, 2006

Are you a manager?

Are you a manager? If yes then this is something you might want to read. If not then you definitely have to read, to assimilate the idea and maybe comprehend on it as soon as you become one…So continue reading!!! :)

The other day I was having a conversation on management and managerial skills, and there were certain aspects, which made me, think about the significance of “geography” in management. The below theory may not be immaculate but certainly gives food for thought!!!

Just imagine you are the CEO of a company, what kind of policies do you want to implement to motivate your employees? What kind of salary structure, insurance, retirement benefits or for that matter even “JOB SECURITY” do you want to provide?

Do you think these policies will change depending on the location of your company? If you feel you have come up with the best policies and it really doesn’t matter where the company is located then think again!!!

Each one of are brought up under a certain environment…after some time the culture gets imbibed in us so much that it’s very difficult for us to change. YES “CULTURE” is a very important word here. If you look deep into it you might realize the prosperity or the demise of your company might actually depend on this!!!

Lets take the example of certain well-known economies before we come to the Indian context. If we consider US of A they always have had the “Hire and Fire” policy. It works well for the company. When the markets are good and its smooth sailing, they hire. As soon as the going gets tough or they hit upon rough weather, they fire. But the bottom line is the people there are brought up in a nuclear family environment and they get used to such insecurities and are tougher to face such situations. Actually the people there are more motivated to perform and show their strength when the environment has been set up like this. They feel more at home and hence it’s a win-win situation for the employer.

In contrast lets consider Japan.
A country where joint family / strong family ties have the highest prominence. These people are brought up in a more secured environment. If we use the “Hire and Fire” policy then it would be a complete disaster. So companies here go for lifetime employment. The employees are by default motivated to improve theirs and in turn the company’s performance. Thus the inherent nature of the Japanese people makes their company (and hence the policy) tick.

Now lets consider our great INDIA.

As far as our culture goes there is not much of a difference between the Japanese and us. But adapting their strategy would definitely result in our downfall. The performance of our public sector (PSUs) or any government owned organizations is enough proof of this fact. We Indians are by default torpid or lazy and that marks the difference between the Japanese and us resulting in the failure of their strategy on us. Neither can we adapt the US strategy because by nature we ascribe for “Job Security” and we are not adept enough to handle such high insecurities leading to performance degradation and eventually the demise of the company. The fact that more than 80% of Indians in US are said to be very insecure and unhappy (stat taken from a survey made by a well known magazine) about their jobs, proves this point.

So what’s the solution if you are heading a company where most of the employees are Indians? The best method for us is to traverse the middle ground i.e we should have a policy where the employment is almost guaranteed (unless you screw up very badly in the company) but the salary structure should be totally performance oriented. It should be such that say only 10% of your total income should be basic and the rest should be dependent on the company’s performance and your contribution to it. In this way the employees will be motivated enough to work, prevents them from being lethargic and provides some kind of protection too.

What I just talked about is a prima facie view of things but somehow I feel this suits our culture the best, with our “health” indirectly connected to the health of the company :).


Ashwini said...

i see some extra characters many times in ur blogs, looks like some scripting language..maybe u shud correct that...
gud article for an aspiring mba student!! but letting 90% of ur salary depend on performance does not sound like a win-win situation...

Rajesh said...

Hmmm.. very interesting article indeed!

I have some comments though:

1) I've always thought sheilding people from competition will make them lazy and ineffecient, as you so aptly pointed out in your PSU example. I do not, therefore, understand how this can work in Japan. Do you have any links from which I can see how Japan works? What is the source of your info on Japan?

2) Your 10-90% soultion does indeed sound yummy (can make loads of money); but the really hard part is determining if the incentives are making people work hard or making them circumvent stuff.
Check out this link to know what I mean: Econ 101 management
Joel suggests a better policy here: Identity method
It seems to work for him, but I am not convinced it can make people like me work ;-)

3) The part about the US of A shedding a lot of workers during low times seem to me to be a bit unjustified. U.S. Department of Labor statistics seem to indicate that unemployment drops to 7% during bad times and stays close to 5% during good times. These figures are great compared to "life-time" employement type countries in europe (france, germany et al). It is said that US has a greater percentage of "churning" (people moving between jobs), but not necessarily bad firing sprees.

4) This is more about perceptions, but I feel Indians are as industrious as if not more industrious as compared to anyone else. Just see indian diaspora in first world countries, they are among the most affluent of classes. It is just that the socialistic structure of our economy had tied us down for so long. Now that the chains have been unshackled, we are witnessing the biggest growth besides china. Atleast that should convince you that Indians can be hard-working. (Of course excepting procrastinators like me :-D)

dilip said...

@ashwini: Yet to find the root cause coz i am yet to see the problem... ;)

1) Yep you are right about the first point. But as i said in my article, Japanese by default have patriotism and the desire to perform well for their employer and hence it works out for them...I read about this in a book (so no url:()

2)That was an interesting read. I completely agree with him, but i would like to see how he carries out such a strategy when his company grows (In his own words "its still a small company"). For ex: It becomes a herculian task to have lunch together with say 250 people, which was one his idea to make his employees feel @ home or feel as part of "one family"...

3)Point taken but one thing the stats doesn’t show is the number of contractors the company fires during crunch situations...As most of the US based companies prefer contractors, the percentage layoffs may not show the true picture. Further you should be looking at 1999-2003 range when the job market was bad all over the world and then start doing the comparison. Even 1% of lay-offs mean tens of thousands of jobs lost. So its definitely not a small matter...

4)I never said Indians can never be hard working, and i agree that they are doing a wonderful job. I will be the first to acknowledge that we are now at an age where we can proudly say that we are "INDIANS". I was actually trying to make a point about how our human resource can be handled better by bringing our own policies that suit our "culture" and our way of thinking instead of copying others...