Conquering the Chaos: Win in India, Win Everywhere (10 page)

In the future, country managers will have fewer choices; they will have to abandon
conservatism and take big risks on young people if they wish to be successful. Korn/Ferry’s
George Hallenbeck explains why: “In India, due to the pace of growth and the size
of the leadership gap, the speed at which it needs to be closed is much greater than
in many other parts of the world. The result is that hyper-development is required
to create tomorrow’s leaders today. There are ways to do this through targeted and
aggressive development efforts, but more than that, it will require leaders to take
unprecedented risks with talent.”

MAKE HUMAN CAPABILITY BUILDING STRATEGIC.
Like all emerging markets, India has loads of bright young people with passion and
potential, but there’s a critical shortage of skilled talent. The skills shortage
is most evident in middle management. For instance, CEOs lament the quality of their
people managers, who are frequently individual contributors whom the company suddenly
promotes to manage people and who lack basic skills in hiring, performance management,
and coaching and development. Functional expertise, especially in disciplines like
supply chain management and project management, is also in short supply. People with
a general management orientation who can run a $20 million business as a profit center
without hand-holding or sales leaders who can close a $200,000 deal don’t exist. That
isn’t surprising, given how recent India’s economic development is.

Building these capabilities should be easier for global corporations than it is for
Indian companies, because they must exist somewhere in the global network. The challenge
is to transfer expertise and capability. Some companies use joint projects as a transfer
mechanism. From 1990, Cummins India deliberately moved global responsibility for engine
families like the V-12 and KV series to India. Those projects became vehicles to build
engineering and manufacturing capabilities in a new location. Dozens of engineers
would go back and forth between the United Kingdom, the United States, and India,
facilitating the transfer of expertise and learning.

Similarly, when AB Volvo wanted to develop a new value truck for emerging markets,
it approached the task as a collaborative project between its headquarters in Sweden,
Nissan Diesel in Japan, and Volvo-Eicher in India. The idea was to marry Eicher’s
frugal engineering capabilities with Sweden’s technology expertise and Nissan Diesel’s
quality manufacturing know-how. The project has resulted in a new low-cost Asian supply
base in China and India, increased engineering and manufacturing capability in India,
and a better understanding in Sweden of what low cost means.

Another way of transferring knowledge is to get people, especially experts, moving
around the global network. At any time at Bosch, there are nearly a hundred Indian
engineers working outside the country and an equal number from other countries working
in India. Some assignments might last three years, but more commonly they last less
than a year. Bosch has a formal policy that encourages such movement: to become a
senior executive, an employee must have worked outside his or her home country. It
is also a prerequisite to have worked in multiple functions and to have led a cross-functional
team. Jean-Pascal Tricoire, CEO of Schneider Electric, insists that members of the
leadership team have emerging market experience. It is much the same at European consumer
products companies like Unilever, L’Oréal, and Nestlé, which have consistent job levels,
compensation, and other policies, so it’s easy for people to move from one country
to another. Some companies like Google, Goldman Sachs, Citibank, Bank of America,
and DHL see volunteering as a catalyst for leadership development and send employees
to work for a year or two with nonprofit organizations like Teach for India.

Companies like Bosch, Dell, Cummins, Honeywell, Ericsson, JCB, Reckitt Benckiser,
and Standard Chartered base global leaders in India. That transfers knowledge and
fuels aspirations. It also sends a message to ambitious young leaders that they do
not have to leave India or the company to have responsibility for a big business.
Moreover, it allows senior leaders to spot and mentor outstanding talent.

Building the critical capabilities to execute a more ambitious strategy in India cannot
be left to the India team alone; headquarters must take the lead because capability
building requires a long-term view and demands investment. If people have to wonder
from whose budget the investments in talent will come, nothing will happen. Talent
will be trapped geographically, negating one of a multinational’s biggest advantages,
namely, access to bright talent around the world. Sadly, too many companies refuse
to invest even 5 percent of their wage bills in developing people and organizational
capabilities, and pay many times the price in India in the form of low productivity,
low commitment, and high attrition.

CREATE A WORKPLACE WITH HEART
. “We are breeding mercenaries,” the leader of an American technology company told
me during my research, capturing perfectly what I felt, too. A century ago, Fredrick
Winslow Taylor sparked a revolution with his ideas about scientific management, which
entailed the breakdown of work through functional specialization into standardized,
simplified, highly repeatable pieces. Embraced by Henry Ford, those ideas became the
basis for modern industrial management, moved from the shop floor to knowledge factories,
and automation and computerization extended them to the modern era. While providing
dramatic productivity gains and better standards of living, the relentless application
of these methods has resulted in workplaces that are devoid of feeling, where people
are called human assets but are mere factors of production. The mindless application
of quotas, forced curves, engagement scores, rule books, salary bands, scorecards
and metrics, mandated diversity targets, Microsoft Outlook-generated birthday greetings,
and the treatment of employees based on their classification into A, B, and C players
is breeding impersonal workplaces and mercenary managers.

In such a world, fairness requires the rigid application of rules. I recollect a junior
employee in India being laid off forty days before his stocks were to vest; for the
only son of a dependent mother, it was a big price to pay. Could we waive the rule
and allow him to leave with his one hundred shares? No, the system would not permit
it. A ten-year veteran employee had to be terminated for poor performance. Does he
have to empty out his desk and be escorted out by security? Yes, that’s what the system
stipulates. How can a salesperson, who won the chairperson’s award one year and underperformed
the next year by missing a target, be told to leave? (This rapid fall from grace is
called “hero to zero” in the sales-driven technology industry.) If the company is
going to be so transactional, mindless, and soulless, why shouldn’t employees be mercenary?
Why wouldn’t attrition be sky-high in India?

Sadly, multinational companies are more likely to operate in a heartless fashion than
are family-run Indian companies, where the patriarch plays an influential role. For
all their flaws, they add a personal touch and strike at least a faint emotional connection
with employees. The latter see what is dismissively termed
paternalism
as genuine concern. Indeed, there is an opportunity for companies to differentiate
themselves by combining a bit of the professionalism of a multinational with the paternalism
of a family-owned business.

In the mid-1990s, for example, Tata Cummins decided to build Cummins’s, and India’s,
first air-conditioned factory. Many in Indiana thought this to be extravagant, mocking
it as the Taj Cummins, but in Jamshedpur, where summer temperatures hit 48 degrees
Celsius (120 degrees Fahrenheit), a factory floor can feel like a furnace. How fair
is it for factory managers to sit in air-conditioned offices while workers load heavy
cylinder blocks into machines in the summer? The air-conditioned shop floor turned
out to be a great investment: it was great public relations and a differentiator.
It was also terrific for productivity; workers simply didn’t want to leave the plant!
In fact, Tata Cummins is still one of the most productive plants in the Cummins network.

In a similar vein, at Microsoft India, we fought to provide health insurance for parents
and in-laws. In Seattle, it may not be obvious that in a country where parents depend
on their children, employees would appreciate the benefit. It proved to be a good
retention tool; parents didn’t react too kindly to their sons or daughters leaving
Microsoft India for another company that didn’t provide them health insurance. In
fact, Microsoft India’s attrition rate has been consistently lower than that of its
peers.

Increasing commitment is critical to retain people in India. After a round of layoffs
at Cummins India around 2001, there was a lot of anger and feelings of betrayal. One
of my predecessors and a founder of the company, Arun Kirloskar, offered me some advice
in his usually blunt fashion: “Any fool can get rid of people. Only a real leader
can do it in a way that they remain ambassadors of the company.” I vowed to live up
to that ideal and discovered that in any situation, except fraud or willful wrongdoing,
it is possible to act in ways that actually increase employee commitment, even when
letting people go.

Consider, for instance, Tata Steel, which needed to downsize its workforce in 1993,
a soul-searing problem for a company that guaranteed lifetime employment. The company
responded with an uncommon solution: laid-off workers under forty years old were guaranteed
their salary for the rest of their working lives. Older workers were guaranteed amounts
20 percent to 50 percent greater than their salary, depending on their age. If they
died before retirement age, their families would receive those payments in full until
the date the worker would have retired.

The program wasn’t crazy. While the laid-off workers would get their full salaries
or more, the amounts would stay constant, instead of rising as they otherwise would
have. Besides, Tata Steel would not have to pay payroll tax or make retirement-plan
contributions. Its labor costs began to decline after the layoffs. By 2004, Tata Steel’s
workforce had shrunk from seventy-eight thousand to forty-seven thousand, with only
about a third of the reduction due to natural attrition. Lower labor costs, combined
with $1 billion in fresh investments, turned Tata Steel into a globally competitive
firm.

It’s not through big decisions alone that you create a caring workplace; it’s through
the small things. I remember once deciding to stop the celebration of all festivals
in our offices to show we were secular and to avoid controversy. One employee immediately
wrote to remind me that “real secularism meant celebrating the festivals of all religions,
not halting celebrations.” He was right; festivals thereafter became a way of unifying
people and injecting energy into the organization. Don’t forget that workplaces are
where people spend most of their waking hours. They deserve to be temples, not tombs,
of the human spirit, and ensuring that doesn’t take money; just courage and heart.
Leading with heart is good business.

Leading an organizational transformation is impossible without the expertise of a
superb human resources leader. However, most HR professionals in multinational companies
are managers, immersed in tactical issues such as compensation and benefits, overwhelmed
by the challenges of staffing and retention, and mechanically implementing global
processes and policies thrust on them by the global headquarters. It is rare to find
an HR leader who, in addition to being functionally competent, has a good understanding
of the business he supports and has developed an internal network. Not infrequently,
the HR head in India is seen as a political power center, that is, as someone with
the power to make or break a career, to be feared rather than trusted. That’s less
an indictment of the innumerable competent and hardworking HR professionals in the
country and more a reflection of what companies demand of them.

Leading the HR function requires more than ensuring that there are butts in seats,
hiking wages constantly, and providing Thai foot massages and gourmet food in company
cafeterias. Transformational HR leaders differ from their competent counterparts in
three ways: they are grounded in the business, they take a long-term approach, and
they are courageous. They push leaders to focus on the people agenda, even as they
push back on corporate HR to do what makes sense in India.

It may sound trite, but good HR leaders care about employees. They have to connect
with people on the front line and have their fingers on the pulse of the organization.
In a widely circulated article, Ram Kumar, the executive director (HR) of ICICI Bank,
lamented “the decadence of our thinking, from engaging and relating to people to managing
human resources. We are obsessed with high-sounding concepts, processes, tools, and
metrics, but have lost sight of the human being … This resource management piece has
to be substituted by a people relationship focus.”
⁶
Added another senior HR leader: “The HR profession does need to reflect on why it
is so criticized. Does it have empathy with people or has it got caught up in processes
and paperwork? Indians grow up in a caring environment at home and expect somewhat
similar treatment at work. HR is expected to be a torchbearer of employee issues but
has neglected that aspect by becoming mechanical.”
⁷

A multinational company’s HR leader in India must take guidance but have the courage
to do only what is right for the local organization. That means implementing compensation
and benefits that make sense in India and fighting for designations and titles that
matter locally. Rather than implementing the global blueprint with narrow, fragmented
roles and multiple reporting lines, creating a locally relevant structure with big
jobs will help attract talent and grow leaders. This is critical because multinationals
increasingly compete with Indian companies for top talent. Even Hindustan Unilever,
traditionally a magnet for talent, has had trouble retaining good leaders because
“jobs at HUL are becoming more functional and narrow,” reported the
Economic Times
quoting a senior executive.
⁸

Senior executives increasingly flee multinationals for opportunities in Indian companies,
braving the challenges of divergent value systems and less professional environments
for a piece of the action. “Moving from a regional role in an MNC, where empowerment
is low and decision making is slow, to having P&L responsibility, complete ownership,
and direct access to the chairman is enormous motivation,” admits a senior executive
who recently made the switch.
⁹

The HR leader also has to help transform a set of talented individuals into a leadership
team, which is particularly challenging in India. “An emphasis on individual achievement
right from childhood breeds leaders who are capable but competitive, rather than collaborative,
and who define success in individualistic terms. They are highly capable lone wolves
and we have to teach them to hunt in a pack,” points out Hindustan Unilever’s Leena
Nair. HR experts like Nair make an enormous effort to become coaches to the country
manager and his or her top management team, helping members individually as well as
facilitating their growth as a team.

Given the shortage of smart HR leaders, Indian companies are turning to business heads
to lead HR. At Wipro, Pratik Kumar is not only the senior vice president of HR but
also leads Wipro’s infrastructure engineering business. At the AV Birla Group, Santrup
Misra is the group HR leader but also heads the carbon black business. And M&M Group’s
Rajeev Dubey leads both HR and the aftermarket business. Multinational companies don’t
take such risks, although there’s one exception that proves the rule: at Bosch India,
A. Krishnan spent seven years running a factory before taking on the HR role. Multinationals
should encourage this kind of mobility to create more HR leaders.