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Make no mistake... a management
revolution is under way. Just as countries collapse, economies get
restructured and technology transforms societies, the art and science of
management is currently weathering a sea-change. Concepts that were taught
in business schools yesterday are obsolete today. Techniques that captured
the imagination of managers in the eighties are old-fashioned today.
Perhaps, only the raison d'etre of business-profit, sales and personal
fulfillment has remained unchanged.
Around the world, students of management are intimately familiar with the
theories and methods propounded by Frederick Taylor, Henry Fayol, A.P. Sloan
and, of course, Peter Drucker. Further, the Four Ms (men, material, money
and machines), the Four Ps (product, price, promotions and place), value
analysis, optimization methods, present value analysis and other precepts
have all been studied assiduously over the last forty-odd years.
In the current global marketplace, however, the paradigms are markedly
different. The new management thinking revolves around organization
reengineering, core competencies and time-based competition (among others).
And just as the old prophets fade, new management messiahs have appeared
(see story). The basic question that confronts us when we encounter such
state-of-the-art thinking is how have Indian practitioners responded to
changes in their environment? The answer is not comforting.
By and large, the corporate sector has succeeded in structuring itself
along the lines suggested by traditional management theory. Massive
organizations like Escorts, Reliance, Bajaj Auto and others feature
functional separation of responsibility, dichotomy of line and staff and
specialized departments/ divisions dealing with quality assurance,
quantitative techniques and human resources. In addition, the areas of
finance, costing, production planning and control, materials management,
marketing and market research are all highly developed. In fact, in certain
specific areas, our companies rival the best in the world. The marketing
reach and professionalism of Hindustan Lever, for instance, is the envy of
many international giants. Similarly, the Taj Group of hotels is second to
none in the fine art of hospitality management.
The large companies are, unfortunately, only a part of the story, a
rather small part I might hasten to add. It is common knowledge that the
contribution of these companies towards income, employment and even exports
is disproportionately small given the resources they control. The ownership
of the corporate sector is only nominally public. Control is vested in one
or two families who own one or two percent of the equity. Quite often,
therefore, even though ownership and management are separate, a narrow
family orientation permeates all facets of the company and its activities. A
concern for professionalism, quality and people is, often, only skin-deep.
The thousands upon thousands of medium and small business establishments
strung across the country have in recent years accounted for an increasing
share of the economy. Yet, under capitalization and difficulties in
realizing accounts receivable (especially from large companies) have
combined to prevent them from attaining their potential. Diversion of funds
for personal use (equally visible in large companies) is another factor,
which violates the basic tenets of organization building. Management
knowledge is available to entrepreneurs who run small-scale industries; yet,
implementation skills are rare.
The result is that, overall, the smaller business entities are constantly
engaged in low-level operations. Notable exceptions are of course visible in
the small/medium sector. The OEN group, for example, has by its commitment
to quality, excellence and organizational building, earned for itself a firm
foothold in the International market for connectors and peripheral devices.
Managers, politicians and trade unionists are all fond of expounding the
virtues of 'workers participation in management'. Most of the time, the
intentions are far from being serious. In practice, the idea of empowering
workers is avoided by managers and owners alike. Though Douglas McGregors'
Theory X and Theory Y have been studied and analyzed in India for over three
decades, workers are still considered confrontationist and irresponsible.
Mutual suspicion ensures that an 'us' versus 'them' (workers versus
management) stand-off ensues in businesses in India. It is not surprising,
therefore, that real commitment to productivity is sorely lacking in all
quarters.
Over the years, we have mastered the art of erecting barriers to
creativity and frustrating sparks of initiative. In this, there is hardly
anything to choose between the public sector and the private sector. Bright
young executives, fresh from business schools, who join a 'large, blue-chip
company' quickly end up filling forms and, consequently, are lost in the
ocean of corporate bureaucracy. The banking industry is a case in point. The
State Bank of India recruits probationary officers from hundreds of
thousands of applicants through a highly competitive selection process,
which includes tough written tests (general awareness, reasoning, English)
and grueling interviews and group discussions. The probationary officers who
are finally selected are among the best and brightest that India can offer.
What follows is gross tragedy- the best and the brightest are slowly and
surely turned into 'risk averse' officers with virtually no chance of being
recognized for their abilities. Is it any wonder then that these officers
have no initiative and, consequently, succumb to low morale? Can
productivity ever by anything but low in such an environment?
Organizations have grown and expanded rapidly, especially during the last
five years. Management thinking, though, is predominantly hierarchical.
Companies incorporate the pyramid structure with incremental authority and
responsibility at every higher level. There are directors, managers,
supervisors and workers, each in his own place. Centralized planning and
reporting is the Indian synonym for professional management. Given the
realities of competing in a real-time international environment, every one
of these approaches is antiquated.
Our economy is being restructured at the macro-level by de licensing,
decontrol and exchange rate convertibility. No company abroad can afford to
ignore the huge potential of a newly freed Indian economy boasting of a
middle-class ranging between 150 and 200 million consumers. The floodgates
of competition are now wide open. Therefore, restructuring at the
micro-level is necessary too. Business enterprises will have to jettison
their compartmentalized, hierarchical, skeptical approach to people and
markets. 'Workers' participation' is hopelessly out-dated; even empowerment
is approaching obsolescence.
Instead, 'high-performance work-teams' with full responsibility will need
to take over. Owners and managers need to realize that transferring power,
information and accountability to their employees is perhaps the only way to
maintain and improve profits. Furthermore, quick-response, consumer
satisfaction and total quality are the new determinants of success (even
survival!).
It is not my suggestion that any of these shifts is easy or painless.
But, that there is simply no choice. Ironically, Theodore Levitt's
'Marketing Myopia' is as relevant now as it was when it appeared decades
ago. The difference today is that smaller work teams with vastly enlarged
responsibilities will attempt to answer the question that Levitt enjoined
every company to ask of itself - 'What business are we really in?'
The transition to decentralized management will be fraught with
uncertainties and mistakes. Companies will be turned inside out. Managers
will suddenly find their power slipping away. 'Coaching' will replace
'leadership' and 'nurturing' will be the manager's full-time occupation.
The greatest of all obstacles will be the long-held attitudes, encrusted
with prejudices. Changing these (both of and towards people) will be the
real challenge of Indian management in general, and corporate owners in
particular. Will Indian investors, entrepreneurs and owner-families accept
employees as true, profit-sharing partners?
If they do, Indian companies may yet conquer the global markets. If they
don't we are back to what we do best - missing the bus, again!
About the Author
Mr. Madhav Mohan's academic background is multi disciplinary; he holds a
B.A. in Economics from St Xavier's College, Ahmedabad and M.A. in Economics
(Gold Medal) from Loyola College, Chennai and an MBA from the University of
Cochin, Cochin. In addition he was awarded the Rotary International Graduate
Scholarship as a result of which he earned his third postgraduate degree
namely, Master of International Management from the American Gradua
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