systems

All posts in the systems category

CORPORATE INDIA AND THE CONSUMER : MAGGI / INSURANCE AND ITS LESSONS

Published June 7, 2015 by vishalvkale

Is the consumer really the king, as a multitude of marketing books proclaim her to be? Or is it a mere empty nice-sounding statement? Recent events would lead the cynic to question the entire premise of “king” or “queen” or anything remotely comparable; conversely, these same events would lead the avid supporter to comment “It is a mistake”, or “it wont happen to me” or “This is a one-off event”, jumping to the defence of Corporate India, who cuts their paycheck in that they are employees in some company or the other. Well, the same Corporate India cuts my paycheck, and I see no reason to defend it, or not ask  some pretty hard questions of it.


Before we continue, read this beauty from the Times of India Article : “I am the real hand behind Maggi action, ‘junior’ food inspector says” : “Not to be outdone, Singh said he had followed the case for more than a year; … he picked up Maggi samples from a Barabanki market on March 10, 2014. “We sent them to a Gorakhpur lab for investigation. The tests showed presence of lead and high levels of monosodium glutamate … Singh said he wanted to be doubly sure before he took on such a major company. So, he collected the samples again and sent them for a separate test. “The results were the same. The noodle had eight times higher than permissible presence of lead and MSG … “I notified Nestle about the irregularities. The firm challenged the tests and demanded a fresh test at the Central Food Laboratory in Kolkata. Even there, the results were the same

A few startling {or not-so-startling} facts jump at you : firstly, that the tests were repeated thrice on fresh samples, and that secondly  this was escalated to the company. We have no knowledge of the internal steps they took {to be fair, we are not supposed to have any}; why didn’t the company act on its own, after a unilateral investigation, and pull out the suspect stocks from the market? Why were the stocks still on sale even a year after the incident? Assuming this was limited to a particular batch, why wasn’t immediate action taken? Why were similar results found in several states in tests recently conducted? Why was a new product launched without prior approval from the regulators, in defiance of the laws of the nation?


The FSSAI also noted that a new product, Maggi Oats Masala Noodles with Tastemaker, was launched in the market without product approval necessary under Section 22 of the FSS Act. “What is disturbing to note is that the company had already released the said product in the market without completing the process of risk assessment and has been promoting its sales. This is illegal and a serious violation of the FSS Act, Rules and Regulations,” it said. – See more at: FSSAI order: All nine Maggi Noodles variants off the shelves

This article isn’t about Maggi, or Nestle; it is about Corporate India and the Consumer. I could have just a easily used any other example : it is just that this is a fresh case, and recent in public memory; it is also the first case in India that has lead to a nationwide recall forced by regulatory developments. Finally, it is easily the best documented and hardest-hitting case in India in my memory.

The question that emerges is : for us in Corporate India, is the Consumer really the king? Is the customer really the center of the organization, and do all departments and levels connect with equal vigour and attention to customer needs? Had this been the case, any number of complaints in the consumer courts would not have happened; take the example of misspelling in Insurance. This Article {Business Standard :  Insurance mis-selling our problem, too: RBI}  exposes the concerns and the reality. The article lists 168482 complaints of fraudulent business practices. I could, with a little research, quote many more examples; but these two should suffice.

Do our internal systems really encourage a consumer-focused team? What do we do when sales dip : blame the sales and marketing teams – or do a deeper analysis of what competitive reasons {along the lines of the 4Ps as well as the broader environment} were there behind the slack  in sales, before blaming the sales team? Do we really have a system, an operational system wherein the customer-facing people are responsive towards customer feedback, and is there in existence a functional and operating feedback mechanism? Is it really feasible for an employee to give negative feedback without fear of personal loss regarding excesses? Do employees trust the feedback mechanisms, whistleblower initiatives, and other internal systems to escalate problem areas?

Sure, we have the consumer as the king or queen when we design the product; but when it comes to running the business, somewhere along the lines, the consumer centricity gets lost in all the hoopla around numbers and profits and returns on investment. Internal checks cease to be as rigorous, practices get condoned {168432 complaints, remember?} and thus become ingrained. And once you reach an acceptability status, then the worries recede, focus is lost, and complacence sets in. Things which ought to set an alarm ringing get ignored. Short cuts get taken; the pressure to deliver numbers leads to slackening of controls on all departments in an enterprise.

Our approach – internally – is to get the numbers; just sell to the consumer. How do we reconcile this with the consumer is king? Be it FMCG or be it Insurance, the approach is the same; I know, having done both. In both the cases above {FMCG / Insurance}, it is clear that there were gaps in both consumer centricity, and a manifest disregard for the written law, if the enclosed report is correct. These 2 cases reveal two aspects : one, the product design and manufacturing aspect, and the other the sales aspect. And in both cases, it becomes obvious that the consumer is not the king.

You know lead is dangerous to Humans; how did the high lead content get into the product? If it was one sample – it could be an error in the Lab; but, based on current data and evidence, this has been revealed in a multitude of tests in several places. Either you made an error : or they did. If they did, please prove them wrong scientifically; all of us would be thankful to you. Similar is the case of insurance mis-selling : prove the customer complaints as flawed – or look in a mirror and chance the internal systems and processes to make them more robust.

Moving on, are our employees aware of the requirements of the law in our respective product categories? If you say yes, prepare to answer my questions on the legal requirements – and be sure to state specifics and laws. Do we really know the laid-down laws relating to our products? Answer : I have yet to attend a training in any company that teaches the legal framework governing the industry in detail. Reason : apparently, it doesn’t concern us in Sales and Marketing! We are expected to sell, without fully understanding the legal framework!

Let me underscore : we, the actual sales people, are expected to sell without having even an iota of knowledge of the laws relating to the consumer as they are applicable in our industry! And, as the icing on the cake, management pundits claim that the consumer is king. She may be the queen while acting in concert to determine marketshare; but she certainly isn’t the queen on an individual basis, that much is certain.

If the consumer were the king or queen, quality certifications would be much more rigorous than is currently the case; vendors would be expected to and grilled on quality for each dispatch or replenishment; each consignment would be checked; the first complaint gets action from the very top of the company; the first customer complaint of proven misconduct gets the sales and marketing guy terminated without notice regardless of performance data; each customer facing function would get top priority and so on and so forth. That this doesn’t happen is a manifest truth.

So Tell Me, Corporate India, Tell Me : One Of Your Own Employees : Is The Consumer Really King? Further, if companies think that they can continue to operate with the same internal systems and processes that they have hitherto taken recourse to, they are missing the signs on the wall : increasing consumer activism, regulatory activism, court activism, and a much more aggressive central government combined with an overactive media and social media. You don’t have a choice:

Corporate India, Change! Or, this time, it is the Government and the Market that might force you to change!

Values & Teamwork in Business and Education

Published September 16, 2013 by vishalvkale

To the Naval Officer with whom I had this discussion: If you are reading this, please accept my thanks for your Armed Forces training and job insights and our comparisons with organisational life and trainings; this idea came to me while we were engaged in our discussion, as you will hopefully recall…
As previously noted in earlier articles on my blog, corporate India has been shaken to its core by a recent series of scandals and scams that have cut across the entire spectrum almost; with the bad news coming from Mining, Pharmaceuticals, Banking, Telecom, Coal etc. I have previously argued in my blog of the need for introspection within the hallowed corridors of power in Corporate India, and of the need for a re-visit to the the basics to set things right. In the course of this analysis, we looked at the external environment, which has changed quite significantly, with very, very heavy competition and the resultant pressure becoming the norm of the day; I further argued that the internal processes are simply not keeping pace with the the on-ground scenario. 
To this, let me add another albeit highly contentious variable – Values. Call it what you will; Values / Ethics / Morals / Code of Conduct, or any other suitable term. (I am not being theoretically rigorous here). Values are our guiding spirit; they help us in living our lives; they help in guiding us, setting targets and directing us on the right path towards the achievement of those targets. They are the DNA on which our lives are built.
It is an inescapable conclusion that the values displayed by the list of financial scams, scandals and corporate exposes are not those we would like to see in our children. It is also true that none of us tries to develop such personality attributes consciously. And yet, the perpetrators were people like us: people from within us; people who grew up in the same systems and processes we were exposed to in our corporate lives. Where and how did they go bad? And how did things come to such a pass that no one even speaks out for fear of being victimised? These are very pertinent questions that should occur to us on reading about these scandals
It is also equally true that organisation after organisation has failed to spot the errors that have set in; the scale of the problems may be small in some and large in others – but it is there. The victim organisations span a list ranging from behemoths to small organisations. Blaming society is useless; we are the ones that make up the same society. Neither is blaming the external environment a satisfactory escape for it does nothing to change the status quo, and does not look for a solution to the tough questions being posed to Corporate India
The above was the rough gist of my argument to the Naval Officer, who was on his way to an IIM for a one-year course in management. He then made a few interesting observations during the discussion, a couple of which are highlighted below… 
a) In the Armed Forces, during our training, if one of the team fails, the entire team is punished and vice versa. This enables group thinking and teamwork. The focus is on performing as a unit, as a team – and not as an individual
b) I cannot believe that you cannot voice your opinion forcefully and truthfully; If I do that, I put the entire ship, along with the hundreds of people on it, at grave risk. Thus when I receive orders that I observe to be potentially harmful, I make it a point to object and point out the inherent dangers
Now look at the corporate sphere; it is easy to spot parallels. Perfect parallels. Group Thinking, Teamwork, Organisation above self are not on overt display anywhere. The argument that “the Organisation does not care, so who should we” also does not hold water, for our long-term career prospects are determined as much by the quality of the organisations in your career profile as by your individual achievements. 
The focus is never on genuine team performance; the focus is rabidly individual, rather than spotting performing teams. This is easy to spot in the behaviours within teams, where there is little sharing of best practices; in fact, quite the reverse. Each team member is looked at more as a rival than as a support system and as a team member. Group thinking is permeated with scoring browny points with the boss, rather than any genuine efforts at adding value. 
We corporate guys willingly and enthusiastically implement strategies that we know will lead to doom and sales disasters; and we do so without even a whimper of protest. Competitor feedback – even of seminal events – is usually tepid, and controlled. No one wants to rock the boat, no one wants to be highlighted. We willingly get into unethical practices (no point beating around the bush; we do do so) without a single second thought. And the system is simply unable to check this habit. Indeed, in some ways the system actually reinforces it, as, for example, those who rock the boat are more often than not the first to get jacked. And the biggest challenge for the Organisation -any organisation – is how to tackle this issue; how to get employees to be forthcoming; how to engage employees, and make them feel part of the larger picture. 
Where are we going wrong? Why is the inability to engage employees such a serious issue? The answer is within ourselves – as I have previously argued. Short and sweet  – this happens as we focus on results, and not the means. We focus on the short-term, and not the long-term especially in tactical execution of long-term strategies. This may explain the unethical behaviour; but it does not fully explain the lack of group and team approach. This explanation also does not fully explain why some employees choose to stay honest even at great personal cost to themselves and their families
The only possible solution, the only answer that occurs to me is that at no point during our professional lives – right from MBA – do we focus on values, the morality of our actions, the aspect of teamwork, the aspect of Organisation first. Critically, the Naval Officer I spoke to was unequivocal: He did not recall a single value-based query, question or case during the entire selection process – which is at complete odds with my experience  in the services selection board
Food for thought; that little tit-bit of wisdom. True: at no point in the entire MBA degree do we genuinely focus on team enhancement. Values are only theoretical points to be mugged up; rare is the exposure to genuine cases where value decisions are required; where the task comes into conflict with your values. The entire focus is on self, or on inhuman strategies. Same is the case in the organisation: 100% of the focus is on performance, meeting numbers: never on the basic fundamentals. And equally, there is precisely zero focus on decision making in conflict scenarios, on value decisions, on emphasising laws of the land; on the human cost of decisions etc. Even in interviews I have given and taken, the focus is on performance – never on the values that make up a person, and what makes him or her tick. It is almost as if we are hiring machines-  not human beings that think and feel. 
Where are we going wrong? And far more pertinent is the query “How to sort this mess”? I do not have answers. Not yet, anway. As I said earlier, the purpose of my articles is to engender a questioning attitude in people, and encourage them to question the status quo in their own minds…

Corporate India: A challenge to Ethics and Morality?

Published June 7, 2013 by vishalvkale


This has been a tumultuous year for the corporate world – with sting after sting leaving companies and corporates red-faced, and running helter-skelter to check the damage. Ranbaxy and Cobrapost, taken together, have hit some of the biggest names in our corporate world. This is nothing to celebrate; neither is it anything to mourn. It is in fact an opportunity for corporate India to introspect and put in place systems and processes that can lead to an image improvement, as well as better on-field performance. 

Are these incidents systemic, or are they sporadic? And, if they are systemic, what are the systems and processes that are causing this? First of all, the Cobrapost sting affected almost the entire banking spectrum without exception. Something so widespread cannot be a sporadic happening. This alone forces me to painfully conclude that this is a systemic failure on the part of corporate India. The question that arises from my declaration above, is that is this constricted to the banking sector, or does this spread outside it as well? While there will be differences between industries, can we spot come commonalities? And can we spot the precise root cause without resorting to sweeping generalisations such as “falling moral standards of society”? 

The first external hint came from the Ranbaxy episode. This leads to the assumption that something, somewhere, is not right. At this juncture, it becomes important to specify, as a serving member of corporate India, that such reactions as you have seen in the above 2 cases, are not the norm; they are only the outliers in the range of responses of employees to corporate pressures and realities. These responses range from the idealistic, to the practical; from the practical to the amoral; and from the amoral to the illegal. In other words, they span the entire spectrum. We are interested in the modal response – that is, the most frequent response and the general trend. 

There is one common string that runs through both cases: the pressure to perform, the pressure to deliver results. This leads to the automatic assumption that there is a problem in the Performance Measurement Systems of corporations. Well, yes – true; there is a  very serious issue there; but that is but one factor. The pressure to deliver results hails,  in addition to the PMS, from Competition and Job Security as well; in addition – all these three factors are intertwined together. Let us now look at all these one-by-one

Competition
This word refers to internal as well as external competition. External Competition refers to the competitive scenario in terms of both competing products as well as competing product categories. This much-ignored factor is the real culprit; competition is increasing by leaps and bounds. Even a cursory glance at management concepts will tell you this is par for the course in a growing market. New competing brands will come up; competitors will continuously innovate in the product variants, brand communications, distribution etc. New categories also come up that frequently challenge that very basis of your business model, or fundamentally alter the business environment in terms of market size, obsolescence etc. The factor of internal competition and the PMS has to be seen in this all-pervading atmosphere. And, as we shall see later, it is the modern corporates’ failure to effectively produce processes and systems to tackle the pressures arising out of this external atmosphere that lies at the root of the problems. The icing on the cake is that we are in a relatively young nation, with the large number of people ready to replace you (with skills comparable to yourself) – with some of them being jobless.  Taken together, this is a recipe for a pressure-cooker like atmosphere where the winner takes all. 

Internal competition refers to the pressure to get ahead, the pressure to excel, get solid increments and promotions. In a pressure cooker scenario such as exists now-a-days as outlined above, this will cascade on employees – challenging the very basis of their thoughts and their business approach. No one enters a job with the explicit intention of breaking rules; it is something that you pick up on the course of your normal duties – it is a survival instinct, a reaction taken to ensure continuity. Not every person is blessed with the obstinacy and the obduracy to avoid the pulls of a slight moral detour – esp when everyone is doing it. Each employee wants to succeed; that is a given. It is this desire that motivates actions seen above in some cases…

Job Security
The manifest lack of Job Security in the modern workplace is also another core reason for this. Threatened with the fear of a loss of a job, quite a few employees do compromise on their values, and take the easy way out. The very fact of the presence of such tactics is mute testimony to this reality. It is relatively easy to get fired, or to get replaced – even without fault. And once out, no one looks to see the base reason; getting a replacement job becomes extremely difficult. It is this cruel reality that fuels and adds fire to the already smouldering embers described above. These 2 combine in the catalysing presence of the PMS to create a full-blown fire…

The Performance Management System
Any Performance Management System should be an aid to performance, a guide-stick for a future plan, an opportunity to increase salary and perks, and a fearless chance to correct mistakes. It should also be a tool to ensure that the organisation proceeds along the right path. Given the pressure-cooker atmosphere described above, it needs to be sufficiently robust, providing a framework for the basic prevention of unhealthy activities as well as a tool, a guide towards the correct operational method. 

Most PMSs I have seen fall way short of this. Inordinate emphasis is laid on the short-term end-result; and consequently lesser emphasis is laid on the process that goes into the result. Most I have seen measure the result to the tune of 60-80% at the lower levels, while altering this only at the senior levels. This creates a lower employee base that is interested in only results; with a senior base that professes to be interested in both. Upto middle levels, this is the unfortunate reality. Obviously, when you are being measured only on results, there will be a tendency to take unethical and even illegal short-cuts. If the Key Result Areas are 60% numbers, 20% processes, and 20% people skills – then it becomes relatively easy to tweak then process, achieve the 60% at the cost of the other two parameters. Net result is that you are safe; and further, at the back of the mind is the knowledge that the corporate will prefer number achievers over the process guys. 

Summary
Thus we can see that in an atmosphere that provides the opportunity for unscrupulous  ladies and gentlemen to get ahead, the pressure to perform colludes with the external and internal pressures to create unethical conduct. Here we run into one fundamental objection: organisations exist to achieve objectives, targets, numbers and profitability, and are operating in a fast-moving and dynamic external atmosphere, which accounts for the emphasis on numbers. To this, let me clarify: numbers are the be-all and end-all of the organisation; but it is also the core task of the same organisation to ensure sustainability of performance over the long term and avoid crises, losses and damages to bottomline and image. Short term tactics cannot ensure long-term success; unhealthy practices if exposed can cause regulatory and business losses, as we have seen in the examples above.  

In conclusion, it can be said that the playing field changed- as seen by the changes in the external competitive atmosphere. And the corporates have been slow in responding with adequate changes that can reflect the new business reality that now faces them. We have seen The PMS in this article, and the lack of Job Security.  The lack of human, friendly processes that de-stress this hard reality and motivate employees seems to be at the root of this. The PMS, Hire-And-Fire, Rewards and Recognition Programmes, Employee education and training  to deal with competive stress are in dire need of updation. We shall look at these in the 3rd part. But these arent the only ones responsible; there is one other factor that needs to be considered to make this picture complete: the bedrock to which this is linked; the overall organisational and societal culture; and the secondary organisational processes like competition monitoring, employee mentoring etc. This is what I shall attempt in the 3rd part of this topic…

Not for Reproduction; please drop me a message in case you are interested in reproducing this

Corporate India, work stress and employee dissatisfaction

Published May 16, 2013 by vishalvkale

Image courtesy: The Economic TImes

Now add one or two other little tit-bits of information that make the picture complete… first, the rising incidence of stress and mental ill-health, as was brought out on a recent report on the IT industry – and second, the rising family tensions and divorce rates. Add the two – and you have the makings of a shakespearean tragedy. I am making an extremely bold move in this article – openly criticizing these matters while being a member of corporate India. But something will have to be done; I dont know whether this small contribution will help or not…

Look at the data: this is the company perspective presented. Employees are facing excessive work pressure and longer hours – and 36-38% of companies accept this. If you ask the employees  – especially in private- this number is likely to double – or more. This is also far higher in India than elsewhere. Thus, this is a local phenomenon. Most critically, look at the most damning comparison of all: the employee perspective clearly mentions that they value job security; this is totally absent from the employer perspective

Rising stress levels, lower job security, ever-tighter deadlines and targets are now a business reality. This is borne out of the competitive environment we find ourselves in – at least the first and the third parameters. The second – job-security is simply a function of internal priorities, processes, checks and balances. Quite a few corporates in India still do not value the employee as much as the numbers. The effect on the employee and his family is totally ignored – and – as I shall delve upon in a follow-up article – the effect on norms, best practices, law and ethics is also a victim of this.

Let me take telecom, for example. Where there were 6 competitors, now there are 12 in the mobile services space. Where there were only Nokia, Sony and Motorola, now there are Samsung, Micromax, Karbonn, Lava, Spice, IBall, Xolo to name but a few. Competition has risen exponentially; this is a business reality and cannot be wished away. This has placed tremendous pressure on the existing players to maintain and grow their toplines and bottomlines. Similarly, the hold on the market of the market leaders has placed equally heavy pressure on the new players to make a mark and win themselves a niche. The other source of pressure is the increasing focus on profitability and revenue growth. This seemingly straightforward focus – eminently sensible- is fine in a system with defined humane processes,  humane systems, proper procedures and acceptable ethics. But when even one of the three is missing – it leads to what you see above. And if more than one is missing, then… 

This is not a factor of the recessionary market phase we are in; in my 14 years experience, this has always been present. Yes, this has risen in levels off late; but it would be wrong to state that this is a phenomenon born out of the larger economic problems facing the world economy. And this is probably present even in the older industries (it has been 9 years since I moved into telecom). The data above seems to indicate that. In those industries, some of the reasons are different.

My point is that this is not going away. Competition is rising and will continue to rise, and focus on topline and bottomline is the way to conduct business. We are, after all, in a business – not philanthropy. It is the way we go about tackling the competition and the daily grind of conducting the business that is the issue. And in that, we are found wanting – as the numbers above, as well as the stress surveys and mental and physical health issues, divorces etc show. 

This is indicative of a deeper systemic malaise: the internal systems and processes are not coping up with the changed business reality that is confronting the corporate scenario. And that, to my mind, is the core reason for what we have seen above. HR systems, fist of all, need to be strengthened to cope with the new reality. This has to go hand-in-hand with a more humane treatment to employees, with a receptive ear to their manifest and genuine concerns. The employee is primarily concerned with Job Security as can be seen above; corporates would do well to move away from the stupid and self-defeating hire-and-fire systems currently in vogue for a start. An assurance of stability would go a long way in tackling attrition, as well as make the employee a happier person. 

The current impression of managers that the employee is driven by fear needs to change; employees are driven more by desire than by fear. Fear incapacitates a person and erodes his competitiveness. The key is to find a set of drivers and focus on them; job security need not mean a drop in performance. Quite the reverse, in fact: performance will shoot up over the short term; and it is the task of the manager to engage with and drive his team to derive performance over the mid to long term. 

Performance measurement, retention policies, promotion and increment policies, office times – in fact – all employee centric policies need to be overhauled. The manager needs to ensure that the emplyee is not spending 6 days a week late at office. Yes, at times staying may be mandated – but this should not be the norm. Make the work-space comfortable for the employee – and spot the difference. KRA do not mean only the end-result; measure the process as well as the end-result. I understand that performance has to be maintained: but what I cannot understand is the assumption that performance can only happen by placing the employee under stress. The key should be to finding the motivators for each employee, and driving him or her accordingly. That is why we have managers: to engage with and drive employees. If the employee  has failed, somewhere along the line even the manager has failed. Simple truth. Do current systems reflect this?

No, they dont. Also simple truth.

Not for reproduction; please drop me a message in case you are interested in reproducing this