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HRM Review April '10
HRM Review
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April '10 | |
INDEX
COVER STORY
-- Debasish Sur, Uttam K Dutta, and Amir Jafar
The concept of Human Resource Accounting (HRA) has been appreciated by the accounting profession and, by and large, its usefulness has also been acclaimed in the literature. With the emergence of knowledge economy, HRA has been accepted as a point of immense importance and the growing awareness about it among stakeholders has been noticeable. The present article makes a comparison among three well-known IT companies, namely Infosys, Satyam and KPIT Cummins, with regard to their HRA practices. This article also identifies the strengths and weaknesses of the companies in respect of such practices and finally suggests a suitable HR disclosure model for the IT companies.
ORGANIZATION CULTURE
-- Payal Johari
Today's business complications, in the aftermath of the recent global meltdown, have adversely impacted some of the most reputed companies globally, which need to be addressed by adopting farsighted strategies. Although markets are showing signs of revival from the worst ever corporate shocks, yet there are apprehensions as to whether it would be a smooth ride from now on. The waves of uncertainty that have shook the roots of many companies in the recent past may resurface with wider implications than before. In such challenging times, it is, not only imperative to reassess our organizational capabilities, but also adopt such proactive strategies that can lay a strong foundation for the companies, making them, not only competitive, but also resilient enough to withstand any unforeseen trouble in the future.
CSR
-- Sarang S Bhola and Varsha Nadkarni
Many corporations have adopted Corporate Social Responsbility (CSR) practices while pursuing their business objectives. The entire approach towards the development of the society is very scientific and well thought out. In all such endeavors, the benefits should trickle down to as many stakeholders as possible. These CSR initiatives can be implemented in the organization with the help of Human Resource Management (HRM) concepts like Quality of Work Life (QWL), so that manifestation of the concept of CSR can be visualized. This article tries to explore the various aspects of the CSR concept, as well as QWL. It attempts to establish the correlation between CSR and QWL.
LEADERSHIP
-- NR Aravamudhan
Narcissist leaders abound in a corporate boardroom. Narcissist leaders thrive on grandeur and flights of fantasy. They believe themselves to be infallible, omniscient, and omnipotent. This article tries to demystify the persona that makes up the narcissist leader. The article also looks at a few underlying strengths of the narcissistic bosses. Managing narcissistic bosses is an art per se. This article also throws light on the daunting task of managing the narcissistic bosses.
CRISIS MANAGEMENT
-- K Senthil Kumar and L Gandhi
In times of economic recession, staff freezing is the order of the day. People are the most important and valuable assets in a business organization. Hence, it makes sense for the management to cut employees overhead first before cutting costs elsewhere. Obviously, this sends a wrong signal down the organization. Consequently, people lose their self-confidence and morale. Layoffs might be an opportunity to take a pause or pursue other possibilities. In some years, people will not consider layoffs `soiled' anymore, and take these in their stride as a part of their working life. Subsequently, the working people will be prepared to face any such consequences in the scenario. This article discusses staff freezing during economic recession, presents a comparison between Product Life Cycle (PLC) and Employee Life Cycle (ELC), consequences of pink slip, and the role of human resource department during this phase.
CRISIS MANAGEMENT
-- Vidya M Iyer
During times of crises, the business and its employees usually live on the edge. In such situations, it is very natural that employees may lose both their intellectual and emotional stability. An individual may go through emotions that range between challenge and trauma. It is the role of HR to build an organizational culture that is leadership-oriented, open, proactive and not afraid of challenges, so that the employees can overcome the stress of crisis and, in fact, rise to a higher competency through learning from each crisis. Towards this end, situations are examined where the management and employees have enabled the organization to emerge stronger out of a crisis.
CASE STUDY
-- Sai Prasanna Ragu and Swapna Pragada
At the dawn of the new millennium, India celebrates the remarkable progress of women in business. Women have made great strides in boardrooms and courtrooms, on screen and in society and are regularly featured on the cover pages of business magazines. Indian women today have broken the so-called glass ceiling to emerge to the top of the corporate ladder. ICICI bank, the leading private sector bank of the country is never bereft of women in senior management positions. Against this backdrop, this case study presents Kochhar's new role as the Managing Director and CEO of ICICI Bank. Highlighting Kochhar's invaluable contributions to the evolution and growth of the company, the case study delves into her stint in successfully running various divisions of the bank and her leadership qualities in handling banking operations during tough times. It offers many intriguing issues to debate on _ whether Kochhar is the right choice to succeed KV Kamath, her capabilities that gave her an edge over other contenders, role of women in business, particularly in sectors like banking and finance, and abilities of women vs. men in leading organizations.
COVER STORY
Human Resource Accounting Practices in India: A Study of Select Companies in the Indian IT Sector
-- Debasish Sur
Professor,
Department of Commerce,
The University of Burdwan, Bardhaman,
West Bengal. The author can be reached at
debasishsur@yahoo.co.in
Professor,
Department of Commerce,
The University of Burdwan, Bardhaman,
West Bengal. The author can be reached at
debasishsur@yahoo.co.in
-- Uttam K Dutta
Professor,
Department of Commerce and Management,
West Bengal State University, Barasat,
West Bengal.
The author can be reached at
uttam.dutta@yahoo.co.in
Professor,
Department of Commerce and Management,
West Bengal State University, Barasat,
West Bengal.
The author can be reached at
uttam.dutta@yahoo.co.in
Amir Jafar
Lecturer,
Centre for Management Studies,
The University of Burdwan, Bardhaman,
West Bengal and Visiting Faculty,
College of Business Administration,
University of Nebraska, Omaha, USA.
The author can be reached at
ajafar@mail.unomaha.edu
Lecturer,
Centre for Management Studies,
The University of Burdwan, Bardhaman,
West Bengal and Visiting Faculty,
College of Business Administration,
University of Nebraska, Omaha, USA.
The author can be reached at
ajafar@mail.unomaha.edu
The concept of Human Resource Accounting (HRA) has been appreciated by the accounting profession and, by and large, its usefulness has also been acclaimed in the literature. With the emergence of knowledge economy, HRA has been accepted as a point of immense importance and the growing awareness about it among stakeholders has been noticeable. The present article makes a comparison among three well-known IT companies, namely Infosys, Satyam and KPIT Cummins, with regard to their HRA practices. This article also identifies the strengths and weaknesses of the companies in respect of such practices and finally suggests a suitable HR disclosure model for the IT companies.
Human Resource Accounting (HRA) measures the cost and value of human resources to an organization and presents the information in a significant manner in the financial statements to communicate their value with changes over the period and results obtained from their utilization to the different stakeholders. It mainly caters to the information need of the HR professionals, senior managers and investors for making effective decisions. Different schools of thought in the domain of accounting have developed different methodologies for the valuation of HR, and suggested different approaches for treating the most valuable asset of the organization. But there was no unanimity on the part of the accounting professionals. However, presently the concept of HRA is being used by the HR professionals as an approach to human capital management. It is also found in the concerned literature that HRA can be used as an effective tool for strategic Human Resource Management (HRM). Despite the difficulties associated with HRA, in India, some giant public sector companies as well as private sector enterprises of international repute have been continuing their HRA practices.
Objectives of the Study
The present study attempts to: (1) make an overall analysis of HRA practices in India, and (2) examine the HRA practices in the Indian IT sector.
More specifically, this study intends to make a comparison among the selected companies with regard to their HRA practices, to identify the strengths and weaknesses in respect of such practices, and to suggest a suitable HR disclosure model for the IT companies.
Methodology of the Study
This study is based on secondary data, which have been collected from the annual reports of the selected companies. The annual reports have been scrutinized in order to identify the companies having HRA practices. IT companies, like Infosys, Satyam and KPIT, were identified to have the HRA practices and thus selected for the study. The authors have decided to select the IT sector since the HRA practice is in vogue in this sector and it is being practiced by one of the best companies in India, i.e., Infosys. The corporate practices of Infosys have been benchmarked by many, especially by firms within the IT industry. Certain information have been obtained from the corporate websites also. The annual reports for the five financial years, 2002-03 to 2006-07, have been considered for this study. We have to confine ourselves within this time period, 2002-07, because of the non-availability of the annual reports of KPIT prior to 2002. The period after 2006-07 has not been considered in order to avoid the controversies that may arise due to inclusion of Satyam in the study, and the annual reports of Satyam are not available on the corporate website after 2006-07. The proposed HR disclosure model has been developed on the basis of the existing literature and corporate practices.
HRA Practices in India: An Overview
The requirements of Schedule VI as per Section 211 of the Companies Act, 1956, relating to the balance sheet and profit & loss account, provide for disclosure of all physical assets and creation of depreciation provision thereon but they have not mentioned any single word regarding the disclosure of HR value in the balance sheet. Section 217(2A) of the Companies Act, 1956, read with Particulars of Employees (Amendment Rules), 1998, requires the companies to give a statement showing the particulars of employees who are employed throughout the financial year and are in receipt of remuneration aggregating Rs. 24,00,000 or more per annum and also the particulars of employees who are employed for a part of the financial year and are in receipt of remuneration aggregating Rs. 2,00,000 or more per month. As a part of the Report of the Directors, this statement includes name of the employee, designation, gross and net remuneration received, age, qualifications, experience of the employee, date of joining and particulars of last employment held by the employee. As far as HRA is concerned, the disclosure of particulars of employees by companies, in fulfillment of statutory requirement of Section 217(2A), is not sufficient to draw any conclusion because only the details of gross emoluments drawn by the employees are furnished. Thus, the Companies Act, 1956, has not framed any rule regarding valuation of HR and presentation of significant information about human resources in the financial statements of companies. The Accounting Standards Board of the Institute of Chartered Accountants of India (ICAI) have so far issued 32 accounting standards on most of the important areas in accounting but have not formulated any specific accounting standard on measurement and reporting of cost and value of HR. In spite of there being an absolutely unfavorable environment in India regarding the method of introducing the reporting on HRA, Bharat Heavy Electrical Ltd., a Navratna Public Enterprise (PE) started the valuation of its HR by following the `present value of future earnings' model of Lev and Schwartz in the financial year 1974-75. As revealed by the existing literature and on the basis of the information obtained from the annual reports of various companies, it is found that 15 organizations belonging to the public sector and eight belonging to the private sector, i.e., 23 companies, had adopted such a practice. The list of Indian companies having HRA practice is provided in Table 1.
Most of these enterprises have adopted Lev and Schwartz model for valuing their human resources. However, SAIL, CFSL and CCI have valued their human resources by applying this model after incorporating certain modifications as proposed by Eric G Flamholtz and Jaggi and Lau, whereas EIL, HMTL and ONGC have not disclosed the models employed by them. The discount rates used by the enterprises have fluctuated between 10 and 15%. Such different rates of discount considered are treated as debatable issues. Even the logic behind the rates adopted by these has not been mentioned. Valuation of human resources cannot be compared due to such different rates for which inter-firm comparison of HR value cannot be done. Almost all the enterprises, except HMTL, have reported category-wise distribution of human resources and their value but only five companies, namely, BHEL, SAIL, MMTC, HMTL, and NTPC, have shown age-wise distribution of human resources. Productivity and performance statistics of human resources have been presented by nine companies, such as BHEL, MMTC, NTPC, PEC, MECON, CRL, MRL, OTL, and ITL, in their annual reports. However, all the enterprises under consideration have reported the information relating to salary with sub-breaks in their annual reports as a part of schedule of accounts, whereas segment-wise distribution of salaries has not been mentioned by any one. Almost all the companies, except SAIL, CCI, MMTC and NTPC, have been silent about their objectives of reporting HRA information in the annual reports (Mallik & Sur, 2003, p.22). Thus, it can be said that the practice relating to the disclosure of HRA information is not uniform among different Indian enterprises. In the absence of any legal requirement, almost all the enterprises, except a very few, have now discontinued their HRA practices. At present, only MMTC, MRL, ONGC, ITL, SCS and KPIT have HRA system. However, these companies have been reporting the HRA information as supplementary information in their annual reports. These accounts are, therefore, unaudited.
HRA Practices in the Indian IT Sector
A review of the annual reports of the top 50 IT and ITES companies in India (based on revenue of 2008, Capitaline) discloses that most of them have strong HR orientation, though a very few have the formal HRA system. As far as the disclosure of HR information is concerned, the IT sector provides a good amount of decision inputs to the stakeholders through the annual reports. Among the Indian IT companies, Infosys Technologies Ltd., Satyam Computer Services Ltd., and KPIT Cummins Infosystems Limited (KPIT) have adopted HRA system and have been disclosing HRA information in their published annual reports. In the following part of this article, a brief profile of these three IT companies, along with the details regarding their HRA practices, has been presented.
Infosys Technologies Limited
Infosys Technologies Limited is one of the largest Indian IT companies, with nine development centers and over 30 offices worldwide. Infosys employs over 1,04,850 employees (2009). It was formed on July 2, 1981 by NR Narayana Murthy and six other software professionals. It is the first Indian IT company to be listed in NASDAQ. At Infosys, employees are considered as the most important assets. The company strongly believes that the quality and level of service that its professionals deliver are among the highest in the global technology services industry. It takes genuine efforts to minimize the information asymmetry between management and shareholders. The company has always been at the forefront in practicing progressive and transparent disclosure. The US Generally Accepted Accounting Principles (GAAP) was first adopted in India by Infosys. Additional disclosures are provided in the annual reports of Infosys so that the stakeholders can have deeper insights to the way the company is running its business. In addition to the mandated Indian and US GAAP financial statements and supplementary data as required by the relevant statutes, the disclosures which are provided in the Annual Reports of Infosys include: Brand Valuation, Balance Sheet (including Intangible Assets), Economic Value-added Statement, Current-cost Adjusted Financial Statements, Intangible Scorecard, Risk Management Report, Human Resource Accounting and Value-added Statement (Annual Report, Infosys, 2006-07).
In the annual report of 2006-07, it is stated "The dichotomy in accounting between human and non-human capital is fundamental. The latter is recognized as an asset and is, therefore, recorded in the books and reported in the financial statements, whereas the former is ignored by accountants. The definition of wealth as a source of income inevitably leads to the recognition of human capital as one of the several forms of wealth such as money, securities and physical capital." In Infosys, the Lev and Schwartz model has been used to measure the value of human resources. The company has valued its HR based on certain assumptions, which include: (a) Employee compensation includes all direct and indirect benefits earned both in India and abroad, (b) The incremental earnings based on group/age are considered, and (c) The future earnings are discounted at the rate which is equivalent to the weighted average cost of capital of the last five years (Annual Report, Infosys, 2006-07). The discount rate varies from year to year, e.g., it was 14.97% in 2007, whereas it was 12.96% in 2006. The employee strength along with the category, gender, and age-wise classification (as shown in Table 2), have been specified in the annual reports under the Section `Additional information to shareholders' as `Frequently asked questions'.
The employee strength and revenue growth since 1996 are provided under the `Frequently asked questions' section. These are very important items as far as HR disclosure practice is concerned. This information helps the internal, as well as external, users of financial statements in making their decisions. The information is provided as per both the US GAAP and Indian GAAP. In this context, it may be mentioned that Infosys is the first IT company, which has adopted the US GAAP for their accounting purpose. Since the IT sector is highly dependent on the US economy, it is very essential to adopt US GAAP so as to suffice the information need of the stakeholders in the US.
In Table 3, the value of human resources during the period 2002-03 to 2007-07 has been shown.
In Table 4, the total value-added and the distribution of the value-added have been shown.
Another significant item presented in the annual reports of Infosys is the balance sheet after incorporating value of intangible assets, such as brand value and HR value. Table 5 presents such balance sheets for the last five financial years, i.e., for the period 2002-03 to 2006-07.
Moreover, in the annual reports of the company, items like total income, total employee cost, value added, net profits excluding exceptional items, value of human resources per employee, total income/human resources value (ratio), employee cost/human resources value (%), value added/ human resources value (ratio), and return on human resources value (%), have also been disclosed. The Intangible Assets Score Sheet provides certain vital information like total employees, employees added during the year gross and net, laterals added, staff education index, employees' nationalities, gender classification in percentage, value added per employee-software professionals and total employee, average age of employees, and attrition.
Satyam Computer Services Limited
Satyam, a Hyderabad-based IT consulting and services company, has already proved itself as a globally reputed one. It was established on June 24, 1987. In 2009, it acquired the new brand identity, `Mahindra Satyam'. Satyam's network is spread across over 63 countries. As of March 31, 2008, 50,570 employees were placed in the company's manpower inventory. Satyam serves over 654 global companies, out of which 185 are Fortune Global 500 or Fortune US 500 companies. The company believes that its real strength lies in both tangible and intangible assets. The company has also put adequate emphasis on the valuation of human resources and brand valuation as the information relating to these two important assets definitely helps stakeholders in taking their decisions. The `additional information to investors' shown in the annual reports of Satyam includes balance sheet with tangibles and intangibles, human resource accounting, brand value, economic value-added statement, enterprise value and financial ratios. The company uses the Lev and Schwartz model for measuring its HR value. HR value is the present value of the future earnings up to the retirement age, and the future earnings are discounted by the weighted average cost of capital for the past years. In the financial year 2007, it had been discounted at 15.29%. In the annual report of Satyam, the summary of human resources value is provided. The category-wise number of employees and their percentages, and the values of the respective category as per both the Indian GAAP and US GAAP are presented in the annual reports. The information relating to the associate cost, as a percentage to the HR value, is also provided to reflect the value addition aspect. In the section, `Balance sheet with tangibles and intangibles' the brand value and the human resources value are shown along with the value of other tangible items. The HR value and the brand value constitute more than 80% of the total balance sheet value (FY 2007 - 89.73%; FY 2006 - 87.72%; FY 2005 - 85.49%). In case of the `Financial Ratios' depicted in the annual report, the ratios and information relating to HR are—personnel expenses to software revenues, number of associates, asset base per associate, and export revenues per associate. In the Director's Report, there is a section, `Human Resources', where certain information about the associates, the HR practices, and the initiatives taken by the company regarding the development of the HR have been mentioned. In Table 6, the value of human resources during the period 2003-2007 has been depicted, and shown with the help of bar diagram in Figure 1.
A bar diagram, entitled `Associate Cost vs. Human Resource Value', showing the relationship between the associate cost and the HR value for the last five years, has also been provided under the `Human resource accounting' section. In Figure 2, the associate and the human resources value for the last five years have been shown with the help of a bar diagram. The associate cost refers to the employee cost. In Satyam, employees are referred to as associates.
KPIT Cummins Infosystems Limited
KPIT Cummins Infosystems Limited, headquartered in Pune, India, provides IT and ITES to clients across the world. KPIT Infosystems Limited merged with Cummins Infotech Limited in 2002 to form KPIT Cummins Infosystems Limited. The company has been recognized as one of top ten investor-friendly companies in India (Business Today, August 2007). KPIT Cummins was ranked 42nd on The 2008 Global Outsourcing 100 and Best 20 Companies by Service Offered: by International Association of Outsourcing Professionals (IAOP). The most important reason for adopting HRA practice in KPIT Cummins is that in the software/IT industry human resource is a significant asset utilized in generating revenues and the conventional accounting practice does not take any cognizance of this important asset in the organization. The widely accepted Lev and Schwartz Model has been used to compute the value of human capital. The value of human capital is the present value of the future earnings of the human resources. The future earnings have been discounted at the percentage which is the weighted average cost of capital for the company. The subsidiary employees are not considered in the valuation and only the earnings in INR are factored into the valuation. Table 7 shows the number of employees, along with the category and the value of human capital, during the period March 2003 to March 2007.
The total employee cost as required to be disclosed under Schedule VI to the Companies Act, 1956 has been depicted in Table 8 for the financial years 2002-03 to 2006-07.
Comparison among the selected IT companies with respect to HRA practices is shown in Table 9.
Conclusion
The application of different disclosure models, while presenting HRA information, implies the use of the directors' judgment which entails a certain degree of subjectivity. It definitely hampers the `comparability' character which is one of the essential attributes of financial statements. So, due to non-existence of any generally accepted HRA disclosure framework, its `reliability' is also facing a question mark.
It has been suggested that the following HR items should be provided in the annual reports in order to overcome the shortcomings of the existing practices and also to make financial statements more reliable and comparable:
The major limitations of this study are that it has considered a period of five financial years only and it is based only on the secondary data, i.e., the existing literature on HRA and the annual reports of the selected companies. But this study certainly validates the importance of the HRA system. Considering the great significance of human resources and the utility of the HRA practices, proper initiatives should be taken by the governments, as well as professional bodies, both at the national and international levels, in respect of formation of specific accounting standard and suitable valuation models on the measurement and reporting of value of human resources for minimizing the discrepancies and for providing the most suitable HRA information to the stakeholders. Hence, more research in this field is urgently called for.
ORGANIZATION CULTURE
Developing Proactive Organizations for Future Challenges
-- Payal Johari
Assistant Professor,
Lal Bahadur Shastri Institute of
Management and Technology, Bareilly.
The author can be reached at
payalhrdS@gmail.com
Assistant Professor,
Lal Bahadur Shastri Institute of
Management and Technology, Bareilly.
The author can be reached at
payalhrdS@gmail.com
Today's business complications, in the aftermath of the recent global meltdown, have adversely impacted some of the most reputed companies globally, which need to be addressed by adopting farsighted strategies. Although markets are showing signs of revival from the worst ever corporate shocks, yet there are apprehensions as to whether it would be a smooth ride from now on. The waves of uncertainty that have shook the roots of many companies in the recent past may resurface with wider implications than before. In such challenging times, it is, not only imperative to reassess our organizational capabilities, but also adopt such proactive strategies that can lay a strong foundation for the companies, making them, not only competitive, but also resilient enough to withstand any unforeseen trouble in the future.
Being proactive is more than taking initiative. It is accepting responsibility for our own behavior (past, present and future) and making choices based on principles and values rather than on moods or circumstances. Proactive people are agents of change and choose not to be victims, to be reactive, or to blame others.
- Stephen Covey
The current business environment of complexities is the outcome of liberal policies adopted worldwide, resulting in the entry of innumerable private players in the market. Local companies, in the hope of larger profits, have also expanded their horizons beyond their national boundaries. Further, to sustain competition, they are continuously implementing innovative strategies to woo customers, irrespective of the associated risks.Before the world could even recover from the consequences brought about by recession, a spate of similar devastating events like terrorist attacks, disclosure of fraudulent activities at some of the most reputed companies and most recently, the pandemic Swine Flu had once again knocked down the corporate strategies being built for revival.
These unforeseen events that have been frequently hitting the world indicate towards a more challenging scenario for the corporate world. Thus, companies today not only have to compete with their contenders but simultaneously have to counter the storm of such unforeseen problems that could have a direct impact on the organizational competitiveness.
Organizational Dilemmas Post Recession
Innumerable interpretations keep pouring from all across the business world on the varied consequences that the economic recession has levied on the world markets. These inputs from the corporate indicate towards the learning that needs to be imbibed further in business policies. With a slight upturn in the economies, the world is heaving a sigh of relief, but sitting in the boardrooms the management of various organizations are buzy analyzing the ups and downs to formulate shock-absorbing strategies. The time of reckoning comes to every organization when it needs to relook the strategies for long-term growth. At this time, revolution takes precedence over evolution. Vibrancies need to be brought about so that the effects of change are not only dramatic short-term modifications but also sustained continuous improvements. The job market, which was comparatively less hit in India, has also started showing positive signs. The Finance and the IT sectors have revamped their recruitment strategies. Companies like Wal-Mart, etc., are hiring a good number of people. Moreover, in India, with the recent assertion of the Prime Minister, Dr. Manmohan Singh, 9% growth in the economy has once again generated hope of a better and shining tomorrow.
The current euphoria of the people over recovery from the recessionary phase is understandable, since it was long awaited by everyone. Moreover, the excitement has to be cautiously handled as future developments tend to be more dubious due to a submissive mood of the customers that is further reflected in their inclinations towards more savings.
Although due to its strong financial base, India has been able to counter the shocks brought about by waves of recession, yet there are apprehensions about the climate change. India has started facing vulnerabilities due to unfavorable currency movements, terrorism and corporate scandals. This indicates a possible downturn and calls for proactive steps to be taken by organizations that have global business interests.
Moreover, organizations have to face multiple challenges and threats today—threats to effectiveness, efficiency and profitability. Challenges include: turbulent times, increased competition and changing customers' demands and the constant challenge to maintain congruence among organizational dimensions such as strategy, culture and processes. Such developments need to be continuously under the scrutiny of the management and adequate steps having to be taken to make the organizations competent enough to not only survive amidst these uncertainties but succeed effectively in their endeavors.
The HR Strategies
Following this trend, organizations around the world are gearing up to formulate shock absorbing organizational systems along with globally competitive structure, processes and culture. There seems to be no doubt that business models need reengineering and financial concerns require advisor support, but, above all, these the organizations need to be administered with proactive concepts so as to take on any challenges that the future may unfold. In such a dynamic environment, a common question is that whether there are any strategies, technologies available to help people and organization cope, adapt, survive and even prosper?
A new approach of identifying and managing competencies of the people, through specially-designed talent management programs, along with providing them a flexible work environment, has to be made a part of the planning. For this, companies need to focus on areas such as organizational development that may strengthen the base of the companies to withstand the testing times.
An altogether different approach to strengthen the company may be possible through the following:
Unleashing Organization's Capabilities
While there is a vast reservoir of potential present in every organization, only a few companies consciously endeavor to unleash this potential and take up the challenge to find out the best possible solutions to the problems posed by unforeseen situations. In the current era of dynamism, leaders need to acknowledge this fact and discover the latent capacities within their organization's vicinity. These capacities are basically the capabilities and endurance of the organization on the whole, to perform effectively and successfully too. A strong organization would mean the multi-tasking abilities of the employees and the ability to handle stress. CK Prahlad, the famous Writer, has also emphasized in his famous book, Fortune at the Bottom of the Pyramid, about the importance of lower level workers, since they are the source of real information which can be utilized for developing futuristic strategies. For this, management needs to empower the employees by giving them sufficient opportunities to discuss their ideas and utilizing them for the organizational benefit. In the wake of the recent incidents in the corporate world, some essential capabilities that an organization needs to develop to face future challenges are:
Organizations, like the Bharti AXA Life insurance, have initiated and created a structured system called "Power of Ideas", that deals with collection of ideas from employees and implementing the same. This also indicates that in the post- recession phase, corporates have to rethink and formulate new business models to recover and emerge successfully says Deepak C Jain, Dean, Kellogg School of Management, US.
Pettigrew & Whipp (1991) believe that the focus of organizational learning should be on developing "organizational capability". This means paying attention to the intricate and often unnoticed or hidden learning that takes place and influences what occurs within the organization. For this, organizations need to promote lateral thinking among employees by communicating a coherent and powerful vision.
Exploring latent potential present within organizations is no doubt a need of such times but it is not possible without the support of the effective leadership. Managers play a significant role in identifying the latent valuable resources of their personnel. For this, they require cultivating an environment of trust and belongingness, so that employees can feel important and open up their hidden skills. Today, leadership demands more than transforming employees into organizational assets. The higher echelons of organizations need to reassess their own capabilities, in terms of organizational compatibility, along with their acceptability among employees as a friend, philosopher and guide. No doubt, that the worst hit by recession are the employees not only due to downsizing and salary cuts but also in terms of behavior. Employees have lost faith in their employers and have become suspicious of management polices to be anti-employees in nature. Leaders, therefore, have a big challenge of sustaining the organizations by driving the people with humility and perseverance and slowly generating their confidence to explore their unidentified talents.
Hiring Diverse Workforce
Workplace diversity refers to the variety of differences between people in an organization-encompassing race, gender, ethnic group, age, personality, cognitive style, tenure, organizational function, education, background and more. Diversity not only enhances a company's image but can prove to be of great significance in designing innovative distinctive strategies by honing the pool of competencies that are brought with such a wide-ranging workforce. According to the 2000 census, (US Census Bureau, 2001), there were approximately 36.4 million African-Americans (12.9% of the population), 35.3 million Hispanics (12.5% of the population), and 11.9 million Asian-Americans (4.2% of the population) in America indicating an acceptability of the fact that creating a diverse workforce will be an essential requisite for the growth of the organization.
Today, several MNCs, such as HLL, Procter & Gamble, Cadburys and Sony, have already welcomed the idea of nurturing diversity at the workplace. Although the reason is new, it is not without valid explanations. The more diverse the workforce is the wider are the skills the organization has. Diversity brings with itself a lot of new learning experiences and the scope for innovations, which are required to survive in today's challenging times. These companies are now breaking the old mindsets of treating certain jobs as male bastions. Instead, they are grooming more women to prepare them for future leadership roles. A global research suggests that a diverse organization leads to more innovation and better performance in the workplace.
Businesses today have to be at the forefront in ensuring that their organizations are multicultural and diverse. One of the top IT companies, IBM, employs a workforce that comprises of a large number of female employees along with ethnic minority executives, non-US citizen, transgender and disabled executives. The network of these groups helps in increasing employee awareness and management sensitivity to environmental factors, thereby, ensuring timely action.
An important type of diversity in contemporary business environment is the cultural diversity brought about by a globally diverse workforce. This helps not only in expanding markets but also in dealing with foreign customers in their language and culture. Apart from the benefits of cost saving, a global workforce can bring abundant value to the firm in the form of improved quality, skills, market access and productivity.
The various advantages of nurturing diversity at the workplace can be in terms of increased adaptability to changing business needs, broader service range, variety of viewpoints in decision-making process, and, above all, effective execution of organizational strategies, policies, etc.
Developing Proactive Organizational Cultures
As per Smircich (1983), organizational culture is a fairly stable set of taken for granted assumptions, shared beliefs, meanings and values that bring forth a new way of understanding of organizational life. A culture of any organization is depicted in its values, ethics, belief, climate, culture, etc. In the wake of the increased number of frauds taking place globally in reputed companies like Satyam, Enron, Worldcom, and Siemens, etc., it is necessary for organizations to be safe, principle driven and value focused. It is essential to reinforce positive work culture comprising of ethical standards, cooperation and mutual trust among the employees. According to Edgar Schein, cultural analysis is especially valuable for dealing with aspects of organizations that seem irrational, frustrating, and intractable. He writes, "The bottom line for leaders is that if they do not become conscious of the cultures in which they are embedded, those cultures will manage them." Smart organizations foster and facilitate aligned engagement from its members. Emphasis should be on bringing new perspective to management decision making.
The corporate world today acknowledges the fact that an organization's ability to learn and adapt itself to a rapidly changing business environment is the key to its survival and growth. In fact, "organizational learning" has become the mantra of many companies (Argyris and Schoen, 1996; Senge, 1990) and forms an integral part of an organization culture. It is been defined by Stata (1989) as, "Learning that occurs through shared insights, knowledge, and mental models ... [and] builds on past knowledge and experience."
The smart organization brings new perspectives to management decision making throughout the organization. Smart organizations, say the Mathesons, have internalized nine interlocking principles essential in creating corporate cultures that emphasize on making the right strategic decisions at the right time. They use best practices to support these decisions and sustain their success. These principles—embracing uncertainty, disciplined decision making, and value creation culture—enable companies to make appropriate choices about their future strategies.
Companies, like Hewlett-Packard, 3M, Merck, Proctor & Gamble, DuPont, Monsanto, and AT&T, stress upon the importance of evaluating investigating alternatives, and getting buy-in across functions to ensure that decisions will be feasible from both, the technological and managerial viewpoints. They show how managers can apply these methods more broadly to create a smart organization. The Mathesons clearly demonstrate that changing the decision-making process is an efficient means of reforming culture and improving, not just R&D, but the overall company performance.
One important aspect of being proactive is imbibing a culture of continuous learning. That has so far been known in terms of training and development activities, Management Development Programs (MDPs), etc., but with an increased frequency of environmental changes, the meaning of learning has changed altogether. Today, organizations have to learn to contribute to the development of their resource capability.
"Corporate training in an organization is currently an activity of the HR department, but, such trainings fail to capture ideas and wisdom of the dynamics market," says Naresh Purshotam, Director of Nuveda Learning Pvt. Ltd. Due to this, corporates need a separate setup to learn lessons from the evolving market. A new designation, titled Chief Learning Officer (CLO), is fast making its place in the organizational structures, so as to ensure crafting the learning strategies in alignment with the company's vision. Companies, like Infosys and Wipro, have already made similar changes, says Naresh Purshotam, Director of Nuveda Technologies, a customized end-to-end corporate learning solutions.
The changing scenario around the world has made organizations realize that organizational learning and knowledge management have become a central source of achieving strategic competitive advantage. According to Owen (1990), "Not that profit and product are no longer important but without continuing learning they will no longer be possible."
Conclusion
What needs to be learnt from such unfortunate events is to be proactive, while formulating organizations, building capabilities by identifying simpler but effective areas mainly targeted towards building stronger organizations structures. Why companies, like Merrill Lynch, Satyam could not sustain during tough times and why companies, like Infosys, Tatas and Microsoft, stood boldly facing all odds is because the former could not formulate simpler policies focused on integrating the essential organizational elements, like people, skills, organizational environment, values, etc., while the latter appreciated and internalized them. Application of concepts like emotional intelligence, self-leadership for managing employees, etc., help employees in initiating positive changes instead of responding to the environmental threats later.
CSR
Corporate Social Responsibility : Proximity to Human Resource Management
-- Sarang S Bhola
Assistant Professor,
Karmaveer Bhaurao Patil Institute of
Management Studies and Research, Satara.
The author can be reached at
sarangbhola@gmail.com
Assistant Professor,
Karmaveer Bhaurao Patil Institute of
Management Studies and Research, Satara.
The author can be reached at
sarangbhola@gmail.com
-- Varsha Nadkarni
Lecturer,
MIT School of Management, Pune.
The author can be reached at
varshanadkarni06@gmail.com
Lecturer,
MIT School of Management, Pune.
The author can be reached at
varshanadkarni06@gmail.com
Many corporations have adopted Corporate Social Responsbility (CSR) practices while pursuing their business objectives. The entire approach towards the development of the society is very scientific and well thought out. In all such endeavors, the benefits should trickle down to as many stakeholders as possible. These CSR initiatives can be implemented in the organization with the help of Human Resource Management (HRM) concepts like Quality of Work Life (QWL), so that manifestation of the concept of CSR can be visualized. This article tries to explore the various aspects of the CSR concept, as well as QWL. It attempts to establish the correlation between CSR and QWL.
This article is conceptual, exploratory in nature and seeks to establish a relation between Corporate Social Responsibility (CSR) and Human Resource Management (HRM). The specific focus is on Quality of Work Life (QWL). There are several definitions for these concepts. One finds broad as well as narrow approaches of the definitions on the magnitude of its applicability.
Corporate(s) in India, as anywhere else in the world, are striving to improve the public image of the business. It is not `dirty business' any more. Most companies believe in being and becoming good corporate citizens. They see the value of giving back to the community, which contributed to their success. CSR is no longer mere philanthropy. Though still largely voluntary, it is seen as imperative for sustainable business. There is growing evidence that socially responsible investment by ethical companies brings in higher returns on a long-term basis. CSR and QWL are umbrella concepts, encompassing several themes—philanthropic towards society and charity towards employees. Organizations plough back benefits like owning customers and owning employees, which in a cyclic way fetches rewards to it (Venkatraman S, The Economic Times, 2006: 1).
An organization, as a system, can be changed and developed to achieve the goals in the best possible way. Generally, the goals of an organization, ab initio, are: survival, stability, profitability, growth and then service to society.
Definitions of the Concepts
To define CSR, it is the commitment of business to contribute to sustainable economic development, working with employees and their families, the local community and society at large, to improve their quality of life in ways that are both good for business and good for development (World Bank, October 2003).
One more approach towards defining CSR is, operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations society has of business.
CSR has been influenced by two major concepts. One is Stakeholder Model, wherein it is recognized that good business practice entails engaging all stakeholders in the company's business.
Stakeholders include authorities, customer groups, business partners such as employees, unions, suppliers, distribution service providers, etc., and external influences, such as community members, media, special interest groups, etc.
The second concept is Triple Bottom Line, where companies would no longer be judged by the conventional single, i.e., financial bottom line but also on their performance in social and environmental bottom lines. Triple bottom line concept measures the overall performance of a company based on its combined contribution to economic prosperity, environmental quality and social capital (The Economic Times; March 2006: 1).
QWL is defined as any activity that takes place at every level of an organization, which seeks greater organizational effectiveness through the enhancement of human dignity and growth. It is a process through which the stakeholders in the organization, management, union and employees learn how to work together better to determine for themselves, what action changes and improvements are desirable and workable in order to achieve the twin and simultaneous goals of an improved quality of life at work for all members of the organization and greater effectiveness for both the organization and the unions.
Richard E Walton had given a much broader concept of QWL proposing eight conceptual categories, i.e., adequate and fair compensation, safe and healthy working conditions, immediate opportunities to use and develop capacities, future opportunities for continued growth and security, social integration in the work organization, constitutionalism, balanced role of work in the total life space and social relevance of work (Flippo EB: 1984, 412).
The terms, CSR and QWL, are complementary and have considerable impact on its internal and micro-external business environment. The domain of application is big and as far as the parameters of both the concepts are concerned, one cannot achieve the same in the short run but the organizations can set these parameters and aim for them.
QWL: A Gateway to Implement CSR
Now, the question that arises is how organizations, by adopting narrow views, i.e., starting from small endeavors and by using HRM concepts can go for CSR, which is broader in scope. In a developing nation like India, HRM concepts, especially QWL can be viewed as a subset of CSR. One of the important areas of CSR includes the development of the quality of life of employees, which in turn, envisages the development of the society at large. This process of development can be better achieved through the implementation of QWL. As has been stated, charity begins at home; organizations through QWL can focus on improving the quality of life of people in the organization at their growth stage. Consequently, it can strive towards undertaking social responsibility as improvement in QWL has a positive correlation to improvement in quality of life of people who are the part of society at large.
The approach of these concepts may differ in the light of the economic system. Corporate(s) in developed nations may adopt narrow approaches, since they comply with majority of the issues related to CSR and QWL. These issues are at times difficult to meet in the short run in developing nations.
The organization, at the outset, should implement workplace initiatives, a leading indicator of CSR, inculcated in the internal environment of the organization. As far as workplace initiatives are concerned, besides broad parameters stated in the definition of QWL, a few criteria should be taken care of. These include: occupational stress, organizational health programs, alternative work schedule, participative management and control of work, recognition, congenial worker-supervisor relations, adequacy of resources, seniority and merit in promotions, employment on permanent basis, empowerment, etc. After the implementation of QWL, periodic review can be taken for assessment along with a step towards the proper implementation of CSR. The focus of organizations in developing nations as far as CSR is concerned should be on basic `Ps', i.e., Population, Poverty, Primary Health, Primary Education, Pollution Control, Pure Water, etc. (Figure).
CSR Argument
Corporate generally refers to a large company. Does this mean that the social responsibility only lies with corporates and medium or small-scale units are not required to undertake this responsibility? This statement may be debated and discussed. The dictionary meaning of the word corporate is formal of or shared by or whole group and not just of a single member.
It means the group of units in a defined geographic unit may also execute their responsibility towards society by adopting narrow approach.
Conclusion
To imbibe the concept of CSR in the organization, the organization should adopt a focused approach and aim at attaining the various CSR initiatives with the help of different HRM concepts. Specific thrust should be on QWL programs for the manifestation of CSR as it will be effective and efficient as well. The smallest unit of organization at the micro level is the individual employee. Welfare of the employee and his family will serve the purpose of welfare of society also. In a way, this effort would add new dimensions to the CSR.
Annexure 1
Case: A Conglomerate Dawns – Bapusaheb Jadhav1 |
Parashuram Shankarao Jadhav, affectionately known as Bapu Jadhav, was born on April 10, 1937 at Kolhapur, Maharashtra in a poor mason’s family. Owing to the untimely demise of his father, Bapu was an early dropout from school in the fourth standard. He had no alternative but to look for a job though he was just 12-years-old. His first job was of a servant, which he continued for six long years, toiling hard on a paltry sum of Rs. 6. He could recognize the need of developing skills to get better opportunities and managed to learn machining work. Honesty and hard work were the attributes that made him rise in the hierarchy. He became a trainee worker earning a salary of Rs. 40 per month. He shifted a few jobs for good payments. Bapu worked in different positions and established relations with many people in industry due to his personal traits. Once, he was called by a renowned industrialist to manufacture cylinder heads, which was an arduous task. At that time, only one unit was manufacturing cylinder heads. Bapu proved his expertise by producing a quality product. The advice from this industrialist was the turning point in his life. It resulted into the origin of a conglomerate of Saroj Industries. The company was started with the sum of Rs. 67,007 in 1964. After that, Bapu never looked back. He excelled in every sphere he touched, technology, human relations and discharging social responsibilities. He was always ahead of schedule, whether it was delivery commitments of cylinder heads manufactured or payment of advance income tax.
His appetite for constant growth and improvement made him vigilant. He got acquainted with new techniques by visiting technical exhibitions; domestic and abroad and through various published material.
Milestones in his life can be narrated as follows:
1975 – Introduced shell molding technology.
1977 – Shifted unit to MIDC Area.
1979 – Visit to GIF A Germany.
1984 – Installed channel type furnace.
1986 – Established induction furnace.
1995 – Saroj Castings Pvt. Ltd. established.
2001 – Sonai Engineering Pvt. Ltd (Machine Shop) set up.
At present, the turnover of the group companies has crossed the limit of Rs. 50 cr.
Bapu has very clear policies based on honesty and quality products. Even recession could not have any effect of the spread of business, as the unit had never given customers an opportunity to complain.
To their credit, Saroj Iron Industries have bagged export orders from companies in the US and UK. Hisentrepreneurship has been strengthened by interactions with staff and workers to resolve various day-to-day problems in the foundry.
Bapu always rejoices, “We are not big on manpower but the tally of 300 employees of our company are one family. As it is apparent for a family; not to state sharing is common practice whether it is joys or food.” One more characteristic of an organization is that there is no positional hierarchy in terms of senior or junior. Politeness and generous approach has enhanced effectiveness of his leadership.
He has been enormously successful in tying the personal bonds between the workers and their families. As a result, they work like a joint family. He is always there for workers in their times of need and despair. The help from him comes spontaneously without quid pro quo. This helping attitude of the owner has boosted team spirit and motivated employees to a large extent. Consequently, all the employees work sincerely. Till date, Saroj Iron retains a few employees who have witnessed its growth right from its inception. A few employees accompanied Bapu in his visits to Germany for GIFA exhibition. He has traveled extensively throughout the world spanning almost all the countries owing to his zest for upgrading foundry and machining setup with latest technology. One striking factor in the success trail of the company is that, they never had to advertize for personnel, preference is always given to family members of workers. Fresh employees are preferred who are then trained in the unit. Saroj Group has never faced any kind of labor problem. Meticulous planning has been done for an employee’s future. Even if at present Saroj Group decides to close down business, provisions have been made to pay the same salary to all its employees till they superannuate.
Bapu has put win-win philosophy in practice. There are many feathers in his cap and to demonstrate a few, truck-transporting business of Cylinder Heads to Rajkot was given away to his driver. A pattern maker division of an organization with independent shed and all the equipment was given away to an interested employee. Following suit, one of his fellow workers is now operating a shot blasting equipment in MIDC. This is the way he has helped many of his employees, to grow, prosper and to scale greater heights. He has assumed social commitment and extends help for genuine causes. He has helped many foundry men by extending technical assistance, and by sharing his experience. His role does not stop here, he assists them financially too. A persona par excellence, Bapu gives the credit of his success to his employees, mother and friends who have helped him in this onerous endeavor.
With his long trail of hard work, endeavor and zest to do best, Bapusaheb has been recognized by society at large. He is the recipient of prestigious honors for his innovation, quality, honesty and social work. To name a few, FIE Foundation Award, Felicitation Award from Institute of Indian Foundry Men, Karveer Bhushan from Kolhapur Municipal Corporation and Rashtriya Kar Samman and Honest Tax Payer from the Central Government of India.
Despite the laurels he has won and the position he has attained, he makes it a point to arrive at the factory at 10 am, starts his day with a pooja of the deities and the equipment. Then he visits factory plants for inspecting work and has interaction with employees. His sons, Deepak, Ajit and Bharat, are all groomed in his mold and now they are helping him in the expansion of the business.
1 The case has been prepared on the basis of published documents collected from the authority of M/s. Saroj Iron Industries, MIDC, Shiroli, Kolhapur, Maharashtra, India.
|
Annexure 2
Case: Corporate Social Responsibility and Work Life – A Case Example from ABN AMRO Bank2 |
We at ABN AMRO Bank firmly believe in a holistic approach in helping our employee manage their work life. We believe that this is a part of our CSR. An employee with a balanced work life is a happy employee, who is in turn, a more engaged and productive employee. Given below is the whole suite of work life programs we have for our employees:
Pro-family Programs
As a Family Life Ambassador, we encourage our employees to strike a balance between work and family. We organize talks on shared parenting, improving family harmony through Feng Shui and handling stress during examinations. We also endorsed the eat with family day every year. One of the highlights is bring your child to work. Our annual Family Day also allows our employees to take time off from work and spend quality time with their family and colleagues. In addition, we provide the following pro-family benefits:
To encourage and celebrate procreation; ABN AMRO Bank’s, New Born Wellness Benefit provides a one-time sum of S$700 per delivery. In addition, employees will be entitled to $80 worth of gift vouchers, a teddy bear and a romper.
To enable employees to cope with their family commitments and work, employees can opt for flexi work hours.
We also offer our employees peace of mind while they work with us. Through generous insurance protection programs like 24-hours worldwide, life, personal accident and business travel insurance coverage, we offer financial assistance to dependants of our staff in unfortunate events.
Our comprehensive suite of staff loans, like housing, vehicle, personal and renovation loans at preferential rates is another way the bank provides financial assistance to its staff.
The purpose of this program is to encourage employees to adopt a balanced work life. Employees received S$ 1,000 (gross) cash for the year 2005 to spend on any other work life programs they wish for but is not organized at the company level, e.g., to attend a cooking/baking course, spa treatments, family vacation, etc.
Health is Wealth Programs
We run many intervention activities to help our employees stay healthy. Some of which are:
ABN AMRO arranges daily exercise classes ranging from martial arts, mind/body, dance and cardio classes for employees to exercise. These classes are held from Monday to Thursday after work for an hour.
We invite speakers from various specialized fields to share their knowledge on relevant health-related issues. Some examples are: stress management, coronary heart disease and anti-smoking exhibitions/smoking cessation programs.
To encourage a healthy lifestyle, we also have six types of sports, where staff can participate over the weekends. These are dragon-boating, bowling, pool, soccer, badminton and athletics.
As part of the total health care program, all employees are entitled to the executive health screening.
A maximum of $300 are reimbursable per staff and family for each calendar year.
A maximum of $300 is reimbursable per staff and family in each calendar year.
Medical Programs
Employees and their spouses and children are covered under our comprehensive outpatient and group hospital and surgical insurance.
The bank grants medical leave up to an extensive period of 30 days per annum or 60 days per annum if a hospital stay is involved.
If medical and hospitaliszation leaves have been exhausted, prolonged illness care which provides further extended absence of 12 months at full (first 6 months) and half pay (subsequent 6 months) will be provided.
In rewarding employees who manage their outpatient limit well, 20% of the unused limit may be carried forward to the following year to be used to purchase health-related items.
Social-recreational Activities
We believe that one must work hard and play hard too. The bank has in place a Social Recreation Club (SRC) that organizes all sorts of social and recreational activities for staff, e.g., movie screening, retreat, karaoke competition, getaways and the annual dinner and dance.
Training and Development
The bank firmly believes in developing and upgrading the skills of our employees through learning opportunities. Towards this end, staff is nominated to attend all sorts of training programs internally, externally, locally and overseas at both the personal, professional and academic level. In addition, we grant five days examination leave to enable staff to upgrade themselves.
Community Involvement
We also encourage and help our employees in their passion and pursuits to contribute to society. Under the Bank’s Sustainable Development programs, we partner our employees in their spirit of volunteerism and helping society. As a token of appreciation, the bank gives to its employees one day’s paid volunteer leave per year.
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LEADERSHIP
Narcissist Leaders : New Organizational Ogres?
-- NR Aravamudhan
Assistant Professor,
Department of Management studies,
Mahendra Institute of Technology,
MallaSamudram,
Tamilnadu.
The author can be reached at
mukundsalem@yahoo.co.in
Assistant Professor,
Department of Management studies,
Mahendra Institute of Technology,
MallaSamudram,
Tamilnadu.
The author can be reached at
mukundsalem@yahoo.co.in
Narcissist leaders abound in a corporate boardroom. Narcissist leaders thrive on grandeur and flights of fantasy. They believe themselves to be infallible, omniscient, and omnipotent. This article tries to demystify the persona that makes up the narcissist leader. The article also looks at a few underlying strengths of the narcissistic bosses. Managing narcissistic bosses is an art per se. This article also throws light on the daunting task of managing the narcissistic bosses.
You can argue that 20% of the general population is relatively healthy; 20% is relatively sick; and the other 60%, who all suffer from `neurotic misery', somewhere in the middle. That applies to most people I meet.
- Manfred Kets de Vries
Reflections upon business leaders. You have to hand it to them! The CEOs of today have a patina of audacity, pompousness, and are gallant. They are suave, stylish, urbane, dashing, vain-glorious and glib talkers to fault. They have a surrealistic larger-than-life-persona. Contrast this with the CEOs of yore. The yesteryear managers stayed miles away from the glare of the pestering media. They were staid, sober and less pompous. They mouthed politically correct lines, if at all they cared to open one. But today's leaders as a tribe are made of radically different mold. Iconic CEOs such as Andy Grove, Bill Gates, Steve Jobs, and Jack Welch, are seen more than the Page 3 brigade and heard more than the political bosses. These CEOs have their own battery of publicist and Public Retaions Officers working overtime. They have the chutzpah and gumption to write a book, give interesting sound bytes to the news-hungry media and aggressively push their personal wisdom. These new poster boys have become the toast of high-profile magazines like BusinessWeek, Time and the like. Admittedly, these high-profile corporate czars have come to redefine the broader contours of social and personal discourses. These leaders are all over the place, advising thegovernment to give impetus to the priority sector, exhorting school kids what they should be learning, etc. We look upon them as opinion makers. Do their opinions count? We cotton on to everything they effortlessly pout - be it futuristic killer, applications or a book they picked up for reading in the airport, or their choice of dream destination - we lap it up with glee. The reasons as to why leaders have acquired this larger-than-life persona are many. At one level, businesses have come to appropriate larger role in our public and private space than ever before and leaders find themselves seeped in fame and glory. At another level, business landscape is on the cusp of profound transmogrification and requires dynamic, charismatic leaders to navigate through the sands of shifting times. Michael Maccoby, in his path-breaking article, "Narcissistic Leaders: The Incredible Pros, the Inevitable Cons" cites another reason for this growing clout of new-age managers. According to him, the imposing and a larger-than-life aura of the leaders of the day comes pretty closest to the personality type that Sigmund Freud famously called as Narcissistic. Freud, according to Maccoby describes narcissist as people who make an effort to impress others with their personalities. He further writes that such narcissist people tend to provide support for others, don the mantle of leaders and may lend impetus to demolishing well-entrenched notions and developing new thinking and ways of existence. History is replete with instances of narcissists having assumed center stage, led people from the front and deftly architectured the political and social consciousness. History stands testimony to the fact that societal discourses at some point or other were shaped, sculpted and redefined by stalwarts such as Napoleon Bonaparte, Mahatma Gandhi, and Roosevelt. Businesses, by virtue of being a vehicle of greater social change had its fair share of narcissistic leaders like, Andrew Carnegie, Edison, and Ford who capitalized on emerging technologies and effected a major turnaround in American industries. The situation that existed five decades ago holds true today also.
Sigmund Freud, Maccoby points out in his article, recognized the underbelly of the narcissistic personality. It is not uncommon to see people looking upon a narcissist in a negative light. A deputy of a Larry Ellison, feted CEO of Oracle, once purportedly quipped tongue-in-cheek, "One Helluva difference between God and Larry Ellison is that God doesn't think he is Larry". One may roll in aisles with laughter, but the drift of this rather cheeky line is not lost on any one. Corporate corridors may whisper in hushed tones about leaders who talk themselves in glorious terms until such time they drop dead? Corporate boardrooms are awash with CEOs who sing paeans of their own escapades and take a sardonic pleasure out of it. If you see leaders at the workplace uttering words like "I, Me and just Me, Myself", you have a boss swathed in a narcissist garb. Sigmund Freud termed `Narcissist' after a Greek mythological figure Narcissus, who died a sorry death owing to his overwhelming obsessions with his reflections. Narcissus fell head over heels in love with his own reflection in a pool of water which grew into a mammoth obsession leading to his sad end. The term `narcissism' bristles with a collection of traits that verge on self-admiration, self-aggrandizement, pompousness, vain-gloriousness, egotism and unbridled arrogance. One may come across such narcissistic people in everyday life. We may take their behavior in our stride if they happen to be our kith and kins. If narcissists cohabit the workplace, our threshold limit of adjustment becomes tenuous and weak. A Narcissist could be your colleague, underling or the manager. More often than not, one may always be saddled with more narcissist bosses at the helm. To buttress the point, it is pertinent to look at the findings of study commissioned by Wayne Hochwarter, Professor in the Florida State University College of Business. The survey covering a staggered 1,200 employees sought to find the opinion of narcissistic predilections of managers. The findings point to the fact that 20% to 30% of the employees had managers with narcissistic streak which has had its fallout in the workplace. Thirty-one percent of the employees opined that their bosses tend to grossly exaggerate their achievements in their bid to do a bit of grandstanding. A good deal of 27% complained of their bosses trying to boast about themselves in their bid to win admiration and adulation. Twenty-five percent of the employees opined that the bosses tend to have an exaggerated notion of self and 24% of the respondents rated their bosses to be way too self-centric. The factoids are too revealing and instructive.
Corporate Narcissism - A Fertile Ground of Toxic Environment
This may sound a hyperbole but what happens if patrimonial bureaucracy and totalitarian organizations are wedded together. A pernicious by-product of this (un)holy alliance is narcissism. Perennial bureaucracy gets firmly well-entrenched in an organization when employees develop an unswerving loyalty to their bosses to such an extreme where they seek permission from their bosses for almost every little thing they do. Narcissist leaders nurture such behavior in their subordinates. Sometimes, colleagues also play into their hands. Subordinates and colleagues morph into narcissist leader's co-dependant. This may ego-massage the leader, but will prove to be costly for the organization as a whole. As patrimonial bureaucracy take firmer roots into the organization, organization will mutate into a totalitarian one. A corporate narcissism will rear its ugly head when a narcissist dons the mantle of CEO and begins to pack his/her team with co-dependents who will fuel to his/her narcissistic behavior. Arguably, the performance of the organization deteriorates significantly. Narcissistic leader may swear loyalty to the company they are, working for but they are obsessed about and loyal to their personal agenda. The Organizations real interests take a battering as most decisions taken are inexplicably linked to serving the personal cause of the whimsical narcissist. Narcissist leaders can't do without co-dependents. If the typical narcisstic traits are to be aroused, co-dependents are too willing to provide the situational clue. Narcissist and co-dependents are inexorably attracted to each other as narcissist love to wield power and co-dependents are desperate for stability and security. Co-dependents, in many instances are prepared to go that extra mile to give the narcissist the clues. In doing so, co-dependents may be constrained to throw all ethical and good practices to the wind. Narcissist leaders are absolutely confident of their intellectual and physical supremacy. Narcissists perceived themselves to be a super-intelligent surrounded by a bunch of small-minded, lily-livered, visionless and petty people. Cut to the early 2000s when the dot com frenzy caught the fancy of the world. The new rookies of dot com companies made a splash with their ventures. All these new-age czars believed they had a vision and cocked a snook at essentials—robust business model, bottom line, warnings of conservative economists, cautious media and insightful analysis. The bubble burst. And how? Narcissist techies brought the doom on themselves. The workplace, led by narcissists, will always slide dangerously into a veritable toxic environment. Narcissistic leaders have a strong desire to exercise control and power over others. In exercising such a brute control, they may resort to surreptitious methods and machinations. If the narcissist boss feels piqued or offended in any conceivable way at the hands of their co-dependents or threatened by the competencies of the managers, they may display their infamous narcissistic rage and aggression. Narcissistic leaders are such an amazing "switch-on-and-switch-off" trapezium artiste as they take little time to switch from, "I am a Mr. Good guy" to "I am a Mr. Bad guy". The shenanigans of the narcissistic boss can plunge the organization into a duplicitous hell. The dubious methods the narcissist employ to exercise control can be devastating for the employees - emotionally, psychologically and mentally. Narcissistic boss may resort to verbal abuses, deliberate smearing campaign, sexual harassment, hoarding information, employment of silent treatment for settling scores with those who dare to cut him or her down to size. A typical narcissist leader is aware of his/her pathetic addiction towards others. They need plenty of adulation, admiration, ovation, cheers big hand, acclamation and what have you. Narcissist leader derives a sardonic pleasure running down, denigrating, humiliating and insulting others. Narcissist leader may spew venom at others and have an overwhelming urge to point out others flaws and frailties. Doctored accounts, corporate scandals, financial improprieties, subverting the rule book, brushing, pressing problems under the carpet, making tall claims, making incredible promises (narcissist call it as a "vision stuff"), are so typical of a narcissist leader . When social mores, norms, and customs blatantly fuel such behavioral traits instead of blunting it, the narcissist behavioral patterns get hardwired, deeply entrenched and calcified. A narcissist leader is born.
Demystifying the Persona of a Narcissistic Leader
Little over forty years ago, a Polish-American-Jewish writer authored a book called Being There. The book chronicles the event that led to pitchforking of an ordinary gardener into the president of USA. His simple, frills-free, banal and hackneyed assertions came to be considered as profound and farsighted insight into political and social matters. These "Being there" symptoms are now finding greater resonance with corporations also. Businesses, battered and ravaged by economic downturns, murky scandals, mega frauds are increasingly gravitating towards "strong men" who are polymaths, have the poise and phlegm, and can usher in a fresh dose of change. But these strong men have a wafer thin resume with very little or no accomplishments to their credit before they inch their way up. They would have shot to prominence from near obscurity. They are perceived as savior as they don't carry the baggage of the past or are less encumbered by ideologies. Their only calling is the beautiful future they want to create. These people have no known history, but they may have the propulsive urge to create one. This obvious lack of personal history propels the person to weave a web of grandiose dream and exhilarating future. He/she may become a plain empty screen on which legions of others project their aspirations, dreams, desires, hopes, attributes, et al. Needless to say, such leaders thrive on the allure and dazzle of neatly-choreographed illusions they manage to work. His supremacy is all a surface bluster sans substance. It is all cloaked in glass and mirror. Admittedly, they may create their own history. Welcome to the world of narcissistic leader. Recognizing the traits of narcissistic leader is quite easy. Though psychologists differ on the issue of recognition of narcissist leaders, a few traits of narcissist can be fleshed out. Narcissistic leaders are way too cold, foxy, understated, refined, selfish, inexorably manipulative, cunning, vain and delirious. They have skills that can match any thespian. They are cruelly ruthless, too charged and singularly devoid of an iota of empathetic quality.
Narcissist Leaders Thrive on a Sense of Grandeur
Narcissists have an overwhelming desire to maintain a façade of a false self. This false self is way too imaginary, insanely grandiose and deliriously concocted. Psychologists consider this personality make-up as a prototypic narcissistic personality disorder. Narcissists project a false self to all and sundry with an overriding hope of getting their narcissistic supply. For the uninitiated, narcissistic supply refers to admiration, adulation or even notoriety and infamy they manage to generate from their underlings. Narcissist likes to hog the limelight and feel miserable, if they do not get the adulation and recognition. The false self is seeped in brilliance, grandiose, obsessive perfection, invincibility, and indispensability, sense of importance, power and absolute immunity. Narcissistic leaders are convinced of their spectacular personal destiny that they believe is theirs. Narcissistic leaders have a strong penchant for setting goals that are far removed from reality. Such leaders have a flight of fancy and are deliriously obsessed with being unique and achieving spectacular things. The truth of the matter is that their projected false self is far removed from their actual self resulting in grandiosity gap. Their success, genius, achievements, bulging financial clout, prestige in the society will be hopelessly not in commensurate with the false self they project to the world. To close the yawning grandiosity gap, narcissist leaders may resort to dubious means such as committing fraud or financial impropriety.
Narcissist Leaders Brag Pompously and Incessantly
The narcissistic leaders have a strong penchant for bragging about their escapades, prowess, accomplishments, successes, genius, wealth and conquests. Their talks will be laced with "I","Me", "and myself". They dub themselves as extraordinarily brilliant, creative genius, too brainy, obscenely rich, or even coy and humble but always in an overtly exaggerated manner. Their biography reads like an esoteric stuff. Their accomplishments will be hopelessly out of tune with their age, experience, fame or even age. The infamous narcissist fibs and lies are obviously evident and palpable. The narcissist derives pleasure in robbing others of their glory and achievements. Narcissist is adept at name-dropping. He/she may do the name-dropping in a non-chalant manner or with a view to generate awe or admiration. For instance, a narcissist leader would prefer to chortle saying, "By golly! I had a dinner with the President, Chakraborthy" instead of saying I met the President, Chakraborthy. This casual and non-chalant remark will have an instant effect of distancing the recipient of such information. In this manner, the narcissist leader manager to induce a feeling of inferiority in the minds of the recipient and keeps his aura of grandiosity intact.
Narcissist Leader Singularly Lacks Empathy
A vibrant leadership calls for a greater sense of empathy. Narcissistic leader expects others to be empathetic without being one in return. Devoid of empathy, narcissistic leaders fare badly in interpersonal relations. Companies may conduct 360-degree appraisal to test their leadership styles or may even host a workshop on listening skills with the avoured purpose of sharpening their skills (or lack of it), but narcissistic leaders are simply not going to change. They lull themselves into a false belief that as long as they deliver and be successful, they don't need training. They look down upon training as a "soft stuff" meant for others and not just them. Though narcissist leaders are surrounded with a pack of side kicks, intuitively they knew who are with them and who are not. Narcissist leaders knows how to wrap people around their sturdy fingers, exploit blatantly and dump them pathetically once their utility is over. No doubt, narcissist leaders have an aura of regality about them, but they are easily reviled at many quarters.
Disdain for Mentoring
Given their strong independent traits and, "Ugh! I care damn about others. I am my own God" kind of attitude, it is unfathomable that narcissists would mentor others and be mentored. Narcissist leaders baulk at the idea of mentoring. Narcissist leaders scarcely mentor others and even if they mentor, they expect their protégées to be watered-down version of their own personality.
Narcissists have Supercilious Body Language
Narcissist body language oozes superciliousness and imperiousness. The physical posture, gait and swagger will betray an air of supremacy, "I-know-it-all" attitude, certain mystery, imperviousness and arrogance. Narcissist leaders can maintain direct eye contact, but avoid physical proximity. They will zealously protect their personal space. Narcissists love social interactions and indulge in badinage. They will mix around with people, fake munificence and beneficence. In the same breath, they want to be a mute spectator or the loner.
Narcissists are Too Self-focused in their Interpersonal Exchanges
Never trust a narcissist leader who coos, "how are you, my dear?" He/she may work from their memory. They couldn't really care about you any less.
Narcissists have Tough Time Holding on to Satisfying Relationships
Narcissist leaders will appear courteous and graceful only in the presence of their probable source of narcissistic supply. They will have tough time holding on to this cursory politeness for long. Before one can say "holy cow", the narcissist will return to his/her vituperative ways. He/she may breathe fire and brimstone, curse, denigrate, stay numbingly aloof, mouth profanities or slip into sulky moods.
Narcissists Tom-Tom About their Intellectual Prowess
Narcissist leaders love to brag about their cerebral prowess or intellectual superiority. Narcissist leaders perceive themselves to be knowledge reincarnate, gifted genius, and persons with extraordinary personal destiny. Narcissist leaders will never own up to their infractions, blunders, mistakes, lies, ignorance and half-baked knowledge. They would not admit to their personal or professional failures. They don't realize that it is possible for any one to break through the veil and veneer of their self-professed superiority, prowess, accomplishments, power, genius and affluence.
Narcissists Feels Shame More than Guilt
Narcissist leader's behavior may seem to be primed on an amazing level of strength. But in reality, it is anything but true. The behavior that rests on a rather tenuous foundation is due to the fear of being caught, exposed or failure staring in the face. Consequently, the leader may exert to overcompensate just to prove his/her utility and relevance. What spurs them on to overcompensate and fake the feelings of being caught or feign "Oh! I-don't - suffer - fools" attitude? In nutshell, it is all about their outrageous shame. Shame is a terrible personal flaw per se. A narcissistic leaders shame is all about their obscene attempt to paper over their `famous' traits such as icy-cold feeling, deceit, falsehood, quirks and cast-in-stone emotions. Narcissist will never let people get closer to them, let alone letting them to know them. The fear of being stripped of their ignorance rattles them very often. Offer the narcissist leader even a trace of mild criticism or make your disillusionment known to them, all hell will break loose and you will have to face the infamous narcissist rage. One cold stare or sparse words from a narcissist leader is enough to strip anybody of their pride and self-esteem. There is something about this feeling called shame - it is unendurable. Many people have assiduously developed a habit not to recognize the shame. Narcissist will protect themselves by becoming insensitive, uncaring, insidious, sly and tortuous. The leader will have to pay a heavy price for becoming insular. He/ she will always be a lone wolf.
Narcissist Leaders Think Themselves as Genius Extraordinaire
A narcissist leader thinks that he or she is an omniscient person. Seldom do narcissist leaders own up to their faults or blissful ignorance. The narcissist leaders are mighty convinced that they are a treasure troves of information. Narcissist leaders believe in turning the mirror inwards and doing a bit of soul-searching as a more effective way of gaining knowledge and despise amassing knowledge through a systematic course work based on conventional curriculum. Suffused with a grandiose feeling, they truly believe that their actions are destined to work wonders for everybody and everyone. Narcissist haughtily look down upon advice or suggestions offered by peers or subordinates. They think people just don't have the brains to suggest or advice them.
Narcissist Leaders Lack Psychological Awareness
Narcissist singularly lack self-awareness. Narcissist leaders remain cut-off from their real self. Suspended from the grim realities of life, coupled with their lack of empathy and adaptive flexibility, will only push them precipitously into a state of fantasy. For a typical narcissist leader, life is just so unreal. A narcissist will never take ownership of his/her actions and cannot for life figure out why he/she should take the rap when things just go bit out of hand. When they are punished, they will think up a conspiracy theory and feel that the entire world is arraigned against them. Narcissists are so convinced of their stupendous personal destiny that they will not be able to take failure and punishment in their stride. A narcissist leader reacts to punishment with a heady mixture of emotions. The narcissist is hurt, disappointed, resentful, bitter, and furious all in the same breath. He/she feels wronged. Narcissists are pretty convinced that other people are envious of their success stories. The truth is a narcissist cannot tolerate the success of others easily. They can wreck havoc against peers, colleagues or underlings who they perceive to be inconvenient for them.
On the Flip Side, Narcissist Leaders Can be Extremely Useful to Organizations
Freud had studied a multitude of personality types, which he winnowed down to three for the purpose of understanding them better. The major three personalities include, among other things, erotic, obsessive and narcissistic. Frankly speaking, every individual is a kitsch of all three major personalities. Of the three, narcissistic streak is firmly hardwired into everyone's DNA. Shorn of narcissistic streak, an individual cannot go on or assert forcefully. Freud's interpretation of all these personality types differed over the period of time. An erotic personality cared for warmth, love, care and affection. Such personalities loved others and craved for love from others. Such people are hopelessly attached to people whom they fear will ditch or dump them conveniently. Teacher, nurses and social workers can be very well be classified as erotic personalities. Erotic people as managers end up becoming very caring and understanding individuals. They steer clear of troubles and make others dependant on them. Freud dubs them as outer-directed people. Obsessives, in a sharp contrast are inner-directed, self-dependant, diligent and great organizers. They can morph into excellent administrators. They are excellent listeners, have better problem-solving skills and constantly scout around for gainful opportunities. Obsessives are underpinned by strong conscience and they work towards continuous improvement at the workplace. Obsessives start off with a business venture that is in tune with their inherent value system. Best of the obsessives are good communicators, good at cost-cutting measures and effectively work within the budget. Their major undoing is that they lack "big picture" thinking, chutzpah, aura and pluck to take the business to dizzying heights of success. Narcissists have a fiercely strong independent streak and are implacable. They are out-of-the-box innovators. They have a maniac-like drive to achieve fame, fortune and glory. Productive narcissists are top-cheese in their chosen endeavor or field. They question old shibboleths or demolish established assumptions. Narcissists want unabashed adulation and admiration unlike erotics. Narcissist boss is not weighed down by maudlin emotions and sentiments like obsessives are. Hence, they have a "Go-For-Gold" attitude and relentlessly pursue their goals. Any attempts to understand the personality in perspective can be enlightening. Erotic types don't have it in them to be good managers. They constantly seek approval from others. Obsessives have what it takes to be good administrators. But they are too cautious and hypercritical, which are the major impediments. Narcissists have it in them to metamorphose into great leaders. They have and can weave an exhilarating vision. They have charisma to attract followers by hordes.
Narcissists Can Create a Stimulating and Breath-taking Vision
Productive narcissists are dab hands at envisioning. They have uncanny ability for "big picture" thinking. They are not hard-balled analyzers, number crunchers or crystal gazers and they don't make any effort to extrapolate to gain deep insights into the future. Productive narcissists create and re-write their own future. Narcissist leaders have a strong penchant for looking at things that never existed and ask, "What the heck? Why not?" It may be quite instructive to look at the example of Bob Allen, productive obsessive and Mike Armstrong, productive narcissist to understand the difference that sets productive obsessives from productive narcissists. In the year 1997, Bob Allen made a concerted effort to revamp AT&T, so that end-to-end service of bell system could be firmly put back on tracks once again. In doing so, Bob Allen resold local services from Regional Bell operating companies. Though the move was intended to benefit the stakeholders, it did not exactly set the river Thames on fire. In marked contrast, Mike devised a strategy that combined voice, telecommunications and Internet on the back of high-speed broadband connections. Mike Armstrong knew he was hedging his bets quite high and any wrong move could backfire. His strategy paid off. The incident is an object lesson in understanding the different approaches adopted by productive narcissists and obsessives. Mike Armstrong took on huge risks for which obsessives hardly have appetites. He was powered and energized by the vision he had for AT&T. The business landscape is on the verge of profound changes and opportunities abound for productive narcissists. A productive narcissist today is hell bent upon demolishing established notions, turning a stereotype on its head and re-writing the rules of the game. A case in point is Robert B Shapario, the Head of Monsanto. In his interview to New York Times (dated August 5, 1999), he made a statement which many think as rather audacious when he propounded his vision of genetically modified crops as "the best thing that can ever happen to agriculture". No doubt, this may seem a downright preposterous claim considering the fact that many questions about safety and acceptability abound and are still to be answered. The Bt crops continue to be a subject of raging debate in industry as well as academia. In the same breath, it should be noted that a staid industry like agriculture needs a fresh dose of dynamism and change. If Robert B Shapario gambit pays off, the industry will not remain the same anymore. Leaders like Robert B Shapario want to create and leave behind their own glorious legacy.
Productive Narcissists Attract Followers by Droves
Narcissist leaders have what it takes to attract followers. They have a natural talent to attract followers through their persuasive and oratory skills. Narcissist leaders firmly believe that words and powerful speeches can inspire and influence people. Their strong, spell-binding speeches can transform them into charismatic personalities. Anyone who has seen or interacted with narcissist leaders from close quarters can vouchsafe for aura, mystique and their ability to cast a spell on others. They can also incite and bestir interest and enthusiasm among the audience.
Avoid the Booby Traps: Dealing with Narcissist Leaders
Managing narcissists can be equally tricky and challenging. You cannot look in the eye of narcissist leader and say "Oh, my gosh! Stop messing things up". Seldom do narcissist leaders seriously turn the mirror inwards and do a bit of real introspection. Psychoanalysts cavil at the thought of getting closer to them in the work environment to dissect their personality. Treatize on leadership may wax lyrical on obsessives who create well-knit groups and are responsive to colleagues and subordinates. Literature compendiums that focus on narcissist leaders are few and far between and is of peripheral interests to the leaders themselves. Such literature is in no way going to help colleagues and subordinates size up their narcissist bosses. The fact that sparse literature about managing narcissists is available in the public domain does not mean that they are impossible to deal with. Maccoby, in his perspicacity as a career counselor spanning many decades, suggests three ways to deal with narcissists (more so, the productive one).
Narcissists Should Find An Acolyte
Narcissists tend to form close ties with persons who may be their trusted acolytes. He/she may act as an emotional anchor and a trusted confidante. But the confidante may still find it quite tough managing his narcissistic boss. The problem is that narcissistic leaders have their world view and perceptivity. The sidekick will have to make an effort to know what their narcissistic boss is up to and what he/she sees to achieve. For his part, the narcissistic boss should see the acolyte as a shadow of his/her own persona. The acolyte will have to be perceptible to the ways of narcissistic leaders to keep the relationship on an even keel. Strange it may seem, but many bosses tend to lean on their spouses as emotional crutches. Excessive reliance on spouses could prove to be a major impediment and more perilous as she/he may further cut them off by feeding their king-sized ego and buttressing their feeling of grandeur. It would be kosher, if a narcissistic boss is able find a colleague as his acolyte. Good acolytes have it in them to point out the essential needs and missing links of narcissistic leaders invigorating vision and help their bosses keep their heads firmly in place. In many instances, these acolytes are invariably obsessive types. For instance, Bill Gates was able to look at the future with confidence as his Chief Operating Officer (COO), Steve Ballmer, a tough-to-crack obsessive, keeps the show on. Oracle CEO, Larry Ellison has the luxury of taking time off from the stormy meetings and does scuba diving, laze around in the yacht and reflect on the future without carrying his blackberry on his person or getting connected to personal computers. Larry knows that his COO, Ray lane (he is a hard-core obsessive type), will manage the show in his absence. The acolytes usually have an unenviable job on their hands. They need to get that nodding wink from their leader before they can execute their mandates. Getting that nod might be bit tough, considering the amount of persuasion and deliberation an acolyte will have to do. It requires more than footwork on the part of the acolyte to demonstrate to his boss that his point of view can coalesce with his views and how it may further the cause of the organization.
Indoctrinate the Company
Narcissistic leaders want their underlings to appreciate and deify him/her for the manner in which they run the corporation. Narcissist bosses, more so the productive ones, who have strands of obsessive persona, are past masters at proselytizing people to their world view. The poster boy of Corporate America and iconic CEO of GE, Jack Welch, was someone who can win over die hardest of heretic to see his version of the story. Jack Welch is ruthless when it comes to fostering corporate culture or rolling out his risk-ridden strategy. Bill Gates, Grove and Ellison have revolutionized their industries with breakthrough products. In contrast, Jack Welch was able to revolutionize the industry through his "hard to crack and find fault with" strategic executions. He stretched the company to the limits of quality, ratcheted up revenue levels and cut costs drastically. Jack Welch weaved a rich tapestry of corporate culture to execute his daring business strategy. Jack Welch had his own share of critics. They panned his approach aimed at fostering new corporate culture. Many critics pointed out that Jack Welch was able to create the culture through teaching. Many don't understand a simple fact that Jack Welch's teaching entails driving a deeply personal doctrine into GE mangers vis-Ã -vis his stormy confrontations, shooting-straight-from-the hips speeches and memos. Jack Welch believed in making authoritative statements, rather than just engage in deliberations. Welch had initiated raft of training programs (like six sigma), which mutated into veritable signature line of GE. Welch's message to mangers was loud and clear: "It-is-my-way or highway". This is a teaching at its brainwashing best. You may love him or hate him. You cannot ignore this man who packs in the gumption, guts, no non-sense attitude and profound insights to accomplish what all narcissistic leaders set out to do - manage their companies to relate to their vision, to look at the big picture in a manner they do and become a personification of their organizations.
Managing Narcissist Bosses - An Art Per se
It is difficult to deal with narcissistic bosses. One will have to pack the bag and baggage and look for other options in the event of any collision course with the narcissist bosses. Subordinates would do well to remember that the company is betting big time on boss's vision and not theirs. So, survival should become the key.
Empathize with the Boss
Subordinates would do well to remember that empathizing with a narcissistic boss can iron out the strains in relationship. But one should not make the mistake of expecting the boss to return the compliment. Subordinates will have to relegate their pride and self-esteem to the back burner. Subordinates should understand the fact that behind the veneer of invincibility and infallibility of the narcissist boss, lies a sense of insecurity. A subordinate can praise the boss's accomplishments frequently in a bid to boost his/her self-esteem. But that should not be overdone. A narcissist boss can see through the game plan of people around them who just pile it on. Subordinates should become cagey and circumspect if the boss asks them to offer honest evaluation of his/her behavior. Subordinates should not say or utter something that could potentially damage their self-esteem. Try doing that and you can be the target of narcissist rage.
Give the Boss the Tips. Don't Hanker After Credit
Subordinates should ensure that they hear their bosses out completely before they present their own views. They should not butt in on the conversations or shoot down the boss's idea downright. The boss may not take it kindly. Even if the subordinates were to disagree with their bosses, they should demonstrate how adopting a different outlook to the problem can benefit the boss.
Subordinates Should Refurbish their Time Management Skills
Subordinates should not be surprised, if the boss makes unreasonable demands on their time. Narcissistic bosses are known to swamp their subordinates with a lot of tasks, which they may not possibly be able to discharge. Subordinates should also learn to overlook some of the outlandish demands made by bosses. The boss may forget about them too soon. Subordinates will do well to hang loose when the boss does not have a tight schedule. When the boss is free, he/she may call the subordinates at the oddest of hours. Subordinates will have no option but to run with their tail between the legs.
Conclusion
Narcissistic bosses love to thrive in a rather topsy-turvy world. They may not be comfortable acclimatizing themselves in a rather peaceful situation. Corporations need narcissistic leaders, their attendant grandiosity, abrasive behavior, warts and all. In this day and age, where discontinuities are becoming common place in the world order, companies have no compunction breaking bread with this narcissist devil. In this age where innovation has become a leitmotif for organizations, having a narcissistic leader on board has become a compelling necessity. Company looks to leaders who can create a brilliant future. Narcissistic leaders fit the bill. But many a time, narcissistic leaders have brought only destruction and catastrophe on companies they work for. Companies that have such bosses can zoom into the big league, if the leaders have a good idea of their limitations and work accordingly. For other organizations, they will be in for the worst. The employees will have to look skywards and live on orison.
CRISIS MANAGEMENT
Pink Slip Management in Employee Life cycle
-- K Senthil Kumar
Assistant Professor,
Department of MBA,
SSK College of Engineering,
Navakaral, Coimbatore.
The author can be reached at
senthilkumar.kalyan@gmail.com
Assistant Professor,
Department of MBA,
SSK College of Engineering,
Navakaral, Coimbatore.
The author can be reached at
senthilkumar.kalyan@gmail.com
-- L Gandhi
Lecturer (HR),
Guruvayurappan Institute of Management,
Navakaral, Coimbatore.
The author can be reached at
gandhilaxman@gmail.com
Lecturer (HR),
Guruvayurappan Institute of Management,
Navakaral, Coimbatore.
The author can be reached at
gandhilaxman@gmail.com
In times of economic recession, staff freezing is the order of the day. People are the most important and valuable assets in a business organization. Hence, it makes sense for the management to cut employees overhead first before cutting costs elsewhere. Obviously, this sends a wrong signal down the organization. Consequently, people lose their self-confidence and morale. Layoffs might be an opportunity to take a pause or pursue other possibilities. In some years, people will not consider layoffs `soiled' anymore, and take these in their stride as a part of their working life. Subsequently, the working people will be prepared to face any such consequences in the scenario. This article discusses staff freezing during economic recession, presents a comparison between Product Life Cycle (PLC) and Employee Life Cycle (ELC), consequences of pink slip, and the role of human resource department during this phase.
Like a product, an employee is also going through different stages in his/her employee life in an organization. One can see many resemblances or similarities between the stages of Product Life Cycle (PLC) and Employee Life Cycle (ELC). But an employee can strategize his activities according to the need of the situation, which a product cannot.
In any organization, an employee goes through the stages of induction, orientation, growth, maturity, and retirement or retrenchment. Organizations plan to get maximum returns from the employees, and, in the same way, employees also plan to derive maximum benefit from the organization for their life. But retirement/retrenchment stage is the most crucial for employees, for which they either plan inadequately or do so unsuccessfully.
In PLC, organizations implement various strategies like creative advertisement, attractive pricing, promotional schemes and mass publicity to introduce a new product in the market, with sustained and tireless efforts. Organizations ensure the vertical growth of the product in a cut-throat competitive market. During the maturity stage, companies will think of modifications and alterations to survive and stay in the market. Finally, the decline stage is tackled with product diversification and product withdrawal.
In ELC, companies use strategies, like publishing job advertisement with attractive emoluments and benefits, to introduce/ recruit an employee to take up the assignments. With effective training and efficient career development programs, employees grow along with the organization. Higher responsibilities and employee engagement will be the major concern during the saturation stage. Finally, an employee retires naturally or is retrenched intentionally.
Product Life Cycle vs. Employee Life Cycle
Stage 1
PLC - Introduction: Due to heavy operating cost incurred during the introduction of a product in the market, the company cannot break even the expenses and total sales.
ELC - Induction: A period of slow performance as the talent has just been recruited to take up the challenging tasks of the organization.
When a product is introduced in the market, a lot of promotional activities are required to make the product popular and capture the market share. At the same time, when a person is recruited, there are lots of developmental and supporting activities that have to take place to make the employee competitive.
Stage 2
PLC - Growth: During the growth period, the product is fully accepted by the market and also considerable profit enhancement is realized.
ELC - Development: A period of high performance and productivity as a result of intense training and development programs aiming at improving their knowledge, sharpen their skills and mold their attitude.
When the product is in the growth stage, sales will be on the higher side and improve revenues for the company. There is less amount of promotional activities required during this period. At the same time, the HR department in the development stage will be on the lookout for more of managerial skills.
Stage 3
PLC - Maturity: During the maturity period, sales growth will decelerate as the product has realized acceptance by most prospective buyers. The profit position of the company becomes stable because of amplified competition.
ELC - Promotion: A period of reward and recognition based on high performance and acceptance by most of the decision makers. Job enrichment and higher responsibilities are the major outcomes.
During the maturity stage, most of the promotional activities will be withdrawn and product diversification or mergers and acquisitions will play a vital role. During the promotion stage, employees will divert from the regular work performed by them and look for higher order tasks. During this period, training will play a minor role.
Stage 4
PLC - Decline: During the decline period, company sales demonstrate a descending flow and profits are also reduced.
ELC - Retirement/Retrenchment: A period when a person gives up his work, usually between the age of 60 to 65, but sometimes earlier due to firms' early-retirement incentive plans.
During the decline stage, the product will be almost withdrawn from the market. During the retirement stage, employees will withdraw themselves from the regular operations of the company.
As far as PLC is concerned, the product will be withdrawn only after it reaches the decline stage. But, an employee cannot predict when his life with the organization will come to an end in ELC. During times of recession, one should be mentally and physically prepared to face the unprecedented changes and layoffs. The reasons cited in the pink slips are shown to range the reasons from US financial crisis to company level bonus issues, from oil price rise to raw material shortage, from nation's inflation to behavioral issues of the employees, from M&A to poor performance of the employees.
In the last two years the pink list of the companies has extended beyond imagination because of economic turbulence. Some examples are given here to showcase the threats and deal with the situation (Table 1).
The Pink List
The list of companies that had retrenched their employees is portrayed in Table 2.
Citigroup had shown the door to 52,000 employees. Soft drink distributor, Pepsi Bottling Group Inc., is planning to slash about 3,150 jobs across US, Canada Europe and Mexico as part of its restructuring plan reveals The Economic Times (Box item).
Consequences of Pink Slip
The pink slip has become synonymous with today's business world. Protected jobs are history no matter whether you have just made an entry into the organization or employed for a decade or two, or whether you are a shop floor employee or a team leader. While cutting costs is the mantra, anyone's head could be on the chopping block.
A pink slip fetches with it a box full of emotional consequences. It causes defiance, antagonism, trauma, and disappointment. It is also a major constant worry for the employees. Since lay-offs are not common in our motherland, many of these retrenched workers face great psychological tension. Some, especially, young professionals who live away from home do not even inform their families about their job loss. The retrenched employees are worried about their EMI payment on housing loan or vehicle loan.
Role of HR Department in Managing Pink Slip
While giving the pink slip to the employees, undoubtedly the HR department is at the receiving end. It has to normalize the feelings of the terminated employees and should also ensure that the retained employees keep up their morale and interest to work and show productivity consistently. HR must put into effect the organization's plan on controlling cost. So what can the HR department do in this critical situation?
Pink Slip Management
Accept the Possibility of Receiving Pink Slip
No one is indispensable. "It cannot happen to me. I am working for a top company", will not give you a protection shield. We should accept the fact that anyone might get a pink slip one day. It will help us face the most horrible outcome and spring bounce easily.
Saving for the Rainy Days
According to a study, less than 20% of workers are able to sustain their families, even for a very short period, if they are given the pink slip. So, we should cultivate the habit of saving money for this unforeseen event. Have crisis savings that can tide over the living expenses till you land a new job.
Cutback on Superfluous Expenses
A reasonable way of life is of good worth these days. Reduce unnecessary spending. Plans that will make a big dent in the income should be kept on the back burner.
Search for An Alternative Job
After working in a company for a span of time, the employees' CV has to be updated with additional points such as experience, new skills and honors achieved on job. Keeping the CV updated will help to begin the job search. Try to sharpen the skills, keep the CV updated and also maintain an active network of contacts while working so as to facilitate searching for an alternative.
It is not only the sluggish players in the company, but the high performers are also facing turbulent times. An employee got 80% in the annual appraisal and was termed as the best performer. Despite that, the employee lost the job. Recession time is not a cakewalk for those who are sticking to their jobs as they panic thinking about losing the job at any point of time. Employees who have seen their peers in other divisions losing their jobs fear it may be their turn to face the axe.
Thanks to booming sectors like IT, ITES and BFSI for making the employees realize the exponential growth in their standard of living. The high disposable income and surplus money paved ways to live in their dream homes and take pleasure in travelling by luxurious cars. While cherishing this life style, they completely neglected to save for unpredicted state of affairs and contingency challenges.
Risk taking becomes a passion and excitement among high earning employees. It is always reasonable if savings are equal to investments. However, they miserably fail in making calculated risks for their investment. As a result, they land up in gloomy areas during economic downturn.
Regrettably, people who had excess cash from their monthly income after meeting all their needs and EMIs invested in mutual fund schemes and systematic investment plans when the stock market was on hit. Subsequently, the deposits at the banks were given secondary importance. Now they need the money but cannot pull it out, as most of their mutual funds have yielded negative returns in the past year. Their mistake was that they violated the principle of asset distribution in response to the market temper.
It is essential for everyone to enhance the relevant skills and knowledge for gaining competitive advantage over others in the booming period. Indisputably, the upgraded knowledge and abilities will help them to sustain and survive during recessionary conditions.
Financial experts also advise people to keep adequate bank balance or an amount of liquid cash to meet their expenses and EMIs at least for three to six months. It is ideal for the people to borrow loans within 25% of their disposable monthly income.
Conclusion
Unfortunately, while the pink slip receivers are looking for another job, the market remains in the darkness, and most companies have frozen their hiring programs. Placement agencies are asking them to be tolerant. We should develop the confidence that we can find an alternative soon.
We will not be taken by surprise, if B-Schools are keen on introducing lay-off management or pink slip management as one of the HR electives. It is also certain that IT, BFSI and other companies' pink slip stories or cases will get paramount importance from the next academic year. People would not have been serious about pink slip or lay-off when they were in academic institution. Now, they are, not only serious about pink slip but also started learning how to tackle pink slip blues.
CRISIS MANAGEMENT
Role of HR in Crisis Management
-- Vidya M Iyer
Professor and Consultant of HR and OD,
Sri Sharada Institute of Indian Management Research,
New Delhi.
The author can be reached at
vmi-2k@yahoo.co.in
Professor and Consultant of HR and OD,
Sri Sharada Institute of Indian Management Research,
New Delhi.
The author can be reached at
vmi-2k@yahoo.co.in
During times of crises, the business and its employees usually live on the edge. In such situations, it is very natural that employees may lose both their intellectual and emotional stability. An individual may go through emotions that range between challenge and trauma. It is the role of HR to build an organizational culture that is leadership-oriented, open, proactive and not afraid of challenges, so that the employees can overcome the stress of crisis and, in fact, rise to a higher competency through learning from each crisis. Towards this end, situations are examined where the management and employees have enabled the organization to emerge stronger out of a crisis.
The world has recently seen semblances of the worst in economical terms. Businesses have had to resort to various steps to stay `afloat'. Quite a few of them have sunk without a trace. Those that have managed to stay above the drowning levels are working on strategies to sustain and get back to growth. Some of them have fought it through people, some through products and some through technology. But the true learning has been the sense of urgency, tact and planning that had to be gone into the whole exercise. Some of them treated the scene as an exigency; some were proactive when they noticed the others and some only reacted after disaster was finally at their doorstep.
A few of them have looked at it as an opportunity and taken the bull by its horns.
Defining Crisis
"Crisis as defined is the situation that is unpredictable but is not unexpected." The nature of the crisis demands attention of both special and general kinds. Crises could range between a Tsunami to a 26/11 and a business crisis like in the case of Satyam or the old Tylenol. They are broadly classified into natural or man-made. Generally, crises manifest into disasters and, in some cases, the reverse.
Who is responsible for handling a crisis?
Warren Buffett says, "If the top management is not interested, the middle management will not be and so will the line manager." Therefore, the onus of handling the crisis first lies on the top managers and then on the others in the organization.
The top management, the departmental heads, the employees and ultimately almost everyone who contributes to the organizational growth are similarly responsible in times of crises. These people are expected to deliver the required capacities in times of need.
Crises are handled at two levels - Physical or Operational level - This is a level maintaining operational continuity with capacities in material form such as money, material and other physical resources.
Psychological level - At this level, the organization needs to have the emotional stability, resilience and perseverance.
Crisis Management Mechanism
Proactive Management vs. Reactive Management
Putting together all the stakeholders and HR in the face of a crisis, we see that there are two categories: the Proactive Agents and the Reactive Agents. These agents are the two sides of the coin and demand equal attention from the facilitating functions. In this case, we look at the role of HR as the facilitator.
By segregating the two sets, the HR can come up with plans to communicate and train each of the sets with appropriate programs and modules. The internal communication mechanism works to build the core. The efficiency of the core will also enable the outer layers to battle with issues. Beginning from bulletin boards to training the Public Relations person, the HR function needs to ensure that any crisis is handled in a manner that causes minimum disruption to the organization. Nokia is a good example in this case. The communication within and outside the company was well-timed, planned and delivered, hence causing minimal damage to the company's image when the company was dealing with the instance of the faulty BL-5C batteries. The exercise was proactive as soon as the defect was noticed.
When crisis strikes an organization, the internal system is expected to proactively take steps to curb damage and prevent it from turning into a disaster (Figure 1).
Reactive agents are those who react to the crisis and create a zone of deeper crisis. These are the segments of people who by nature of their relationship with the organization are entitled to reactionary behavior, whereas the internal stakeholders' primary responsibility is to educate others about panic reaction. When a crisis facing organization openly comes out with the facts and owns up responsibility, the brand reputation increases, rather than falling. But it is a test of character of the organization to stand up to such emotional challenges. Such an attitude towards customer satisfaction and social responsibility is the core to business conduct.
To supplement the attitude of the promoters and owners of the company, the HR of the organization plays a vital role in educating its employees in matters of conduct, behavior and utilization of resources during the crisis phase. This exercise is either done as formal training, coaching or as a culture building exercise.
For business to avoid failing in the long term, it is essential to develop the response and reaction mechanisms and a proactive culture as a strategic capacity.
Role of HR in Developing Employees for Crisis Management
To appreciate the role of HR in crisis management, we identify the elements of crisis management.
Elements of Crisis Management
Response, Reaction, Resourcefulness, Repair and Restructuring (Figure 2) are among the key elements that define an organization's capacity to recover from a crisis. These mechanisms are activated in organizations through various programs initiated by the Human Resources Development (HRD).
Response - Organizational response is more a matter of culture than mechanism. Some organizations are in the habit of responding to matters, however big or small. On the same plane, some organizations let an issue dies its natural death.
This could be owing to the culture of chalta hai attitude as in India. The best mechanism in times of crisis is to have cool-minded people to collect relevant information in the shortest time and respond suitably to market challenges, as well the stakeholders.
Example: Anil Ambani at the time of the IPO of Reliance Power came up with appropriate communications regarding the company's decision to allot bonus shares.
Also, a case in point is Tata's response to public doubts regarding the Singur Project for Nano. The company officials spoke to the people through various media at appropriate times to tell them the Tata, Nano project was on and that the company was trying to strike a deal with the West Bengal government. These instances have saved the brand equity for these large business houses.
At the individual level, the employees should possess emotional stability, sense of integrity to the system and respect the values of the organization.
Magnifying these aspects, at the organizational level, the organization should respond based on facts, rather than emotions only, should endeavor to respect the sentiments of the people (depending on the culture of the local environment the nature emotions that shall be accepted and rejected are unique, therefore, there can be few thumb rules) and identify the appropriate time and medium to communicate the response.
The role of HR here would be to act as a catalyst that had created the sense of responsibility to evoke the response.
Reaction - The activity that moves alongside, if not after and before the response is the reaction to the crisis. While the organization is firefighting the crisis, it also responds to the situation by reacting as per the circumstances. The reaction has to be in the form of communication and action and at appropriate times.
Example: The HINI scare in India. Though it was almost imperative that every country would at some stage be affected by the pandemic, there was not much that could be done to totally prevent the virus from entering the country. The best was to fight proactively and react according to the developments. The reaction of the government though became more intense after the first death was reported. The reaction of the government to this development included: stocking of Tamiflu, developing and releasing the list of the testing centers directory, health directives and communication to the public through mass media. In spite of all the criticism, the government machinery had kept its head above the waters and given the Indian set up, has so far done a reasonably good job, if not the best.
The role of the HR here would a catalyst that had created the sense of responsibility to evoke the reaction.
Resourcefulness - It is natural tendency to lean on others in times that are not the smoothest, because there is a sense of remorse and depression. But the most important resource is emotional stability to believe in the self (both individuals and organizations) that this is a temporary phase which will soon pass.
The HR can make this through the policy and practice, thereby emphasizing the role.
Example: While AIG was resourceful in time to seek and accomplish the bailout, GM was not up to the standards. Though the argument would be that a financial sector unit deserved a bailout more than a automobile manufacturer, the foresightedness of AIG deserves to be commanded.
Repair and Restructure - As Nixon said - the most important phase is to see how the organization reemerges from the crisis phase.
Companies that have come out of crises with suitable strategies have either learnt to foresee the crises and have built on the learning.
Example: Most of the countries in the world are anticipating terror threats and learning from others' experiences and devising technologies that suit the local conditions to say that they are safer than the others.
The HR develops a process and places it for practice to promote learning and development through coaching, mentoring and other initiatives that strengthen the intellect and emotional capabilities.
Leadership is the Emphasis
The underlying emphasis of any of the crisis management strategy and mechanism is on the people who constitute the system. The essential elements to be considered while developing the strategy include: the culture, availability of resources, policies that facilitate action and, above all, training and confidence building communication that arises from the source which is the authority to battle the crisis.
At the backbone of the whole system is the leadership. Inspiring and effective leadership can motivate the employees to be efficient in the most adverse circumstances. Leadership can help the employees and affected parties in coping well with the crisis and reducing the pain.
The HR is the leadership builder in the organization.
This role highlights the importance of HR in building leaders who can sustain the ship through a crisis.
The HR Functionary in Times of Crisis
In the event of downsizing, HR has to walk on a double-edged sword - to chip and chop organizational flab, as well as maintain emotional stability in the existing employees and also create an atmosphere where animosity is minimal between the organization and the exiting employees.
HR comes in at an elementary level of manpower planning, training and retraining, retrenching and outplacement and many other employee-oriented angles of business. In such a context, it is essential for the function and its functionaries to put up their hands and get clued to business strategies and innovative methods of man management rather than allow the crisis to spill into the society, lest it creates a social disaster.
Conclusion
The core of an organization is its people who make its business possible. Since unforeseen circumstances and crises are common occurrences in business, it is the imperative for the management to foresee the worst. This test will enable it in anticipating the troubles and preparing for eventualities.
The preparation is multifold with stress on:
The essential activities to be conducted by HR towards preparing the organizations:
These measures will give higher emotional strength to the organization to emerge stronger after the crisis.
CASE STUDY
Chanda Kochhar as the CEO of ICICI Bank: Can She Manage the Mandate?
-- Sai Prasanna Ragu
Research Associate,
IBSCDC, Hyderabad.
The author can be reached at prasu-4you@rediffmail.com
Research Associate,
IBSCDC, Hyderabad.
The author can be reached at prasu-4you@rediffmail.com
-- Swapna Pragada
Senior Research Associate,
IBSCDC, Hyderabad.
The author can be reached at pragadaswapna@gmail.com
Senior Research Associate,
IBSCDC, Hyderabad.
The author can be reached at pragadaswapna@gmail.com
At the dawn of the new millennium, India celebrates the remarkable progress of women in business. Women have made great strides in boardrooms and courtrooms, on screen and in society and are regularly featured on the cover pages of business magazines. Indian women today have broken the so-called glass ceiling to emerge to the top of the corporate ladder. ICICI bank, the leading private sector bank of the country is never bereft of women in senior management positions. Against this backdrop, this case study presents Kochhar's new role as the Managing Director and CEO of ICICI Bank. Highlighting Kochhar's invaluable contributions to the evolution and growth of the company, the case study delves into her stint in successfully running various divisions of the bank and her leadership qualities in handling banking operations during tough times. It offers many intriguing issues to debate on - whether Kochhar is the right choice to succeed KV Kamath, her capabilities that gave her an edge over other contenders, role of women in business, particularly in sectors like banking and finance, and abilities of women vs. men in leading organizations.
Chanda has played a key leadership role in all the major strategic initiatives that we have taken. I am sure that the depth of experience, multi-dimensional domain knowledge and strategic thinking that she brings to the role will take the ICICI group to even greater heights.
- KV Kamath,
Non-Executive Chairman and Former CEO,
ICICI Bank.
Non-Executive Chairman and Former CEO,
ICICI Bank.
I won't really [consider] anything as a worry. Currently, the priority for me, for the bank, would be risk containment, property conservation and liquidity management... We have to be agile enough as a bank to change course to this mode of operation [during these times]. In India, we have all been used to very fast rates of growth. And therefore, to change to this mode for a certain point in time requires a huge mindset shift.
- Chanda Kochhar,
Managing Director and CEO,
ICICI Bank.
Managing Director and CEO,
ICICI Bank.
On December 19, 2008, Chanda Kochhar (Kochhar) was appointed the Managing Director and CEO of ICICI Bank. Kochhar's invaluable contributions to the evolution and growth of the bank together with her 25 years stint in operating various divisions helped her reach the top. Various qualities like the ability to turn every challenge into an opportunity, adaptability to the changing business environment and above all the knack of dealing with complexities and disruptions in a stable way gave her an edge over other contenders like Shikha Sharma (Sharma). However, is Kochhar the right choice to succeed the legendary CEO, KV Kamath (Kamath), particularly during times of crisis? Can Kochhar prove that women can be better leaders even in areas like banking and finance? Will her agenda for the bank's growth during troubled times prove worthwhile? Does she set a new trend for Indian women leading large business organizations?
Women Executives in India: An Overview
The diverse and complex Indian society was more a complicated web of class, caste and community, where women were almost considered insignificant. Traditionally, women were relegated only as second class citizens in the patriarchal, oppressive and male-dominated society. The status of women varied significantly across different time periods-from being predominantly unknown in ancient times to being victims of several social practices like exploitation, illiteracy, etc., in medieval times. Women were largely confined only to the household chores while men, on the other hand, dominated the society as the bread winners.
Gradually, social reformers and voluntary women activists revolted against these long-standing prejudices and the voice of women was increasingly heard. In 1950, the Indian Constitution conferred equal rights for men and women including right to own property, matrimony and divorce, inheritance, education and employment and equality before law to improve the condition of women in the country. However, legal and constitutional rights did not change the social attitudes of traditional India.
In spite of this, women, particularly those living in urban areas, realized the benefits of education and pursued various professional courses at par with men. All these factors have nudged the traditional Indian society to accept the new freedom for women through priorities like separate insurance policies, exclusive educational institutions, introduction of research topics related to women, etc. Despite these developments, women were not given significant positions in companies.
This phenomenon took a drastic change during the economic liberalization of the 1990s. As an open and growing economy created new opportunities in domestic and global business, even organizations made many macro-level changes in their management and organizational structures. There was a paradigm shift in the characteristics of workplace environment, particularly, regarding workforce participation and workplace demographics. Women thus joined the job market fray, became active participants in the growth trajectory and even emerged as significant contributors to the Indian GDP.
The new work dynamics, coupled with increased global focus on women-related issues, had a favorable impact on the role of women and their career progression. However, traditional stance towards women confined them only to secretarial jobs, in soft fields like fashion, clothing and cosmetics and in areas like human resources, public relations and administration at subordinate or junior levels. Men, on the other hand, were stereotyped with fields of production, sales and marketing and even carried out hard field works and challenging assignments. Thus, men were overwhelmingly the decision makers and they held all the top positions.
This was because organizations remained hesitant to change the corporate profiles of the top management to reflect greater diversity and an innovative mix of professionals. Further, traditional corporate mindsets and cultures even prevented organizations from moving out of their comfort zone of stereotype identities. According to a survey in 1997, US and Canada had the highest ratio of women to men in managerial positions - with 67 and 68 women respectively, for every 100 men. New Zealand had a ratio of 48:100, while in Poland it was 18:100 and Japan at 9:100. India, on the other hand, had barely two women managers for every 100 men managers.
Moreover, women also created barriers for themselves and the so-called glass ceiling prevented them from moving up beyond a certain level in the corporate hierarchy (primarily due to social, psychological, cultural or even organizational bias).
During 1970s, a young computer science graduate from Indian Institute of Science, Bangalore, came across a job advertisement from TELCO (now Tata Motors), seeking bright young graduates, followed by a footnote, "Lady candidates need not apply". Deeply upset, she wrote a letter to JRD Tata, the legendary founder of Tata Group, asking him how a leading corporate powerhouse like Tata can put such a restriction. Within 10 days, she got a telegram asking her to appear for the interview with the promise of reimbursement of first class train fare to and fro. She is none other than Sudha Murthy, who played a key role in the formation of Infosys, an author and a philanthropist.
Meena Ganesh, an alumnus of Indian Institute of Management (IIM), Kolkata and CEO of Tesco Hindustan Service Centre, the IT services and BPO arm of Britain's largest retail chain, also face a similar situation during her early career when a company refused to offer her a job (despite being qualified) for the sole reason that their organization does not hire female employees. Today, she is a successful woman who is proactive in introducing new technology in the organizations in which she has worked. She began with NIIT Delhi in mid-1980s introducing computers and IT strategies to the corporate world and moved on to Microsoft during late 1990s pushing forward the backoffice applications and introducing the Internet to the country.
Indian corporate spectrum today is replete with many more examples of women who made to the top positions in the organizations with panache. On one end, we have Anu Aga and Meher Pudumjee, the mother and daughter who successfully led the engineering giant Thermax Ltd., as Chairpersons; Sulajja Firodia Motwani, Joint Managing Director of Kinetic Engineering; Mallika Srinivasan, Director of TAPE; Shobhana Bhartia, Chairperson and Editorial Director of the Hindustan Times group who successfully inherited their family legacy.
On the other end, we have several successful women executives across various fields. In fact, many global IT giants opted for women to lead their Indian operations-Rekha Menon for Accenture, Kalpana Margabandhu for IBM India Software Lab and Padma Ravichander for HP. There are many more women who have redefined the standards of the industries they lead-Indra Nooyi, CEO of PepsiCo, Neelam Dhawan, Managing Director, HP and Bharti Ramola, Executive Director and first woman partner at PricewaterhouseCoopers. Such exemplary women not only took up challenging jobs but also attacked the glass ceiling by foraying into those areas that were traditionally closed to women. What actually fuelled this trend?
The growing uncertainty in the marketplace and the need for high professional talent made organizations realize the high value of diversity in thinking and innovative ideas that women can bring in for better business performance. Organizations thus redefined the priorities and roles of the top management, broke traditional formats and sought new ways of bringing in innovative best practices.
P Senthil Kumar, Director in the oil exploration and production firm, Cairn India, says, "Women bring in their own perspectives and also a diverse set of views to flow onto the table. We are giving a lot of preference to women and give them equal opportunities in all programs". Many companies have introduced several women-centric incentives to attract as well as to retain women employees.
Bharti Airtel successfully combined western corporate practices with Indian values and encouraged gender diversity across its line and staff functions. According to a survey by Confederation of Indian Industries (CII) in 2007, 18% of Bharti Airtel's workforce was women as against a nationwide large company average of 4%. The company had even set up a diversity committee with the mandate to ensure gender inclusivity. Vijaya Sampat, Bharti Airtel's General Counsel and Company Secretary, says, "The objective is to create an environment in which women at all levels will feel respected for their professional contribution, evidenced by continuous reinforcement from senior management". The diversity drive was also supported by a mentorship program, where women executives were trained and guided by senior women managers. Mamta Saikia, Secretary, Bharti Foundation, asserts, "Mentorship has been the most powerful initiative for women in Bharti. It allows us to gain from the experience and insight of senior women colleagues. Nothing can prepare a woman better for growth than learning from experience. Mentoring has helped me particularly in the art of influencing".
In fact, the cellular giant's chief of IT Solutions is a woman. Amrita Gangotra successfully led the group's IT operations by leveraging on technology that enabled Airtel handle 100 million subscribers. Manoj Kohli, President, Bharti Airtel, says, "Amrita is among the top performers and an integral part of one of our most critical functions, IT, which forms the backbone of our business".
Another company that undertook similar initiatives was PepsiCo India Holdings Pvt. Ltd. In an attempt to tap talented women in India, the soft drinks company had tied up with a leading job portal, Jobstreet.com to post jobs targeted only at women. It included both full-time and part-time jobs, consulting, sales and marketing roles with options such as working from home and flexible timings. Thus, in 2008, women in the company accounted for around 33% of its top management and 15% of the rest of the workforce as against 5% of the total number of employees in 2006.
In March 2008, Tata group distinguished itself by launching a second career internship program for women who took a career break of less than eight years. As part of the initiative, selected candidates got an opportunity to work on a business project by Tata group companies. After completion of the project, they were provided with an option to join full-time. Some companies even offered employees an additional bonus of around 25% for referring a female employee. Such examples of gender inclusivity in organizations are abound in the Indian IT sector as well (Annexure I).
This clearly shows the changing corporate mindsets towards women employees and a shift in viewing gender inclusivity as a business imperative rather than merely a Corporate Social Responsibility (CSR). Priti Rao, who heads Infosys, Pune, asserts, "In the early days, women engineers were not even allowed to appear in certain campus interviews, the assumption being that work would not be a woman's priority once she started a family". But she felt that over a period of time, men, particularly in the top management, are being supportive of their female employees. She owes her steady rise at Infosys for 19 years to merit-based rewards and recognition as well as support and encouragement from her superiors.
Step further, teading educational institutions have also introduced exclusive courses for women at national as well as international level. Indian School of Business offers a 150-hour, 12-week managerial course for women in sponsorship with Goldman Sachs. Launched in March 2008, it was a massive worldwide initiative by the global investment banker to train 10,000 women, predominantly the underserved in emerging markets in management education. The entrepreneurship course with three weeks of classroom instruction and nine weeks of mentoring and on-the-job support provides insights into businesses, marketing, strategies and management. On the international front, Wharton School of the University of Pennsylvania, had also introduced an Executive Education Programme, Women in Leadership: Legacies, Opportunities and Challenges.
Women thus grabbed the command of successful enterprises with futuristic, growth-oriented and excellent managerial abilities and these changes are found even in Indian banking and finance sector that remained a male-dominated sector, for long. But, though women employment in Indian banking sector began in 1950s and grew significantly over the next few decades, they were concentrated only at clerical levels. For instance, it took more than three decades for Ranjana Kumar to become the CEO of Bank of India in May 2000. Further, despite celebrating 200 years of its existence, State Bank of India and its associates have no woman CEO till date.
Gradually, changes at the societal and organizational levels brought significant improvement in women education and career progression, which in turn, made them pursue career in banking and finance to compete even for top slots. Tarjani Vakil was the first woman CEO in the state run financial sector when she became the chairperson of Export-Import Bank of India in 1996. Likewise, Kishori J Udeshi took the credit for being the first woman Deputy Governor for the Reserve Bank of India (RBI) in June 2003, followed by Shyamla Gopinath and Usha Thorat in the next consecutive years. H A Daruwalla was the second woman (after Ranjana Kumar) to head a public sector bank in 2005 as Central Bank of India's CMD.
In the case of private sector banks, Naina Lai Kidwai, Group General Manager and Country Head of the Hongkong and Shanghai Banking Corporation (HSBC) India, was the first Indian woman to guide the functioning of a foreign bank. Manisha Giritra, Managing Director and CEO of UBS India and Meera H Sanyal, Chairperson and Country Executive for ABN AMRO Bank are some of the exemplary women handling Indian operations of global entities.
ICICI Bank is an exemplary financial institution that successfully leveraged on the capabilities of women executives. In 2007, the country's leading private sector bank stood out with 33% of overall women workforce and 40% at the senior level. Successful women like -Lalita Gupte, Kalpana Morparia, Sharma, Kochhar, Renuka Ramnath (Ramnath), Madhabi Puri-Buch and Vishakha Mulye—played a major role in scripting the bank's success story over the years (Annexure II).
While each of them contributed to the growth of the bank in their own way, Kochhar distinguished herself by bringing in several innovations to the Indian banking system.
Chanda Kochhar's Journey to the Top at ICICI Bank
Forty-seven year old Kochhar began her career with ICICI Bank as a Management Trainee in the project finance department in 1984 and steadily rose to head various divisions of the group. When the bank decided to enter into commercial banking in 1993, Kochhar was part of the core team in making commercial banking a major division apart from investment or merchant banking. Kamath, the then CEO had all the confidence in her. Initially, Kochhar was reluctant to shift from corporate finance that accounted for 50% of the company's business to consumer credit business that accounted for just 1%. Kamath assured her that he wanted her to make even consumer credit to more than 50% and Kochhar did not let down her boss' expectations.
Once commercial banking was put in place, Kochhar moved on to strengthen the group's services in infrastructure financing, a trend that was fast catching up during 1996. In the next two years, she created a "major client group" to handle relationships with the top 200 clients of ICICI Bank. Kochhar created a team of eight members from different divisions of the group, say, investment banking, securities, commercial banking, etc., and each member handled different clients. The rationale behind the idea was that the way an investment banker met a client and talked about a product totally differed from the one handled by a commercial banking executive. In fact, she believed in multi-faceted leadership with the willingness to share knowledge and ideas with each other rather than being an authoritative leader.
When the bank forayed into retail business during early 2000s, Kochhar played a vital role in analyzing the changing consumer behavior (regarding spending and borrowing) and predicting the size of the business in the near future. Further, to roll out a business totally new for the company as well as for herself, Kochhar hired a new team of professionals with good domain knowledge in retail business and combined it with ICICI Bank's strategic thinking. Hence, her decisions were totally based on the team's domain knowledge and her leadership perspectives rather than on her past experiences. In her words, "Domain knowledge helps, but only to a certain extent, and the available data is never complete. We need to depend on logic, gut feel and our ability to react. There is risk and one must take risks".
She even brought in many innovations to the Indian retail banking. These include: introduction of direct selling associates, cross-selling and bancassurance model. Further, to make money in a business that is totally related to scale of operations, Kochhar took the bold decision to set up 3,000 ATMs across India in just two years while there were only 200-300 ATMs altogether by then. Within four years of its foray, the bank claimed 53% market share.
By integrating valuable insights from India, Kochhar even led the group's international business to make it one of the fastest growing businesses for the bank. Kochhar leveraged on the group's technology to carry out certain transactions at one-tenth cost of other global banks. For instance, to serve the requirements of Indian companies in UK and Canada, Kochhar used Internet banking instead of setting up local banking for local customers.
Kochhar's approach to globalization in her own words, "Our approach to globalization has been two-fold. One, to follow the Indian customer. Two, to identify those niches where we believe that as a bank from India we have some competitive strengths and how we can capitalize on those globally. We realized early on that the individual customer had gone global much earlier than the corporate customer. So, we set up our global operations around Indians and NRIs. But two or three years ago, we realized Indian corporates too were going global, and we reset our skill sets around how we can serve them too. Their needs are M&A or raising funds globally".
Thus, having run different businesses of ICICI Bank, Kochhar donned the role of a supervisor overseeing various functions like: finance, risk, audit, compliance, industrial relations, etc. She owes her success to backing a big strategic vision with a lot of institutional capabilities, ability to understand and adapt to new business situations and above all ability to see an opportunity in every challenge. Ramkumar K, HR Head, ICICI Bank, asserts that Kochhar, a practical innovator, has a calm and unhurried style: "She is unflappable even at times of a serious crisis like the one we had recently on rumors regarding the financial health of the bank".
Kochhar then tookover as joint managing director and group CFO in October 2007. Enriching experiences and expertise that she gained through her stint across different departments of the bank gave her a new confidence to take up the job of a CFO, head of the group's corporate center as well as the bank's official spokesperson. She effectively made use of institutional capabilities in leveraging on globalization of the Indian economy by assisting Indian corporate entities in their global ventures. Thus, Kochhar played a vital role in transforming ICICI Bank from a corporate bank (the erstwhile Industrial Credit and Investment Corporation of India) to a retail bank and more recently to a universal bank.
Amid this scenario, 61-year-old Kamath, the leader who looked beyond the obvious to transform ICICI bank's brand image into a symbol of India's EMI revolution decided to end his 13-year innings at ICICI Bank in order to spend quality time with his family.
To end his tenure in April 2009, Kamath cautiously began his succession planning three years ahead, i.e., in April 2006. ICICI Bank board's nomination committee for selecting the CEO is called the governance committee that consisted of six esteemed individuals - Narayanan Vaghul (Vaghul) (Chairman of ICICI Bank), Kamath, Tinoo Puri (independent and McKinsey Director), M K Sharma (Hindustan Unilver Ltd.'s Legal Executive and former Vice Chairman), Marti Subrahmanyam (Charles E Merrill Professor of Finance and Economics at Stern School of Business, New York University) and P M Sinha (former Pepsico India Chairman).
As part of the process, the board brought in Wayne Brockbank, a professor at the Michigan School of Business in April 2006. The professor made a presentation on world's best practices for CEO succession and the board then decided upon a few guiding principles. The board even introduced a developmental process of 360-degree feedback that was laid down by Kamath, Ramkumar and Wayne Brockbank.
Marti Subrahmanyam gives the rationale behind the 360-degree feedback, "When you are a leader, you need to be respected by everyone around-not just be subservient to the board. I am familiar with situations in other companies where if the board members' ego is stroked, they might feel a candidate is very collegial and easy to get along with, but the candidate's peers and subordinates may not concur".
Contenders were tested on their ability to manage the corporate center involving diverse areas—investor relations, media, external representation of the organization and other profit drivers. After evaluating each of these contenders in the context of this framework for nearly a year and a half, the committee garnered feedback from peers and superiors as well as customers and other stakeholders (government officials). The key element in choosing the right successor solely depended on how they managed the clients on behalf of the company.
Boardroom participation was another significant element in testing the contenders' leadership capabilities. All the contenders in consideration for the job of the CEO (including those running subsidiary companies) were invited to attend every board meeting of the group. Marti Subrahmanyam, asserts, "Instead of going through formal presentations on each candidate, one must observe them as they go about their normal business. For a board member to understand what the talents and potential of a candidate are, you need many ways of getting information. For instance, it is better to get that information in the course of regular events, such as in board discussions, or when he or she is making presentations. Over time, you get a good feel for how the candidate handles stress, his or her ability to listen and react, how he or she deals with people, especially peers and subordinates". Further, to ensure that the race to the top did not degenerate into an unhealthy internal battle, the board had asked Vaghul and Kamath to manage the internal process.
The committee, then, evolved a short list of CEO successors in April 2007. Nachiket Mor (Mor), Kochhar and Sharma were the major contenders while the list also included Ramnath, (CEO of ICICI Ventures), Sandeep Bakshi, (CEO of ICICI Lombard, the general insurance business), two young executive directors -V Vaidyanathan, who heads retail, SME and rural banking and Sonjoy Chatterjee, heading the group's international business - and Madhabi Puri Buch.
In fact, throughout his tenure, Kamath had built ICICI Bank's legacy with the support of able and young aspirants and was personally involved in grooming young leaders. When senior executives like Lalita Gupte and Kalpana Morparia were expected to retire, he kept Mor, Sharma and Kochhar on board. He even brought in the next batch of leaders - V Vaidyanathan, Sanjoy Chatterjee and Madhabi Puri Buch, followed by Dasgupta, Vishakha Mulye, N S Kannan and Vijay Chandok. Kamath convinced the board to allow these senior general managers into board meetings to understand the process. Ramkumar asserts, "Just like in business, he had an uncanny knack of making calls with people. He looked for some characteristics in people with relatively low experience - that made them perform at an exceptionally high level. He gave them freedom to show their skills. Often, he gave them extraordinary situations to perform in".
Commenting on succession planning at ICICI Bank, Kamath said, "There has been a change in the context during the time that Mr. Vaghul thought of me as somebody with the ability to take his place, and the last few years. In recent years, ICICI has become a more broad-based organization; its mission is now on a much broader footing, and there are several business lines. The strategy I adopted during the last 10 to 12 years was to see who could be groomed to grow into what I'd call the leadership context. I wanted to ensure that we had at least four capable people who could be considered possible and potential successors. Each had to be a proven leader in his or her own business. We had people in our various subsidiaries, and we had people within the bank. In the last two years, we further refined the criteria we wanted in this new leader".
In 2007, Kamath reshuffled his team and in the process Mor was given the task of heading the ICICI Foundation, a new entity set up by the bank for achieving inclusive growth. At one stage, several sources had confirmed that there were some external contenders like Aditya Puri, Managing Director of HDFC Bank but the board declined to reveal any information regarding the same. It was also believed that strong leadership capabilities within the organization dissuaded the board to look for external executives.
However, in a couple of months, Vaghul pruned the list to drop Sanjoy Chatterjee, Madhabi Puri Buch and V Vaidyanathan due to lack of sufficient boardroom experience. By mid-2008, the final list was down to Kochhar and Sharma. The board arrived at the final decision in November 2008, but withheld the public announcement keeping in mind the then prevailing Citibank crisis.
Finally, on December 19, 2008, Kamath declared Kochhar as the new Managing Director and CEO of ICICI Bank with effect from May 2009. The announcement was not totally unpredictable as many sources considered her as an apparent heir to Kamath when she was elevated to the second most powerful position in the bank - Joint Managing Director and CFO. Kochhar's 25 years of experience with the bank, her track record of successfully building various divisions of the organization, very strong personal character and sufficient public stature and above all, excellent adaptability to new and challenging situations decisively tilted the scales in favor of Kochhar. Thus, Kochhar successfully won the race to the top at ICICI Bank amid serious competition from other senior officials (Exhibit I).
In an interview with Wharton Management Professor, Michael Useem, Kamath recollects, "One element that I put in - which today, when I look back, seems particularly timely - was to look for somebody who could deal with complexity, shocks and disruptions in a stable way. Typically in most leadership situations, this attribute is not considered to be of the highest importance, but we made it the No. 1 quality. And, of course, all the other leadership traits were also required. So everybody was tested". The selection was therefore totally based on leadership and cultural fit rather than domain expertise.
However, in April 2009, just a few days before Kochhar was to step in as the CEO of ICICI Bank, two high profile executives, Sharma and Ramnath quit the organization. A 29-year veteran with ICICI who led its Prudential Life Insurance division, Sharma moved to Axis Bank as its Managing Director and CEO with effect from June 2009. Ramanth, on the other end, who led ICICI Bank's private equity arm, ICICI Venture Funds was expected to set up her own private equity fund. Vishakha Mulye replaced Ramnath while V Vaidyanathan took the place of Sharma.
Amid these dramatic events, Kochhar was all set to blaze a new trail as she succeeded Kamath as the new Managing Director and CEO of ICICI Bank on May 1, 2009.
Chanda Kochhar As The New CEO of ICICI Bank - The Challenges Ahead
Adding strength to millions of Indian women opting for top slots in banking and finance, Kochhar set out a new agenda for the company's growth during the crisis well ahead of taking charge of the bank operations (Exhibit II). She even had detailed meetings with CEOs of global banks to learn the strategies in dealing with different business situations and gained valuable insights from their experiences. Kochhar also expressed her interest in interacting with various parties involved in the bank's operations - regulators, employees and investors (Exhibit III).
Keeping in mind the prevailing financial crisis, Kochhar decided to change the bank's traditional focus on three sources of funding for business growth - long-term bond issuances, rise of inter-bank borrowings and retail deposits. Thus, Kochhar wanted to bring in many changes during the Chanda era. It included aligning organizational goals with the prevailing economic conditions, immediate focus on deposit structure and credit quality, reduction of reliance on external agencies for selling loan products and instead reliance on selling and cross-selling by the branches themselves and fixing the cost structure through a different approach to capital utilization and profitability. Further, Kochhar was also ranked among the world's top 20 powerful women compiled by Forbes (Exhibit IV).
Despite all this, many analysts were sceptical about Kochhar's abilities in carrying forward ICICI Bank's legacy that Kamath had built over the years forward. More so, when the leading private bank faces the impact of global economic slowdown with shrinking balance sheet and a growth rate of mere 5%-10% as against the regular 30%. The company's international business that accounts for 25% of the consolidated balance sheet, reported losses due to US' subprime crisis.
Further, in 2008, the bank scaled back its retail portfolio, did not pay any bonus to its employees. It even lost depositor trust due to rumors of failure and also saw the exits of high-profiled executives. Viren Mehta, Director at Ernst & Young, says, "Kochhar's challenge will be to steer the bank through a period of financial turbulence, create momentum and put some life into its stock price".
But Kochhar remains undaunted: "If the environment throws up challenges, we would take cautious steps. At the same time, we are optimistic because the long-term scenario will bring a whole lot of opportunities." She further adds, "We are adjusting ourselves to the change in the environment. Next year, growth will be definitely higher as lower interest rates will be a catalyst to restart investment activity". Regarding executive exits, Kochhar is all-optimistic saying that the bank has a depth of versatile talent who can handle different functions efficiently.
Given the scenario, is Kochhar the right person to succeed Kamath? Is she the right person for the tough job that lies ahead? Can she manage the mandate in the male-dominated financial sector? Can women be better leaders than men, in areas like banking and finance?
Annexure I
Women-centric Initiatives in the Indian IT Sector | |
Company
|
Initiatives
|
• Received from the Madras Management Association, the Best Women-Friendly Company award.
| |
Accenture
|
• Gender diversity begins at the recruitment stage itself and designed a recruitment campaign has been design to attract women employees. It includes a metrics-based recruitment process, a referral program, a strong connection with colleges dedicated to providing women education, a tailored advertising campaign and weekend recruitment events.
• Under the leadership of Rekha Menon, the company introduced various policies – global flexible work arrangement, maternity returners program, which helps ease the transition for new parents back into the workforce by providing career guidance and support for finding ideal reentry roles, child care centers, etc.
• Set up Vaahini, a formal community of all women employees where they can share experiences and create opportunities to learn and grow.
• A women networking portal.
• Gender sensitization training for supervisors and counsellors to help them understand and appreciate diversity and engage and manage employees successfully.
• Launched a 14-month India leadership development program for high potential, senior women managers and a ‘Developing high performing women program’ to enable women managers to develop relevant skills as part of their career journey.
• Career counselling and mentoring for women executives.
|
Cisco Systems
|
• Numerous training and development opportunities.
• A volunteer employee network within the company - Women’s Action Network (WAN) aimed at empowering all levels of women to develop influencing and leadership skills that support their career growth.
• Women’s Leadership Development programs, Mentoring initiatives.
|
Wipro
|
• Set up a diversity council.
• Launched Women of Wipro (WoW) initiative, coinciding with the international Women’s Day on March 8, 2008 and honoured its women workforce with the title of ‘Green Ambassadors’ besides felicitating women achievers.
|
Infosys
|
• Infosys Women Inclusivity Network (IWIN) that promotes a gender-sensitive work environment and provides avenues for vocational, personal and psychological counselling to enable professional and personal development.
• Family Matters Network that provides support to employees on parenting matters.
• Honoured women employees on International Women’s Day honored women employees who have been catalysts of social change.
• Launched SPARK, a unique two-day event for women students in their fourth-sixth semester from engineering colleges across India.
|
Annexure II
Women Executives at ICICI Bank Ltd. | |||
Name of the Women Executive
|
Age
|
Educational Background
|
Current Designation
|
Chanda Kochhar
|
47
|
• A MMS degree from the Jamnalal Bajaj Institute of Management Studies, Mumbai and a degree in Cost Accountancy from the Institute of Cost and Works Accountants of lndia.
|
Managing Director and CEO of ICICI Bank Ltd
|
Madhabi Puri-Buch
|
43
|
• A graduate in mathematical economics and has a post-graduate degree in management from the Indian Institute of Management, Ahmedabad.
|
Managing Director and CEO of ICICI Securities
|
Vishakha Mulye
|
40
|
• A commerce graduate from Mumbai University, and a chartered accountant.
|
Managing Director and CEO of ICICI Venture Funds Management Company Ltd.
|
Kalpana Morparia
|
58
|
• Bachelors’ degrees in science and law.
|
Head of JP Morgan Indian operations
|
Lalita Gupte
|
60
|
• A Bachelor’s Degree in Economics and a Master's degree in Business Management - an INSEAD alumnus
|
Independent Director of Bharat Forge Ltd. since December 2006
|
Shikha Sharma
|
48
|
• B.A. (Hons.) graduate, has a Post Graduate Diploma in Software Technology, from the National Centre for Software Technology, Mumbai and completed her Masters of Business Administration from the Indian Institute of Management - Ahmedabad.
| |
Renuka Ramnath
|
48
|
• A graduaute in Engineering and holds an MBA in Finance from University of Bombay.
• She also completed the advanced Management Programme at Harvard Business School
|
Likely to start her own venture
|
contd..
Annexure II
Women Executives at ICICI Bank Ltd. | ||
Name of the Women Executive
|
Work Experience
|
Achievements and Credentials
|
Chanda Kochhar
|
• Began her career with ICICI Bank in 1984 in project finance department.
• Played an instrumental role in establishing ICICI Bank as an independent commercial entity in 1993.
• Made in charge of the Infrastructure Industry Group in 1996.
• Promoted as general manager to handle client relationships in 1998.
• Simultaneously handled the group's strategy and e-commerce divisions.
• Chosen as the head of Retail Finance division in 2000.
• Made executive director of retail banking in April 2001.
• Promoted as deputy managing director in 2006 with responsibility for both Corporate and Retail banking business.
• Handled International and Corporate businesses during October 2006-October 2007.
• Became Joint managing director and CFO of ICICI Bank in October 2007.
|
• Ranked in Fortune’s List of Most Powerful Women in Business for four consecutive years (2005-2008).
• Selected as Retail Banker of the year in 2004 for the Asia Pacific region.
• Selected for the ‘Rising Star Award’ for Global awards 2006 by Retail Banker International.
• Awarded Business Woman of the Year 2005 by The Economic Times of lndia.
|
Madhabi Puri-Buch
|
• Began her career with ICICI Bank in 1989 in the project finance department.
• Left ICICI in 1992 and worked in ANZ Grindlays.
• Joined ICICI again in 1997 in the planning and treasury department.
• Designated as senior General Manager in 2003 and was promoted as group corporate brand officer and head-operations in 2006.
• Promoted as Executive Director in June 2007.
|
• With very little experience in fairly specialized fields, she tackled a succession of responsibilities, ranging from Internet trading to mortgage financing.
|
Vishakha Mulye
|
• Began her career with ICICI Bank in 1993 in the project finance department.
• Designated as senior General Manager in 2004 Became ICICI Bank's CFO and treasurer in 2005 and subsequently as group CFO in 2006.
• Appointed Executive Director at ICICI Lombard General Insurance in 2007.
|
• Honored with the India CFO Award in 2006, instituted by International Market Assessment (IMA) for excellence in finance in a large corporate. Chosen as a 'Young Global Leader' for the year 2007 by the World Economic Forum.
|
Kalpana Morparia
|
• Had 33 years of career with ICICI Bank.
• Worked in the legal department of ICICI from 1975 to 1994.
• Became General Manager, to take charge of legal, planning, treasury and corporate communications departments in 1996.
• Designated as senior General Manager in 1998.
• Joined ICICI Board of Directors in May 2001.
• Became Executive Director in May 2002.
• Became Deputy Managing Director in 2004.
• Elevated to the post of joint Managing Director in 2006.
• Became in charge of ICICI corporate centre to take care of transaction processing and operations for wholesale, retail, rural and international banking, strategy, risk management, compliance, audit, legal, finance, treasury, secretarial, human resources management, corporate communications and facilities management and administration functions.
• Appointed chief strategy and communications officer—ICICI Group for a period of five years effective June 1, 2007.
|
• In recognition of her outstanding contribution in the field of finance and banking in India, the Indian Merchants’ Chamber (Ladies Wing) has conferred on her the ’Women Achievers Award in the Field of Finance and Banking–1999.
• Business Woman of the Year 2004-2005—The Economic Times. Awards for Corporate Excellence on ‘The Women Behind ICICI’.
• Women of the year award in 2002 from International Women’s Association.
• The 21st Century Finance & Banking award from the Ladies '“Wing of the Indian Merchants” Chamber in 1997.
|
Lalita Gupte
|
• Has more than three decades of experience in the financial sector.
• Began her career with ICICI Bank in 1971 in the project appraisal division and rose to hold various positions in areas of Leasing, Planning and Resources and Corporate Banking.
• Appointed as Executive Director on the Board of Directors in 1994 and subsequently as the deputy Managing Director in 1996.
• Elevated to the post of joint Managing Director of ICICI in June 1999 and retired in October 2006.
|
• “Women Achievers’ Award” from the Women Graduates Union (2001).
• Has been instrumental in setting up various group businesses for the company, including investment banking and retail finance.
|
Shikha Sharma
|
• 29-year veteran with ICICI Bank.
• Began her career with ICICI Bank in 1980 and she has been instrumental in setting up various market leading businesses.
• In 1992, she was involved in setting up ICICI Securities – a joint venture between ICICI and JP Morgan.
• After working for ICICI Bank group for 15 years, she moved to ICICI Securities and was even deputed to J.P. Morgan & Co.
• Rejoined ICICI in 1997 as general manager in charge of the strategic planning and development department.
• Served as Managing Director and CEO of ICICI Prudential Life Insurance Company till she quit the company in April 2009.
|
• In 1992, she was involved in setting up ICICI Securities - a joint venture between ICICI and JP Morgan.
• Responsible for establishing ICICI Prudential Life Insurance Company Ltd. as India's leading private life insurer.
|
Renuka Ramnath
|
• A 20-year veteran with ICICI Bank .
• Began her career at the Merchant Banking division of ICICI and then headed the Corporate Finance and Equities businesses at ICICI Securities.
• She moved back to ICICI in 1997 to set up the Structured Finance business.
• In 2000, she spearheaded the e-Commerce initiatives for the ICICI Bank group and built a solid foundation spanning the entire B2B, B2C and technology opportunities.
• Became Managing Director and CEO of ICICI Ventures in 2001.
• Quit ICICI Ventures in April 2009.
|
• Featured in many prestigious lists including the Top 25 Most Powerful Women in Indian Business (Business Today) and in the India's most powerful CEOs (The Economic Times).
• Was honored with IMM Best Women Entrepreneur award
|
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