Thursday, June 10, 2010

Knowing that we lose money, do we really want to know why?

This company, undertook turnkey projects globally and had sizable order books to last another 5 years. The board took a serious notice of the alarming rate of increase in the instances of customer complaints, legal suits on performance shortfalls and cancellation of orders. It was clear that competition from Chinese, Taiwanese and Korean companies was getting intense; they had acquired a reputation for undertaking larger projects lower costs and shorter delivery cycles. In a few cases, the Scandinavian companies were given the job of designing, which was more profitable and prestigious, reducing the role of the Indian company to being a mere labor supplier and site supervisor. The CEO was advised by the board to infuse fresh blood into the company to arrest the decline and present a clear strategy to regain their market share.

Satwinder Narang, one of the management trainees, vividly recalled the welcome address of the CEO during their induction program. Taking a great deal of pride in ‘his’ team, the CEO had proclaimed, “Everybody in my company works very hard. We have reached this far because of the untiring efforts of the workers and senior management. While extending a warm welcome to our ‘associates’ drawn afresh from colleges, I would urge you all to emulate the culture of dedication and transparency instilled by your seniors.” The meetings ended with a customary vote of thanks being proposed by one of the inmates of the incoming batch of fresh employees.

Soon thereafter, Satwinder was assigned the task of identifying the scope for making additional profits and containing the room for possible leakage of profits leading to losses. After having toured the various departments he had been assigned to study, it was time for him to turn in his report. A sample of 25 out of the 100 plus projects that he had studied showed that any project could potentially lose money under six headings.

All trainees, like him, were due to be assessed for their aptitudes by an assessment board that included the CEO. Candidates that came up with directly actionable findings will be given independent charge of managing the projects and posted overseas.

While the prospects for professional visibility and faster career growth were a distinct possibility, there was considerable anxiety about the level of readiness and receptivity of the top management to the somewhat ‘brutal’ findings the project report contained. Was the management really serious about knowing the shortcomings and doing something about the business?

When Satwinder alluded to virtues of openness that the CEO mentioned during the induction program, the seniors merely chuckled in discreet silence and persuaded him to exercise discretion. Satwinder became even more uneasy when he consulted his seniors. His HR guide encouraged him to be bold but advised him to verify the numbers and the logic so that his report could not be dismissed as the work of an amateur. On the contrary, his mentor, drawn from the business stream however, cautioned Satwinder on the need to contain his enthusiasm lest he be perceived as being a nit picker and an upstart.

Should he play safe or be bold and feel sorry?

Was there a danger of ruining one’s career prospects by tabling facts that may not be of very sympathetic towards the top management? How to know and whom to ask for advice, wondered Satwinder?

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