Tuesday, September 28, 2010

Why be honest when it is inconvenient to be so?

Peter Kolaco is a tough no no-nonsense CEO of a National Insurance company in the US. He knew his subject well and treated all his employees, suppliers and stakeholders with great respect. He is always empathetic to wards his people because he knew he demanded a lot more from them than what they were capable of. That is why he rewarded them at a 20% premium over the others in the market place.

Yet, if there was one thing that annoyed him most, it was this. He hated nasty surprises. Especially so after sufficient opportunity is given to people to clarify issues in advance, air their difficulties and renegotiate the commitments they make to him. If ignorance was thoroughly unpardonable, dishonesty was totally unacceptable.

He learnt that the Indian Software supplier had failed to keep his delivery commitments for one more time. He had served them an ultimatum, very politely but firmly though, at the last meeting with the Indian CEO, Mr. Kedlaya. He just then called up Mr. Kedlaya and told him that the contract for the project stood terminated. He had consulted his lawyers who found enough grounds for breach of contract and non fulfillment of the terms of the agreement. Regrettably, he will have to turn the matters over to his attorneys to serve the notice the following week.

Kedlaya convened an emergency meeting immediately. He was fuming at his executives that he had not been kept informed about the displeasure of Peter well in advance. The adverse publicity generated by the legal notice will go around the industry making it harder for them to book more business. After a lot of deliberations, he was informed that the project delivery team had shipped the product in spite of the Quality Assurance team not approving of the despatch.

Kedlaya appealed to Martin Bird, the newly hired Director of Quality Assurance, to call up Peter and somehow placate him to hold off his ultimatum for now. Peter, an Irish National was fanatical about Quality and enjoyed the highest reputation in the industry for enforcing the most stringent standards of commitment to quality. Peter knew about Martin’s unimpeachable track record; after listening to Martin patiently, Peter elected to wait for 48 hours by when the “promised miracles must happen” he said.

Martin lost no time. He studied the various weekly progress reports thoroughly and concluded his investigations within an hour. Promptly, Martin convened an emergency meeting of the CEO and the sales team. “ We all know about the gravity of the issue here. I will get to the point straight. Peter is right. Whoever gave them the wrong commitment needs to step forward and repair the situation or face the consequences.

As you all very well know, the Quality Policy is very clear. Ms Kamala, the QA officer was perfectly justified in holding back the shipment. She did her job. I want you all to appreciate her for her diligent efforts to do her job to the highest standards we expect of QA staff. The team round the table applauded her after which she excused herself. The project director felt let down and protested that if QA is given a free hand to stop shipments, he would find it very hard to show profits.

Kedlaya concluded, “We cannot undermine Quality. That is why we have brought in a person like Martin with a fine reputation. His decision will be final and binding on all of us. We must appreciate that this is the last straw. Either we produce quality or face the consequences from high profile clients like Peter. Time is running out. I trust Martin’s judgment and will empower him to take appropriate measures.” Returning to his desk, Kedlaya called in the CFO and asked him to brief Martin informally on how he can avoid the inconvenience of the company by adopting a more ‘practical view.’

Martin chuckled to himself at the diplomatic doublespeak and the convenience with which Kedlaya tried to escape from his commitments made to the client. He also noted the tacit support Kedlaya extended to the project team when Martin, as a Director, was obliquely advised to take a more balanced view. Implicitly, the pressure of commercial considerations were being cleverly passed on to the Director Quality. He felt it was his moral duty to remind the CEO of his role in the matter. He was in no dilemma as he walked out into the cool December night of Chennai, after dictating a note to the board for approval.

Guess the message Martin would have put out to the board invoking the CEO’s responsibility for Quality?


Friday, September 17, 2010

A matter of judgment!

Paul Rajan, CEO of the pharmaceutical company Eureka International looked very worried.

His new and revolutionary product, developed after 7 years of painstaking research is waiting to hit the market. The

sales team has been trained and are looking forward to the excitement of making a ‘killer’ sale this season. The marketing

team has put together a multi media promotion that is definite to place Eureka amongst the pioneers in research. The

media and press relations are excited at the coverage they will generate and the proximity to the centers of power it will

generate. The company secretary is definite that the shareholders will welcome this introduction. There will be a positive

jump in the share prices. With so much excitement all around, what could get Paul Rajan so worried ?

To go ahead with the launch or not?

Paul had just had one final round of meetings with his R&D managers. Everything seemed to be normal until one of

his staff reported an adverse reaction from one of the elder patients on whom the drug had reacted adversely. Should he

hide and dismiss this as a freak occurrence and go ahead with the launch ? Or should he have the matter investigated more

thoroughly and get fully reassured about the absence of any side effects? This was his dilemma.

Quite by accident, his school teacher had dropped in the day before to enquire about his health and the well being of

his family. Paul Rajan has been donating liberally to the development of his school and enjoyed a very special place in the

heart of his school teacher. Paul took the liberty of airing his concern and sought the impartial view of his Guru.

“ As we grow older and somewhat successful, instead of getting more powerful from within, many of us are challenged

by fear. I do not run a company such as you and I therefore am not sure if my response will be palatable . Nevertheless, the

hardest thing to do as we grow older are these :

Ability to challenge precedence: Can we assume the circumstances to always be favorable? How do we learnt to

accept and overcome set backs and adversity instead of pushing along with our own agenda?

Having the courage to undo our past doings: We take all the benefits endowed upon us by our previous

generation and blame them for the problems they let behind, forgetting the miseries we leave behind for the ones that


Letting go our privileges: Learning not to succumb to the charms of pleasures and privileges that we are prone to

take so much for granted. How much of what you have can you do without? without surrendering oneself to it for eternity !

Administering a bitter medicine to the self: How does one resist the temptation to follow what is convenient

in preference to doing what may be difficult but more appropriate ?

The fact that your conscience continues to trouble you shows that you are being true to yourself.

The fact hat you are seeking my advice shows your deep respect for me.

The best I can do is to encourage you to trust your judgment and choose to go with what will give you true joy!

Think: What would Paul Rajan tell the board? To go ahead or to stop?


Retrospective commentary:

Rajan reflected upon the words of his school teacher.

The anxiety that Rajan experience was justified. The teacher was right in pointing out that it is because he

cared so much for the medicine to be good that he was troubled mentally. Instead of sharing his dilemma, he

told the board the predicament he was in and asked them for their advice. He allowed the collective wisdom of

the board to bear on the issue rather than feel compelled to think n their behalf.

Saturday, September 11, 2010

Extreme HRM in the International Aviation Industry

Amar al Mafrigi, an Omani National, won a prestigious scholarship to study in India. His stint in India, opened his mind to pursue what he desired most. Upon his return, he sought transfer from his sinecure job with one of the Ministries to a more challenging role with Oman Air as their head of Human Resources.

The IT head and the Branding Manager had cornered sizable share of the budget for next year. Unless Amar succeeded in persuading the board to grant him a bigger budget than the others, his stature in the organization may stand undermined. So, he convened a meeting of the HR department and asked them to give him a well researched business plan that would leave no choice for the board but to approve. Naturally, being a local national, while he enjoyed all the privileges, he allowed all the thinking to be done by a few India born MBA’s.

Promptly the team got to doing what it always did in an hour of crisis. Browsed the balance sheets of a few leading airlines and called up their friends in India to come up with an outline of what could be done.

The 2008-09 Annual report of British airways was categorical in that the International passenger airline industry was already mature and highly deregulated. 35 passenger and cargo companies had either gone out of business or absorbed into other companies (P 20). Further it predicted that in the next 10 to 20 years, the industry will be dominated by a small number of Global airlines Groups(P 5).

DEMANDING CUSTOMERS: Meanwhile, Interbrand study of best Global Brands 2009, did not feature even one international carrier amongst the top 100. A survey of highly active global travelers declared ‘Integrated customer experiences from web booking to return home by cab’ as their most pressing differentiator and wanted seamless global connectivity with minimal flight disruption. Travel costs was the most favorite line item for cost savings and budgetary cuts for all class of travelers. All class of customers were active bargain hunters and looked for relative price differential on the web before booking (78% book on web at South West Airlines). Singapore airlines for voted # 1 on Attentiveness to customer while the british Airways coveted the # 1 position for fulfillment of frequent flyer points. Southwest Airlines was favored most for Frequency & Convenience Flight schedules.

BRUTAL COMPETITION: Aviation winners were all contemplating on managing their short term crisis through dynamic forward cover on fuel cost fluctuation and resort to short term cost cutting, freeze on recruitment or large scale layoff. Aircraft selection & utilization were the focus of Emirates & SIA. they managed their needs for daily cash flow and liquidity through IT enabled Research intensive business model reengineering.

Oman air had already committed budgets to improve upon these areas. Likewise, Oman air had upgraded their brand campaign and made very significant efforts to tune harder into the customers, align with their long term customer needs to convert them into loyal long term annuity yielding customers.

Creating a brand campaign is one thing but living up to a profitable brand promise is quite another. The difference is not mere technology not brand campaign but people.

Our analysis (see table) suggests that it is the ability of the employees of Singapore Airlines to generate 2.1 times the profit for every unit of salary they have received is the key. While British airways with more aircrafts and 25% more employees ( after retrenchment) posted huge losses, SIA remained profitable. While emirates needs 221 employees to service an aircraft, SIA needs only 129. SWA employes only 66 people compared to SIA but we should remember that SWA is not an International carrier. For a domestic carrier, why are they paying 60% more than SIA?

RISK : All the Airlines are faced with risks they cannot pass on to others but suffer. Factors that are clearly beyond the scope of any airline are the volatility in the price and availability of ATF, the ever present dangers of war, terrorism and political instability together with the worsening currency crisis and economic conditions. Impact of Air traffic density and congestion at ATC, regulatory changes in safety, emissions, noise, investment towards safety, security and environmental disruptions, demand swift and decisive global response to emergencies.

So what will Oman air count on to stay tuned in to ever changing in consumer preferences, value perception, spend patterns and demographic shifts? It will have to be people. We all know that People and flights cannot look tired they need to maintain a ‘virgin fresh’ look (like in Jet Airways), and invest in a ‘Youthfully intelligent employee base’ and develop a globally scalable work culture where people are fully engaged and sensitive to changes.

An internal research report on the demand for aircraft Maintenance, Recovery & Overhaul (MRO) has studied the emerging traffic patters and concluded that there will be just ONE hub for each continent. SIA will lead Asia, SAA for South Africa, Lufthansa for Europe, Varig for south America.

The report is silent about the Middle Est.

Will Oman Air tip the Emirates to rule the skies in the Middle East?

Think: Did Amar get to present the findings to the board? How may have they reacted?


Omani Rials




SW Airlines


























VA/Wage bill


2.19 X

1.63 X

1.13 X

Mean wage bill










Retrospective commentary:

Amar got himself a seat on the board.

Amar has been assigned to form a task force involving IT and Branding to take a seamless approach to the future. His teams are doing outstanding work with a consultant to chalk out a 5 year HR strategy that can recreate the magic of SIA.

Saturday, September 4, 2010

HR: Merchants of depression or messiahs of motivation!

There was simply too much at stake and somebody had to bell the cat. This startup company, now eight years old that went recently public, was no longer a fledgling privately held enterprise. It boasted of multinational clients being served by over 3000 employees drawn from the fields as wide ranging as engineering, off shore banking and market research. While people indeed mattered most, people management was however a different story altogether. Sad but true; in the eight intervening years, nine heads of Human Resources had entered and exited, with significant periods for which the position remained vacant in between.

Narottam Bhai, a prominent industrialist o the board, did precisely what had to be done and no one else was willing to do. ‘If people are our most invaluable assets, why do we have to hire a new HR head every once in a while?’ thundered he. The room and the CEO fell silent. At his instance, a reputed consulting house was invited to contact the erstwhile incumbents for a candid interview.

The findings, tabled subsequently for the board members to take notice of, brought out the predicament faced by the HR heads in their line of duty that had never ever featured before.

    1. HR personnel had to balance their administrative workload with a substantial amount of developmental effort. the fast paced business and demanding customers required them to change tack and transform the policies and practices at a faster pace than the organization was willing to embrace. HR enjoyed little sympathy from the rest of organization for the ‘breathing space’ they needed to tide over the challenges.
    2. Everyone knew that people feature on both sides of the balance sheet; they become liabilities if not developed into assets. Still the best and deserving ones were never released to pursue developmental work. Consequently, while the best ones left, the budgets for training were spent on those who never made use of the investments made in them. Meanwhile, HR personnel were themselves kept so busy developing others that they hardly found the time to invest in their own development!
    3. By design HR is meant to be an integrative function. They made efforts to bring the might of the management to bear on a single goal; by default however, businesses remained unchallenged in their efforts to retain their fiefdoms; assert their own personality and uniqueness.
    4. CEO’s and the board were always seen to be either vulnerable or sympathetic to the business managers in the short term and HR managers in the long term. HR had an obligation to caution the CEO and they claimed to have done so, but failed.
    5. “HR is felt the least, when people practices is claimed as a Corporate virtue”, they said. Business managers liked to keep the privileges of HR to themselves but passed on the ‘people issues’ to HR. Consequently, the business mangers gained a reputation for being ‘friendly and affable’, while HR acquired the ignominy of being ‘tough minded and task oriented’. There was a soft bigotry between mediocrity and permissiveness that went unchecked.
    6. Meanwhile the organization could never achieve the right balance between automation, that demanded standardization and personality considerations that required making due allowance for exceptional discretion. Rigidity of the automated responses ran directly in the face of the flexibility needed to sustain a rapid learning and change oriented work culture.
    7. Finally the system of MIS automated the wrong dials: while Financial indices are a lagged measure and happen much after the event, HR needed early warning metrics. Using financial measures to evaluate the performance of HR is like driving through a fog using the rearview mirror. Unfortunately, much of the HR metrics were ‘soft’ that the number driven czars of management had little patience for.

Narottam Bhai broke the silence. “The problem we have here is more serious than what I had imagined. Are we such an unsafe place to speak up? Why else would our HR mangers who know exactly what it is that is ailing us be so tongue tied as to suffer and sulk in silence rather than speak up and get heard? What do we as senior management need to do for the HR community to feel truly listened to? HR can become messiahs of motivation or merchants of depression depending upon how they are treated.”

Before we hire the next HR head, let us decide how we may want to treat them in the future?


Retrospective commentary: Narottam Bhai invited a speaker to address the board on the subject of ‘Primal leadership’. Most managers, like the Lion that roars in the forest for no apparent reason, is often unaware that they are scaring the other animals away and compel them to take cover. Likewise the senior managers need to be aware that their moods and conduct, however unintended and disguised they may be, send signals, often of the wrong kind, down the organization. They should become aware and take responsibility for the waves they create, howsoever unintentended!