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Monday, 4 June 2012

Margin-alization: Known Devil!

Who doesn't like profitable company? After all it's the fundamental expectation from any business. There is no dispute on that rudimentary concept but debate is all about at what costs and where to draw the line. Corporates exist since eon so taking a dig on its functioning will be like sneering at blue sky. Information technology(IT) is comparatively a newer kid on the block and as my professional existence is through IT, I will confine my snivel and sarcasm to the industry I know the best.

Corporates do start as entrepreneurship at inception and gradually the amoebic but nimble initiative transforms to so called structured organization. Does it lose the nimbleness and essential people-focus once it embraces the structured, process-heavy and profit-centric corporate culture? Academically No. Arguably Yes. But the essence of my discussion is not to defy those umpteen institutions and consulting firms who earn their living by preaching the equation, Process -> Growth -> Profit. Rather to harp on one of most important stakeholder of an IT organization, it's employees. Situationally a hapless stakeholder who stares at the danger of being commoditized as a company grows.

More resources drives higher revenue. Some companies do pad themselves with inorganic acquisitions and non-linear growth alternatives. But it's never a serious alternative to linearity unless one is a IBM or HP who added service linearity to the existing non-linear business model. So going by the equation, for IT services company it's all about resources, resourcing and retention. Individual performances are valued and credited individually. Suppa!

But does this simple equation stands good once a company grows to a significant size? Believe me, it gets complex. Individual performances gets blurred with so called constructive comparatives and eventually employees are befitted into what I define as CCC: company comfort curve. A fair phenomenon to appraise employees to incentivize the best with most and penalize the lower comparatives with least. A best practice with a vital catch: Handsful of comparative 'best' will qualify for the 'most'. Voracious appetite for growth takes companies 'public'. Investment conscious, Return oriented and sentimentally vulnerable shareholders puts relentless pressure on companies to grow and get profitably stouter. It triggers a cost conscious tsunami across the organization gobbling employee satisfaction and annhilitating motivation. In the name of lean, organization is stripped to bones. CCC becomes an undaunted catalyst to implement a faux pas: Forced Attrition. Well, cutting off ones arm is the easiest way to reduce weight. Fallacy?

Can organizations avert employee vegetation at midst of juggernaut growth? Decidedly optimist, I refuse to concede its an imminent apocalypse. Success of a company shouldn't be cherished just at top management rather relished by each employee. As professor Nonaka elucidates, practical wisdom is key for leaders. Whether its "toku - Common good and moral excellence" in Japanese or "yukta - just right" in India, leaders should believe that business essence and even the profits, should be to serve people. So people shouldnt be just punctuations to growth, rather the benefactors. As Mr. Eiji Toyoda from Toyota aptly said, Doing the right things, when required, is a calling from on high. So a potential antidote to this organizational epidemic should advent from the highest levels of an organization. Apart from sketching obvious top and bottom lines, CEO and leaders have to own up People aspect as their major KPI's. Normally, the employee development is delegated till middle management and generally scapegoated to Human Resource team. Ideally, the ownership and accountability should go all the way to the top and interconnected. Engage, encourage and empower are three 'E's required to sustain employee-employer balance irrespective of latter's business dimension.

Engage: Every employee is relevant and contributes to company's success. It has to be sensitivised with every employee through regular communication channels. Communication fosters sense of involvement which inturn ensures engagement. An engaged employee is a loyal employee.

Encourage: Financial compensation might be the most coveted perk but thats not the only one. Recognition is also a key expectation attribute. Irrespective of the mode, recognition encourages one to excel. A motivated employee lays the stepstone of a successful company.

Empower: One of the most matured and powerful virtue in an organization. One who empowers and one empowered, both carry an incredible risk pertaining to trust and execution, respectively. Empowered employees fathom companies direction, envisions it and steers it to realization.

Every stakeholder and not just shareholders, is pertinent for an organization. Companies are answerable to employees as much as they are to shareholders. So an ecosystem which fosters mutual growth breeds success whereas marginalized approach prescribes recipe for disaster. Choice is obvious but chosen to be obfuscated.


  1. Superb blog.
    I would like to mention here that Vijoy had practiced the 3E's fairly well during his TCS Career, I have worked with him and know this from a personal experience.

    This could well in turn become the MANTRA for a corporate success.

    Publish it as much as you can.

    Bharat Deep

  2. Totally agree with the second E. Unfortunately, extremely few people know it. A few words of encouragement does a world of good,
    and most importantly, forges an extremely formidable bond(dare I say "loyalty", for that term has been mangled beyond recognition
    within my initial years in this industry) with the person who doles it out. Even though the link here is personal, but once the same "process" follows across layers, the grassroot is tied very securely to the company."A chain is only as strong as its weakest link".
    This blog post coming from you, probably tells me there's still hope in this industry, for scepticism is deadly and it's already set in.

    1. Thanks Anirban. You have put up an impressive blog for yourself.