BRIDGING THE GAP BETWEEN POTENTIAL AND PERFORMANCE:

THE CHALLENGESS OF INDIAN MANAGEMENT

FRANCIS PIRON, Ph.D., 2013

A COUNTRY OF CONSIDERABLE CONTRADICTIONS

• Willing & able to play a leading role in the global economy but with a closed economy in terms of labor, capital and knowledge

• Highly confident national mindset but small number of confident entrepreneurs

GAP BETWEEN INDIA’S

POTENTIAL & PERFORMANCE

A COUNTRY OF CONSIDERABLE CONTRADICTIONS

• Laden in traditions: – Domination of families– Highly bureaucratic government systems– Lack of management know-how & professionalism, &

ethics– Low quality

• Protectionist Culture =>Inefficiencies, Corruption

• Significant Global Leadership in Software, Automobiles, Bio-technologies, Pharmaceuticals

LOCAL ISSUES & FORCES OF TRADITION INFLUENCING THE MGMT HERITAGE OF INDIA

• Key Traditional Socio-Cultural Influences on the Indian Mindset: – Strong residual influences of cultural & spiritual forces– Existence of “ Split Personality”

• One type of behavior in the organizational context (collectivist),

• Another type at the very personal level (individualist).

– This duality is guided by:• Desh: Site or location,• Kaal: timing,• Patra: Specificities of the context

LOCAL ISSUES & FORCES OF TRADITION INFLUENCING THE MGMT HERITAGE OF INDIA

• Key Traditional Socio-Cultural Influences on the Indian Mindset: – Dissonance between democracy & caste system– Concept of “Guna,” a personality attribute guiding

behavior• Sattawa Guna, virtue orientation, refers to higher values,• Tamasik Guna, negative value orientation, as with

ignorance, corruption,• Rajas, action orientation, strong purpose/focus

– Western mgmt values are tempered with Indian values, and patriotism & religious values shape organizations, businesses, companies, etc.

LOCAL ISSUES & FORCES OF TRADITION INFLUENCING THE MGMT HERITAGE OF INDIA

• Key Traditional Socio-Cultural Influences on the Indian Mindset: – Contemporary managerial worldviews derived from deep

spiritual Indian values, such as Nishkama Karma, the central concept of the Hindu source of human endeavor

– These deep values are rooted in Vedantic philosophy • Emphasis on Dharma, the principled, ethical core,• On Artha, the practical challenges,• Kama, the worldly motivation,• Moksha, the self-actualization.

– Such values are dominant in managerial leadership, organizational cultures, strategic formulation

• Tata uses Dharma as the primary base for appraising managerial performance

LOCAL ISSUES & FORCES OF TRADITION INFLUENCING THE MGMT HERITAGE OF INDIA

• Key Traditional Socio-Cultural Influences on the Indian Mindset: – Education based on rote memorization (as in China), but with

strong ability for abstract thoughts (different from China), intuition and logic (argumentative vs. discipline & obedience for Chinese)

– Cultural bonding involves • Sradha, the upward loyalty to someone senior, and• Sneha, affection for and mentoring of someone junior,• Similar to Confucianist values parent-child, older-younger siblings

– Family bonding and social links at the workplace are one of the most positive cultural practices that sustain Indian organization (loyalty, hierarchy, reciprocity, etc).

LOCAL ISSUES & FORCES OF TRADITION INFLUENCING THE MGMT HERITAGE OF INDIA

• Key Traditional Socio-Cultural Influences on the Indian Mindset: • Key Traditional Socio-Cultural Influences on the Indian Mindset:– While collectivistic in non-work contexts, Indians are individualistic at work

… “Split Personality.”

LOCAL ISSUES & FORCES OF TRADITION INFLUENCING THE MGMT HERITAGE OF INDIA

• Managerial Context & Global Competitiveness:– Stable institutions– Slow and rigid bureaucracy but abide by the “rule of law” and

independence of the judiciary– “License Raj” 5 decades of “mixed,” socialist-patterned economy– Moved from an economy of chronic food shortages to a service-

oriented economy, becoming a global provider of IT solutions– Significant improvement in the quality of “Made in India” products– Massive growth of management schools and knowledge-based

industries

LOCAL ISSUES & FORCES OF TRADITION INFLUENCING THE MGMT HERITAGE OF INDIA

• Indian Competitive Advantages & Constraints:– Large pool of English speakers– Knowledge-intensive human resources

• Young population (compare to “Reserve Army of Underemployed”

• Linkage to Indian diaspora– 38% of MDs in the USA are Indians– 2% of Scientists in the USA are Indians– 36% of NASA employees are Indians– 34% of Microsoft employees are Indians– 28% of IBM employees are Indians– 17% of Intel employees are Indians– 13% of Xerox employees are Indians

• Indian Competitive Advantages & Constraints:– Large pool of English speakers– Knowledge-intensive human resources

• Young population (compare to “Reserve Army of Underemployed”

• Linkage to Indian diaspora

– Regional diversity:• Inconsistencies in economic ideologies

– Bharatiya Janita Party (strongly Hindu, heads govt. coalition)– Indian National Congress (main opposition)– Communist Party of India (Marxist) (W/ Bengal & Kerala states)– Samajwadi Party– Shiv Sena (MAharashtra state & Delhi)– All-India Anna DMK (Tamil Nadu state)– Akali Dal (Punjab state)

• Indian Competitive Advantages & Constraints:– Large pool of English speakers– Knowledge-intensive human resources

• Young population (compare to “Reserve Army of Underemployed”

• Linkage to Indian diaspora

– Regional diversity:• Inconsistencies in economic ideologies,

• Inconsistencies in managerial mindsets,

• Inconsistencies in governance

– Ideology of nationalizations, regulatory controls, bureaucratic hurdles

– Mindless bureaucracy lacking in innovative spirit

THE MGMT OF INDIAN INSTITUTIONAL INFRASTRUCTURE

• The Corporate Context:– Family Conglomerates:

• The Corporate Context:– Family Conglomerates:

• Global aspirations

• Hybrid mixture of indigenous & sophisticated global managerial culture

• Backbone of Indian economic & managerial life

• Tata Empire = Indian business culture

– Born Global: • Within the knowledge industry economy

• Enshrine world-class quality, flat & empowered work teams

– Multinational Firms employ the best of global mgmt practices– Govt-Owned & Controlled Entities lack performance and skills– SMEs – Trading mind set, unable to use scale economies

A protest in front of the unfinished Tata Nano plant in Singur last week. (Prashanth Vishwanathan/Bloomberg News)

West Bengal protests lead Tata to halt all work on Nano car factory

THE MGMT OF INDIAN INSTITUTIONAL INFRASTRUCTURE

• Towards an Indian Managerial Model:– Strong Nationalistic Pride: Mother India– Traditional cultural forces originating from the desire of achieving

a robust global identity– Unavoidable prevalence of the bureaucratic institutional structure– New local confidence in innovation, enterprise & global reach

THE MGMT OF INDIAN INSTITUTIONAL INFRASTRUCTURE

• Managerial Emphasis at the Micro Level:– Motivational dynamics:

• Different motivational patterns at various levels & industries– Emphasis on Dharma, the principled, ethical core,– On Artha, the practical challenges,– Kama, the worldly motivation,– Moksha, the self-actualization.

• Different motivational patterns in private & public sectors

• Priority of learning replaces economic & security motives

• Decision-Making Patterns:– Top-Down Approach:

• Professional & expert advice may be obtained

• No or low request for participatory energy from staff

• Bureaucratic rules dominate

• Managerial Emphasis at the Micro Level:– Motivational dynamics:

• Different motivational patterns at various levels & industries

• Different motivational patterns in private & public sectors

• Priority of learning replaces economic & security motives

THE MGMT OF INDIAN INSTITUTIONAL INFRASTRUCTURE

• Communication Process:– Reflect the country’s natural context:

• “Shared Meaning” may not be consistent

• Expectations of “time” are not shared between industries (i.e., future vs. now)

• Excellence in English

• Reliance on “task & role” orientated communication

• Need improvement in cross-cultural communications & negotiations

• Sensitivity to political, religious & social issues • Decision-Making Patterns:

– Top-Down Approach:• Professional & expert advice may be obtained

• No or low request for participatory energy from staff

• Bureaucratic rules dominate

THE MGMT OF INDIAN INSTITUTIONAL INFRASTRUCTURE

• Management of Change Innovation:– Wider acceptance of shortcomings:

• Lack of competition – protectionism, socialist orientation

• Lack of professionalization

• McDonald’s

• Managerial & Leadership Culture:– Patriarchal leadership culture dominates– Acceptance of “satisfactory under performance”– Strong organizational discouragement of critical feedback

REFLECTIVE ESSAY

• WHAT HAVE YOU LEARNED ABOUT INDIAN MANAGEMENT?

• HOW DOES IT COMPARE TO YOUR NATIONAL MANAGERIAL STYLE?