management fundamentals in kautilyas )hjd=id=ijh= vi

8/14/2019Management Fundamentals in Kautilya s )HJD=ID=IJH= VI

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Management Fundamentalsin Kautilyas

)HJD=ID=IJH= VIRADHAKRISHNAN PILLAI

The Running of an

OrganisationKautilya emphasises that the

foundation of an organisation isits financial strength, itseconomy. No good organisationor country can run effectively

without having its economy ingood condition. KautilyasArthashastra makes many refer-ences to the methods ofmanagement of an organisation.They can be broadly classifiedinto three:

1. What a leader should know2. Handling the employees/

people3. Keeping a good accounting

system.

1. What a Leader/KingShould Know

Arthashastra gives prime

importance to the economicaspect of a state. He says thatwealth is the foundation of anation. Bhishma in the Maha-bharata also says that artha is thefoundation of this world, andspirituality is the foundation forthat. Even spiritual organi-

sations require the support ofstrong finances to carry theirnoble messages across the globe.A leader should understand thisfirst.

The objective of any king

(leader) or state (organisation) is to

create, expand, protect and enjoywealth.

There are various dimensionsto wealth. It is not enough justto create wealth; a leader shouldalso know how to expand and

protect it. A good businessmanis not satisfied with just whathe gets; he has an industriousspirit to expand what he hasgot. He needs to have the driveto produce more wealth.

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Next, he should know thatthe wealth earned has to beprotected as well. Otherwise itwould be like a vessel whichhas a hole in its base. We may

go on filling the vessel, but dueto the hole, all that is put in itleaks out. The net result iszero.

Having protected the wealthhe earned, he should also knowhow to enjoy it. This is true even

at the individual level. Theprime responsibility of the headof a family is to earn bread and

butter for his family. Not stop-ping with that, he has toexpand, that is, earn moremoney for a comfortable livingand the higher education of hischildren. He also needs toprotect his hard-earned moneyin good investments. Finally, hehas to know how to enjoy thewealth he has earned by using

it for himself and others. Spend-ing of wealth in the right direc-tions is as important as earningit. Or else we would just becomemisers, without knowing whatto do with the wealth earned.

Be ever active in the man-

agement of the economy, because

the root of wealth is economic activ-

ity; inactivity brings material distress.

Without an active policy, both cur-

rent prosperity and future gains are

destroyed (1.19.35,36)

It is important to be activein the management of the eco-nomy. Activity brings wealth.Can you imagine an organisa-tion that is lazy and also rich?

Without continuous activity,whatever is earned will be dis-sipated, without leaving muchhope even for future wealth.

2. Handling theEmployees/People

There can neither be a leaderwithout followers, nor a kingwithout subjects. Having earnedenough wealth and knowing thestrategies of how to handle it,he also has to understand how

to handle people.A good leader is first a goodpeople manager. Withoutknowing how to handle people,he cannot run the organisationproperly. Understanding people


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is to understand their minds.People have different tempera-ments, attitudes and mindsets.How to handle each one is astudy in itself. Among the most

famous of Kautilyas theories isthe one known in todays cor-porate world as the Theory ofMotivation.

Theory of Motivation

Saama counsellingDaana offering giftsDanda punishmentBheda separation

This theory is used byKautilya in various areas likethe running of a state, making a

plan for warfare, passing judg-ments over criminals etc.

Let us see an example tounderstand the application ofthis theory in todays corporateworld. You may find that oneof your employees is not work-

ing properly. The first step thatyou take is to speak to him andtry to understand him. This issaama counselling, the prelimi-nary round of discussion. Mostof the problems in life start dueto lack of communication. Oncewe sit down across the table anddiscuss things straight, manyissues can be resolved.

However, some employeesare such that they never listen

to good advice. Then we needto use the second method -daana, the offering of gifts Ifyou do this I will give you that.Incentives, promotions, a good

vacation, raise in pay etc. areoffered by various companiestoday to motivate employeestowards better productivity.

Well, some employees do notget motivated by external

benefits. The leader now has to

take corrective action. He has tostart using punishment. Thishas to be implemented tocontinue to retain control. Thepunishment can be severe ormild, depending on thesituation.

If punishment does not yieldthe desired result, one has toresort to bheda or separation.Divide and rule is a very prac-tical and effective way of han-dling certain difficult situations.In the Indian context the phrasedivide and rule has gathered avery negative meaning becauseof its association with the policyadopted by the British to subju-gate India. However, the policyof divide and rule can be used

creatively for the welfare of thevery people concerned. For ex-ample, if two students are verynoisy and troublesome together,the school teacher separatesthem and seats them far away


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from each other so that they will be attentive and learn the les-son well. In the organisationalcontext, sometimes a single in-dividual can become a negative

force by creating a small coteriearound him with his personalcharisma and ability to influ-ence people to his way of think-ing. This can be handled by geo-graphical relocation, or alloca-tion of duties in different de-

partments, or promotion of oneor more of the group to a dif-ferent role of responsibility de-manding their energies in a dif-ferent direction altogether, thusweakening the negative force ofthe group. Here the separation

of the group of people actuallyunifies them in the cause of theorganisation. Finally, if none ofthe above methods work, onehas to resort to the removal ofthe person from the organi-sation altogether.

PunishmentWe may wonder if it is nec-

essary to punish at all. Parentshave this conflict while dealingwith their children. Kautilyasays punishment is necessary,

but it has to be just and withinthe right limits. One of the othernames ofArthashastra is DandaNiti, the art of punishment.

The king, severe with the rod

(punishment), becomes a terror. A

king with a mild rod is despised.

The king who is just with the rod is

honoured. (1.4.8-10)

Punishment does not meanthat you have to become aHitler, and kill indiscriminately

just to prove your strength andpower. A king who is verysevere with the rod becomes aterror. However those who donot punish at all, are not taken

seriously. The one who is just ishonoured by one and all.What happens if the king

does not punish at all?

If the rod is not used at all, the

stronger one swallows the weak in

the absence of the wielder of the

rod. (1.4.13-14)If the king does not mete out

just punishments, the peopleworking under him will takethings for granted. They mayappear to be working, but incourse of time their productiv-

ity will go down. The most deli-cate part is that the people inthe higher rungs may misusetheir powers when the king isabsent. It is likely to become likethe law of the jungle withoutany control. The strong willswallow the weak. The wholelegal system may end in a stateof crisis.

He (leader) should constantly

hold an inspection of their work,


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men being inconsistent in their

minds. (2.9.2-3)

The human mind is unpre-dictable. It can slip from its

balance at any moment. It isvery necessary for a leader toregularly inspect each oneswork. This can be done bychecking reports every now andthen. He can organise a goodManagement InformationSystem (MIS) for creating

records. But he should not betotally dependent on reportsalone. He needs to keep a physi-cal check on each activityhappening at the ground level.Meeting even the lowest of theemployees and finding out

problems with the help of intel-ligence services is recom-mended by Kautilya.

We see this throughout ourancient history books also. Be itLord Krishna or Shivaji, theyused to go around their king-

dom incognito, even at night, toascertain the ground levelrealities.

If inspection is not held on aregular basis, the king will losecontrol over his employees first,

then his subjects and finally hiswhole kingdom.Wage is for work done, not

for what is not done. (3.14.8)

This verse shows howfocussed Kautilya is on the

productivity of a person. Hesays there is no scope for aperson to get paid just to sit idle.Results are very important. Whyshould the state treasury pay a

person for not working? Wagesare paid only to those whowork.

Today our government orga-nisations need to implement thismessage in its fullest measure.

Just sitting in the office will not

suffice if the country has toprogress. The managers ofvarious government institutesneed to pull up their socks anddo the same with their juniorstaff too.

3. Maintaining a Good Accounting System

He (leader) should check the

accounts for each day, group of 5

days (a five-day week), fortnight, a

month, three months (quarterly) and

a year. (2.7.30)We can clearly see from this

verse that the modern way ofdaily, weekly, monthly, quar-terly and annual accountingmethods were used by Indians

more than 2300 years ago! It isadvised that the leader shouldkeep a check on the accounts ina systematic manner. Kautilyasays that the king needs to takefull control of two aspects of


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any state the treasury and thearmy. If he loses control overeither of them, there is a goodpossibility of take-over by theenemy. Kautilya also lays stress

upon the aspect of keepingcontrol over the accounts bystating that the first thing a kingshould do after getting up in themorning hours is to check hisaccounts.

Apart from keeping track of

the total accounts, the kingshould keep control over theindividual accounts too.

The individuals in an organi-sation make up the totalorganisation. There is a possi-

bility that a few of the employ-

ees are misusing the financialpowers given to them or are notmaintaining proper records.Hence he suggests,

In addition to reporting in de-

tail as well as in aggregate, there is

also an individual accountability for

the revenues and the expenditures.(2.7.24)

There are various peoplewho are responsible for therevenues which flow into thegovernment treasury and otherswho are responsible for theexpenditure. These two extremeends of revenues and expendi-ture are likely to be the mosteasily corrupted. Therefore it isnecessary to keep a check on

individuals who are responsiblefor revenues and expendituresfrom the treasury.

Next, Kautilya explains howthe records are to be maintained

with details of each entry. Themastermind that he was, helooked into the details of eachaspect of the treasury. It issurprising to see the way he hashandled this subject in a mostpractical and efficient manner.

He should check the incomeand expenditure with reference to

the period, place, time, head of

income/expenditure, source, bring-

ing forward, quantity, the payer/paid,

the person causing payments to be

made, the recorder and the

receiver. (2.7.31-32)The financial record books

needed to have these columns,where the entries about theperiod, time and place of thetransaction could be done. Italso had to maintain details of

the source of the income orexpenditure, who brought it orwho spent it, the person whoreceived it, etc.

Thus, a total plan was made by Kautilya in a systematic

manner to manage the economyof a state properly. No wonder,with such amazing standardsset up by him, India in thosedays saw the golden era in ourhistory.

management fundamentals in kautilyas )hjd=id=ijh= vi

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