power journal

8/9/2019 Power Journal

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The rules of the game of the corporate world

have changed completely in the last fewmonths. The recent global economic crisis, theworst since 1929, adversely impacted theorganizations across the world. Though theIndian economy has not been affected as badlybut the pace of growth certainly slowed down.Indian power sector too has not been affectedsignificantly owing to the huge growth potentialin thesector.

The global business environment has been showing signs ofimprovement in the recent past but the economic uncertaintycontinues across the world. Organizations are coming up withinnovative solutions to emerge from the crisis and succeed in thisturbulent business environment. An important factor fororganizations to get through such difficult times is the availability ofeffective leadership in the organization. Organizations acrossindustries need to invest in developing leaders who not only help theorganization and people to adapt to changing times but also buildorganizational capability to succeed in the uncertain businessenvironmentin future.

A number of articles have been included in this issue frommanagement practitioners as well as management experts andconsultants. I thank and congratulate all the authors for their thoughtprovoking articles on various contemporary issues includingleadership,organizational culture, corporategovernanceetc.

I am sure the readers will find this journal of Power HR Foruminteresting and useful. I also request all the readers to share theirlearning and valuable experiences through the forthcoming issues of

Power People for thebenefit of theentirepower sector.

(R. C. Shrivastav)Director (HR), NTPC &

President-Power HR Forum

CHIEF PATRON

PATRONS

MEMBERS OF GOVERNING BODY

Harishankar Brahma

G. B. Pradhan

V. K. Abbey

S. K. Garg

R. S. Sharma

Satnam Singh

S. K. Chaturvedi

P. Uma Shankar

H. K. Sharma

R. S. T. Sai

R. C. Shrivastav

A. S. Bisht

I. P. Barooah

R. P. Ojha

Vinod Behari

R. S. Katoch

V. C. Agrawal

Rajeev Sharma

Suresh Jain

U. C. Misra

Dayal Mathur

Secretary-Power, Government of India

Chairman, BBMB

Chairman, DVC

CMD, NEEPCO

CMD, NHPC

CMD, NTPC

CMD, PFC

CMD, POWERGRID

CMD, REC

CMD, SJVN

CMD, THDC

Director-HR, NTPC &President-Power HR Forum

Director-Personnel, THDC &Vice President-Power HR Forum

Director- , NEEPCO &Vice President-Power HR Forum

Executive Director-HR, POWERGRID &Honorary -Power HR Forum

Executive Director-HR, REC &Honorary -Power HR Forum

Director-Personnel, SJVN &Member-Power HR Forum

Director-HR, NPCIL &Member-Power HR Forum

Director (Projects)-PFC &Member-Power HR Forum

Chief Engineer-BBMB &Member-Power HR Forum

Personnel

Secretary

Treasurer

Executive Director-HR, NHPC &Member-Power HR Forum

Message From the PresidentMessage From the President


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EDITORIAL BOARD

MANAGING EDITOR

ASSOCIATE EDITORS

DESK EDITORS

S. K. Chaturvedi

P. Bhattacharjee

Ashok Swarup

Kalpna Kaul

G. K. Agarwal

Dr. C. S. Venkataratnam

Dr. Seema Sanghi

R. P. Ojha

Rakesh Pathak

S. K. Sharma

DMR Panda

H. P. Pal

Konark Srivastava

Published by-

www.powerhrforum.orgNopartof thisjournalmay bereproduced,storedin a retrievalsystem,transmitted in any form or by any means electronic, mechanical,photocopying, recording or otherwise without the prior writtenpermissionof thepublisher.

Noresponsibility isacceptedforthe accuracyof informationcontainedin the text, illustrations or advertisements. The opinions expressed inthearticlesare notnecessarilythoseof theEditororthe Publisher.

CMD-POWERGRID &Patron, Power HR Forum

NEEPCO

NTPC

PFC

Professor (Strategic Management),MDI, Gurgaon

Director - International ManagementInstitute, New Delhi

Former Director - Fore School ofManagement, New Delhi

Executive Director-HR, POWERGRID &Honorary Secretary-Power HR Forum

NHPC

THDC

NTPC

POWERGRID

NHPC

Power HR Forum

at: Power Management Institute, NTPC5-14, Sector-16A, Noida - 201301Tel : 0120-2515208Fax : 0120-2515210

From the Managing EditorWorld is full of happenings. Success depends on how you use your personalimagination to construct patterns from emerging disparate trends to single out

andvalidate right action.

One of the biggest learning from ongoing recession is that portability andscalability makes organization all weather proof. Scalability in business is anarchitecture that can handle 10,000 orders per week as easily it can handle 10orders per week. Thus in the context of an individual one should have a wellrehearsed blueprint to scale between worst nightmare and long cherished dream.Second learning is that survival is guaranteed for whom change is a reflex actionand does not wait till forced by a meltdown. Truly, change favors the preparedmind;are you ready?

In recent years the power of culture and corporate governance has become a

decisive factorbehind sustainability. On x-ray in thereasonsforthe fall ofGeneralMotors, it is revealed that resisting a culture of non-confrontation with harshrealities was the biggest cause of its tumble. The rise of Infosys and fall of Satyamteaches that in the 21st century every moral imperative is also a strategicimperative.

One of the major learning from current Indian parliament election is that peopleaccept a leader who is fighting for something rather than the one who is fightingagainst something. Beingseen in a morepositivelight mayhelp you enlist, engageand retain more support for your cause. Also considering the role of youth fromcampaign to finaltally, it is evident from thiselection thatwhere there is no dearthofmatchingexperience, it isonlyenergy that acts asa winningdifferentiator notto

talkthetalk,butwalkthetalk.

Another learning from recent business best seller comes from the title The 4-hours work week which focuses manytested techniques fordoing more with less.Especially the chapter titled 'The Low Information Diet - Cultivating SelectiveIgnorance really is an eye opener in modern management to be used both as aleading individual competencyand also as a competitive organizational characterin this age of high information overload resulting in indecisive and de-focusedactionshort-circuits.

The aim of Power People is to share such transformable learning. To this end, Iam extremely obliged to the wonderful contribution of all writers of this issue and

request to all learned consultants, academicians and practicing managers to usethis wonderful media to reach out their learning to millions in this sector whichwilltrulylendahandinwritingmanysuccessstoriesintheannalsofanation.

(R. P. Ojha)Executive Director (HR), POWERGRID &

Managing Editor Power People


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Featuring.......

"Decide to Lead-A Journey to Leadership"Reviewed by Siddharth Sundaram, Director, AC Nielsen

25

"Hard Facts, Dangerous Half-Truths & Total Nonsense: Profiting fromEvidence-Based ManagementReviewed by H. P. Pal, ManagerHR, POWERGRID and coordinator Power HR Forum

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GENERAL MANAGEMENT QUIZ : By National Quiz Master-Bijay Bhujabal, Professor-ICFAI Business School, Dehradun30

BUSINESS BOOKS : Recent Best SellersBy H. P. Pal, ManagerHR, POWERGRID and coordinator Power HR Forum

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MANAGEMENT CARTOONS : By Parimal Joshi31

Effective ODbySanjiv Narang, Director - Innovation Systems Consulting, Gurgaon

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"The MD who sold his Fiat and went the TQM way"byManoj Dubey, Sr. Manager, Corporate Business Excellence Group, NTPC, Corporate Centre

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Organization CulturebyAshok Swarup, Deputy General Manager-HRD, NTPC, Corporate Centre

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Corporate Governance : Evolving A Minimum Desirable CodebyA. K. Sachdeva, Former Executive Director (R&D), NHPC

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Competitive Advantage Through Organisational Cultureby Tapomoy Deb, Dy. General Manager, Spentex Inudstries Ltd., New Delhi

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To Lead or Not to Lead?bySangeeth Varghese, Founder LeadCap and Author of the Book "Decide to Lead"

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I

n my first organization, they referred to the top-levelexecutives as management, while in my second

organization the top level was referred to as leadershipand the mid level as management. Thoroughly confused, Iasked my boss if there was a difference between managersandleaders. His replywas swift: 'Yes there is', which led meto the second question: that being difference what is that?This time his answer was vague and incoherent. All I couldgather was that leadership is about bigger decisions, whilemanagement is about smaller decisions, leadership is longterm, while management is day to day. Is that all? Is it thatsimple? Or are they two different terms used to refer tobasically the same thing? I have spent many yearspondering over thedifference.

Management Is A Career, Leadership Is A Calling:According to Leslie Kossoff, a leading organizationalthinker, leaders have clearly defined convictions of theirown and more importantly, the courage to see theirconvictions being turned into reality. In the case ofmanagers, the courage is about somebody else'sconvictions, which include the convictions of bosses,leaders or board of directors, helping to convert these intoorganizational realities through clearly definedsystems andprocesses. Management is all about believing in somebodyelse, while leadership is about believing in yourself.Leadership is about assimilating, learning and

understandingyourroleasguideandstewardbasedonyourownmostdeeplycherishedtruths.

Marvin Bower had a stable career after graduating from theHarvard Business School when he felt the call to take theleap of faith. He accepted the leadership mantle byresponding to his conviction and setting up McKinsey andCompany. Hestrived to establish management consultancyas an expert practice, till then unheard of and thought of asan unviable proposition. For Marvin, the growth of hisclient's business washis business and wasabove all personalinterests. Once he stood up boldly in a client meeting

pointingout that the biggest risk they faced was the narrow-minded opinions of their president. He ended up losing theclient, but not his convictions, guiding him to buildMcKinsey into one of the most revered managementconsultancies.

You Manage Things, While You LeadPeople: JimClemmewrites that one key distinction between management an

leadership is that wemanage things andleadpeople. Thingincludephysical assets, processes, andsystems while peoplinclude employees, teammates or followers. When dealinwith things, we talk about a way of doing. In the peoplrealm, we're talking about a way of being. Whimanagement focuses on work and efficiency, leadershifocuses onpeople andtheirgrowth.

When Steve Ballmer, the current CEO of Microsoft, meBill Gates for their first business meeting, he was lookinforward to a bright career after his stint at P&G aneducation at Harvard and Stanford. A start-up, in the tithen still nowhere computer field, was the last thing in h

mind. Bill Gates looked into Steve's eyes and declared thatogether they can chase a dream of putting a computer oevery desk. The dream sounded impossible, but the ring oconfidence in Bill's voice enamored Steve. He was certaithat he would never gain such satisfaction other than in thleadership of Bill Gates and so gave up everything to be aaccountant inan unknown garagecompany.

Management Is About Arms And Hands, Leadership IAbout Heads And Hearts: Warren Bennis says that moscompanies are over managed and under led which is not good sign since leaders are much more successful tha

managers in harnessing people power. While leadershicaptures the constituents' heads and hearts, appealing ttheir conscience, management buys their arms and handthrough hierarchies. Management gets people to do whaneeds tobe done.Leadership getspeople towant todo whaneeds to be done. Managers get things done througcontrol, by lighting a fire under people; leaders get thingdonethrough commitment, by stoking a fire withinpeople

When the Reliance Industries' Patalganga refinery wacompletely submerged in the flash floods of 1989, thmanagers of Du Pont declared that it was virtuallimpossible to get the project back on track in less than foumonths. But Dhirubhai Ambani knew something moresomething his managers did not know that nothing waimpossible if his employees put their hearts and minds to iAnd as the foreign consultants looked on, every singlemployee worked round the clock, sweeping the floor

A Journal from Power HR Forum 1

To Lead or Not to Lead?

Sangeeth Varghes

Sangeeth Varghese is a leadership expert and the founder of LeadCap (www.leadcap.org). He is the author of the book'Decide to Lead: 8 decisions that can make you a leader'. He can be contacted at [email protected]


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dismantling the machines and cleaning them, restoring therefinerybacktoshapeinlessthanthreeweeks.

Management Is About The Present; Leadership Is AboutThe Future: According to John Kotter, the fundamentalpurpose of management is to keep the current systemfunctioning, while that of leadership is to produce useful

change. Management tries to deal with complexities thatarise in the current system while leadership tries to copewith change. Zaleznik sees managers as fairly passive work-centered operators intent on keeping the present show onthe road, whereas leaders are seen as people-centric,proactive, intuitive and attracted to situations of high riskwhere therewardsfor success areenormous.

When Varghese Kurien embraced upon chasing hispassion, Indian milk was branded as more contaminatedthan the sewage water in the Western world and theindividualmilk producers subsisted in the throesof poverty.

But the shadow of the present did not hold back hileadership spirits from seeing the futureandestablishing thGujarat Cooperative Milk Marketing Federation, a modecurrently replicated all over, making India the largest milproducer in theworld.

High-technology conglomerate United Technologies ha

written: People don'twant tobe managed.They want tobled. Whoever heard of a 'world manager?' A 'WorlLeader,' yes. We know of Educational Leaders, PoliticaLeaders, Religious Leaders, Scout Leaders, CommunitLeaders, Labor Leadersand Business Leaders.

They lead. They don't manage. The leader's carrot alwaywins over the manager's stick. Just ask your horse. You calead a horse to water, but you can't manage him to drink. you want to manage somebody, manage yourself. Do thawell and you'll be ready to stop managing, and starleading.

To Lead or Not to Lead?

A Journal from Power HR ForumA Journal from Power HR Forum2

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It is an interesting equation:Less me.More them. Equalssuccess.

There is a difference between being an achiever and a leader. Successful people become great leaders when they learn t

shift thefocus from themselves toothers.

Higher up you go in the organization, the more you need to make other people winners and not make it about winnin

yourself.

Half of the leaders I havemet do not need to learn what todo. They need to learn what to stop we get credit for doin

something good. We rarely get credit for ceasing to do something bad. Yet they are flip sides of the same coin. ..

Avoiding mistakes is one of those unseen, unheralded achievements that are not allowed to take up our time and

thought..manytimesavoidingabaddealcanaffectthebottomlinemoresignificantlythanscoringabigscale.

There is a difference between success that happens because of our behavior and the success that come in spite of ou

behavior. Almost everyone I meet is successful because of doing a lot of things right, and almost everyone I meet successful in spite of some behaviors that defies common sense. One of my greatest challenges is helping leaders see th

difference, seethat they areconfusingbecause of andinspiteof behaviors andavoid this superstitiontrap.

Deep and Penetrating Insights from Marshal GoldsmithThe one-of-a-kind legendary Coach and Thought Leader in Leadership and Executive DevelopmentThe one-of-a-kind legendary Coach and Thought Leader in Leadership and Executive Development


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O

vera period of time, organizationshave developedadedicatedmindsetfortraining.Thisisgoodfroma training point of view and it is also resulting in

substantial efforts to improve the quality of training, butmindless application of training systems for the purpose oforganization development has become an ineffectiveexercise. In the process, a lot of over inspired trainingmanagersdomoredamagethangood.

Let me cite the case of a training manager in a MNC whowanted to conduct a Large Scale Interactive Process in theorganization. Before I examine its inadequacies inapplication, letme explain thebasic concepts of Large ScaleInteractiveProcess in order tohavea proper appreciation ofthis case.

The LSIP has to be deployed carefully. The role of theleading team in the process of prioritization and resolutionof issues has to be clarified and agreed upon before thedeployment.

The MNC training manager deployed the LSIP withouadequately briefing the leading team. The result wadisastrous. The ticklish issues which were identified by thorganizational personnel were brushed aside without andiscussion. One of the issues identified was that of tomanagement leadership. In front of the entire group, onteam leader asked, Who has pointed out this inadequacy?There was complete silence in the room. One of thstrengths of the LSIP is the surfacing of data anonymouslyIn case the leaders try to find the originator of ainadequacy, theentirepurpose of theexercise gets defeated

Protecting the identity of the data provider is the sine-quanon of the LSIP. When this phenomenon was happeningthe training manager watched helplessly from the sidelineIn case, such vitiation of the Large Scale Interactive Procesis allowed tohappen, the participants are bound to lose faitin its efficacy, which results in skepticism and fear oparticipationin such OD interventions in future.

The inadequacy did not end here. No meaningful actiopoints were formulated on the basis of inadequacies. In casa few points related to enhancing internal communicationresponsibility was fixed. However, this was quicklforgotten after the endof the session. After a few months, thmemory of the action plan faded away. What a mockery otheLSIP?

So nothing significant was achieved and a lot of faith an

trust was lost. This is a typical case which indicates as tohowaLSIPshouldnotbeconducted.Incaseitisdoneinsuchaill prepared way, it does more damage than good. What wasteof time andresources?

OD interventions are potent systems for improvinorganizational effectiveness. In order to deploy themeffectively, the spirit of the intervention and its soulneeds tbe well understood by the intervention agent. In caslearning is superficial, the outcome becomes a mess. One othe by-products of this outcome is a disbelief in ODinterventions.

The finance head of another MNC was worried about th

lack of team spirit in his team. So he decided to conduct team building intervention. This intervention was designeas an OD intervention so that the real issues could bsurfaced and resolved. So the intervention was divided inttwo parts. One part dealt with developing competencies o

Effective ODSanjiv Narang

Sanjiv Narang is the Director of Innovation Systems Consulting, Gurgaon.His web and blog addresses are www.innovativetraining4u.com and www.trainingpoint.blogspot.com.

Large Scale InteractiveProcess (LSIP)

Purpose:

Process:

The LSIP is an OD intervention which involves a largecross-sectionof organizational personnel.

Its purpose is to involve the organizational personnel tosurface organizational adequacies/inadequacies and toformulate an action plan for resolving the inadequaciesinorder ofpriority.

1. Clustering of participants in cross-functional andcross-hierarchicalgroups.

2. Surfacing of organizational (in) adequacies throughthe deployment of a group process namely: Glads,MadsandSads.

3. Discussion ofGlads.

4. PrioritizationofMadsand Sads.

5. Action planforresolving Mads/Sads.

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team building and the other part dealt with surfacing andresolution of issues in order to enhance teamwork and teameffectiveness. In order to evolve a shared understanding ofteam building competencies, all finance team memberswere the part of the intervention. The team buildingcompetencies explored and assimilated were emotionalintelligence, communication and conflict resolution.

Subsequently, the LSIP was deployed. Team adequaciesand inadequacies surfaced through the deployment of agroup process. The top four inadequacies were taken up forresolution. Responsibility was fixed for execution of theformulated action plan. The team reaped the benefits of thisdeployment of the LSIP in terms of enhanced efficacy,reduced stressand conflict at work.

The only faltering point of this team was in terms of regularreviews of execution plan. Till the time the reviewshappened, execution went along fine. When reviewsstopped,theexecutionstopped.

This indicateshowthe LSIPcan be effectively deployed atafunctional teamlevel.

This intervention was a fusion of a workshop and an ODintervention. This is increasingly becoming a potentinterventionin organizational programs for improvement.

Another largely neglected but potent OD intervention is'Appreciative Inquiry'.

It is surprising that very few organizations have recognizedthepotentialof this intervention.

In an organization, appreciative inquiry breeds a culture ofpositive outlook and an inside-out approach to excellence.

Over a period of time, most organizations have developedan outside-in approach to leading change. What does thismean?

Say an organization wants to become world class. So, thedominant approach is to find out the benchmarkorganizations in this line ofbusiness.

Learning from these benchmarks, these organizations tendto incorporate their strategy, structureandsystems into theirown organizations. This is the dominant style offunctioning.What arethelimitations of this approach?

This approach takes long time. Approval of

the benchmarked organization is required. Theorganization may not be interested in sharing knowledgeand information. Data has to be collected. It has to beanalyzedandsynthesized.

Few people have a buy-in regarding the planof action that ensues on the basis of such an outside-inapproach. Knowledge is restricted toa fewpeople.

Implementers would have a tendency to

Limitation 1:

Limitation 2:

Limitation 3:

Effective OD

High PointStories

PositiveCore

resist change, because the action plan may not be ialignment to their unique context and organizationproblems.

Organizational personnel would have tendency to feel demoralized because of the perceiveassumption of the organization that what others are doing

thebestandisworthemulating.It becomes extremely difficult to cascade the proposechangestrategy andstructurein theorganization.

Appreciative inquiry in contrast is an inside-outapproach tleading change. It focuses on strengths rather thaweaknessesand theprocess of leveragingthese strengths foachievement. It in-fact is a whole new approach to the wawelookat ourselvesandwe evolveour vision.

Before going into the details of its utility and effectivapplication, let us develop a shared perspective of itobjectives and process.

Appreciative inquiry is an OD intervention focused oenabling an organization to develop its own vision on thbasis of its strengths and driving it on the road to its visionThe methodology of appreciative inquiry is unique in thsense that it triggers the identification of strengths on thbasis of organizational high point stories. Since there are npsycho-metric or socio-metric tests, thequestions of validitad reliabilitydo notarise.

TheAppreciative inquiryprocess has4 stages:

This is the stage when

t he o r gan iza t i onidentifies its positivecore on the basis oforganizational highpoint stories.

High point stories aren a r r a t e d a n danalyzed in order toidentify the positivec o r e o f t h eorganization.

The positive core consists of competencies, processesocial-psychology, technologyand strategy.

After identifying the positive core, the organizationpersonnel are asked to dream up the vision of th

Limitation 4:

Stage1: Discovery:

Stage 2:Dream

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organization on the basis of the positive core. This ensuresthat the vision of the organization has strong roots in itspositive core.

This ensures that the vision is realistic and the organizationhas the capability to achieve it. The power of this approachis that it reduces the confusion surrounding vision. Thereare so many opportunities that it is easy for an organizationor an individual to lose its way among them and becomeconfused resultinginnotgetting anywhere.

This stage involves the formulation of strategy, structureand competencies in order to convert the positive core intothe preferred future as enshrined in the organizationalvision.

Approachingthe visionandstrategy from this angle tends tomake it realistic and practical. The organizational visionformulated on the basis of the organizational positive corehas themaximum probability of becoming reality.

Now let us examine the varied applications of theappreciativeinquiry process in theorganizational context.

Napier's was puttingup a damin an area infested with socio-economic-political unrest. Thus, the organizational leadersfunctioning at the dam site had to face huge hurdles inmaintaining project schedule and also taking theorganizational personnel along.

The organization wanted to evolve a customized leadershipcompetency model. Appreciative inquiry was the ideal OD

tool for this purpose. Keyorganizational leaders were askedto propound leadership high point stories. These werecollated and analyzed to formulate the leadershipcompetencymodel.

Such an approach yielded two benefits. One was thecustomized leadership competency model. Second was theconsolidation and dissemination of positives due to thepropagation of leadership high point stories in theorganizational culture.

The Finance director of a MNC financial co. realized that

oneofhiskeymangerswasonacareernosedive.Hewasnotable to manage his subordinates; was suspicious of them;was continuouslyquestioning their motives and was loosinghis temper publicly. The result was that slowly themanager's responsibilities were being reduced. In spite ofbeing the senior most, he had the lowest area ofresponsibility.

The finance director asked the concerned manager to go

Stages 3 & 4:Designand delivery

Case 1: CustomizedLeadershipcompetency model

Case 2:Leaderon the decline

through leadership coaching. The coach put him througappreciative inquiry. On the basis of his high pointstories ischool, college and professional life, the coach helped himidentify his positive core. This served as the anchor for hidentifying his personal vision in organizational life. Usinthe vision as a guiding beacon, an action plan waformulated in terms of initiatives for expanding visibilit

and performance.The result of this appreciative inquiry process was u-turn in the career prospects of the manager. Thteam's perception of him as a problem person declinedTheir perception of him as a caring and yet performinleader increased. Hence, new projects began to find theway to him. His number of subordinates increaseaccordingly.

Thus, appreciative inquiry helped him regain his formeposition in his team and restored his career in thorganization.

Jamsoft wanted to involve its leaders in the evolution of vision for the organization. So it decided to deploappreciative inquiry. The discovery phase of appreciativinquiry was an eye opener to a lot of leaders present in thsession. The high point stories narrated led to a positivclimate for change and a confident organizationaatmosphere.

Subsequently, when the leaders formulated a vision on thbasis of the positive core, new energy was visible in thorganization and there was a palpable expectation that thorganization ison themove.

Thus, appreciative inquiry is a powerful OD interventiofor creating a positive dialogue in the organization resultinin a culture of achievement, confidence and movementowardsa desirablevision.

I n t he a bo ve c as es , w e h av e e xa mi ne d t happlication of appreciative inquiry to the criticasuccess factors for an organization as well as to professional. These highlight the range of applications othisOD intervention.

In this article, two OD interventions have beehighlighted namely LSIP and appreciative inquiryBoth are powerful and potent. Both are underutilizeby organizations. The beauty of OD is in its capacity tmake a long lasting positive impact on organizationaeffectiveness. It is sad to see that such powerful tools havnot appeared in the perceptive horizon of moorganizations.

Case 3: Jamsoft

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Effective O


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In the early 1980s, competitive strategy was seen as azero sum game. MichaelE. Porter caused a gradual shiftin emphasis from value appropriation tovalue creation.

Withglobalisation, thenature andextentof competition hasbeen changing very fast in an information-based,knowledge-driven and knowledge-intensive economy. Thepace with which change is taking place is not only pervasivebut also very fast thereby redefining the basis ofcompetitiveness where speed, flexibility and self-renewalrule the roost. Where competitive advantage was oncedependent on economies of scale and large scale salespromotionarenownomoreaseffectiveasitusedtobeafew

yearsago.

With paradigm shift of competitive edge from physical andfinancial resources to human resources, management ofpeople have assumed paramount importance. It is nowincreasingly realized that introducing newer strategies inorder to stay competitive in global business scenario is notenough as it has to be seamlessly integrated with humanresource policies and practices so that organizationalobjectives and mission can be attained successfully.Introducing newer strategies involves continuous learningand adaptations on the part of the organisations which inturn requires creating, sharing and leveraging knowledge

for the benefit of the organization and its customers.Knowledge can be viewed as information in action.Knowledge creation, sharing and leveraging requiresorganisations to be in learning mode wherein humanresources are active agent, carrier and constituent ofknowledge paving the way for exploration and subsequentexploitation of new opportunities before competitors canidentify them. Knowledge has today assumed the status of aprincipal economic resource providing newer insightsamidst intense competition, changing customer tastes andrapid technological change and accordingly organisations,needs to learn faster than competitors. Knowledge is

embeddedin theorganisational architectureandculture is acritical component of the architecture. This is because ofsocial exchange process. The willingness of people to shareknowledge is influenced by organizational culture. Thisimplies that effective learning and resultant achievement oforganisational success is positively associated with

organisational culture. In researching his book, Good tGreat, Jim Collins confirmed time and again that culture the most critical component of an organisation's transitiofrom good to great. That is why organisational culture hataken the top position in the agenda of organisationaprioritiesbytheCEOs.

With the emergence of more demanding, informationempowered customers and increased availability ocompetitive options to customers, organisations must bperceived to be superior to their competitors by at leassome of the customers. Carpenter & Sanders (2007) define

competitive advantage as 'a firm's ability to create value inway that its rivals cannot'. With global business beinincreasingly characterised by efficiency, innovation ancost, organisations have to transform themselves fromproduct provider to customer value provider in order tattain and/or sustain competitive advantage. Thereforecompetitive advantage requires organisations to creatcustomer value with the active support of their humaresources. Competitive advantage is sustainable as long acompetitors are not able to duplicate the organisationvalue-creating strategy by acquiring new resources ancapabilities. In other words, competitive advantage can bsustained only when an organisation's value-creatin

strategy is supported by inimitable and non-substitutablresource and capability. The only inimitable resource ancapability that can accrue to an organisation is humaresources. Market knowledge, technology, intellectuproperty management may be readily replicated bcompetitors and therefore are less dependable source ocompetitive advantage in the long run. People arinfluenced by organisational culture thereby shapinpeople through behaviour and actions. However, merpossession of or control over inimitable and nonsubstitutableresource andcapabilitydoesnot by itselfmakan organisation gain or sustain competitive advantag

unless it is able to exploit it appropriately. This implies thaorganisational culture assumes centrestage in the process oattainment and sustainability of competitive advantageTherefore, the influence of culture on the willingness opeople to collaborate in harmony to accomplisorganisational objectives and mission will becom

Competitive Advantage Through

Organisational CultureTapomoy Deb

Tapomoy Deb is working as Deputy General Manager (HR) in Spentex Industries Ltd., New DelhiHe can be contacted at [email protected]

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increasinglyimportant.

Organisational culture is the first mechanism to achievemanagerial effectiveness and control. Edgar Schin definesorganizational culture as a pattern of shared basicassumptions that the group has learnt as it solved itsproblems of external adaptation and internal integration

that has worked well enough to be considered valid andtherefore, tobe taught tonewmembers as the correct way toperceive, think, and feel in relation to these problems.Defining culture is difficult as it defies all definitions giventhat it is an abstract concept. Irrespective of definition,organisational culture has the followingattributes:

It is a shared phenomenon as it emanates from learningexchange and groupexperience;

Its foundation can be attributed to the persons whocreatedthegrouporunit;

It has two levels-visible and invisible. Thevisible level isexemplified in written and spoken language, symbols,mannerisms, dressings, customs, mores, folklores, etc.whereas values, ethics and basic assumptions constitutetheinvisiblelevel;

Itcanbelearnedandacquired;and

It changes gradually.

Richard Panico (2004) lists the following characteristics of astrong culture:

Values are clearly communicated, defined, understoodand practiced;

Organisational vision is clear and extends beyondprofitability;

Strategicpriorities areunambiguous andfew;

Organisational performance and progress isregularly measured and communicated (positive ornegative);

Individual responsibility and accountability areaccepted and expected;

Standards of performanceareabsolute;

Contributors(collectiveandindividual)arerewarded;

Peopledevelopment isa priority;

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Trust reignssupreme; and

Futureisasimportantasthepresent.

Organisations have social, political, economic antechnological dimensions. Organisational culture uniquelvaries from organisation to organisation within the sam

geographical region. It reflects the shared thinking, believalue system, behavioural norms and organisationassumptions and therefore there is no unity across thorganisations which make every organisation uniquelplaced to leverage its advantages for enhancincompetitiveness. Since organisations are open organsystems therefore they influence their environment and geinfluenced by it. Consequently, its organisational culture impacted by the geographic region, competitors anproducts and services an organisation provides. This because organisations exist to serve the society ancustomers of the organisation are an integral part of thsociety. With changing patterns of societal needaspirations and socio-economic level of development, thexpectations of customers changes, placing new demandon the organisation.

Organizational culture helps people to integrate with theorganizations which fosters a team-based approach imeeting external environment and stakeholderexpectations, particularly customers, both internal anexternal. On the external front, organizational culturimpacts its branding. For example, organizations which arhighly quality conscious as a brand, emphasize quality as way of day-to-day working. Accordingly, suc

organizations place high importance on employeempowerment and team work. Such organizations havHR processes aligned to recognize and reward team effortin a transparent, interactive and less controllable mannerWhere, culture is the epicenter of internal and externabehavior of an organization with its customers, it becomethe prime responsibility of top leadership to create anmaintain equity and harmony within the organization bstrengtheningappropriatevaluesand HR processes.

Within the organisation, people are the link between thorganisation and its environment as far as customers arconcentrated. As people are influenced by organisationa

culture, thereforetheir interactionswith customersbearthainfluence. Moreover, people have their own assumptiongiven the process of socialisation which also impacts theiinteractions and the branding process of the organisationAs culture is based on values it derives also frompersonalities of theemployeesand themanagement. Normare closely associated with values; they are the unwritterules that allow members to know what is expected of themin different situations. This does not amount to th

Competitive Advantage Through Organisational Cultur

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submission that the interaction of peoplecannot be changedby the organisations. Organisations use reinforcementbehaviours through various HR mechanisms such astraining, feedback, counselling, performance appraisals,compensation, career management, succession planning,employer branding, etc. to shape behaviour and actions ofhuman resources in the desired direction. This helps to

foster innovation and risk taking capabilities of people aswell as normalisecontinuous learning andchange.

Organisations might have strong culture as well as weakculture. A strong culture is marked with clear employeebehaviour and action, values are strong, communication isopenandinteractive, commitment, empowermentand trustis high. As Henry Ford aptly stated, 'you cannot build areputation on what you are going to do'. Trust facilitatesnurturingof relationshipamongst managers andemployeeswhich contributes to a cohesive work environment whichenables human resources to work more productively andreduces turnover. The situation is just the reverse in weakculture where informal culture compensates. The culturalnetwork, which is basically the informal socialisationprocess and heroes or role models are closely linked. It is aninformal medium of communication within organisationsthat take pride in a glorious past. Strong cultures havepowerful impact on people in the organisation. As aconsequence, everyone moves in the same direction as acoherent team and goal attainment becomes a much easierendeavour. It also evokes strong motivation in humanresources given the high team spirit which makes peoplework harder than then would otherwise do which results inincreased organisational performance and success.

However, such strong culture must support knowledge

creation and sharing and must be responsive tenvironmental needs and changes otherwise organisationafailure could result from cultural arrogance. In other worda strong yet adaptive culture can only support desireorganisational outcome.

Therefore, a strong adaptive organisational culture

necessary to enhance organisational competence anperformance in the long run. This means that variations iculture will result in variations in organisationaperformance. Organisational culture is unique and almoimpossible to imitate. Thus, organisational culture can be source of distinctive competitive advantage. Successfucultures contribute to a sustainable competitive advantagof their many interlocking elements such as history aninner structures. History provides a basis of gaininknowledge and thereby prevents repetition of making thsame mistake or failure. It also helps in evolving bespractices in thelight ofprior experience.

Organisational culture results in consensus and consistencValues, norms and attitudes of human resources arconsistent and in congruence with organisational practicewhich foster a shared sense of loyalty and commitmenIntegration of people and processes with culture assumincentre stage is a consequence of such a scenario. Thereforeorganisational culture plays a vital role in enhancinorganisational performancethrough humanresources.

Building, linking and bonding culture is the essence of sustainable competitive advantage where HR professionalplay a pivotal role in designing, developing and deliverin

competitivepriority of organizations.

!

!

!

!

Thehigherupyougo,themoreyoursuggestionsbecomeorders.

Imagine you are the CEO. I come toyou with an idea that you think is very good. Rather than just pat me on the back ansay Great ideayour inclination is to say (because you have to addvalue), Good idea,but it would be better if you triedthis way. The problem is, you may have improved the content of my idea by 5 percent, but you have reduced thcommitmenttoexecutingitby50percent,becauseyouhavetakenmyownershipoftheidea.

The higher you go, the more your issues are behavioral. The interpersonal behavior is the difference-maker betweenbeing great and near-great, between getting the gold and settling for bronzeIn fact even when all other things are noequal,yourpeopleskillsoftenmakethedifferenceinhowhighyougo.

Love is often an appropriate emotion. Anger is not appropriate. But even saying I love you can be inappropriate if wemploy it too often or at awkward moments. And conversely, anger can be useful tool if we parse it out in small doses aopportune moments.

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Introduction

Corporate governance is about commitment tovalues andethicalbusiness conduct. It is about howan organization is managed. This includes itscorporate and other structures, its culture, policies and themanner in which it deals with various stakeholders.Accordingly, timely and accurate disclosure of informationregarding the financial situation, performance, ownershipand governance of the company is an important part ofcorporate governance. This improves publicunderstandingof the organization and is able to attract investors, andenhancethetrust andconfidenceof thestakeholders.

Business has changed as never before. Technology andglobalization have changed the way we work. The greatestchange, however, is in public expectation of the business.The obsession with bottom line profit shareholder valuelooks tired and no longer provides the stimuli forleadership, motivation, innovation or brand equity.Stakeholders are questioning the very purpose of thecorporation.

Theconcept of corporate governance came up after a seriesof financial crises/scandals took place during the last twodecades around the world from developed economies to

developingeconomies such as collapse of BCCI, collapse ofRobert Maxwell's empire, various high level scandals inRussia, and more recently, Asian financial crises, thecollapse of energy giant Enron (the largest bankruptcy andone of the most shocking failures in US corporate history),etc.

Ever since the concept of corporate entity was recognized,corporate governance has been in existence in variousmanifestations. Efforts to articulate standards for corporategovernance took root in countries like the US and the UK.As a fall-out of 1997 economic and financial crisis, Asiancountries too became keenly interested in the issue of

corporate governance. The OECD countries took earlyinitiatives to address governance issues. Despite variousattempts to define corporate governance and its elements,and suggesting a model of good corporate governance, nouniversally accepted model of good corporate governanceexists.

Initiatives taken by the government of India in 1991, aimeat economic liberalization and globalizationof thedomesteconomy led India to initiate reform process suitable to thdevelopments taking place the world over. On account othe interest generated by Cadbury Committee Report, thconfederation of Indian Industries, the AssociatioChambers of Commerce and Industry and the Securitieand Exchange Board of India constituted committees trecommend initiatives in corporate governance. Earlieconceptof corporategovernance was limited to functioninof Board of Directors. In current scenario the concept ocorporate governance has widened significantly

Recommendations of the Kumar Mangalam BirlCommittee constituted by SEBI led to addition of initiadraftingof clause49 in the listing agreement.Thecommitteconstituted by Department of Company Affairs, Goheaded by Shri Naresh Chandra in 2002 examined varioucontentious corporate governance issues which havbecome mandatory. The N. R. Narayana MurthCommittee set upbySEBI enabled the finalamendments tClause49which waseffectivefrom Jan1, 2006.

Standards of corporate governance have changed vastldue to the migration of public value brought about bglobalization and connectivity. Shareholder value is n

longer a dominant business driver. As stated by Sir AdriaCadbury that the concept Corporate Governance habroadened from being solely concerned with raising boareffectiveness to its acceptance as a key factor for economiand socialdevelopment.

Corporate governance has succeeded in attracting a goodeal of public interest because of its apparent importancfor the economic health of corporations and society igeneral. However, the concept of corporate governance poorly defined because it potentially covers a large numbeof distinct economic phenomena. As a result, differenpeople have come up with different definitions thabasically reflect their special interest in the field. It is hard tsee that this 'disorder' will be any different in the future, sthe best way to define the concept is perhaps to list a few othe different definitions rather than just mentioning ondefinition.Someof thedefinitionsare:

General PrevalentDefinitions

Corporate Governance :

Evolving A Minimum Desirable Code

A.K. Sachdev

A.K. Sachdeva is the former Executive Director of NHPC Limited

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Corporate governance is the system by whichcompanies are directed and controlledCadburyReport(UK),1992.

Corporate governance involves a set of relationshipsbetween a company's management, its board, itsshareholders and other stake holders and also thestructure through which objectives of the company areset, and the means of attaining those objectives andmonitoring performance are determined. Preamble totheOECDPrinciples of Corporate Governance, 2004.

Corporate governance is about promoting corporatefairness, transparency and accountability. J.Wolfensohn, President of the Word Bank, as quoted byan article in FinancialTimes, June 21, 1999.

fundamental objective of corporate governance isthe enhancement of the long-term shareholder valuewhile at the same time protecting the interest of othershareholders. SEBI (Kumar Mangalam Birla) Report

on Corporate Governance , January, 2000Corporate change can not be achieved simply throughedicts. It has to come from within. The key is propertraining of the board. The problem is the prevailingbelief that once directors join the boardroom they nolonger need training. Dr. Madhav Mehra, President ofWorld Council forCorporate Governance in his addressat 7th International Conference on CorporateGovernance,11-12, May2006.

From the point of view expressed in the abovedefinitions/statements and various other definitions speltout by various eminent national and internationalpersonalities, corporate governance tends to focus on asimplemodelasunder:

Shareholderselectdirectors whorepresent them;

Directors vote on key matters and adopt the majoritydecision;

Decisions are made in a transparent manner so thatshareholders andotherscan hold themaccountable;

The company adopts accounting standards to generatethe information necessary for directors, investors andother stakeholders tomake decisions; and

The company's polices and practices adhere toapplicablenational, stateand local laws.

The following are a few core issues to be addressed throughcorporategovernance:

Transparency or full disclosure of financial and keyperformanceinformation;

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Conflict of interests involving board of directors anmanagers;

Property rights; and

Contract enforcement.

Eachof the above issues poses grave challenges for both th

functioning of a market economy and a democratic societySolving corporategovernanceproblems such as those listeabove involves going beyond a narrow view of how ownerandmanagers of capital interrelate.

Thekey point in this definition is that the public and privatsectors have to work together to develop a set of rules thaare binding on all and which establish the ways in whiccompanies have togovernthemselves.

Due to public concerns regarding protection of investointerest, especially the small investor, the promotion o

transparency within business and industry, the need tmove towards international standards in terms of disclosurof information by the corporate sector and through all othis, todevelop a high level of public confidencein businesindustry andsociety, it is essential todevelop and promoteminimal desirable code for corporate governance to badoptedand followedby companies andcorporateentities

Once a draft minimal desirable code for corporatgovernance has been framed this needs to be thoroughland publicly debated through workshops and seminars ansuggestions through this exercises reviewed and adoptedbtheappropriatetaskforcetofinalizethesame.

The minimal desirable code for Corporate Governancseekstoservethefollowingpurposes:

To articulate the high standards of honesty, integrityethical and law-abiding behavior expected of directorandseniormanagementmembers;

To encourage the observance of those standards tprotect and promote the interests of shareholders another stakeholder (including investors, employeecustomers, suppliers and creditors);

To guide directors and senior management members ato the practices thought necessary to maintai

confidencein theCompany's integrity; and

To set out the responsibility and accountability odirectors and senior executives to report and investigatany reported violations of this code or unethical ounlawful behavior.

The minimal desirable code should cover the followinaspectsas givenunder.

Minimal DesirableCodefor CorporateGovernance

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Boardof Directors

Audit Committee

NominationCommittee

The board should have a core group of excellent,professionally acclaimed directors who should haveindependent views and dual role of appreciating the issuesput forward by the management and of honestlydischarging their fiduciary responsibilities towards thecompany's shareholders as well as creditors. The boardshould meet at a regular interval as per defined frequencyand requirement of the company business and should haveagenda items circulated to all, preferably at least two weeksprior to the Board meeting. The Executive Directors areappointed by shareholders for a minimum period of fiveyears at a time who are eligible for reappointment uponcompletion of their term.

The listed companies should set up audit, nomination andremuneration compensation committees. The Boardshould assist these director's committees who examine andcome out with their in-depth recommendations for theconsiderations of the board in their respective roles andresponsibilities. The brief review of role and responsibilityof these three committees aregiven as under.

Audit Committee should consist of at least three members -all drawn preferably from among the company's non-executive directors. They should have adequate knowledgeof finance, accounts and basic element of company law. Tomake this committee effective, their terms and referenceneedtobenormallywelldefinedandallthemembersofthiscommittee must be willing to spend more time on thecompanies work vis--vis other non-executives directors.

This committee should assist the Board of Directors infulfilling its functions relating to corporate accounting,reporting practices, financial and accounting control,financial statements and proposals of a company, publicissue of any security and thus provide effective supervisionof financial reporting process. The audit committee shouldperiodically interact with statutory auditors and internalauditors to ascertain the quality and veracity of thecompanies accounts as well as capability of auditors. Toenable this committee to discharge the fiduciaryresponsibilities with due diligence, the management mustensure that the members of the committee have full accesson all financial data of the company, its subsidiaries andassist companies in calculating data on contingent law debtregister, correct liability and loans and investments. Theaudit committee shall ensure long-term goodwill throughsuch transparency.

The nomination committee constantly works with theBoard toevolve succession plan for Chairman, CO, CEO&

CFO as well as develop plans for interim succession for anof them. A key success factor is the quality of leadership oan enterprise. A nomination committee with a writtemandate and terms of reference consistent with goopractice may assist the board in the selection of directorand a Chief Executive Officer (CEO) of the highest calibeComprising mainly of independent directors, th

committee should have a written definit ion oindependence, inclusive of both subjective and objectivcriteria.

A compensation committee should be set up for assistinthe board in framing the compensation policy for directorand senior management, commensurate with performancmeasured against comparable industry benchmarks ankeyperformance indicatorssuchas economic valueadded

The compensat ion commit tee determines anrecommends to the Board the compensation payable to th

directors. All Board level compensation is approved bshare holders and separately disclosed in the companyfinancial statements. Regarding remuneration of ExecutivDirectors, compensation of a fixed component anperformance, the compensation committee makeappraisal of performance of Executive Directors based odetailed performance related metrics. The annuacompensation of the Executive Directors is approved bcompensation committee within the parameters set bshare holders. Itsbroad frameworkshallbe as under:

The board should set up a remuneration committee tdetermine on their behalf and on behalf of th

shareholders with agreed terms of reference, themployee's policy on specific remuneration packagefor Executive Directors including pension rights ancompensationpayment;

To avoid conflict of interest, the remuneratiocommittee, which would determine the remuneratiopackages of the ExecutiveDirectors, should comprise oat least three directors, all of whom should be nonexecutive directors, the chairman of the committebeing an independentdirector;

All the member of the remuneration committee shoulbepresentinthemeeting;and

The Chairman of the remuneration committee shoulbe present at the AGM to answer the shareholdequeries. However, it would be up to the Chairman tdecidewhoshouldanswer thequeries.

Due to globalization and with the growth of financial presand equity researchers the companies accounting standar

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Compensation/Remuneration Committee

Disclosures byBoardofDirectors

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as well as disclosures are required to be very transparent,authentic andcreditable. Theworking group on CompaniesAct has recommended many financial as well as non-financialdisclosureswhich shouldbe complied with.

The Director's remuneration and compensation in a tabularformat should form part of the Director's Report. Financialstatement should disclose cost incurred in using services ofgroup resources. Listed companies must provide certaincompanyinformation on itsdecision andbusiness segmentsin the Director's Report which should include share of totalturnover, review of operations during the year, marketconditions and future prospects. A separate statementcovering use of funds raised through any public issue,debenturesandother securities shouldbe included.

According to clause49 of the listing agreement with IndianStock Exchange, an Independent Director means a personother than an officer or employee of the company or its

subsidiary or any other individual having the materialpecuniary relationship or transaction with the company.The Board is responsible for selection of the independentdirectors. The Board delegates the screening and selectionprocess for recommending it for selecting the new directorto the nomination committee. The Board constantlyevaluates the contribution of all the Board's members and arecommendation of the share holders, re-appoints themperiodically as per statute. The current law mandatesretirement of 1/3rd of all Board members by rotation everyyear and qualifies the retiring members for re-appointment.Non-Executive Directors do not have a specified term buthave to retire by rotation as per law. NominationCommittee of the Board recommends such appointmentsand re-appointments. However, the membership term islimitedbyretiringageofthemembers.

The Board should have at least 30-50% independent Non-Executive Directors and by concept of limitations, theyshould not be holding Non-Executive Directorship in aplethora of companies. No single person should holddirectorship in more than the defined numbers in theCompanies' Act. The Non-Executive Directors should playa material role in corporate decision making andmaximizing long term shareholder value. They should beactive participants in the Board and not passive advisors.The company in a bid to secure better effort from non-Executive Directors should pay commission over andabovea sitting fee for the use of theirprofessional inputsandshould also consider offering stock options relating rewardsto performance. During the process of re-appointing themembers on the Board, the Company should also furnishtheir attendance record andas a general practice should notre-appoint those who have not even attended half themeetings. The independent director should be provided

IndependentDirectors

quality and timely information on the matters undeconsideration of the Board by the management. Such keinformation must become a part of the agenda papers ansuch key information should generally include: AnnuaPlans and Budgets, Capital Budgets, Manpower anOverhead Budget, Internal Audit Reports, QuarterlResults, Show Cause Notice, if any, factual or seriou

accidents, if any, default in payment of interest or nonpayment of principal, default in nature corporate depositpossible or direct liability claim of substantial nature, detaiof joint venture or collaboration agreement, substantiatransactions, recruitment remuneration of senior officeretc.

The compensation payable to independent directors limited to a fixed amount per year as determined anapproved by the Board, the sum of which is within the limof 0.5% of the net profit of the year to calculate as per thprovision of the Companies Act, 1956. The performance othe independent director is reviewed by full Board o

annualbasis.

The lead independent director represents and acts as spokesperson for independent directors as a group and responsible to preside over all executive sessions of thBoard's independent directors and work closely witChairman and CEO to finalise information flow, meetinagenda, meeting schedule and to liaison betweeChairman, CEO and Independent Directors of the BoardHe shall also along with Chairman take a lead role in thBoard's performanceevaluationprocess.

The corporate governance should ensure equitabltreatment to all shareholders including minority, majoritand foreign shareholders and should have effectivredressal mechanism towards any violation of their rightsAll shareholders of similar class should be treated equallyInterest of minority shareholders from abusive action bcontrollingshareholdersshouldbe protected.

The creditor's right should be ensured and pre-noted claimon the income of the company irrespective of the state o

affairs of the company. Companies defaulting on the fixedeposits should not be permitted to accept further deposiandmake inter-corporate loan or investments till thedefauis made good. They should also not declare the dividenuntilthedefaultismadegood.

The powers given to the Company Law Tribunal arperhaps more effective remedies than the power of windin

Lead Independent Director

Shareholders Rights andTheir Responsibilities

CreditorsRights

Protection of minority shareholders

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up which is vested in the Courts, though one may wonderwhether these powers are too sweeping. However, theirscope is limited to very extreme cases of mis-governancewhereitisjustandequitabletowindupacompany.

The pursuit of good corporate governance in investeeenterprises is a risk management tool. Institutionalinvestors, general partners, and fund managers have afiduciary duty to actively monitor andvote on issues vital tothe success of enterprises in which they invest as guardiansof the savings of big/small investors entrusted to them.Enterprises will find it helpful to communicate with them,deliver in a timely manner true and fair disclosure reports,and remove impediments from voting by all shareholdersby takingadvantageof modern communications and followa one-vote for one-share policy. The fair treatment ofminority shareholders must be ensured and largeinstitutional investors should lead thepursuit of shareholderrights.

Strong and effective corporate governance is critical forpromoting growth, improving access to low-cost capital,ensuring appropriate risk management, and increasingoverall productivity, and competitiveness of the economybesides being increasingly concerned with the aspect ofsustainabledevelopmentand societal upliftment.

The corporate world will have to adopt strategic drivers ofgrowth and leverage opportunities in emerging global

economy that best match the proven internal capabilities.The transition from competing in a relatively protectedenvironment to winning in an intensely competitive andrapidly globalizing market will require the strength andsynergy of human resource transformation, innovations,andamalgamations of vision, valueandvitalityandcreationof unique business model that synergizes long-term share-value enhancement with fulfillment of higher societal &environmental purposes recognized globally during thattime.

Thepotential of an enterprise for wealth creation is set apartby the distinctive amalgam action of its vision, value andvitality. The effectiveness of interplay between thesecomplementary elements determines the extent to whichlatent potential is realized. The enlargement of enterprisepotential therefore requires vision, value and vitality to becontinuously recharged through practices and insight. It isthe role of leadership to constantly monitor and regularlynurture a unique combination of the 3Vs towards ensuringthat the enterprise sustains superior wealth generatingcapacity in an environment of escalating competitive

Role and Responsibilities of Institutional InvestorsSpecially towardsMinority Shareholders

FutureScenario andConclusions

pressures, and enhancing its capabilities to responsivenesandadaptability tochange.

Training aspect is not only considered essential for thmanagement cadre but also it is of utmost importance fothe board of directors. The technology, values, economicthoughts and dimensions of sustainable developmenenvironmental and social priorities are all likely to changwith time. It is; therefore, essential to remain updated in asuch futuristic thoughts and knowledge areas. One of thbestmeans of achieving this is through regular training tooto be extended for all the board members in addition tthoseorganized generally forthe managementcadre.

Research and Development is basically focused on increasin stock of knowledge in known and unknown areas. Thleads to enhancement of knowledge of people, culture ansociety and can be utilized for improvements in all walks olife and to devise new applications and ultimately tsustainable development. R&D, therefore, is essential folong-term gain through new process, product, system anservices with sustainable improvements. The R&D in tharea of operation is equallyimportantfor corporateworld twork on future planning, process and development of newstrategies to be adapted by the company. Thus organizintraining progarmmes for the Board of Directors anencouragement and promotion of R&D activities of thcompany by the Board of Directors keeps the companahead of others through innovations, updated new thinkinand dimensions, so that they can plan their prioritiesfinancial growth with new and upcoming opportunitiesareas/fieldof technologies.

Being abreast with the latest scenario on upcominthoughts, dimensions of sustainable developmenenvironmental and social issues, besides up-gradation anadoption of process/product/technologies, decisiomaking regarding obsolescence and diversificationbecomes handy and thus with appropriate utilization otools of R&D & training, the company gains the potential otraining into a pioneering organization, which is generallahead of others in innovations and always takes the lead obeing a premierorganization ina particular area.

Ethics of corporate governance clubbed with corporatsocial responsibility will enable corporate houses to firm utheir vision which can be driven through the corporatculture for implementation. Such an abiding commitmento society provides moral strength and infuses energy acrosthe enterprise thereby elevating collective corporate efforttowards that mission through human resourctransformation, multi skilling, strengthening of competitivcapabilities, deepening consumer insight, breakthrouginnovations in product, process and technology, creation oability to rapidly absorb knowledge and harnestechnology; widening bandwidth of distributed leadership

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encouraging pro-activity and adaptive-ness to change, andleadinginnovationsin all areas of itscorporateobjectives.

1. Dissertation Project titled Corporate Governance: APerspective, A.K. Sachdeva, submitted to WorldCouncil of CorporateGovernance, U.K.

2. Concept Paper on Companies Bill 2004 (Ministry ofCompanyAffairs,Govt. of India)

3. Naresh Chandra Committee Report on CorporateAudit andGovernance, 2002

4. Narayana Murthy Committee Report: Report of theSEBI Committeeon Corporate Governance, 2003

5. ConceptPaperonCompaniesBill2004 (CII'sViews)

6. OECDPrincipals ofCorporateGovernance, 2004

7. ASXCorporate Governance Council Report, 2003

References

8. Higgs Report: Review of the Role and Effectiveness oNon-ExecutiveDirectors,2003

9. The Combined Code on Corporate Governance issueby HampleCommittee, 2003

10. Sarbanes OaxleyAct, 2002

11. KingCommittee onCorporateGovernance, 200212. Blue RibbonCommitteeReport, 1999

13. Cadbury Report: The Financial Aspects of CorporatGovernance,1992

14. Literature available on website of National Foundatioof Corporate Governance in India

15. Certified Course for Director, organized by Institutioof Directors, New Delhi, held during 07.06.2006 t11.06.2006atPalampur,HP

!

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People tend to overestimate their strengths; they also tend to overrate their weaknesses. They think they are really bad a

something at which they are only mediocre or slightly poor an "F" when they are really a "C" minus. In other words theseecancerwhereprofessionalwouldseeonlyamusclepull.

If you study successful people, you will discover that their stories are not so much about overcoming enormous obstacleand handicaps but rather about avoiding high risk, low reward situations and doing everything in their power to increastheoddsintheirfavor.

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Change isnot a one-waystreet. Itinvolves two parties: the person who ischangingandthe people who notice it.

Themoreyousubsume yourdesire toshine, the moreyou will shinein otherperson's eyes.

It is extremely difficult for successful people to listen to other people tell them something that they already know withoucommunicating somehowthat(a) wealreadyknew itand (b) weknowa betterway.

Tellingyour brain andyourmouth not todo somethingis nodifferent than telling themtodo it. If you can master it you calisten effectively.

Ifyoucanseeyourworldinanewway,perhapsyoucanseeyourselfanewaswell.

If I think you an arrogant jerk, everything you do will be filtered through that perception. If you do something wonderfuandsaintly,Iwillregarditasanexceptiontotherule;youarestillanarrogantjerk.

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production/operations, a natural comment comes from

executivesoftheseareathatwhyonlythissectionwhenalof improvement is required in other sections (they point outoo many meetings, lengthy review, shuttling of files, lonlead time and multiple monitoring etc. as obvious resourcidlers). Last year during my quality management training aJapan I saw a video presentation on surface wastages anthey are quite relevant here. Mr. Robin Sharma in his boostressed Quality of Life based on age-old Himalayan saintphilosophy. The surface waste are also tackled by 150-yeaold concept of IE saints Taylor & Gilberth but thephilosophy is laden with new buzz words of TQM. Againeach type of waste I have tried to give examples an

solutions based on case studies of various Indiaorganizations, especiallyPSUs.

No incentive for guessing that title is inspired by

Robin Sharma's book. MD is not any Director,monk or CEO but an abbreviation of my name.

Lastyear I soldmy Fiatcar topurchasea new car and joinedcorporate TQM department. These two transformationwere nonethelesscomparablewith theFerrari of that Monk.In India, for almosta decade,many Quality initiatives are invogue. As a matter of fact, all of them are directed towardscore department, i.e. production/operations. It is logicalalso because these departments have well definedperformance indicatorsand usually give high ticket (milliondollars) saving potential. However these are hard savingsand equal attention is required for soft savings where

Human Resource is primarily responsible for waste. Theseare normally predominate service and support functions.W he ne ve r w e t ry t o i mp ro ve c or e a re a o f

The MD who sold his Fiat

and went the TQM wayManoj Dubey

Manoj Dubey is working as Senior ManagerCorporate Business Excellence Group in NTPC, Corporate Center.He can be contacted at [email protected].

Surface Wastes

People Waste Process Waste Information Waste Asset Waste

leave home early, get home later, have fewer working dayin a week, more hotel expenses and so on. The companalso lost some highly affected sales personnel due tresignationfollowing thishassles.

A similar company on the other hand, tied up corporatticketingwith a leadingairline. As peragreement,all tickewillbebookedundereconomyclass. However at the endothe year 40% of turnover shall be returned bacto the company by the airliner. The FF mileage shall bploughed back to the organization instead of individua

Further credit arrangement was tied up with worlrenowned credit card group. The effective cost was neatrainAC1stClassFare.

The effort used to complete aunnecessaryor inappropriatetaskis assignmentwaste.

TQM / Six Sigma Solution

II. Assignment Waste :

PEOPLE WASTE

There are five people waste that occurs becauseorganizations fail to harness the potential that resides in allworkgroups.

Goal alignment waste is theenergy expended by people working at cross purposes andthe effort required to correct the problem and to produce asatisfactoryoutcome.

An edict issued to reduce travel expense because sales have

droppedoff.

Travel Department implemented a policy that requires allpersonnel to use tickets issued by them and at lower fares ortrain travel. This forced people to take extra flight legs,

I. Goal Alignment Waste :

Example

Effect

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Example :

TQMSolution

II I. Waiting Waste:

Result / Effect

TQMSolution

IV. Motion Waste :

Example

Multiple MIS, andreportpreparation based on anticipation(in case asked for it in review meeting), presentation bysubordinates on topics liked by higher management.Giving expediting responsibility to many departments,which usually result in monitoring by many and executionby few kind of situation. Routing of papers to hierarchywithout much value addition. Assigning a job to seniorpeople / managers / engineers which otherwise can be doneby outsourced typist /steno. This type of waste is prominentin organizations where role and responsibility matrix is notwell laid. Opening of new departments without in-depthanalyzed vision/mission. Lack of clear/stringentdeliverables.

Benchmarking of manpower with the best in the industry.Implementation of systems like ERP, Balanced Score Card,e-procurement, e-governance, role and responsibility and

communication matrix with clear objective and target foreach department. job description, job analysis and jobspecification are welldesigned.

Waiting waste describes the resourceslost as people wait for information, a meeting, a signature, areturn phonecall, a copier or computer that is broken, poorintranet/internet connectivity and so on. People cannotaddvaluetotheproductorserviceswhiletheyarewaiting.

This is one of the normal accepted wastes. If high levelmanagement is annoyed by such instances, some

improvement forshort term for that particularaspectwill beevident.

A green belt project for identification and solution of suchwastages. As a first step a lot of feedback/perception iscollected to identify waste. Video conferencing for multi-location organization has proved a good time and moneysaver. Useof e-mail instead of frequent phone calls.

All movement that does not addvalue,suchaswalkingandreachingismovingwaste.

Multi-location offices within a city, inter-linkeddepartments located without strategy within sameb u i l di n g , m o v em e n t f o r p h o to c o p ie r , f a x ,p e r so n a l e n t it l e me n t , i s su e r e so l u ti o n w i thHR/F&A, establishment department, meetings bydifferent tiers (corporate/regional headquarters) whereinexecutives from many locations come before meeting andgoafter meeting.

TQMSolution

V. Processing Waste :

Example

Result

TQMSolution

I. Control Waste:

Example

TQMSolution

Time and motion study, spaghetti diagram, loadindiagram, layout plan, many other methods are available iindustrialengineering to minimize suchwaste.

Any non-optimallyperformed woris processing waste. Employees are engrossed with th

status-quoatworkbutthereisabetterwaytodothejob.

Revision and retype of letter, IOM, notepaper, proposareports, proposals being closed at higher level, cancellatioof meetings, conferences,events.

Such wastes are usually taken as accepted wastes. In typicaloffice, if there are no major mistakes then it is a goowaytoappear busy.

Finding and establishing best procedures, standardizatioof all documents, common look and feel type of documenacross the organization. Templates for most of the routinproposals, corporate identity manual, visual instruction, oline query address system, platform to share best practicecasestudies (archives)across the organization.

There are 12 process wastes. These wastes arise during thoperation of business processes as a result of process desigand executionshortfalls.

Control waste is energy used fo

supervision or monitoring that does not producsustainable, long term improvements in overaperformance. A large part of traditional supervision anmanagement interactionwithemployees is control waste.

Reporting structure in a department where same leveperson reports to a level person based on seniority. Amanager in charge of purchase section walks the floothrough their department several times a day to see who idoing what. Frequent review meetings and multi level omonitoring. As traditional feature appointing some perso

as head of group which, in turn, distributes jobs to areporting to him and his individual value addition is nocriticallyanalyzed.

Identification of key processes and performance indicatorPutting KPA system in place with stretched targetWeekly/monthlyperformancereview in e-formatsbasedoKPI. Productivity analysis of department and employee

PROCESS WASTE

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Trending of KPI and productivity. In case of gaps, QualityImprovement Project or Six Sigma Green Belt project canbe undertaken.

Resources expended to compensatefor and or correct outcomes that deviate from expected ortypical outcome create variabilitywaste.

An organization claims that payment will be released tovendor/agency within three weeks from submission of clearinvoice. When the cheque does not arise in three weeks, theagency makes phone call/personal enquiry to accounts andother related departments. All executives of thesedepartments have to initiate additional searches, phonecalls, file tracking, etc. to find the status and the bottleneck.Thisalso leads topoor customer-oriented approach.

All key processes are to be tracked with performances

indicators. Customer feedback and satisfaction survey,internal customer surveys, etc. should be conducted to findout which processes are causing customer dissatisfactions.SixSigma isa powerful tool to control process variability.

The effort used to arbitrarilychange a process without understanding all of theconsequences and the effort required to compensate for orcorrect the unexpected consequences of the arbitrarychangearetemperingwaste.

A senior level manager upset by the overspending of

budget, issues a procedure that required his review andapproval off of each administrative expense though as perdelegation of power, it was tobe sanctioned at a muchlowerlevel. This has resulted in time delay and internal/externalcustomer dissatisfactionon routine jobs.

Strict control on configuration change management,evolving feedback mechanism on arbitrary decisions oncompany-wide basis. Analysis of expenditures under A, B,C category. Visual display of expenditure under Category'A'.Monthly reviewof expenditureunder category 'A'& 'B'.Gap Analysis and accordingly Performance Improvement

Projects.

Strategic waste is value lost as a resultof employing a process that satisfies short term goals and/orinternal customer needs but does not provide value tocustomersand shareholders.

An organization decided to implement software related to

II. Variability Waste:

Example :

TQMSolution :

III. Tempering Waste :

Example

TQMApproach

IV. Strategic Waste:

Example

HR Management, it went for an off-the- shelf package andalso put various requirements forcustomization. But due tshort time frame somehow software was put in place but ituses arelimited toattendancesystem.

Before implementing any strategic change of such a nature

the entire value chain to be impacted by change (saysoftware) should be studied. Stakeholder analysis for eacgroup should be carried out. This study shall clearly puforward practical requirements to be catered so that aaspects can be addressed upfront. Shared vision and goaalignment.

Reliability waste is effort required focorrection of predictable process outcomes due to initiallunknown causes.

This waste occurs when complete information an

knowledge about system, procedure, circulars, delegatioof power, interpretation of rules/regulation, etc. are limiteto one or two key persons in the department. Npaper/proposal are deemed to be complete unless seen oconsultedby thesekeypersons. Thatparticular departmenfaces a lot of difficulties when these persons are noavailable.

Making of standard work processes that are graphicalldisplayed. A cross function training matrix for employeeJob rotation of employees, transfer after certain intervals tother locations in conjunction with career planningCompetencymapping forjobs.

Energy wasted becausajobisn'tdonethebestwaybyallthosewhodoit.

Difference in performance level of executives within thsame department. In a typical approach, performers arpromoted. As a result, a major chunk of people get furthede-motivated.

Incentivisation of output, defining standard outpu

units, employee counselling, training, follow of bepractices, department interaction meeting, career patplanning.

Processes competing witone another causes sub-optimization waste. In the becase, the only waste is the duplicated work. In the worcase, competing processes counter each other and degradthefinaloutcome.

TQMSolution

V. ReliabilityWaste:

Example

TQMSolution

VI. Non Standardization Waste:

Example

TQMApproach

VII. Sub-optimization Waste:

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Example :

TQMSolution

VIII. Scheduling Waste :

Example :

TQMSolution

IX. Work Around Waste:

Example

An organization with multi locations, decided to reduceadministrative cost, number of supplier and uniformity ofcost for certain purchase items (like fuel, bulk chemicals). Itwas decided that these items shall be purchased centrally.Purchase order was placed from central office with

instruction to supply different locations. However, lack ofcoordination between local purchases department, centralpurchase department and supplier made central and localoffice at loggerheads.

Formation of cross-function teams to look at the aspect ofminimizing cost. Empowerment to locations is the bestsolution with guidelineson optimum cost. Japanese conceptofmanagingbyprinciples.

Waste of resources bycompensating for poorly scheduled activities are schedulewaste.

An organization hada long list of personal entitlement itemsto its employees which are distributed at fixed intervals oftime. However, often the cycle of purchasing anddistributing these items coincided with critical itemprocurement list. This led to peak work load at times andthe department used to have extra manpower strength andcushion. Thisalso ledtohigh inventories.

Project management oriented approach for critical

packages. Outsourcing of procurement of non-care items.Lump sum package to employees instead of distributingentitlement items. ERP implementation with objective ofminimum leadtime andinventory.

Workaroundwaste occurswhenresources are used to create and maintain informalprocesses that replace official processes or conflict withotherprocesses.

M a ki n g o w n f o rm a t/ s p re a d sh e e t a n d l a te rconvert ing data f rom i t into s tandard format

of organization. Shifting job responsibilities fromone department to another, contrary to organizationalguidelines. Create own review system and forumsthereby generating additional meetings. Changingspecifications of standardized items and so on.Such deviation initially contribute to waste but later giveroom for massive crackdown of audit authorities whichleads to more stringent control thereby delays ( controlwaste).

TQMSolution

X. Uneven Flow Waste:

Example:

TQMSolution

XI. Checking Waste:

Example

TQMSolution

XII. Error Waste:

Standardization is done on the basis of user-friendlapproach and it is revisited after certain frequency so tharecent development can be incorporated. Changmanagement is donein a scientific manner.

Resources invested in material o

information that piles up between work stations createuneven flow ofwaste.

1. The HR department of an organization is hiring newbatch of engineers and interviews are arranged after written test. Since candidates are being inducted fospecific technical functions, the people in interview boardwere from those specific functions. However, theavailability was not checked in advance beforcommencing interview. This resulted in chaotic interviewinterruptedbyphonecalls.

2. The corporate office of an organization asks for routinreports to be submitted on weekly/monthly basis. Thesreports are regularly submitted from a different locationsHowever, whenever a review takes place at the apex leveall locations are once again asked to give updateinformation without looking at the report alreadsubmitted.

Such wastes are difficult to be deducted at first place sincthey are usually formed at the corporate/apex level officesHowever this can be tackled when we systematize workinand are sensitive to feedbacks. External assessment baseon certain models like EFQM also helps to identify suchgaps. External consultant for productivity improvemenalsohelpsi

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