Retain your talents...they cost a lot

Gyanendra Kumar Kashyap

The cost of employee turnover for businesses is high, time for leaders to step in  

Harsh decisions with reference to asking an employee to hang his/her boots have to be made; there are no second thoughts on this. No one is indispensable (whatever be the potential of the quitting employee), is a clichéd logic given to this end. Understandably, the present business dynamics believes in ‘doing more with less’ and this quest many organizations end up losing key people. In such cases it is apparent that statements like, ‘our people drive the businesses’ are more at a superficial level. Of course, in the short term, there is a reduction of expenses; yet what is not realized is the fact that the pain (monetary and otherwise) is usually felt post the cut which is neither reported to the CEO nor is factored into the organization’s bottom line. Besides what makes more sense is to know the additional ‘ramp-up’ costs that is required to bring a new hire to the same competency level as the departing employee. A reason as to why this is not factored in an organizations bottom line could perhaps be the lack of a robust process in place to estimate the turnover costs. However, the cost of employee turnover for businesses is high, regardless of the level of wages being paid to the departing or incoming employees. To put a numerical value, the Society of Human Resource Management, SHRM, estimates that it costs about $3,500 to replace one $8.00 per hour employee. Estimates by various research sources note that it costs 30 - 50 percent of the annual salary of entry-level employees, up to 150 percent of middle level employees and up to 400 percent for specialized, high level employees. Given these numbers and its implications, it makes sense to put in place workplace policies that improve employee retention can help companies reduce their turnover costs. Can leaders play a role here? If yes, then what can they do to retain and motivate employees?

It is a common phenomenon that employees are drawn to leaders who offer optimism and new possibilities, not despair. Thus leaders can improve their ability to retain top talent and at the same time support broader business objectives by understanding and adopting practices to promote long-term employee engagement. At this juncture it is important to understand that engaging and retaining high-potential leaders requires more than traditional incentives such as competitive pay, benefits and good physical working conditions – high potential can easily be lured by rivals with all the more better pay and benefits. Leaders can earn the loyalty of employees by putting in place a disciplined engagement strategy, listen to their employees on two levels – what they say and what their unsaid emotions reveal,  and encourage a consistent follow-through from senior management. They must develop sophisticated programs to address the problem of retaining their best people and finding more to further accelerate their growth.

Researches point to several practices that a leader can use to retain and engage talent and yes positively impact the bottom line too.

Create a sense of purpose: Engagement and retention improves when people understand how they connect to the ‘Big Picture’ and how they make a difference. Feeling connected to the people one works with helps create a sense of purpose.

Provide meaningful work: Allowing people to do what they do best and make a significant contribution is critical to engagement and retention. Leaders should actively listen and acknowledge the employees current roles as well as their aspirations for the future.  Knowing what types of work they find stimulating, what they would consider a dream assignment and taking measurable steps to help them progress toward those career goals would be like icing on the cake.

Solicit ideas: Leaders can solicit employees’ opinions on business challenges and workplace issues. Involving people in decision making gives them a sense of control in uncertain times, shows them that they are valued and that their opinions matter. While it is good to publicly recognize and reward the sources of ideas, it is equally important not to discount employees whose ideas are not used. It is best to meet with them one-on-one, thank them for providing thoughts, and explain how their idea could lead to another initiative later on. This also helps in improving decision acceptance rates.

These are not exhaustive; giving honest feedback, setting tough yet realistic goals, enhancing trust and communication et al would go a long way in engaging as well as retaining people – who matter. In essence, leaders need to do more with more - more interaction with employees, more communication, more partnering, and more coaching. Only then can they create the work environment necessary for increased productivity and employee loyalty. Else employee retention will continue to remain an expensive proposition.

How True Are Your Ads?

Gyanendra Kumar Kashyap

Soulful poetry, bombastic promises and beguiling slogans… you definitely can’t escape the great Indian electoral jamboree if you are an Indian. But do slogans really translate into votes?

“Bijli gul, paani gul, sever full, is baar Dilli sarkar ka dabba gul.” The ad campaign launched by the BJP during the 2007 Municipal Corporation of Delhi (MCD) Election had certainly created a political advertising furor then. But two and half years down the line, a majority of campaigners (read: BJP members who are now councillors and must have shouted the slogan on the top of their voices then) can’t even recollect the slogan which had helped them dethrone the then ruling Congress party. And it’s just not one instance. In fact, a random survey conducted by us revealed that 66% of the total respondents couldn’t even recall the India Shining and Bharat Nirman campaigns (and at best were unable to differentiate between the two). Put a rupee value to it – the public at large is unaware of the fact that Rs.1.5 billion and Rs.2 billion worth of tax payers money was involved in India Shining and Bharat Nirman campaigns respectively – and the efforts seem to have gone down the drain.

So the moot question is - If the brand recall is such then why do political parties like Congress and BJP keep aside huge sums to the tune of Rs.1.5 billion and Rs.2.5 billion respectively as their advertising budgets. Do political advertising really serve the purpose? Or is the Rs.10 billion advertising extravaganza by political biggies just another revenue source for the ad agencies.

From 1984 to 2009, the political advertisement landscape has been more or less the same, in the sense that it has remained a convenient place to fallback for answers, both in the case of victory and defeat. Be it Rediffusion, Grey Worldwide, Crayons, or Utopia, they have either been praised for ‘brilliant’ campaigns or have been held guilty for their ‘horribly negative’ work. In fact, like any other brand, political brands too have shifted agencies as and when they couldn’t continue with that winning streak. But then, what is it that differentiates a brilliant campaign from a horribly negative campaign? If your answer is in the context of creativity, then you need to reconsider; because political ads have never been so creative. And if at all they have been, they have failed miserably. So what is it that attracts voters to vote for a particular political party?

If it’s not the creative design, then certainly it has to be the message that the advertisement sends across to its target segment. Though both BJP and Congress politically insist on the fact that neither India Shining nor Bharat Nirman was a political campaign, yet the subtlety with which the ads were used as ‘proxy campaigns’ to highlight their achievements makes them classic cases for consideration. In fact, there was nothing wrong with the Rs.1.5 billion plus Grey Worlwide’s India Shining (for the BJP led NDA government) campaign. Media loved it, even the tagline became an instant catchphrase for the booming Indian economy. Yet the common perception of the masses was that it was more of an elitist advertisement, with no recognisable face on the hoardings. Result: NDA lost the next election. The campaign that had become the catchphrase was suddenly vilified and the Rs.1.5 billion plus price tag was cited as an extravaganza. The post mortem analysis indicated that the ruling BJP while recognising the achievements of ‘India’ had completely forgotten about the teeming millions in Bharat.

Compare this to Percept/H Bharat Nirman Campaign (for the UPA government), at an estimated cost of Rs.2 billion, publicising the work of the UPA government. As per political pundits, the campaign connected more with the masses. In fact, this was one of the several reasons behind Congress’s thumping victory in the 2009 Parliamentary Polls. Did you notice that subtle change – ‘Bharat’ replaced ‘India’ and ‘Shining’ was substituted by ‘Nirman’? And this struck the right chord with the voters.

On comparative ground too, the two ad campaigns by respective governments speak volumes on what experts’ term as ‘positivity, inclusiveness, youthfulness and all the more pan India appeal’ as against ‘negativity, incoherence and ads of exploitative nature.’ Well, one can’t blame political analysts and experts for their ad analysis. Reason: At this juncture it’s important to note that political advertising and brand advertising are polls apart when it comes to measure the return on investment. While in the latter’s case a plethora of parameters (awareness, likeability, et al) needs to be considered, in the case former the return on investment on advertising can be judged almost instantaneously and on a single parameter – whether the concerned political party won the elections or not. This makes political advertising altogether a different ball game.

Moreover, though negative ads do get the much needed eyeballs and in the future does generate recall, but they do not necessarily translate into votes (sales if can term them so). Jai Ho and Bhay Ho hit the media blitzkrieg almost simultaneously. While with Jai Ho (the Congress was inspired by the Oscar award winning movie Slumdog Millionaire and got the rights to use the same in its political campaign) Congress highlighted its achievements, with its follow up ad “Aam aadmi ke badte kadam; har kadam par Bharat buland” it only took the endavour further.

On the other hand the main opposition party (read BJP) focussed on the negatives and came up with Bhay Ho campaign. Apparently the campaign did not succeed in persuading the Indian voter. Nor did its follow up ad ‘Mazboot Neta, Nirnayak Sarkar’ strike a positive connotation with the masses. Raison d’être: Ads in the context of political advertising must be able to persuade the electorate by political messages based on parameters like trustworthiness, honesty, et al. And critics feel that latter had missed on them. In fact, the message the voter is now sending out to all political parties is – don’t take me for granted, and don’t expect me to be swayed by hype without substance.

For instance, cut the picture to December 2008 when during the Delhi State Assembly Election the BJP came up with the campaign “Mehengi Padi Congress.” Nothing was wrong with the ad, as a matter of fact it did highlight the problems gripping the common man then, but still BJP lost the election. Well, it’s a different issue that 90% (including the chief ministerial candidate Dr V. K. Malhotra) of the party members themselves found that the ad had a negative connotation. “We did highlight the problem, but what we missed was the solution. We did not tell the electorate how we would solve the problem. Further, we focused so much on the word Congress that in the end Congress won the election,” avers Anil Sharma, a BJP Councillor. Therefore, as the party gears up for the assembly elections in three states - Arunachal Pradesh, Haryana and Maharashtra – the focus this time will not only be the problems, but also on the solutions. As far as Haryana is concerned, price rise is its issue.

Similarly the main theme for Congress in the state of Maharashtra (where its ally is Sharad Pawar led NCP) is the developmental plank and sustaining the growth momentum. Says Ranjan Bargotra, President, Crayons Ltd. (the ad agency taking care of the Congress ads in the state assembly elections), “there is no point flooding the ads with information. We are highlighting issues which connect with the common man.” And critics agree with Bargotra. They too feel if campaigns highlight the work done by the collation governments, they can easily persuade the common man to vote for the party. Thus, as a policy measure the Congress ads are never designed to hit below the belt. “This in its own way differentiates the party and persuades voters to vote,” says a critic.

If you don’t agree, sample this, “Aisa pehli baar hua hai … No 1 Haryana” – the ad campaign of the government of Haryana which focuses on the developmental works (NREGS, NRHM, Electricity, SSA, et al) with rural masses in the background conveys a positive picture of the party and is successful in persuading the voters (Haryana government has already spend Rs.80 million on the campaign). Even their latest master stroke – 13 October ko, Sonia Gandhi ke naam pe, Congress ke kaam pe, mohar lagaye haath pe – is a crystal clear ad asking voters to vote for the party clearly on developmental planks.

In fact, a similar ad from the stable of BJP, “Jeetaga Gujarat”, which clearly cut across the clutter and asked people to vote for the development of Gujarat, struck the right chord with the voters at a time when the entire opposition was involved in mud slinging. Ditto in Karnataka wherein BJP had put across a host of questions along with the solutions. Result: The campaign which read “BJPyee Parihaare” (BJP is the solution) connected well with the masses and persuaded the Kannada voters to vote for BJP. All praise to Arun Jaitley who was hailed as the Chanakya of BJP.

Though, on retrospect it’s not always possible to pin point the reasons for failure of the ad campaign, but yet winning admen will continue to claim that they had a better understanding of Indian politics and political pundits will as usual sit and dissect the advertising threadbare. For a moment, imagine, had the BJP won, “Majboot Neta, Nirnayak Sarkar” could have been the new catchphrase. As Bagrotra points out, “Campaign plays a significant yet limited role and it’s performance that communicates it back to the people.”

PS: The article was written in October 2009 for 4P's B&M

A case for the fairer talent

Gyanendra Kumar Kashyap

While the representation of women on boards and executive committees are low, a survey suggests that a key agenda for India Inc., in 2013 would be to invest in women talent...

According to a new study from Booz and Co., “Empowering the Third Billion: Women and the World of Work in 2012,” nearly one billion women are poised to enter the global economy in the coming decade. However, the question remains as to whether theirs will be a story of economic empowerment or missed potential. Consultancy firm McKinsey & Company, in its report titled, “Women Matter” states that companies in Asia's leading economies have "strikingly" few women in senior jobs, missing out on a vital pool of talent to fuel the region's growth. In a similar vein Centre for Talent Innovation’s, CTI,  research on women professionals in emerging markets finds that women encounter bias in the workplace, severe enough that large numbers (55 percent in India, 48 percent in China and 40 percent in Brazil) disengage or consider dropping out altogether. While Booz & Co study suggests concrete steps that governments and employers can take to tilt the scales toward success, CTI argues that the problem can be addressed by employers by recognizing that there are high-potential women and must create procedures and programs that will enable talented women to reach their maximum potential. Given the talent deficit across industries, the proposition makes all the more sense to retain talented women workforce.

Statistically India fares poorly when compared to China or even Indonesia when it comes to representation of women talent on executive committees and boards. As per the McKinsey Report, in India women’s representation on boards and executive committees are 5% and 3% respectively (lower than that of China which has the representation at 8% and 9%). Taking a cue from these studies and the “double burden” pressure (career and household duties) that McKinsey cited as dominant reason for women in India to leave jobs; companies are offering unusual perks and incentives and creating unique programmes to contain dropouts. Media reports state that companies are putting an extra effort into increasing the number of women in their workforce, including paying higher fees to third party recruiters for finding appropriate women candidates. Apparently it seems that India Inc. is keen to keen to move beyond policies and frameworks to actually doing things to increase the share of women representation and train them for leadership roles.

Interestingly, one of the key agenda for India Inc., in 2013 would be to invest in women talent. A survey conducted Avtar Career Creators and Flexi Careers India, across 130 companies in India that operate in multiple domains, state that some 79 percent of the companies polled believe that investing in women would bring them sustainable growth and increased productivity. According to the survey respondents more than 75 percent of their diversity & inclusion (D&I) investments for 2013 would go into inducting, developing, training and retraining women talent.  In terms of budgetary allocation IT, BPO, KPO and FMCG companies have higher budgets for gender diversity compared to other industries. Besides, an increasing pressure to retain talent and greater consciousness about the need for diversity at workplaces has also added to the momentum. Further according to the Avatar study as much as 83 percent of respondents in the survey said they were keen on hiring second career women - those who took career breaks for marriage or childbearing. It is in this context that it would be interesting to know as to how are companies going the extra mile to retain talent by showering ‘would be mother’ employees with extra perks.

According to reports available in the media, there are companies that have adopted unique talent retention strategies. For instance, Accenture runs a unique programme called 'Hours That Help' where employees can donate their unused vacation time to their colleagues who are in need of additional paid leave to attend to critical medical or personal matters. Often, this option is used by new parents to attend to any critical or urgent childbirth related matters. Besides, Accenture also offers security escorts and dedicated medical cabs for expecting mothers. Google India, besides offering an insurance cover towards delivery related problems and the general insurance scheme that is extended to the family, also offers a baby bonding benefit to young mothers soon after the child is delivered. As a unique practice, in case of adoption, Google bears the entire adoption expenses against bills that include the legal charges and fee charged by the agency. SAP India, which has its, ‘Run the Mummier’ programme, believes that there is a clear evidence that maternity and childcare benefits translate into higher retention, helping firms also to develop strong women leadership benches. IBM has a programme in place to train in-home caregivers or nannies on the nitty-gritty of childcare while Yahoo runs volunteer-driven Women in Tech (WiT) group that supports women across the talent pipeline and enables them to successfully enter and remain in the IT workforce.

Given the practices / procedures, intent and investment in place the logical question in a world obsessed with measurability would be - do such measures help curtail dropout? Though a sweeping statement would be much of a generalization, but yes there are companies that state they have had positive results. SAP India’s experience with their programme over the years is a testimony to that fact.

Listen Boss – I quit because of you!

Gyanendra Kumar Kashyap

Contrary to popular imagination that employees leave jobs for money; the truth is ‘people don’t leave jobs – they leave managers!’

Employee turnover is not a new phenomenon; they join an organization, quit and then move on to the next. Managers readily accept turnover as ‘a cost of doing business’.  Perhaps, they may not be entirely wrong; however it does make sense to figure out as to whether employees quit because they are disgusted with the entire company or is there more to it than meets the eye? According to Saratoga Institute Survey, 89 percent of managers say they believe that employees leave for more money. While this may be the managers’ perception, Saratoga’s research supports the many other surveys that categorically state that money is not the driving force causing employees to quit their present employment. The manager’s perception is primarily due to the results of ‘exit interviews’ wherein the outgoing employees generally offer - better pay package and opportunities, as reasons for their quitting the job. This is because the employees do not want to burn bridges with their existing managers (for perhaps they need their reference or recommendation). What is all the more interesting is that very rarely do managers’/leaders look in the mirror and face the real reason why their best and brightest employees choose to leave. The author duo, Marcus Buckingham and Curt Coffman in their book, ‘First Break All the Rules: What the Worlds’ Greatest Managers Do Differently’, write that that people don’t leave jobs, they leave managers. If employees don’t get along with their managers, don’t like them or don’t respect them, they will leave a company despite a high salary or great benefits. Leigh Branham, in his book, ‘The 7 Hidden Reasons Employees Leave’ states that one of the top reasons employees cite when leaving a job is either disagreement with or disapproval of their immediate supervisor. Back home, a survey by industry body ASSOCHAM, ‘Employee-Boss Relationship’ October 2012, has some startling numbers. Around 62 percent of the respondents said that they have an abusive boss, such as humiliating and insulting employees or isolating them from co-workers. This perhaps explains as to why nearly 69 percent of employees who quit their jobs complained about indifferent attitude of their bosses or immediate supervisors.

True, that employee discontent, disengagement and final exit does not occur overnight – perhaps it takes weeks / months and in a few cases may be even years; therefore it does make sense for leaders /bosses / immediate supervisors to look beyond the obvious and get rid of what psychologists refer to as ‘motivated blindness’. They need to accept that one of the critical reasons as to why employees quit may be linked to their own behavior. DDI’s, ‘Lessons for Leaders from the People Who Matter’ a trend research on how employees around the world view their leaders, offers valuable insight and learnings for bosses/ leaders / immediate supervisors. The research report states that one in three respondents (34 percent) don’t consider their managers to be effective at their job; 37 percent said that their leaders are able to motivate them only sometimes or never; 35 percent respondents stated that their leaders would sometimes or never, listen to their work related concerns. Only 56 percent of employees reported that their current leaders help them be more productive. Add to this, as per the report 39 percent surveyed said that they left a job primarily because of their leader while 55 percent said they have considered leaving job because of their leader. These  stand contrary to what leaders feel about themselves; a 2010 front-line study, “Findings the First Rung” by DDI, reveals that a vast majority 87 percent leaders rated their own leadership skills as good or excellent. The leadership effectiveness is ultimately determined by those who are led; the discontent between what the leaders and the those who are led feel, is reflective of wherein the problem lies and what corrective measures can be initiated.

There is no doubt that bosses / immediate supervisors who don’t create the right opportunities for their employees, don’t communicate with them, and don’t appreciate them often find themselves dealing with a high turnover rate. So what are the qualities of a good manager which may help them retain their employees? The ASSOCHAM survey offers a few - approachable (83 percent), a good communicator (82 percent), supportive (81 percent), a good leader (80 percent) and someone who respects their staff as individuals (76 percent).

Lessons for bosses / immediate supervisors, if they want to retain their people: you should neither be intimidating, nor aloof, nor be unable to hold confidences nor you should you break the ‘psychological contract’. A good manager, it is said – no matter the salary, inspires loyalty. So my dear manager/boss/leader/immediate supervisor (as you may like to be called): I didn't quit my job for money … I quit because of YOU!

Are you losing out on your introvert employees?

Gyanendra Kumar Kashyap

When it comes to reward, recognition or ‘race to the top’ the introverts are a discounted lot; it’s time they get their rightful dues…

Call it a trend or a fallacy; organizations apparently seem to lay their bait more on the big personality. In such a scenario where does the proverbial ‘shy, sober and simple’ employee fit in the organizational schema? In their search for a charismatic, effusive and outgoing leaders as well as employees, organizations seem to lose sight of the calm, eremitic and the observant lot. More often than not, the hidden gems do not get the recognition they deserve and eventually they either quit or feel depressed. Neither is a win-win situation for either the employee or the organization. At best for the employee - the so called introverts as opposed to their outgoing extrovert colleagues, quitting (or job hopping in the hope of being a part of an organization where they are recognized and can excel to their potential) is but a temporary solution. As for the organization, the loss is greater. Living and believing in ‘culture of personality’ where it is the charisma, outward confidence, and ability to sell others a vision, that is prized and rewarded; organizations are perhaps missing out on one third to one half of the population that considers themselves to be introverts. Author Susan Cain, in her book, “Quiet: The Power of Introverts in a World That Can’t Stop Talking” suggests that by succumbing to the noisy charms of the extrovert, society and business are missing out on the insight and creativity of the more thoughtful part of the population. She is of the opinion that there’s a bias against the introverts and they are discounted for a trait that goes to the core of who they are; further arguing that it's time more thoughtful and reserved types got their due. It makes business sense for managers to understand the differing needs of their introverted (and extroverted employees) and reap the benefits in terms of productivity and motivation.

What is it that is different in the way the introverts communicate or work that finds itself at odds with modern business culture? It is in this context that it makes all the more sense for managers / leaders to build on the talents of their more inward-focused workforce by exploring the workings of the introverted mind. Here again the question is, how do you define an introvert? Shy, unsociable, unhappy, unfriendly, insular are but a few adjectives that are wrongly attributed to an introvert. Contrary to these popular imagination introverts are neither shy nor unsociable nor aloof; but nonetheless introversion, as a trait, continues to carry a stigma in the workplace. Misconceptions aside, introverts tend to be calm and reserved, speak softly and slowly, don't seek the limelight, and act only after thinking their thoughts through. These characteristics often tend to mask their strengths: creativity, intellectual depth, and the ability to see the big picture, maintain an organization's internal compass, and balance out the go-getters in the organization. In their book, “Type talk at work”- Otto Kroeger and Janet Thuesen put forth their view that, “With Introverts, you see only a portion of their personality. The richest and the most trusted parts of an introvert's personality are not necessarily shared with the outside world. It takes up time, trust and special circumstances for them to begin to open up."

Going by the author duo, the takeaways for managers / leaders are clear: recognize & harmonize their key strengths and encourage their introverted employees to be their best selves. There is no dearth of example of introverts who have been successful leaders. Be it Bill Gates, or Jim Goodnight, or Warren Buffet or for that matter Richard Branson (who claims to be an introvert but knows how to hide it well) – all quintessentially introvert professionals have been successful at leading global corporations. However organizations probably need a right balance of extroverts and introverts. For instance Steve Jobs had Steve Wozniak, Steve Ballmer complemented Bill Gates. While mangers / leaders can play a role in encouraging their introvert friends, introverts, too can make more effort to get their thoughts across, to smile, to make eye contact, and yes speak up.

Extroverts can take a leaf out their introvert colleagues’ philosophy and organizations can do their bit to tap into the untapped potential of the introverts; introverts besides ‘leading a quiet revolution’ (as Susan Cain puts it) must learn from their extrovert colleagues to be ‘able to talk the needed talk’ and place themselves on the ‘organizational positioning’ cluster. If the two fail in their efforts, the business world may never get to see another Buffet, Wozniak, or Gates.

Is Air India the comeback kid?

Gyanendra Kumar Kashyap

Statistics show that Air India is re-gaining its market share; is it a temporary phase? If not, can Air India survive the competition and regain its lost glory and position? 

If numbers are to be relied upon, then data for the last six months show consistent increase in Air India’s market share. As a matter of fact, it has inched past other airlines to take number two position in the domestic market over the last two months. It has risen from 16.2 percent in May 2012 to 20.8 percent in October 2012. For June, July, August and September 2012, the market share of Air India was 16.8 percent, 18.2 per cent, 18.2 percent and 19.3 percent, respectively. Can the increase in market share be attributed to ‘the bad times’ for ‘the king of good times’ or is the ‘Maharaja’ improving its management-employee relations, rebuilding its customer base and all the more relearning lessons about quality services? Air India, for some reason or the other has been mired in negative publicity. Be it lack of professional leadership and good management practices; the inability of the national carrier to function on sound, independent, commercial lines (thanks to the high handedness of government and political leadership); or the employees holding the airline and its passengers to ransom through strikes and protests – may lead one to believe that this gain is a temporary phase, primarily due to the crisis at Kingfisher Airlines. While the reason cannot be out rightly rejected, yet there are ample reasons to believe that Air India is gradually doing things right and the gain in market share is rightfully theirs. This raises the more important question: Is Air India the comeback kid and can it survive the competition and move to the top slot?

When in May 2012, the IPG (Indian Pilots Guild) took the airlines to ransom, analysts and commentators were worried as to whether Air India could really come out of the mess and rebuild its image and brand loyalty? On their part they reasoned that an emphasis on management – employee relations, customer relations, and quality of service to passengers could help Air India get back traffic and generate the revenue to recoup the airline. On a rational ground, the suggestions were perhaps too good to be ignored. For irrespective of the amount of money the Centre pumped into Air India, nothing could probably succeed without good management – employee relations. A give and take approach, where protesting employees gave up their agitation and the management paid their salaries and dues, was adopted. It constituted a committee to ensure the implementation of the Dharmadhikari Report. A cash surplus of Rs. 48 crore during April-July, and the government’s infusion Rs. 2,900 crore to the airline (under the Rs. 4,000-crore budgetary allocation for 2012-13) gave ample elbow room to make up-to-date payment of PLI (productivity linked incentives) and clear payment of salaries of all its employees before Diwali. As a result of these measures there was a perceptible increase in Air India’s traffic.

It is argued that aggressive fare schemes and an improved on-time performance are perhaps the two biggest reasons why Air India is seeing an increase in its market share. This implies that it is gradually getting its customer relations and service quality on track. Increase in load factor implies that there have been fewer cancellations and rescheduling of flights (as a matter of fact, ordinary passengers and India Inc. had lost faith in the airline on account of the strikes, the cancellations, and the rescheduling of flights). As for the quality of service Air India is learning from its rivals. It is now trying to modernize services to improve the entire experience of flying with it. The airline has roped in the National Institute of Fashion Technology to design crew dresses. Soon flyers when flying in the new Dreamliner (Boeing 787) to any international destination can order from a variety of international cuisines.

The role of independent directors (usually well-known industrialists) at Air India has been put to question more often than not. Perhaps they could not see eye to eye with anything that the management proposed. For a change, the management has decided to invite professionals to take up the role of independent directors. In a bid to do away with petty politics and focus on the turnaround, it is expected that their expertise and professionalism would give the corporate restructuring process a leg up. Perhaps, this is put to rest the question of lack of professional leadership at the helm.

In a dynamic aviation market, it may be too early to term Air India as a comeback kid but nevertheless the approach seems to be on the right track and will certainly help rebuild its image and brand loyalty. If these can be taken care of being ‘numerous uno’ is a mere number game.

The Sena's Test

Gyanendra Kumar Kashyap

Politics and the dark side of charisma aside, there are a few lessons that one can learn from the legacy of Balasaheb Thackeray...

“…For men may come and men may go, but I go on for ever…” reads Lord Alfred Tennyson’s poem ‘The Brook’. Perhaps other than ‘time and the brook’, a living entity can’t claim immortality, and more so a political entity. Yet, there are exceptions. Given that a number of political parties and leaders have come, dazzled the political firmament and then disappeared into oblivion; creating a political outfit, shaping it and remaining its undisputed  and revered leader for over four and half decades is an exception of sorts. Bal Keshav Thackeray (known more as Balasaheb Thackeray or Sena Supremo) stormed into the political landscape in 1966 when the opposition political space in Mumbai (then Bombay) was gradually becoming a stronghold of Left-leaning trade unions. Keeping aside the debate as to whether the ruling Congress used him as a ploy to corner the Left or not, what is worth knowing is how his political philosophy based on identity-politics changed the prevailing political discourse. What was the unique leadership trait of the political cartoonist that generated such a followership; was it his charisma; or was it the political vacuum; or was it Balasaheb’s ability to articulate, and that too aggressively, widely shared anxieties?

A leader first must be accepted as one, and in a country which generally believes in idolizing a leader, creating a space for one is not easy. You need to strike a chord, pinch where it hurts the most and espouse and address issues which affect the general masses. You need to have a set of trusted lieutenants who can carry forward the legacy with the same zeal and zest.

Perhaps, Balasaheb realized it early on. To begin with, he wanted to fight for the identity and rights of the sons of the Marathi soil, not fight elections. He did not go beyond the demand for jobs for Marathi youth. This struck the right chord with unemployed youth. His aggressive diatribes at leaders made him seem like a person with steely determination, unwavering in the pursuit of his goals and far from being emotive in public. He did not only do plain speaking; at local levels there was a genuine ability to translate bragging into action – in effect this was the major reason for the outfits’ early success.  He provided a collective identity and pride to the people who were feeling marginalized in the globalizing city of Bombay.  If a leader can stand up and raise a voice for a cause that will benefit masses, followership is not far away. He had a band of leaders, cutting across the social strata – be it Manohar Joshi, Narayan Rane or Chhagan Bhujbal, all grass root leaders who had unfailing belief in the brand of politics they were associated with and the vision of the leader.  It was only when Balasaheb did not approve of the recommendations of the Mandal Commission that leaders like Bhujbal dissociated themselves. In the management context, the question arises – should organizational philosophy be rigid, should there be no rooms for flexibility, if yes then what should be done to accommodate the aspirations of your trusted lieutenants? 

To remain politically relevant, he took up issues one at a time, connected with people and expanded his political base. He began with a tirade against communists and migrants.  The first target were the Gujaratis, followed by South Indian migrants and then labour from UP and Bihar. He simultaneously embraced the ‘Hindutva’ agenda to appeal to a larger electorate.  Old age, frail health and the limitations of identity politics did get the better of the Sena Supremo (after early electoral success in 1995); however what is noteworthy is the enormous support and power that he wielded in Maharashtra. Since his early days in politics he had mastered the art of developing a symbiotic relationship with his political opponents in the corridors of the Mantralaya. He was suave in using the ‘powers that be’ politically, openly or clandestinely. Perhaps these and many more such attributes made him the mass leader that he was.  

The man on whose charisma the Sena was born and reached its pinnacle is no more. And this raises the most relevant question on the future of Shiv Sena, the outfit. Will it crumble or will it re-invent itself? Like majority of contemporary political parties, the outfit too is a family fiefdom; the quitting of Rane (2005) and Raj Thackeray, Balasaheb’s nephew (2006) raised the question on succession planning. All the while Balasaheb scoffed at dynastic politics but when the moment of truth arrived he too gave in to the lure of family succession and handed over the baton to his son, Uddhav. Though the party has managed to remain afloat, thanks to the charisma of Balasaheb and the Sainiks’ implicit support of his vision, political commentators argue that the future of the party is bound to be tumultuous. It was the loyalty to Balasaheb that held the party members together and is seen to be a major roadblock in the party’s future success. Leaders can take a leaf out of this entire episode – build an organizational brand; the organizational culture must be such that potential talent flock to the company not because of an individual leader associated with the organization.

The way the succession was handled has some lessons in succession planning. Should the next in command be the kith and kin of the incumbent leader? How do you decide who is the best suited? What about the aspirations of the others? The rank and file of Sena leaders saw Raj as the natural successor, for it was Raj who measured up to senior Thackeray in charisma. As is evident, post the split, Raj has struck an emotional chord with the people and has used identity-based political ideology in the same way as his late uncle. Leadership abilities, the ability to come up with a strategic plan, organizational and people management skills are but a few attributes that should be looked into when deciding on potential successors. Many in the know say that Uddhav does not fit into the mental construct of a leader; on the other hand Raj epitomizes his late uncle and many are comfortable with his leadership traits. 

Identity based politics is losing steam and it is time for Shiv Sena to rethink and opt for a new political philosophy; perhaps one which is more inclusive and development oriented. In the same vein, leaders in general should not carry on for long with strategies that follow the law of diminishing returns – they must at some point of time opt for disruptive innovation. Just like political parties must come up with new political planks, organizations too must show and come up with ‘thought leadership’ which will not only propel the organization / sector on a fast track growth trajectory but will also contribute to society at large – what Prof Robert S Kaplan and Michael Porter term as ‘creating shared value’. The new (political) leader at helm should have a national agenda, have concrete plans to transcend the regional boundaries and make an imprint on national politics.

Though, Balasaheb’s column in Marmik (a political weekly), ‘Vacha Ani Thand Basa’ (read and keep quiet), became a hit; realizing that the only constant is ‘change’ he changed the title to Vacha Ani Utha (read and rise). It is time for the ‘Tiger Scions’ to change the stripes and survive…Lessons for leaders across the spectrum – you too need to accept and embrace ‘change’ 

Superstition@Workplace

Gyanendra Kumar Kashyap

A survey finds that Indian corporate workforce still finds sanctity in their superstitious beliefs to herald success.

‘Superstition is merely the confusion of correlation and causality,’ argues Marshall Goldsmith in his book, ‘What Got You Here Won’t Get You There’. Be it sportsperson, professionals, ordinary folks or workplaces across the globe, they use superstition- though irrational and nonsensical, to make connections and create explanations. Cut the picture to a stock exchange and the Bombay Stock Exchange, BSE, offers a few tidbits. In January 2008, when the Sensex plummeted from the highs of 20,000 mark to the levels of 8,000, many edgy brokers and traders at Dalal Street became impulsive and blamed a five-foot-tall shiny bronze bull statue, usually a symbol of optimism and strength, just outside Gate 2 for the onslaught of ‘bears’. They were convinced that it was the position or the direction of the bull’s raging glance that was inauspicious. Attaching high priority to these unwarranted beliefs Vaastu experts were called in, who suggested a change in the bull's direction (South West, facing northwards to be precise - any other position would invite trouble). Those who blended superstition with money-making seemed to suggest, “Get the bull to look at us and all will be well." This wasn’t the first time though; such beliefs (superstitions) were forced upon to explain earlier corrections too viz.: the free fall of Sensex in mid-80’s was reasoned as the pain of a tree which was cut for BSE’s expansion; the 1992 Harshad Mehta scam was linked to the opening of the eastern gate; the same gate which opened once again in 2001 to welcome Bill Clinton was reasoned to be the cause behind the famous post-dotcom market fall.

But is it that such (superstitious) behaviors are only to be seen amongst traders and brokers? Perhaps the answer would be in the negative. We have ample examples of our very own politicians hopping from one temple to another in response to each political crisis or tests. Leave the political class; there is no dearth of office going colleagues who have their favorite Ganesha or a Feng Shui plant or Sai Baba or Laughing Buddha on their office desk.  November 2012, report “Superstition and Personal beliefs at workplace” by TeamLease Services reveals that overall faith in personal belief or superstition is quite high (62 percent) among employees in India and more than half of respondents (51 percent) follow superstition at their work place. Add to this that for as much as 81 percent of employees there is a high willingness to follow superstition/ beliefs at work place (there is an equally high belief system seen across the senior management too) – this is an eye-opener. Further, the level of believability on superstition practices is found to be higher in Bangalore and Delhi as compared to other cities. This lends a feeling that Indian cities despite being modern workplaces are traditional at heart.

 The report states that while Vaastu Shastra and Feng Shui are the most common practices followed at the workplace, the personal favorites are lucky charms like stones, color specific items etc. It further states that managements in India are generally adaptive to employees’ superstitious beliefs and don’t restrict them from practicing them at work, as long as it doesn’t negatively affect productivity. In fact, a majority of senior management officials believe that superstitious practices are more prevalent at the top of the order. Does such kind of belief system have an impact on the corporate culture? A majority of senior managers believe that though practices like Feng Shui, Vaastu Shastra, lucky charms, arrangement of idols and stickers of gods at workstations, laughing Buddha and money plant are common at workplaces, they don’t have any significant influence on people and the corporate culture.

The result of experiments conducted by social psychologist Lysann Damisch et al., on effectiveness of ‘good luck beliefs’ (i.e. superstitious behaviors like crossing fingers, using lucky charms etc) suggests that superstitions improve performance. According to Matthew Hutson, author of ‘The 7 Laws of Magical Thinking: How Irrational Beliefs Keep Us Happy, Healthy, and Sane’ when people feel lucky or follow a superstition, it gives them enough confidence and optimism to boosts their performance. The latest TeamLease study, in the Indian context, goes to say that more than 48 percent of the respondents felt that practicing superstition at workplace has had a positive effect and modern organizations impose fewer restrictions on such practices.

But how does superstition kick in? Goldsmith explains in his book, ‘What Got You Here Won’t Get You There’, that it is based on the assumption that, "I behave this way, and I achieve results. Therefore, I must be achieving results because I behave this way. This belief is sometimes true but not across the board. That's where superstition kicks in.”  Nevertheless, practice whatever you may, but ultimately the work and outcome are subject to an individual’s skills, knowledge and its application.

Yes Minister!

Gyanendra Kumar Kashyap

The recent cabinet reshuffle was touted as one infusing young blood. In this context, will the new leadership at HRD ministry bring about a new policy direction?

There are 20 bills pending (11 on higher education and 9 on school education) for passage in the parliament including the crucial National Accreditation Regulatory Authority Bill, Foreign Educational Institutions Bill, Prevention of Malpractices Bill and Education Tribunal Bill. However, the HRD ministry – the custodian of the country’s education system, has rarely been in news for either failing to muster the necessary political support to push forward the bills or how it intends to end the logjam. Two instances where the ministry did make some buzz in the media and the intelligentsia were entirely for the wrong reason – the cartoon controversy (a 1949 cartoon depicting Pandit Nehru and Dr B R Ambedkar by Shankar) when the then minister Kepi Sibbal apologized in the parliament, and second being the reshuffle in the ministry which was more or less sabotaged by Modi-Tharoor-Naqvi-Raju comments. The reshuffle was much needed, for Sibbal donning two hats (Telecom and HRD) was too burdened with the scam ridden Telecom ministry and was bent on defending his ‘zero loss’ argument, had little time to spare or prioritize for India’s education ills. There is immense optimism that the new leadership in the ministry would push for reforms and expedite work on long frozen bills.

There are reasons that the new team would make sincere efforts in seeing to it that a few of the pending bills are passed before the 2014 general elections. People in the political circle reason that as an anti-thesis to Sibbal’s aggressive ways of working, M M Raju’s (the new HRD minister) conciliatory demeanor would come in handy in persuading, creating consensus and convincing parliamentarians across the political spectrum. Former UN Diplomat Shashi Tharoor, who is back in the cabinet, along with Jitin Prasad, is expected to infuse fresh ideas in the ministry. While it is true that education portfolio is a new turf for the trio, it seems that they are well aware of the problem at hand, are ready to take on the challenges and make a mark before the general elections.

As the new team works towards putting the reform agenda back on track, it will be interesting to see whether they will bring about new policy direction in a short span of 15 months or so, or will they continue to focus on policies laid down before the reshuffle. If the latter is true, it will be a big disappointment, especially given the credentials of the three ministers at the helm of HRD ministry. M M Raju, in a press briefing outlined that he would continue and consolidate the good works done by his predecessor in the ministry. Thus it will become all the more interesting to see as to how they will make a case for allowing foreign universities set up shop in India. Will the muster the courage to make way for greater investment in education to improve quality (at present the government spending on education is a mere 1.2% of the GDP)? Can the team led by Raju, Tharoor (both with global experience) and Prasad play a critical role in transforming the research environment in the country? Will they expedite the recommendations of committees headed by Narayan Murthy and Kakodar? And more importantly, can they bring RTE (the flagship legislation of UPA II that has woefully fallen short of its promise to ensure free and compulsory education to all children up to 14 years of age) back on track?

In their interactions with the media, the team has outlined their intent to make a mark. While time is a constraint, the greater impediment to the reform agenda could be the lack of political will by the leadership and a greater focus on myopic gains based on electoral politics.

Be careful! Lest you post and are damned

Gyanendra Kumar Kashyap

Your fascination to be connected on social media and your penchant for posts, share, tweets and retweets could land you in problem. Be careful! lest you post and are damned... 

In a nation of a billion-plus population, faced with myriad challenges ranging from mass poverty, developmental issues to corruption, few of us would have ever known about people such as Ambikesh Mohapatra, Aseem Trivedi, Ravi Srinivasan, Shaheen Dhada and Renu Srinivasan or for that matter Henna Bakshi. Thanks to our nation’s somewhat schizophrenic relationship with freedom of speech and the arbitrariness of the amended Section 66A of the Information Technology (IT) Act; the reach of social and mainstream media has given them minutes/hours/days of (in)fame. While Ravi’s followers on Twitter increased manifold, Aseem landed in Big Boss’s house and Prof Mohapatra in jail. At one point it seemed that the entire debate on revoking (or may be even restricting the scope) the so called ‘draconian’ law was put on the back burner, yet the arrest of Shaheen Dhada and Renu Srinivasan for ‘posting’ and ‘liking’ (respectively) a question on the appropriateness of a bandh in view of Shiv Sena supremo Bal Thackeray’s death, has once again put the debate back on track. Given the series of arrests, invoking Section 66A of the IT Act, it is apparent that the government and its machinery have more often than not used Section 66A of the IT Act to enforce suppression of dissenting voices. For a change (and for the wrong reasons) the action of police in each of the case has been swift and harsh. This brings us back to the discussion – what does the Act state and what makes the legal hawks and civil societies challenge the constitutional validity of Section 66A of the IT Act?

The Section states that any person who sends, by means of a computer resource or communication device, any information that is grossly offensive or has a menacing character could be punished with imprisonment for a maximum term of three years, besides imposing appropriate fine.

For a layman, the wordings of the Act mat not suggest that the Act is against the freedom of speech guaranteed under the Constitution.  Consider the tweet, “got reports that karthick chidambaram has amassed more wealth than vadra” [Karthick Chidambaram is the son of Union finance minister P Chidambaram and Vadra refers to Sonia Gandhi’s son in-law Robert Vadra] and the repercussion Ravi had to face thereafter. In the early hours, 5 am, on October 30 he was woken up and pulled out of his house and told that he was under arrest because of his tweets. Similar was the case with Prof Mahapatra who shared a satirical cartoon criticizing Mamta Banerjee, the CM of West Bengal. The recent post by Shaheen and ‘like’ by Renu and their arrest on flimsy grounds expose the potential for mischief embedded in the law.

 In all sanity, neither of the tweets, posts or the cartoon was ‘grossly offensive’ or had a ‘menacing character’ to invoke the Act and subsequent imprisonment.  This is why lawyers and civil society members feel that there is an incongruity as far as the section of the Act is concerned. They argue that the phrases such as ‘grossly offensive’ and ‘menacing character’ – both of which are subjective, need to be well defined, which is presently not the case. It is perhaps this vagueness that allows the police (and politicians with authoritative backing) to use the law as per their whims and fancies and suppress dissenting voices.  A general argument put forward is that as long as the section remains so loosely worded and sweeping, it will continue to remain a draconian weapon of oppression of anyone viewed as a dissident by the ‘powers that be’. Cyber law experts such as Pavan Duggal believe that Section 66A has the potential of becoming a dangerous tool that can be used to gag legitimate free speech online.

But is the right to free speech an absolute right? The answer is a big NO. As per the first amendment to the Indian Constitution (May 10, 1951), “reasonable restrictions” was placed on the right to free speech. However players across the political spectrum have often abused the opacity that surrounds the expression “reasonable restrictions”. And this was exactly what junior Chidambaram cited in his defence. He had tweeted, “Free speech is subject to reasonable restrictions. I have a right to seek constitutional/legal remedies over defamatory/scurrilous tweets.”

Interestingly, the expression “reasonable restrictions” become wholly unreasonable if we were to see politicians hurling abuse at one another, parliamentary or otherwise, in parliament (assembly) or outside.  It is no wonder that Section 66A of the IT Act has never been used against the political class. This raises a question as to whether there are two distinct standards of freedom of expression – one for the privileged political elite, and the other for the common citizen aka aam aadmi.  

Are there exceptions where to the 2008 amended Section 66A of the IT Act (it was passed without any discussion in the Lok Sabha) has been used for good –protect citizens against online harassment. We do, thanks to the celebrity status of the complainant.  It was when Chinmayi Sripada, a Tamil Singer and entrepreneur, filed a police case about a series of vulgar comments aimed at her on Twitter that the Chennai Police registered a case under Section 66A of the IT Act and others including the Prevention of Women Harassment Act and used the law in fairness to the end of justice. But such cases which highlight the merits of the laws, to move against incidents of harassment or defamation online, are far and few.

Will Section 66A of the IT Act get cleaned up? Will the ministry of ICT seek legal advice and recommend a modification? Will the honorable Supreme Court take suo motu cognizance of the act and step in to protect freedom of speech guaranteed under the Constitution? Till then ‘Be careful! Lest you post and are damned.’

The FDI Conundrum

Gyanendra Kumar Kashyap

It was on June 27, 2012 that the government criticized for its inability to push through reform measures decided to ‘reverse the climate of pessimism and revive the animal spirit in the country’s economy.’ Cabinet reshuffle and the so called ‘BigBang’ reform measures announced on September 14, 2012 which allowed for opening  the doors for greater flow of FDI are attempts to bolster economic growth and make India a more attractive destination for foreign investment. Despite the debate and logjam in political circles, India Inc. is upbeat and is hopeful that the measures announced would start showing positive results in the next 18-24 months. Questions on the impact of FDI in the context of productivity, economic growth, employee-employer relations, talent deficit, and infrastructural bottlenecks are being raised as well as addressed. Thus, it becomes all the more important to have a conversation on FDI & what it means for sectors that will probably benefit from it. 

The Indian landscape is not new to FDI.  Automobile, Telecom and IT/ITeS serve as excellent examples of what capital and technology infusion can have. Be it in term of employment generation, contribution towards GDP, providing more choice to consumers and of course raising the productivity of these sectors and making them globally competitive; the impact of FDI is for all to see. Dr. Varun Agarwal and Mohd Aamir Khan in their study, “Impact of FDI on GDP-A comparative study of China and India”, International Journal of Business & Management, October 2011, conclude that their study “confirms FDI promotes economic growth, and further provides an estimate that 1% increase in FDI would result in 0.07% increase in GDP of China and 0.02% increase in GDP of India.”

Perhaps, these served as the background for the recent decision to allow FDI in some sectors (aviation, pension etc.) and increase the cap on others (retail and insurance). In essence FDI will provide for both capital and technology. Capital on its part will help build up the productive capacity in the economy, and providing advanced technology and organizational know-how will help increase the efficiency or productivity of investment. For instance, a general observation is that India has low productivity of food grains and an inefficient distribution system. Increasing the scale of investment in organized retail will enable increase in productivity and distribution efficiency. For the insurance sector, this could provide the private insurers the necessary financial wherewithal to reach out to untapped markets. FDI in aviation will give the much needed breathing space for players.  Apart from these, a higher share of FDI is expected to increase market competition thereby raising competitiveness in terms of products and service offerings.

Retail:

As far as the retail sector is concerned, there is a need to compress the market chain and reduce the ‘distance’ between the farmer and the consumer; build a modern, integrated logistical chain involving grading, transport and storage; and add value to perishable commodities to reduce volatility and create wealth and jobs. All these things need investment, infrastructure, technology, management practices and deep pockets. Capital infusion in the form of FDI is one possible answer. An important aspect is the governments move to move to make it mandatory for multi-brand retailers to invest $100 million with at least half the money being compulsorily spent on back-end infrastructure, in the first three year of operations. While foreign players have expressed their apprehension on this, the proponents feel that the move will improve back-end infrastructure. It is to be noted that though India allows 100 percent FDI in cold storage, this has not evoked much of a response in the absence of FDI in multi-brand retailing. A better infrastructure is expected to increase productivity and distribution efficiency by minimizing the role of intermediaries and link the farmers directly to consumers. It will strengthen rural-urban linkages, encourage agro-processing and check post-harvest losses.

Retail (organized and unorganized) provides employment to about 40 million people in India. The government claims that FDI in the retail sector is likely to create as many as 10 million jobs in a span of 10 years, making it the largest sector in organized employment.  For instance, entry level jobs profiles - sales, supply chain executives, security personnel, attendants, in-shop supervisors, floor managers and warehouse supervisors are likely to see significant increase in demand. The present guidelines ensure that FDI in multi-brand retail must domestically outsource 30 percent of the finished products sold in the market. This will help build domestic capacities in manufacturing, create jobs and help build quality human resource. Given the skill/talent deficit, this implies that the new set of retailers will have to invest in training and skilling the manpower – quality controller, standardizer, certification agency, processor, packaging consultants etc.

Insurance /Pension:

The capital intensive insurance sector, which allows for 26 percent FDI, is crunched for money. It is expected that of the announcement to increase the cap to 49 percent can muster the support of the parliament then it will usher in capital infusion to the tune of Rs. 30,000 crores over the next five years. Besides providing capital to the bleeding insurers, the decision will also pave way for new players. The biggest advantage of increasing FDI limit will be to grow the industry by increasing customer penetration with a range of products that are focused on today’s uninsured.  Given the lack of legislative action, many a private players are not very upbeat about the decision, pointing that other avenues such as listing are available to raise capital.

According to Department of Financial Services, just 12 percent of India’s active workforce has a formal pension or social-security plan. The intention behind the pension bill – and allowing greater foreign investment in the pension sector – is ultimately to entice more Indians to open retirement-savings plans.  Given the current structure of India’s pension sector, whereby the majority of such assets are managed by a government agency, the Employees’ Provident Fund Organization, foreign players would not be very interested. Add to this the risk averseness and preference to put money into gold and property or in bank deposit. Yet analysts believe that foreign money managers will invest in India anyway, betting on the growth potential of the sector. Perhaps it is too early to figure out whether or not foreign investors will make a real impact on increasing India’s pension assets.

Aviation:

FDI in aviation is expected to bring in much-needed long-term financial and strategic capital and expertise. However, the real question that seeks attention is that why would foreign investors sink money in order to revive Indian carriers with losses running into thousands of crores? Take for instance, in the last reported financial year (2011-12), Jet Airways, India’s largest carrier by market value, reported a loss of Rs 1,236 crores. The Kingfisher’s losses stood at Rs 2,328 crores while Spicejet posted a loss of Rs 605 crores. On top of it, Jet, Kingfisher and Spicejet’s balance sheets are highly leveraged with debt of Rs 13,500 crore, Rs 7,057 crore, Rs 860 crore respectively.  If foreign investors decide to invest, it is the bakers who have lent money to the sector will be happy. What further renders a grim look to the whole sector is the restrictive and retarding environment in which airlines have to operate. Even International Air Transport Association (IATA) has expressed its reservation stating that unless issues of high taxes and infrastructure costs are addressed, sector may struggle to take-off despite allowing FDI. Domestic carriers like Indigo and Jet who have made the most of the fall of Kingfisher and Air India believe that the FDI decision will hamper growth of the airlines.

On the positive side, if foreign investors post their assessment decide to put their money it would help the domestic players to acquire more aircrafts, add more to its existing route, invest in employing & training pilots, technical staff and crew members.  And of course a few domestic carriers would be in a better financial health to pay salaries (pending for months) to employees. New routes provided the government sorts out the policy and infrastructure reforms, besides providing better connectivity would spur economic activity and new businesses.

A few concerns

Focus on human capital development: While FDI inflows create a potential for spillovers of knowledge to the local labor force, the host country’s level of human capital determines at the same time, how much FDI it can attract and the extent to which the local firms can absorb the spillover techniques. FDI is complementary with human capital, that is, human capital needs to be above a certain threshold for FDI to be more productive than domestic investment. Though FDI may bring with it advanced technology and techniques, India needs to have sufficient absorptive capacity, in terms of qualified people, to benefit fully from it. Without a sufficient level of human capital, the country will not have the absorptive capacity to take full advantage of FDI. Given the skill deficit, it makes for a case that India should create a supportive environment of innovation and skill upgrading. Companies on their part need to invest in training and education and put greater stress on skill building.

 Labor laws: Labor laws fall under the jurisprudence of state governments in India.  Thus, states may use labor laws as instruments to attract (or deter) foreign direct investment.  Depending on the political nature of the government in power, states pass amendments to labor laws that are either more pro-worker or more pro-employer. This may affect outcomes of collective bargaining, disputes, and strikes. Given costs of locating in India (exit barriers, lack of adequate infrastructure, and other factors), it is likely that foreign firms will veer away from states that have high incidences of labor conflict, particularly as measured by the number of man-days lost due to work stoppages translating into higher production costs, low productivity, and thus, reduced profits. Nidhiya Menon and Paroma Sanyal in their work, “Labor Conflict and Foreign Investments: An Analysis of FDI in India” conclude that since FDI brings significant positive benefits, from a purely economic perspective, it may be prudent for state governments to try and reduce the incidence of labor disputes.

FDI, though welcome, is certainly not a panacea; it is important to have in place measures that address infrastructural hurdles and business –unfriendly environment. 

The Yawning Skills Gap in India

Gyanendra Kumar Kashyap 

India, one of world’s fastest growing economies and home to one of the world’s youngest population faces a unique and paradoxical problem. While it has the numbers in terms of manpower, that manpower lacks skill and training. It is specifically this very point that the 2005 study by software lobby Nasscom and consultancy firm McKinsey & Co - just one in four engineers was employable, or could be trained for a job - jolted India out of its reverie on employability. However (late) Dr. C K Prahlad’s prediction in 2007 that a double digit growth in India will see light only if the country is able to make available 200 million graduates and 500 million skilled people by 2022, provided the much needed breather. Today the government as well as the industry shares the same view. India’s GDP growth is still expected to range between 6%-7%. The domestic industry is growing and several international companies are setting up base in India; propelled by the sheer market size. This tremendous growth has increased the demand for labor – skilled labor. Considering the demographic dividend that India enjoys, it is apparent that one would expect that this requirement of a large pool of skilled labor to be the least of all the bottlenecks. However the irony is such that a number of industries are struggling to achieve their growth targets because of shortage of skilled labor.

The awakening:

As India moves progressively towards becoming a ‘knowledge economy’ it becomes increasingly important that the country should focus on advancement of skills  and these skills have to be relevant to the emerging economic environment. The key emphasis has to be on ‘employability’. Though India churns out a large number of educated people every year, they lack the ‘skills’ to make them readily employable. They have to be trained again. Therefore, while in absolute number, there is surplus supply of manpower, in the crucial ‘skilled’ and ‘qualified’ segment, there are acute shortages. These shortages if not addressed properly can lead to a slowdown in the country’s economic growth. In order to achieve the twin targets of economic growth and inclusive development, the country requires significant progress in several areas, including infrastructure development, agricultural growth coupled with productivity improvements, financial sector growth, a healthy business environment, ably supported by a skilled workforce.

Currently, 90 percent of the jobs in India are ‘skill-based’; entailing the requirement of vocational training. This is in contradiction to the fact that only 6% of the Indian workforce receives any form of vocational training. As per industry statistics, only 25 percent of technical graduates and 10 to 15 percent of general graduates have the necessary skills for immediate employment. The education system churns out students that are not immediately employable and skill up-gradation on the job is low; implying that a large section of the currently employed labor possesses outdated skills. This has in a way created an undoubted necessity to scale up vocational education to cater to India’s demand for higher economic growth, demographic changes, and the obvious demand-supply mismatch in available skills in many sectors.

A well-intentioned initiative/ The positive vibes:

The growth prospects of the Indian economy depend to a large extent on how the country tackles certain issues of intellectual capital today. The concern largely centers on the much-debated demographic dividend, or the rising proportion of working-age people in India. Faced with the twin challenge of unemployment and job creation, the Central government’s biggest concern is not just how it can boost new opportunities for India’s burgeoning population of young people, but also how it can overcome the acute shortage of skilled labor. The good news is that the government of India has undertaken a series of initiatives almost on a war footing in the past few years. The government has set itself an ambitious target of training 500 million people by 2022 in its National Skill Development Plan (NSDP). Some of the clear and far-reaching outcomes from NSDP are to look at increasing the capacity and capability of the existing system. This was proposed to be done with multiple, wide-ranging initiatives. Key amongst these are PPP (public private partnerships) to complement private investment in this space, the setting up of a National Vocational Qualifications Framework (NVQF) and establishment of National Skill Development Corporation (NSDC) to foster skill training in the identified sectors.

To this end the National Skill Development Corporation (NSDC) has been entrusted with skilling 150 million people, the ministry of labor and employment (MoLE) has a target of 100 million, the ministry of human resource development (MHRD) 50 million and the rest of the 200 million among 17 other ministries.

The industry’s participation:

To a large extent the industry is the victim as well as the culprit when it comes to the scarcity of skilled workforce. However there is a palpable trend in India Inc., starting to train its people on a scale large enough to alter the nation's future. Dozens of training companies with ambitions of training millions in engineering, construction, manufacturing, retailing, insurance, banking services including microfinance, accountancy, hospitality, health care and other vocations are sprouting up around India. For example, education company Core Education and Technologies Ltd.,  plans to invest at least Rs.225 crore to open a chain of vocational education institutes across India to train some three million people over the next five years. Further there are seasoned players like Centum that bring to the table both backward and forward linkages. They work with companies to understand their skill set requirements over a period of time and then work backwards and decide what courses should they launch and where should they open new training centres.

Not only this, there are a number of private firms across industry verticals that are adopting ITIs. For instance, Maruti Suzuki India Ltd.,  is adopting 40 state-run technical schools to create a customized labor pool it will need to fuel its Rs. 18,000 crore expansion in Gujarat. The ITIs, mostly in northern India, will not only ensure a steady supply of trained personnel to the auto maker, but also to its dealers and vendors such as Sona Koyo, Amtek Auto Ltd and Rico Auto Industries Ltd. In fact the ITIs adopted by various companies such as the Taj Group, Hindustan Unilever Ltd, Videocon Industries Ltd, India Cements Ltd and Punj Lloyd Ltd have shown to have better placement record. This is primarily because in such cases ITIs get better infrastructure, contemporary curricula in sync with the industry demand which consequently also improves their placement record. As facts would have it, the adoption of government ITIs is a win-win situation as it helps the cause of modernization, and from the company perspective, it helps them to get a customized workforce.

The government’s well intentioned initiatives as well as India Inc's newfound push on skilling could help it follow the footsteps of its South Korean or even German peers where an intense vocational focus in education and training helped the countries rapidly expand their economies. If the dozens of training institutes mushrooming in India can deliver it a skills edge, the country could reap benefits of its demographic dividend. On the contrary, if it fails, India better get ready to deal with a demographic debt or in a worst case scenario a demographic disaster. But at this juncture failure just cannot be an option for India. 

The academia – industry alignment:

Education, broadly speaking, equips or should equip an individual for the world in which s/he has to operate and successfully so. In the light of this, education as it is falls short of empowering the youth for the competitive market scenario. As studies suggest, only a part of graduates are employable out of the enormous volume of the output of educated youths. If education has to strengthen its role and remain relevant to the world, it will have to render skills development an integral part of its endeavor. The challenge of skilling / up skilling 500 million by 2022 will require both fundamental education reform across primary, secondary and higher education and significant enhancement of supplementary skill development.

In India, approximately 12.8 million people join the job market every year. The current skill capacity of the country is about five million - a deficit of more than seven million annually. To add to the woes is the quality of training, which has limited industry linkages and fails to meet the industry standards. As the gap between skills, employment needs and the quality of the output continues to widen, there is a need for drastically different strategy to bridge this gap and a need for the intervention of the government, academia and industry. Thus, the curriculum for training and skill development, which is critical for providing decent employment opportunities, has to be evolved in consultation with and active involvement of the industries which require the manpower. An industry-academia team must be in place which understands the industry needs and thereby factors this in the teaching and curriculum.

Change of hearts / the mind shift:

There is an obvious and widening disconnect between education imparted to the youth and the market requirement and demand. While education imparts one kind of training to them, industry and markets are looking for another kind of skills set in the job seekers. As a result of this - the degree holders are seeking jobs while there is manpower crunch and degree holders are being denied the jobs. This paradoxical situation is in a way reflective of the obsession with degrees and the white-collared jobs that they potentially secure. The importance and hence the acceptance of vocational education has been clearly undermined.  As a matter of fact formal education system in India still remains divorced from any sort of vocational education or training.

Skills development is going to be the defining element in India’s growth story. There is a need to re-define the relationship of education, employment and skills development. Often vocational education is even dismissed as good education. People perceive vocational education as something which one pursues when one cannot get into a mainstream course. It is believed that a vocational course takes one to a shop floor while a graduation will leads to a good office. All this has to change and people’s perception needs to undergo a change.

The change in perception is all the more important as the prevailing higher education system in India is not churning out skilled individuals and thereby affecting the employability quotient. There is also a dearth of quality institutions as compared to the number of students coming out of secondary schools and joining higher education. Thus, in such a scenario, vocational education can prove to be a lucrative option for students as it will skill them and provide them with jobs.

This can be brought about only when there is proper recognition for the various courses and acceptance of the same by the industry. Further vertical mobility options for students opting for vocational education at the UG and PG level is also essential failing which students may not prefer it at the school level.

The way forward:

In the present context of continuing demographic dividend the unique problem facing the country is that of labor surplus and skills scarcity. The International Monetary Fund’s April 2012 Regional Economic Outlook: Asia and Pacific, “Managing Spillovers and Advancing Economic Rebalancing”  categorically states that India’s continuing demographic dividend can add about 2 percent to the annual rate of economic growth, if harnessed properly. Hence, if India is to maintain its growth and prevent the economy from derailing the ‘skill gap’ issue has to be addressed immediately.

The government is keen on encashing this demographic dividend. The Budget for 2012-13 has doubled allocation under the National Skill Development Fund (NSDF) to Rs 1,000 crore, raising the corpus of the fund to Rs 2,500 crore. Besides this the launch of credit guarantee fund and exempting vocational training institutions from service tax will make skills training affordable. While the 500-million target is stiff, experts in the field believe that it is achievable.