<p><em>The core purpose of HR should be to safeguard, develop and nurture the most important asset of the company — its employees, writes <strong>Prof. Mala Sinha</strong></em><br><br>Luxetta’s strategic approach to gain competitive advantage is outward looking, which means adjusting the organisation’s relationship with external environment by changing structure or repositioning products and services. The fallout of this approach is that even when products are unfinished and have technical glitches, they are launched in markets to be in time with, perhaps, a festive season, be first among competitors , or simply to ‘beat the Chinese’. For this reason, in the past, a noiseless juicer that Luxetta had launched failed in three markets and had to be withdrawn. Now, market intelligence had indicated that competition was ready with three new products in refrigeration section: making the marketing department push for early launch of the technologically advanced five-door refrigerator, Liza Extra, even though its ice dispenser unit — also supposed to be the ‘wow ‘ feature of the product — was giving problems. The R&D and production people were resisting, and felt this move to be a recipe for disaster.<br><br>An outward strategic approach is essentially reactive and stems from inherent insecurity due to uncertainty regarding the external environment — more prevalent in case of European and US-owned multinationals when they are dealing with Asian economies. At Luxetta, the strategy is also blinkered by centralised control mindset, possibly a colonial hang over, with little trust for people from APac. Thus, when Ken Williams, the previous head of Asian R&D resigns, instead of mentoring local talent from Asia, though there is a half-hearted and therefore a failed attempt to do this, the company deputes John Kramer based in US after year-long bickering. This is strategically a bad decision because John will now be even more stretched by responsibilities straddling US, Europe and now APac , while simultaneously reporting to three bosses. In order to make life a little easier, John gets the company to agree to a suboptimal solution like appointing a junior in Singapore, who would report to him, while he himself would be based in US. This move ends up causing several complicated and inefficient lines of communication to develop among the APac countries, Europe and US, leading to delays in decision making which further strained the system.<br> </p><table style="width: 200px;" align="right" border="0" cellpadding="5" cellspacing="5"><tbody><tr><td><img alt="" src="http://bw-image.s3.amazonaws.com/Prof-Mala-Sinha.jpg" style="width: 200px; height: 200px;"></td></tr><tr><td><em>Prof. Mala Sinha</em></td></tr></tbody></table><p>Organisations benefit from an inward looking strategic approach, which focuses on their core purpose, embodied as products and services, meant to serve specific needs of stakeholders in a particular way the organisations know best. In case of Luxetta, the central purpose of the organisation is producing top quality and technologically advanced home appliances, and therefore all systems, processes and people resources should be focused primarily to fulfilling this objective. When strategic intent deviates from organisation’s core purpose and decisions are guided by secondary concerns such as being first in the market, or beating the Chinese, among others, there is misalignment of people, processes and products, which leads to adverse consequences. At Luxetta, the strategy is determined by a desire to retain European control of APac operations, and rather than nurturing Asian talent, which, with their greater depth of understanding of Asian markets and culture would be more capable of serving the central purpose of the organisation, deputes an overworked westerner to APac.<br><br>An incident from Jaipur Rugs, an Indian SME that has won several prestigious national and international awards for excellence is illustrative. Traditionally, the company gave designs for carpets and rugs (in demand by western markets) to weavers in India, but this time CMD N.K. Choudhary asked 10 weavers to create their own design — essentially make a carpet based on their own creative insights. After completion, when the carpets were exported and put on sale at High Point Market in North Carolina, US (one of the world’s largest centres for home furnishing where over 2,000 suppliers exhibit wares at a time), seven of the 10 carpets were sold within an hour of being unpacked. The inward approach of aligning processes and markets with weavers’ competence, rather than the other way round, resulted in the creation of top-class products that got instant recognition from external stakeholders —the customers. Anchoring the organisation’s strategy to mavericks of market forces and uncertainty brought about by rapid and unpredictable technology change makes the organisation strategically directionless.<br><br>By the same analogy, the HR strategy at Luxetta is also outward looking. The core purpose of HR should be to safeguard, develop and nurture the most important asset of the company — its employees, in a way that the larger and overall purpose of the organization can be effectively served. HR should have been the first to worry about John’s wellbeing, and the first to question the rationality of making a person travel across the globe for greater part of the month, deal with idiosyncrasies of three bosses and juggle two seemingly bipolar hats — brand management and R&D.<br><br>The maintenance engineer while taking care of company’s physical assets increases efficiency by mechanical precision and documenting data, but HR, which deals with intangibles of human nature has to be more creative in sense making. The approach of HR towards annual health checks of employees at Luxetta is documenting and informing, wherein it should have been discerning patterns in the state of health of the organisation’s human capital, and counselling. HR should also motivate people to be conscious of their health, and had Madhav been counselled by food and exercise therapists, he may have realised the seriousness of his medical condition and taken remedial steps that could have averted the brain hemorrhage he ended up with. People are paid to work for the organisation, and therefore worrying about themselves often takes a back seat. Good health maintenance can be incentivised as happens with defence personnel, where poor physical fitness impacts promotions as medical category goes down. The services know that soldiers and officers have to be physically fit to be able to do the job for which they are hired. John was a valuable asset, he was handling two critical functions — R&D responsible for producing high quality home appliances — the core of Luxetta; and branding which is essential to survive in a competitive environment.<br><br>What are the limits of corporate responsibility towards the health of an employee? In the context of heated global competitiveness due to the economic success of emerging economies, consumerism and greater material and stimulation needs of populations, corporate work life has become more stressful. Abetted by principal-agency nexus comprising of faster returns to shareholders compensated by hefty corporate salaries, perks and bonuses, corporate stress levels have increased exponentially, making it difficult for individuals to deal with it on their own. HR must play a greater, nay, a more sense-making role in corporations. Performance criteria should also include good health — we want people who are both productive and healthful and perhaps even the balance sheet can report on these matters. Radical changes in the way companies are trying to reduce performance appraisal linked stress are on the anvil. Accenture CEO Pierre Nanterme recently told The Washington Post that starting in September, the performance of the company’s 330,000 staffers will no longer be judged based on company rankings and annual evaluations, but on a more fluid system. The irrationality of forced ranking along distribution curves will be abandoned and people will be evaluated for their role, and not vis-à-vis someone else who might work in Washington or Bangalore.<br><br>Finally, the case indirectly questions the limits of western values like individualism, free will and autonomy, which are fast becoming the values of new age aspirational Asians too. John was on fast track of personal growth and treated every added responsibility as an opportunity in this direction. He was individualistic and his wife’s observation at the funeral that ‘he took to heart if he missed soccer game with kids’ was perhaps compensatory concern towards the family; and the fact that ‘he was always smiling’ and never shared with his wife the considerable problems at Luxetta showed John did not relax at home. John Kramer was perpetually on a centrifugal spin and had forgotten to be still and listen to his body. The markers of the stressful life he was leading were present, only he never recognised them. <br><br><em>The writer teaches Business Ethics, CSR and Leadership through Asian Values at Faculty of Management Studies, University of Delhi</em><br>mala.sinha@fms.edu<br><br>(This story was published in BW | Businessworld Issue Dated 07-09-2015)</p>
