There is no question that many people would welcome a chance to live the life of N.R. Narayana Murthy, co-founder and chairman emeritus of software giant Infosys. However, if it was somehow possible to exchange places with the man, few would likely emulate his dedication to helping out on the home front, where he famously cleans the lavatory on a regular basis. And that’s a shame. After all, Murthy's willingness to get his hands dirty doing a job that he doesn’t have to do is one of traits the helped make him a billionaire, not to mention a leader worth respecting.As a professor with the Richard Ivey School of Business, I have always been fascinated with leadership. Are great leaders born or made? This question has been debated for centuries. But I see a clear answer. Successful leaders, including political ones, are made through a combination of trial and error and a willingness to accept a never-ending process of on-the-job training. This is the topic of Good Leaders Learn, a book project that recently brought me to India, where I had the good fortune to learn from Murthy, Gautam Thapar, chairman of the Avantha Group, and Kiran Mazumdar-Shaw, founding chair of Biocon. What I learned is that each of these leaders accepts the need to learn from mistakes and remain open to listening to others. But they have to work at it.When Murthy picks up a toilet brush, he isn’t just looking to make his wife happy. Learning from Gandhi, he takes on tasks widely considered beneath his station as a reminder that all contributions to society should be valued. "In the corporate context,” he says, “it shows that you have respect for everybody’s contribution." As Murthy points out, sustainable success requires CEOs to recognise that there are smarter people who do things better. "Once you have that humility, once you have that openness of mind, even when you are doing well, it is possible to learn from people who are doing better than you both within the organization and outside the organisation."But recognising that you can benefit from other people’s honest opinions isn’t enough because employees don’t like to disagree with the boss. As a result, Murthy says, the biggest challenge a leader has is to create channels for feedback and keep them open. "The day a leader closes those feedback channels," he says, "is the day when a leader’s power starts diminishing and he or she starts doing things that are completely wrong." At Infosys, Murthy had one rule: “You can disagree with me as long as you are not disagreeable.” Among other things, this openness to polite opposition allowed him to learn what employees really thought about his leadership style. "Many colleagues have come to me and said I am too sales oriented; and that I value the contribution of sales people much more than the contribution of other people. That was a big revelation to me."Thapar, who was advised by an early mentor to remove the word impossible from his vocabulary and shoot for the stars while keeping his feet firmly planted on the ground, is also big on remaining humble. In fact, he thinks any business leader who writes a management book while still in office should be sacked for hubris. "An organisation is not static. It’s a dynamic living thing. No leader can believe he or she knows everything there is to know about the job today, tomorrow and the day after." After all, success is blind to past accomplishments, not to mention an individual's upbringing and education. "I have witnessed ordinary people doing extraordinary things without the benefit of an MBA or without the benefit of any formal education. If you don’t have a certain amount of humility and introspection, you are at risk of derailment. Just look at the last six months, one year, two years, three years, 10 years or 15 years – there are so-called icons of management and business leadership whose corpses litter the road of downfall."Remaining humble, of course, isn't easy for corporate titans, especially in India, where the hierarchical structure surrounds successful people with an aura of awe that makes it difficult to foster candour and establish relationships. “You almost expect to be treated a certain way,” says Mazumdar-Shaw. “And when you’re not treated a certain way you get uppity. That’s not a good trait.”Biocon’s founder, who was taught by her brew master father to respect anyone who works hard at doing a good job, relies on her husband to keep her grounded. “He always reminds me of a very important saying: people that mind, don’t matter, and people that matter, don’t mind.” Simply put, relying on others is how she leads. “I am like a sponge. I absorb a lot. I like to hire people who are smarter than me,” she says, adding there are two styles of leadership. “There are leaders who want to command and control. The other kind of leader focuses on collaboration and empowering people. I like to do the latter.”Thanks to the complexity of the modern world, collaboration is no longer just an option. It is a must. Indeed, as noted by former US First Army commander Lt. Gen. Russel Honoré (Ret.) at an Ivey leadership conference earlier this year, “command and control will not serve the future,” not even for military officers. The general, who led the US military’s response to numerous crisis situations, advised leaders of all stripes to put egos aside and learn to share control over decision-making because that is what it takes “to get things done in the new normal,” where hierarchical thinking is a barrier to achieving results.The next generation of corporate leaders is an important group that will face huge challenges. So the next time you pick up a gift for a business student, give them a toilet brush so they can remain open to learning like the best and brightest that India has to offer.(The author is an associate professor of Organisational Behaviour at Richard Ivey School of Business as well as the executive director of the Ian O. Ihnatowycz Institute for Leadership at Ivey).
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It is the basic infrastructure to offer mobile services. In a telecom market that has been through turmoil, Bharti Infratel, the telecom tower unit of Bharti Airtel has come out with an initial public offer (IPO) with a price band of Rs 210-Rs 240. It is expected to raise between Rs 4,000 crore to 4,500 crore.The offering of 188.9 million shares or 10 per cent of Bharti Infratel (BIL) is by the biggest IPO in the country after the $ 3.5 billion Coal India IPO in 2010. The BIL issue includes a fresh issue of 146.2 million shares while four existing shareholders including Compassvale Investments Pte Ltd. (an indirect wholly owned subsidiary of Temasek Holdings Private Limited), GS Strategic Investments Limited, Anandale Limited and Nomura Asia Investment (IB) Pte Ltd. are selling 42.7 million shares.Bharti Infratel has 34,220 towers (as of end September 2012) and has a 42 per cent stake in Indus Towers 110,561 towers. The consolidated Bharti Infratel has 80,656 towers across the country. The Bharti Airtel shareholding in BIL will reduce from the current 86.09 to 79.8 per cent post the IPO. During 2011-’12, Bharti Infratel recorded revenues of Rs 9,597 crore with net profits of Rs 750.7 crore.Read Also: Bharti Infratel IPO Bank of America Merrill Lynch, JP Morgan, Standard Chartered, Deutsche Bank, HSBC, UBS, as well as India's Kotak Mahindra and Enam are advising Bharti Infratel on the IPO. The tower business has seen no IPO happen till now. In recent times there has been only one big tower deal—GTL acquired the 17,500 towers of Aircel for Rs 8,026 crore in 2010. That works out to valuing an individual tower at around Rs 4.5 lakh. Since then valuations of tower companies have fallen as new operators slowed down roll-out post the cancellation of licences.As a telecom industry official says: “When a large operator like Bharti Infratel looks to go public, it brings in a huge degree of confidence in the market.” That however remains to be seen.
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One of the key issues being discussed by industry and civil society leaders is future of India's growth model. Will this be driven by crony capitalism or will it be driven by a transparent rule based system that is far to all?India is still struggling with creating its own model of economic reforms and growth. The growth debates are increasingly about inclusion and governance and transparency. So the India Council at the World Economic Forum. decided to assess the efforts taken by the government to strengthen these three pillars of public policy.Written in partnership with PwC, the Indian Council realised that there is more to transparency than the Right to information Act. There are several other efforts like the National E-governance Plan and the Policy of social media engagement that ensures that civil society gets a generous look inside the working of the government. The report can be accessed here.A lot of legislative time and effort has gone into creating new laws by central and state governments to enhance transparency and inclusion. Despite much effort, the public perception has not changed.The debate around the Lokpal or Ombudsman has reached a crescendo. Lokpal is not strictly about inclusion, transparency or governance. It is about creating another penal institution to police governance. AT the core of the articulated need for Lokpal is the need to combat corruption. I believe improved transparency and inclusion in governance would automatically reduce if not remove systemic graft.Government decision making should follow a simple path. First, include civil society in debating and deciding a policy. Second, create transparent laws and procedures so that all decision making is accessible and open. Third, improve the effectiveness of the decision by enhancing governance capability and reducing red tape.The road to a government decision should ideally begin with inclusion. As far as possible government decisions should include the views of the public. And it should be done in a way that is demonstrably open. Transparency should be genuine. If the decision is in good faith, sharing the arguments with civil society will not undermine the authority of the government. Finally, the best decisions die at the altar of weak implementation. Therefore government must put a serious effort in reducing needless processes and deploy technology to bring the impact of the decision to the people.It is easy to say that a certain law has been passed and therefore change will necessarily follow. But often the fine print takes away from the effort.A law is as good as its implementation. Nothing is truer than this in India. Despite great rules and laws, governance remains poor. Changing processes does not always lead to a change in attitude. There is severe and stiff resistance to any attempt to improve. The central and State governments have enacted several laws and initiatives to improve transparency and governance.Some of these laws remain victims of the same inertia, neglect and inefficiency that they aim to reduce. As a result the changes are not as effective as they can be and should be. There seems to be a fear of transparency.There are pockets of excellence and islands of competence. But the pace of change is so slow, that it is testing the patience of civil society. When a change is enforced, officials and department accept it, but do not embrace it.The steps to involve technology could be the key to improving governance in India. If technology is allowed to play its role, unfettered by archaic rules, government departments will become more responsive, open and efficient.Truly transparent, inclusive governance will then be a reality. (Pranjal Sharma is a senior business writer. He can be contacted at pranjalx@gmail.com)
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Can you guess what is common between the world’s largest music company (Apple’s iTunes), the world’s largest bookseller (Amazon Kindle), today’s fastest growing entertainment company (Zynga), one of the best movie production companies (Pixar), world’s fastest growing telecom company (Skype) and world’s largest recruitment company (LinkedIN)? All of them are “software" companies. Technology is disrupting nearly every business today, with VC firm Kleiner Perkins estimating that industries with a market capitalisation of $1 trillion will be reinvented through the use of technology.The technology boom goes hand-in-hand with an interesting trend in today’s economic scenario: the rise of India. While companies from developed nations face bankruptcy, India Inc. is not only surviving, but thriving. The business landscape is active with over 50 million SMBs, second only to China. Over 100 Indian firms are contenders for being among the global top 2,000 companies. The IT services sector has peaked and the day has come for product firms to shine, accelerated by the adoption of technology trends such as Cloud, Mobility, Analytics and Social Technologies. Internet user base in India is expected to surpass that of western Europe as a whole, and we are racing to be a nation of over a billion mobile subscribers and 250 million social networking users. In such a scenario, it is evident that technology can be a key determinant of success in business.However, its adoption has both drivers and constraints, and we see six broad trends that will govern how successfully businesses can leverage technology to win. The first trend is a shift away from focusing on IT to reduce costs, to an era where businesses turn to technology to drive value and efficiencies.Convergence of modern IT (cloud, enterprise mobility, big data and social consumerism) is creating new opportunities, with global corporations looking for the next phase of business growth through technology and information-driven innovation. For example, oil companies are gaining unparalleled insights by investing in the ability to process petabytes of data generated by seismic sensors through new approaches like big data. Social media data and sentiment analysis are creating new possibilities. Companies today – including leaders such as GE and Kimberly Clark – collaborate more effectively using social platforms. Imagination is the only limit to the value that modern technology can create for organizations.The second trend driving technology growth is the disruption of traditional business models. A range of exciting new companies are developing new innovations, at a rapid pace, leveraging technology for scale as well as insights. For example, Airbnb, a startup, has disrupted the hospitality industry with over 100,000 rooms in 192 countries that can be selected and booked onlineThey have done over a million bookings already and are valued at over $1 billion in a short time. Larger companies, on their part, are also starting to invest in technology to protect their turf from agile and aggressive startups. In short, traditional business models are transforminginto technology-empowered models to survive.The third trend driving technology adoption is the rise of the connected business. Large organisations are leveraging efficiencies gained through tighter integration with partners, suppliers and the ecosystem, and IT is following this pattern too. An ecosystem characterised by manual interventions is now witnessing automated interfaces, driving smaller or mid-sized partners to also embrace IT. For example, Google runs all their procurement through their e-procurement engine that is built on the same model as their ad bidding engine. IT systems operating at the intersection of the various ecosystem players will add significant value to the enterprise.The fourth trend is the growth of product firms. Over 70 per cent of all the software product companies started in India in the last three years are based on modern IT technologies. As IT services reaches a peak, it is now time for product companies to demonstrate their value-add. Indian IT product companies are building disruptive innovations, and one example of this is Capillary Technologies. Capillary allows companies to understand the customer as soon as they enter the store and offer real-time deals. The company received over $15 million dollars to replicate their India model in other countries. The ecosystem is also contributing to the growth of startups, such as initiatives by companies like Microsoft, Qualcomm, Citrix, and IBM. Industry associations such as Nasscom are driving initiatives to build the start-up ecosystem by providing access to funding, customers and market visibility.While the four trends detailed above expand the possibilities of technology, the fifth trend – regulatory environment – will define its boundaries.Technology has made geographical boundaries irrelevant and countries are beginning to realise the need for a digital code of conduct. Today the internet is like the “Wild West”, but we are starting to see some tough – and controversial – regulations starting with where data centres are located, what is free speech and so on. On the other hand, government can also spur technology adoption and infrastructure. Large banks are investing in new technology to comply with rules that require them to fill automated regulatory reports. State data centres are being converted to private clouds. Social media is playing a role in politics; the Gujarat chief minister recently interacted with citizens on a Google Hangout –viewed by over 4 million people on TV and online.The last trend is the changing data protection paradigm. As the world increasingly depends on technology, business continuity and security are critical issues. Shutdowns experienced by a cloud provider impacts not only its own business, but that of customers as well, which we saw last year. Hacking and digital attacks question the credibility of computer systems. The security system protecting online transactions still has not evolved to prevent frauds and can adversely impact adoption. Companies that can address these challenges can potentially experience huge success.Knowledge democratisation has spread awareness about the potential of technology beyond the IT community and into the board room. CEOs and business heads are asking CIOs about their cloud, mobility or big data strategy. CIOs are tasked with driving innovation and business growth. Security and compliance are board-level discussions, laying the foundation for technology adoption. India has the unrivalled position of being a software powerhouse. To leverage this advantage, maximize IT possibilities and win, CIOs need to understand their role. An increased risk appetite coupled with the startup mindset of experimentation and ideation is critical. CIOs must constantly be a step ahead, developing new ideas and use cases rather than being an implementer of systems. Knowledge of contract structures, service-level agreements is a must as they will fundamentally change in the next few years. Today the CIO is at the centre of a tectonic shift in Indian business. The possibilities are limitless for those who can excel in the new paradigm, generating value for their companies and disrupting traditional industry.(The author is CEO, Zinnov, a management consultancy company)
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Two historically momentous events will unfold in the next few days. The Americans will decide who will run their country for the next four years, and the Chinese Communist Party will bring in a new leadership that would be responsible for shaping the world’s second-largest economy for the next decade.While there is little similarity in the ways institutional politics plays out in the two countries, a change at the top of decision-making in the world’s two biggest economies at the same time is likely to have far-reaching implications since they are both so closely linked.The impact on the world of the leadership change in a cloak-and-dagger China will probably be greater than in the United States where issues and political players are mostly out in the open. For China not only has to keep its place in the external world, but ensure internal stability.As Beijing prepares to host the 18th National Party Congress, China-focused websites are already talking of a “state of lockdown so extreme that it feels like war “for the sake of stability and security. There is good reason behind the paranoia.China’s political, social and economic landscape is looking the shakiest in a long time. The economy is showing signs of slowing, putting pressure on a government wracked by corruption allegations against top leaders to take strong steps towards revival or face increased social unrest.The latest scandal – a report by The New York Times about Premier Wen Jiabao’s family estimated $2.7 billion wealth – would have rattled the Communist Party leaders already battling the ramifications of the corruption and murder charges against former high-profile Chongqing party chief Bo Xilai, which cast a shadow over the government for several months. Wen — widely seen as a reformist — is understood to have led the charge against Bo.Earlier this year the Bloomberg news agency carried a report on the wealth of the family ofChinese Vice-President Xi Jingpeng, who is expected to become the Communist Party Secretary and take over the presidential reins from Hu Jintao next year.An insecure political class, under severe scrutiny after revelation of high-level corruption, doesn’t bode well for China or for the rest of the world. A fractious, unsettled leadership can only make mistakes, which can only damage China where a widening chasm between the rich and the poor is creating unhappiness and the middle class is coming out on the streets in protests the government.The Hurun Report, which tracks China’s wealthy, said in a report earlier this year that the combined net worth of the 70 richest delegates to China’s National People’s Congress was nearly $90 billion in 2011. This was more than 10 times that of all 660 officials of the three branches of the American government.The cosy relationship between money and politics is a cause of great concern in China, just as it is in India; but what happens in India doesn’t have as deep an impact on the world as what happens in China.The new Chinese leadership will have two choices – continue to gratify itself as the practice has been, or change a system that like a pressure cooker might explode one day if the steam is not released on time. The one thing that worries the Chinese decision-makers is internal strife and instability that could cause the breakdown of the party machinery. This is a phenomenon they are not used to and probably don’t know how to deal with except through a heavy hand.Nearly three generations of Chinese have only benefited from an economic growth that has powered the once-reviled nation to the top of the world. These hundreds of millions who have become rich and now form the urban middle class are in no mood to give up their demand for a better life and want more rights in a country where media is controlled and dissent throttled. Protests have not only increased in recent years, but have also turned violent, as an aware and educated milled class has increasingly taken on local governments on environmental issues. Last month there were reports of thousands of people protesting against the nearly $9 billion expansion of a petrochemical factory on Ningbo, a port city. Similarly, there have been protests in Dalian and Xiamen in the past.A survey of the residents of the Chinese capital by the Beijing Academy of Social Sciences last month showed that only 1 per cent of those polled felt that their quality of life had greatly improved in recent years. Around 20 per cent said it had improved slightly, while nearly 35 per cent said they felt there had been no change. The remaining -- more than 40 per cent -- said their quality of life had actually declined.The same survey showed that people were worried about rising medical expenses, housing prices, old-age security and prices of commodities. In short, it only indicates widespread unhappiness in China despite an increase in income levels.The sooner China’s new leadership comes to grasp with the ground reality and finds ways to address the concerns of its people, the better it will be for all. An unstable China can only be bad news. The next American president along with the rest of the world will be watching the tea leaves closely.(The author is President, Public Affairs, South Asia, Genesis Burson-Marsteller and former Editor, Khaleej Times, Dubai. He has a deep interest in China and Southeast Asia. Views are personal)
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Gyan Harlalka, managing director & head sales, RBS India was surprised by the RBI's decision to slash cash reserve ratio (CRR) rates by 25 basis points (bps) to 4.25 per cent. He had been expecting a 25 bps cut in repo rates. He feels RBI is still worried about inflation and continued high fiscal deficit and that’s the reason why the central bank didn’t bite the bullet. However he expects them to cut rates by at least 25 bps by March 2013. Meanwhile the market reacted negatively with the 10-year G-Sec yield after trading at 8.11 per cent before the monetary policy ended the day at 8.18 per cent, losing close to 50 paise (7 bps) in a day. Harlalka expects the 10 year G-Sec to remain in range of 8.10-8.20 per cent, but his advice to investors will be to buy bonds, especially 5-10 year paper as its more liquid.Excerpts:What are your initial reactions to the policy? Was it a surprise to you with the central bank cutting CRR?Yes we were surprised with cut in CRR. On the contrary we were expecting a 25 bps cut in repo rates which didn’t materialise. RBI continues to give more weightage to inflation which has been quite sticky. It seems the RBI is waiting to see the impact of recent policy measures by the government as well as future responses to growth. With liquidity likely to remain under pressure, the CRR cut is more in line with market expectation. The 50 bps CRR cut in April 2012 by the RBI was in anticipation of government action on the fiscal and policy fronts. In your view why is the central bank delaying cutting rates? What is your view on the Indian economy and market? Do you see growth being hampered?The sticky inflation and the continued high fiscal deficit are probably the reasons for the same. The economy seems to be stablising with growth in the 5.5-6-per cent range. The growth seems to have bottomed out at current level. However, the upward movement in growth is expected to be gradual. Do you think RBI will bite the bullet in March 2013? And why?A lot depends on inflation, which will be guided by commodity and food prices. If they soften, we should see action by the RBI. But yes we expect to see RBI cutting rates by March 2013, by at least 25 bps.What is your outlook for the Indian Bond market? The G-Sec climbed higher with no rate cut. Where do you see the G-Sec yield in the coming 3 months? Do you think it is good time to buy G-Sec (what would be the tenure) and why?With the rate cut not materialising nor any guidance for the same, 10 year G-Sec are expected to remain in the 8.10-8.20 per cent range with minor breaches on both side. We are of the view that bonds are good buys on upticks, with 8.20-8.25 per cent good levels to go long. With growth and inflation stablising at current level, RBI will ease sooner or later. What is your advice to your clients? Which instruments will you advice them to invest going ahead and of what tenure?At this juncture when growth seems to have slowed down and stabilising in the 5.5-6.00 per cent range, debt instruments present a good investment opportunity, especially the 5-10 year mid segment.What is your take on the corporate bonds? Will you be a buyer in corporate bonds and what would be the tenure?Corporate spreads over government securities are currently very low due to sluggish demand from the industry. Corporate bonds remain attractive from directional perspective rather than spread compression perspective. Meanwhile we are a buyer in corporate bonds, in the 5 year bucket which is liquid.What is your take on the Indian currency? Where do you see it going by March 2013?We see a gradual appreciation trend with lot of volatility and around 52.50 levels by March 2013.
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Like everyone in the market, Rahul Goswami, CIO Fixed Income of ICICI Prudential Mutual Fund, is expecting the rates to come down gradually, and by March 2013, he sees the rates lower by 50-75 bps. He also thinks that RBI could go in for a 25 bps cut in repo rate on 30 October. Meanwhile, in the absence of any unforeseen event, even if there is no rate cut, Goswami does not expect 10 year G-Sec yield going beyond 8.35 per cent. But on the medium term, he expect yields to come down to 7.8-per cent in the next 3–6 months with potential trading range of 7.75-8.25 per cent on the bond yield.As a fund manager, Goswami has increased the allocation on government securities given that spreads have narrowed significantly between G-Sec and corporate bonds, but feels it’s unlikely to sustain for a long time and will increase allocation to corporate bonds if spreads widen. He sees 2-5 years' tenure for corporate bonds looking attractive on expectations of a gradual rate cut which will provide the opportunity to lock in the carry.Excerpts from the conversations:Are these testing times for the Indian economy as well as the market and why? When do you think the sword of uncertainty will move away?The Indian economy continues to grapple with challenges coming from the euro zone crisis as well as the unsustainable current account deficit and fiscal deficit. However, on the positive side the government biting the bullet and initiating the reform cycle have boosted sentiment. Reduction in oil subsidy and a cap on the number of subsidised cooking gas cylinders per household should help contain fiscal deficit by 0.2 per cent of GDP over the next 12 months. The firm resolve shown by the government in introducing reforms ensured that there were no roll backs. Going forward, continuity in policy reforms, divestment decisions and other such steps to aid further fiscal consolidation will act as key positives for the economy and markets. Now is the time for execution to follow action. This will be the key to ensuring that the Indian economy while clearly being a structurally strong growth story continues to improve on fundamentals. We expect continued effort from the government on containing fiscal deficit. Though it may potentially be inflationary in nature in the near term, in the long-term it is anti-inflationary and will thereby provide more room for RBI to bring down the rate structure.Everyone is expecting a rate cut and even you expect 50-75 bps cut in interest rates in the next 6 months. First, why do you think he central bank will cut rates? Second when inflation and deficit are at higher levels, don’t you think cutting rates will further impact inflation and deficit or are you of the view that RBI will have to bite the bullet of rising inflation and deficit to boost growth?It will not be an easy decision for the central banks to cut rates in light of the high inflation that continues to be out of the comfort zone of RBI. While inflation and high fiscal continue to be of concern, there are basic requirements of the economy which may warrant support from the central bank in terms of monetary easing. The investment cycle needs to be revived and growth continues to be much below the potential growth of rate + 7 per cent that the country can have. Hence RBI has a tight rope to walk of balancing inflation and growth. We therefore expect that RBI will only be able to take calibrated monetary easing stance in the form of a gradual rate cuts, CRR cut & bond OMOs.As far as inflation and deficit are concerned, the government has already been taking steps to bring down fiscal deficit to more sustainable and moderate level. While inflation continues to stay elevated, the positive is in the fact that there is no more significant upside risk on inflation. We are confident that the government will continue to demonstrate intent and action towards fiscal consolidation and thereby hope and expect a good part of the Kelkar committee recommendations to be accepted and implemented. So the key trigger going forwards will be how the twin deficits pan out. How much will RBI cut rates in the forthcoming monetary policy on 30 October 2012? What is your view on the liquidity in the system? Do you expect further cut in CRR and by how much?As mentioned earlier, there are requirements on both sides i.e. inflation is refusing to come off and at the same time investment cycle is not picking up and growth continues to be much below potential. Hence some monetary easing is definitely in the offing with the view to support growth. Whether it will by way of rate cut or reduction in CRR is yet to be seen. In terms of liquidity, liquidity going forward is only expected to tighten in light of the seasonality witnessed in currency in circulation. Further liquidity will be a function of how government balances behave in times to come, going forward even if liquidity worsens further, we expect RBI to take the necessary steps to bring down the liquidity deficit within their comfort range of +/- 1 per cent of NDTL (net demand and time liability). Hence liquidity is not a concern given the comfort that RBI will continue to address any liquidity concerns that may arise as effectively as they have in the past. What is your outlook on the Indian Bond market?The 30th October policy is going to be the immediate key trigger. Lot of things will depend on the stance and method taken by RBI to provide monetary easing i.e. weather it will be through a CRR cut, a rate cut or a combination of both. But highest probability, RBI would consider a gradual calibrated monetary easing and would be willing to assign a 25-bps cut in the repo rate. In case of a rate cut, the market will be cheerful and will give some headroom for yields to move down further. In such a scenario, we expect bond yields to soften further over a period of time. Even in the absence of a rate cut we do not expect a sell off to happen and bond yields are unlikely to go beyond around 8.35 per cent in the immediately foreseeable future, however, over the medium to long term basis expect bond yields to soften. Apart from rate cuts, market will closely track guidance from RBI on future monetary stance, global events direction, direction of commodities specifically oil and inflation expectation pans out.Going ahead, what would be the fund house strategy to invest?At ICICI Prudential AMC we have a framework that works on the principle of SLR i.e safety, liquidity and then returns. Aligned to this the first priority in portfolio construction is safety. Then comes liquidity followed by returns. On a standalone basis, we are very selective as far as credit opportunity is considered given that we manage money in fiduciary capacity and only look at it if it aligns well within our framework of SLR.Last year, most of the fund managers made good money by keeping the money in short-dated securities. In current market condition where will you advice investors to invest?We will always advice investors the same investment strategy as we follow in our portfolio construction that is to first focus on safety, liquidity and then return. Further their investment decision should be aligned to their risk appetite and investment horizon.We expect short-term rates to ease off in the coming months based on RBI’s liquidity measures. This may benefit the 2-5 year maturity space. We therefore believe that the 2-5 years segment on the yield curve is attractive in terms of risk adjusted returns. In the second half of the financial year, the downward bias for the longer end is expected to accelerate once RBI starts conducting OMOs and hence investors should gradually tilt portfolio allocations towards the next step onto a higher duration fund.Post government’s measures on fiscal consolidation, there is expectation that RBI may support government’s efforts through monetary action. Further RBI is likely to conduct OMOs to ease liquidity. These measures will be positive for long duration funds and offers a reasonable opportunity to enter Gilt and Income funds.What is your take on the 10-year G-Sec yields and why? Where do you see the G-Sec yield in the coming 3 and 6 months? Do you think it is good time to buy G-Sec (what would be the tenure) as further demand for G-Sec and rate cut will help in making some capital gains?The direction of 10 year G Sec yield is also going to be a function of the RBI action on 30th Oct. In absence of any unforeseen events happening, even if there is no rate cut we do not expect 10 year G-Sec’s going beyond 8.35 per cent but on the medium term horizon we expect yields to have a downward bias and come down. In the event of calibrated monetary action, space will be created for yields to go down further and may result in 10 year going down to the 7.8 per cent range in the next 3–6 months time. Direction will also further depend on how RBI caters to the liquidity conditions in the future given that we expect stress on liquidity over the next 6- 8 weeks. We anticipate a potential trading range of 7.75- 8.25 per cent on the bond yield. Any rate cut move or OMO will only help the bond yields to soften. As a fund manager how are you managing the money in your portfolio and where are you investing in this market?We have increased allocation in the portfolios to government securities given that spreads have narrowed significantly and is unlikely to sustain. We may further increase allocation to corporate bonds if we see spreads widening to a more comfortable level. What is your take on the 1 year, 2 years, 3 years, 5 years and 10-years yields in corporate bonds? Will you be a buyer in corporate bonds and what would be the tenure?We believe that the 2-5 year tenure looks attractive given the expectation of a gradual rate cut which will provide the opportunity to lock in the carry. On a relative basis corporate bond spreads are too tight against sovereign bonds and where we may see central government securities outperforming corporate bonds over the next 3 - 4 months Will you be an investor in PTC, CD and CP in these markets and why? What are the yields you are looking at in these instruments?We will look at opportunistically investing in PTC, CP’s and CD’s and will depend on the levels and liquidity conditions at that point of time. In the current context CP‘s and CD’s will be preferred. We may not be keen participants in PTC’s given the lack of clarity on the segment and the current taxation of PTCs.
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One of the most discussed topics in HR conferences is how companies can win the “war for talent” that is roaring across the world. Recent surveys even indicate that the attraction and retention of talent (employees with superior endowment or ability) is the top concern for more than 60 per cent of employers. Deloitte’s 2011 Unified HCM and Talent Technology Survey Report, for example, affirms that “nearly two-thirds of executives surveyed identified talent retention as one of their top-two business challenges.” In the business world, where holding onto your best people translates into competitive advantage and the related financial aftermath, this is certainly cause for concern. And firms have tried it all! From offering various add-on internal services and fringe benefits such as an on-site gym, a restaurant or health insurance coverage to attractive variable pay schemes including access to company shares and talent pool concepts, which collectively and individually offer the very best to the "happy few." These traditional retention strategies even sometimes go as far as applying the inclusive approach of looking for each employee's potential and then adjusting the investment level to the projected impact for the firm. Nevertheless,talented employees continue to leave companies, either to join competition or to set-up their own firms. Caroline Miller, founder of “head-to-head,” a leading executive search and public relations firm in Geneva confirms: "High potentials are those who still move, even in times of economic crisis. They are willing to accept a new challenge and to leave their comfort zone, if only we can make them dream again!"So what's going wrong with our current approaches? The issue of “dreaming” is an important one when retaining talented employees. Of course, it is much easier to make people dream from the outside because, as we all know,the grass is always greener at the neighbor's house. Making your people dream despite the fact that they know the company's flaws may bea tough challenge, but it is possible. It requires firms to reach a certain stage of maturity where, beyond nicely declared mission-vision-values, the company's DNA allows high potentials to realistically believe that their dreams are real possibilities. We can try to manage these promises by standing guard against some "dream killers": Poisonous People In each and every organisation, there are people whose behavior is poisoning the company's DNA. They might, for example,be acting or asking others to act unethically or infringing systematically on the firm's code of conduct. Ultimately this might require the courage to ask these misaligned people to leave, whatever their hierarchical level. Indeed, how can we expect the talented employee’s roots to be deep in poisoned fields? Badly Implemented Change Every change that companies engage in, depending how it is performed, injects subliminal messages. For example large scale restructuring: employees will observe the way it is announced, and the way those who are made redundant or transferred are treated. When trust in leadership is destroyed, why should high achievers not behave as mercenaries? Black Marks On The Company ReputationRecent years have seen an almost uninterrupted series of scandals in, for example, the oil, banking and financial sectors. Certainly preventing these from happening would be best, but once they do, denial and minimization is not a good idea in terms of communication. Impact goesbeyond the firm's image: how many employees had their association with a company turn from pride to shame in one second? Do they really want to remain after that? Lack Of On-going Learning: When people stop learning, or wanting to learn, it is likely that they have abandoned their dreams. So completely cutting training budgets during difficult periods sends a terrible message. An indicator that Chief Learning Officers may want to use is measuring the percentage of employees who are actively involved in a training program at any given point in the year. How can companies turn dreams into reality without continuous learning in place? Although the combination of all the above might well help in the retention oftalent, there is no magic wand; these extras still might not be enough.Perhapsbecause what made them so talented in the first place is passion for excellence, and they will escape a claustrophobic environment as soon as something prevents them fromgrowing. There are also a myriad of reasons beyond a company’s control drawing talented employees to new pastures. Family incompatibility on an overseas assignment, for example, is an often-cited explanation for a talent’s departure from a company. In this case, countries have a significant responsibility because very often, retaining talented people means retaining their whole family. To this end, large firms will likely soon start putting much more direct pressure on politicians to requirebetter infrastructure, more security, optimal education system etc. Attractive taxes are not enough to make a particular location attractive for an entire family. In the end, if companies implement retention strategies and even go the extra mile by remaining watchful of the “dream killers” mentioned above, and yet they continue to lose their talented employees, we need to ask ourselves if talent retention issimply the wrong objective.After all, is the success of an organization related to one individual or to the micro-team it belongs to? To the Chairman alone or the Board?To the CEO or the CEO with the Board and the Executive Committee?The functional head alone or the management team?One talented inventor or the innovation team? Perhaps we should shift our energies away from talent retention and focus rather on a new framework: talent integration. Talent integration implies that instead of overly pushing atalented employee’sindividual performance or sheltering them in protected “high-potential” programs, they are encouraged to fully integrate with others therefore influencing the broader culture of the organization, inspiring colleagues in both mindset and in pursuit of excellence. Such a shift in approach meanschanges to the assessment at hiring time as well. New considerations might be: 1.Can he or she integrate the team? Would peers be ready to protect him or her, or provide free advice to avoid the person to fail? 2.Does he or she have the willingness to share knowledge and help others? Hiring under this new framework and with the assumption that the best employees are likely to move on necessitates a steady pipeline of confirmed talents as well as high potentials. This approach is especially relevant in countries with more liberal employment laws, where taking the risks necessary for hiring high-potentials will be much easier for companies. Ultimately, moving away from the idealistic objective of retaining all talented employees and re-directing efforts toward a more pragmatic approach of integration does not mean that retention policies are useless. Provided these policies don't focus exclusively on the "happy few," they remain critical. Companies need to be attractive in order to ensure the continuous hiring of an optimal mix between confirmed talents and early potentials. Beyond cost, mastering the pipeline stream has another advantage: when the so-called top or rising stars realize that they are replaceable, you completely avoid dealing with the “diva effect!” (Marco Mancesti is R&D Director at IMD)
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