Case Analysis: Focus On Systems

The Gemmet case, in my view, could be looked at through several lenses — for example, what ‘higher purpose’ or meaning does a professional manager derive his actions from? Should it be simply KRAs/KPIs (key result areas/key performance indicator)? Or should his actions be embedded in a deeper sense of duty to oneself, a kind of dharma? What can he use as the source of his strength? Related to this is the issue about how a coach can help a senior manager stay the course through this choppy voyage. Then, there are the tricky issues of boundaries and autonomy, not just for the CEO, but for every level of management. After which point does guidance become meddling?

Is it right for the Board to use HR as the hatchet man to communicate to the CEO the need to sack Abhiram Murthy? If Abhiram is being made a fall guy for a shortfall in another division, how right is this? If this is wrong, what makes right people do wrong things? It is a story we hear in the corporate world all the time — bit like the Jagjit Singh ghazal in Arth (1962) – “Yahi duniya hai to phir aisi yeh duniya kyun hai; Yahi hota hai to aakhir yahi hota kyun hai”.

Finally, why does it always seem that shareholders are the only stakeholders in this game? Don’t the others — employees (and their families?), customers, and society — count?

Let us look at the purpose piece first — purpose inspires, a lofty purpose inspires mightily. One oft-repeated story in the corporate world is about the two stone masons. One describes his job as chipping stone, the other describes it as the building of a cathedral! Many of us in the corporate world have become a bit Pavlovian about this — our lodestones are the KRA / KPI documents — tick all the boxes, get my grade, get my increment and bonus. End of story. Stone chipped.

Sadly, this process sometimes enslaves us to the system and enervates our resolve to be bold and do the ‘right’ thing. When Anand Mitra, CEO of Gemmet India, chooses to source his actions from a ‘higher purpose’, he is making a bold decision; a decision to free himself from the tyranny of the KRA and look at higher order issues like justice and fair play. At a CEO level, maybe KRAs need to reflect a few ‘abstract’ concepts which are critical success factors but hard if not impossible to measure! Bit like the kings of ancient times. While many CEOs are able to resist becoming stockmarket slaves and to live their own personal values as opposed to their company’s market valuations, this perhaps needs to be done more.

This short-term attitude also explains the high attrition rates of professional managers. If everyone thinks their job is to chip stones, who will build the cathedral? An owner does not close down his business simply because he has had a bad year. While I have no ready access to industry data (perhaps my HR colleagues will), I wouldn’t be surprised if attrition at senior levels is lower in owner managed companies than in professionally managed ones.

Assuming that Naman Firoze is Anand’s coach, he is doing a great job in helping Anand find his truth and his ‘higher purpose’. Which is as it should be. Rightly, Naman refrains from giving advice and lets Anand explore his reality through his own language. Anand is revolted by the unfairness of the Board’s decision on Abhiram and his ‘higher purpose’ of justice gives him the strength to do the right thing.

This example of ‘or else I resign’ may be a bit extreme but the principle holds — if, even on smaller issues, we ‘come from the right place’, lives could be much happier, bolder and more aligned with our respective truths. Naman’s question to Anand — “As an autonomous CEO, what would you have liked to do ideally?” — is classic coach enquiry.

It shifts perspective and helps Anand break his mind block.

The debate between the what and the how, between the end and the means, is an old one and recurs every day in organisational contexts. It may not be wrong to say that organisations sometimes prefer ends over means. Means are often enshrined in corporate values and framed on walls in boardrooms but ignored in practice. But there are honourable exceptions as well.

At least, one of my clients has structured its whole annual appraisal process on an X-Y grid to reflect both task achievement and adherence to values like care for people. In this case study, adherence to the how will also lead to a better performance on the what. But only over a longer term.

Naman tries to make Anand understand where the Board could possibly be coming from. This leads to an interesting exploration of professional versus entrepreneurial management and its implications on short versus long term horizons. To me, the take from this is that the conflict is depersonalised and seen as a difference of perspective rather than an opinion on individuals. So, what makes the Board take such a harsh decision and further, to communicate it in this most insensitive manner?

To come to our original question —in an organisational context, what makes good people behave badly? One theory would say there are no inherently good or bad people, only good or bad actions. Why do organisational actions end up creating so much stress, politics, negativity and unhappiness? Actions or decisions often stem from the culture that an organisation creates, the role modelling that leaders do, the norms that are practiced. Most importantly, from the goals, systems and structures that an organisation takes upon itself.

Anand nails it when he says, “I need to learn how to stand up to the Board. I think my mission is much larger — corporates need to learn how to make commitments to stock exchanges….” Possibly, in this case, this may be the driving force behind the need to find a scapegoat. The goals that are set for us and that leaders sometimes set for themselves, are double edged —they give us direction and enable task accomplishment. But they also generate stress and, in the extreme, make us do hurtful things, increasing the organisational misery quotient.

Anand is incensed at being informed by HR about the Board’s decision to let Abhiram go. His turf is being intruded upon. The Board needs to let him run the business instead of telling him whom to retain and whom to sack. “I am the CEO and I am navigating the ship.” And “I don’t want someone to suddenly change my team. Or affect my team in any way.” Aptly said by Anand. And I am really curious to know how his meeting with Board and the management committee went! What did he actually end up saying? The fact that he had offered to resign and the Board wanted him to stay strengthens his hand. Question is — would he be willing to allow this culture to take root and be practiced by his juniors as well? The impression one gets of Anand, likely yes. This culture can make an organisation hugely successful provided goals are commonly understood and owned, roles are clear and accepted, and enabling processes exist and are respected. Every leader below Anand should feel the freedom to say what Anand wants to tell the Board. If we stopped meddling with others and trespassing their turf and instead, stayed simply available to help and support as needed, work would be a happier place!

Having said all this, Anand clearly is a wonderful manager and an asset to any organisation. If the Board has done something right, it is to not let him go! A company has many stakeholders — shareholders, employees, customers and external stakeholders. The values that Anand appears to espouse and practice are great for everyone. It is unfortunate that Gemmet India has had a bad year. But, as the Buddha said, ‘everything is impermanent’. Achche Din will come. And go as well. Like entrepreneurs, companies need to take a longer view. The company would be short sighted to lose its star performers in lean times and have no one to cash in when the wheel turns. The Board would do well to retain Anand and Abhiram and focus the company’s energy on building systems, strategies and competencies for the better times to come.