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In the long run, there is nothing to worry
At a time when the growth rate is declining and rating agencies one after the other are downgrading their outlook on India, it is time we emphasize on understanding the basic fundamentals of our economy. We need to decide the terms of the real application of liberal economic policies, when it should happen, how it should happen and with what speed it should happen. It is true that the growth enablers are moving south; but from a medium to long term perspective, the fundamentals of the economy remain robust and we have no doubts in that. If we put the enablers in the right perspective our GDP growth rate can definitely go to 8%. In the long run there is nothing to worry because such stumbling blocks have always been part of the experience of developing economies moving towards stable economic growth over the years across the world.
The current economic situation is impacting the automobile industry but it is a more of a temporary blip and in the long term 12 -15 percent CAGR growth would be the trend in India. Typically in the current situation when we look at the dynamic changes and the global crisis, we can compare it to the situation in the last economic slowdown after which we saw the recovery and 20-30 percent growth in 2008-09. This kind of volatile business environment requires a different leadership perspective – transformational leadership. So a kind of versatility, capability to switch gears, capability to forecast change - is required. Also this kind of dynamic business environment would require a micro view of business understanding. We at Maruti Suzuki are getting back to basics and focusing on the micro view of business. We are studying even the micro details. For instance, when we look at analyzing the market situation, we look at regional or even city wise detailing; urban or rural market, customer wise market segmentation rather than just a macro perspective.
In the present context, the first thing that comes to mind is not to go for knee jerk reactions. It would be better to try and understand the current business situation more clearly. It will be very important to decode the downtrend, the causation factors and the likely recovery variables. Also we can carefully dwell on our counter strategy and action plans which may be customized to the business sector rather than generalized approach. It will require tremendous amount of communication within the team as to what is our understanding and what strategy we will take. It will be really important to create a clear understanding, high ownership and involvement in all the stakeholders including the team with good communication. Thus, the best leadership would be the one which is patient and not “reactive”, mature, positive and capable of effective communication and people connect in such a situation.
In any such crisis, we should always look at conserving costs; if you have this habit as part of your work culture to look at any extra cost then it will be a big help. However, there is a kind of a deceptive perception that reducing the labour cost budgets should be the first priority in any such crisis; or reduce spending on training and talent management initiatives. Its more a perception and practice borrowed blindly from the Western economies. The point which one misses is that it is only capable and committed people who are going to define the blueprint and roadmap to recovery. So we should look for cost conservation in other business areas such as materials cost, finance costs, marketing & advertising costs. Also the companies can look at non value added aspects of business activities. A zero based budgeting exercise may also help. The people strategy should always be looked at from the medium to long term perspective. Hence, knee-jerk reactions on people related decisions should never be taken. The leadership traits of being creative, leading to out of box thinking and pro-active will be the need of the hour.
In the absence of credible and transparent communication rumor mongers take centre stage. It leads to negative perceptions, misunderstandings and low morale & motivation. Some companies do use email communications from the top management which does help but in addition it is better to have small group and face-to-face interactions. People do have a lot of enquiries and anxieties and therefore it is critical to have effective mediums of communication in place to be able to satisfy that.
The 2008-09 economic crisis, where USA, UK, Europe and Japan faced deep recession while India only experienced an economic slowdown and not a recession as was made out to be, has taught us a few valuable lessons. Even during the 2008-09 scenario we at Maruti Suzuki had desisted from any knee-jerk reactions.
Same way even in the present downtrend first, we have tried to decode the crisis for the Automotive sector in India. We have analyzed the situation to closely understand what is happening – what are negative variables pushing down the volume sales of our cars and how to define the right countermeasures from immediate term and medium term perspective. Also, we strongly believe that any desperate measures would only harm our potential business interests, hence, its much better to be patient while taking a strategic way forward. We also believe that its very important to bring in our people through various communication sessions to enable a participative, brainstorming and dialoging approach through which we can look at new ideas and various counter measures to help us take some proactive measures to outperform this slowdown and also stay agile in a intensely competitive market. Again a leadership which strongly believes shared leadership, in positive people orientation, talent or people power, leading by example or walking the talk and being the role model will turn out to be more effective. Again the moral & ethical aspects of leadership will be the critical in this context since businesses are not planned for one or two quarters or immediate term perspective but business strategies & plans are conceptualized over medium & long term basis.
Even presently during this blip phase of our business, we have not taken any non professional, reactive or negative view of our people related decisions. Our recruitment plan is as originally conceived for 2012-13. We look forward to our fresh entry level professionals from campuses joining us in August 2012 as scheduled. Our investments in people development initiatives including overseas training is going as per normal plan. Our decision on career growth policy being normal and implemented as part of the HR Calendar in April, 2012. Importantly, our announcement on Compensation & Benefits for the year has been better & higher than 2011-12. Last but not the least, we do not believe in rightsizing or downsizing because we firmly believe that in a tough and challenging business times people will be the core strength to define & deliver the blueprint to recovery, success and sustained growth.
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