Management Lessons from Indian Freedom Struggle- Part II

On October 2, the world celebrates Mahatma Gandhi’s birth anniversary. United Nations as a tribute to his principles has declared it as an International day of Non-violence. The world definitely misses his leadership and wishes in the present environment there were more leaders of his caliber and principles.

I wrote an article to celebrate India’s Independence Day on 15 August, titled “Management Lessons from Indian Freedom Struggle”. The post had covered the leadership style of Mahatma Gandhi and the lessons which the present day corporate world can learn from it. The article got a lot of positive response and quite a few readers wanted to know more. As a mark of my respect to Gandhi’s leadership, I am writing here about some of the other lessons which we can learn.

1.      Non-violent Behavior

Mahatma Gandhi practiced the principle of non-violence.  His viewpoint was that non-violence should be practiced in thought, speech and behavior. His was against verbal abuse and physical harm. His statement was “I object to violence because when it appears to do good, the good is only temporary; the evil it does is permanent.” Wrong words spoken or harmful actions done to others definitely causes a lot of damage to self and others.

In the present world, violent speech and action is being perceived as a sign of strength. The corporate world is dealing with workplace bullying, abuse and harassment. Nearly 50% of the employees in various countries are reporting to some kind of harassment, and in 10% cases the victims need medical help. I would like people to remember Gandhi ji’s statement “Strength does not come from physical capacity. It comes from an indomitable will.”

To make this world a better place to live for all, we need to learn to refrain from all violent behavior. As he said Victory attained by violence is tantamount to a defeat, for it is momentary.

2.      Ethical Leadership Matters

When I view Gandhi ji’s principles of fighting on grounds of non-violence in light of the world events unfolding at that time, my respect for him grows. From 1920’s to 1940’s the western world was reeling under the damages caused by World War I & II. On one side the world saw Hitler as a leader whose leadership style was based on hatred, fear and violence. On the other the world saw Gandhi who preached love, non-violence and tolerance. The difference could not be starker. I think the world leaders sympathies and support was with India after World War II, as most of them had seen enough damage.

The world after over 60 years of their deaths, regards Gandhi as a positive leader of the world, and Hitler is considered a negative leader. This shows that a leader leaves his/her footprints for a long time for others to follow.

Ethical leadership matters in the present world. Stakeholders, customers, employees and public at large expect the CXO’s to preach and practice ethical and honest behavior.  As Gandhi said – “Even if you are a minority of one, the truth is the truth”.

3.      Culture is Within You

Respect for Gandhi’s principles in the world indicates that a leader’s skin color or religion does not matter. Leadership traits and values are respected by the following generations.

In the present world we see a lot of intolerance and fights for supremacy based on race, color, religion and language. Sometimes learning another’s language and mannerisms also can cause a loss of self-esteem and significant disputes. For example, when Indian call center industry started, the call center agents were butt of all jokes. People were saying they were aping westerners to earn money. There was a cry from some Indian political parties and religious outfits that youngsters are giving up their own culture and adopting western culture.        

Gandhi ji had said – “A nation’s culture resides in the hearts and in the soul of its people.” One would not perceive Gandhi ji less of an Indian because he had an excellent command on English language. Learning a language or accent does not change the heart or soul of people. People should be proud that they retain their culture and identity while understanding the international community. That is the true perspective of being a global citizen and provides a competitive edge to the country as a whole.

4.      Be Committed & Humble

Gandhi ji showed the world how to be committed to principles while facing a daunting task. In his life he faced despair and heartache very many times, but even in time of great difficulty he retained his wacky sense of humor. He was once asked by a journalist what he thought of the western civilization. Gandhi ji responded –“That is a good idea”. He took the task of fighting for India’s independence seriously but not himself.  

We take ourselves very seriously and are affronted when someone criticizes our efforts. However, in the face of criticism we are disheartened and discontinue our efforts. In the corporate world we need leaders and employees who are committed to principles and strategies without being egoistic.  As Gandhi had said- “Whatever you do will be insignificant, but it is very important that you do it.” Instead of fighting for credit, stay committed to the task at hand.

5.      Management & Execution

Mahatma Gandhi always stated- treat your enemy with respect and courtesy. Fight in respect to the issue and not the person. Therefore, a tribute to his memory cannot be completed without acknowledging the positives of the British Empire.

The British Empire, at its peak was the largest empire of the world. It controlled a quarter of land on Earth and a quarter of the world population. The most known phrase was- “The sun never sets on British Empire”, as it spanned the globe.

England was and is a small country and it could control India, a country multiple times larger in size for over two centuries. It clearly reflected the management, administration and execution capability of the British Empire.

I would say the East India Company was one of the first global multinationals which played a dominant role in history.  The company ran a global setup without telecommunication and technology facilities available to the present day managers.  There are a number of lessons which the present day managers can learn from history. British management and execution capacity was faultless.

My heartfelt respect to the man, who won the biggest battle against the mightiest empire without throwing a single stone, be it verbal or physical. A final salute to Mahatma Gandhi, the man who showed the world how to lead from the heart, with generosity of spirit, and an indomitable will.

Please join me in Gandhi ji’s prayer for peace.

Wishing you all a Happy Gandhi Jayanti and International Non-Violence Day.


Corruption Is King

I am very angry regarding the fiasco of Common Wealth Games (CWG) and hold the Indian government completely responsible for it. With a financial expenditure of Rs 70 crore (Rs 700 million) much better was expected. The corruption charges against the organizers show that India’s pride and honor was sacrificed for personal self-interest of a few people.

The organizers have not only mis-utilized the tax payers money, they have also demolished India’s global image which was created over last two decades by millions of employees working in information technology and business process outsourcing industries. Every time a software developer wrote a code for the international client and every time a call center agent took a call for an international customer, India’s brand was built. Each successful customer outcome contributed to the positive brand image of India. It is these employees whose work got recognized globally that Indian industrialists could think of competing in global markets. The CWG organizers and Indian government have no right to negate decades of hard work of millions of workers for personal gain.

For this every Indian who has contributed to the success of India should be angry. National pride and honor has been sacrificed for corruption. Corruption is the king now.

What surprises me is that a country which won its independence by adopting a moral high ground, in the last six decades has become so corrupt. Indian population’s moral apathy can be seen from the messages on Twitter. Mr. Shashi Taroor, Member of Parliament wrote these two messages:

1)        We’ve owned up 2our mistakes &r doing what’s needed to get it right in the end. Let’s not write the obituary before the birth. Work 4success

2)        Something positive in all the criticism &breast-beating on #CWG. Confirms we are a mature democracy &have the confidence to be self-critical.

Mr. Taroor was involved in the IPL corruption controversy. His stance then also was that he returned the shares, hence all is clear. How can this be considered a mature democracy? A person participates in corrupt activities, when caught owns up to it, and hence should be forgiven. There are no questions regarding responsibility and accountability for creating an international level fiasco? 

The problem with Indian society is that corruption is at ground level and has seeped into daily life of an Indian citizen. Indulging in greed by earning money with wrong means is considered acceptable. The Indian public has lost the moral consciousness regarding corruption. There is no effort made to erase corruption from the society as a conflict in values is not felt. The normal reactions of the public when a discussion takes place regarding changing the corrupt systems are:

1)      If one asks a young person, the normal statement is- “What can I do, I am so young and junior? I have no power. Let me become somebody, and then I will do something.”

2)      If one asks a person holding a powerful position, the response is- “Wish I was young, maybe then I could do something. Now at this position a lot is at stake and at senior level all are corrupt. If I take a tough stance, I will have to risk losing everything.”

 Power corrupts and absolute power corrupts absolutely. It is people down the line who are willing to support the corruption for personal self-interest which makes corrupt people so powerful. The powerful people continue to retain their positions while indulging in corrupt practices because of the unstinting support of the public. If the public says a “No’ to corruption, powerful people will automatically need to clean up their act.

I think one needs to explore the social psychological factors to understand the cause of public’s apathy towards corruption. A simple statement – “Greed is not good, one should have morals”, is not going to make people change their behavior.

I decided to explore the various experiments conducted on social psychology and determine how these are linked to Indian psychology for corruption. Given below is my attempt to demystify corruption psychology by understanding four social psychology experiments.

1.      The Halo Effect (Experiment by Nisbett and Wilson).

Experiment: Students were divided in two groups and shown a video of a Belgian instructor. The instructor in one video displayed a pleasant personality and in the other a cold and distant personality. The students were asked to rate the performance of the instructor including physical appearance, mannerisms and accent. The results showed that students were unconsciously evaluating the performance on likeability of the instructor. The instructor had delivered the same content and adopted same mannerisms; however he had two different ratings. The students themselves believed that they had rated the instructor without considering the likeability factor. They were unaware that the experimenter had manipulated their thought process.

Psychology: The results of the experiment can be seen in our everyday life. If a famous personality, be it a politician, actor or business leader, is warm and friendly while interacting, the public immediately forms a positive impression. A handsome actor is considered a morally good and intelligent person. Public may have negative information regarding the personality – involvement in sex, drugs, alcohol or financial scandals; however these factors are ignored due to the overall pleasant personality.

Corruption: In India, quite a few famous and powerful personalities are involved in corruption cases. The general acceptance level opinion is that all powerful people are corrupt. Hence, corruption as an attribute and information regarding it is not considered negative for determining the popularity and likeability of the person.

Recommendation: While assessing the likeability of a person consider corruption as a negative attribute. Do not let perceptions of one or two positive traits overshadow the negative trait. Be aware when someone is changing your thought process on personal values.

2.      Group formations and discrimination (Experiment by Tajfel)

Experiment: An experiment was conducted on 14-15 year old boys to determine the human tendency to be loyal to a group. A scenario was created where the boys were divided into two groups and an “us’ versus “them” mindset was formed. The boys were then asked to distribute virtual money to the members of the experiment. Results showed that boys distributed more money to their own group members though they had nothing riding on their decisions.

Psychology: The results analysis indicates that humans form their social identity by their group memberships. They prefer to join groups with high status and positive image. The groups should have a high status in comparison to the other groups. Members unconsciously work towards making their group look better than others without even realizing that they have joined a group.

Corruption: In Indian corruption context, people with high status- power and money, are known to be somewhat corrupt. However, their attribute does not hold significance as people wish to be associated with powerful person to enhance their own social standing. The public subconsciously joins groups of the powerful person and starts working towards the powerful person’s goals. Hence, the powerful person’s strength increases despite being corrupt.

Recommendation: Be aware of your subconscious need to be part of a group with high status. However, do not associate corruption with power. Focus on creating your own individual identity so that group identity from association is not required significantly.

3.      Bystander Effect (Experiment by  John Darley and Bibb Latane)

Experiment: Participants were invited to a discussion through intercom so that they could not see each other. During the course of the discussion one participant would suddenly sound like he/she was having an epileptic seizure and needed their help. Results indicated that when more people were involved in the group, it took them longer to react for helping out the suffering participant.

 Psychology: An analysis of the results showed that the participants who made no move to help the suffering participant were in a heightened state of arousal and were in considerable discomfort. The non-helpers were in a dilemma. They felt a sense of shame and guilt for not helping. On the other hand they did not want to face embarrassment by exposing themselves since the success of the experiment depended on being anonymous.

Corruption: This experiment is significant since on seeing a person in crises people do nothing to help although at a personal level they are concerned. As observed, in road accidents very few people come forward to help the victim and take him/her to the hospital. The psychology behind is that law enforcement agencies are corrupt, if we involve ourselves, we will be unnecessarily drawn into legal cases. The impact of corruption is so significant that it stops the public from showing basic humanity.

Recommendation: When facing an ethical dilemma choose the lesser of the two evils. A victim’s life is far more precious than obedience to authority or fear of dealing with corruption.

4.      Conflict, Peace & Corrupting Influence of Power (Sherif’s Robbers Cave Experiment)

Experiment: Eleven year old boys were taken for a summer camp and divided into two groups. Initially in the first week, they were not informed regarding the other groups existence. Each group members were encouraged to form relationships and bond with each other. In the second phase, the experimenters created situations which caused conflict between the two groups. In the third phase, the experimenters created situations which would bring about peace between the two warring groups.

Psychology: The study showed that two warring groups could be reconciled and peace can flourish when the focus is on super-ordinate goals. In an earlier study, the boys had ganged up against a common enemy and in another on experimenters themselves. The results indicate when a powerful group attempts to manipulate a weaker group; the weaker group can turn against the powerful group. If the weaker group realizes they are being manipulated it becomes risky for the powerful group, as the weaker group does not play according to the rules set up by the powerful group.

Corruption: In Indian society, power is perceived to be with corrupt people. The powerful people are always playing the divide and rule game. As can be seen in Indian politics, the divisions are based on caste, religion and state. Whether it was the Khalistan movement in Punjab or Godhra riots in Gujarat, powerful people had instigated the conflict between people of two different religions. In the Khalistan movement, the weaker group had turned against the politician.

Recommendation: Be aware when powerful people manipulate the general public to create conflicts to achieve their own personal agendas. Do not become pawns in the hand of the manipulators.

The four experiments highlight the social psychological manipulation which occurs unconsciously in the human mind. Indians to curtail corruption need to understand the psychological manipulation of power players and its impact on their behavior. Indian psychology is somewhere trained to think that they are helpless to do anything, especially if the corruption is at higher level. The mindset has to change first. Indian’s should have the courage to say no to corruption. A population which is so huge, it can topple the power players easily. For example, a corrupt politician cannot survive if the people do not choose to support him or her. If the population is united and stands against a corrupt politician, the politician becomes powerless. Indians have to discard their myopic view of the situation and see the bigger picture. Gandhi was right when he said one morally courageous person can stand up against a hundred. When a hundred get united, they can take on a lakh (100,000).

On the lighter side, I can’t stop wondering at the coincidences in CWG. The chief organizer for the games, Mr. Suresh Kalmadi, an ex-army officer, was taught during service to protect India’s honor and pride and compromised both. The Delhi Chief Minister Shiela Dikshit enjoys the reputation of being extremely efficient and there is such a big fiasco in her state. The Prime Minister of India, Mr. Manmohan Singh is considered to react swiftly to protect India’s international image, and he took his own sweet time in responding for CWG. The Queen of England is not attending the games. India is a past master in non-violently sabotaging anything and everything relating to British Imperialism. Are you thinking the same thing I am thinking?

P.S.: To read more on the social psychology experiments visit PsyBlog

Let Us Focus On Environment Risks

Environment risks are really not being given the priority they should get. The emphasis is on covering the financial risks of the country, corporate, society and individual. I do not really understand the reason for it. Is it that, as a society we are simply financially focused or it is because a natural disaster and subsequent loss is unpredictable? In recent times there is ample coverage of environment and climate change risks; however the attitude is still lax. Although, as seen in the recent case of Pakistan floods, the losses caused by a natural disaster are far higher.

The floods in Pakistan are considered the worst humanitarian crises in recent history. The human death toll is estimated at 3000. WHO is concerned and states that health of the citizens is at risk with widespread diarrhea, malaria and cholera. 200,000 cattle have died and another ten million are at risk. According to estimates nearly 20% (1.38 million hectares) of farmland of the country has been washed away, and 2 million houses, and 7000 schools are damaged. The total financial loss is estimated to be $43 billion.

In the last few years we have had a number of natural disasters- earthquakes, hurricanes, tsunami, tornados, and floods, in different parts of the world. The reason of the increased number of natural disasters is stated to be climate change. The environment risks are intellectually understood by all along with the magnitude of loss to life and property. But as Stalin said, “One death is a tragedy; one million is a statistic.” I think we as a society are not doing much because we do not feel the pain of one million till our life gets washed away suddenly.

I came across the video in which 13 year old Severn Suzuku, from Environment Children’s Organization of Canada, had addressed the UN Earth Summit in 1992. In this she had asked the Boomers and Gen X- “when you were children did you have to worry about environment?” I would say- “No”, as a child I never thought that the natural environment- clean air, rivers and lakes, forests and wildlife, etc. will not be available for the next generation to see and enjoy. Though the speech was made in 1992, it is still applicable in 2010, as the situation has deteriorated. According to me, the Boomers and Gen X have not been responsible environmentally.

The only hope is that finally the Indian government is recognizing it. President of India, Pratibha Devisingh Patil, while addressing the AIMA conference said – “Even as India reaches new milestones in its economic growth that ensures sustainable development, we need to address challenges such as climate change, carbon emissions and our depleting natural resources. There should be focus on the use of alternative energy sources that produce fewer emissions. Also, investing in alternative natural sources of energy such as wind, water and sun, is a huge opportunity waiting to be harnessed.”

India is the largest democracy in the world and it has to take center stage to improve the environment. In our individual, social and organization level, let us actively engage in mitigating the environment risks. In this case each drop in the ocean will count.

I have seen in Bangalore, citizens are working voluntarily in various projects to save the environment. Some of them relate to cleaning parks, tree plantation, setting up sewage treatment plants and saving wildlife. This clearly indicates that in individual and social capacity we can do a lot. The participation needs to increase and we need to be more disciplined about it.

Write to me here on how you think we can protect the environment. Please share your ideas and let us build some momentum for it.

President Of India Speaks About Business Ethics

In the 37th National Management Convention-2010 organized by All India Management Association President of India, Prathibha Devisingh Patil, yesterday said-

“Business is for profit but it cannot be divorced from ethics. This basic principle should be the guiding principle for business houses and thier management. For corporate India to become a credible partner to India’s progess, a trust-based relationship between government, organizations and society at large is a must”

Ethics play a crucial role in developement and progress is being publically stated by the highest government authority in India. Let us commit that the way forward will be the ethical way of doing business.

Applying Collective Intelligence in Risk Management

This isn't me, I look Cat

I was reading a risk management blog today and was very impressed with the technical article covering various aspects of solvency and valuation of insurance industry. As I was reading it, my mind analyzed the information with respect to various laws, sections, cases etc. After finishing reading it, I took a breath and thought- “I actually felt like referring to various books to understand the article, will a regular business operation employee actually understand it?” This resulted in a depressing thought- “I do the same, to show my knowledge; I mention sections and case laws of various acts which leave business people stumped.” Well, in my defense I will say it gives a heightened sense of satisfaction and success. The adjacent picture truly depicts my emotions after such a discussion.

 Somewhere I feel risk managers are having their cake and eating it to. The primary responsibility of managing risks is of business operation team. The risk manager’s role is of a support function, a facilitator to the business. The business managers are not being provided with the necessary information, knowledge and tools to proactively manage their risks. Let me explain why I am making this statement.

 The risk managers in their role as auditors are focused on what went wrong in the past rather than equip the business managers to how to deal with the future. It is a feedback rather than feed-forward system working. The other aspect is that risk managers in their role as advisors issue guidelines and policies without the complete involvement of the business people.

 Scenario 1: Let me take a scenario here of implementation of information assurance policies. The risk manager will discuss the overall requirement with the business managers, prepare the policy, take feedback regarding it and then issue the final policy. Then they will ask the business users to implement it. Since in quite a few areas implementation may not be possible, exceptions will be granted to the business users. In nutshell, around 75% of the policy only will be implemented. 

 In both these roles the involvement of business operations team is minimal at the commencement of the project. They are expected to implement the recommendations.

 Considering the abovementioned short comings in the risk management approach, I wished to explore the concept of collective intelligence and its applicability to risk management functions.

 As a first step, let us understand the nature of information and intelligence which risk managers require to conduct their jobs:

 1)      Organizational Intelligence– Information regarding processes, structure, culture and technology. These they normally get from the business managers through interviews and review of standard operating procedures.

2)      Commercial Intelligence– Information regarding the external environment- customers, suppliers and competitors. This information they obtain from interviews with business managers, customers and suppliers. Other sources are various media and research reports published.

3)      Technical Intelligence – Information regarding the various laws, acts, methodologies and tools applicable for risk management. Risk managers have the knowledge on how to conduct the risk management while using this information appropriately.

 As can be seen business managers have more information and knowledge on two of the three intelligence capabilities required for conducting risk management. In a more collaborative approach the risk managers should be able to impart their skill specialization to the business managers effectively.

 The question is how can this collaborative model work? Let me take the example again of preparing information assurance policies.

 Scenario 2: In this scenario the risk manager puts up the objectives of preparing and implementing information assurance policies along with a table of contents and broad outline on the intranet. Now it is open to the employees to contribute and decide how it should be developed and implemented. The employees comment on what is applicable, how the process works, what are the bottlenecks and challenges, who should review it, how it should be implemented etc. The risk manager identifies the major contributors and meets them up to interview them. Based on the web interactions and meetings, the risk manager prepares a draft policy document and uploads it on the intranet. Again the employees are invited to review the same and provide feedback. After incorporating the feedback, the risk manager proceeds to obtain approval of the senior managers.

 In this approach the risk manager has the buy in of the employees before the finalization of the policy. Hence, implementation will be easier since employees feel a sense of collective ownership and responsibility. This will enable adoption of information assurance polices as part of organization culture.

 To further delve on the approach, I am adding the example which I read in “Collective Intelligence- Creating a Prosperous World of Peace” fore-worded by Yoachai Benkler and remixed by Hassam Masum. I have adapted the example “Three ways to storytelling” to the risk management function.

 Three Ways of Story Telling- Risk Management Adaption

 Let us formulate three societies for risk management: Red, Blue and Green. Each society has specific procedures on how to conduct and discuss risk management activities.

Red: In Red society hierarchical top down approach is followed. All the risk management issues can be reported by the risk management department to the CXO’s. Business operation manager is required to go to their respective risk managers to discuss their issues. A business process team member has to route their risk management issue/ query through the business operation manager to the respective risk manager.

The senior management issues risk management guidelines, policies and reports to the business operation team. The business operation team members hear regarding the issues only from the senior management and implement accordingly. In this case, an employee’s understanding of risk management issues is at an overall level controlled by the senior management. An employee’s perceptions and knowledge are based on the information provided to him/her by the seniors.  

Blue: In Blue society again hierarchical top down approach is followed however with a slight difference. Here the business operation manager can bring up the risk management issues directly to the CXO’s attention. Then the risk management department and business operation manager work in collaboration to address the issue. In this case, a change agent from business operation team can be nominated to address the risk management issue.

In this scenario, the business operation team members hear about the risks which senior managers, risk managers and their elected change agents inform them about. The employee’s perception, knowledge and awareness on risk management issues are governed by this select group. Though information is not controlled as in the completely top down approach of Red, it is controlled by the major key players in the business operation team.

Green: In Green society the approach adopted towards risk management is of collective intelligence. Business operation team members can put all their concerns, suggestions and problems regarding risk management on the intranet. The other team members including the risk managers would discuss the same on intranet and meetings, to suggest a solution to the issue and mitigate the risk.  

In this scenario, the business operation team members discuss the issues which concern them. There is no control from a senior manager regarding the topics to be discussed, and no permission is required for the same. The flow of information regarding risk management is through multiple channels- team members, business managers, risk managers and CXO’s. The information which an employee has is extensive and he/she is well informed regarding the subject. The perceptions and awareness is built through multiple sources of information.

Collective Intelligence Approach

The problem with the collective intelligence approach can be that employees have extensive information and on what basis will they decide the relevance and applicability of the information. How will the risk management function operate? The adjacent diagram depicts the steps for using collective intelligence in risk management activities.

The main advantages of this approach are:

1)      Risk management department generally faces the challenge of adoption of risk management practices by the business operation team. There are enough people who commence the process, but for implementation a significantly higher number need to be knowledgeable about the issue. This requires focused efforts of building awareness and training. The cost of training and implementation is subsequently quite high. With collective intelligence approach a significant mass of people are already aware and knowledgeable about the issue. Hence, cost and time of implementation is lower.

2)      Whistle blowing is the only option which is allowed to employees to bring a critical issue to light. This has a lot of negative repercussions on the employee, management and organization. With open communication, the employees will be able to discuss the smallest issue of corruption, illegality and unethical behavior without hesitation. Risk of exposure will also inhibit employees from indulging in such practices.

3)      The other aspect is that this approach fulfills the psychological needs of the employees. The approach provides a sense of ownership to the business operation team and this motivates them to implement risk management solutions. The risk managers are adopting feed-forward system by guiding the business operation team into doing what is right in the future. Rather than focusing on providing a critique on what has been done wrong in the past.

4)      This approach encourages innovation and adoption of new ideas. Employees are encouraged to do their own research and revert back with their feedback. They are not told on what they should research on. The diversity in thinking works effectively in providing better solutions.

5)      Last but not the least, a sense of collaboration and cooperation exists between all the departments. It breaks down the walls which managers construct to work in silos.

Do you think this approach is worth adopting for risk management function? Presently, most organizations are adopting the Red and Blue society approaches to risk management. What according to you would be the inhibiting factors for applying collective intelligence for risk management of Green society?

The New Risk Manager

Another point not to be missed is which I think might be the unconscious agenda when I started exploring this concept. It significantly reduces the work and responsibility of risk managers. They can chill!

Welcome your comments on the topic.

Optimism Leads to Delusions?

Since birth, the mantra taught to us about life is optimists do better in life as they think positive, are surrounded with positive people and generate positive energy. The example of the glass filled with some water typifies our thinking. Here are three examples of the statements people make and the general opinion formed by the public regarding the statements.

First person

Statement: The glass is half full.

Opinion: Give the guy an immediate pat on the back for being an optimist.

Second person

Statement: The glass is half empty.

Opinion: Well the guy is a pessimist and has negative thinking.

 Third person

Statement: The glass is half full and half empty.

Opinion: This person is really picky, majorly into specifics.

Most of the successful people are optimists. Optimism gives them self confidence, a belief in their capability to execute a plan and a capacity to vibe well with people.

It is difficult to imagine a pessimist succeeding with life when he/she is always viewing the picture for the shortcomings.

Optimists on the other hand succeed while viewing the positives of the situation. The problem is that more successful an optimist is the likelihood of seeing the negative side decreases. The person starts believing that he/she is succeeding because the negatives of their personality are not really negative. For example, let us say that an optimist boss has a short temper and takes it out on his/her staff. You might hear the boss saying that it is a good trait as the staff is more careful about work.

The optimist doesn’t realize that he/she is succeeding despite the negatives. Hence, they do not focus on working on removing the negatives as they don’t believe they have them. This results in a number of blind spots. They look at it sometimes, when a major disaster occurs. Normally, because of their belief in themselves, they manage to hold the other party responsible for their own shortcomings.

You might be able to observe this, when you see an optimist friend who has married a number of times. The ex-spouse was always the problem. Their belief in institution of marriage doesn’t reduce with time.  Neither do they think that they might be making wrong partner choices or having some romantic notions or impractical ideas of marriage. The option that they themselves may not be ideal spouse material is not going to strike them.

Optimism can lead to delusions which can be fatal for a successful life. You might still be thinking, is it possible. Watch the video “Problem of Coaching Successful People” of Marshall Goldsmith. He is the author of the book- “What Got You Here Won’t Get You There” and is an executive coach. In this short video he has described the four problems of getting successful people to change their behavior.

Mantra for the day is: Obtain feedback, understand your blind spots and work on removing them. Use your optimism to become better rather than blind.

Have a nice week.

Auditing – Food For Thought

I am hungry and desperately need some food. I am contemplating whether to prepare a plain dosa, have a nice paneer paratha, cook a continental breakfast, call for home delivered pizzas or go out and eat. Loads of options. Let me decide while I read these questions on auditing on LinkedIn. Lots of questions are popping up regarding audit planning, audit programs, project execution, etc. Food and audit got linked somehow (blame it on the gender :)) so food has to wait while I write this article.

There are some common practices which auditors follow while executing an audit assignment. Some practices effectively derail the project and quality of the deliverables is yuck. So here goes, my opinion on how to conduct a delectable audit.

Courtsey fotolia.com1.       Audit programs

 When cooking we pick up a recipe, get the ingredients in the quantity mentioned and follow the instructions.

When we want to start a new audit, we look for a Standard Audit Program. There is nothing like a Standard Audit Program and the same practice of cooking can’t be applied to auditing. An organization has specific strategy, mission, vision, culture, products, services, processes, technology and people. An audit program should be prepared after understanding all the components which make the organization unique. One can use prior knowledge and experience to prepare a custom made audit program specific to the business.

 Prepare an audit program after understanding the business of the client properly.

 2.      Audit supervision

Have you observed the cooking in a major hotel? The main chef is present and directs all the junior chefs. He/she is constantly supervising and tasting the dishes. He/she is responsible for ensuring proper quality and taste of the dishes. Isn’t it remarkable that the food on every guest’s table is presented in the same manner and tastes exactly the same?  

For audit supervision we need to follow the same process. Auditor supervisors and managers have a habit of putting their best foot forward at the beginning of the assignment. They are present for planning the assignment, holding the kick off meeting with the client personnel and organizing the resources. Nearing the end of the audit, the supervisors are present all the time to review work, hold discussions with staff and client, finalize the report.

However, their presence is sorely missed in between the project period. Sometimes, the client starts wondering whether the audit is being supervised at all, or is it just the juniors are working on the job. Since the audit supervisor failed to visit the client in between he/she is unaware of the observations and problems. A last minute fire fighting is done to wrap up the audit.

Audits need to be supervised for the duration of the project. Ensure audit supervisors time is allocated for periodic reviews and client discussions.

 3.      Audit staff

 Ever had a situation when you organized a dinner at home for 10 people, and a considerate spouse or family member invited another 10 without informing you. You were enlightened regarding this nice gesture at 6 pm when you had finished cooking the dinner. The party generally gets ruined because last minute efforts are made to organize food and drinks, and everybody feels a little bit embarrassed and uncomfortable.

When an audit project is getting delayed adding staff at the last minute to maintain the deadline is not a good idea. The new staff needs time to understand the client’s business, work in progress and what they need to do to complete the project. The client staff gets hassled with the increased number of people asking basic questions near the end of the assignment. The message which goes out to the client is that these guys don’t know what they are doing and wasting our time.

Think twice about adding new staff at the last stages of the project. It might not be the right solution to meet the deadline.

 4.      Audit work-papers

Courtsey As a sixteen year old when I was new to cooking I decided to figure out a shortcut to cooking vegetables. I figured that my elders were creating unnecessary hue and cry about following the recipe.  I thought, let me put the vegetables to cook, and once they are tender I can add salt and all the other spices. Idea was that I don’t have to be in the kitchen at all. Needless to say, it was a disaster, rather inedible. Mind you, I did try self appreciation to save face but nobody took a second bite.

 I won’t recommend adopting the same method for preparing audit work papers. As auditors, we have to prepare lots of work papers for our observations and as an evidence of conducting the audit. The work papers require a lot of time and energy. We think let us do it at the end of the project rather than simultaneously as we do the work.

The problem with this approach is that critical points of audit are missed since there is no written documentation available for review and understanding. Secondly, as most of the observations, discrepancies and risks are in the mind of the audit staff, some are forgotten by the time of finalization of audit. The other aspect is that if the specific audit staff falls sick or has some emergency because of which he/she can’t attend office, the rest of the team is left in the dark.

Prepare audit work papers as you do the work to avoid dishing out something inedible to the client.

 5.      Audit communication

Have you attended those parties where the music is so loud that one has to shout to get heard? There is no way to have a conversation unless one is directly speaking in the ear of another. I generally come out feeling; I wish I could have talked to so and so about this or that, maybe I will give a call tomorrow. These parties are basically big time mindless bliss; the things which you can do happily are dance to the music and drink yourself silly.

An auditor has to adopt very sane practices while communicating with the team and client. Communication cannot be delayed till the end of the specific step or project. It has to be constantly done to keep the team members and the client personnel on the same page. It is a two way communication here, speak and listen. Listening is crucial to the success of the project.

Lastly, adding numbers to the communication list and sending for your information messages does not help, since it creates a din and message gets lost. So decide in the beginning of the project, who will be communicated what and in what form. Define and formalize the communication channels at the beginning of the project with the stakeholders.

Audit communication is a critical art which has to be mastered. Do it properly without creating to much noise.


My Breakfast

What do you say, are the above mentioned points food for thought? Shouldn’t we be thinking of adopting some good practices and burying some of our bad auditing habits?

Now I am really hungry, am going to have this breakfast. Slurp. You all have a nice weekend. Love, drink and eat 🙂

Cutting Costs in a Positive Way

Ryanair CEO Michael O’Leary grabbed headlines recently by making a statement in a magazine interview- “Why does every plane have two pilots? Really, you only need one pilot. Let’s take out the second pilot. Let the bloody computer fly it”. When asked what would be done in an emergency he replied specially trained flight attendants could assist.

According to him a flight attendant can do a pilot’s job. It saves costs, as a flight attendant’s salary is lesser than a pilot’s. In his viewpoint this is a good way to cut costs and reduce air ticket price for the low fare airlines. I think my sentiments are shared by the general public. Passengers to save a few dollars would not like to lose their peace of mind while flying.

Unfortunately, while making efforts to cut costs and increase profits, extreme measures are taken without viewing the cultural, social, environment and security impact. The biggest line item in a Profit & Loss statement is employee benefits. Most organizations focus on cutting jobs and freezing/ reducing salary and perks. A survey published in 2009 by Challenger, Gray & Christmas, Inc regarding various methods adopted for cost cutting during recession showed the following three top initiatives:

  1. 67% respondents focused on reducing travel expenses
  2. 58%  respondents initiated hiring freezes and reductions
  3. 56% respondents did permanent workforce reductions.

When layoffs are done it has a lot of impact on the organization culture and future profitability. The employees who were working before were doing something. So what part of the work is not required during the recession? Companies fail to bifurcate the job description into critical, necessary and optional activities.  Focus is on reducing the headcount. Instead focus on reducing the optional activities and improving the functioning of the critical and necessary activities. One must remember there are no easy quick fix solutions to cost cutting.

Approach cost reduction exercise after detailed analysis of costs. Study each line item and its components including the loss contributing factors.  Focus on understanding aspects which are reducing productivity, resulting in stock losses, increasing insurance costs etc.  

To show how each element of cost should be studied I am giving some unorthodox examples out here of improving productive work time of employees while reducing costs of the organization. These should be adopted only after undertaking a detailed analysis of the organization culture, requirement and dollar impact.

Restrict/ Disconnect Internet:

This might sound like a backword move on technology but it is worth exploring. IDC study conducted in 2008 shows an employee spends 2.09 hours excluding lunch for non-work related internet activities, 30 to 40% of Internet usage in the workplace is not work-related, while 75% of all Internet porn traffic is done during the nine-to-five Although, human resources department build in one hour of work-time in the salary cost for non-productive usage of Internet, the actual time is double of it.

A good way to start is to assess whether employees need the Internet connections at work or can access be restricted by filtering sites. Secondly, if they are not allowed Internet connection on their desk, will their morale reduce? In Internet is discontinued, an alternative cyber café can be made available to employees to use in their free time. Employees would also be free to use web on personal cell phones. To keep morale high, consider whether any alternative fun activities can be provided which are less time consuming and cheaper.  

Evaluating this option will increase the number of hours the employee is focused on official work. Simultaneously, it will reduce the technology infrastructure costs of providing free net access to employees, reduce information security threats and minimize the risk of employees contravening intellectual property rights of another organization.

Prohibit Smoking:

I am not being high handed out here because I personally do not smoke. You might be wondering how it is linked to productivity and cost reduction.  Some organizations are prohibiting smoking in office and a special area is allocated as a smoking zone. A smoker depending on the smoking habits takes periodic breaks to visit the smoking area in the office. For smoking each cigarette he/she spends around 10 minutes. So a person smoking five to six cigarettes during office hours wastes at least an hour of work time more than a non-smoking employee.

Health insurance costs for smokers are 10-40% higher than non-smokers. As per 2004 study smoker health cost are higher by $17,500 during their lifetime in comparison to non-smokers. A person who quits smoking saves $ 9500 during their lifetime.

Here the suggestion is to prohibit smoking completely in office or if possible do not hire smokers. This will increase productivity, reduce health insurance costs and decrease absenteeism from office for sick leaves.

Keep Paper Towels in Washrooms:

This might be sounding like a completely bizarre idea. Most organizations now install hand dryers in the washrooms to save costs on paper towels while considering the environmental aspects.

A person using a hand dryer takes 4-5 minutes for drying his/her hands, in comparison to less than a minute with a paper towel. An employee visits the washroom around 4-5 times during the day, so ends up spending an extra twenty minutes drying hands.  Hand hygiene study shows that some people go without washing hands for 38 hours at a stretch. You can say yuck again but it is the truth. So if it is going to take more time and effort, the chances of washing hands are less. Lastly, 80% of the diseases are transferable through touch.  

This one simple act, adds to the productive time in office, reduces health risks and consecutively decreases health insurance costs. Ever thought, a simple thing like paper towels could be so critical in office hygiene and productivity.

If the above mentioned measures are adopted by an organization productive work time increases. On a rough average the additional productive work time for a non-smoker is 1 hour and 30 minutes, and for a smoker is 2 hours 30 minutes. Multiply this with the number of employees and average hourly salary cost, the cost savings will be considerable.

The point I am attempting to make is that cost cutting should be an ongoing exercise in any organization. There are unique perspectives from which costs can be viewed. Wear different hats and brainstorm on the various ideas before implementing.

What do you say, does this make sense?

Brand Building of Risk Management Department

“Your brand is created out of customer contact and the experience your customers have of you” – Stelios Haji-Ioannou, Chairman, EasyGroup

The risk management departments are sometimes perceived in negative light due to their role in the organization. The business operation teams view the risk management departments as office police, watch dogs, critics and messengers of bad news. The basic job function of the risk management departments is to:

  1. Conduct audits and reviews of business operations and identify weaknesses, non-compliance and non-adherence issues. This generally negatively impacts the business operation teams as their work is under review and shortcomings are identified.
  2. Ensure compliance to all statutory and legal requirements. This activity sometimes results in business operation team needing to adopt a longer process with more controls and/or sacrifice a specific strategy of earning profits because it contravenes laws. Here risk managers advise sacrificing profits to maintain ethics and laws, which again negates the activities of business operation teams.

The negative image causes a lot of damage to the department and team members. The following reactions of business operation teams are sometimes observed:

  1. Lack of transparency or hiding facts from risk management team.
  2. Obstructing risk management team’s participation in critical meetings and discussions.
  3. Creating political scenarios where risk management teams credibility is put in question.
  4. Ganging up or retaliating against the risk management team at a personal level.

These reactions are driven by emotions of the business operation teams. It is a scenario where the messenger of bad news gets shot. As one senior manager said to me when I was responsible for fraud investigations – “Sonia, your presence in my office indicates to me big time trouble, so I can’t say I am happy to see you. However, as there is trouble and I know it is you who is handling it, it gives me a level of confidence that it will be handled efficiently.” This statement basically indicates the sentiments of most professionals when they see a risk manager in their office. Sometimes the views are so clouded that a risk manager’s professional job and personal personality are considered one, and they are viewed as being critical, ruthless, rude, etc. in personal life.  

These negative emotions build resistance to the risk management department and their work is made more difficult. The need of the hour is for the risk management department to focus on building a positive brand image. The following process should be adopted for building a brand of the risk management department.

1)   Vision & Mission of Risk Management Department

The risk management department needs to position themselves such, that stakeholders and customers view them as value adding agents. The vision and mission statement should be communicated to all the stakeholders and customers to ensure that same message is received by all. This can be done by putting up on the company intranet in text and video. Mass newsletters and emails can be used to convey the message.

2)   Understand customer requirements

The risk management department should do some internal selling to build awareness that business operation teams will benefit from associating and involving them. Organization surveys, group forums and one-to-one in-depth interviews should be conducted of the business operation teams. The purpose should be to understand their requirements from the risk management teams, and their positive/ negative emotions regarding various aspects of risk management. The business strategies and operations should be understood along with personal aspirations of the team.

With this information the risk management team should conceptualize and discuss a method by which they can hand hold the business operation teams in achieving their goals with complete compliance to legal requirements.

3)   Build trust and credibility

The risk management department at some level is viewed with fear and apprehension by the business operation teams. The perception is that the negative points highlighted in the reports will be used as political ammunition to harm the business operation managers. This creates an environment of distrust.

In a risk management department trust is the key component of its reputation. A risk management department perceived as unethical, political and self-serving can damage not only the department but also the organization.

The risk management team needs to first focus on building a non-political independent image which is for the benefit of the organization. Few aspects need to be ensured:

  • Reports issued focus on process shortcomings and are not person specific.
  • CXO’s and other managers do not use the reports to settle their personal political agendas.
  • Develop relationships at all levels of the organization to address employee concerns regarding the reports and their impact.
  • Ensure transparency in the process and obtain buy-in of the business operation teams on the recommendations and way forward.

In nutshell, the department should always be perceived as following the high moral ground and using ethical means to manage issues.

4)   Focus on the bigger picture

The image of risk managers is that they are focused on nitpicking and make mountains out of mole hills. The other aspect is that they do not appear at the CXO radar since the observations are immaterial from the CXO’s standpoint of business. This image is basically formed as the risk management departments are focused on transaction audits.

The risk management department needs to develop a strategic focus and understanding of the business. They need to involve themselves at the point of strategy formation and provide viewpoints for increasing shareholder value while minimizing risks.

The present day organizational challenge is to build a healthy work culture. Risk managers can be key drivers for building an ethical and constructive work culture. They need to develop the core values of the organization and work with organization behavior change management team with human resources department to build a uniform culture throughout the organization.

5)   Reward and recognize accomplishments

The next negative viewpoint of the risk management department is that it is viewed as a department which dishes out the punishments with a stick in hand. People suffer emotionally from the criticism and the management actions taken for implementing the recommendations.

Here the risk management department needs to bring an attitudinal shift in business operation teams. The good things about their operations and positive compliance should be recognized and rewarded.

The risk management department can initiate a formal recognition and reward system with the help of human resources department. The criteria for achieving the key performance indicators should be communicated to the operations team. In some manner a competition can also be set up to check on the awareness of risk management practices and adherence to the same.

Last but not the least, the reports submitted should provide a balanced view. For example, if 20 internal controls checks have been done, and 5 are considered weak. The report should indicate that 15 internal controls are good and only 5 are weak.

To summarize, risk management department to build a positive image needs to ensure that the business operation team experiences with them are favorable and perceived in positive light. They should take care that they are not perceived as selling negative services.

Welcome your opinion on building a positive brand.

We All Have A Bad Boss

I was going through the various groups of Linkedin and seeing the updates of my connections. The one thing which hit me hard was the number of topics about bad bosses and how to manage them. Every person had some experience on how CXO’s/ bosses behave negatively and how to deal with the situation.

I did not see any comment from a CXO saying- “I am a bad CXO and this is my suggestion on how not to do the same mistake”. I didn’t see any message from a regular boss (senior/middle) saying that “Hey, these are the mistakes which I made while being a boss”. Or any person saying “Hey, my boss is nice but I am a bad subordinate”.

With my tongue firmly in cheek, I kind of wondered. Except for fresh employees all of us are someone’s boss and have some subordinates. So how come we have a bad boss and are such good subordinates. And the surprising thing is our juniors are saying the same “My boss is bad, I am a good subordinate”.

I think most of us haven’t reached the CXO level nor are likely to reach. Hence the HR industry is focusing on the rest by showing empathy and sympathy for dealing with the bad boss. This is a good branding exercise by the HR industry to rope in new customers for coaching and mentoring. Nobody likes someone else having authority over them, as kids we didn’t like our parents telling us what to do, and as adults we don’t like our bosses telling us what to do. It is a universal emotional thought process which HR industry is exploiting by giving us a shoulder to cry on.

I am not going to give you 10 steps of how to manage a bad boss. I would recommend reading Scott Adam’s book – Dilbert The Joy Of Work -Guide to finding Happiness at the Expense of your Co-workers. It is one of the books which give profound meaning to working as a subordinate. 

Watch the clip to understand the true meaning of a hardworking employee who has a really bad boss. My heart goes out to him.