Biz@blaise: Make In India, who benefits

Recent a senior member of the village of Verna which is next to  the largest industrial estate in Goa, stated that the village gets no benefits as even the youth are not getting employment in the industrial estate. With “Make in India” fast becoming a mantra and every State government falling over themselves to attract investors, this issue needs to be looked at quickly; else resulting agitations will have their effect.

Being closely involved with Verna Industrial Estate and also having my origins in the Verna Village, there is an excuse to comment on the situation. I do not agree with my fellow villager. The village is benefiting from the existence of the industrial estate, what is debatable is the kind of benefit they are deriving. However it appears tgey have made a choice. Even turning a blind eye to the happenings is a choice.

Years ago, the Association office bearers were summoned by the Governor of Goa. Goa was then under Governors rule and a few concerned villagers had complained that the industry was affecting the demographic makeup and also having a negative influence on the villagers. The employees of the companies located in the estate were residing in the village and as such beginning to outnumber the local population. They also felt that since there were only men, they were getting involved with the local girls and cases of cheating were reported.

The situation from their point of view has worsened and the causes which at that time were raised as solutions were not and remain unaddressed.

Industry by nature needs manpower. They do not look at where a person resides or is from before giving the job, they look for ability and willingness to do the job. The employee on the other hand prefers a job closer to home. If his home is far away he moves closer to his place of work to avoid commuting. That is why in Goa a lot of ancestral homes are empty in the village as the owners prefer to stay in the city close to schools and workplace.

The employees today come from other States, they get jobs in the Industrial estate and they go to the nearby areas and look for accommodation. For the residents of the nearby areas in this case Verna Village it offets an easy source of income, renting. As demand increases, almost every household begins to first rent the spare rooms inside their house and then build rooms in the open space in the compound to increase the capacity. Some encroach on available  open space and build there.

None of these rooms have adequate sanitation, electricity or water provisions and usually all of them flout the panchayat rules and building laws. As is expected, the occupants work hard in the factory and come and pay the rent to the landlord who I assume is still local. The landlord, earns his money without moving a muscle. If he worked eight hours in a day in the factory he would earn less. Given this situation, can we say that the benefit of the industrial estate in not coming to the local.

The local then argues but these outsiders work for very cheap rates. Assume that this is true. Who is aiding this action, the local? How? They make the cost of the room cheap by adding more rooms, reducing the space and not providing facilities. Then since staying is cheap the employee can accept a lower salary. If the accommodation was not available nearby he would have to go farther away and they the job is not so lucrative as transport cost kicks in.

Assume, that all building bye laws were followed, and then the amount of rooms available would definitely be reduced. The cost would increase as the landlord would have to provide sanitation importantly, FSI would have to be maintained, taxes would have to be paid to the panchayat etc., naturally the employee would then demand a higher salary from his employer. This higher rate may be more acceptable to the local living in the area. If you see the type of outsiders living in Verna, they are mostly working class with no great skill sets, so that means either the locals do not want that job or have a better alternative, currently it is renting.

The other issue that gets raised is social interaction. Having invited the men to stay in your house or compound and then not expecting a social interaction between the men and local women is akin to what Hillary Clinton said to Pakistan leadership, you cannot keep a snake in the backyard and expect it to bite only the neighbours. They are many instances of the women folk eloping and later being robbed and abandoned in the State the male worker originated from. There could also be some happy endings too.

Open defecation causes another major concern. Again if the building bye laws are followed, a toilet within the premises would be a must. If a landlord keeps more tenants, correspondingly more toilets would be needed. Is the panchayat looking at these aspects, are the locals demanding this from the panchayat? Or is it easier to go hammer and tongs at the industrial estate and create and us versus them syndrome and gain brownie points. Why is no one asking what is done with the funds collected from the taxes paid by the industry to the panchayat. Does that money not help develop the village? Penalising people if they defecate in the open or dump garbage is closing the stable door after the horse has bolted. Why not enforce the requirement of toilets?

The situation needs to be addressed quickly across Goa, with the Government working hard to make Goa an aspirational investment destination.

The Reluctant Entrepreneur: Beating Attrition

The last few weeks have been particularly laden with resignations. Possibly the new found hope generated by the “make in India” policy of PM Modi has begun to generate opportunities and new jobs. My early decision not to allow either myself or the Company to be demoralised by a resignation has paid rich dividends. Instead we decided to accept resignations as part and parcel of a growing company and looked at ways to 'resignation proof' the company.

The key to having an attitude of acceptance is the fact that each of us has reached a position of responsibility in the Company where we accept resignations because we have ourselves resigned to take advantage of opportunities in the past. Basically leaving one job and taking up another is part of development of a career and harvesting rich experience. This is beneficially to the Company when it hires a new person with experience, obviously he has resigned from some other place.

The most obvious answer is pay a salary much higher than industry average. The reason this does not hold water is because the best paying companies also have resignations and two if your Company is paying higher than its capacity, you know where it is headed and you will have resignations faster than rats deserting a sinking ship. So paying more or less is not a solution. We have tried the concept of loyalty bonus. We pay a lumpsum at the end of three years if the employee is still working with us, that too is not a foolproof method.

Creating an environment with opportunities for growth and developing a sense of camaraderie through team work. This too will not stop people moving on but one good side effect is that it definitely creates a good environment for the people who are still working in the Company.

I regret having to change one policy that we started with. Initially our appointment letters did not require the employee to give notice when they wished to leave. The logic being, once an employee has decided to change, his commitment and involvement reduces, in such a situation it is better he leaves immediately. However, we now insist on notice period or pay in lieu of same to allow for transition and to ensure our customers are not inconvenienced.

Fast changing technology whose acquisition cost is reducing everyday gives us the best opportunity to beat attrition. Yes if you can afford it, robots would be a high end solution, operations like welding painting are done by robots, for smaller companies this may not be feasible.

What is feasible is using menu driven systems which allow anyone to operate with minimum training. We used to record orders and make invoices manually. When a new person joined it took a while for them to understand the products, variations, customers and most difficult was making an excise invoice correctly, added to that was the complication of sales tax. Often, we used have issues at the border because the tax authorities would stop the vehicle as the CST no was not incorporated in the invoice. Today the story is different, it is menu driven, with drop downs for selection, certain information has to be filled and calculations and printing automated and therefore error free.

So while we cannot stop anyone from leaving we have made the process a little less painful for us and our customers by adopting technology and putting systems in place. These IT driven systems ensure easy training and consistent process. Now the focus is not on retention but on pushing to finds ways to reduce dependency on human intervention and ultimately reducing the issues involved with attrition. Merry Christmas and happy hiring in 2015.

The Reluctant Entrepreneur: Business cycles

Any one watching the price of a barrel of oil dropping will be amazed not just at the speed at which the price is falling but at the fact that just a few months ago, it looked like oil prices could only go up. The very fact that there is not a single story off any entrepreneur hay or any analyst predicting this amazing fall, shows once again the glorious uncertainties of being in business. Business it seems is a lot like cricket, you have to keep your eye on the ball all the time.

Rising oil prices put nearly all business in a spin, transport costs spiraled. This meant imports, exports local buying or selling would take a hit in terms of transport, this automatically pushed prices upwards, and sales took a hit with dampened demand. Nobusiness that would have been laughing all the way to the bank except petrochemical companies. It looked like they were on a roll that was never going to stop. However, today the situation is simply the opposite, oh yes transport costs are yet to come down and no finger pointing to Goa's tourist taxi's, no one is reducing their transport cost, in effect now the shoe in on the other foot.

This brings me to the point that I want to make, every business undergoes these cycles and every entrepreneur has to make a judgment call. More so when the tide is turning against the business. What kind of call. Take and example of a manufacturer of black and white TV's, if he looks at his falling sales graph and believes it is the effect a slow economy he is only fooling himself. This may be very straight forward, but consider the example of a bulb, is the falling sales graph a result of a slow economy or is it the effect of substitutes like CFL or LED lights?

Alternative energy sources would have seen a lot of activity in terms of R&D, setting up of manufacturing facilities for say solar panels and also sales of these products would have zoomed as the cost benefit or payback given high oil prices would be pretty good. Now, that oil prices have cooled customers will relax and defer decisions to buy or replace conventional energy sources. Should entrepreneurs here sell out, shut shop. No, but they will have to be innovative and ride this slump because we do not know when but we know it will happen, oil prices will rise again.

We started selling SHAKTI water tanks way back in June 1996, we had just missed the boom in the real estate sector, added to that was the fact that for the next 4/5 months we would be in the traditional lean season, better know in India as the monsoon. It was only later after spending many a day sad or despondent that we had missed the high season that we realised that it was a good thing.

Missing a high season and good? Well imagine our launch coinciding with the start of the high season (Sept to May) . Within 2/3 months we would have had orders pouring in and the teething trouble that all entrepreneurs have to go thru would have kicked in. Once that happens, and a Company fails to deliver right at the start it is a recipe for disaster. By starting at the fag end we were able to ramp up our production, take control of teething issues and deliver consistently what was ordered. We were battle ready when the next high season came along.

Every business cycle comes with its pro and cons, like a surfer, the important thing is to figure out how to ride it safety to the shore and then head out again to catch the next wave.

The Reluctant Entrepreneur : Risk Management

Recently, I lost a young friend and colleague. He was in your face, larger than life and always positive. There was nothing too wide, high or difficult, everything was made possible. He had a never say die spirit. Yet, he is not amongst us, he moved on to a better place. In an instant. I cannot get the incident out of my head so as I write this I am thinking about him. It is my tribute to him.

No one should be surprised because there are only two things certain in life, Death and Taxes. Taxes we usually have under control one way or another. On taxes we may cheat and possibly get away but not adviseable. Death, why bother we never think about it. It is something that does not happen to me. Right, wrong...it can happen to anyone and anytime. The funny thing is we never plan for it, not consciously and I am being dead serious here.

Years ago, when were being audited for the Rajiv Gandhi National Quality Award, we scored pretty well on many parameters, operations, human relations, financial management etc but we fared quite miserably on leadership. My ego was stung for sure. When the audit team met me, they knew what my question main interest would be but skirted the issue. Finally, unable to contain myself I asked why my leadership scored low and how was it possible then for other parameters to be scoring high.

They explained very nicely that while my management skills were good, they did not see any successor, they did not see anyone being able to run the Company after me. They had asked the question “after Blaise who? The answer they saw was no one. If for any reason I could not make it to work, the Company would totter.

This came as a shock to me, I had never considered anything would happen to me. We did get a commendation award. Corrective action followed. A meeting was organised with the team. They agreed that the Company was important to them too, at that moment. They were working to satisfy their needs and not just to ensure my livelihood. So we decided to make the Company “Boss Proof”. The Company must run even if the Boss is taken out of the system. Today, many years later, we are closer to our goal, closer because the target is always moving.

The key aspect was we introduced systems and ensured decision making was more system or rule based rather than on “bosses” mood. Delegation was another area that was worked on. The problem with delegation is employee turnover. The person you delegate to decides to move on and out. You cannot control turnover but the problem is better addressed with use of systems. With systems in place the new person knows where he fits and can thus get involved faster, proverbial HIT THE GROUND RUNNING. Periodically, the setup needs to be tested, easy the Boss goes on a month long vacation. After returning, the fining tuning has to be done after review and grey areas resolved. This is a continuous process.

It had its benefits, one of our MNC customers was doing an audit and they ask questions related to continuity under different situations. They do not want any situation to occur where they will be left high and dry because the supplier has to stop or close down because the top management was indisposed. They are especially cautious in cases of family owned businesses.

I am not sure if my friend had done such an exercise but it is highly recommend that every business, especially vulnerable SME's undertake a risk audit and put corrective actions in place to reduce or mitigate the risk involved. My friend inspired this article, may his soul rest in peace.  

The reluctant entrepreneur: Legacy Building

Congratulations Business Goa on your sixth anniversary. It is another milestone on your way to creating a legacy. This is an ongoing process, we live and learn. Keeping it going month after month year after year is an achievement by itself, we wish you luck and blessings as you go into a new year. We at GMI Zarhak just completed 20 years and as usual it is a time to look back, refocus and rededicate ourselves to the task at hand, creating a legacy.

The most obvious lesson that comes to mind is actually better explained by the glorious game of uncertainties, cricket. Most great batsmen say that the secret of their success is the fact that they play every ball as if it is their first ball of the innings. They actually practice what the financial ads publish as a disclaimer, the fact that you hit a four of the previous ball is no guarantee that the next one will be a four. So also for any Company. Just because the firm had a good year is no guarantee that the next year will be great. It will be only if a review was done and attention was paid to those areas where problems faced and corrective action taken.

A classic example is brought out by the saying “When Good Sales Hide Poor Performance”. There are often times when sales rise without any effort on the part of the company or despite rude or poor service. This could be due to non availability of competitors products, withdrawing of a competing model etc. This situation could lull the company into a false sense of security and once the competition gets its act together, the customers will switch and it will be too late.

When we entered the market 20 years ago we pushed a new delivery model. We offered dealers an opportunity not to stock. They could call the factory, order the material required, with no minimum and we would deliver directly to their customers. This meant they did not have to carry inventory and that they could use the godown space for other material. This model we developed based on the finding that every manufacturer had a minimum lifting quantity to deliver free to the dealer. If the dealer ordered less than the minimum he had to pay for the delivery. This offered us a gap, an opening, we grabbed it with both hands and this was born our delivery model, JIT no minimum. As orders increased we had to make additions, changes to our process after review to ensure our 24 hr delivery commitment.

Employee engagement or team building is another area that one has to constantly review. Anyone starting will have a very hands on approach. This will mean that the Boss will be in close touch with the employees on a daily basis. As the business grows and spreads, the day to day activities are taken over by others and that contact is lost or weakens. In addition there is attrition and additions as an on going process, that personnel touch/ contact can get lost. For us at GMI, it is the monthly Kaizen meeting where interaction with every employee happens. Team building is an ongoing and continuous process.

Talking of engagement, over these last twenty years one way of giving back to society, a much talked about concept is “INTERNSHIP”. We keep cribbing about the fact that those who pass out are nowhere near the required standard. Yet what do we do about it, easy way out is blame the education system. If we have stated the problem, can we become part of the solution. That solution is to hire INTERNS. Interns are students who come and work in our organisations and when working get a feel of the real world and how it connects to the theory they are learning. This process effectively contributes to making the student a better product once he/she actually finishes school and therefore the hiring organisation has added value to society, given back in a way.

But only charity will not motivate us to hire interns, the question is how will the organisation benefit. It will benefit. Everyday our people focus on day to day activities, there is really no time to stand back and study data generated various activities. Eg while we know what is the rejection level do we hav time to study the rejections and attack the one cause that is generating the most defects, Pareto's analysis or do we have time to do a fish bone analysis to find the root cause. Interns are the answer, they are not concerned by day to day work, they can study the data, make observations on the ground and give the concerned department heads better information to take corrective action, win-win for both.

Old customers do not die they fade away. Just as employee turnover happens in your company, it is also happening in your customers Company. The new purchase manager may not be aware of your relationship as a supplier and having his own connections from a previous experience, he will shift his business elsewhere. It helps if a review is done and old customers are reminded of your presence regularly just in case they have forgotten or the new hire does not know about your product.

There is something we have not done but it is surely on our wishlist. I recently attended the 10^th anniversary bash of Sethu. It was not just a bash, it was a birthday bash with a purpose. It was a great way to connect with the stake holders, and get feedback. Often we get feedback through a survey, in this case the feedback was in the attendance, they are doing a great job and they are doing it right. Maybe at 25 we will have a bash and that will be a fun way of doing a serious job.

Last but not the least is keep scanning the horizon. Is there anything out there which will put you out of business, colour TV's blew B& W's out of the water, as did Maruti to Premier Padmini. The owner of an aluminum tube mfg, believed that lami (plastic) tubes would never replace aluminum tubes. He felt that due to the fear of fakes, cosmetic companies would not switch because lami tubes could be reused. Today, it will be hard to find an aluminum tube being used to package toothpaste. These threats do not have to be another competitor, but it could be another process, another material.....

You could add your own areas to review on your anniversary, but do review so that you will be around at the next anniversary. Happy legacy creating.