[I first interviewed Indian company executives in the late sixties in the course of my early studies on industrial technology. In Stanford I extended my knowledge to management across the world. This column was published in Business Standard of 3 July 2000.]
Managers: the make-or-buy decision
I was once visiting
the India International Trade Fair, where I met a German executive. He asked
me why we did not allow his company to set up a subsidiary (this was before the
reforms). I asked him what difference it would make, since his company was in a
joint venture with an Indian company already. He picked up an engineering
product – I think it was a valve. He said, “Ask one of your workers to
disassemble this product and reassemble it to make it work. He would not be
able to, while one of our workers would. Our workers serve a five-year
apprenticeship. At its end a worker is given a lump of stainless steel, and is
required to make a perfect cube from it. That is the kind of training we give
our workers; we would train Indian workers too in the same way if we were given
freedom to organize our business the way we like.”
The point is that
the Germans instil a lot of training into their workers before they induct
them. Most skilled workers would undergo five years’ apprenticeship in a
technical school. All graduates would do a four-year degree. Many would go on
to do a minor doctorate that might take three-four years. This way they create
workers who are highly skilled and versatile before they take them; their
proven ability takes them smoothly upwards.
The Japanese
pattern is slightly different. There they take workers at an early age; then
they train the workers and managers within the firm. But the training is as
rigorous as in German technical schools. The worker is sent from one department
to another. In each he is assigned to a senior worker, who acts as his teacher.
There he is expected to achieve perfection in the job; then he is sent to
another job. The jobs themselves are broadly defined; at a single workstation a
worker may be handling half a dozen machines at the same time. In his first few
years the worker achieves precision and versatility, and thus becomes qualified
for promotion into the ranks of teacher-managers. Again, a meritocracy is created
from which the upper management emerges.
In the French
system, the workers do not necessarily get prior occupational training; many
are recruited straight into jobs after leaving general or specialist schools.
After that they are promoted according to ability. But managers are separately
recruited, usually from universities, and the best from the écoles supérieures,
where they are given a rigorous professional training. Workers seldom make it
into the higher ranks. Within the corps of managers, promotion is a combination
of merit and collegiality.
The British system
is still less structured. Not only are workers recruited from a broad field
without any necessary level of prior training, but managers are equally broadly
recruited without professional training. The interview is the prime instrument
of recruitment as well as of promotion; what counts is an informal assessment
of quality by peers, not training.
The American system
was the same, but has undergone major changes in recent decades. First came the
divisionalization of American management. Departmental structures were replaced
by divisions within a company, each of which was designed to be a profit
centre. In other words, financial responsibility has been pushed ever further
downwards in American companies. As a result, many more managers get
responsibility and have a chance to prove themselves at a relatively early age;
their performance is used to promote them to higher positions. Second and more
recently, the output of MBAs from American universities and business schools
has expanded enormously. All these MBAs do not go into industry; a high
proportion goes into finance and consulting. Still, the American industry
inducts a large number of starting managers who have a broad training in
various areas such as finance, marketing, personnel and strategy.
The Indian system
has been close to the British. The government started many Indian Technology
Institutes – centers of basic mechanical training – with help from Germany and
other countries. Still, most industrial workers come with no prior training.
They can hope to rise to foremen. But managers are recruited separately out of the elite. The IIMs provided a small part of the managers; in the 1990s they
have been supplemented by trainees of other new management schools. But by and
large, managers too come untrained into a company. After that, promotion
follows periodic assessments, partly meritocratic and partly political.
But there is a
difference between the best companies and the others. The best rotate managers
– not workers – through their various factories, departments, and functions;
that way they both raise the quality of the managers and form a solid view of
their ability over time, and use it for promotions. In other words, although
recruitment into the ranks of managers is still haphazard, their movement
upwards is meritocratic. In the worst companies, the promotions are also
political. The practices of a company become immediately apparent when one goes
into a meeting with the managers of a company. The managers of a well managed
company will all speak, and will have views of their own; they will be
obviously used to functioning on their own, and coordination amongst them will
be collegial. In the poor companies, the managers will sit silent, often behind
or away from the Big Boss; they will be focused on him, and follow his every
word. They are not managers, but flunkeys; they do not magnify his power, but
only personify it.
Indian companies
that want to become competitive will, above all, have to change the way they
recruit and train workers. Their productivity is abysmal, and since the
companies are stuck with the workers once recruited, it is in their interest to
invest in the ability of workers. But they will not be able to produce better workers
unless they can train better managers – more confident, more hands-on, more
secure.
