Saturday, August 23, 2014

Drucker on Managerial Psychology

I just loved the below paragraph by drucker from his book Management - Task responsibilities and practices ' He has beautifully articulated the role of psychology in managerial task and how it also if used extensively is nothing but X ,albiet camouflaged.  Find below the exact para as mentioned in the book


"To look for a new set of drives to take the place of the old carrot and stick seems not

only rational but tempting. Such replacement drives are indeed being offered managers in

the form of a new “enlightened psychological despotism.”

Most, if not all, of the recent writers on industrial psychology profess allegiance to

Theory Y. They use terms like “self-fulfillment,” “creativity,” and “the whole man.” But

what they talk and write about is control through psychological manipulation. They are

led to this by their basic assumptions, which are precisely the Theory X assumptions: man

is weak, sick, and incapable of looking after himself. He is full of fears, anxieties, neuro173

ses, inhibitions. Essentially he does not want to achieve but wants to fail. He therefore

wants to be controlled. Indeed, for his own good he needs to be controlled—not by fear of

hunger and incentive of material rewards but through his fear of psychological alienation

and the incentive of “psychological security.”

I know that I am oversimplifying. I know that I am lumping under one heading half a

dozen different approaches. But they all share the same basic assumptions, those of Theory

X, and they all lead to the same conclusions. Psychological control by the superior,

the manager, is possible; and psychological control by the superior, the manager, is “unselfish”

and in the worker’s own interest. By becoming his workers’ psychological servant,

however, the manager retains control as their “boss.”

This is “enlightened” whereas the old carrot-and-stick approach may be condemned as

crassly coercive (and is condemned as such by the psychologists). But it is despotism

nonetheless. Under this new psychological dispensation, persuasion replaces command.

Those unconvinced by persuasion would presumably be deemed sick, immature, or in

need of psychotherapy to become adjusted. Psychological manipulation replaces the carrot

of financial rewards; and empathy, i.e., the exploitation of individual fears, anxieties,

and personality needs, replaces the old fear of being punished or of losing one’s job.

This is strikingly similar to the eighteenth-century philosopher’s theory of the enlightened

despot. As in modern organization today, affluence and education—in this case, the

affluence and rising education of the middle class—threatened to deprive the sovereign of

his carrot and stick. The philosopher’s enlightened despot was going to maintain absolutism

by replacing the old means with persuasion, reason, and enlightenment—all in the

interest of the subjects, of course.

Psychological despotism, whether enlightened or not, is gross misuse of psychology.

The main purpose of psychology is to acquire insight into, and mastery of, oneself. Not

for nothing were what we now call the behavioral sciences originally called the moral

sciences and “Know thyself” their main precept. To use psychology to control, dominate,

and manipulate others is self-destructive abuse of knowledge. It is also a particularly repugnant

form of tyranny. The master of old was content to control the slave’s body.

We are concerned, however, here neither with the proper use of psychology nor with

morality. But can the Theory X structure be maintained through psychological despotism?

Can psychological despotism work?

Psychological despotism should have tremendous attraction for managers. It promises

them that they can continue to behave as they have always done. All they need is to acquire

a new vocabulary. It flatters them. And yet managers, while avidly reading the psychology

books and attending psychological workshops, are shying away from trying the

new psychological Theory X.

Managers show sound instincts in being leery. Psychological despotism cannot work

any more than enlightened despotism worked in the political sphere two hundred years

ago—and for the same reason. It requires universal genius on the part of the ruler. The

manager, if one listens to the psychologists, will have to have insight into all kinds of

people. He will have to be in command of all kinds of psychological techniques. He will

have to have empathy for all his subordinates. He will have to understand an infinity of

individual personality structures, individual psychological needs, and individual psychological

problems. He will, in other words, have to be omniscient. But most managers find

it hard enough to know all they need to know about their own immediate area of expertise,

be it heat-treating or cost accounting or scheduling.

And to expect any large number of people to have “charisma”—whatever the term

might mean—is an absurdity. This particular quality is reserved for the very few.

Managers should indeed know more about human beings. They should at least know

that human beings behave like human beings, and what that implies. Above all, like most

of us, managers need to know much more about themselves than they do; for most managers

are action-focused rather than introspective. And yet, any manager, no matter how

many psychology seminars he has attended, who attempts to put psychological despotism

 

into practice will very rapidly become its first casualty. He will immediately blunder. He

will impair performance.

The work relationship has to be based on mutual respect. Psychological despotism is

basically contemptuous—far more contemptuous than the traditional Theory X. It does

not assume that people are lazy and resist work, but it assumes that the manager is healthy

while everybody else is sick. It assumes that the manager is strong while everybody else is

weak. It assumes that the manager knows while everybody else is ignorant. It assumes that

the manager is right, whereas everybody else is stupid. These are the assumptions of foolish

arrogance.

Above all, the manager-psychologist will undermine his own authority. There is, to be

sure, need for psychological insight, help, counsel. There is need for the healer of souls

and the comforter of the afflicted. But the relationship of healer and patient and that of

superior to subordinate are different relationships and mutually exclusive. They both have

their own integrity. The integrity of the healer is his subordination to the patient’s welfare.

The integrity of the manager is his subordination to the requirements of the common task.

In both relationships there is need for authority; but each has a different ground of authority.

A manager who pretends that the personal needs of the subordinate for, e.g., affection,

rather than the objective needs of the task, determine what should be done, would not

only be a poor manager; no one would—or should—believe him. All he does is to destroy

the integrity of the relationship and with it the respect for his person and his function.

Enlightened psychological despotism with its call for an unlimited supply of universal

geniuses for managerial positions and its confusion between the healer’s and the manager’s

authority and role is not going to deliver what it promises: to maintain Theory X

while pretending to replace it."

Saturday, October 12, 2013

The CHild


On a busy bridge,
A child lying stiff and motionless,
A thin veil of cloth
Substituting as a dress

Hardly a limb flutters in broad daylight
So many who pass by,
Most of whom ignore the sight.

A women besides, begging for alms
Using the child as bait
Expecting pity from all passers by
Not realising there also could be hate (towards the woman)

Trampling upon his childhood by controlling when he sleeps
Denying him his mischief , for in business hours
Who wants to manage if he weeps

If only one can stand a moment longer
And not run away from the feelings that arise
IF only one could take a look at the innocent face
And not act as if doesn’t matter
If he was dead or alive

Saturday, November 5, 2011

Homecoming A Novel

There are authors that wish to impress the audience with the verbosity and there are authors who make the reader connect intimately with the characters they portray in their novels in a lucid manner. Shashi Warrier definitely belongs to the second category in the likes of R K Narayan. Homecoming by warrier is wonderful treat to read. TO state briefly, the main protagonist Javed Sharif who visits his home every year in Kashmir gives a surprise visit on his fathers 84th birthday (setting is in the year 2002) The novel captures the moods prevalent in Kashmir and Javed feels like a second class citizen in his own city due to the rights to question anybody with Police and armed forces. Things turn for the worst when his son is arrested as a suspected terrorist on the day of the B’day. The book explores Javed relationship with his parents, two sons, daughter and his politician brother apart from his relationship with a woman in Bangalore.

As the story progresses, Javeds relationship with every other character changes while he is running around to get his son freed from prison. The author beautifully expresses the emotions that the protagonist goes through as these relationships change - The woman who will not marry unless javed converts his religion, the brother who is no separate from his role, the son in Bangalore who feels he should get more share of business than he gets etc leave Javed utterly isolated at a time when men retire from active life. The strength of a relationship definitely gets tested when times are tough and by the end you wonder whether he feels more of a second class citizen in his state or in his family. Perhaps it’s difficult to make other see a viewpoint when the mind is already made.


 

Tuesday, October 11, 2011

Movement with imperfections

Been a while since I have posted a blog. Somehow, the more I postpone, the more difficult it becomes for me to get back to it, as if length of absence from a task is directly proportional to the difficulty levels of getting back. There have been occasion when I have started writing the blog but not finished and have given it up halfway. This not only applies to my Blog post but inevitably any task that I postpone towards completion beyond a reasonable time frame, be it my personal finances or my learning needs.


This to me is a universal rule of nature. How does this play out in organisations. Somewhere the challenge that I see in the choice between a perfect system/decision and a movement albeit with some imperfections.


I am a great believer in the second choice since movement with imperfections keeps the ball rolling and avoids the trap of nature. The skill is to know that whether these imperfections can be lived/managed with without the system going helter- skelter.

Friday, September 3, 2010

Hanlon's Razor- Version1.1

Hanlon's Razor is a good way to look a events and people

Never attribute to malice that which is adequately explained by stupidity.

A week back it struck me that this razor could be modified to make it more comprehensive to look at events and people and more specifically that the razor cuts through human tendency to malign impulsively rather than to understand. So here goes version 1.1

Never attribute to malice that which is adequately explained by Ignorance.. >

and version1.2

Never attribute to malice that which is adequately explained by immaturity..

Sunday, August 1, 2010

SALES Vs OPERATION

More often than not, Sales and operations are in conflict leveling allegations at each other. Sales alleging that operations do not understand client level issues and urgencies, and operations alleging Sales does not follow the processes laid.

At the heart of the conflict, lies inadequate understanding of each others Role.

Operations is a shared resource. They operate from a underlying approach of

a)serving maximum number of customers in minimum possible time across sales geographies/divisions/regions etc. (within the current capacities).

b) And acting as gatekeepers, guardians of Regulations, Risk etc objectives as laid by business.

Local Sales team (teams/regions/Divisons etc) on the other hand operates in servicing its minimum number of customers (to the company as a whole) in minimum time

To overcome the potential conflicts, SLAs are signed between heads of these department.

But market realities and business objectives dictate that some customers are treated more important than others, hence these SLAs have to be bent.

So Local Sales starts pressurizing ops to bend the rules. What is one exception to local sales team , turn by turn adds to several exceptions to Ops team. For them exceptions become normal routine. Secondly Local sales have their own fires to douse. Hence for them the urgency is paramount although from overall business objectives they may not be of the same importance. Hence pressurize Ops

So Ops find it difficult to judge the genuine from the Non – Genuine exception, hence they react back. Along the way the genuine cases are put with roadblocks.

This leads to Local sales stating that Ops do not understand client issues. Ops in turn states that processes are no longer followed.

The spiral is complete. Is there a way out. Defining Exceptions as laid by Senior Mangement helps. But at the end of the day, a friendly talk with Ops helps understand each other better than any rules laid.

Wednesday, June 2, 2010

Drucker: Relevant Then , Relevant now

Recently I purchased a book by Peter Drucker “The practice of Management”. Having only read him as a student earlier, and now after professional experience of few years, I have come to respect and realize the simplicity and insight of management that only a genius can provide.

Peter drucker comes across more as a management philosopher rather than an expert. Anyone dealing with the dilemmas of management should visit his ideas, and I am sure they would come up with a clarity that they did not possess before reading.

I particularly liked the chapter on structure where every management should look at three aspects - Activity analysis, Decision analysis and relation analysis.

Surely Drucker is as relevant in 2010 as he was in the 1950s.

Saturday, February 20, 2010

HEART OF THE ENTERPRISE : Stafford Beer - Book Review

To my mind, I have classified Organisational Development in 2 broad categories

1. OD dealing with structures systems and processes
2. OD dealing with behaviours and mindsets, anxieties, feelings etc.

Heart of the enterprise belongs to the first genre of OD. The question to my mind while reading the book is can genre 1 intervention be effective without the genre 2 interventions and even if we establish that both are required, the question like the chicken and egg riddle is what comes first.

Nevertheless, a genius can be ignored only at ones own expense and Stafford beer is truly genius par excellence, for what he sets out in the book is a model of viable system. Stafford Beer likes to call himself a cybernertician – a word first coined by Norbert wiener. He defines cybernetics as the art and science of effective management. Cybernetics also means “steersman ship” and since managers themselves have to steer the company through turbulent environment, the definition aptly reflects the role of Managers.

Part 1 of the book sets the tone by discussing the nature of systems and boundaries. The questions raised by the author are equally in the realm of management as in the realm of philosophy, psychology or cognition. Since a large part of systems and boundaries are a subjective phenomenon, the question again to my mind is the process of establishing an agreement on what those boundaries etc. are amongst the senior managers. On one hand a common language amongst managers helps in reaching agreements on common maps, but on the other hand the internal mindsets with its own sets of defensive routines seriously risks the ability to work through them.

The author goes on to state aphorisms axioms and principles, which do certainly enlighten the task of manager and by the end of Part 1 he establishes the role of Management Unit in the scheme of viable model. Looking at Managerial Task as variety handling through its operational element and environment by effectively designing suitable amplifiers and attenuators does provide looking at new ways of handling old problems. Being based in Mumbai, at one level of recursion, Railways could definitely look at handling local train traffic in this perspective.


Part 2 continues in the tradition of Part 1 where question such as what is freedom (computable function of systemic purpose as perceived) and what it is constraints are propounded. But more importantly this part unravels the levels of viable system. The author uses the aid of diagrams to explain these levels without which it is next to impossible to understand viable systems. Here I would want to mention the aspect of Level 5 which deals with closure. At an individual level, closure is provided by conscience, but at an organisational level, the collective conscience of the organization has to be agreed upon which helps the organization to be survival worthy. This is where Management meets philosophy, art meets science.

The effective functioning of viable system within the realms of organization is tackled in Part 3. Question of Measurements, Plans, Recursion and Identity are addressed. In Chapter 11 one of the most comprehensive definitions of Manager I have come across is stated. Having earlier read about Stafford Beers work, I myself have applied his concepts of measurement in my organisational context. The same is mentioned in my blog “

http://sellingretailsales.blogspot.com/2008/07/performance-measurement-application.html

The concept of recursion is also elaborated in this section where only through practice, one can effectively understand at what level of recursion one is operating. The recursion theory is definitely an aid in OD but to count on the book as a prescriptive tool will not help since it is possible that several recursions can be confused and only a larger reading of Stafford beer combined with practice and debate can enlighten the individual reader on recursion.

Section 3 ends with an elaborate exercise on identiy:a dilemma where sharing of mental maps are discussed. This is where the book for a brief interval looks at Genre 2 OD interventions and acknowledges that Managerial suitable style combined with suitable response are a prerequisite for effective Management interventions

I am glad that in Section 4, the author uses the example of a service industry(insurance) in using the viable model for diagnosis since throughout the book manufacturing examples were abundant but not service sectors.
The section deals with the implementation of viability in organisational context. Having myself worked in an insurance industry, I was able to relate with different functions at a more intimate level. At one level the example helps in clarifying all that is mentioned in the previous section, but at another level, more importantly it stimulates the reader to effectively design the viability for his own firm. The book would achieve its purpose if every reader could look at his own organisation from the model described.


Overall, the book is a challenging read for all those who venture, but is also enlightening to all those who have patience and want to work through complexity. Every chapter end with a fictional story “Later in the Bar” which is further aid to understand what has been read.

The question still that remains unanswered is “Can structures induce changes in behaviour that is lasting”. Well the genre 2 OD definitely would definitely answer no.

Nevertheless all models are only an aid to unravelling complexity and the closer the model is to the current realities the better it is. On that count Stafford beer’s Heart of the enterprise is truly an astounding work of art and science for no author has ever so beautifully combined various disciplines to provide its readers with a comprehensive understanding of Management. What also lends credence is that his understanding is backed by serious experiences which he has had in designing organizations.


I would want to end this review with a quote that ended the book and so this review
“Life is a process and not a justification”.

Friday, January 8, 2010

Ideology

Starting the year with one more poem I have penned titled "Ideology". I hope that those who read do leave their frank thoughts on my poem and any suggestions likewise

The mind full of confusion, the heart filled with hate
Spitting venom, without learning to discriminate.

Telling self, “I am right, I am right”
Manipulating oneself to justify the fight

Real feelings lost in a maze of emotions,
Mindless chatter in a haze of commotion

No bridges to build, no seas to cross,
defending the ideology at all costs.

Conversation

A simplistic take on a sales conversation in the form of a doggerel, but I can't resist the dilbert in me and wrote the below lines. M stands for manager and S for subordinate



M: Tell me how many leads have you got,
Have you done as I had thought,

S: I have sent you the MIS, and with them the leads,
I have met those clients and have sown the seeds

M: Tell me will they buy and when will they
And I want to listen to an answer that is my way

S: Some want the stars, some want the moon,
Some want my blood till I reach my doom

M: Guts and Blood , I don’t care
I want to smell the money in the air
I want the cash, I want the honey
If you cant get it, I have to kick your bummy.

S: I will call them up and tell them to buy
If they won’t can I tell you why

M: Why is not What I want to hear,
If you cant do it, let me get you a peer

S: Tell me in our talk, what light have you shed
In the whole conversation, what insights have you led

M: I create a role for myself in this land
If I don’t know what to do
I do what I understand !!

Friday, December 25, 2009

RUTHLESS EXECUTION

In one of the business presentation I read for an organization still struggling to come out of red, the roadmap for 2010 by the management was summed up in two words, RUTHLESS EXECUTION.

This got me thinking about the term ruthless execution within the context of an organization especially one which is trying to get in the black. There are two points that this term evokes in me

1) Firstly, the term presupposes that the business model is fairly robust and the challenge is now in implementation
2) That implementation has to be carried out with military precision, hence discipline the greatest need of the hour.

Great! Certainty is extremely comforting. My concern and the challenge is see is that there is no historical data to state that the model is fairly accurate. Since what has been done in the past with the refining of models has not yielded results, I am skeptical as to the process of arriving at a conclusion that the model is robust.

Secondly, as I strongly believe we work well with emerging realities rather than with designed futures, then the model should always be responsive to change in the environment.

Tuesday, September 22, 2009

Intent and skill

Recently, A question was posed to the HR head on how to deal with non performers and whether line manager could be armed with tools to have an exit mechanism. The HR head rightly said that for handling such tools, the line manager should have sufficient maturity and even then there is always a possibility of misuse.

This got me thinking about how a line manager comes to the conclusion that the subordinate is a non performer and can there be some guidelines to going about.

Well presented in a scenario form, the situations describes possible ways of coming to some conclusion. I have also suggested my ways of dealing with those situations

Be warned that the terms INTENT and SKILL themselves have a high level of abstraction and the manager would have to come with concrete examples in action settings which are a deviation from standard norms.
Also the subordinate has an equal right to provide feedback and has to be listened with an open mind

Scenario 1
- No Intent but is skillful, then Feedback to and from employee on actions and effects and possible redeployment. If it fails, then letting go


Scenario 2 - If intent is there but lacks skill, then Suitable Skill development in shortest possible time or else redeployment.

Scenario 3 -if intent is not there and skill is also lacking, then Evaluation of possible reasons and feedback to and from employees. If still no change, then letting go

Scenario 4 - If intent is there and so is skill, yet business is not happening as per plan, then the business model has to be tweaked.

Saturday, May 23, 2009

Feelings and Poetry

Just sharing my feelings of the current times in the form of a poem

During times of stress, there are multiple voices,
Some relevant and others, mere noises.

Beware, for there are opinions masquerading as insights,
And poor judgements as foresight,
For it is your skill to distinguish the wrong from the right.

This may be the time for action, but so also for contemplation,
This may be the time for aggression, but so also for direction.
For only a sense of urgency coupled with a sense of perspective
Could energise and bring out the creative. (Perhaps the biggest need of the hour)

Saturday, April 18, 2009

Why Some Managers Talk Endlessly

The basis for the above title is on observations I have made where the Line managers have had marathon meetings with their team talking about targets, focus etc etc for hours together. This got me thinking as to the effectiveness of such an exercise and the possible reasons in the mind of the Manager. These meetings are normally characterized by one speaker (the manager) and several listeners (the team) where the same points are spoken in several ways. The listener’s involvement is in normally replying to questions posed by the speaker. The listeners have confided to me about the sheer waste of time and their frustrations with this GYAAN. The manager normally talks on responsibilities of the team, their failings, their commitments on targets (in large part forced commitment) , their improvements, suggestions etc where the frustrations of the manager are voiced out but rarely of the team. There is an implicit pressure for the team to conform to set standards of performance and behaviour

As the title suggest, I am going to attempt in offering a couple of hypothesis by delving into the mind of these managers and also state why these exercises are normally counterproductive to the team. The need to speak endlessly would vary from manager to manager and the hypothesis would cover these broad aspects.


Hypothesis 1 – This Line manager is riddled with anxieties as to how or from where the targets are going to be met. Also there is an implicit pressure on him that the team should be under his control. His anxieties on targets and his fear of loosing control ignite him into action. Since what productive action is not clear to him, the action he normally chooses is in the form of speech where by talking and pressurizing his team, he is in some way able to mitigate his anxieties. The task orientation of the meeting is replaced by mitigation of Managers anxieties.

Hypothesis 2- This line manager is narcissist and enjoys the power that comes along with the authority. Every time he speaks to his team, he gets a high experiencing the power of control as well as the ability to moderate other voices. His endless gyan is got nothing to do with the team but everything to do with himself.

For the moment I can think of these two hypotheses to explain my title based on my observations. Hopefully in future I might be able to unearth more the reasons if they exist.

For the second part as I stated earlier, In most cases during such meetings, the team normally shuts off mentally. The reason being that in all non-participative listening unless the listener is really interested in the topic at hand, he would not be able to concentrate on the talk. Lack of participation is also indicative of lack of concrete agreements, hence all talk is empty. Also if the tone is of admonition, the defenses of an individual rise leading to hardly any scope for change et al.

To end this blog, I would just like to state crudely what Humberto maturana (an expert on cognition) stated - You can only make people see your point of view by emotionally seducing them with you argument and not by appealing to objective rationality.

Friday, March 20, 2009

Mangerial Roles –An example

In continuation with my previous blog, I had discussed the role of Managerial task. I want to take it further by clarifying it with an example from my settings.

Well apart from leadership and drive, there are 3 more areas mentioned by S. Beer – Policy making, decision making and control.

Applying this in the context of lending business, I will take one examples from each of the parameters and explain its requirements. This will be applicable to the business head for the lending business channel.

1) POLICY Making – In a lending business, the business head is part of the risk Policy. Ensuring that the risk policy is not that stringent that it stifles all new business yet is not so liberal that it will lead to higher NPAs and thus affect P&L. The foresight and judgment in this area is critical in impacting bottom-line.

2) Decision Making - Every action in the present is impacting the future directions. Taking decision on what structure will yield the maximum results is a key skill. For e.g. Have I integrated the voice of the market, products, employees, Top management etc in getting the structure in place. Is the DSA model more appropriate for our type of product or would a direct sales team yield better results is one critical area of decision making.

3) Control – Sensing the data from the ambient sounds is an important skill. Within the current environment is my product suited to match the needs of client factoring the competitors? Is the interest rate in line with the market and hence has to be factored in being aligned with the market.

There are several such examples that a Manager has to take in his daily operations and this intellectual capacity and judgment is having a critical role in making the business a success or otherwise. Leadership and drive will only help in keeping the wheels on track but cannot make the vehicle run as per the desire.

Saturday, January 3, 2009

SALARY AND SCALABILITY

There is always a talk in financial services that every one has to justify his or her salary, more so at the frontline sales (being easier to track). But how do people at higher levels look at justifying their salaries or how they envision their critical roles within the firm.

Surely taking the business from ‘X’ levels to ‘X+5’ levels would not justify. Taking from ‘X’ to ‘7X’ with the same resources would really test the Management skills. Now my observation for financial firms is that whenever they want to scale business, the pressure increases on middle Management who get into supervisory roles rather than managerial trying to extract the maximum mileage from sales personnel by heavy supervision and control This might make the team efficient to a degree but the model is still not scalable from the top Management perspective.

The next important question is what is a managerial role and are people in managerial positions especially Top management ( those getting really high salaries) thinking in those lines

Well again I wish to invoke the thought of Stafford beer who described the role of Management as mentioned below

Policy-making, decision-making, and control: These are the three functions of management that have intellectual content. A man may be very good at any two of them, and still make a hash of his job for want of capability with the third. And whatever can be said for the qualities of drive and leadership, which is a lot, these attributes cannot in the long run be expected to compensate for deficiencies in the three-pronged intellectual attack

Guess the above para is self explanatory. Please note that by control Beer means more in terms of feedback and action rather than supervision.

I seriously Hope that intellectual content is given its due importance in organisations over drive and leadership

(The role of middle management has not been sufficiently described my be in the above and would share my views on some another occasion.)

Tuesday, December 16, 2008

Experiencing the Experience

Q) What is the toughest task for a line Manager?

A) Line Managers mental model of experience faced by his sales personnel being a close approximate of the experience as actually felt by the sales person while going about the task of attaining goals.

For any line manager to intervene and suggest changes, be it at the individual or business level, he has to know the experience as faced by his team.

To clarify the above, let me explain with my area of operation.

I was managing a team in Mumbai for an online product, where the Mumbai market was divided in 4 zones. Each zone had a designated sales person handling a given set of relationships with our channel partners viz. Bank Branches Each sales person had roughly the same assigned relationships

It was observed that business in different regions varied widely. South Mumbai was at top and West mumbai ahead of andheri was last. There are a series of question that I went through

1) Do the varying figures be a reflection of Sales persons ability or the inherent nature of market, Hence South Mumbai being on top can or cannot be assigned to Sales person.
2) What is the potential of each relationship that the sales person is handling and should the targets be a reflection of this.
3) What are the right things that south Mumbai person is doing that has led to results.
4) How is individual personalities of sales personnel (including mine) enabling or affecting a “relationship based sales model”.
5) How is the existing business model an enabler or otherwise for sales numbers

I guess there are no easy answers to above question but only choice left for Line manager is to himself be a part of the action and develop appropriate models if he has to meaningfully intervene.

Guess the above para applies at all all levels in corporate hierarchy.

Monday, August 11, 2008

PUSH PRODUCTS VS PULL PRODUCTS

I have been wondering if a marketing firm could design a table for every product or services and classify it in two broad categories – Mainly a push based product or predominantly a pull based one and drill it to show the extent of pull or push in each category. .

The words “mainly” and “ predominantly” being prefixed because all Pull based products would have some element of push and vice versa. Say in FMCG branding is extremely important (pull based) but also a recommendation from grocery shop owner or salesman would add the push element.

What the marketing firm could do is to show the relative extent of PULL or PUSH based products in every category. Not denying that the relative extent of Pull or Push would vary from firm to firm based on various factors.
To take an example, say in Push Based product in financial category – Insurance would have the maximum push, followed by MF, then bonds, etc. As the list would move from left to right, the push element would decrease and pull element would increase. Similarly a pull based product for financial category would have say Home Loans, Vehicle loans, personal loans, gold etc indicating the degree of pull element required.

Alternatively a number line merging the two above categories could show the proportion of Pull and push for each product.

Well you must be wondering how this classification would help. It could help the marketing and sales team to tweak its approach based on these findings and incorporate elements that suit the needs of the category the product belongs to. No use expecting tangential shift in numbers from sales team if the product is inherently pull based, similarly no use spending vast sums on marketing if the product is Push based.

Saturday, July 12, 2008

Performance Measurement: An Application

In this blog, I wish to apply the Performance Measurement I had discussed in previous blog using the aid of a case. I have applied it in my daily area of operations and found it beneficial in understanding performance


Background

A broking firm has a tie-up with two banks a public sector and private sector bank (let’s call them bank A and Bank B) for sales of their trading account. The banks Savings and demat account is linked with the trading account of the broking firm. This linked accounts enables the bank customers to do seamless share trading i.e. On Buying Shares the shares will come directly into their demat without the need for delivery instruction slip. On selling shares money will come directly into their savings account.

Business Models

In Bank A (public sector bank), the client can trade in two forms,
1) Online with usage of his net banking id and password to transfer funds
2) Offline by calling a dedicated Dealer for these bank clients. Here he need not use his net banking id and funds will be automatically debited (in case of share purchase) from his savings account. The dealer even does outbound calling

In Bank B (Private sector) the client can again trade in two forms
1) Online with usage of his net banking id and password to transfer funds
2) Offline by calling a toll free number, but using his net banking to transfer funds before he calls these numbers, without which he will not be able to place his trades. This is only an inbound calling number

In Bank A’s case, there is a possibility of trading without resorting to net banking or need for internet; Bank B clients have no choice of auto debits

Metrics

I am going to use only one metric here to propound on the application of Performance measurement standards.

Activity ratio is one way of evaluating steady revenues.
Activity ratio is defined as no: of customers traded in a month/total number of customers in the channel*100

Performance measurement(PM)

I am going to measure performance using terms used in the previous blog- actuality, capability and potentiality and apply the same framework to one task at hand(please refer to these terms explained in the previous blog)

Bank A- On an average, the Activity ratio hovers around 45%

Bank B -On an average, the Activity ratio hovers around 10%




My analysis for the difference in activity ratio amongst both bank is due to ease of transferring funds and a dedicated dealer for bank A accounting for these figures

Here the figures 10% and 45% stands for actuality

Applying the framework

I am going to use the PM framework on Bank B

My understanding is that capability for bank B is around 15% (based on activities that can be carried out without any disruption of other metrics)

Suppose the management decides that we need to increase the activity ratio. Then I believe the course of discussion would be as follows

Step 1- the productivity ratio should be increased

Productivity ratio (actuality/capability) for Bank B is 0.66


To increase the productivity ratio, a series of activities that can be carried out without hampering other function. These activities could be as follows
1) Telecalling exercise asking clients to trade, by the sales personnel without affecting his sales calls. Say around One hour a day.
2) Demos to inactive clients by sales personnel’s. (Again without dropping sales calls). Within the given constraints of personnel this cannot be a full time activity in the channel and has to be carried out alongside sales calls.
3) Engaging client by sending trade reports. This can be sent from time to time by sales force to keep the client interested
4) A one time activity involving customer care department to carry a telecalling activity finding out reasons for inactiveness and resolving technical issues etc if any. E.g. client must have lost his trading password, net banking not enabled for shopping mall transactions, not having net banking password etc.

.This would definitely increase the productivity ratio up a few points.

The second course of discussion would be what the extent of Latecy is and how it can be eliminated.

My assumption is that Potentiality would be around 55% active ratio( we already see it at 45% in Bank A) Hence to increase and measure performance of activity ratio without disruption on other metrics the management will have to change its model.



Latency (capability/potentiality) currently is around 0.27
Performance (latency*productivity) is around 0.1782

Now I propose the following steps that can be used to decrease latency

1) Bank B also having the option of trading without resorting to net banking. This can be done changing the product in such manner where customers can block fund instead of transferring fund using netbanking. This is already present in the market.
2) A dedicated dealer who not only can place trades on behalf of client but also block funds in his savings account as soon as a trade is placed.
3) Dealer involved in outbound calling and maintaining relationship

There will be an additional cost of dealer and product upgradation but the benefit will far outweigh the cost.

Conclusion

What I have just proposed is framework that helps in not only measuring performance but the direction one can take with these aids. Also the discussion on numbers is far more solid with these tools.

Definitely there are a lot more factors that can affect activity ratio such as market conditions, but the factors apply to everyone uniformly. Also in such a case, the potentiality itself will change without change in performance numbers. Hence absoluteness on measurement would not be valid.

Monday, June 9, 2008

PERFORMANCE LED GROWTH VS PROFILE LED GROWTH

On an average, people with profiles on the revenue side of the organization have more importance within the system than others. Simple rule is the more revenue the department brings into the system, the more its relative importance.

But the next question comes to mind is whether Revenue contribution is equal to performance and should employees be evaluated or promoted based on their revenue contribution or Performance.

One cannot rule out the possibility that certain profiles have an inherent advantage in contributing growth as well as revenue to their organization, primarily due to external circumstances (industry growth, city, policy change etc) rather than the talent of those employees. So, if revenue led promotion is the norm which according to me is in most cases, than talent assessment itself is a myth.

Partly the reason for Revenue Led promotion is the norm is due to the extremely difficult nature of measuring performance. For e.g., unless the understanding and application of Statistical Variation (special and common causes) is not there, one cannot judge two salespersons in different markets/regions based on revenue contribution and pass a decision on their performance without factoring things such as client base, purchasing power of clients, etc. etc.

So is there a way out and more importantly what is Performance. I have come across the closest definition of performance proposed by the legendary cybernetician – Stafford Beer. The explanation in terms of ratios is as below

ACTUALITY/CAPABILITY = PRODUCTIVITY
CAPABILITY/POTENTIALITY = LATENCY

PRODUCTIVITY*LATENCY=PERFORMANCE

(Note: 1) Capability stands for given the constraints, what is the ability of the system?
2) Potentiality stands for, if certain processes/constraints are addressed, what would be the ability of the system? )

The closer the answer for performance is to 1 the more effective the individual, department is.


I admit the fact that determining the capability, potentiality is a itself a complicated task, but the above ratios gives us a framework to measure performance and have a fair evaluation for individual/departments.(as sated above, statistical variation can be good start for measuring sales performance across regions and determining capability)
Perhaps than talent assessment and Performance Measurement systems would lead to a fairer performance led growth.