Paradox of customer experience: the “Human Element”- Dr. Shashank Shah [Interview]
About Shashank Shah
Shashank Shah is a stakeholder management strategist, researcher, and national bestselling author. He has authored over 100 research-based papers, articles, case studies, and technical notes in peer-reviewed national and international publications in the areas of Stakeholder Management, Corporate Responsibility, Corporate Governance, Business Ethics, Integral Education, Humanized Healthcare and Social Entrepreneurship. He has been a visiting scholar at Harvard Business School and Copenhagen Business School; fellow and project director at Harvard University South Asia Institute; and is a consulting editor with the Business India Group. A TEDx and Talks at Google speaker, he has addressed scores of prominent platforms across academia and industry in India and the USA.
We have the pleasure of welcoming Dr. Shashank Shah today to our interview series. I’m Sumitha Mariyam from the peopleHum team. Before we begin, just a quick intro of PeopleHum – peopleHum is an end-to-end, one-view, integrated human capital management automation platform, the winner of the 2019 global Codie Award for HCM that is specifically built for crafted employee experiences and the future of work. We run the peopleHum blog and video channel which receives upwards of 200,000 visitors a year and publish around 2 interviews with well-known names globally, every month.
Welcome, Shashank. We’re so happy to have you.
Thank you. Thank you, Sumitha.
So moving on to the interview. The very first question I have for you. You’ve had quite a journey. So, can you tell us a little bit about your inspiration? What keeps you going every step of the way?
Yeah. I keep getting asked that a lot. I think it goes back to my belief systems that have played a role in the way I have done my research and all my writings as well. I’ve always believed that corporations have had a much larger role to play in the society than just wealth creation because given their access to resources, both financial resources and human resources they have the potential to positively impact the economy and the society in more ways than one but agree that the factors of production that is land, labor, capital and enterprise need to have their payments, as in land needs to get rent, labor needs to get wages, capital needs to get investment and enterprise, of course, needs to get profit.
But there is a lot more that corporations can do while and after earning those profits. So that has been something that has been kind of my guiding mission statement. I’ve also seen over the decades that, unfortunately, most of the management literature post World War 2, corporate strategies have been equated to war-like situations. So where destroying the competitors is the only way to exist. Business management isn’t a battle because human beings are the very core of the business. They are the ones who facilitate the business. They are the ones who collaborate in order to achieve the end goals of the business.
And hence there is a phenomenal opportunity for corporations to create value for human beings within the organization and outside the organization. Now, how do we get insights into how this can be done? So I looked at two things specifically. I found insights in the ancient Indian literature, of course, there it was focused on the role of a king and how he leveraged his position in order to contribute to the wellbeing of the society, but while he was contributing to societal well being, the means were as important as the ends. Both were meant to be equally noble.
In contemporary times we can say that corporate leaders are like the kings of Yore and hence there’s a lot more they can do while they’re making money and a lot of it. Then I realized that this is not something which is limited to the ancient Indian literature. If one looks at the insights provided by the likes of Chanakia from India, Aristotle from Greece, and even Adam Smith, who is hailed as the father of economics, all of them have the common underlying thing that ethics and economics can coalesce and values and business can go together.
In fact, this is a lesser-known fact that, historically, Adam Smith had written a book called The Theory of Moral Sentiments over a dozen years before he wrote his classic book, The Wealth of Nations, which has guided most of the modern capitalist systems. If people would have given equal importance to both his works, corporations, and economies would have done far better in creating value for themselves and society at large.
So over the last 15 years, as I give you an overview of what has inspired me, I’ve also interacted with over 250 subject experts and industry captains in India, U.S, and Europe on. As a result of these interactions and my own research, my focus has predominantly been on how corporations can create economic and social value to three parameters. One is visionary leadership. Second is stakeholder centric decision making, and the third is inclusive business strategies.
“Corporations can create economic and social value to three parameters. One is visionary leadership. Second is stakeholder centric decision making, and the third is inclusive business strategies.”
So that was an overview of what my research has been, and I think I have been inspired by some of these scholars and leaders in the field of business management, economics, and even history and philosophy.
Well, that’s wonderful. As you talk about what inspired you, you know, we can see how grounded your beliefs are. So that’s amazing. And can you tell us a little bit about your book? The “Win-Win Corporations” now is it related to all of the inspirations that you have had?
Yes, yes, So “Win-Win Corporations” has got to do a lot with whatever I just shared, but I would like to mention about one of the professors has also inspired me and my work. That’s professor Edward Freeman, who is a professor at the Darden School of Business – University of Virginia. He’s often hailed as the father of stakeholder theory. I also had an opportunity to meet him and interact with him. We had a two-hour-long conversation in 2013 when I visited him in person.
At that time he shared something very inspiring, he said, ‘Profits for a corporation are like red blood cells to a human body.’ A human body cannot survive without red blood cells. Similarly, corporations cannot survive without making profits. But does the human body exist for making red blood cells? No. They need to exist for far larger purposes and a far broader vision. Similarly, to say that corporations exist only for profit-making and wealth maximization is equivalent to saying that human beings exist for making red blood cells.
“Corporations exist only for profit-making and wealth maximization is equivalent to saying that human beings exist for making red blood cells.”
Another thing before I share about Win-win corporations is a book that inspired me and I would encourage practitioners and researchers to read that. It’s called ‘Built to last’. It’s quite a famous book. It has been a New York Times bestseller. It was written by two authors, Collins and Porras, at the Stanford Research Institute. And they highlighted the characteristics of what made corporations successful in the long run.
I say that in a way,’ Win-win corporations’ has been inspired by that idea. But it has been down tailed to the Indian context. Now, why Indian Context? Because I’ve taught at several business schools as a visiting faculty and I have realized that most of the syllabi are filled with examples of global case studies. Now all global case studies may not be relevant to the Indian context. So I realized that there is a gap of writing a book, or doing research, or even exploring more and more case studies that capture successfully Indian corporations.
In fact, most of the leading business schools, and in my time at Harvard for about three years, I realized that Harvard has a phenomenal collection of Indian companies. Over 100 case studies on the TATA Group are taught in the leading business schools of the world. But how much of that are we doing in India? So I thought that was a gap that I could fill, and Win-win corporations thereby focused on six companies.
Now, these were selected as a part of my research. It was an extension of my doctorate research in a way so I had done a primary survey. And from that, I got responses from 325 companies and then I shortlisted about 10. And finally, 6 were featured in the book, which is those six? HDFC Bank, Larsen and Toubro, Hindustan Unilever, Bharat Petroleum, Taj Group of Hotels, and TVS Motor Company. As you would see, they belonged to diverse industries.
They have diverse ownership patterns, and they also belong to different times in history, going back almost 14 decades. So you have a very wide variety of contexts in which each of these companies operate. But a caveat is that they have done very well financially, because that’s the first question people ask ‘where’s the money I want it now and a lot of it.’ So one of the first things I mentioned in the first chapter is that these six companies give 7x returns over 20 years earlier when compared to the BSE Sensex but it did more at a deeply strategic level.
What is that? Often business schools teach business like a science. Through equations and economic concepts like the zero-sum game where either party has to lose. So what is the zero-sum game? I win, you lose. You win, I lose. But businesses aren’t a science, it deals with human beings. So it needs to be inspired by other fields of study, like psychology, philosophy, history, and ethics. So I believe that business decision making can be win-win, it need not be you at my cost. It need not be me at your cost. We both can win.
“Business decision making can be win-win, it need not be you at my cost. It need not be me at your cost. We both can win.”
And in win-win corporations, I have captured how these organizations have created value for a broad set of stakeholders, customers, employees, supply chain partners, the natural environment, the local community and society, the government, and sometimes even the competitors. So if you permit me, I can give you two or three examples from the book as they did this win-win bit is part of the strategic decision.
So I’ll give you three examples to show you how win-win is not a fixed formula. It can emerge in several ways. For example, in the mid-1990s, HDFC bank transformed its branches into sales and service outlets by implementing what was not very popular then what was called core banking solutions.
As part of this, what happened was that the drudgery of mundane work was shifted to a back office, so employees could do more proactive and creative kind of work that benefitted the employees. Customers got more involved in participation when they went to branches, so it gave them more satisfaction. And of course, both of these together gave a lot more a lot of money to the company. So the shareholders benefited. It was not just a win-win. It was a win-win-win.
Another example. This is of a public sector company like Bharat Petroleum. They were quite innovative and pioneered the introduction of smart cards or what they called the petro cards and fleet cards. And of course, it’s a pure for sure campaign which promised or assured the customers of the purity and surety of the quality and quantity of the petrol or diesel that is being inserted into the vehicle.
What was the advantage? It gave phenomenal win-wins in the commercial sense and in terms of convenience. In terms of convenience, it gave a lot of benefits to the retail consumers and even to the fleet owners and commercial benefits were for the company because their sales went up dramatically. In fact, HPCL and Indian Oil were inspired by some of these initiatives and they came up with their own brands of cards and even the pure for sure, kind of assurance. It became a big differentiator in the energy industry, which continues to date.
The last example I’d like to give is of Larsen and Toubro. In 2003 the Aditya Birla group divested is the stake. It sold its stake to LNT and it was about 10% which they had interestingly acquired from Reliance under Dhirubhai Ambani. So what happened was, the then chairman Mr. Nair created an employee’s trust out of the stake that was sold by Birla.
Now it was hailed as a grand win-win by national and international experts. How? 1) Because LNT prevented a takeover. There were takeover attempts for LNT. I’ve covered that in the book. Secondly, LNT divested its cement business, which was eventually bought over by the Birlas and it strengthened the employee commitment towards the financial success of the company because the employees became participants in the company’s financial success story because they were given ESOPS and Mr. Nair recalled very fondly that I was given credit for transforming engineers into economists because every single day they were tracking the share prices in the newspapers of LNT.
So it was a phenomenal win-win on all fronts and between 2003, when LNT’s market cap was 6000 crores to May 2019 which was last year when the market cap rose to 2.5 lakh crores, LNT’s value is amplified by 42 times. Some of these decisions are not connected with the stakeholders and the financial success of the company. At the same time, they just don’t give financial success and exploit all the other stakeholders. So, see it’s possible. It is doable, and I’m giving you real examples of companies that you and I worked with, study about, or even have benefited from the products, processes, or services.
Well, that’s very interesting. I mean, it’s not hypothetical. What if Company X did that, company Y would get that. It’s real. So that’s quite interesting.
It is. In fact, I’ve given 84 actionable ways on how companies and entrepreneurs and even startups can become win=win corporations by focusing on 30 characteristics of what win-win corporations are. So the book is very comprehensive. I’ve not just done a pie in the sky kind of analysis and where you go be preachy kind of stuff. No. Because the Gen Z and Millennials and I myself am a millennial. They want proof. They are very idealistic but they want implementable and instrumental idealism and not just utopian stuff. If you give them that, they will take it and just move ahead. They will not just walk or jog, they will sprint.
Yeah, exactly. So that’s really thoughtful of you to write something like that. I think we should all recommend our audience to read and understand it.
Please do. It’s available online in both, Kindle and print formats.
Yeah, that’s wonderful. So moving on to the next question. Let’s shift our focus a little bit.
We would like to know your opinion on organizations moving from a business-centric approach to a customer-centric approach and then to an employee-centric approach? What is your take on that?
Right, So, business-centricity to customer centricity to employee centricity, right? So from that, can infer that by business centricity all the while it meant centricity of money-making and shareholder wealth maximization. Business centricity has not gone. It continues even today. I mean the disproportionate focus on quarter to quarter returns continues to force corporate leaders to think only in the short term.
But by legal nature, as it’s taught in commerce 101 corporations have eternal life. Then why just worry about what will happen to the corporation in the next quarter instead of thinking How can I make this company sustainably successful? So I think that’s one of the first things that corporate leaders need to focus on and are increasingly focusing on though they are still in the minority. But I think the conversation has begun in a very big way, and I’ll share with you a few more as we progress in this interview of why that is.
Moreover, I think customer-centricity and employee centricity cannot be divorced from the core purpose of the corporation. After all, all forms exist to provide value to the customers. Employees are meant to collaboratively help the company to achieve that end. So then to say that you’re shifting from money-making to customer centricity to employee centricity means two things. One is if companies are making that kind of an explicit claim, one is that they’re acknowledging that they weren’t doing things correctly earlier, and second, they continued to make another mistake.
Unlike B-school lectures on marketing, HR, Finance, which are linear, corporate decisions are not linear decisions. Corporate decisions involve multiple functional areas, multiple stakeholders in every decision making. So a company cannot look at any stakeholder or any functional area in isolation. It has to balance all of this, all the time, so I personally believe that employee centricity is important from day one, because employees are not resources to be optimized. They are assets that companies need to build on because they are the core force of what makes a company exist.
“I personally believe that employee centricity is important from day one because employees are not resources to be optimized. They are assets that companies need to build on because they are the core force of what makes a company exist.”
So I think sustainably successful organizations focused on and invested in employees right from the beginning. A classic example and visible standard in India is of the TATA group.Its India’s largest private-sector employer with almost 7,25,000 employees and one of their companies, TATA steel is celebrating 90 years of industrial harmony this decade and that too while operating in a Naxalite hotbed where 6000 people have lost their lives in some form of Naxalite violence and yet not a single person has been from the TATA Steel ecosystem.
Why? Because right from the beginning there has been an immense focus on employee well-being. It’s not something that started now. Even under the British Raj years, they have had some of the best practices connected with employee welfare. Whether it is in terms of the minimum of working hours, or accident compensation, or availability of pure drinking water or sanitary huts, you name it and the kind of things which didn’t exist in the developed countries in the 1900s was already in implementation in TATA Steel.
Moreover, in the 1920s, post World War One, when the steel industry in India suffered tremendously, TATA steel especially because they helped in manufacturing steel for railways. They suffered huge losses and were suggested to shut down the company. But Dorabji Tata, who was the then chairman, mortgaged his wife’s jewelry in order to get a loan from the Imperial Bank of India, which is now the State Bank of India of 1 crore so that he could pay wages to the labor force.
Imagine, mortgaging your wife’s jewelry so that the labor force does not lose their wages I mean, these are types of priorities that Indian companies have given to their stakeholders. Another example, and I will conclude this question with that. In the 1990s, TATA steel was again going through a very tough time. But after liberalization, they decided to ever kind of most expensive manufacturer of steel in the world.
And they realized that they need to change the way they operate on. One of the key things they had to do was cut down the workforce at least half of it from 80,000 to 40,000. And It was going to be very difficult for them to do so. So, they envisaged an employee separation scheme where they gave the employees. the opportunity to earn their salary till their notional date of retirement.
They gave them an opportunity to get medical insurance for them and their family for a lifetime and continue to live in the quarters in Jamshedpur for three years till they find an alternative accommodation base for themselves. So, the industry veteran said that either you have too much money or you have too little brains because nobody gives these kinds of separations but steel said, no, maybe that’s an experiment we’re doing.
Fifteen years later, when Forbes came out with the top 10 best industrial decisions ever in the world, there was only one company from India which featured there. And that was TATA steel for laying off 40,000 employees in an extremely amicable way and also turning around the company to become the least cost producer of steel. And winning the Demming price, which is like the Nobel Prize. So, Employee centricity is not an add on, it is not a tick box item. It is a part of the organization’s culture.
“Employee centricity is not an add on, it is not a tick box item. It is a part of the organization’s culture.”
So this transition from business to customers and customers to employees, in my opinion, is very lopsided. A holistic view would be to integrate all of these into the core of the organization’s function because that’s the way I look at the business. And I think visionary leaders also look at business in the same way.
Yeah, that makes a lot of sense because once you were telling about the example also, it made a lot of sense all of a sudden, you know, it’s like a revelation. It’s not really like it’s gone from here to there. It’s been always there.
And actually, you’re talking about India, which was considered kind of 3 world country in those years, though we were not. So historically, India contributed, to 35% of the global GDP for 1500 years before we were colonized by several countries. So, we were made a 3rd world country but even in those years, those decades, we’ve had some very fine practices.
And moving on to another one of your books, ‘Corporate as a social citizen’. So what is the correlation according to you, between the success of an organization, and its corporate social responsibility?
Right. I think you’re referring to my book ‘Soulful corporations’. Yeah. Soulful Corporations was my first book, which is published by Springer. It’s a little more academic and rigorously researched-based than a practitioner-oriented book. But yet I have tried to keep it as action-oriented as possible, but it basically captures the essence of what is now popularly called corporate social responsibility.
CSR is the very soul or the very purpose of an organization because it enables companies to have an existential purpose, just like a soul inspires an individual to have an existential purpose. Similarly, CSR plays a similar role. CSR is not about charity and philanthropy. Unfortunately today, people look at: Oh, CSR okay, take this much of charity or I’ll write a check. No, it is about how companies do business while discharging their holistic responsibility towards society. It starts right from the time of sourcing of raw materials.
It is when you’re manufacturing your product, How are you doing that? It is about how you’re recruiting from the local human capital pool. It’s about how you’re discharging the pollutants into the environment while you’re manufacturing something. What kind of packaging you’re using, what kind of logistics facilities you’re using until your product reaches the end consumer.
All of this is as much a part of CSR as focusing on a cause like education, health care, women’s empowerment, or rural development. So this is something which I believe what CSR is and have captured in great detail in soulful corporations and have given perspectives both from the Oriental and Occidental antiquity.
I also have emphasized that CSR hasn’t originated in the west and recently imbibed in India. There’s another book by Pushp Sundar that you may want to refer to. She’s done a very detailed study on this, but I’ve built on part of that with respect to the history of CSR. If one got to look at ancient literature, one would realize that for several centuries, the merchant and trade guilds, which are called Mahajans (Hindi: a moneylender) and Mahajans exist even today related to specific trades and areas of business.
They would take up the responsibility of ensuring the well being of the local community in which they’re operating. And this was nothing to do with religions. There are examples of Muslim Mahajans taking care of Jain temples and Hindu Mahajans taking care of Muslim women and children and so many other things. So there was a lot of harmony in society with some of these things brought. Then you had that transition from the Mahajans.
Some of the Renaissance organizations, which took up the responsibility. From there, it went to business philanthropists who through their personal wealth focused on how they could contribute to the well being of the society. We see that even in the West. It happened in a big way in India in the late 1800s, early 1900s from there as corporations took on larger and larger proportion in the Indian scenario, it went towards the corporations as corporate philanthropy. From there, with an increasing socialistic focus of the government.
The responsibility was passed on to the government because the taxation rates became so unmanageable that corporates had no money available for any kind of philanthropy. But after India’s liberalization, that responsibility, what is called social responsibilities comes back to the corporations who what is now famously the CFR legislation, which mandates that 2% of the profits after tax are spent for social welfare.
But I think it’s not about the money part. That’s another thing I’ve highlighted, both in soulful corporations and elsewhere. 2% is not about the money that will be available because it comes to 20-25,000 crores over several causes. No, that 1000 crore per is not going to solve the problems of education, health care, women’s empowerment in India. But what it does is that it has taken the conversations around CSR to the boardroom and some of the finest thought leaders of corporate India are now talking about how they can solve problems of the society, so it has given a lot of Ideas related opportunities for resolving social issues.
Second, It is also given corporations an opportunity to get brand benefits by directly investing in those areas and a smart corporate can do that very effectively. Pharma companies can contribute to healthcare-related causes. IT companies can contribute to education-related causes. Construction companies can contribute to livelihood. Manufacturing companies can contribute to rural development causes because they have their operations in areas closer to the rural population.
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So a lot of brand benefits can be derived and are being derived. For example, in recent times, you see Hindustan Unilever doing some phenomenal work connected to healthcare, sanitation, and hygiene in the current COVID crisis. They derive a lot of brand benefits from that because they have a lot of products in that space. But they are also investing in it as a core focus of their organization.
Another thing connected with HR because you are a platform connected with people and leaders. I think corporations need to look at CSR like they looked at the total quality management revolution. In the total quality management evolution employees were part of the process of how quality standards can be improved, our collective thinking quality, and so many other things on that from the part of the quality revolution.
Similarly, employees can be involved in a very big way in contributing to CSR. We have Social volunteering. But I often say that social volunteering can shift from hour based social volunteering to idea-based social volunteering. Most of the time we have volunteering as these many as per week or these many hours per month?
Can we move to idea-based social volunteering where it has to do with how many ideas people can give or how they can collectively ideate and come to a solution? It’s not about the quantum of money. I’ll give you an example of TVS motor company. TVS motor company’s annual CSR budget is just 10 crore rupees but they have used that as a catalytic process and have positively impacted 5000 villages in the last 20 years.
It’s on record and there’s a book too about. 5000 villages have impacted in five states of India with an annual budget of just 10 crores, which has created more than the kind of impact that companies that have 50x times more budget have been able to accomplish. So I think CSR is not about money. It is about ideas, it is about the transformative role that companies can play in society. And it’s also about how top leadership and employees can engage in very creative ways in order to solve social problems, just like they’re adding commercial value to the economy.
That’s wonderful. I mean, it’s as a fresh perspective that you’ve given there. So that’s amazing and, moving forward the holistic approach to stakeholder management, right?
So what are the three most important stakeholders you focus on and why would that be?
Yeah, So as I mentioned earlier, stakeholder management is not an add-on thing. You don’t say okay after I reach a particular threshold of turnover or market cap, I’ll start focusing on stakeholder. No. It is there from day one. It’s basically about how you make decisions, balancing the interests of diverse stakeholders within your corporation.
I’d like to give a caveat before I answer your question, CSR is no longer utopian or normative. All the expert literature published in some of the best journals like the academy of management. The earlier argument against a stakeholder theory was that it is utopian, is not normative. But it is not just that, it is instrumental it is implementable, and it financially rewarding. And I’m not saying this.
This has been said by the Business Roundtable, which is among the most elite institutions of corporate leaders in the USA. And in the last quarter of 2019, 200 CEOs of America’s leading corporations at the Business Roundtable proposed a new purpose for the corporation. It was a 300-word statement, and that statement did not cover to two or three like your question suggests, it covered five stakeholders that, according to those 200 corporate leaders of America every corporation needs to focus on.
For 20 years, prior to that, the only stakeholder they believed was a shareholder and how companies should maximize the wealth for the show. Now the same CEOs are saying No, we need to focus on five: customers, employees, supply chain, communities, and long term wealth creation for shareholders. So the entire focus has moved from one or two or three to five stakeholders whose interest companies need to focus on.
In the Indian context, I will add three more: natural environment, very vital in a country that is having 10 of the world’s 20 most polluted cities in its own geography. The government, because in India, operations need to proactively need to engage with the government so that they can create win-win solutions because business and bureaucracy, have diverse priorities and a lot of engagement is required. unlike America, which extremely cooperates, focused, and a very proactive proponent of the free market economy.
India is still a mixed economy. So you need to engage with the government and I would add even competitors because, in economies like India, vital industries like telecommunications and energy, which formed the backbone of the existence of the country, lack of private-sector competition can be disastrous. It can add deleterious effects on the economy and the end consumer. So corporations need to be sensitive even to their competitors, in the larger interest of the economy.
So I hope I’ve answered your question and I can give you two examples of companies that have done well and stories are always resonated with viewers. And so I thought I should share two examples One is of Hindustan Unilever’s Shakti Project. It is a case study by some of the leading business schools of the world and also taught in business schools now because global business schools are teaching.
Actual Shakti Project was basically a women’s empowerment project wherein HUL trained women in rural India to become distributors of their products. It wasn’t a social welfare project. Then they did not start with the objective of empowering women. They realized that there is a huge opportunity in the hinterland, which is the media dark region where all their promotion and outreach and logistical channels are not able to create new markets.
So they realized that if they want to reach those markets, they will have to engage with the new set of people. They empowered women entrepreneurs in rural areas with the skills to market and sell HUL products. They also packaged them in much smaller sizes so that they are useful because you and I can buy a 400 rupee shampoo bottle. But that’s not the kind of money available with the rural population.
That’s when the sachet revolution started 1 rupee and 2 rupees sachets for the whole family. They can share in alternation use and similarly with toothpaste and soaps and several other things. So what were the outcomes of? That 80,000 women in 18 states of India became entrepreneurs and became what was called Shakti Ammas. The word came in because the project started in Andhra Pradesh.
And in South India, women are often referred to as Ammas. So, 80,000 shakti ammas in 18 states of India enabled them to reach out to four million rural households in one 1,60,000 villages. So you see what a phenomenal win-win it has led to and how several stakeholders have benefited, employees have benefited, customers have benefited, the economy has benefitted, society has benefited, and of course, HUL has benefited because it has remained the number one FMCG company in the country by a large margin.
Another example is of Tanishq. You must be fond of jewelry. So that’s a woman’s favorite jewelry brand, Tanishq. It’s Titan brand and Titan belongs to the TATA group. They realized that almost 10 years after commencing operations in the early 2000s, Tanishq realized that the suppliers, or the artisans, the karigars were losing eyesight and had neuro problems with their hand and eye coordination because of the poor situations in which they were working.
So what Tanishq thought was, why can’t our suppliers also retire at 60 like our employees? Because they were losing their eyesight and other things by their 40s and they were forced to work as a watchman in metro cities. So they started what was called Kariger Parks and the Mister Perfect Program when their karigars were given air-conditioned workspaces. Uniforms with insurance, with housing facilities, with ID cards just like their counterparts in the IT industries and sectors.
And they were also given wholesome Bengali food and Bengali DVDs and their families were welcome to come and stay there for a week or more because they were all working in cities that were far away from their homes and almost 60% of the karigars hailed from Bengal. So as a result of that they invested 20 crores in establishing karigar parks, almost 10 of them for 1400 karigars and it was phenomenal because that and the process innovation did in these karigar parks led to reduction in wastage from 5% 0.15%.
That amounted to 75 KGs of gold saved in-process loss per year. Well, imagine what that you know a company like Tanishq, a brand like Tanishq, which today contributes to 85%of Titan’s revenue and Titan today is TATA’s second-largest company by market cap. Last year that had a market cap of one lakh crore. Importantly, when the karigars were asked about how they feel about this, and mind you, the karigars are not employees of Titan, they’re suppliers.
So when they were asked how they feel, they said, Wow, I feel great. I’ll now get better marriage prospects because I have more respect in society. So you see how human centricity. It’s not business centricity, customer centricity, employee centricity, or CSR. It is human centricity, which is the core of business because human beings are at the core of the business.
I think among the six Ms of business and I remember our prime minister. Modi had also shared this in the Parliament and I also mentioned this several times even before he sourced it from the same source, he said of the six Ms of business Men or human resources gives value to the other Ms of business, which is money, machine, methods, minutes and material.
The other five Ms of business have no value without human beings which gives value to them. Unfortunately, we try to optimize the others at the cost of the core, which is humans. I would say human centricity is what is most important, whichever way you look!
Well, yeah, that last sentence is what we can conclude all of this answer to.
So we’ve covered most of it. But still, How can we increase employee engagement and, of course, loyalty in an organization effectively? So we’ve covered a lot of it already, with examples and everything right now. But you know, if you can add a little bit more about it, that would be great.
Sure, I’m not someone who says is that metrics are not good, or we should not be doing some of these things proactively and do it more heuristically. No. But we should not limit to that because employee engagement and loyalty is not an add-on. Metrics are important because what gets measured gets done.
That’s what is taught in business schools. And that is true. Whatever is put in your KRAs is what will be given first priority. But these need to be integrated into the organizational culture because Professor Peter Drucker one of the foremost management talk leaders of the last century had very famously said, Culture eats strategy for breakfast. Culture is what is most important that we lead to all of these, including employee engagement and loyalty.
And how can such an employee-centric culture be built? That is a question that companies need to ask. It’s not something that will happen overnight. It’s something that needs to be invested by the top leadership day in and day out, a quarter in and quarter out, year in and year out to who build such an enabling culture, which helps them achieve that broader vision is going to be the core. And I’ll give you an example of one company which I have covered in win-win corporations and in TATA Group and which is a very, very prominent brand of India, which is the Taj group of hotels.
I’m covering them in the context of employee engagement and loyalty because the employees of this company displayed loyalty by giving up their lives for the company. We’re all aware of the terror attacks on the Taj Mahal Hotel in Mumbai on 26/11 and several landmarks in Bombay that year, and In fact, I lost my neighbors in those terror attacks. They were at the Oberoi Hotel, two kilometers from Taj.
And in fact, my mother returned home just in time, half an hour before the terrorist struck the Chattrapati Shivaji Terminus or the Victoria Terminus in Bombay. She reached home in the cab, and the shooting started exactly when she was half an hour before. So I have some very poignant memories of the 26/11 attacks. But what is unique that employee loyalty can lead to despite 1800 people being inside the Taj Hotel that day, only 35 or 36 were killed in there, the casualties would have been 10 times more, easily. But why didn’t that happen?
Why did the casualties just remain 35? Because employees formed human chains and nobody instructed them to do it. There was no training. You cannot train people on how to manage terror attacks. That’s not even taught in business schools. That’s not taught anywhere, because nobody’s going to train you on how to handle a terror attack situation, but they formed human chains and came in between the customers and the terrorist because they were always…
And one more point can become that I’ve interviewed Karambir Kang who was the manager of the Taj hotel, and he was leading from the front when his wife and two sons were getting asphyxiated on the sixth floor of the hotel but he was not focused on how to get them out of the room. He was focused on how to lead so that they could save as many as customers’ lives as they could. So why did this happen?
And Raymond Brickson, the MD of Taj hotels and Mr.Krishna Kumar both of whom I’ve interviewed who was the vice-chairman of Taj. He said that it is because the employees were always thought that ‘Atithi Devo Bhava’ the Indian philosophy, which says that the customer is God. So the employees were always made to believe that these customers who have come on our premises are like God come to our home, so we should do anything and everything to make them happy.
You cannot come to my home and kill my God when I am still around. Supposed to take my life before you can attract my God. So is the kind of passion with which this year these. Secondly, what is important is, and there’s a Harvard case study on this too, is that Taj has always believed in hiring for attitude, not aptitude because they believe that aptitude and training can be given on campus. But changing one’s attitude is very, very difficult.
So they always look for people who are not looking for hopping jobs or are not looking for trivial salary rises but are looking to contributing to an institution and that too Taj, which is now almost 120 years old. Moreover, as an organizational strategy, the employees are always told that they are the customer’s ambassadors. Employees are not the company’s ambassadors, employees are the customer’s ambassadors.
So they should do anything that it takes to make the customers happy. And any decision the employees take at work while they’re dealing with customers and you know how dynamic a hospitality serving role can be. Any decision the employees take, which would make the customer happy. Everybody, all the way to the CEO will back up the employees because they have taken it in the interest of the customer. So that kind of organizational culture and confidence needs to be created in the employees so that they feel that this is a company I would not mind giving my life for. And what did Taj do when they give their life for the company?
Under the COVID crisis, we see headlines of Ola and Uber and Swiggy and several of these companies laying off employees. When heir properties were closed. Taj did not retrench a single employee. In fact, they sent them to other properties so that they could improve their skills.
Taj continued to pay the salary of the deceased employees to the notional date of retirement and the educational opportunity for their family members till they complete post-graduation and they ensured that they paid the healthcare expenses of the people who lost their lives or were injured on and around not just the Taj properties, but everywhere else around Bombay. Other companies may have said that’s not my job.
There’s the government’s job because it’s an attack on the state. It’s not an attack on Taj alone, but they said no, that’s our gesture because we received so much from society will give back. And that further improves employee loyalty that even when I give my life, this company will take care of my family just like I would have if I was alive.
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So when you asked about employee engagement and loyalty, it is these kinds of things which will make the employees loyal, A slight rise in salary or a slight flashy employees title is only going to give temporary satisfaction because then you’d be looking for the next salary raise and the next flashy title, but it is felt like these, which really inspire employees to be loyal to an organization. I have examples from so many companies, but given the shortage of time, I covered something which has several ramifications and then several insights. I hope you found this relevant to you.
It is very relevant and very helpful, actually. That was a wonderful answer. So, you know, Shashank, just to kind of wrap of the interview process.
If you have any last important sound bites that you would like to leave our audience?
Yes, yes, I think two things I would like to mention. I feel extremely fulfilled and satisfied that it’s been 15 years since I’ve been researching, writing, talking about the area of stakeholder management, and this year, which is the 50th year of the World Economic Forum at Davos, the theme of the 50th anniversary of the World Economic Forum is ‘Stakeholder capitalism’. How can capitalism be taken forward with a stakeholder mindset?
As I’ve said, creating value for multiple stakeholders. So it’s a validation of my opinion that a large set of scholars and researchers and authors’ opinions that stakeholders management is the way if corporations want to survive and move towards the 22nd century, which means if you want to survive the next 80 years, we need to look at inclusive and sustainable ways of success because I’m going to give you an important statistic here.
Of the 100 large economies of the world, 69 are companies and 31 are countries, I repeat, of the 100 large economies of the world, 69 are companies and 31 are countries, so the importance of corporations and the way they do business is going to be far more than how governments rule their countries. Because the resources and the size of the corporation, 69 or now it will be 70 or more are companies. And another fact is that we’re not doing things right.
The forest fires in the Amazon forest or the Australian bushfires where 100 crore animals died indicate that we are not doing things right. If we wish to survive as individuals, as institutions, as economies, as ecologies, and as a planet, we will have to balance the interests of diverse stakeholders while we focus on financial success. And means will be as important as ends.
“If we wish to survive as individuals, as institutions, as economies, as ecologies, and as a planet, we will have to balance the interests of diverse stakeholders while we focus on financial success. And means will be as important as ends.”
It was always a message of Mahatma Gandhi, father of the nation, that means an end in the making. So that’s the kind of focus corporations should have. And, who is responsible for that? I think the leader of an organization the leader of the SBU, the leader of the group, at every level leader. His name is leader, but how is leadership looked at?
As the art of getting things done through others. No. The leader has to provide the vision, the leader has to create an enabling ecosystem and culture which enables the people or his team members or his SBU members, or the company at large to achieve that vision and the leader has to lead from the front and walk. These are the core ways in which we’ll be able to make a difference as individuals, as corporations, as an economy, and as a human civilization over the next eighty years of the 22nd century to arrive into this planet’s existence.
And, I have shared lots of more ideas and insights on my social media handles. I’d like to encourage the viewers to go to them. I’m very active on LinkedIn. You can connect with me. Dr. Shashank Shah is my identity on LinkedIn. I’m active on Twitter as well, @DrShashankjshah is my Twitter handle. I have started uploading a lot of short video clips based on my talks and insights on different best practices connected with businesses on my YouTube channel. You can follow me there. It’s again with the name Dr. Shashank Shah. Do connect. Do give your feedback and do share your thoughts. It will be great to engage with you.
And as Sumitha said, all my books are available online, both in Kindle and print format. Whenever we’re relieved of this lockdown, do have a look and give me your feedback because I will be truly benefited from your thoughts, and let’s make this world a better place to live in and make our lives more fulfilling.
Wonderful. Wonderful. Thank you so much for your time and all of this energy for us, Shashank. I really appreciate your time and it’s been the It’s been a total enriching and learning experience for me personally, and I’m sure it is going to help our audience. So let’s keep in touch and have a healthy and safe time ahead of you. Thank you.
Thank you so much. Thank you so much for reaching out to me and for initiating this conversation and for asking some very insightful questions I’d like to thank you and your entire team. Wish you the very best.
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