Thursday, April 30, 2009

Who's a better ass?

(Note: This is a copy of the email I'd sent to Mr.Azim Premji, Chairman of Wipro.)

Please allow me to tell you a personal story before making my point.

Recently a bank tracked me down from Delhi(from where I had shifted away 8 years ago) and 
said I needed to settle a credit card debt that was unpaid for 8 years. They were OK with me 
settling the card upto the card limit, even though the accrued interest was way higher.

While I was feeling like an ass to have defaulted on a credit card, I realized the bank was more 
of an ass to have forefeited the interest income for all these years and more so for pressurising me 
to settle now in a downturn when I could have been in a rut myself.

This betrays poor business controls and poor empathy.

Could'nt the same be said of Wipro who "discovers" that hundreds of people are not performing upto the 
mark and lays them off in a downturn - at a time when the job market is already very tight?

Poor cost control;poor empathy. Neither good for shareholders nor for employees.

Even Mr.Jack Welch,ex-Chairman of GE - who was once called "neutron Jack" for laying off people in 
hordes, had a performance review system that weeded out the bottom 10% regularly with the logic that 
it was unfair to wait till people reach their middle-ages to tell them they were not making the cut.

As someone who had extensive relationship with GE and Mr.Welch, you may have a better perspective than I on this.

If anyone needs to be fired now, it's your business leaders who report hoarding the largest of poor performers.

--End of Email--

On second thoughts, there is a perverse incentive for companies to retain hordes of poor performers to be laid off during downturns. Laying off people in large numbers combined with recruitment freeze and "no salary hike" provides the much needed boost in profit margins when the market is tight, leading to headlines such as "Wipro net profit up;sees revenue fall"! 

It's cynical,short-term but shit happens!

2 comments:

  1. mm some thing to ponder about.. if only man had learnt to live with only the things that he "essentially" needs, these would not happen. Corporations are man made and are no exceptions.. when you fall sick, you watch your diet and when you are ok, we freak out.. looks dirty.. but come on who is a saint here ?

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  2. Basically am advocating proactive vs reactive cost control. GE employs 323,000 employees(2008) but they never layoff during downturns citing "performance". Apparently there are some saints and giants.

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