Virtual Parliament

Anguished by the washout of the monsoon session of our parliament, Chetan Bhagat has suggested that it is time that we explored the alternative of having virtual sessions of parliament. This is a welcome suggestion that will certainly prevent the culture of holding legislature to ransom.

Such a move will enable all parliamentarians to participate more effectively. Transparency will improve. This will also encourage the legislators to seek the views of informed professionals on various matters without the fear of being ridiculed. Outsourcing for expertise while the ownership will be with MPs will be good for the nation's development.

Parliamentarians used to physical wrangling will not like this idea. But they have no right to practise the dog in the manger policy of neither they will do their duty nor will they allow others to do theirs.

Appointments in Public Sector Banks

Persons from private sector were appointed as MD & CEO and non-executive Chairman of Bank of Baroda. Bank unions predictably criticised the move. The stock market equally predictably reacted by posting a 12% jump in the bank's share just on one day. The price has softened subsequently.

There are merits and demerits in this move. What is astonishing however is the subsequent clarification from the Finance Ministry that the new policy of utilising talents from private sector applies only to the top five PSBs. MDs and EDs of other PSBs will be selected from the pool of PSB officers only.

What could be the rationale for differential treatment of the top five banks? Normally experiments are conducted in smaller organisations and if successful, they are repeated in the larger ones. What the Finance Ministry is doing is counter-intuitive.

Opinion of the Supreme Court

Sometimes, the opinions expressed by honourable judges border on the hilarious. During arguments in the Kerala liquor ban case, the Supreme Court judge, Vikramjit Sen, probed the counsel for the state government and said, "In some States, rice left over from the afternoon is soaked in water and taken the next day. It produces a nice (sic) stupor. So what purpose do you serve with this ban... Where are we going with this ban?"

So what is the message? Unless rice is banned, liquor cannot be banned?

New York Times' report on Amazon

In an address to students of Princeton University in 2010, Jeff Bezos, the promoter cum CEO of Amazon distiguished between 'gifts' and 'choices'. Gifts are what we are endowed with. Choices are what we make of them. He advised that in life choices are more important. He concluded by asking,

"How will you use your gifts? What choices will you make?

Will inertia be your guide, or will you follow your passions?

Will you follow dogma, or will you be original?

Will you choose a life of ease, or a life of service and adventure?

Will you wilt under criticism, or will you follow your convictions?

Will you bluff it out when you're wrong, or will you apologize?

Will you guard your heart against rejection, or will you act when you fall in love?

Will you play it safe, or will you be a little bit swashbuckling?

When it's tough, will you give up, or will you be relentless?

Will you be a cynic, or will you be a builder?

Will you be clever at the expense of others, or will you be kind?"

Bezos emphasised the importance of kindness. It was therefore surprising when The New York Times screamed in the title of an article that Amazon is a 'Bruising Workplace' and went on to quote many employees, past and present, how they cried in their workplace. Bezos' kindness apparently is more in the form of tough love.

John Rossman, the author of "The Amazon Way" had said about Amazon that 'it is the greatest place that I hate to work'. Compared to Amazon, Microsoft is a country club!

Amazon is the most valuable retail marketer with market valuation of $250 billion. Bezos is the fifth richest person in the world. He has made Amazon more nimble and more productive , but harsher and less forgiving. The triumvirate of 'Bureaucracy, Profligacy and Lack of Rigour' is the company's bete noire. 

According to NYT, Amazon believes in 'purposeful Darwinism', survival of the fittest employee on an ongoing basis. Employees have to be at their best every day. Amazon is where overachievers go to feel bad about themselves!

Amazon is essentially data-driven. 'Data is incredibly liberating'. Employees are at once flattered and intimidated by data regarding how they serve the customers.

Even more surprising than the NYT article is Jeff Bezos ' response. He has advised all the employees to read the article and take up with company's HR department if they feel pressured, harassed or frustrated by the company's rigour. He has claimed that Amazon is not what the newspaper describes.

The company's 14 leadership skills are:

Customer Obsession, Ownership, Invent and Simplify, Are Right A Lot, Hire and Develop The Best, Insist on the Highest Standards, Think Big, Bias for Action, Frugality, Learn and Be Curious, Earn Trust, Dive Deep, Have Backbone - Disagree and Commit, Deliver Results

NYT's linkage of these principles to Amazon's practices is interesting:

"Of all of his management notions, perhaps the most distinctive is his belief that harmony is often overvalued in the workplace — that it can stifle honest critique and encourage polite praise for flawed ideas. Instead, Amazonians are instructed to “disagree and commit” (No. 13) — to rip into colleagues’ ideas, with feedback that can be blunt to the point of painful, before lining up behind a decision."

Bezos has disagreed with the NYT portrayal of Amazon and has deplored what he called its portrait of “a soulless, dystopian workplace where no fun is had and no laughter heard” and said, “I don’t think any company adopting the approach portrayed could survive, much less thrive, in today’s highly competitive tech hiring market.”

Which company will accept that it is tough on its employees?

More on "Indradhanush"

The ambitious policy designed by Department of Financial Services in the Ministry of Finance to revitalise public sector banks (PSBs) has been named 'Indradhanush' which means 'the rainbow'. Like VIBGYOR, the new policy contains seven colourful parts. It is claimed by the Department that this is the most significant reform in Indian banking after the nationalisation of banks which took place in the year 1969. (The policy wrongly quotes the year as 1970!)

The parts are creatively named in alphabetical order, ABCDEFG. These respectively are Appointments, Bank Board Bureau, Capitalisation, De-stressing PSBs, Empowerment, Framework of Accountability and Governance Reforms.

Appointments: The post of Chairman and Managing Director (CMD) has been split into two, as is the trend globally to promote better governance. The two posts are non-executive Chairman and MD & CEO. Chairman will focus on policy whereas MD & CEO will look after the operations in a bank. The process of selection to these posts has become 'more transparent and meritocratic'.

Bank Board Bureau (BBB): BBB which is likely to be operational by 1st April, 2016 will be in charge of selection of non-executive Chairmen and Executive Directors of PSBs. BBB will engage with PSBs in formulation of growth strategies. This is a new approach and its effectiveness remains to be seen. BBB may enable all PSBs to become one large 'Learning Organisation' if BBB is able to transmit successful strategies from one PSB to another.

Capitalisation: The policy says, "If we exclude the internal profit generation which is going to be available to PSBs (based on the estimate of average profit of the last three years), the capital requirement of extra capital for the next four years up to FY 2019 is likely to be about Rs.1,80,000 crore. This estimate
is based on credit growth rate of 12% for the current year and 12 to 15% for the next three
years depending on the size of the bank and their growth ability. We are also presuming that
the emphasis on PSBs financing will reduce over the years by development of vibrant
corporate debt market and by greater participation of Private Sector Banks."

It is noteworthy that the government hopes for / is reconciled to reducing role of PSBs in future. Government proposes to fund PSBs to the extent of Rs.70,000 crore in the next 4 years including Rs.25,000 crore this financial year itself.

De-stressing PSBs: Finance ministry intends to take more steps, jointly with RBI, to enable PSBs to improve recovery through better monitoring. Government will facilitate early commissioning of infrastructure projects. All these measures will reduce the stress on PSBs. (In a lighter vein, 'De-stressing PSBs' also means giving less importance to PSBs viewed in the light of previous paragraph. A Freudian slip?)

Empowerment: Government has promised to avoid interference in the working of PSBs. PSBs will enjoy full functional freedom. This is a crucial element of policy that will determine the future of PSBs.

Framework of Accountability: A new set of Key Performance Indicators for top management has been announced. There is 80% weightage for quantitative factors and 20% for qualitative ones. ESOPs for top management is under consideration. Intentions are good. Is it possible to prevent window-dressing by banks? Trade unions which are of course losing their strength and perhaps significance too have already questioned why only the top management should get financial incentives.

Governance: More Gyan Sangams will be held. Strategic initiatives like consolidation will be considered.

'Indradhanush' concludes by saying, "The Indradhanush framework for transforming the PSBs represents the most comprehensive reform effort undertaken since banking nationalisation in the year 1970.
Our PSBs are now ready to compete and flourish in a fast-evolving financial services
landscape."

Finance Ministry has forgotten that banks were nationalised in 1969 and not 1970. 

New experiment in public sector banks

GOI has come up with a new policy called 'Indradhanush' ('rainbow') with a 7-point agenda for public sector banks. One of the points is not to be inhibited by present practice of appointing only public sector bankers as chiefs of such banks.

Many wondered whether executives accustomed to sumptuous salaries would like to serve PSBs. At last, the government has succeeded in roping in P.S.Jayakumar to be MD and CEO of Bank of Baroda which is among the largest three banks in India. Ravi Venkatesan, former Chairman of Microsoft India will be the non-executive Chairman of Bank Of Baroda. This is quite an experiment, having both Chairman and MD from private sector.

Will the experiment succeed? Prakash Tandon who was the first Indian to head Hindustan Lever Ltd. became Chairman and Managing Director of Punjab National Bank in early seventies of the last century. He was not a banker otherwise.Though he tried to change the bank's bureaucratic culture, he was not a roaring success partly because the government control on the bank was tight and unrelenting. The government has now assured that it will not interfere in the functioning of PSBs.

P.S.Jayakumar is not new to banking. As a Citibanker, he was interestingly once the Head of Balance Sheet Optimisation in Asia-Pacific region of Citibank. Optimising the more intractable imponderables in public sector culture may be more difficult. At present, he is the MD of VBHC Value Homes. An M.Com. from University of Madras, he is also an MBA from XLRI, an ACA and an alumnus of London School of Economics.

Unlike Bank of Baroda, PNB, IDBI Bank and Bank of India will not have the benefit of fresh blood from private sector. The experiment in (or with?) Bank of Baroda will be keenly watched.

Words of Wisdom - Independence Day thoughts

Irresistible and chastening thoughts from Pratap Bhanu Mehta:

Never before was such immense possibility held hostage to mightier pettiness, great historical hope stymied by little men.

Independence, it seems, was the project of replacing the shackles of being colonised by the shackles of our own politics.

Time is not a free good. Each year’s delay wastes the prospects of another generation, squanders another possibility.

It is possible that the world is our oyster, but we cannot transcend the narcissism that cannot see beyond the nose.

The party of India’s Independence is also the source of its deepest corruption and monumental stupidities. It acts as if it did not lose the last election, but the election was stolen from it.

Every pathology that India suffers from — a vulnerable banking system to corrupt cricket to the agriculture crisis — has the active connivance of that party. If anything, the brief debate in Parliament reminded us why India was right to boot it out.

The Congress even pooh-poohed one of the rare occasions where India’s industry actually made sense and appealed to Parliament to function. It will be said of the Congress under Gandhi — in victory it displayed corruption and hubris; in defeat, pettiness and destruction. This is the party that carried the flame of independence.

Whatever the prime minister’s politics and psychological makeup is, it is not parliamentary. The PM is incapable of handling an assembly, with its rough and tumble questions.

But you almost get the sense that there are insuperable psychological obstacles in dealing with the Opposition. It also comes from the party’s own narrow conception of strength. It confuses strength with bombast, not recognising that artful compromise can add to strength. Like the Congress, it has also not understood that our besetting vulnerability is declining institutions. No ego, whether it comes from dynastic entitlement or a plebiscitary mandate, can substitute for institutions. The PM could have so easily occupied the high ground. Instead he took the low road and reduced himself to the level of his opponents.

Instead of matching idea with idea, leadership with leadership, tactful coalition with interesting alliances, political adversaries match sin for sin, abdication for abdication, and obstruction for obstruction.

For a brief moment we will enjoy that marvellous spectacle that a Parliament lit up for Independence Day presents. But we will also wonder whether the glitter is there to deceive.

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