Case Study: Finding Direction

Naman Firoze read the letter on his screen. It was a forward of the letter that Anand Mitra, CEO of Gemmet India, had written to his Board of Directors and the management committee, the latter who he had coached the last many years.

Anand had been told by HR to sack their sales head for the poor results that Gemmet had posted. Disturbed and angry by the turn of events, Anand had chosen Naman to share his mind, for in his position there was no one else he could talk to, explosive as the matter was. At the end of the chat, Anand had found the clarity he needed and had then gone on to tell Gemmet’s Board, in a clearly drafted mail and in no uncertain terms, that he could not be party to a decision that was being forced upon him —“A decision that in my opinion seeks to save face for the organisation by simply and coldly pinning the blame for a disappointing performance upon Abhiram” [Murthy, head of Gemmet’s Sales], he wrote in his letter to them.

“Neither am I unmindful of our inability to meet targets fully this year. The results have been a source of anxiety for me too. I see we have been unable and I see some core reasons why we have struggled and failed.” Explaining the sales forecast at 9 per cent over previous year as over-ambitious in the face of the home cleaning products coming under activist gaze for over-toxic formulation — and consequent bad press and loss of their collaboration with Ebertz, Anand recalled for the Board that he had fought to bring down the growth forecast to 5 per cent but he had been unable to resist their pressure to stay at 9. For the Board had felt Gemmet Foods would more than make up through mopping up the huge markets lost by another player in the Ready-to-Cook foods business consequent to some regulatory investigation into their production processes.

Wrote Anand, “To now desire to save face and look good and make Sales and Abhiram the fall guy, is in poor taste. The reasons are all before each of you, right where your conscience is. You can cogitate on all this.

“What is more, nobody thought it appropriate to check with me. This is not the organisation that I have been grooming for 11 years. This is not the way I feel. It pains me to see how desperate we have become to photoshop our image. And this is not how I wish to run the business.” And somewhere in the end, he had added his displeasure at being directed and micromanaged (including who should be sacked) interspersed with “I am the CEO and I am navigating the ship.” And “I don’t want someone to suddenly change my team. Or affect my team in any way.”

Naman could see that Anand was very categoric, leaving no doubt as to where he came from. The end note was assertive, “If this is not acceptable to you, then I resign from the stewardship of this esteemed organisation, wishing to place on record that if blame must be borne, it will be mine.
“I would urge you to find my successor and I would like to leave by the end of the month.”

Naman called Anand. “I read your letter to the Board, which you forwarded to me. Did the Board reply to you?

Anand: They say they are not accepting my resignation.

Naman: And how does that make you feel?

Anand: Oh, well… everyone likes to feel wanted.

Naman: How are you going to leverage this in your negotiation with the Board?

Anand: I don’t know…. I don’t like what is happening. I don’t even think I am going to negotiate.

And Anand once again lapsed into his unhappiness over how the whole thing had been handled. Playing his role deftly, Naman sought to help Anand summarise his goal while also structure his thoughts about what (in his opinion) was really going on. And Anand talked about, ‘I need to learn how to stand up to the Board. I think my mission is much larger – corporates need to learn how to make commitments to stock exchanges….’

Naman needed to help Anand evolve the options available to him. But now Anand was yet smarting from the shock of how the whole thing had come to play out. “I do not see how sacking an individual answers why the performance was poor…. Whatever happened to logical reasoning? Nor do you tell HR to come and tell me to sack someone! I feel trapped, my hands tied, as it were!”

Naman: As an autonomous CEO, what would you have liked to do ideally? What is it that you feel unable to do?

Anand: I do not think Abhiram should be asked to go, I do not think any single function should be blamed for outcome. I do not think that sacking is a solution, because it is reactive, but it still does not tell you where you went wrong. If anything, it only deepens the wrong that you have done. Now if they are asking me to stay on, refusing to accept my resignation, yeah, that is very satisfying to the ego. But right now I am not working from that level of the ego. I am still asking, what is the position of Abhiram. Does he stay, does he go? If he is going, then I am going too. If you are going to keep him back, then I want a dialogue… (he emphasises these words) with the Board and the MC where I want to put down very clearly, how do we manage failure, how do we deal with failure. And that is where I want to come from….

Naman: I see then that you will ask for a meeting or they will call you. One or the other is bound to happen. Who will be at this meeting?

Anand: The Board members and the MC. We need to sit together and talk about: a) What is this failure all about. Is this the failure of the organisation? Is this a slump in the market? Is this our ignorance to see the other forms of eating that people are now opting for, because the significant business that has been affected is the Foods business' Ready-to-Eat foods? Is there some emergence in the foods business that we have missed or failed to give attention to?
naman pondered over what Anand thought was the Board’s role. Did it include trying to run a profitable company? So he said, “Define the conflict, Anand — what is the disagreement about? If the Board is also seeking to run a profitable business like you, then where lies the conflict?”

Anand: There is a conflict not on the ‘what’ but the ‘how’.

Naman: OK… where do you think they are coming from? What is their perspective?

Anand: See, they want profits at any cost whereas I want to achieve that very profit in a humane manner. They want that Gemmet be known as an organisation that is continuously successful, always No. 1. Hence it is this emphasis on what we must be seen as…. this position on the stockmarkets, prices of shares, the glory of the organisation… You can’t have that just because you want it. There has to be a fundamental honesty in managing people. That is where I am coming from. I think long term like an entrepreneur; if I do this hire- and-fire, then I will lose half my talent, but this way I will build people to withstand the long term. I will not be able to make the most of the opportunities when they come if good people are lost like this.

Naman: That’s great. Can you present this in the same manner to the Board? How do you think they will react?

Anand: It may sound weak, limp, but I feel if you don’t manage the people, you cannot win the numbers.

Naman: What you say sounds strong not weak to me… to deliver long term like an entrepreneur shows foresight.

Anand: There is also the ego that operates differently for the entrepreneur and the professional. Professional managers order the brand around. Owners are careful and full of care. The brand is a real persona for them, verily like a child. Professionals feel that shareholder interest can be had by whipping the horse. And Abhiram being asked to go is only one of the manifestations that are clearly visible. But the second thing that is now becoming visible to me is this manner of directing HR to come and tell me to sack Abhiram. So, we see that there is this feeling that HR can be pushed; Abhiram can be pushed and now…? I can also be pushed!

Naman: Power play….?

Anand: It is power play… combined with an ignorance of the changes in the world today. Today, businesses run more by the power of the people. By their attitude, by their feelings; what they bring to the table is much more than their MBAs. Right? In this decade, carrying people along is serious stuff. I know management gurus talk about this. But when you look closely, it is verily a fine dimension of team work, what the Bhagvad Gita refers to as, yagna, where people come together for common good and remain honest towards the common objective. Respect of the team then is integral to the successful outcome.

Abhiram Murthy is not just his qualifications and the 8-9 years he spent in this organisation, yeah? He carries with him a certain capital of the organisation, not just the training, but the feel, the ownership, the way he deals with stockists, the retail, the area sales fellows,... by no stretch of imagination can one brand him as irresponsible or incompetent!

Naman: How easy or difficult will it be to replace Abhiram?

Anand: Is the quality replicable? Can’t say. But they will go to the top drawer placement companies and maybe even offer 10 per cent plus on his current Cost to Company, and get somebody like that. It is not difficult for them. But will the new comer be able to add the same value that Abhi did? My answer is no. But of course, we will all pretend that Abhi is fully replaceable.

Naman: Whether a person is suitable or not, is the CEO’s decision. The Board does not know the individual’s competence or attitude or even what a given job needs in terms of demeanour, attitude.... It is not the Board’s turf to tell the CEO who is competent.

Anand: Right! So, if you feel you won’t find a replacement for me, do you think you will find a replacement for Abhiram? You are right now just hanging an outcome on this peg called Abhiram.

Naman: What would be the implications of your permitting the Board to get involved into the detailed areas of people?

Anand: I don’t let them; they let themselves in!

Naman was now strengthening Anand’s conversation with the Board, helping him draw the lines, which they (the Board) must not cross if they want to keep him back.

Naman then began rehearsing with Anand the likely dialogue that would take place. But Anand was talking…

Naman: You must do what you think is right to do. No one can stop you. The intention now is to attach your effort to a higher purpose as your career goal, should you agree to stay back.

Anand: Absolutely. And with this goal I will serve the remaining three years of my tenure.

Naman: Please define that higher purpose…. What will you be prepared with for this meeting? What will you take with you?

Anand: A plan for the next three years, that covers training in managing crisis without panic and knee-jerk responses that includes both eyeing a rival’s vacated market slot as well as panic forecasting in the face of competitive pressures. Invest in inspirational motivation and intellectual stimulation….

Naman: Let me tell you a story. A start up in e-commerce sector came up with a never-before idea. No precedents, no way to do business forecasts, no way to set realistic financial targets. Nothing. Technology was involved, and nobody knew how to do this business, how to approach customers nothing. The methodology of doing business was yet to be evolved, but it was proposed that the MC cannot be held responsible for output, but you can question them about inputs, if they are doing all the things right.

The problem was — how to motivate / set performance targets for the management team.
The CEO tasked with convincing the Board, is impatient for financial returns. Chairman has made public commitments and is putting pressure, and is seen as unreasonable by the team on the ground.

CEO’s recommendation: For a year-and-a-half, evaluate my team not on outcomes, but on inputs and activity milestones. Don’t let me off the hook; simply change the way you see my performance. This window has to be finite, agreed, but that’s the difference between entrepreneurs and professional managers — entrepreneurs think long term.

Anand: That is quite relevant in my MR right now. Currently our business too is going through a lot of uncertainty. It is not Abhiram’s fault enough to sack him. Test him for inputs, test him for analytics. If Abhiram is doing everything that he is supposed to do, then you cannot hold him responsible.

Damn! I need to be focused on the business now, but look at the energy being spent on all this! Or is this all about telling me that I do not know what is good for the business?

Naman: What distinguishes an owner-manager from a professional manager?

Anand: One can draw a list, but staying with the context, I feel professional management is more driven by being able to show results today. The high is about accomplishment and it also meets the needs of stock options.

The entrepreneur thinks long term, he does not have to meet stock exchange every quarter, he is in the business of building long term value for the family. Employees are pretend owners but it’s not the same as being the owner. The whole attitude is different. Every top man says, ‘I want ownership in my team and so we have a stock option plan...’ What ownership? Does that .00001 per cent assure ownership? But he gives lip and every management likes to say we want our people to feel they are actually owners. Everyone wants them to behave like owners. We want them to behave like owners.

Will an entrepreneur sack his sales head for poor results? Don’t blame the non-performance on one person. The conditions in the market are such that there is a lot of unpredictability as to outcome. But the effort, the input to the business is high. There is no means to measure and evaluate. For example, this new line of e-commerce we are looking at is something that everyone is struggling with. We too are. So, we need to not be reactive.

Naman: Ok, so what do you want to achieve from this meeting?

Anand: It should not create more ripples and drift into name calling. It should make us all see that we are in panic for the wrong reasons. That on a new business path the measures and means are different. That we each need to bring in honesty in attitude to the business. And… it should also get everyone’s buy-in into a new vision for the organisation …

Naman: So, what are you going to say specifically to them? What is your case?

Anand: Yes, I will need help here.

Naman: What do you think should be the first thing you say to them?

Anand: Straight off communicate to the Board that I am willing to meet them for a dialogue; that I am not perched on a high horse….

Anand was relieved with the clarity in his head. As their meeting ended, he thanked Naman and started preparing to write to the Board that he is willing to meet them and talk it over to see what were their thoughts.

As for Naman, he was satisfied. Whether the Board bought Anand’s plan or did not buy his plan, did not matter so much, although he would be interested to know what they said and thought. But what satisfied him was that the impasse that had been created by Anand wanting a certain outcome and the Board wanting a different outcome, had found a meeting ground — his chat with Anand had created doorways for dialogue and understanding between two important management factions.

Importantly, Anand had been able to express, been able to identify, profile, and present the issues that needed addressing. And if despite that, the two sides were unable to see eye-to-eye, that was fine, thought Naman. It was the nature of humans to bear different viewpoints. But humans should try always, at all costs, including the cost of the ego. This opportunity to express was what was good for any organisation. And the ability to allow every man his point of view.

At the end of the day, it was the privilege of the Board to accept or not accept what Anand had to say. Naman now thought about Anand. He was not aggressive as they came; he tended to cut his path and operate there. In any negotiation, your strength came from your willing ness to walk away. In this case, Anand had put in his resignation on the table and they had refused to accept it. And at that stage in his career (where he was not likely to find another assignment anywhere), he was choosing to source his actions from a higher purpose. Naman was only helping strengthen his morale, so that he could always hold his own. That was what Naman was trying to reinforce in Anand.

At the door, as Anand thanked him for unscheduled time and the willingness to drop everything to attend to his moment of crisis, Naman said, “You appear confident about this meeting! Where would you say your strength comes from?”

Anand: The ability to let go, rather, the absence of a burning desire to hold on to the job…. I am willing to walk away. I have nothing to gain or lose. I only want that there be fair play and honesty. And I thank you for helping me sift and separate and extract my purpose….

Read Also: Case Analysis by Atul Mathur | Viju Parameshwar

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