Creating a sustainable company is possible—companies like Colgate, Apple, Britannia and many others have demonstrated it. In fact, many of these big companies are still growing.
And it isn’t just the top companies; even NGOs like Ramakrishna Mission, Save the Children and Oxfam have withstood the perils of time and are still growing.
The issue is not whether a company is private, public or an NGO. The crux of the matter is to create a sustainable organisation. The decision is destiny. To paint every company or NGO with the same brush is undesirable.
There is a general feeling that all public sector companies are unprofitable and that they need to be sold. However, this notion is far from reality. Companies like Coal India Ltd., BPCL, HPCL, Indian Oil Ltd. and State Bank of India are very profitable and perhaps the best stocks to get hold of to reap a good dividend.
The problem lies in the fact that politicians occupy the roles of trade union leaders and then force the management to take excess people to have a larger vote bank. Even if these companies want to get rid of unproductive workers, they are not allowed to do so. If they were able to, they would perhaps be more profitable.
But it boils down to why some companies remain profitable and sustainable and why others are vulnerable to change and uncertainty.
For over 30 years, I have been researching and working in the domain of Organisation Development and Change Management around the world. My primary research of 52 companies led me to identify some common themes.
Firstly, a company needs to have the ability to handle chaos. We live in a VUCA time—this is volatility, uncertainty, complexity and ambiguity. And VUCA is only slated to increase if the first-world countries continue to ruin the Earth in the pursuit of luxury. Essentially, there is very little genuine inclination to reduce climate change and help save the Earth. But there are companies and NGOs who have survived this chaos and grown—they were more responsible in their practices and knew how to manoeuvre their way without panicking. And they were able to do this only because they had a system in place to mitigate the impact of the chaos. But there were also companies who did not follow any of this—of course, they headed southward.
Secondly, companies need a vision and strategy. In Jim Collin’s famous book Built to Last, he points out that companies that become sustainable have a very strong vision—they defined how they wanted to be seen and what their purpose was. For example, Toyota’s vision is to be the biggest and best car company in the world. Another example is J R D Tata—he started 94 companies, but still created wealth for the country because he defined his organisation’s vision as one that serves the nation.
Thirdly, companies need to focus on building future leaders. The most successful and sustainable companies go to college campuses every year and hire the brightest students—they then groom these freshers to become leaders. In most cases, 50% of these new recruits leave the company, but the commitment of these firms to train future leaders never wanes. Family businesses on the other hand are slightly more skeptical of doing this, but those that follow this become sustainable. And this commitment should be there even in tough times: TCS recruited one lakh engineers during the pandemic. Asian Paints, HUL, NDA, IAS, IPS, etc., every year select bright new talent and grow them. No police commissioner, General in the Army or municipal commissioner is recruited from outside. The prime minister has also been inducting talented individuals from the bureaucracy for the post of ministers.
Fourthly, a great work culture is needed to make employees have job security and also feel engaged in the development of the company. A scientific performance review, rewards and recognitions and a decent salary make the employee feel secure.
Carl Rogers spoke about the need of every human being to grow and prosper—this differentiates humans from other animals. As a management consultant, I have found that many companies do not engage employees in generating ideas to improve the organisation.
Last year, we helped a manufacturing company generate ideas for cost reduction and it saved `9 crore. Similarly, we used design thinking in a consumer product company to generate customer-centric products—this increased their profits exponentially. In a large media company, journalists were unhappy with the annual increments—they returned their increment letters to the chairman. I involved them in a new performance appraisal system; they accepted it and the concept is still thriving. Even some large newspaper companies in the US have adopted this system. Ultimately, the intention should be to use all these techniques to create a sustainable organisation.
Ashoke K Maitra
Founder, Sri Ramakrishna International Institute of Management