Thursday, April 12, 2012

Consequences of Haphazard Management Systems !

Modern terminologies of management are invented by management academicians who work in management schools located mostly in the United States of America.  They routinely invent new terms and terminologies which are fed to the rest of the world through their research papers and books published year after year. Business media further try their part to popularize these.

Taking cue from these leaders of management from the leading country of the world, other modifications and adaptations of management theories keep flooding the information circuits of the world.

In the days when computers began making an impact in the world, those of us who chanced to interact with those gigantic electronic machines using the human understandable machine codes such as FORTRAN and COBOL, soon learnt a fundamental aspect of modern technology with special regard to computers. In those days we used to refer that as ' rubbish-in-and-rubbish-out' syndrome.

In a similar way rubbish-in-and-rubbish-out situation exists in all facets of information including management.

I am not telling that all that is researched and published in the field of management are rubbish.

A good number of Indian brains have contributed to the development of management 'science'. The popularity of the term 'management guru' to denote an expert academician or writer in management is a living example of the Indian influence in modern management.

The management principles and research discoveries that have been introduced to the world under various nomenclature, idioms and personified theories that got evolved from case studies from big money making businesses gave modern management the aura of a super science or philosophy. Management Gurus in the recent past have become so influential in politics and business that they could sell their theories so effectively to the decision makers of most of the countries.

The most remarkable one being their success in  removing the ceilings on individual service remunerations or simply salaries that existed a couple of decades ago. Now those occupy top slot positions in any organization are deemed as the top management personnel and very high remunerations to them are fully justified. This was not the case in the pre-globalization era !

In the past a public company could not have paid very high salaries to the top management personnel the way they liked. There existed some statutory guidelines limiting the pay and perks.

In India, the post liberalization scene greatly benefited the top management people working in the private sector companies. All of a sudden the promoters appointed themselves to the top management slots and began to draw such high salaries never ever imaginable by the common citizens.

Some top management persons of privatised PSUs also benefitted immensely.

Some PSU managers who migrated to the private sector also benefitted as far as their salaries are concerned.

In no time, the ratio between the lowest paid and the highest paid jumped to the order of thousands from the order of tens that existed before.

The best part of the new policy was that the top management could draw enormous amounts as salaries or 'management fees' to a couple of individuals of the company even when the company made no profits !


This logic perhaps came from the interesting philosophy of management which postulated that there is 'nothing absolutely right or nothing absolutely wrong' which in simple terms meant the non-existence management failure or success !

That meant that companies can go ruined or bankrupt under the able leadership of management experts holding positions like the CXO or CEO and the good fortunes that they had siphoned out as management fees cannot be taken back from them for their management failures. Because in management there is no real failure. The situations are all various facets of management !

With this logic, a company could be set up using a small percentage of promoters' money and a larger portion of public money either as bank loans or equity from mutual funds and in a couple of years time a good part of it could be siphoned out to a few individuals holding the top management posts as their salaries. If the company's business became successful by any chance, very good. If it does not, then also it is very good !

The Management of the company has nothing to lose, either way. The losers are the public. They could be the ordinary employees of the company or the ordinary share holders or the mutual fund investors or even the simple account holders of the banks.

The consequences of such a ridiculous management system without proper checks and balances on management accountability are for every one to see.

All at the same time the policy makers allowed the existence of other sectors with administered restrictions of pay and perks.

Is it not an insane policy where a lesser experienced person holding a top management post in a smaller private company drawing a monthly salary equivalent to the yearly salary of a more experienced person holding a similar post and performing a management task at a much more complex environment only because the latter is in a company bound by certain statutory clauses which prevents the latter to draw a salary equivalent or better than the former ?

Had it been a transitional thing which existed only for a shorter period of time, we could have perhaps ignored it as a systemic fault which is unavoidable. But if such an illogical situation is prolonged for decades then the whole society would have to bear the brunt in one way or the other.

For example in India even after two decades, the economy is still in mixed mode. Earlier India had a mixed economy where private and public enterprises co-existed more or less on a levelled playing field. Certain sectors were reserved for the government and there was no competition in those.

But now again it is a mixed economy where both private and public enterprises co-exist and compete each other, but in an unbalanced playing field. The situation is neither favourable to the private sector  nor to the public sector.

It is such a situation that all management principles and theories that got evolved in the west can be either proved or disproved at any one's choice and convenience.

A situation has now come in India where honest and competent public sector managers do not find it rewarding to aspire for the top management posts. Managing the company well is not the task which need to be accomplished in this sector now. A different kind of expertize is needed for this management which is yet to be defined by the management gurus !

At least in one aspect both private sector and public sector companies are on an equal footing. Failure of the company is no more the failure of the top management team- it is either the fault of the employees or the policies.

Because some how the modern management gurus have not yet defined management failure !

Then what is haphazard management ?

Or why should we bother of the consequences ? 

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