Rank Based V/s Peer Based Organizations

RANK-BASED VS. PEER-BASED ORGANIZATIONS

Obviously, an organization designed to be peer based will be very different from its rank-based counterpart. Rank-based thinking suppresses the heart and intelligence of the majority of an organization's employees. Command-and-control managing under the influence of rank-based thinking tends to be harsh, coercive, and demotivating. It is likely to create a poisonous atmosphere in the organization that kills an employee's natural desire to cooperate and be productive. Peer-based thinking rejects rank and supports a different type of organization, one that respects all members of the organization as peers.

The very form of peer-based organizations promotes the heart and intelligence of all employees. The more individual employees participate in decision making, the more their energy and dedication are enlisted by the organization. Allowed to share in business deliberations, individual employees expand their range of concerns beyond narrow self-interest to include a disciplined concern for the well-being of the whole organization. Most rank-based companies discourage the average individual's participation in decision making.

Deprived of a share in business deliberations, individual employees become almost totally absorbed with their own individual concerns and needs. Many rank-based leaders view this as further proof of their need to control decision making. They are blind to how rank-based leadership by nature creates self-centered employees. Thomas Kuhn (1962) said we don't see something until we have the right metaphor to let us perceive it. Most of our mental models, particularly in business, are still rank based. We need a new gestalt.

John Case (1993), in a cover story for Inc. magazine, pointed out that "a twenty-first century company's task will be to organize work so it can be carried out by businesspeople—by men and women who take responsibility and who share in the risks and rewards of enterprise" (93). Ten years later, most companies still have not created this sort of organization. I believe a main reason for this failure is the absence of a proper understanding of rank-based versus peer-based thinking. When a leader tries to share decision-making responsibility with others but fails to address the underlying rank-based thinking, any positive results will be short-term. The long-term results will include an increase in employee cynicism and an increase in rank-based control.

From: The Myth of Leadership

Jeffrey S. Nielsen

Davies-Black Publishing

Published by Davies-Black Publishing, a division of CPP, Inc., 3803 East Bayshore Road, Palo Alto, CA 94303; 800-624-1765.

Tranquility in the midst of disturbances

All around us, if you examine, countries are facing a very turbulent today.

Pakistan is in flames due to the untimely sacking of its Chief Justice. The Musharraf regime is faced with violence all over the country with political pundits predicting his fall in the very near future. People seem to have had enough of the dictatorship. I think one of the reasons that Pakistanis tolerate the dictators is that they bring along with them American Funding (due to Washington's strategic interest in the region) that basically keeps the country alive and kicking. Having achieved freedom at the same time as India, Pakistan's industrial progress makes for sad reading. The establishment is now resorting to gaging its people even placing a ban on blogs published by the locals. This points to a systemic failure of the state.

Look east at Bangladesh and you have a caretaker government in place. It seems that violence between the two dominating political parties is the natural thing to do. Up north, you have the troubled state of Nepal which has witnessed a complete breakdown in its law and order and down south, Sri Lanka is in the grip of strife caused by the LTTE.

Amongst all this we seem to be in a sea of calm. It seems that the democratic process has taken deep roots in the collective psyche of the nation. With the transfer of power happening in a smooth manner in one of the largest states of the country, UP, it seems that all is well with the democratic process.

Now all we need is for the thinking people to participate in the democracy in an active manner such that the rotten scum of existing politicians are replaced with right people.

Right people who take the country forward.

Strange Case of Mahajan V/s Mahajan

It is almost a year since Pramod Mahajan died at the hands of his own brother Pravin Mahajan.

Pravin Mahajan shot his brother in cold blood in a premeditated attempt on his life. Immediately after shooting him, he went and surrendered to the local police and also gave up the weapon of crime.

Now we read about the trial on a daily basis. Is this not a fit case for speedy disposal? Why is the court interested in hearing the testimony of witnesses produced by the defence? Why has Pravin Mahajan pleaded not guilty? If Pravin did not shoot and kill Pramod who did?

From what has been reported in the media, it is an open and shut case and Pravin should be punished as soon as possible, rather than allowing the trial to drag. Justice should not only be done but should also be seen as having been done and swiftly at that. Only such an action will allow people to once again repose their faith in the judiciary.

Credit card cos make extra (Rs 6000 Crores) bucks Mumbai:

Credit card cos make extra (Rs 6000 Crores) bucks Mumbai:

You always knew your credit card company was charging you an exorbitant rate of interest for the convenient mode of payment it offers. But were you ever tempted to figure out how much “extra’’ these companies have made from people like you in, say, the last ten years? Well, don’t rack your brains. For the Credit Cardholder’s Association of India has worked out some chilling numbers for you. According to the association, these companies have made at least Rs 6,000 crore extra from credit cardholders in India in a span of ten years, through “hidden charges’’ such as overdraft fee, late fee, cash advance fee among others.

“We have studied the interest income and non-interest income columns in the balance sheet of many banks for a period of ten years. We have found that non-interest income is 10-15% of the gross income in the case of national and private sector bank in the country. When we studied foreign banks, we have found that the non-interest income forms 50-60% of the gross income for them.’’ Says CV Giddappa, general secretary of the association. “The figure is highly suspicious. We think these banks have made this extra money by keeping various charges hidden from the customers at the time of joining,’’ he added.

The association is planning to call for a general body meeting on May 28 in Bangalore to decide its future course of action. “Our delegates will meet and decide whether we should approach the supreme court to ask for refund of these extra charges levied by the bank,’’ said Giddappa, who claimed Indians pay the highest rates of interest on credit cards in the world.

Foreign banks, however, refused to join the issue. “We don’t have details to comment on the issue. Anyway, it is too general for us to comment,’’ said an official at a foreign bank. Another foreign bank official refuted the claim that Indian pay the highest rate in the world. “It is well known fact that countries like Argentina and Brazil have the highest rate of interest in the world. Also, the argument of hidden charges is not true. Details of all charges are given to the customers. In fact, they will get details of these charges through net, credit card bills,’’ said the official.

According to financial experts, interest rates on credit card is always highest because of the possibility of default on them. “If you get into the habit of rolling on a credit card, you may in all possibility would fall into a debt trap. In fact, in theory, you could go on paying forever if you opt to pay only the minimum amount due every month,’’ said a financial advisor. Check the fineprint before applying for a credit card

Mumbai: Recently, a 49-yearold Mumbai consumer reached her bank ATM to find that her account balance of Rs 42,440 was reduced to a mere 0.94 paise. When she contacted the bank’s 24-hour customer care number, she was told that the amount had been adjusted against her credit card outstanding. “This has really shocked me as there has been
no intimation whatsoever from the credit card department to this effect,’’ she says.

In order to avoid a shocker of this sort, the next time you get a credit card offer from your bank, you must must go through the fineprint minutely before signing up. Such offers could carry a “right of setoff ’’ clause, which allows banks to set off outstanding credit from any of the cardholder’s accounts held, singly or jointly, with the bank—without any notice.

The Mumbai consumer, too, remained unaware about the clause because, she says, “when you apply for a card, you just sign on the form, you don’t really read it.’’ Her grouse is that the clause could have been invoked in case she were absconding. “But the recovery agents were constantly in touch with me and I had informed them of my intentions to pay up.’’

Says H N Sinor, chief executive at the Indian Banks’ Association (IBA), “Banks do not immediately invoke such a clause. Bankers prefer that you do not pay the first time so that interest accrues. A two- threemonth delay in payment is considered good business for a bank. Only after three-four reminders, do banks trigger such a clause.’’

According to Sinor, if a bank plans to invoke such a clause, it does not require to send across a specific notice to a customer, as “the mandate is already obtained upfront’’.

A senior banking consultant, though, deems this a malpractice. “Banks must send one or two notices to a customer to give him an opportunity to pay up, as he may have kept the money aside for other purposes.’’ Like, the Mumbai consumer who needed the sum to pay her medical bills. “If at all an amount is to be adjusted, it could have been only the immediate due amount and not the entire outstanding amount,’’ she says, as the bank was charging her interest, late payment fees and service charges on the dues.

This case brings to light the lack, and thus, importance of transparency and clarity in bank dealings. As per the IBA’s Fair Practice Code for Credit Card Operations, “Our banks’ dues collection policy is built on courtesy, fair treatment and persuasion. We believe in fostering customer confidence and long-term relationship... We will provide you with all the information regarding dues and will give sufficient notice for payment of dues. Our staff/ agents are governed by Model Code for Collection of Dues and Repossession of Security issued by Indian Banks’ Association.’’

If a consumer faces trouble with his card issuer, Reserve Bank of India’s master circular on credit card operations of banks, issued in July 2006, has laid down redressal guidelines. It says a time limit of 60 days may be given to a customer to refer his grievances. Besides, the card-issuing bank should constitute a grievance redressal machinery within the bank and publicise it through media. Redressal officers’ names and contact numbers must be mentioned on the credit card bills. The designated officer should ensure that genuine grievances of card subscribers are redressed promptly without delay.

“There should be a system of acknowledging customers complaints for follow-up, such as complaint number/ docket number, even if the complaints are received on phone,’’ the circular says.

Who are ‘clever people’?

2nd Article in the Series How to Manage Clever People and grow your organization as appearing in The Times of India, Mumbai Edition, dated 7th May 2007 and originally appearing in Harvard Business Review.

Who are 'Clever People'?

ROBERT GOFFEE & GARETH JONES

Clever people are highly talented individuals with the potential to create disproportionate amounts of value from the resources that the organisation makes available to them. Clever people are not simply those with the highest IQ or the most impressive academic qualifications (although many do score highly on these two measures).

Of course, precisely what these clever people do within organisations depends on the context. In pharmaceutical companies they carry out scientific research and produce ideas for new drugs; in professional services firms they solve complex client problems; in ad agencies they understand customers, brand values and craft highly innovative communications that connect the two. Typically they are a scarce and valuable resource able to bring creativity, innovation and complex problem solving skills to all they do.

Sometimes clever people can create value more or less alone. Others are dependent on teams and yet others need the complex support systems of large organisations. Think, for example, of a research scientist working on a new cancer drug. He or she cannot work effectively without research funding and facilities such as a laboratory. Or, think of an advertising executive who needs the resources to make and broadcast a TV commercial or, increasingly, create an online marketing campaign.

The clever people we are talking about require a symbiotic relationship with an organisation. They may not always realise this fact, or be especially pleased about it, but it is true nonetheless. Herein lies a paradox that is at the heart of leading clever people. The challenge for leaders is to be the organisation of choice for these people. Fail to do so and you encourage them to walk into the open arms of your competitors.

The starting point, if you are to effectively lead clever people, is to better understand their key characteristics. Our research suggests that the key attributes of clever people are:
Their skills are not easily replicated. If they were, then they would not be the scarce resource they are.

Their knowledge is tacit (it is embedded in them and in their networks). If it was possible to capture their knowledge within the organisational fabric, then all that would be required would be better knowledge management systems. It isn’t.
They are smart enough to be in the right place—and they know it. They will find the organisational context where their interests will be most generously funded.

Unlike some who are driven to reach the top, they may not be hierarchically aspirational (indeed, many are resistant to the notion) but they are often organisationally savvy because they are so driven by their own obsessions. They challenge the status quo and, therefore, are often sources of creativity in organisations. This can make them uncomfortable if they feel as if they are in a subordinate role. It can also make them difficult to lead.

They are well connected to other clever people. In other words, they are plugged into highly developed knowledge networks—who they know is often as important as what they know.
But beyond these characteristics, the way to identify clever people is this: typically, they say they do not want to be led nor to lead others. This is the central paradox we referred to earlier. But in our experience, neither of their assertions is really true. They do want to be led—indeed they require leadership if they are to achieve their full potential—and they have the ability and motivation to lead others. But in both cases it is a special sort of leadership. Understanding this brand of leadership will be crucial for all who wish to succeed and lead in the clever economy.

The 10 Commandments of Networking

From © Mark McGregor

Getting The Most Out of Business Networking

Networking is a lot of fun! Business networking is when a group of like minded business people gather and help each other. If you check, you will surely find a networking group in your area. The networking group can meet as often as they wish, as is convenient for the participants.

Regretably, most people start with a networking group by looking for immediate gains.... that is, for favorable results for themselves. If this is what you are trying to achieve, you are networking for the wrong reasons and will be sticking out like a sore thumb.

Many people think that the size of a networking group makes the difference in networking. When groups start falling in size, members will say, "we have to build up our numbers." Now, what numbers are they referring to? Is it the number of participants? I would rather belong to a networking group of two people who can help each other on a regular basis then have a large group of business people not following the Ten Commandments of Networking. It is not the quantity, it is the quality.

"I haven't got any leads yet!" Well excuse me, have you given one, ever? Or, have you made a suggestion that might help a fellow member? Did you call anyone with a compliment and say, "Just wanted you to know, Jim, that your comments on the XYZ expansion was right on the money." One must be willing to put in time waiting also. It might take a while before people feel comfortable with offering you a referral.

Networking groups will come and go. To get the most out of your networking experience, you need to build a relationship with people who you want to have contact with. Not all members will be able to help you, nor will you be able to help them. That doesn't mean you should snub them! I still have strong relationships with my networking friends from groups that are long gone.

When networking, spend most of your time and effort on people who can help each other out, for the long term. That is right. This is a long term project. Countless times I have been to business networking events and have seen people actually run from person to person, with the expectations of first giving away their card and hoping to gather the other person's. How can you possibly build a relationship with a person when your objective is to get out there, and collect cards? Some networking groups make a game out of it to see who can collect the most in a certain time. What a waste of business cards!

You will find that a highly effective networker will "work the net". What I mean is that they will go into a function with a goal in mind. My usual goal when business networking is to have the expectation that I will "meet" and "understand" only three people per event. I know what kind of person that I can help and expect that this person will be able to do the same for me. A win/win situation is what I am talking about. The highly effective networker will take the time to cultivate a rapport.

After the business networking event is when the real work begins. After all, you are only at the networking event to meet and build rapport. Follow up ASAP. Now is the time to send a nice customized card, and call a few days after to arrange a time to meet for a coffee or to have lunch. That is when you can listen to the details of what your new "friend" requires. You might even have the chance to offer your goods and services, only after listening.

If you want to gain the most out of business networking, follow the Ten Commandments of Networking!

• 1) Thou shalt drop the "what is in it for me?" attitude.
• 2) Thou shalt listen.
• 3) Thou shalt build a relationship.
• 4) Thou shalt give the first referral.
• 5) Thou shalt not tell others of the referral you require; thou shalt "show them" with a story.
• 6) Thou shalt be specific of the type of referral.
• 7) Thou shalt reciprocate when appropriate.
• 8) Thou shalt participate in the network executive, functions, and network time.
• 9) Thou shalt thank the person who gave a referral.
• 10) Thou shalt follow up on the referral within 24 hours.

Business networking is productive and fun, and that is why it will always be part of the Bigger Picture.

Mark McGregor is a keynote speaker and professional presenter with Speaking of Hearts. He is a motivational and inspirational speaker on business and stress matters. Mark is available to speak for your next Canadian and American conference, trade show or event.

The boss is always wrong!

Clever people know their worth and expect you to know it too. So how does a manager deal with people who are much smarter than him?

Franz Humer, the CEO and chairman of the Swiss pharmaceutical giant Roche, knows how difficult it is to find good ideas. “In my business of research, economies of scale don’t exist,” he says. “Globally today we spend $4 billion on R&D every year. In research there are not economies of scale, there are economies of ideas,” he adds in an article by Rob Goffee and Gareth Jones in Harvard Business Review.
For a growing number of companies, according to Humer, competitive advantage lies in the ability to create an economy driven not by cost efficiencies but by ideas and intellectual know-how. In practice this means that leaders have to create an environment in which what we call ‘clever people’ can thrive. These people are the handful of employees whose ideas, knowledge, and skills give them the potential to produce disproportionate value from the resources their organisations make available to them.
If clever people have one defining characteristic, it is that they do not want to be led. This clearly creates a problem for you as a leader. The challenge has only become greater with globalisation. Clever people are more mobile than ever before; they are as likely to be
based in Bangalore or Beijing as in Boston. That means they have more opportunities: They are not waiting around for their pensions; they know their value, and they expect you to know it too.

Contrary to what we have been led to believe in recent years, CEOs are not utterly at the mercy of their highly creative and extremely smart people. Of course, some very talented individuals artists, musicians, and other free agents can produce remarkable results on their own. In most cases, however, clever people need the organisation as much as it needs them. They cannot function effectively without the resources it provides. The classical musician needs an orchestra; the research scientist needs funding and the facilities of a first class laboratory. They need more than just resources, however; as the head of development for a global accounting firm put it, your clever people “can be sources of great ideas, but unless they have systems and discipline they may deliver very little.”

That is the good news. The bad news is that all the resources and systems in the world are useless unless you have clever people to make the most of them. Worse, they know very well that you must employ them to get their knowledge embedded. In clever people’s minds and networks, all it would need is a better knowledge-management system. The failure of such systems to capture tacit knowledge is one of the great disappointments of knowledge-management initiatives to date.

The attitudes that clever people display toward their organisations reflect their sense of self-worth. They tend to be scornful of the language of hierarchy. Although they are acutely aware of the salaries and bonuses attached to their work, they often treat promotions with indifference or even contempt. So don’t expect to lure or retain them with fancy job titles and new responsibilities. They will want to stay close to the ‘real work’, often to the detriment of relationships with the people they are supposed to be managing. This doesn’t mean they don’t care about status—they do. The same researcher who affects not to know his job title may insist on being called ‘doctor’ or ‘professor’. The point is that clever people feel they are part of an external professional community that renders the organizational chart meaningless. Not only do they gain career benefits from networking, but they construct their sense of self from the feedback generated by these extra-organizational connections.

This indifference to hierarchy and bureaucracy does not make clever people politically naive or disconnected. Most clever people are quick to recognise insincerity and respond badly to it. David Gardner, the COO of worldwide studios for Electronic Arts, knows this because he oversees a lot of clever people. EA has 7200 employees worldwide developing interactive entertainment software derived from FIFA Soccer, The Sims, The Lord of the Rings, and Harry Potter, among others. “If I look back at our failures,” Gardner said, “they have been when there were too many rah-rahs and not enough content in our dealings with out people. People are not fooled. So when there are issues or things that need to be worked out, straightforward dialogue is important, out of respect for their intellectual capabilities.”

7 TRUTHS ABOUT CLEVER PEOPLE

They know their worth

They know how to work their way around in an organisation

They ignore corporate hierarchy

They expect instant access

They are well connected

They get bored easily

They won’t thank you