It was late 2000. I, along with a few regional and global seniors from Standard Chartered Bank, went to call on the then finance minister, Shah AMS Kibria, and share our decision to acquire ANZ Grindlays Bank in this part of the world.
I remember Mr Kibria, while consenting to our approach, reminded us: “Our job is very precious in Bangladesh. Please make sure people here don’t lose their jobs.”
I was sorry that we were not able to retain all officials from both banks, but only because we had to show some signs of synergy from the merger of the two major banks here. The rationalisation of doing a headcount was one of the major synergies identified.
However, we did do a core and non-core analysis, and offered redundancy to a few of our seniors and middle managers. The redundancy packages also accompanied a hefty payout in recognition of their services to the company, and covering up for the years completed and years-to-go.
Our human resource division organised training and counseling sessions so that our colleagues didn’t feel abandoned, and could find a suitable job in the market. Since this market had a dearth of good people, our colleagues could easily have found similar or even better jobs with other banks.
My friend Erik Aas, who previously led the country’s largest cell phone company, Grameenphone, finds himself in deep soup after joining Banglalink as its new CEO. Banglalink, reportedly, has too many people, more so than it requires. Since it was a growth company, nobody bothered to do any sort of “wallet-sizing” or any analyses on “return on people.”
The company was rumoured to have become almost a white elephant. Under-performers and super-performers were rated and recognised in the same way. Officers were being paid overtime, and not all the elevation, or upgradings, were well-justified.
In this situation, what could Erik Aas do to successfully transfer and drive the company forward in a fiercely competitive market? Especially when it was clear that the second position is being challenged with the merger of Robi with Airtel?
Any management books would have told him to review the business model and product offering, bring in efficiency, and ensure cost synergy. Their balance sheet is still in the red, their products are no longer talked about, and yet they are carrying a large pool of “passengers.”
Most of their lieutenants have lost the ability to drive anything forward. Erik has decided to do the same thing that companies all over the world are doing, the successful ones at least, in order to fly over the turbulent zone: Reduce cost and optimise operations. The difference is that other CEOs are usually rewarded for this, but Erik is being cursed.
While successful companies all over the world believe in the principle of “taking care of the best and being fair to the rest,” there is no reason to not go for any wallet-sizing or optimum capacity modeling. Company CEOs should always know: Be it client or employee, who is offering what to me? Which product is my value creator, and which one is the value eroder?
Most of the time it is like a jaw -- the space between the upper and lower one is the net profit. In order to maintain the net spread, or even increase it, one has to take up the upper one or force the lower one down. Simple.
This is exactly why during a bumpy ride, companies mostly focus on cost reduction.
It won’t be an over-statement when I say most of our local companies are over-staffed, and that we have yet to foster a “performance culture” here in Bangladesh.
A few years ago, I remember telling the CEO of a rather large television company that they were heavily over-staffed -- he wasn’t exactly pleased hearing me say that.
He was jubilant that he had created so many jobs. But nobody was paid a good salary there, and most of the staff didn’t have any clarity regarding their roles.
On the contrary, when I asked the owner of a consumer electronics and pharmaceuticals company why he was not paying very well the staff at a newspaper company he also owned, he said: “I see everything as a business. If they make profits, I reward them accordingly.”
This is performance culture. You must “take care of the best and be fair to the rest.” Reward and punishment are doled out equally. This is what is meant by “internal governance.”
As we move forward with our economic and corporate successes, the government and all relevant regulatory institutions must allow and encourage companies to be profitable through performance improvement and cost reduction.
All over the world, governments are increasingly acquiring more stakes in profitable companies than loss-making ones.
Yes, the job is precious, but more important is creating an environment where companies can do business, make money, and share their success with the common people either directly or indirectly.