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For anyone who likes to observe human behaviour, it simply does not get more entertaining than at appraisal time.

The process is so inherently flawed that one is amused when one sees human resources in large setups struggle to run this process in its letter and spirit. That every company must have a fair and transparent appraisal system has no debate, then why do they end up in heartburns, disappointments and disillusionments?

A lot of times the victim is the poor Bell Curve in which the company tries to fit in its staff to ensure rewards follow results.

If you look a little deeper, you may realise that the reason why appraisal systems do not deliver the intended results is that they are stacked against human psychology. We all have an internal image of how we are, what are the efforts we are making, how is the world perceiving those efforts, how are the people around us behaving and how the worlds is perceiving them versus us.

A lot of people have a 'good-boy' mindset. I am good, hardworking, non political but my colleagues suck up to the boss, manage their image, get credit for work they did not do, do not get pulled up for their short delivery are politically manipulative and somehow manage 'perception' of their performance while my quiet hard work often goes un-noticed and un-rewarded. This allows us to reconcile in our mind that I am paying the 'goodness tax' as a simple man living in a manipulative world and by tainting the credibility of the person giving me the feedback, I can actually reject the feedback logically.

We are awesome lawyers to ourselves and strict judges to others. We judge ourselves by intent and others by outcome. Most performance appraisal feedback gets lost in the fact that the appraiser is giving feedback on the outcome while the appraisee is defending the effort put in.

Most of us accept things that fit our self image and reject those that don't by putting it down to biases of those giving the feedback. We edit things about us even as we hear them.

Have you ever thought of how we think we are versus how those that deal with us know us to be? Even with your parents or spouse you would be surprised to see how different these two would be, leave alone your boss.

We are not who we really are, but the stories we tell ourselves of who we are

Note : Views, thoughts, and opinions expressed in this blog belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual

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Building a business is just a roll of the DICE.

After building several businesses, the following is the learning. You hire for Competency and Integrity. Two things that cannot be taught or changed easily. Its the summation of all that has made the individual what he/she is. Once in, it is the job of senior management to provide a clear Direction and an Energised environment. I am a firm believer that there are no bad soldiers, only bad generals so the job of the management is cut out. Get the right team in place, provide clarity on direction and speed and then provide energy through purpose, appreciation and celebration as well as review, censure and course corrections. Hire for Competency and Integrity and provide Direction and Energy - DICE to make an acronym simple to remember. For a commodity business like financial services, it is not so much about strategy but, execution..execution..execution.

Note : Views, thoughts, and opinions expressed in this blog belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual

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RAROC….Lenders in India are saying whats that?

As a banker, you are taught the concept of Risk Adjusted Return on Capital. Fundamental logic of lending is you price for risk. Sovereign return is taken as the risk free return and you seek a premium on it to justify the additional risk you are taking on the loan. The further away the borrower is from AAA, the higher the risk premium and hence the rate of the loan. Recent @CRISIL report says Personal Loans have a delinquency of 0.52% while Home Loans of 1.56%. Credit Cards are at 1.7% vs Loan Against Property at 2.62%. Interestingly, the rates of lending are inverse. The higher the default rates, the lower the interest rate! Sure, secured loans have lower Loss Given Default but recovery is a long drawn inefficient process and till that you carry the cost of impairment. Mis-pricing risk is one of the Seven deadly sins of banking. It seems that Indian lenders are pricing interest rates to ticket sizes. Lower the loan value, higher the rate and vice versa. Additionally, the longer the tenure of the loan, the lower is the interest rates thus lenders are totally missing the tenure risk premium they should be charging. Indian lenders are skating on thin ice here. Time we stopped pricing to competition and start pricing to risk?

Note : Views, thoughts, and opinions expressed in this blog belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual

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The Players

Lets talk about some of the players All species need to have scientific name. Lets call this one “The Articulate Incompetent”. This is a guy who seizes the spotlight. I am not being a chauvinist, but trust me this one is always is a he. It doesn’t matter the topic and doesn’t matter that he is learning about it the first time by listening to other people discuss it right there. He has a Tharoorian flair, with the entire English language at his command and is able to pick up the random dots of information and string it into a very articulate commentary on the subject that sounds so authentic that he could contradict Einstein on relativity and for a moment even Einstein would leave the meeting with a doubt! When people who have never played the game start talking about it as an authority and get mistakenly accepted, they become dangerous. They interview well and hence tend to get hired. They speak well and hence tend to be popular in the short term. They put out big plans ahead, achieve little and always have a credible excuse why something did not happen. An organisation that can’t differentiate the talkers from the doers is doomed. Is it just me or have you spotted these articulate incompetents in your company ?

Note : Views, thoughts, and opinions expressed in this blog belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual

 

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The Game

Today we sing a little ode to one of the favourite corporate games called “ the meeting”. This game is so precious it has its own arena called “the conference room”. It is here that we boil the ocean, stick to core competency, discover synergies, create paradigm shifts, move the needle, think outside the box. If not for this hallowed space where else will we do blue sky thinking, peel the onion, give a ball park number and have a thought shower? It keeps us fit for it is here we jog our memory, take a deep dive, hack into the customers mind, circle back, touch base, drill down or even thrash the issues out, we get the ball rolling even as we hit the ground running and if asked a real good question we simply take things offline. It is here we are taught the all important corporate trick to pick up the low hanging fruits. The game is so important that we keep minutes of the hours wasted and circulate them ASAP. This game protects bosses from the inconvenience of facing real telephone calls and the team calling them with problems as their secretary can tell them that boss is busy in an important meeting. Meanwhile they are winding up yet another inconclusive meeting by scheduling a follow up meeting to discuss why no work is happening around here.

Note : Views, thoughts, and opinions expressed in this blog belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual

 

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Why so serious ?

“All Well?” A colleague asks trying to make small talk in the lift. “Oh Yes!” I say,"All in the well. Deep in the well.” and his face relaxes as he bursts into laughter. Look at the faces at work. When I look around large offices, I want to ask them what Joker asks in the movie Batman, “Why so serious?” The Jews survived the holocaust through their sharp sense of humour. There is no greater stress buster known to mankind than humour. It does two things: It alters the lens through which you view the situation. The problem, it doesn’t solve but the mind frame through which you can solve the problem, it creates. Secondly, It puts your ego in check. There is nothing more humbling and beautiful than an ability to laugh at yourself. You don’t necessarily have to look serious to do serious work. Somehow we confuse seniority and responsibility with seriousness. From childhood we see symbols of authority serious. It needn’t be so. The company counts your remuneration in terms of CTC, don’t pay the price in terms of CTY - Cost to Yourself that includes BP, Diabetes, Ulcer and Cardiac Arrest. Pressure, stress, timelines are real. Your choices are humour or tumour. What do you choose?

Note : Views, thoughts, and opinions expressed in this blog belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual

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What Floats your Boat?

Opportunity is missed by most people because it is dressed in overalls and looks like work.’- Thomas Edison. The process is never glamorous, the finished product is. The process of construction is always full of dust, dirt, grime, sweat, late nights, fears, worries, doubts, small celebrations and the hard work of beating the odds. The Taj Mahal looked stunning when finished but the 21 years it took to construct it would have been anything but pleasant. To bring any imagined reality to life is always a story of relentless execution and a test of character. A movie that lasts an hour and half is full of smooth glamour. However, the process of movie making is mind numbingly boring. The process of building a company is joyful if work in itself gives you joy. It is joyful if daily challenges give you joy. Its joyful if overcoming irritants, delays give you joy. Its joyful if tackling slow progress, fighting setbacks and trouble from unimagined quarters give you joy. It is painful if you are in it for the result. The builder finds his joy in the middle of the chaos of construction. The world will however only admire the finished product. Either the process, the daily grind gives you joy or nothing will. What floats your boat?

Note : Views, thoughts, and opinions expressed in this blog belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual

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Employee or Entrepreneur :: How do you recognise yourself ?

Having tasted life as an employee and now as an entrepreneur, I can safely say that in the end there is only one difference between the thinking and hence their behaviour. An employee is effort driven and an entrepreneur is outcome driven. The former judges her own performance by the efforts she has made and the latter doesn’t give marks to self for efforts but only the outcome. It’s simply not enough to do your best but to do all that is required to get where you want. Do you work so that you have the means to do what you want or what you want is so important you don’t clock the hours? If business class travel, five star hotel stays, club memberships, big chauffeur driven cars, unlimited expense account and a secretary to handle all that is your thing, you have an employee mindset. If the joy of being able to do what you want is your driver, you are an entrepreneur. When you start looking at the weekend as an interruption and a time delay, you are possessed. It doesn’t then matter even if you are in a job, you then, are an entrepreneur.

Note : Views, thoughts, and opinions expressed in this blog belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual

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2019 Budget : Introduction of FKC for IRHY

The Government of India is a modern day Inverted Robin Hood. They quietly run a very successful scheme. Let’s call this initiative Inverse Robin Hood Yojana. Hitherto referred to as IRHY.

IRHY robs from the middle class and poor and liberally distributes to the rich. The instrument of former is taxation and instrument of latter are Nationalised Banks. These are the vehicles through which the objectives of this scheme are achieved.

Vijay Choudhary, Nitin Kasliwal, Venkatram Reddy, Deepak Baweja, Jatin Mehta...do these names ring a bell? Well they should. Over a third of our money (assuming the highest tax bracket) is with them now and that too tax free. You may want to scroll down to see some of the beneficiaries of the IRH Yojana of the GOI.

http://www.financialexpress.com/economy/wilful-defaulters-list-names-and-amounts-all-you-ever-wanted-to-know/226791/

The modus operandi is simple. Loans have been given to the firms of these gentlemen, they have defaulted, these loans have been written off (mind you they are all classified as wilful defaulters by their lenders meaning they have the ability just do not have the intention. There is a hole in the net-worth of the PSU bank which is filled by the budgetary allotment every year. Just Nirav Modi has wiped off 27% of PNB net-worth to give you a sense of proportion. I am marvelling at such a clean transfer of wealth that is achieved with minimum fuss.

The amount has now reached Rs. 1,00,000 crores or Rs.1 Trillion. This is daylight robbery and the commonality of these beneficiaries is that they live a high lifestyle, have properties all over the world, pose for page 3 pictures and you and I work to support their lifestyle.

Next ahead, brace for Fraudsters Kalyan Cess (FKC) to pay for the IRHY

Note : Views, thoughts, and opinions expressed in this blog belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual

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The Mother of all Challenges!

2.2 lakhs students take the JEE Advanced of which about 11000 seats are available at the Indian Institute of Technology which means about 5%. Harvard accepts about 5% applicants. MIT has an acceptance rate of under 8%.

If like me you think these are the most difficult to get in places, you missed the recent news clip that made me sit up in my chair. A staggering 2.8 crore applicants applied for 90,000 vacancies at Indian Railway for positions of Motormen, linemen etc giving you an acceptance rate of 0.32%!

If you do not count the probability of a human sperm fertilizing the egg, this officially makes Indian Railway the most difficult institution to get into. Next time you take a train please doff your hats in respect to those that made it through these odds.

The youth of India are facing unemployment in public sector and unemployability in private sector and this is converting what has been touted as a demographic dividend into a demographic disaster. This is a clarion wake up call for the Government of India.

Note : Views, thoughts, and opinions expressed in this blog belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual

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Quo Vadis, Mumbai?

Airport lounges are good places to catch up on reading, so there I was reading an article on how the vehicle population in Mumbai has increased 50% from two to three million over the past five years. With road length almost steady at 2000 km, it means the vehicle density per km is up from 935 to 1500 vehicles per km.

Usually, I prefer to read the local newspaper of wherever am headed so I request for The Straits Times on board the aircraft, which curiously had an article that from 1st February'18, you cannot buy a private vehicle in Singapore. Two cities, same problem, so different responses.

The fact that they were rationing permits called certificates of entitlement and auctioning them each year was well known. In fact the last auction went for nearly $50K for a small car permit for ten years. Now it has reached a zero point. No more addition of new vehicles on Singapore's roads. Period.

To move to this point, over the past six years the Singapore Land Transport Authority has increased rail network length in this city-country-island nation by 30% and will further invest $28 billion in rail improvement and Bus subsidies over the next five years.

We seem to be oblivious of the crisis in front of us. The pollution, the wait in traffic and deterioration in the quality of life have reached endemic levels in our cities but we are doing nothing to alleviate it. We are waiting for a disaster and when that happens we will as usual respond with a botched up reactive plan not fully thought through.

Every day of delay in putting a plan to end this is adding 700 new vehicles on the roads. Quo Vadis, Mumbai?

Note : Views, thoughts, and opinions expressed in this blog belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual

 

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Economics

Last year was goldilocks scenario for private banks and NBFCs. Demonetisation pushed up deposit inflow and a Dovish monetary policy has seen a reduction of policy rate by 175 bps since Jan'16. This was due to slowing growth, benign inflationary expectations on the back of falling crude and commodity prices and it famously brought down interest rates. This, along with a hamstrung Public Sector Banking system aided private lenders loan growth. YOY loan growth in the system as on 30/11 is 10% and deposit growth only 4% result of which Excess liquidity of Rs.4 trillion in April is now only Rs.80,000crores. Come March and we are likely to see a scramble for deposits. Inflation has picked up to a 8 month high, oil prices are moving up. FIIs have invested $16 billion in Debt in trailing 12 months at average yields of 6.5%. G-sec yields already at 7.28% As this moves higher, somewhere they will cut losses so any flow out will put pressure on rupee to head south. Economic Growth is picking up slowly. The central bank has already signalled a pause but the combination of the factors above means interest rates are headed north. 25-50 bps in 2019 is a possibility. As it appears to me, this is not an if, its a when. Fasten your seat belts, this roller coaster is on its way up.

Note : Views, thoughts, and opinions expressed in this blog belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual

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Every company is in a hurry to add new product lines chasing growth

Diversify. Every company is in a hurry to add new product lines chasing  growth. Since 80 years, Parle-G biscuits soldiers on. The yellow wrapping, the Parle Girl, nothing has changed, no flavours have got added, no brand extensions. Yet even today, it has 20% share of the Rs.25000 crore biscuit market. The simple offering with entry level pricing available at every chai stall in the country has become more staple than snack. Glucose Biscuit dipped in tea became the food of the labour class; from factory to construction workers and from Agriculture linked migrant labour to the shop workers. Britannia came up with Tiger against Parle -G and added some seven variants to it. In the board room this sounds like a great strategy. An offering for each price point but can you imagine the distributor's cost for  stocking up all of these?  Is there a lesson for BFSI space here? Banks want to set up NBFCs, NBFCs want to become banks, Banks want to become wallets and wallets wants to become banks, Banks are buying MFIs and MFIs are becoming banks, Full service NBFCs want to do Gold Loans, Gold Loan NBFCs want to do Housing. Parle-G is not an exciting but an enduring brand. Sometimes it pays to be boring. Choose what you want your company to be? Exciting or Enduring?

Note : Views, thoughts, and opinions expressed in this blog belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual

 

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phones have got smarter!

In the 80s Madhavsinh Solanki then Congress CM of Gujarat came up with KHAM theory a vote bank of Kshatriyas Harijan Adivasi and Muslims. The Patels and upper caste Hindu votes moved to BJP. That was then. In 2017 Gujarat election the congress talked of Patel and OBC appeasement and BJP hindutva. How far have we come really? As Alphonse Karr said ‘The more the things change the more they remain the same.” Whoever wins Gujarat, Gujaratis have lost. It seems in all these years only the phones have got smarter!

Note : Views, thoughts, and opinions expressed in this blog belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual

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Payment banks will likely face an existential challenge.

FY 19 the total investment in stocks by Indians will cross that of fixed deposits. A historic first. Indicates that new banks will struggle in times to come for deposit growth. The fight for CASA will intensify. Payment banks will likely face an existential challenge.

Note : Views, thoughts, and opinions expressed in this blog belong solely to the author, and not necessarily to the author’s employer, organization, committee or other group or individual

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