HR Managers, Retaining Talent, Entrepreneurship

You will find HR managers obsessed with retention of talent. Infact for many retention of talent is one of the key performance indicators. HR Managers keep coming up with ideas to retain talent.

HR Managers should also think about what if they don’t retain talent. One impact would be rise in cost of hiring and time taken for new person to stabilize.

But at times quitting  of talent, while may not be beneficial to company, may be beneficial to employee and even society.

Narayan Murthy was employee of Patni, company founded by Patni brothers. One day he decided to leave Patni with his team and start company of his own. With his wife acting as venture capitalist, he started company called Infosys. Infosys today one of the biggest IT companies in India, while Patni no longer exists.

Had the HR manager been able to retain Narayan Murthy and his team, at most he would have been COO in Patni ( CEO position was reserved for Patni family)

“The key takeaway for me from the Cheminor crisis, which I hold on to till this day, is that you can never have a company totally dependent on one individual. So I decided to build an organisation that’d sustain changing ownership, technologies, products, strategies, etc.”

-G V Prasad, CEO Dr. Reddy’s Labs

Another interesting example is that of Murli Divi. Murli Divi was hired by Dr. K Anji Reddy to turn around subsidiary of Dr. Reddy’s Lab called Cheminor Drugs. It was a tough task. But Murli Divi managed to build a team and succeeded in turning around the company. Meanwhile Dr. Anji Reddy appointed his son in law G V Prasad on board of Dr. Reddy’s Lab. Murli Divi could not get along with G V Prasad, hence resigned. The day Divi resigned, almost 150 employees too resigned.

“The impact of this [style of functioning] was great. When he left Cheminor in 1990, almost 125 people resigned the same day. That tells you how he handled people.”

-Ramesh Babu Potluri, founder SMS Pharma

Murli Divi started company of his own called Divi Laboratories. One of his team member Potluri too started company of his own called SMS Labs.

Had Cheminor Drugs retained Murli Divi, he would have remained employee. But quitting benefitted the Pharma industry.

“Perhaps because I was destined to become chairman of my own company rather than remaining managing director elsewhere.”

-Murli Divi, founder Divi Labs

 

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Matthew Syed, Black Box Thinking, The Checklist Manifesto

“Learn from the mistakes of others. You can’t live long enough to make them all yourself.”

― Matthew Syed, Black Box Thinking: Why Most People Never Learn from Their Mistakes–But Some Do

Matthew Syed is a British journalist and table tennis player. He has written a book called Black Box Thinking, in which he deals with interesting topic of learning from mistakes.

He gives two examples, one example from medical field and other from airlines.

In first example he talks about surgeons struggling to make the patient they were operating on to breathe, they spent almost 20 minutes struggling to find a solution, the nurse know the solution but kept quiet, she was afraid of offending the surgeons by giving them suggestions. Those crucial 20 minutes resulted in death of patient.  The surgeons did not share their mistakes, their ego prevented them from admitting that they made mistake, besides they are also afraid of getting sued for medical negligence.

 “Psychologists often make a distinction between mistakes where we already know the right answer and mistakes where we don’t. A medication error, for example, is a mistake of the former kind: the nurse knew she should have administered Medicine A but inadvertently administered Medicine B, perhaps because of confusing labeling combined with pressure of time. But sometimes mistakes are consciously made as part of a process of discovery. Drug companies test lots of different combinations of chemicals to see which have efficacy and which don’t.”

― Matthew Syed

In second example he talks about United Airlines flight 173. In 1978, the indicator in flight 173 showed malfunctioning of landing gear. At that stage the flight had sufficient fuel to make an emergency landing. But crew members got preoccupied with working on malfunctioning of landing gear. This proved to be a costly mistake, they didn’t notice that spending time on this had lowered fuel levels and finally there was no fuel left and plane crashed. 10 passengers died in accident.

“United Airlines 173 was a traumatic incident, but it was also a great leap forward,” the aviation safety expert Shawn Pruchnicki says. “It is still regarded as a watershed, the moment when we grasped the fact that ‘human errors’ often emerge from poorly designed systems. It changed the way the industry thinks.” Ten people died on United Airlines 173, but the learning opportunity saved many thousands more.”

― Matthew Syed

But unlike surgeons the airline company went through the recording in Black Box and a comprehensive failure analysis, then came up with recommendations to prevent such accidents in future.

This “Black Box Learning” of airlines industry make it one of the safest mode of transport.

Atul Gawande is American surgeon. He too has reached similar conclusions. In case of surgeons he found that if nurse goes through a checklist and ensure basic things like ensuring surgeons have washed their hands, it can reduce cases of death due to infection. But many surgeons are reluctant to do basic things like washing hand before surgery.

“I got a chance to visit Boeing and see how they make things work, and over and over again they fall back on checklists.The pilot’s checklist is a crucial component, not just for how you handle takeoff and landing in normal circumstances, but even how you handle a crisis emergency when you only have a couple of minutes to make a critical decision.”

-Dr. Atul Gawande

Atul got idea of checklists from airline industry.

 

 

Venezuela Crisis, JNU and Lal Salam

Venezuela has huge reserves of one of best natural resource in world- Oil. Rising prices of oil resulted in huge cash flows for Venezuela. The then President of Venezuela Hugo Chavez decided to follow the socialistic model of economy. He decided to spend this money on social welfare, the money was supposed to be distributed among poor.

“I have always said, heard, that it would not be strange that there had been civilization on Mars, but maybe capitalism arrived there, imperialism arrived and finished off the planet”

-Hugo Chavez

As committed socialist he was also against capitalism. He decided get rid of private enterprise, the power of bureaucracy went up and those opposing him were labelled as rightist and agents of capitalism and US. He used popular leftist methods like control of production and control of prices.

All this made him very popular.

In faraway India, in one of the universities called Jawaharlal Nehru University, Chavaz’s success was something worth celebrating. One of the student called Sini Minsu considered herself to be “leftist”. Minsu got married to one of the PhD student of same university called Siju, who was also a “leftist”.

“Chavez had put an end to a corrupt economic and political elite, and had focused the government’s attention on the poor.”

-Siju, student of JNU for last 10 years

Siju and Sini wrote some powerful “leftist” and “anti-capitalist” songs. They also choreographed a “anti-capitalist” dance. They also used to have equally powerful debated on “communalism”. Students like Kanhaiyya Kumar and Shahela Rashid sing them even today.

They decided to do research on Chavez. They wrote entire thesis based facts given in one book called “Chávez, Venezuela and the New Latin America” written by Aleida Guevara, daughter of Che Guevara and supporter of Chavez.

“Poverty was declining dramatically under Chavez”

-Sini Minsu, unemployed mother of two children

Sini and Siju decided to invite Chavez to India and address JNU students. “Comrade Chavez” was given red salute “Lal Salam”.

After oil prices started falling, the socialist economy started facing problems. With private enterprise on decline, the bureaucrats took over running of economy. Bureaucrats were incompetent and corrupt. Shortage of funds for social welfare along with corruption and controlled economy resulted in poverty, hyperinflation, food shortage and riots.

“We need to reduce extreme consumption to achieve a point of equilibrium between supply and a fair price. I trust in the hardworking majority of this country.”

-Nicolas Maduro

But Chavez and his successor Nicolás Maduro blamed all problems on capitalist and called anti-government protesters as agents of US. With no solution in sight, people continue to suffer poverty and hunger. Ironically, this absurd way of running of economy by Maduro is hailed by leftist all over the world.

Last heard Sini and Siju, currently jobless have decided to migrate to Venezuela.

 

 

Luigi Pirandello, Late Mattia Pascal, Midlife Crisis

“For the moment (and God knows how much it pains me), I have died already twice, but the first time was a mistake, and the second—well, you may read for yourself . . .”

Luigi Pirandello, Forward to The Late Mattia Pascal

Italian novelist Luigi Pirandello has written novel about an Italian youth called Mattia Pascal. Mattia loses his fortune to a person who is given authority to execute will by his mother. His marriage with Romilda Pescatore is a failure, he also dislikes his mother in law Signora Marianna Dondi-Pescatore.

He wants to escape from married life. He finally escapes to Monte Carlo and make some fortune through gambling. Fortunately for him, his wife and mother in law identify a corpse as Mattia. So Mattia Pascal is now officially dead.

“Alone! Alone! My own master! Having to account for nothing, to no one! I could go where I pleased. To Venice? Yes to Venice! Florence? Florence! I felt so drunk with freedom that I was afraid I would almost go mad, that I couldn’t bear it for long.”

-The Late Mattia Pascal

Mattia enjoys his new freedom under name Adriano Meis. Mattia now lives a life which every person in mid-life crisis wants- new start with new identity and freedom from spouse and mother in law.

Strangely, after some time Mattia does not like his freedom, he wants his old life and identity back, so he kills his new identity and come back to his native place.

“I had already seen how my freedom, which at the beginning seemed without limitation, was indeed limited. I realized that it could better have been called solitude and boredom, and that it sentenced me to a terrible punishment—my own company. What sort of man was I then? And what kind of life was mine? As long as I was content to remain shut up in myself and watch others live, I could prolong the illusion that I myself was alive…. The life which seemed to stretch ahead of me, free, free, free was only a mirage and could never become real except superficially.”

-The Late Mattia Pascal

Some experts attribute this fear of freedom to political views of Luigi, who distrusted democracy. He was supporter of Mussolini.

“‘But the real cause of all our sufferings, of this sadness of ours – do you know what it is? Democracy, my dear man. Yes, democracy; that is, the government of the majority. Because when power is in the hands of a single man, this man knows he is one and must make many happy; but when the many govern, they only think of themselves happy and the result is the most absurd and hateful of tyrannies.”

-The Late Mattia Pascal

Luigi was son of a rich merchant. He was married to a rich lady called Antonietta Portulano. Like Mattia he lost his fortune and was forced to live a lower class life. He had troubled relation with his wife, who had become mentally unstable due of shock of losing fortune.

Some of his novels are The Turn and The Excluded Woman. One of his most famous play is Six Characters in Search of an Author. He won Noble Prize for literature in 1934.

 

 

Richard Thaler, Winner’s curse and Nudge

“The economics training the students receive provides enormous insights into the behavior of Econs, but at the expense of losing common-sense intuition about human nature and social interactions. Graduates no longer realize that they live in a world populated by Humans.”

― Richard Thaler

Economist Richard Thaler in one of his articles quotes an interesting problem.

There are two companies A and B. Company A wants to acquire Company B. Company B is working on major oil exploration project. If they find oil the value of company will go up and its share price will be $ 100, but if no oil is found its share value is $0.

So, value of Company B fluctuates between $0 to $100 per share. While Company A is not aware of price of Company B, Company B is aware of its price. Also, once Company A acquires Company B, the value of combined entity will go up by 50%

Question is how much should Company A should pay for Company B. Catch is the acquisition has to be done before the results of exploration are known. Also, Company B will accept bid only if it is equal or more than what it is worth.

Game Theory assumes that all player are rational thinkers and will act rationally when they bid for company i.e. factors associated with winner’s curse like aggressive bidding, hubris etc. will be absent.

Winner’s curse occurs when bidder with incomplete information bids in auction and after winning finds that he has overpaid.

“MBA students are not the only ones overconfident about their abilities. The “above average” effect is pervasive. Ninety percent of all drivers think they are above average behind the wheel,”

― Richard H. Thaler, Nudge: Improving Decisions About Health, Wealth, and Happiness

When this experiment was conducted, most of the students bid between $ 50 to $75 per share. Their logic was the price fluctuates between 0 to 100, so most likely price would be average i.e. 50. Post-acquisition it will go up by another 50%, i.e. 50 +25 =75.

Now assume A makes bid of amount X and it accepted by B. It means B is not worth more than amount X, let us assume that correct price is average price i.e. X/2. Post-acquisition its value will go up by 50% i.e. X/4, so value now is X/2 +X/4 = 3X/4.

Now 3X/4 is less than X. So rational person should not bid at all, because any bid he makes he will face winner’s curse. Yet most of the students wanted to bid amount between 50-75.

So, we do not always think rationally. To highlight not so rational thinking of humans, Thaler introduces concept of “Nudge”.

Nudge theory says that says that people, rather than being forced, can be encouraged and influenced to pursue or desist from certain actions through nudges.

“The combination of loss aversion with mindless choosing implies that if an option is designated as the “default,” it will attract a large market share. Default options thus act as powerful nudges.”

― Richard H. Thaler, Nudge: Improving Decisions About Health, Wealth, and Happiness

Interesting example of this is Organ Donation Policy. In Spain all citizens are automatically registered (by default) for organ donation, unless they specifically mention they do not wish to donate organs. While in Britain or India a person has to fill a form to express his desire to donate organs. Since humans are not fully rational and may not always fill form, Spain is world leader in organ donation, while India with much larger population lags in organ donation.

India should register all citizens for organ donation, they should also be given option to opt out. Or like citizens of Illinois drivers should be encouraged to fill up organ donation form when they opt for driving licence renewal.

Richard Thaler won Noble Prize for Economics in 2017.