From backwaters to white waters: managing talent in God's own country

Sumeet Varghese | May 09,2011 10:26 am IST

For an entrepreneur, place of business or choice of business location constitutes perhaps one of the most critical early decisions that he or she makes for the business. Typically this decision has major repercussions in terms of the long-term Fability of the business to attract human capital.

Interestingly, even as large organizations undertake considerable research before setting up a plant or factory, MSMEs do not have the luxury of conducting a great deal of analysis before settling into a new place. However, many MSME owners would concede that locational and regional dynamics do play a very large role particularly in connection with the availability and retainability of talented employees. But is this something that plays on their minds when looking for a new business location? How critically are such inputs viewed when deliberating on choice of business location?


How do they mitigate these risks when scouting for an operational base? Whereas there is no straight arithmetic to explain how important people matters are for an MSME deciding on a business location, anecdotal evidence does point to a clear connection. Atleast, a handful of MSME owners based in Kerala that this author spoke to confirmed that there were linkages between location and the human capital challenges they faced. While many could not pinpoint the nature of the influence location had on their business' ability to attract and retain talent, some did grant that regional labor dynamics had indeed skewed the challenges they faced.


The case of Unnikrishnan, MD at Cochin Petromins is particularly instructive here as he took the entrepreneurial route right after his graduation without a stint as an employee in a regional firm. As a matter of fact, though his firm manufactures and imports thinners, lubricants and phenolic compounds, Unnikrishnan has had several forays into various kinds of businesses before settling down to manufacturing and trading in industrial chemicals. While he has moved into a new office over a period of time, his industrial unit has been at the same location for over 14 years. One of the main reasons for setting up the factory was government support in the form of industrial licenses and its proximity to a large industrial area. As a matter of fact, manpower availability was not an issue for choice of location initially. However, with increasing differentiation in the workforce - blue collar and white collar, location became an issue. The sales team, says Unnikrishnan, wanted to sit out of a proper office as the factory area began to be perceived as inaccessible and polluting. However, this was not the only challenge Unnikrishnan's business faced. With increasing penetration of the IT sector and Banking Services related jobs into the Kerala economy, it has become even more difficult to retain white collar workers. It is not just the higher salary but the nature of the work that is now luring the staff away.


Unnikrishnan strongly believes that talent is even today being wooed by countries in the Middle East. Besides, rising living standards and strong familial support has created a class of workers that prefer to take it easy.

Incidentally, even blue collar workers are being attracted to the rapidly growing sectors in the Kerala economy as firms in these sectors shell out upwards of Rs. 500 a day for casual labor.


With minor variations, the MSMEs that this author spoke to seemed to be echoing the experience of Cochin Petromins. Typically, most agreed that the cost of doing business has been steadily rising due to a clutch of factors like:

Increased Competition for Talent - Internal and External Kerala is unique among other Indian states in that it has one of the largest NRI populations in the Middle East. Almost everyone in the state knows someone or the other in the Gulf. This network has only increased over the years making it difficult for MSMEs to attract a skilled labor pool that has grown up with the promise of making a fast buck in another country.


Interestingly, the little industrialization that the state has welcomed has not stalled this talent exodus in a major way, though salaries in the Gulf have more or less stagnated over the last few years. Of course there is a wave of educated and skilled workers who prefer to look at working in other Indian states where there is more promise of growth. With large foreign remittances, good returns from agriculture (predominantly cash-crop) and steady increases in the standard of living, service sector companies have made a beeline not just to cash in on the rising aspirations of all classes but also the skilled labor pool that has now the option of working for well known brands at competitive salaries without venturing out of the state.


Sectoral Bias
Due to the large-scale setting up of service sector companies, a new generation of workers in Kerala seems to be growing up with a particular bias in favor of service sector jobs, according to some MSME owners. This is also because the other sectors may not have branded themselves well from an employment perspective. Whereas a lot of banks and insurance companies have already occupied significant mindshare thanks to the incessant advertising, MSMEs in various other sectors are yet to come to terms with this subtle or direct branding that is continuously on.


Clearly the service sector industry seems to drawing most of the eyeballs for now.


It is generally believed that Kerala has one of the largest number of unions in the world. Typically, for a business that grows over a period of time, run-ins with employee unions are pretty common. For MSMEs that have to wager employee deals everytime with unions, growing a business becomes that much more challenging. Ironically, when employee and management interface is union driven, real genuine opportunities for real human resource development activities take a backseat, thus offering practically limited options out of the stalemate that businesses find themselves in. When working with a particularly large enterprise from the state, this author discovered that frequent union issues had given rise to an employee culture and outlook where trust, information sharing and genuine respect and understanding for employees were in short supply.



Sumeet Varghese is an independent management consultant....