Growing in the MSME universe
Sumeet Varghese Dec 20,2011
It is an all too common fact that out of the 100s of MSMEs that spawn every year, globally speaking, an overwhelming majority of such MSMEs do not survive beyond the first 5 years of their existence. While there are a host of interesting reasons and theories that explain the early demise of MSMEs ranging from Leadership to Learning, one of the most common factors that gets missed out in the regular postmortem is People Management.
For very often, those MSMEs that cross the 5-year barrier have a strong people philosophy and practice in place.
The MSME landscape in India too, is no exception to this general truth. Interestingly, the emphasis on people issues in such successful MSMEs is more, if not less. For instance, take the case of Outdoor Advertising Professionals (I) Pvt. Ltd - a niche media form that delivers a host of Outdoor Advertising and Retail Designing services. To the external world, OAP may appear to be just another Out of Home media company that bags outdoor advertising projects from various companies or their advertising agencies only to ensure the outdoor adverts - flexes, go up on various billboards across the country and stay there during the length of the marketing campaign - in other words, just an intermediary player between the vendors who own the billboards and the various companies that want their advertisements on those billboards. However, what is interesting is that while doing this and more, the company has grown from a small motley pack of employees in 2002 to a 100 plus employee organization with offices in all major metros and annual revenues touching over Rs. 70 Crores today - almost 400% growth in its 8 years of existence.
Additionally, the business has also added a very diverse customer profile in segments like FMCG, Electrical & Electronic Appliances, Apparels, Insurance, Automobile and Telecom.
Adding value - customers
What can explain the kind of growth OAP continues to show? In an industry where competition is acute particularly from large outdoor agencies owned by household names in the advertising industry, OAP has carved a small niche for itself by differentiating its brand in the marketplace. While there are several differentiators, their clients - who incidentally continue to give them repeat business, strongly feel that they and their employees "add value".
A Marketing Manager at a well known airline company - one of OAP's big ticker clients, put this in a rather interesting way. "There are two types of people in the outdoor industry," he said, "those who just do a job and those who add value. A regular outdoor agency, tells its clients which 10 billboards they can pick up in any city for what duration out of the ones that are available. Instead, an OAP tells me which ones to pick up in a particular city depending on cost, mileage among target group, proximity to business districts, traffic flow in the area and a host of other factors - all of this amount to adding value to the job." Incidentally, this business about adding value internally and externally informs all operations at OAP, including the people management part.
Adding value - people
Interestingly, OAP does not have any advanced HR Architecture or System to flaunt for all the growth that is has achieved. While some systems like Recruitment, Induction, Training & Development, Compensation & Benefits and Performance Management are only evolving, a Strategic part of the HR piece is in the works including the creation of a Competency based HR Architecture that integrates Competencies into all systems ranging from Recruitment to Succession Planning. In all probability, the absence of a full-fledged HR Structure in the early years of its evolution may have only fuelled OAP's growth. So, how then does it manage to ensure the people it hires and develops bring value to the customers it serves?
Blame it on the Senior Leadership. Everyone from the CEO onwards is expected to focus on 3 powerful mantras: People, Performance and Profits. For the CEO, Abhjit Sengupta (who interestingly has had a Steve Jobs like career background ranging from selling hand printed cards, working on lathe and extrusion machines and selling products door-to-door to founding 3 successful companies), who personally handpicks his people and spends quality time on people issues, value compromises are a nono especially when probing a candidate for performance and integrity issues. Interestingly, he does get involved in all critical recruitment processes for some levels - including initial screening, interviewing and even, background checks. For the CFO, Rajesh Walawalkar (interestingly, he's pursuing a PhD in HR), who also doubles up as the HR Head, the strong focus on adding financial value though robust financial controls goes hand in hand with inculcating in each employee a strong profitability mindset. Both of them, along with the VPs and Branch Heads practice a no nonsense approach to performance.
Employees clearly understand that they are welcome to stay and enjoy themselves but there will be no compromise with performance and profitability. Almost every employee has an interesting story to tell about their experience of this hard and soft aspect of the organization. For instance, there are many cases of people moving out of OAP on various grounds (including performance) trying their hand at various things including joining other companies and then re-joining OAP in a matter of a few years. When asked why they rejoined OAP, some of them confessed that the relationship and rapport they shared with people internally and the environment that they found at OAP was too powerful a benefit to be compromised. For the Senior Leadership, that is not averse to welcoming employees back (incidentally, the company has less than 7% attrition) the employment contract with an employee spans a lifetime - they know for sure that by welcoming employees back they are getting an opportunity to leverage new skills the employee may have picked up at other places.
Adding value - corporate governance culture
While the focus on People, Performance and Profits permeates the entire system, the emphasis on integrity is equally overwhelming. This is because, it is easy for some employees in such agencies to make a quick buck by getting into an arrangement with a particular vendor and then overcharge a customer. There are various ways in which the Senior Leadership at OAP checks this behaviour. If an employee is found to indulge in any unethical behaviour, he/she is given an opportunity to improve. In extreme cases, immediate dismissals are effected. Also, the company has an open door policy to whistleblowers inside and outside the system. Practically, anyone with enough evidence on any questionable employee behaviour can report directly to the CEO and the other Senior Leaders at OAP without fear of any reprisal. Interestingly, the CEO has also mandated that no OAP employee should receive any gifts valued above a certain figure from any vendor.
People strategy married to business strategy.