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Performance Management - National HRD Network

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Today, I propose to tell you a story of a<br />

business unit which can be described<br />

as symbol of Honesty. YES, I am talking<br />

about the company : Polyhydron located at<br />

Hubli near Belgaum in Karnatak State, India.<br />

Mr.Suresh Hundre, CMD, established this<br />

unit in 1987 and with two decades of<br />

experience of observing ethical practices<br />

developed into "Business Ashrama" on 4th<br />

July 2002. (Samadhi day of Swami<br />

Vivekanand). According to Mr.Suresh<br />

Hundre : "It is a place for grooming<br />

karmayogies based on an experiment of<br />

integrating spirituality with business which<br />

produces excellent results".<br />

If you read the vision statement of<br />

Polyhydron it says: "We will create an island<br />

of excellence through focus on customer,<br />

employee-empowerment and continuous<br />

improvement." Let me explain to you that<br />

Mr.Hundre and his colleagues follow not only<br />

in words but also in spirit their mission<br />

statement which reads as "Polyhydron will<br />

nurture an ethically managed organisation.<br />

We will not exploit our customers, suppliers,<br />

government, society and nature." Frankly,<br />

as a teacher of management, I have yet to<br />

find a more comprehensive mission<br />

statement than this one.<br />

If you visit the Ashrama, you will experience<br />

the spiritual ambience - Dhyan Mandir for<br />

meditation, water ponds, fish, royal swans<br />

and a lot of greenery.<br />

Polyhydron is in the manufacturing of mobile<br />

hydraulic press, way back form 1987-88. Till<br />

then the equipment was imported from USA.<br />

Obviously from India's point of view,<br />

precious foreign exchange has been saved<br />

by the Unit.<br />

It conducts usual business activities like<br />

manufacturing, marketing, finance, HR etc.<br />

but in a unique way. For example ; in<br />

manufacturing, there is such an open-ness<br />

that a worker on the shop-floor can reject<br />

the material and believe me - he is the final<br />

authority. As regards marketing, no attractive<br />

concessions or discounts are offered to the<br />

customers. At this stage, some figures will<br />

make my point clear. For example; in 1995-<br />

96, the company turnover touched Rs.5.75<br />

Polyhydron : Business Ashrama<br />

A Unique Experiment in<br />

Business Ethics<br />

crores without offering any discounts and<br />

company proudly paid corporate tax to the<br />

tune of Rs.1.5 crores. Incidentally, Mr.<br />

Hundre does not welcome any consultant<br />

in his office who may like to offer advice on<br />

how to reduce the tax burden! You will be<br />

surprised that the company's starting point<br />

of planning is : How can we pay more tax to<br />

the Government in the current year as<br />

compared to previous year! To Mr.Suresh<br />

Hundre, this is "continuous improvement".<br />

I remember having read an article in the<br />

Harvard Business Review entitled : "If<br />

honesty does not pay, why be honest in<br />

business" ( It is a well-intentioned survey<br />

based article). However in the words of<br />

Mr.Hundre, "Honesty is not the best policy.<br />

It is the only policy. "We are honest, we are<br />

transparent and we do not pay any bribe!"<br />

<strong>Management</strong> of the unit is simple. It is based<br />

on "trust". Mr.Suresh Hundre's Polyhydron<br />

is a temple of ethics in an engineering<br />

industry. Ms.Sushma Nirgundkar who wrote<br />

an article in the Times of India, mentions<br />

"Mr.Hundre's role models are Mahatma<br />

Gandhi, Kiran Bedi, Ratan Tata and Narayan<br />

Murthy".<br />

It is admirable that in this unit, there are only<br />

two layers( in other words there are no<br />

supervisory staff). The atmosphere is of<br />

mutual trust. Everybody in the organisation<br />

knows the figures of net profit, material cost,<br />

labour cost, tax paid to the government,<br />

excise paid, payments made to the suppliers<br />

etc. Even outsiders like government officials<br />

and customers have access to this<br />

information. Anybody in the organisation can<br />

challenge any voucher! There are no<br />

"debtors" no "creditors". Obviously there are<br />

no bad or doubtful debts. Suppliers are paid<br />

the moment the material is accepted and<br />

customers pay immediately on delivery.<br />

Employee Empowerment:<br />

All the employees are expected to be<br />

honest. They will follow ethical practices. I<br />

can give one example here. A few years<br />

back, the company was to buy a few<br />

computers. The company paid heavily for<br />

software and hardware for the computer<br />

network, buying from the original<br />

Dr. S G Bapat is President, Dr S G Bapat & Assocites, Pune. E-Mail: sg_bapat@hotmail.com;sg_bapat@indiainfo.com<br />

Dr. S.G.Bapat<br />

manufacturers, when pirated versions were<br />

cheaply available in the open market. The<br />

price paid was working out to be double.<br />

The company decided to buy half the<br />

number of computers and employees<br />

agreed to work in turns and by rotation -<br />

even night shift for some might be thought<br />

to be OK. A small incident but noteworthy.<br />

Mr.Suresh Hundre believes in setting a<br />

personal example. He does participate in<br />

social activities but it will be after 5 p.m. If<br />

he is taking Off, his casual leave application<br />

will be on the notice-board. I was surprised<br />

that in our seminar in Pune on "Value based<br />

<strong>Management</strong>", he was a faculty, but he was<br />

on "leave" and was not on duty. Forget about<br />

charging TA DA for the company!<br />

Anybody would like that all the world over<br />

such units be multiplied. There are quite a<br />

few people in the world who still believe that<br />

"Good Ethics is Good Business". I talked to<br />

Mr. Suresh Hundre, CMD. Here is a brief of<br />

the interview:<br />

Do you feel that most of the employees have<br />

understood the concept of employee<br />

empowerment?<br />

Suresh : Yes. Most of the employees have<br />

understood the concept of Business<br />

Ashrama and they are fully empowered. In<br />

fact, a senior faculty member from Karnatak<br />

University's <strong>Management</strong> Institute is writing<br />

Ph.D. thesis on Empowerment at<br />

Polyhydron.<br />

Mr.Hundre, you may be knowing that<br />

Mahatma Gandhi suggested "trusteeship<br />

formula" for distributing the gains as 25%<br />

to owners and shareholders, 25% for<br />

additional repayment of loan and interest,<br />

25% to be divided equally amongst the<br />

employees and 25% is to be used for<br />

"expansion of the business in future". Do<br />

you agree with this formula or you have<br />

developed your own one?<br />

Suresh : Dr.Bapat, we have our own formula.<br />

We first calculate the wealth created and<br />

then we share 30% with employees, 5% with<br />

shareholders, 1% with society and balance<br />

64% remains in the for growth. (Of course,<br />

this is all after the payment of corporate tax<br />

as per existing rules).<br />

u H<br />

| <strong>HRD</strong> News Letter | March 2007, Vol.22, Issue:12 33|

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