As going gets tough, CEOs prefer clear-speak to rally teams

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Malini Goyal, Forbes-Network18

 

Last month, software product vendor Manthan Systems played a little game with its 400-odd employees in Bangalore. Just as they entered the office, a poster listing the fallen stars of the global meltdown-Lehman, Wachovia, Merrill Lynch, BSE et al-stared at them. A red caption below said: "Yes the times are challenging."

 

On the reverse, it listed seven clients-Manthan's recent wins. The caption read, "Yes the times are good." Below the poster the statement read: "Let's face it. There are two sides to adversity..."

 

The game continued. At their desks, employees found a square white sheet (with random alphabets) with a web URL link to solve the origami-based puzzle. As they folded the sheet into a neat little box, three captions showed up: Innovate. Have Fun. Reduce Costs.

 

These aren't exactly times to play games for India Inc. But remember it is only a ploy to drive home the message. Amid panic and all-round mayhem, when business is difficult and spirits are low, it's a question that CEOs across India Inc are grappling with. What to say and how to say? More importantly, how to re-energise the organisation when every news is bad news?

 

Amidst a bleak present and uncertain future, Indian CEOs are doing what they don't do often and well-talk to their employees. The mode varies and the style differs. Ratan N Tata writes a crisp email to the heads of businesses about urgent steps that must be taken. Azim Premji quotes Charles Dickens's Tale of Two Cities and Irving Wallace's Prize in his quarterly newsletter to exhort employees to confront the crisis and triumph. Vineet Nayar of HCL Technologies holds townhall meetings to reiterate "employee first", come what may. Ashok Reddy, MD of staffing company Teamlease, does day-out sessions in each location to brainstorm an 18-month strategy to reorient his organisation to the new realities. Jindal Steel's Sajjan Jindal sends email urging staff to not "panic or despair but show prudence and determination". In good times, it didn't matter much. But CEOs are realising that in bad times their communication to employees couldn't be more important.

 

While Indians generally are not as skilled in communicating, this one is especially difficult for them. "CEOs are uncomfortable telling people they don't know," says the HR head of a Delhi-based white goods MNC. "How do you lead, what do you say when (you) yourself aren't sure," he adds. The pace of events, the uncertainty on virtually every front makes the task of leaders and leading very difficult. Seasoned executives advise that even if one does not know, the communication channels should be open with regular updates.

 

Not surprisingly, every email and communication strategy is vetted by a team of people to make sure that message and tone is finely balanced. At SRF Ltd, an email that the deputy MD sent out recently was vetted by the MD, the chairman, the HR chief and the corporate communication head. Often the senior management team too is asked for comments. Internationally, it is not unusual for MNCs to have the legal team vet the communication (especially if it is around drastic steps like pay cuts or layoffs) before it is sent out. While getting it vetted is important, being fair and transparent in communication is a must. "What employees are looking for is unvarnished truth," says R Sankar, executive director, PwC.

 

But at times, unvarnished truth may create panic. This is especially true for MNCs with presence in different heterogeneous markets. Often, via webcasts or global emails, in a very mechanical, process-driven manner, the distant headquarter sends out communications apprising all employees of the situation and may be impending decisions often related to layoffs and pay cuts. While it does inform them about what's going on at the headquarters, it creates panic as well. "Many of my friends (senior executives) with MNCs are panicking after receiving these emails. They don't know who will survive who will not," says a senior HR executive working in the telecom sector. Many of his friends are already looking out for a job. Even though different subsidiaries will get impacted differently, for most MNCs the message remains uniform. While the country heads do have an important role to play, because they are far from the headquarters, they often are not able to keep pace with the developments.

 

New economy companies have a relative advantage over the old world manufacturing sectors because they already have systems and processes in place to interact with employees. From townhall meetings to company-wide emails and monthly newsletters, they have been doing it all during the good times and "it is easier for them to do it during the difficult times," says Mohinish Sinha, president, iDiscoveri Enterprise.

 

Sudhir Dhingra, chairman of Orient Craft, one of the largest garment exporter from India, knows it first hand. Difficult times pushed him to let go 3,000 people 10 months back-the first time he laid off people. "It was difficult but I realised I could not be emotional about it," he says. He did it the old style-talking to people, factory to factory, location to location. He put down the numbers, people productivity and gave them the exact sense of the money they were losing. "The message was clear. Either we save the ship or we all go down," he says. Hence the decision to layoff, who to layoff, how to go about it and the ways to boost-up productivity-all of it came from the employees as they absorbed the extent of the crisis. "There's a great deal of understanding among them," he says. With training, reskilling and some cost-cutting measures, employee productivity and efficiency has already gone up.

 

At steel major JSW, it was slightly different. Employees were pleasantly surprised to get emails from the MD on the downturn. "The letter is probably the first of its kind," says a senior JSW executive. While the company may have faced serious challenges in the past, there was not much interaction between the promoters and the employees. Jindal's email, while calling for belt tightening, reiterates and reassures that the company's Vision 2020 remains intact and on track. "This letter reflects the company's new-found confidence," the executive says.

 

It also reflects the change in management philosophy at many family-owned businesses with the younger generation taking over the reins. Last year, at Rs 2000-crore SRF Ltd, the young scions Ashish and Kartikeya Bharat Ram took over as the MD and deputy MD. Around that time the 35-year-old company also kicked off a blog on the intranet, open house meetings addressed by the MD or plant head and a quarterly update to all employees. "It was a big change," says deputy MD Kartikeya. A few weeks back, the MD in his quarterly letter sent out a routine update and apprised the staff of the meltdown and tough times ahead. "I am now following it up with a more specific email about the impact and steps needed to tackle the situation at SRF," Kartikeya said.

 

What's the toss-up between face-to-face meetings, townhalls or company-wide emails?

 

"Synchronous, constant communication is a must," says Subroto Bagchi, gardener, MindTree. When the message has to be conveyed quickly, homogeneously and across many locations, emails are the best bet. A lot also depends on the message. Emails are a good starting point to send a generic message, set the tone, apprise people of the situation and align everybody with the urgency of some of the issues that the company is grappling with. Townhall meetings signal urgency and could be about a sudden development that has to be addressed frontally. Further, any drastic measure of layoffs, pay cuts must be delivered via face-to-face interaction so that there is scope for two-way communication. "Any action with residual toxicity (discontent among staff) must be handled transparently, face-to-face and empathetically," says Bagchi.

 

Companies are adopting a differentiated communication strategy for different levels of hierarchy. Arvind Singhal, chairman of consultancy firm Technopak, says he has a three-layered approach. First, address all the staff as a chairman sensitising them to difficult times and elaborating a bit on the economic crisis. Second, is more plain speak, without-frills communication with his CEOs and may be the CXOs-stock taking the business, difficult decisions that might be needed and possible strategy for the company to deal with difficult times. And some guidance on how to communicate decisions down the line. Third kind of communication treats them more like a colleague. It could range from personal advice on how to live through the difficult times or forward emails (he forwarded Azim Premji's email to Wipro staff) and interesting articles that give a perspective on how to deal with it at a personal level. Singhal just wrote a column for a magazine about getting laid off and how to deal with it. "I try to walk the talk, setting personal examples," he says. He just trimmed down his elaborate silver wedding anniversary to a modest one. Maintaining a fine balance between keeping staff informed and not create panic is important, most CEOs insist.

 

There are other things that CEOs and senior executives need to pay attention to. "Answer questions. Clarify doubts," says K Ramkumar, group HR head, ICICI Bank. At a time like this when rumours are aplenty and you barely have control over what people are talking about the company, it is important for leaders to lead and answer. "Be upfront, frank without being diplomatic-even when the message isn't good," he says. Take extra care about the way you dress, your body language and be very firm-not ambivalent-about what and how you speak. "Such rituals and protocol matter," he says.

 

In times of crisis, when a company is making headlines for the wrong reasons, a CEO must pay special attention to his press engagement and communication outside the company. "The CEO interview should appear credible and challenging and should be conducted by a journalist of repute," he adds. Ramkumar himself did a hard-hitting 90-minute interview with K V Kamath, ICICI Bank chief, asking all the tough questions, seeking clarity on rumours, including some tough questions on strategy. He says, it helped the bank communicate to its employees effectively.

 

While communication during crisis may require a completely different strategy, here's what Ashok Reddy, MD, Teamlease Services, is doing to re-energise and re-tune the organisation amid a downturn. "So far, we have just been running. Now I want to use the slowdown to consolidate and build muscles so that we are prepared for growth when good times return," he says. Three months back, he met with top 14 managers, created an 18-month roadmap and planned activities around training, rejigged businesses, and plans to reskill and upgrade his employees. To communicate, they have done day-out and open house meetings in each of the major locations. The new plans and strategy have been conveyed to all employees. "We have recalibrated and are working hard so that we are prepared when the market turns around," Reddy adds.

 

Different Folks, Different Strokes

 

 

 

Ratan N Tata sent out emails to MDs and CEOs of all Tata companies. The message was without flourish, almost terse, formal and urgent. ".....This state of affairs is not likely to improve substantially over the next 12 months....Failure to manage this could result in irretrievable positions," his two-page email said, outlining eight key suggestions on mobilisation of funds and operational efficiency that must be undertaken.   Azim Premji, chairman, Wipro Technologies, used his quarterly newsletter to communicate with employees. The 770-word email was gentle, quoted Charles Dickens' A Tale of Two Cities, gave global perspective of the meltdown and exhorted employees to use all energy to triumph over the challenge. "...So how long will the winter of despair last? Nobody really knows but the estimates vary from 2 quarters to 2 years. In fact one study of 113 downturns suggests that it may be as along as 3 years...." the email said, outlining seven things that employees and Wipro must do to "weather the storm and make the most of the silver lining".   Vineet Nayar, CEO, HCL Technologies, preferred the annual townhall meeting route. During his September trip to Bangalore, he told his employees in a townhall meeting: "While CEOs of other companies may be heading to the US to try and take stock of their customers, I'm here with you...because employees are our first priority. We will not move away from our employee first policy, no matter what. We will not let go any employees come what may." And amid meltdown panic, he stood out as one of the few CEOs who was calming nerves and reassuring employees that at HCL it is business as usual.   Sajjan Jindal, MD, JSW, used his Diwali email to reassure JSWites: "Times like these don't call for panic but for prudence. Not for despair but for determination," he said in his email.   Ashok Soota, MindTree, said "even though during 9/11 and the recession that followed, the businesses almost ground to a halt, we kept the team together and didn't lay off a single person..... Please know that MindTree is a company for both the good times and the tough times..."   Arvind Singhal, chairman, Technopak while updating employees on the meltdown impact and some belt tightening in the company advised on the personal front: "A few months of self-imposed discipline on our personal expenses is now desirable. It could be something as simple as a "a multiplex visit not made, a long distance vacation deferred... I have begun practising this myself."   Tesco HSC India top executives preferred a one-hour townhall meeting addressing all the 3,000 staff. Questions were solicited in advance and around 35-40 were submitted touching on a range of subjects including slowdown, jobs and future growth. The message was that Tesco HSC's importance would only go up in difficult times as it helps other parts of Tesco become more efficient. They would want to rely on India for more support going forward.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Malini Goyal is Associate editor with the new business magazine to be launched by Network18 in alliance with Forbes, USA. Additional reporting by Rohin Dharmakumar, Prince Mathew Thomas, Mitu Jayashankar and Shloka Nath.