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Wednesday, January 7, 2009

Management and Handling Ambiguity

Before I joined ISB, I received feedback from my Manager (s) that I need to improve my ability to handle ambiguity. They even said that as you go up there will be more and more ambiguity and that one has to learn to handle it.

I could understand that ambiguity increases as you go up, I never really understood how they were handling ambiguity and how their actions were improving the situation. Everytime a unexplainable decision was taken, they blamed "Management."


It is very interesting to note that this is the same thing I observed even in the old economy firm that I first worked with. Everything was blamed on the elusive and invisible "Management." At that point I was in the junior cadre and thought that the senior managers formed the Management and used to get little surprised when the senior managers themselves blamed "Management." But then when I saw the CXO level also blame the "Management" I couldn't stop myself from wondering where/who the hell is this "Management." But Mr. Ramalinga Raju of Satyam, by taking complete blame on himself has kind of answered my question that the "Management" lies at the top and now where else.

How foolish does he expect the shareholders by stating that he and he alone was responsible for all the non-sense. He may have given the okay for all the decisions but then every other top manager must have known what was happening and had all the opportunities to raise alarm. To this a classmate of mine said that who knows if someone has raised an alarm and he was stopped. But then raising alarm is to get attention and unless you get enough attention and thereby some action, you shouldn't stop.

May be this is a reflection of our behavior. As someone said, we are ready to fire anything as long as it is over someone else's shoulder; we will never take responsibility and I think this explains why the "Management" Devil never dies - it doesn't matter if it is old economy or new economy. We have so much pressure to comply with the boss that we are afraid to talk against the decisions that may harm the company forget about taking decisions.

In my view handling ambiguity is not sitting there and waiting for ambiguity to get cleared; instead everyone in the management has to work to reduce ambiguity at each level and give decisive direction to lower levels. I had seen that very few managers actually accept ambiguity and talk about it lest try to reduce it. In fact their behavior adds to the ambiguity.

What I would like to say is that every employee at every level is part of Management and that they have take responsibility to the possible level and reduce ambiguity in company's business and take decisive action towards performing company's business. This is what would benefit all the stakeholders not the shareholders who just give the money. Only then can we expect to rise against the tide not just along with it.

It is a day of great importance to India and to all the so-called Corporate Managers and Leaders. When I read Mr. Raju's letter, it appeared to me like a suicide note acquitting everyone else from any responsibility.

I must share this small discussion I had with my colleague who is active in the stock market the day-before-yesterday about Satyam. He was saying that since the company had cash, he would buy the stock if it falls to Rs.100/- as at that price it would be lucrative for other companies to takeover; my comment was that one cannot be sure how the money would be used and that may be the reason no one is yet making a serious effort to takeover and now that whole cash has vanished in to the past. We can only wait and watch what happens to MAYTAS (reverse of SATYAM)

2 comments:

  1. there is a talk about the role of auditors in it...any thoughts?

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  2. Given the incentives, when things go wrong, most CEO's would like to fudge numbers. Audit is the mechanism put in place by the system to check such thoughts.

    Misleading the auditor to some extent is possible and the auditor himself will give ideas if they are harmless. Most of us can experience this while filing personal tax returns.

    However the Auditor cannot allow anyone to do things that are potentially and even remotely harmful to any stakeholders interests. It may be believable if this was a one stray incident. But if this has been happening for sometime, there is no way Auditors couldn't sense something. Either they closed their eyes or they colluded.

    We have to wait and see to what extent the auditors have compromised. Everyone relies on the Auditor's signature and if he fails to behave in the right manner, then the whole system fails.

    I am surprised no one is questioning the top management's (other than Raju) claim that they knew nothing. The top management along with Raju must be house-arrested and all their accounts seized while a Industry Body nominated committee should handle the operations.

    This (Raju declaring that everyone else is innocent) must be his last attempt to cheat everyone again. He may use this time to destroy crucial evidence and weaken the case

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