A behavioural scientist once placed a glass pane in the middle of an aquarium. As expected, at first, the fish kept bumping against the glass. After some time, they caught on, and restricted themselves to their compartment. Then the scientist removed the glass. And lo, the fish continued to swim only in their restricted space.

Do human beings behave the same way?

The HR problems that managers are confronting in newly privatised public sector units (PSUs) would suggest so. After all, an ownership switch doesn't transform a company overnight. "While any merger or acquisition throws up a plethora of HR problems emanating from different cultures, attitudes and styles of functioning," says Anil Sachdeva, CEO and Founder, GrowTalent Company, a consultancy, "acquiring a PSU is a different ballgame altogether."

Take Reliance's Rs 1,491-crore acquisition of Indian Petro Chemicals Limited (IPCL) in June. Reliance is famously performance-driven, and even more famously snappy in its decision-making. But, "IPCL is bound by procedures, so delays were an inherent part of their work culture," says a Reliance hand. That's not all. "Unlike Reliance employees," he continues, "IPCL's workforce does not think profit."

That's typical. Since 2000, the Indian government's Department of Disinvestment has privatised more than 12 central PSUs, including such companies as Modern Foods, Balco, CMC, IBP, VSNL, Paradeep Phosphate, Hindustan Zinc and 18 ITDC hotels. More are on the block. The time to start working out solutions is now.

Conditioned By Circumstance

How many PSU employees does it take to change a lightbulb? Thirteen. One to hold the bulb in its socket, and a 12-member committee to rotate the table on which he's standing.

It's a joke, of course, but also an eerie reflection of the real world. The committee, for example, may not find a consensus on which way to turn the table, or whether to turn it at all. Long experience has taught people that doing nothing is safer than doing something and risking the scrutiny of authority. Be it audit and vigilance commissions, senior bureaucrats, politicians or even Parliament.

The result: decision-paralysis. The secondary result: organisation-wide laziness.

And if there's pressure to produce results, it's easier to report that the bulb is alive and bright, and pretend that this is so, than to face reality. Recording a bust bulb as 'on', as a '1' rather than a '0', is to destroy the very basis of information-the oxygen of any enterprise.

Perverse? Yes. But it's important to avoid the blame game. If that sort of thing could go on, it was not because individual employees were unworthy, but because most PSUs remained insulated from market reality for so long that it conditioned the staff-like the fish-to behave the way they did. So long as taxpayers kept paying their salaries, what would motivate anyone to shake things up?

Well, reality, in the form of privatisation, has already served those blissful dozers a rude wake-up notice. It's de-conditioning time now, as workforces adapt to the business of making money by fulfiling market needs. Workers are learning that they're not do-gooders on state patronage, they're value-creators for a business. And they had better generate value, and be productive, before someone else takes their place. "When employees discover that their jobs are no longer all that secure, attitudes change automatically," observes Sachdeva, citing his experience with Mumbai's Hotel Centaur, which has turned markedly more customer oriented of late.

Taking Them Along

It does not work to scare workers, though. Acquirers that display sensitivity and patience tend to get better results from an acquired company's workforce. Deep down, ex-PSU employees know that they aren't at fault for poor productivity.

Yet, there's fear. A primitive sort of fear-like that of a defeated army awaiting its fate at the mercy of the victor. "With any merger or acquisition," says a senior Tata executive, "the employees undergo a period of uncertainty as far as their place in the merged entity or under the new ownership is concerned." The Tata group acquired a 51 per cent stake in CMC in October last year, and bagged a 25 per cent stake in VSNL in February this year.

According to Sasanka S. Ghosh, Managing Director and CEO, CMC, the company's workforce has welcomed the change, though he is quick to add that "any change does bring anxieties and we are addressing those".

The Tata group has resolved to allay any transitional concerns through a clear and transparent flow of communication with employees, says the Tata spokesperson. "There is an open-door policy under which employees are free to walk in at any time to have their concerns addressed," he adds.

Even that may not be enough, according to Rumjhum Chatterjee, Managing Director, Feedback Reach. "Sometimes," she says, "the employees of the (acquired) PSU need counselling." People may need to overcome their inferiority complex, vis-a-vis their private sector counterparts. "They feel that since their company has been bought over," she elaborates, "they're the ones who have to change. And that makes them the underdogs." It calls for sensitive handling.

Paradeep Phosphates Ltd (PPL) is an interesting case. Since its inception in 1981, PPL had only posted losses. So the workforce hadn't seen a pay hike since 1997, and morale was abysmal. In February this year, 74 per cent of PPL was acquired for Rs 151.7 crore by Zuari Maroc Phosphate, a joint venture of the K.K. Birla-promoted Zuari Industries and Maroc Phosphore SA of Morocco.

The new management, led by PPL's Managing Director, K.K. Gupta, began by moving the top brass from New Delhi to the plant's location, in Bhubhaneswar. At the first 'gate meeting' on the first day of the takeover, Gupta tried to win over the employees by assuring them that the staff would be retained, and that their support and suggestions would be a critical component of the envisaged turnaround.

The fear conquered, the rest is a motivation game. And nothing motivates better than shared monetary success. Within a month, Zuari-Maroc had revised the wages of PPL's employees. An award scheme has been instituted, too. Morale is up, and capacity utilisation has risen from 40 per cent to a claimed 120 per cent. What's more, an employee suggestion has even helped PPL produce a new product, black dap. On the whole, Gupta is glad that he decided to make the most of the staff he inherited.

Reliance has done similar things at IPCL. By December, it hopes to have a new HR policy-with new motivation tools and performance appraisal mechanisms-in place for the IPCL employees. Production at IPCL has increased by 12-13 per cent already, and could rise further.

The other way to turn the old staff from a liability into an asset is to train people at new jobs. IPCL's Vadodra plant, for example, is highly overstaffed (it has 8,500 employees, while other similar plants-at Nagodami and Gandhar-have 2,500 and 1,400 employees respectively). So Reliance is retraining workers for redeployment at Reliance Infocom, a group venture.

Another famous trainer is Hindustan Lever Ltd (HLL), which bought 74 per cent of the government's equity in Modern Foods in January 2000, for Rs 105.5 crore. HLL has held all sorts of training programmes to get workers going. "The employees were positive. This has helped correct the lack of a result-oriented approach and improved employees' effectiveness," claims Peter Selvarajan, Managing Director, Modern Foods Industries (India) Ltd (MFIL).

Culture Confluence

Yet, it's never as easy as it sounds. The most rousing of motivation speeches and the most drool-worthy of incentive plans can fail. Uncooperative and indisciplined workforces are a reality, too. These workers are the banner-waving type, the kind who see the takeover less as a liberation from PSU-hood and more as an infringement of their privileges and freedoms. Remember, for many people, the word 'private' still evokes images of greedy sadists who want to grow rich by overworking them.

In dealing with that, it's advisable to exercise strictness (strict timings monitored by punch-cards, for example, can go a long way in telling people that you mean business). An information campaign could help counter any anti-takeover propaganda. Seeking a convergence of values is a good idea. Workers who understand that business is as much about meeting human needs as making money, might also accept that the management's value system is not at odds with theirs.

Integrating a PSU workforce into a corporate culture is perhaps the stiffest challenge of all. According to a senior executive at Modern Foods, no matter what HLL has done, the worker mindset remains unchanged. However, Selvarajan doesn't see it quite that way. "Since the disinvestment," he claims, "HLL is successfully embedding the same culture in MFIL."

Ghosh claims that CMC being a new economy player has made integration with the Tata culture easier. It was a highly-skilled workforce to begin with, though some effort is required to bring it up to the standards of, say, TCS.

It's a slow process, says the Tata spokesperson. "We're still in the process of understanding the work culture of these two companies," he adds, of VSNL and CMC.

The classical merger principle may come in handy. Everybody needs to agree on at least one thing, be it what the company's mission is, how it must reach its goals or even that organisational unity must take precedence over all else.