f o r    m a n a g i n g    t o m o r r o w
NOVEMBER 5, 2006
 Cover Story
 BT Special
 Back of the Book

The Building Boom
Is an asset price bubble building up in the real estate market? Flats in posh Mumbai areas sell at the rate of Rs 50,000-70,000 a sq. ft. and housing plots in Gurgaon are going for Rs 1 lakh a sq. yard. This may sound like music to those who have been clinging on to their assets, it portends danger to buyers. The high real estate prices keep the majority out of the housing market and make the dream of owning a house more distant.

The Learning Curve
India's investment in education-as a percentage of GDP-is lower than not just of countries in the West but also some of the emerging economies, including China. The percentage of population in the relevant age group enrolled in higher education too is the lowest among countries with which it must compete. Clearly, there is a need to scale up substantially the physical infrastructure and attract better faculty by offering market wages.
More Net Specials
Business Today,  October 22, 2006
Employee First


Please don't leave: Attrition has become a big problem

As competition in the market place got stiffer and stiffer, smart marketers came up with a slogan to tell everyone who they felt was the boss: Customer is King, they said. Profitable and loyal customers are still awfully hard to get. But there's someone else proving far more elusive: a good employee. Not surprisingly, then, the competitive slogan-at least at some of the companies covered in our Best Companies to Work for survey-has been stood on its head. "Employee First", cry these companies, cocking a snook at their customers. This signals a dramatic shift in the balance of power at organisations. Not too long ago, employees were expected to be grateful for getting an opportunity to work with, say, a top bank, a manufacturing company, or an FMCG giant. The very fact that one had managed to secure employment was expected to be taken as part compensation.

Try recounting these stories to the modern day hr manager and you'll hear her groan. Finding and keeping employees has become the single-biggest challenge for organisations around the world. And it's an issue that has grabbed the attention of top-most leaders at organisations. As a result, human resource management has become a board-level job at major organisations. It's not surprising that employers are rediscovering the importance of human resource. After all, organisations are not so much about plant and machinery as people. Everything else, and we mean everything else, flows from that. People are what differentiate a Toyota from a General Motors; a Wal-Mart from a K-mart; an Apple from a Sony. Ideas, innovation, and execution all come from the people and the culture an organisation has.

But when and how did people become the most precious resource? In general, talented employees became important when companies no longer had captive markets. The US has always been a free market internally, but it became vastly more competitive when the Japanese and Chinese started invading their markets. India, too, had closed markets until the early 90s, but the opening up thereafter brought hordes of new competitors. Perhaps more fundamentally, employees became important when the nature of wealth-creating industries changed. When manufacturing was the money-spinner, rising wages could be tackled by increasing productivity or automating processes. But when brain power is what drives an industry, it's that much harder to find substitutes. The scramble for top-notch techies in America's Silicon Valley and India's own it industry proves that. Will the employer's infatuation with the employees end? It will, when supply catches up with demand or demand slows down to match supply. The problem is, neither seems likely in the near term. So, employers had better get used to the idea of Employee First.

Open Up Education

A new chapter: That's what our education system needs

The prime minister's recent emphasis on the need for greater penetration of education brings to the fore the need for a comprehensive policy on education. One that genuinely provides all universal access to education at the primary level; lays out standards for education at various levels; and regulates private sector in the education business. Clearly, Foreign Direct Investment (FDI) in the sector must follow once the house is set in order-government identifies segments where education can be recognised as a commercial activity. For instance, pursuit of fine arts or philosophy will require state support and commercialisation will restrict universal access. However, FDI in management education must be allowed, as it can be encashed in the market place. Here again, the government must regulate the quality of foreign institutions, since, otherwise, such schools will only add to the unemployment count in the country. While the higher education system needs to be tweaked, the primary education system requires an overhaul. The palpably inefficient delivery system of the state is to blame. One solution lies in the model pursued by Kerala, which boasts of the highest literacy rate in the country. In this southern state, schools are largely in private hands-managed by the private sector. However, the state reimburses the cost of service. Public-private partnerships of this sort need to be explored by other states and replicated where possible.

While state funding of primary education is a Hobson's choice, the same does not hold for higher education. In fact, greater private participation, backed by recognised foreign institutions, is an optimal prescription to sustain growth and employment in the country. Here's why. It is an acknowledged fact that the manufacturing sector provides the maximum 'knock-on' effect in terms of employment generation, owing to its linkages with other sectors. At the same time, sustaining the present pace of robust growth in the manufacturing sector on the back of low-cost labour, as has been the past practice, is not a sustainable option. Hence, the need for a large basket of institutions that can provide quality education.

Surely, such debates cannot be lost between government departments like the Human Resources Department, which is opposed to FDI in education. Time, the government gets educated on education.

He Who Pays The Piper Calls The Tune

Money matters: And BCCI is flexingits muscles

What is it about the chemistry between the International Cricket Council (ICC) and the Board of Control for Cricket in India (BCCI) that makes their relationship so volatile? There's no easy answer to that-the reasons range from prickly personal equations between office bearers of the two bodies to disputes over money, and, indeed, control of the game to allegations of bias and one-upmanship. It wasn't always like this. Till the early 90s, the ICC, and more specifically, two of its founder-members, England and Australia, were pretty much monarch of all they surveyed in the cricketing world. Granted, there wasn't really that much to survey-cricket was (and is) played by only a handful of Commonwealth nations; cricketers, with the exception of Englishmen, Australians (and some West Indians who played on the county circuit) were poorly paid; and ICC itself was a chummy, albeit cash-strapped, club of mostly white, Caucasian males of Anglo-Saxon descent.

Then, the television explosion in India changed all that. Money started pouring into the game. The BCCI became the richest cricketing body in the world; and the ICC, led by Jagmohan Dalmiya, leveraged the game's following in India, and began selling the rights to its events (the World Cup and later, the Champions Trophy) for astronomical sums. The point to be noted here is that the ICC gets about 75 per cent of its global revenues from India. The tail had started wagging the dog.

Given this background, the BCCI justifiably feels that it should have a greater say in the way the game is run. It also feels, with equal justification, that ICC-which is run by an Australian-is still guided by a mindset that seems to place the interests of its founder members over those of others. The ICC, on its part, makes politically correct noises but continues in its set ways. Commercial disputes apart, this invariably leads to allegations of racism (which this magazine would like to believe does not exist in cricket) and official bias against Indian, and other sub-continental, cricketers. Result: a running battle between ICC and BCCI.

Lalit Modi, Vice President, BCCI, has made it plain that the Indian board will not settle for anything less than a complete overhaul of ICC's existing equations. He says the executive head of the world body should be an Afro-Asian. It is an accepted convention the world over that he who pays the piper calls the tune. There's no reason why cricket should be an exception.




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