Wise incentives for management teachers

Money still continues to be the single largest motivating and retention factor for any employee, more so for a knowledge worker such as management faculty, says V. R. K. Prasad in The Business of HR in Business Schools (www.vivagroupindia.com). He reasons that intense competition, fuelled by mushrooming growth of business schools, has created a dearth of quality faculty, and the resultant fattening of the financial packages. “Management faculty is a highly-networked group interacting with each other in various seminars and conferences. Consequently, they become aware of salaries, perks and other facilities offered to peers in other institutions. That's how the job-hopping process starts…”

Stating that management teaching talent not only looks for higher rewards but is equally conscious of equity, the author rues that a key factor behind the fall in the quality of Indian education system in general and management education in particular is compensation. “Unfortunately, teaching as a profession in our country is not much valued. This is evident from the fact that in India academic faculty receives far less salary than fresh MBAs who join companies. Therefore, there is a pull towards job market in the industry and push away from the academics. The situation in most of the lower rung private schools is pathetic on the compensation front.”

Reward the extra bit

In a chapter devoted to ‘compensation,' Prasad offers a list of functional areas where a faculty deserves to be rewarded for doing the extra bit of work. Examples are research (pre- or post-doctoral), publication (books, research papers, articles), presentation at seminars and conferences, selection as ‘best teacher' for the term or semester, maintaining industry interface through projects and student placements, undertaking consultancy and executive training assignments, referring new faculty members to the institution, loyalty incentive for long service, taking on assignments like controller of examinations and project coordinator in addition to normal teaching load, question paper setting and answer book evaluation, and any other ‘value adding activity' as deemed fit by the head of the institution.

The author reminds that, for an incentive plan to be successful, employees must be able to see a clear connection between the incentive payments they receive and their job performance. Also, “Managements should never allow incentive payments to be seen as an ‘entitlement.' Instead, these payments should be viewed as a reward that must be earned through effort. This perception can be strengthened if the incentive money is distributed to employees in a separate cheque.”

Informative analysis of B-school scenarios.

Costs of unconsciousness

What are the causes behind wastages and non-value-adding costs? Inefficiency, extravagance, and unintelligent innovation, all of which are caused by ‘unconsciousness,' says Santosh Sharma in Next What's In (www.conscious.co.in). Describing the ‘level of consciousness of any organisation' as the collective consciousness of the people forming it, he rues that organisations are seriously trapped in the vicious cycle of mental intelligence; and that corporate culture is often deprived of evolutionary energy and designing intelligence to respond to different situations.

The author draws inspiration from agriculture and classifies corporate culture into four types, viz. barren, infertile (hard-working, but there is a lot of friction), fertilised (where external stimulants are added, but there can be dangerous side-effects), and universally intelligent and fertile.

He assures that inner reengineering of organisations will revitalise the organisational DNA to make them fertile. “Just as higher consciousness renews each cell in the human body, similarly it rejuvenates each and every employee. What a cell is to a body, an employee is to an organisation. Through higher awareness we bring in life, intelligence, self-motivation, and free each basic unit, making an organisation free from all of its limitations.”

GE model

An example mentioned in the book is of GE, which disrupts itself to adjust to the present needs, and serves as a model to many other companies. “Credit goes to GE for identifying the need for fluidity to encourage change. They're using this strategy to lead the future dynamic world where the power centre is shifting from the US and Europe to Asia with China and India as the fastest-growing economies.”

A chapter titled ‘Universal economics' makes a case for having metrics that go beyond GDP (gross domestic product), GNP (gross national product), PCI (per capita income), and SMI (stock market indices). The author suggests the development of GUI – not graphical user interface but ‘gross universal index' – as a measure of the freedom of the people in the economy to have a universal purpose and intelligence to fulfil that purpose, reflecting the state of well-being and freedom from slavery of all kinds. He urges, therefore, employers to initiate individual development programmes where employees are encouraged to come out of their mental pits, and thus enable the organisation to gain an edge.

Earnest attempt to grapple with the many problems that surround us.

Mischief in cryptic information

Sample this situation, about the auditors who made confidential report to the directors of a company calling their attention to the fact that the security for substantial amount of loans was insufficient and that a major part of the debts was not realisable. “Under these circumstances, they advised that no dividend could be paid for the year. In their report to the shareholders, however, the auditors only made a cryptic remark that the value of assets was dependent upon realisation. The directors recommended a dividend of 5 per cent.”

Giving this as a practical problem, A. K. Majumdar and G. K. Kapoor pose the question whether the auditors are liable. Their answer – as discussed elaborately in Company Law and Practice, sixteenth edition (www.taxmann.com) – is that an auditor who gives to shareholders the means of information, instead of the information itself, in respect of the company's financial position, has failed to discharge his duty and will be liable.

For, a person whose duty it is to give information cannot be said to have discharged his duty simply giving others so much information as is calculated to induce them to ask for more (The London and General Bank Ltd case of 1895). “The auditors were expected to have stated in unequivocal terms that the securities for the loans were insufficient and that their realisation would be difficult. Auditors shall, therefore, be liable to make good the loss which the company has suffered, viz. dividends paid plus any other loss that could be shown as directly flowing from breach of duty. Besides, auditors may be fined up to Rs 10,000 under Section 233 of the Companies Act for not making a report in accordance with the requirements of Section 227…”

Time we looked around for aberrations in audit, armed with the educative guidance given in the book!