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Continued from Previous……
Merit for People Growth
What should be the eligibility criteria for growth in an organization? It remains highly variable and is open to conjecture. Performance at job is not certainly the top criteria, though it should be. For most entrepreneurs, loyalty is more important than all other things, including performance. The commonest perception among small/medium entrepreneurs is that they run their enterprise solely and no one else has any worthwhile role in the overall scheme of things. That is the reason loyalty without question is considered the highest virtue. This leads to two consequences: one, employees’ focus shifts from performance to survival through loyalty; two, capable people focused on performance get disillusioned and leave. Overtime, the organization is filled with mediocre, but loyal employees. Scaling up becomes impossible and growth of the organization stalls, business growth notwithstanding.
Choosing loyalty over capability is a self-defeating attitude, but it is rampant in Pakistan. While the world is crying for talent, we are not even searching for it. Talent Acquisition, Talent Retention, and Talent Management have become key words internationally and it is being lamented that enough talent is not available now and will shrink further in future. For most enterprises in Pakistan, this is not even under consideration.
Availability of low-cost labor is another factor which fuels the fury of muddled merit. Fire one, and twenty more shall be waiting outside to take his/her position. For some entrepreneurs, it is a matter of great sadistic pleasure to be able to fire an employee at whim and they keep doing it periodically. Low-cost labor also means that one could hire two people in place of one, and although two incompetent people do not add up to one competent person, but it still works somehow.
Siphoning Money Away
The second big hurdle to scaling up is the constant siphoning-off of money from the running business. No one waits for the profit to be declared, the money is drawn without calculation any time and all the time. The money thus siphoned off is spent on personal things. The accounts department is supposed to adjust books to accommodate this constant drain. This trend is highly damaging for the scaling up of business. Growing businesses do not have surplus cash; whatever they earn must be spent on business growth. Siphoning off money from everyday income does not leave enough resources to reinvest for growth. The business growth slows down, or stops, vendors payments pile up and employees’ salaries get more and more delayed. The response to all such things is harshness towards employees and hiding away from vendors.
Most entrepreneurs in Pakistan turn to other unrelated businesses to make money, property getting the highest attention. What kind of business diversification is to divert money from a running business towards property trading? During Dubai meltdown, Pakistani and Indian businessmen were among the biggest losers. No wonder because we come from the same stock. Property in Pakistan is also greatly favored and vast agriculture lands, houses, apartments, and building are purchased regularly. The running business keeps suffering due to restricted resources, but it is not considered.
Scaling up is based on business growth. Income growth and staff expansion are required, hierarchies are needed to streamline and expedite decision making and keeping the organization on the track of development. None of this remains possible due to unplanned, unthoughtful, and brash withdrawals any time and all the time. It shows rather clearly that scaling up of business is not a priority, although business growth is strongly desired.
The format of management in most enterprises in Pakistan is standard; the entrepreneur/owner holds all powers, does not share with any employee, and does not delegate at all. It is a one-party rule which all employees are required to accept, whatever their titles may be. On paper, there may be an organizational structure, but practically it exists only to the extent of responsibility only.
Hierarchies are always hard to build. Even before proper hierarchy is built, the silos are formed which is the negative form of hierarchy. Functional heads, even when they do not have corresponding authority, make, and enclose themselves and their functions in tightly sealed silos. Silos are detrimental to collaborative, team work and also become tangible hurdle in the scaling up of the organization.
To be Continued……
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