Time to rediscover Indian frugality: Nirmalya Kumar
Source : Economic times
As Warren Buffet famously said “you only find out who is swimming naked when the tide goes out.”
It had become common practice for performing employees to regularly bring counter-offers and ask them to be matched. Underperforming employees who are let go resurface at other firms at twice their salary. A generation has grown up knowing nothing but rapid increases in living standards. The consequence is that Indian managers probably have the highest standard of living in the world with a plethora of perquisites, including free housing, club memberships, chauffeur-driven cars and generous expense accounts. My Indian friends may not like to hear this, but the reality in India is that people are getting overpaid (on a standard of living comparison) and over-titled, relative to their global competence.
Since the 1991 liberalisation, Indian employees have only seen the positive side of free markets in terms of rising wages, opportunities and living standards. For the first time in late 2008 did companies start considering layoffs or reduction in perquisites. The reaction of employees at companies like Jet Airways, where such actions were implemented, was one of rebellion. But the slowdown and reduced profit margins means that 2009 will be the year when companies confront their talent; and question which executives are really worth their cost to the company. As Warren Buffet famously said “you only find out who is swimming naked when the tide goes out.”The slowdown will require companies to tighten their belts. Historically, Indian companies and their managers were excellent at squeezing efficiencies. Unfortunately, the rapid growth has weakened the cost discipline in many companies, especially amongst younger executives. It is a good time to rediscover the instinctive Indian frugality that was so admired by visiting Western executives.
