Kuldip Maity

The most contentious issue to have dogged humankind, especially the ones who are the leaders, is the question – reward or penalty, what works best? It’s not an issue that is peculiar to business organisations. It’s a challenge in every field where there is a group involved. Be it a school, theatre group, business – you name it, and you have it.

The issue here is to extract the most that a participant can give. And we are talking about productivity in its most efficient avatar subject to the participant’s ability. Therefore, the question that gets asked here is how to get the most from a group, performance-wise, through effective individual participation.

While writing this, I recalled an Indian IT organisation’s HR experiment. They broke up a team into three groups: the first had more self-motivated performers than not-so-motivated ones, while the ratio was reversed in the second group. The third represented ratio of motivated to not-so-motivated workers that existed in the company.

What is interesting is the year-end result. The first group (which had more self-motivated participants) surprised the observers with the performance results. The laggards in the group, who were never in the reckoning in the race for career growth, nearly matched the stars’ performance and showed mettle that their managers never knew they had!

For the second group, the result was the reverse: the performers returned an indifferent performance.

In the third group, the members behaved how they were expected to behave.

What was the learning? The apparent learning was that motivation and willingness to perform do not necessarily depend on the reward as we generally tend to understand it (something connected with material benefit). But here the performance quotient got mapped to a competitive excellence.

In the third group, the laggards were de-motivators and their overwhelming presence sapped the spirit of the performers. It ate into their zeal to perform.

This case study is often referred to in the management schools for discussion. Because there is theory ‘X’ and then there is theory ‘Y’.

Theory ‘X’ assumes that employees are lazy and they need constant direction and are motivated by the fear of punishment.

Theory ‘Y’ on the other hand assumes that employees want to do a good job. It further assumes that money is not really a motivator. So intangible rewards, carrot by any definition, work the best.

In our example, the first group bears out theory ‘Y’. Being self-motivated, they are competitive achievers. What about the second group? This is where the debate sneaks in. The challenge here is to make the laggards imitate the achievers and not vice versa. But how does one achieve it? Will pure carrot work? Or should one wield the stick? Or should one go for a mix?

There is no clear answer. This is where leadership should step in.

Motivation doesn’t flow merely from monetary benefit. Notwithstanding that people work for money, the satisfaction of achieving a goal is something that needs to be brought to the fore and instilled in those who lack this realisation. Otherwise, no societal organisation can emerge efficient.

Probably, benevolence tempered with sternness in the leadership would work. The leadership must make it clear across the organisation that the organisation cares but will not suffer fools.

That perhaps is the best carrot-and-stick policy.

Only an over-jealous incompetent boss would keep his subordinates muffled. This is the general refrain that one gets to hear in HR talks, but, more often than not, this is the slogan practised to the tee in most organizations. That is probably why so few companies in the world win the race for being called ‘excellent’. An excellent organization would be the one in which there is ownership across the entire team, with everybody encouraged to think like an entrepreneur or, in management parlance, an ‘intrapreneur’.

But ownership that translates into entrepreneurship, as in innovative thinking while doing stuff, does not come naturally to an employee. He or she needs to be led into believing that there is freedom in the organization to do it. No two organizations encouraging intrapreneurship would do it the same way. But there would be one thing all of them converge on. That would be giving employees the freedom to experiment, giving them a say in the way things get done, and in continuous innovations. This can only happen when an organization starts reposing greater faith in their employees, preferring reward over punishment to raise efficiency bar.

How does one do it? How does an organization achieve this? There is no actual roadmap in achieving this, but one thing that’s common in all such organizations is role models. But how are the role models created? That’s where the top leadership comes in. The first role models are the top leadership. The process starts with the original entrepreneur, who starts setting the performance bar and encourages others to think innovatively for the organization’s benefit. He must prove his receptivity and must encourage and reward such behaviour among the rest. Once it starts out and role models are created among the staff members, the process can only reverse once the leadership reverses its values.

The fun in intrapreneurship lies in the innovations that happen in the production lines, products, or marketing but in the internal management processes. Innovations begin from the shop floor and spread across the organization. This is why all organizations ranked as “excellent” and where employees would die to work for are the ones that recognize some form of intrapreneurship for achieving what they have achieved.

Most of us fail to realise what it means when we talk about “reaching out” to our customers. Let me take this opportunity to recount a story. The story cannot be checked. But if you have done a stint at a rural branch or know someone who did, you will have such stories. I heard this one from a friend who heard this from his friend who is now quite famous.

The story goes somewhat like this. As a young probationer in India’s largest public sector bank, his first posting was in a remote village in Murshidabad, West Bengal. In the 1980s, the branch had a staff strength of three—the probationer, a peon and a manager. One day, in the second week of the probationer’s posting, he was sitting alone in the branch. The peon was out, so was the manager. An elderly woman burst in crying, “my Budhiya is lost.” After some interrogation, the probationer realised that Budhiya was a goat that the woman had bought with a bank loan.

Just then, the manager happened to return to the branch. He took in the situation quickly, shoos the probationer, saying, “What are you looking at? Run! Find it before someone eats it! This is still our asset!”

A city-bred person, the probationer didn’t know where to look for the goat, let alone identify it. But the goat was finally found and returned to the woman, and all was well!

That was the last mile then. The goalposts have shifted, and it is up to us, the microfinance industry, to transform the economic landscape. The story that I recounted here has turned even more challenging. Geographical access and handholding the customers as they turn a loan into a productive activity has become more challenging. However, each customer interaction brings with it enriching strategic learning. Increasing digital reach has lightened the burden for operations, but the challenge of physical contact remains.

What makes all this worthwhile is to hear a customer who had been living a day-to-day existence now planning for the next loan cycle. A customer who couldn’t think of sending her kids to school now aspires to send them to college for a degree. A customer who worried about her family’s next meal now employs others.

Like the anecdote above, it’s always satisfying to bring the lost goat back home to the customers. Challenges notwithstanding, this is what keeps us ticking and motivated.

The microfinance segment keeps delivering from behind the curtains in achieving what the nation has set out to achieve. We want growth and we want to eradicate poverty. This segment provides the means to leverage the strength that the poor have. I am referring here to the strength that is counted in terms of their ability to add to the growth momentum that the nation is seeking.

The data on the direct impact of microfinance on generating employment and thereby reducing the incidence of poverty unfortunately remains sketchy. However, the anecdotal evidence, spread of microfinance reach and the data related to agriculture, read together, provides ample reason to believe that starting from scratch microfinance has achieved what it was mandated to achieve, which is economic empowerment.

Take for example the spread east of Bihar till the last tip of North East. Dominated by agrarian sector with related activities being the main source of livelihood for the majority of the population, it was for long caught in a low income trap. But this region has been able to initiate the process of extricating itself out of the low income trap. Alongside, the microfinance reach out has also speeded up.

The Microfinance Micrometer, the publication of the microfinance industry association, claims that the East and the North-East together still account for the largest share in the microfinance funding. With a 36 per cent share in the second quarter of the current fiscal, this region leads the nation in the microfinance activities. The development in the region also anecdotally correlates with the microfinance activities.

The process is so simple. Probably, that’s the reason it’s also elegant. All that microfinance does is to help harness the enterprise in the poor by providing fund in a manner that no other mainstream conventional financial route will take. Thus empowered financially a borrower not only creates employment for himself, by employing helping hands also sets off a chain of indirect employments. So it can be conservatively said that one unique borrower implies creation of one direct and at the least three other indirect employment.

From this one can see that microfinance units provide a beneficial impact not only on the customer, but also indirectly on others and thereby create a self-sustaining ecology of growing prosperity. This is how the industry has a positive impact by direct and indirect creation of prosperity cycle and contribution to the nation’s aspiration of creating the growth moment.