India suffers from unemploybility, not unemployment: Adi Godrej
24 January 2014
Industrialist Adi Godrej shares his views on issues before the country, managerial leadership and the future of the Godrej group, in a chat with Swetha Amit.
Renowned Indian industrialist Adi Burjorji Godrej, Chairman of the Godrej Group, who was conferred the Padma Bhushan, India's third highest civilian award, and the prestigious Ernst & Young Entrepreneur of the Year Award in 2013, is part of a unique nation-building initiative, "India at 75", a vision which is aimed at creating a better India by its 75th year of its Independence in 2022.
In an exclusive interview with domain-b correspondent Swetha Amit, Godrej outlines the contours of India at 75 to raise economic growth; importance of leadership and future plans for the Godrej Group.
You have said in public that bad times have tided over and the economy can grow. How conducive according to you is the environment in India for business and for foreign investment today?
I think the worst is behind us. However, for the economy to go back to 8-9 per cent growth, we need a very growth-friendly government, quick decision making and a considerable reduction in corruption.
If this can take place, the Indian economy can quickly bounce back to an 8-9 per cent growth. I think a lot will depend on the results of the election and whether we will have a government that can deliver on all these fronts.
How do you see the impact of the current state government of Delhi opposing FDI in retail, on the overall industrial climate?
Delhi state had already indicated that FDI in retail would be welcome. It is not good when a government changes at a state or national level and existing policies are reversed.
We are sending the wrong message to international investors. I don't think this is a good decision and it will create a bad perception among foreign investors of our country.
You made a mention of how there is potential for growth in the manufacturing sector in India. What can be done to improve business in this segment?
We have neglected manufacturing as a strong part of the economy. However the government has announced a manufacturing policy where they want to increase the salience of manufacturing in the economy from 17 per cent to 25 per cent. I think that's a good objective and a lot of things need to be done.
Firstly, the ease of doing business in India must be improved. Currently there are a lot of difficulties that comes in the way of business establishments in India. Due to this the smaller business establishments and start-up business establishments tend to suffer more.
India has always been ranked poor in terms of ease of doing business; it has now deteriorated further. So we must quickly pull up our socks and make sure it improves considerably.
Secondly some of our labour policies are anti-labour. The right labour policies should encourage employment strongly.
If employment is discouraged by whichever means, it's bad for labour in general and also for people who need to employ. Due to our labour policies, a lot of businesses hesitate to hire more people. So there must be fair compensation but an open labour policy.
And thirdly our infrastructure for manufacturing needs improvement. But the biggest reform which will help not only manufacturing but also our GDP growth is the goods and services tax. Some of the problems where one does not get refund in taxes, or when they extort, will be resolved with the GST. So if these policies are implemented, manufacturing can get a boost.
Leadership styles play a significant role in an organization's growth. What style of leadership does Godrej industries advocate?
What is very important for a leader or for a senior person in any organisation, be it a business organisation, the government or a non-profit organisation, is leadership skills.
Leadership means one must encourage people working under them to achieve the objectives of the organisation. One should always have stretch objectives and the leader has to motivate his people to achieve those stretch goals.
According to me, the most important thing is emotional intelligence. If one can motivate people through understanding them, it works very well. I think we should change our attention from 'I' to 'We'. That doesn't apply only in organisations but for the country as a whole.
One of your statements emphasised on how teamwork needs to be given a great deal of attention. How do Godrej companies promote the concept of 'Think of we, rather than I'?
I think it's very important that team-work should be encouraged. I have come across a lot of people who have been very bright, intelligent and capable but they have been unable to motivate teams or organizations. These people must be either mentored to change or they should be out of the organization.
It is extremely important that team work is encouraged in organizations. I am not referring only to business organisations but other domains like sports also, especially in team sports. In fact some of the most motivating speakers on team work are sports people. If we emphasize team work more, we'll do better.
I think this thought process should start at a very early age, say right from school. So we should also have lessons on leadership and ethics incorporated in educational institutions along with the regular curriculum, so that everybody grows up with these ideas which are very important in the modern world and which is essential for success.
EQ is considered more important than IQ for effective leadership. What methods can be incorporated by a leader to focus more on relationship building?
I think both EQ and IQ are equally important. But in the olden days, it was only IQ which was given more prominence. Now it is clearly realised that EQ is also very essential. Just possessing one of the two qualities is not adequate enough. A strong combination of the two is what will lead to success in the long run.
Coming to the second part of the question, I think empathy, understanding people and what motivates them is the key to relationship building. For instance, if a leader has six people working under him/her, each person will tend to exhibit different traits.
A leader must be aligned to each of their needs and use suitable techniques to encourage them. I think the Human resource department in any organization should help everybody in this attempt.
Leaders should bring out the best in their team members. For instance Sourav Ganguly is a good example. He was not the best player in the team, but he was a very good captain. So is Mahendra Singh Dhoni who is also a very good leader.
With CSR being made mandatory, does one see a rise in initiatives and activities towards nation building?
I am in favour of CSR being made mandatory. I think it will help the overall development of the country.
It also helps an organisation when it does good CSR, in terms of motivating its employees, attracting and retaining good employees and with regards to its customers. Customers tend to react positively to organisations which are well respected.
I also feel that a lot of India's difficulties rise with the lack of social development. For example, when we talk of infrastructure, we only talk of physical infrastructure. We tend to ignore social infrastructure such as education or health care which is equally important.
Now the other area where I think CSR will be extremely useful is in skill and training. In India again, enough emphasis is not given to skill and training and we have done very little. Not everybody is well placed to get a university degree or inclined to go to one.
However they can be skilled and trained in something very well. As the world changes rapidly and new technology is developed, one needs to be skilled and trained even at the age of 30 and 40.
I like to say sometimes that there's no unemployment in India, but it is only 'unemploybility.' A lot of jobs go unfilled because adequate people with the adequate skills aren't availabl.
So with skills training and of course education, one can get these two difficulties to meet. When this happens, more people will get employed, more people will get incomes, spending power will increase which will help businesses grow, which in turn will help the government get more revenue. So if CSR is properly directed, it can do a lot of good.
Does one also see an increase in career and employment opportunities for those in the social sector?
There will definitely be a lot of career opportunities. In fact there has been a shortage of CSR experts and there are now some groups which have been formed just to train CSR people.
There is shortage of almost everything in our country and yet there are a lot of people who do not get trained for the skills that are required.
As a CSR objective, our group has envisioned training of million people in different kinds of skill. This way our businesses will also benefit.
For instance we are leaders in the hair colour business in India. So we are training young women to give hair dressing services in homes and it has been extremely successful.
We are also leaders in the animal feed in the country, so we are training people in poultry farming. We are training people in sales skills as we employ many people in sales for our businesses and we teach them how to sell well. We ensure that their skills which we equip them with will be useful to them and to the country.
Speaking of CSR, you have also helped in initiating a movement called 'India at 75'. Could you tell us more about it?
This was a vision first enunciated by Professor C K Prahlad who was one of India's greatest management thinkers. He had suggested that India should have a vision for its 75th birthday in 2022.
So CII has taken up this course and we have enunciated what India should look like in 2022. The vision is to involve all Indians into getting to this goal. So for example, we're currently running a volunteering week.
We want millions of people to join in the volunteering, for which the response has been fantastic. If we can motivate people to meet these objectives, it can change the country.
Our vision should be not only for an economical successful country but also a socially progressing one. We have done quite well. But we need to do much better. And if we optimize in every area, the opportunity is huge.
You made a mention as to how Godrej's real estate business will emerge as the ''fastest growing business'' of the Godrej Group. How do you see the current scenario for real estate prospects? Will Godrej be focusing more on housing or commercial sectors?
At present just like all other businesses, real estate is growing slowly because there is an economic slowdown. But when the economy picks up, real estate will also grow rapidly.
Godrej properties is still doing quite well because we are adding a lot of new projects. I feel this should be our fastest growing business. It is unlike our other businesses, be it furniture, refrigerator or soap business where there is a certain category size and we have competitors.
We can't grow more than the category size as there is a limitation to how much we can grow.
However with regards to properties especially in residential properties, no one player has more than 5-per cent share in the market. So competition is not critical.
If somebody starts a project, I as a competitor do not pay much attention to it because that's not going to affect me in a negative manner.
Similarly when I start a project, a competitor is not going to react. The market is huge and growth can be limited only by one's financial and management resources. That's why we think that in the future that this will continue to be our fastest growing business. And we are focussing more on residential as the scope for residential is tremendous.
Lastly what is your vision for the Godrej group over the next decade?
About two and a half years ago, we projected what the Godrej group should be after 10 years. We called this vision "10 by 10". We should be 10 times our size in 10 years, which is the compounded annual growth rate of 26 per cent. If we grow every year at 26 per cent, we will be 10 times our sizer in 10 years. That includes inorganic growth, organic growth and growth through acquisitions.
We have been doing quite well on that path. However this year, our growth will be less in comparison to last year as the economy is not doing well now.
However we are still on that path as we think it's possible and we are expanding inorganically through acquisitions. So now we have operations in about 25 countries outside India which includes manufacturing in several African, Asian and South American countries. But our objective is in the developing world as
that's where greater opportunity is and that will be the group's goal and objective.