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India's journey towards differentiation

Ganesh Chella

Clearly, differentiation is here to stay. It is on top of the agenda of leaders in both traditional and modern businesses. What remains is its execution in as painless a manner as possible. This second part on the complex subject of differentiation of talent deals with the problems in India. As the going gets tough, organisations are forced to practise differentiation, albeit with mixed results.

The problems of scale and the accompanying pressure to manage expectations are placing a huge pressure on the modern businesses to differentiate. However, the lack of maturity of their workforce to accept combined with the lack of good managerial depth to execute it is making the practice of differentiation rather difficult in these businesses. Added to this is the self-limiting belief that differentiation may lead to attrition.

Similarly, organisations in traditional businesses wanting to hire fresh talent at market pay or wanting to pay market salaries selectively to their existing talent are finding it hard to make this cultural shift. Changing the rules for the employees who grew up with pre-liberalisation values and with a long history of warm relationships with their managers and leaders seems quite a heart wrenching process.

In summary, as the going gets tough and the pressures of the labour market drive up the premium for good talent, organisations are forced to practise differentiation, albeit with mixed results. Employees hate it, managers and leaders dread it and HR drives it mechanically.

In fact, for the majority of organisations in India, making differentiation work is such a huge struggle that many ask if all the effort is worth it at all.

Key underlying issues

There are at least three underlying issues leading to this dissatisfaction and pain.

The challenge of differentiation in an egalitarian structure

In the past, organisations had a clear management and non-management divide. While the non-management employees lived in the protected world of internal equity they also lived with a very "no frills" employee value proposition. While the management staff had a much richer employee value proposition, they were also subjected to all the capitalist principles of merit and differentiation.

Many of today's modern organisations are however classless and egalitarian.

As a result, we now have the onerous task of practicing differentiation across the entire population although a good part of this population in the past would have been part of the unionised or non-management group or would not have been part of the target population for differentiation.

Having attempted to hold out an equally attractive employee value proposition for everyone and not being able to deliver on it in good measure, organisations are now trying to "manage expectations". The technical term for this is "differentiation"! This is especially the case in the service industry including banking, insurance, IT and the ITES industry.

Manager inability to have the conversation

This inability of employees to come to terms with the very process only gets further aggravated by the fact that many of the managers themselves do not believe in the process and therefore do little to sell it or make it work.

For one, many managers take the easy route of choosing to be the popular person and transfer the blame onto the system which they claim forces them to do what they are doing.

The problem is aggravated by the fact that the manager — subordinate relationships have become so transient that the manager finds it convenient not to rake up issues that are likely to disturb the artificial peace he has with his team and compromise his ability to get things done, at least in the short-run. He finds it more convenient to let things pass.

More important, managers are seldom able to muster the emotional courage to confront poor performance and call a spade a spade. The issue is much deeper than what can be solved by giving them performance counseling skills and relates to lack of emotional courage and a trust based relationship.

The use of "force" to achieve the goal of differentiation

Given the resistance from both managers and employees, organisations end up having to resort to hard means to make the process work.

As the very terms indicate, "forced" ranking, "forced" distribution are two of the most popular (notorious) means to achieve the objective. However, force makes the entire process unpleasant. Employees see this force going completely against the grain of everything else that the organisation says and does.

The third part in this series will attempt to provide a possible model of differentiation that is humane and inclusive.

(The author is the founder and CEO of totus consulting, a strategic HR consulting firm that designs and implements HR systems and process for organisations across diverse industries. This series on differentiation is the result of his consulting work and on-going research on the subject. He can be reached at ganesh@totusconsulting.com)

(The first part of the differentiation series was published on September 25.)

(To be concluded)

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