The Krishnamurthy Effect

My Career Memoirs - Chapter 14

V Krishnamurthy - The Manager with the Midas Touch

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When the announcement came that PM Rajiv Gandhi appointed V Krishnamurthy (VK for short) to rescue, rehabilitate and put on a trajectory of growth the behemoth called Steel Authority of India Limited, SAIL, there were heaves of relief among most of us in the company. With impeccable credentials as a no-nonsense Chief Executive and with his legacy of proximity to the first family, VK fitted the bill. If at all anyone could improve SAIL, the maverick elephant that refused to shake its legs, it was this man. If he too failed, then probably the IMF or any strategic consultant might recommend the sale or scrapping of the perennially leaking ship!

VK arrived like the magical Maradona walking in when his team was already down by a couple of self-goals and the whistle time was fast approaching. How he played the cards and how SAIL and its management team were rescued to safety and positivity would make a modern management masterpiece. 

Let me attempt to narrate the recovery and renewal of SAIL as objectively as I can. Of course, having had an opportunity to be an active player in the operations, my views can be subjective and at times even hyperbolic.

Every great leader, whether in management or governance, sets out his vision, motivates and energizes the cadres and influences their thoughts, behaviours and working styles. I would like to summarise the essence of what I learned from the Master, especially on the uniqueness, robustness and convictions of VK’s prescriptions to rid the company of its anemia and pessimism.

I remember the first address that he made to a select group of managers; a few young executives like me were, randomly, invited to the gathering, possibly to get us a feel of what the new leader would bring to the company. He told the meeting he very well understood that working in a public sector, dealing with the marketing of a scarce, controlled and ‘rationed out’ product range, the managers on the ground would be under tremendous external pressures. They would face attempts to interfere and distort transparent and systematic functioning.

He said categorically, “Your job is to follow the rules, guidelines and procedures laid out. As your Chairman, it is my task to guard you from the external influences attempting to intimidate, tempt or scare you to submission. Tell anyone who wants you to favour somebody unduly that exceptions are not your domain. The company will of course look at fair and legitimate customer needs at the highest level and take appropriate decisions including if needed to relax any set procedures for justifiable reasons and a limited purpose”.

He was very clear that boundary management and empowering the hands-on executive team were a CEO’s great responsibility and challenge. He spoke at length about the human element and the great role that managers and frontline supervisors had in motivating, supporting and mentoring the workforce.

If academic qualifications and being an alumnus of a prestigious institution were the main criteria for going up the executive ladder, he would never have made it to the top. He had started as a frontline, shop-floor supervisor, and had just a Diploma in Engineering to start with. But his contributions, consistency of performance and history of providing inspiring leadership in a variety of situations made him a go-getter, a transformational leader and one who visualized and communicated not just the present but the future of the company and its people. A string of executives was mentored by him over the years into corporate leaders who went on to occupy positions at the helm of many large corporations. What he spoke came out of a passion for change, convictions on what mattered as the core transformational strategies and his strong, unwavering belief in the essential value and goodness in every individual in the team.

‘People, Culture, Change’ was the trinity of his change mantra. People who had worked with him in BHEL, Trichy where he was at the helm for long, used to recall how he knew almost all employees, irrespective of hierarchy or function, by the first name. The empathy, compassion, care and concern that VK visibly demonstrated endured his image as the ‘head of the corporate family’.

In those days, Steel supplies were subject to strict regulatory oversight. The position of Iron & Steel Controller was a clear example of bureaucratic overkill and the set-up was a springboard of nepotism and corruption.

Krishnamurthy told the meeting of Steel Marketing Executives candidly, “Your company’s Sale Order is a contractual commitment to the customer after his demand is reviewed and payment received. Yet it says, ‘Delivery is not the essence of this contract’. This means that irrespective of the customer’s genuine need, and his making full payment for the material, he is not guaranteed of timely, proper and satisfactory delivery of the product. The vague exemption clause means that the customer has no recourse to complain of delay or lapses in the execution of the sale order.  Can you find any such practice in the commercial world anywhere?”.

He ordered the removal of the clause forth with. This was just an example of how he drilled into the managers of the PSU monopoly that the customer was the primary purpose why any business existed. 

The insistence of the Chairman to treat the customer with dignity, respect, empathy and understanding was indeed ‘Greek and Latin’ to the generally arrogant and indifferent staff at large, with of course the exceptions that always existed, though few and far between.  

VK was an outstanding transformational leader. Over the next two to three years he rolled out a Change Management program that converted many internal sceptics to ardent believers in the capacity of the organization to become more responsive, proactive and confident.

VK’s management philosophy, practised meticulously and drilled into the value matrix of the executives he mentored, motivated, appreciated and continuously elevated to strategic leadership, rested on a few core pillars. These included articulation of a Vision for Change, massive communication across the organisation and participative workshops, creation of cross-functional Change Champions cutting across levels, functions and roles, an unrelenting emphasis on Customer Service and a quest for constant Technology upgrade, Productivity enhancement and Value Addition.  

He enhanced the profile of the management team while significantly strengthening their accountability, responsibility and ownership of the transformation program.

When a colossus strides into the arena, the corporate corridors become lively with narratives, anecdotes and gossip. The same was true with VK’s tenure in SAIL too. Some of the stories were figments of imagination and exaggeration.

One such message was that VK came into a Sales Meeting in progress unannounced and found that the atmosphere was casual and indifferent. The table was full of cashew nut plates, snacks were heaped up and cups of tea and coffee were incessantly being served. He is said to have curtly asked, “Gentlemen, do you always indulge yourselves in roasted cashews and plentiful of snacks, even at home? When will you get over with these and get time to focus on the job at hand?  The meetings thereafter became more business-like and productive. His messaging on the frivolousness of meetings had a universal resonance in the corporate circles.

The mark of a good leader is his ability to assemble an efficient and inspiring team. VK gave great importance to the Commercial and Human Resources functions. He believed that without employees and customers, the two most critical stakeholders, no business could turn around, improve and go on to success.

He decided to bring in SK Ahluwalia, an ex-Indian Railway Service Officer of great reputation as a go-getter manager to be SAIL’s new Director-Commercial. Of course, many internal stars in the line of succession did not take the induction of a rank outsider with pleasure. But the Chairman’s persona was too powerful to challenge. Ahluwalia’s qualities as a leader focused on results and his image as a tough taskmaster made him a greatly effective leader with all the cynics and indifferent managers falling in line sooner than everyone thought.

As for HR, according to VK, it was the key to transforming the culture of the organisation. He took his time to asses whether to bring in an outsider or to tap internal resources. After much thought, VK decided to continue with MRR Nair, the incumbent Director-Personnel. It goes to the credit of VK’s judgment of talent at the high table that subsequently Nair went on to become the Executive Chairman.  It was rare for an HR Functionary to rise to the CEO of a large, multiunit Engineering company. A lot of the credit for Nair’s meteoric rise after a prolonged stint as a ‘routine’ HR and Admin Manager goes to the mentoring by VK and of course, the learning and self-motivation that Nair demonstrated.

As a young executive, I was fortunate to have been handpicked as one of the resource persons for the transformational initiatives at the Corporate and the unit level.

I believe that destiny holds for us surprises and twists in life and career which brings forth the best in us when the call comes. My interfaces and proximate work with Krishnamurthy, Ahluwalia and Nair had a snowballing effect on my professional maturing and accomplishments. My early stint in the O&M function that ingrained in me the ability to look at the big picture and my cross-functional exposure would have helped me to get noticed when the opportunity came.

In those days, HR was largely considered a mundane, administrative function. The department was not reckoned much when it came to strategic themes like revenue, profits, growth and customer service.

The pioneering work of Dr. TV Ro and Dr. Udai Pareek, both academic leaders in IIM, Ahmedabad in developing the strategic edge of HR and bringing forth the tremendous scope for leveraging behavioural sciences to identify and develop future leaders and potential corporate heads revolutionized the HR and upgraded it from being the poor cousin among functional specializations. The central role of HR in culture change and leadership development is now well recognized as key input for corporate transformation.

Dr. TV Rao, who along with Dr. Udai Pareek pioneered Organization Development

TV Rao and Udai Pareek introduced Organization Development as a specialised stream that would provide an empirical basis to measure and assess behavioural, cultural and leadership capabilities. This was a revolutionary change since people management became more rational, objective and transparent as opposed to being mired in a ‘pick and choose’ approach based purely on subjective and external considerations.

What we attempted in SAIL in 1985-87 was a pioneering effort to refine and refocus the emotional capital of the employees across the board in alignment with business priorities and long-term corporate plans.  

We were fortunate to get Prof. TV Rao as the consultant, coach and facilitator in our change program. The company-wide, interactive change workshops brought together employees across the levels and functions to discuss and debate with openness the opportunities, challenges, constraints and inadequacies in the organization as they perceived.  

A resource document was prepared with facilitation by TV Rao’s team, aptly called ‘Priorities for Action’. This was a vision document for change management in the company. It was meant to provide a trigger and a comprehensive introduction to the themes of the change program. A series of interactive workshops were organized across the company where employees cutting across hierarchy and functions were encouraged to debate, discuss, review and recommend action points that would lead to change.

The importance that Krishnamurthy accorded to the participative and iterative deliberations to evolve a comprehensive action agenda for change was reflected by his personal attendance in many of these workshops. The board-level Executives sat through and listened to the ideas, frustrations, criticism and recommendations aired.  These workshops opened our eyes to the tremendous willingness and motivation among employees to shake off the image of the company as a lethargic, inefficient behemoth.

The participants realised the central importance of the customer as the principal stakeholder in any business. Everyone, including trade union office bearers, realised that a company, whether in the public or private sector, existed to serve the customers, not merely to cater to employees’ needs and aspirations. The complementarity of customer and employee interests and priorities became clear in the open, unfettered discussions.

One corollary of the deliberations was that the Chairman and Board Members identified the participants with fire in their bellies and a craving to be change agents. These participants, from all levels, were then co-opted for various thematic working groups on the workshop outcomes. VK had a knack for tapping the enthusiasm and eagerness of the younger participants. He would be seen moving around during the pre-dinner fellowship time to interact with the younger participants who would normally get fewer opportunities to meet and exchange ideas and feelings with the top team.

 One of the strategic programs to follow the workshops on change management was the introduction of the revamped Performance Appraisal System, designed by Dr. TV Rao. He had earlier pioneered a novel, highly effective appraisal system as part of his consulting assignment with L&T, the Engineering giant of India. The challenges of introducing a rating system that discriminated the employees based on their performance and potential in a Public Sector culture was sensitive and almost ‘controversial’. Only the stature and credibility of VK could push through the unprecedented change in a massive public sector like SAIL.  

The performance-driven and discretionary appraisal system proposed clear goalsetting, objective appraisal discussions between the appraiser and the appraisee and a ranking based on normal distribution overlaid on the appraisal ratings. The system would force the bottom and the top performers to be identified and rewarded or passed over. Promotions and increments were linked to the appraisal outcome.  We had a lot of hard work to do to convince people about the fairness and strategic need for applying a normal distribution curve on the appraisal ratings. However, many dissatisfied and cynical employees continued to question the rationale of the forced classification of final ratings. Many managers were too soft-footed and hesitant to identify and rate the poor performers. They were reluctant to frankly discuss the appraisal rating with the appraisees. Everyone wanted the shroud of secrecy to shield them while awarding poor ratings. It called for honesty of purpose and conscientious objectivity to be able to give feedback and do performance counselling to improve employee performance and competence.  

VK’s leadership and his pursuit of a transformation agenda resulted in a dramatic turnaround in SAIL. My experience in being associated with the program as a communicator, facilitator and change agent has been tremendously helpful in my comprehensive development.

Being part of the Central Marketing Organisation, I was doubly fortunate to work with another great manager even as VK’s towering personality and his influence opened possibilities for my career and personal growth.

The opportunity to work closely under the guidance and direction of SK Ahluwalia (SKA), our Director - Commercial rubbed off on my executive competence and confidence. The initiatives that I could partake in under Ahluwalia’s leadership were great learning opportunities. I always think of the years I spent in close working relationships with two stalwart Managers, VK and SKA, as the second MBA I did, the first one from Jamnalal Bajaj being the academic foundation and the second one being even more valuable than the first, because that was not a degree by reading, writing and clearing exam but by working, making mistakes, getting feedback and appreciation. 

In the next chapter, I shall discuss my learnings from my association with Ahluwalia.