Combining "Jugaad" and Global Best Practice to Succeed in India
“Jugaad” is a colloquial Hindi and Punjabi word which means innovative fix or simple work around. Depending on the context it can have many meanings when translated to English. Some of these can be “out of box thinking”, economic workaround or hacking. Jugaad has become an acceptable business management technique and is taught and studied in Indian schools.
One common example of Jugaad in practice is the huge number of executives and business owners who are chauffeured around the cities in small inexpensive cars. Of course the cars are economical but mostly it is a practical solution for the chaotic traffic and poor road conditions. Also it minimizes extravagant displays of wealth which is an important personal attribute in Indian culture.
Westerners from well-developed cities in Europe or the US are used to infrastructure that works reliably. Therefore, engaging with a successful business in India which has embraced the Jugaad management style can be confronting. As with most cultural and business integration, knowing what to keep and what to change is the art of growing a business in India.
India is the most complex and exhilarating country to work. It has many social layers, a plethora of intelligent and well educated people in the work force and high level of entrepreneurial spirit. Indians are quick adopters of new technologies and market trends. They quite often skip whole generations of technology and experiences so that they are at the forefront. e.g. Most Indians will only ever know a mobile phone…never a traditional land line phone.
Indians are very colorful and yet, modest and self-effacing. They are one of the most traveled nationalities in the world and well networked globally. However, no matter how capable they may be, Indians are thirsty to learn more and strive for self-improvement.
Contrary to these selling points are the challenges of governing and coordinating the largest democracy in the world. These challenges are best illustrated by the poor and unreliable infrastructure: roads, electricity, internet and public transport. The exception to these are the modern airports which have mostly been newly established or rebuilt in the last 12 years.
The 1.3 billion population means that there are people everywhere, a lot of people. The cities are noisy. The distances within India are vast…it is a big country. The unreliable infrastructure means that companies take measures into their own hands to ensure continuity. e.g. Most buildings in the major cities have back-up generators for the blackouts and brown outs.
Unfortunately, these negatives are used to form the first impression for many foreign business professionals who are new to India. The Indians also find the same things frustrating but have used the Jugaad mentality to look through and find a way to succeed, to get things done in a practical and cost effective manner.
The 12 years I have spent leading and growing businesses in India have been rewarding from both a business outcomes and also cultural perspective. Here are some lessons I learned establishing and growing businesses in India.
Overwhelmingly I have found that local leaders are better than expats. You can hire quality executives in India or recruit Indians from outside the country. Either way locals have the education, a history, a business network and the cultural connections. Get the right leaders and integrate them into your regional or global leadership team.
The quality of people and the salary ranges are very wide in India. Senior Executive salaries are now comparable to Australia and only about 10 or 15% different to those in the US. Middle managers’ salaries are half of global standard. At the same time entry level staff or “freshers” are often paid barely above a subsistence level. This leads to a huge disparity between the executive and entry level compensation levels. The disparity could be as much as 50 to 200 times between freshers and CXO level.
In the past 15 years it has been common for companies to give semi-annual appraisals and subsequent compensation adjustments. Annual individual increases have been in the order of 20 ~ 40%. This was the only way in which companies could keep abreast of the rapidly rising market levels and also keep the staff attrition levels to an acceptable point. However, recently, compensation revisions have started to move more to an annual basis and the amount of increase per annum has slowed.
There are 700 degree granting institutions and 35,000 affiliated colleges in India with 20 million students enrolled. This means about 6 million new graduates in the work force each year. A lot of them will have post graduate or master’s degrees.
However, the market is short of skilled labor. Each candidate that you offer a position will have 2 or 3 other offers. There will be a range of criteria used by the candidate to determine which company to work for. Culture, benefits, commute distance, engagement programs, work hours, family opinions and compensation level.
Some global clients I worked with had developed extraordinary employee engagement programs. e.g. They are focused on looking after females and supporting them while they worked and developed a family during pregnancy and also child care services at the work place. Health insurance and life insurance are all critical requirements that improve engagement. The result for these clients was attrition rates around 6%, a level not often seen in India.
Just because you receive a signed offer letter for a new member of staff does not mean they will start with you on the agreed date. Rejected offers in India can be as high as 50%. Not only you will be fighting for the best talent in the market. Therefore, on a case by case basis it is important to understand the criteria important for each person and focus on that. Hire quality and not quantity. Develop a Talent Acquisition process in which you have confidence. Put highly skilled people in charge of the process, empower them and give them technology and analytic tools.
Market Engagement and Strategy
Do market analysis. India is a huge country geographically. All of the main states have their own culture, tax laws, political situations and idiosyncrasies. You will need to ensure that your management team, the business strategy and products are a match for the region in India. What works in Delhi and Haryana may not be appropriate to Bangalore in Karnataka.
If you are adapting a strategy from overseas, then decide on the main priorities for integration and implementation. It may not be possible to afford or achieve everything at once. Involve the local leadership team
Manage the P&L
India is a highly cost sensitive market & most of the foreign companies do commit a mistake by spending lavishly. Costs in India may be low for some line items on the P&L but some may be the same as in Europe. The problem with this is that the revenue levels are likely to be much lower and this creates a pressure on profits. It is important to implement the technology and operational initiatives gradually so that the revenues and the profit grow at the same rate as your costs. If you do this, then it is possible to make good levels of profit in India because the yearly revenue growth rates are very high.
The Real Estate sector (Office rentals) are at par with global standard (Europe, US and Australia).
As mentioned above Indians are well educated, very intelligent and have a lot of initiative. Investing in a comprehensive Talent Development program for all levels of the organization is one of the best uses of scarce resources. You will hear people say that by “skilling your people up then it makes them more mobile and likely to leave”. I have considered this argument from the opposite side and also found agreement from large global clients in India. i.e. give your people an environment where they can grow and develop and they will stay for a longer period and contribute to the growth of the organization. With this philosophy in India I was able to decrease the attrition rate of the organization by 33% in just 12 months.
Vision with Regional or Global emphasis
Indian managers and staff appreciate business leaders that can inspire and paint a vision for the direction of the business. This will be a key reason people will join and stay with your organization. Hire smart people and treat them accordingly. Give the best people opportunities in the organization outside India or at the least connect them up with their colleagues in other countries.
Religion and Diet
As stated above India is a complex country with many layers. Hindu is the main religion but India also has the most Muslims of any country in the world – living peacefully with each other. Mix in with this the differences within each of the religions and the dietary requirements and you have a real melting pot. This melting pot is brought to work and the work environment must cater for it.
India is the most complex and exhilarating country in the world to do business. The Jugaad mentality is born out of necessity to succeed and get ahead. Don’t ignore it. Approach India with an open mind and be prepared to learn before giving too much advice or jumping to conclusions. If you do this, then you will be successful and enriched.