Book Reviews
The Org: How The Office Really Works
A delightful survey of organisations

When the Al-Qaeda successfully destroyed the World Trade Centre Towers in 2001, many experts sat up. A terrorist group, seemingly without a clear hierarchy or a bureaucracy, could motivate hundreds with the same beliefs and band them together for the same objective. The devoted followers were even willing to kill themselves in its service. Here was the kind of an organisation one would certainly die to create.
 
Then, the US invaded Iraq and encountered an insurgency that operated on the same principles. A terrorist organisation, a decentralised alliance of networks that could fight against the mighty US military, “surely held lessons for any organization looking to get stuff done,” in the words of the authors of The Org: The Underlying Logic of the Office.
 
But the authors point us to something like an ‘inter-office memo’, discovered in 2008 but dating back to the 1990s, from Egyptian Al-Qaeda leader Mohammed Atef to a subordinate. Atef, a former agricultural engineer, wrote:
 
“I was very upset by what you did. I obtained 75,000 rupees for you and your family’s trip to Egypt. I learned that you did not submit the voucher to the accountant, and that you made reservations for 40,000 rupees and kept the remainder claiming you have a right to do so... Also with respect to the air–conditioning unit... furniture used by brothers in Al Qaeda is not considered private property... I would like to remind you and myself of the punishment for the violation.”
 
As the authors triumphantly remind us: “That’s right: Al-Qaeda required a T&E report. Neither allegiance to a cause nor the threat of ‘punishment for any violation’ was enough to keep the troops in line. Even Al-Qaeda, the networked org of the future, succumbed to the weight of organizing.” T&E report is, of course, travel and entertainment, an essential part of corporate bureaucracy. 
 
Ray Fisman, a professor at Columbia Business School, and Tim Sullivan, editorial director of Harvard Business Review Press, have written a delightful book. This is a small paperback printed on paper generally used for printing cheap page-turners. But it offers a peek into the history and idiosyncrasies of organisations, especially business organisations, the most obvious public face of which is the modern-day corporation.
 
We all know that large companies lumber along; bosses get caught up in an endless cycle of meetings and supervising workers. And supervising the supervisors is a deadening regime. The authors cite many cases of how large organisations function like a moronic machine—squelching creativity. Here is one such story. 
 
Dustin Curtis had suggested simple design changes that would significantly enhance user experience of the website of American Airlines (AA)—www.aa.com. But he was so frustrated in failing to get his suggestions heard that he went public with it in his blog. An AA executive, Mr X, replied by email. He explained how large organisations with different vested interests cannot implement the changes Curtis was suggesting quite easily. With his permission, Curtis published the email on his blog without identifying him. AA hunted down Mr X and had him sacked.
 
While such examples abound, the central point of The Org is that companies, among the newest forms of organisations (compared to religious, social or other forms of business organisations), are products of centuries of evolution and really do function well. 
 
To explain this, The Org packs in incredible amount of titbits about corporate life, history and academic references. One such story is a Stanford-World Bank study of Indian textile mills, which recorded a sharp increase in productivity in Indian textiles firms after they got $250,000 of free consultancy from Accenture (49 out of the 66 firms approached turned down the offer, underlining how businessmen perceive management consultants). 
 
There is no big insight in this book. In a forest of tomes that scream about the next game-changing management idea, this book is a breezy romp through management and economic ideas about companies and many delightful corporate stories, including John Thain’s $1,400 wastepaper basket in an office remodelling that cost $1.2 million, to McDonald’s innovations to suit the Indian culture. A great read.

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Greater Scrutiny, Not Less Vigilance

Raghuram Rajan wants Public-sector bankers bankers to be saved from Central Vigilance Commission. Much higher in priority is to reduce political pressure on bankers


RBI governor, Dr Raghuram Rajan, has started the new financial year on a very positive note, choosing to bat for bank customers as well as bankers. Although bad loans at public sector banks remain dangerously high, Dr Rajan has decided to tackle the problem of bankers’ reluctance to take bold decisions for ‘fear’ of being skewered by the CVC.

The Economic Times says that the RBI has started a “dialogue with the CVC to define terms like fraud or diversion of funds.” The idea, apparently, is to stop mindless questioning of legitimate banking decisions often based on internal complaints aimed at wrecking careers.

As the governor said recently, “No doubt, mistakes will be made, but if the weight of clean actions builds up, the miasma of suspicion that pervades our society today will ebb. The RBI intends to play its part in making this happen.”

RBI’s lead in pushing for greater clarity about write-offs and lesser harassment is bound to be welcomed by banks. However, this has to be preceded by greater scrutiny of senior management and the board of directors, including the role of government nominees, RBI nominees and public representatives.  

It will be interesting to see how the CVC reacts to this overture, given the recent goings on at United Bank of India (UBI). Its chairman & managing director (CMD), Archana Bhargava, was allowed to leave overnight without any scrutiny of the sharp escalation of bad loans during her short, and controversial, tenure.

Within weeks of her departure, the Bank has announced a major turnaround. Shareholders, who were misled by the Bank’s statements into selling their shares, incurred losses, but RBI and the Securities & Exchange Board of India (SEBI) have been stunningly silent. Similar action by a private company would have led to an inquiry under price manipulation rules.

Also, while bankers hold the CVC responsible for their inaction, why does the same fear not prevent banks from extending large loans, guarantees and extremely favourable corporate debt restructuring (CDR) to politically powerful borrowers? Kingfisher Airlines, the Lanco group and Deccan Chronicle are some recent examples. But the story has been the same for decades. This is because these loans are politically motivated, with the finance ministry providing the cover to CMDs and bank boards for these dubious decisions.

Corporation Bank Officers’ Organisation (CBOO), one of the most vigilant officer groups, in fact, calls for ‘improved governance structures’, in the wake of the UBI episode. Describing the opaqueness of bank board meetings, it says that one-line loan approvals are recorded, while discussion and dissent is not even mentioned in the minutes of the meetings. CBOO believes that CMDs on short tenures inflict greater damage on bank balance sheets because they are not accountable for their actions. RBI and the finance ministry need to introduce ‘minimum disciplinary and accountability standards’ for CMDs and CEO.

Since top appointments at banks, including those of their directors, are political decisions, the CMDs, who reciprocate with extending bad loans, guarantees or restructure existing loans, are protected. In the past decade, legitimate internal complaints (from unions and even directors) in Corporation Bank, Bank of Maharashtra, Central Bank of India, UBI and Canara Bank have tried to prevent the CMDs from going on a value-destruction spree. While RBI went through the motions of investigation, no meaningful action was initiated or ordered.

It will be nice to see if Dr Rajan works on this issue as well. Otherwise, his intervention with the CVC will only offer more protection to those who are clever enough to put a smart spin on deliberate bad decisions. With Rs4 trillion of bank loans in the process of being restructured, the time for a clean-up from the top is now.

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COMMENTS

Nagesh Kini

3 years ago

Dr. Rajan might as well first ascertain how and why the loans went and many more are on their way to go bad.
It is well known that most of the NPAs as well as Restructured loans - for some mysterious reasons still classified 'standard' - are all TOP driven (this includes political and MOF babus).
Invariably they have the covert approval of the government appointee Executive Directors and CMDs.
RBI might as well come out with a statement on its findings on the complaints lodged by the respective Bank Unions.
No doubt good and dedicated banks need to be protected, but they are few and far between!

Nagesh Kini

3 years ago

Dr. Rajan might as well first ascertain how and why the loans went and many more are on their way to go bad.
It is well known that most of the NPAs as well as Restructured loans - for some mysterious reasons still classified 'standard' - are all TOP driven (this includes political and MOF babus).
Invariably they have the covert approval of the government appointee Executive Directors and CMDs.
RBI might as well come out with a statement on its findings on the complaints lodged by the respective Bank Unions.
No doubt good and dedicated banks need to be protected, but they are few and far between!

March inflation up to three-month high of 5.7% on costly food items

Inflation in March rose to a three-month high of 5.7% mainly on a spurt in the prices of food items such as potatoes, onions and fruits while prices of sugar, pulses, cereals, cement and minerals eased

Snapping its declining trend, inflation in March rose to a three-month high of 5.7% mainly on a spurt in the prices of food items such as potatoes, onions and fruits.

Inflation in food items, based on the wholesale price index (WPI), shot up by 9.9% in March as against 8.12% in the previous month.

Overall WPI inflation, which has been on the decline since December, dropped to a nine-month low of 4.68% in February.

According to the data released by the government on Tuesday, January inflation number has been revised upwards to 5.17% as against the earlier estimate of 5.05%.

In March, the price rise in potato was 27.83% as against 8.36% in the previous month. Inflation in onion was 1.92% in the last month of 2013-14 fiscal compared to a contraction in the price of the kitchen staple in the previous month.

Overall inflation in the vegetable segment was 8.57% as compared to about 4% in February. Fruits were costlier by 16.15% in March compared to 9.92%.

The government further said the build-up of the inflation rate in the 2013-14 financial year was 5.70% compared to a build-up rate of 5.65% in the earlier fiscal.

The data further revealed that prices of sugar, pulses, cereals, cement and minerals eased in March compared to the previous month.

Inflation in the fuel and power category (LPG, petrol and diesel) rose to 11.22% versus 8.75% in February.

Later in the day, the Government is also scheduled to release data for retail inflation calculated on the consumer price index (CPI).

In the monetary policy review earlier this month, the Reserve Bank of India (RBI) had retained the key interest rate expecting a rise in inflationary expectations.

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