A Students’ Initiative

In this issue….

FINANCE | GENERAL MANAGEMENT | HUMAN RESOURCE | MARKETING | HEALTHCARE | OPERATIONS | SYSTEMS

The Reflection of Management

PRATIBIMB

A Students’ Initiative

October 2013

Revisiting Ghoshal

Services Marketing

Financial Independence in India

The Future of Indian Rupee

Performance Vs Rewards !!

Maslow’s Higher Order Needs

Pratibimb | October 2013 | 2

T. A. Pai Management Institute (TAPMI) is a premier management institute situated in Manipal

and is well known for its academic rigor & faculty-student interaction. The Institute has been

recently ranked amongst top 1 per cent of B-schools in India & 4th in the South Zone by The

Week Magazine.

Founded by the visionary, Late Shri. T. A. Pai, TAPMI’s mission is to provide much needed

impetus to the task of building professional management capability in the country. In the

process, it has also played a role in strengthening the existing educational and health

infrastructure of Manipal.

“To excel in post-graduate management education, research and practice”.

Means:

By nurturing and developing global wealth creators and leaders.

By continually benchmarking ourselves against best in class institutions.

By fostering continuous learning and reflection, achievement orientation, creative

interdependence and respect for diversity.

Value Bounds:

Holistic concern for ethics, environment and society.

T. A. Pai Management Institute

Manipal, Karnataka

About TAPMI

Our Mission

Pratibimb | October 2013 | 3

TAPMI’s e-Magazine - is the conglomeration of the various

specializations in MBA (Marketing, Finance, HR, Systems and

Operations). It is primarily intended to provide insights into the

plethora of knowledge that relate to the various departments of

Management and to give an opportunity to the students of TAPMI

and the best brains across country to exhibit their creative cells. The

magazine also strives to bring expert inputs from industries, thereby

bringing the academia and industry together.

Pratibimb the e-Magazine of TAPMI had its first issue in December

2010. The issue comprised of an interview of well known writer Ms.

Rashmi Bansal along with a series of articles by students and industry

experts like MadhuSudan Rao (AVP-Delivery, Mahindra Satyam) & Ed Cohen who is a global leader

and chief learning officer who led Booz Allen Hamilton & Satyam Computer Services to the first

rank globally for learning & development . It also included a hugely successful and engrossing game

for finance geeks called “Beat the Market” to bring out the application based knowledge of

students by providing them the platform where they were expected to predict the stock prices of

two selected stocks on a future date. The magazine is primarily intended for the development of all

around management knowledge by providing unbiased critical insights into the modern

developments.

TAPMI believes that learning is a continuous process and is not limited to the four walls of the

classroom. This viewpoint is further enhanced through Pratibimb wherein students manage and

contribute to create a refreshing learning environment outside the classrooms which eventually

leads to a holistic development process. The magazine provides a competitive platform and

opportunity to the students where they can compete with the best brains in the B-Schools of the

country. The magazine also provides a platform for prominent industry stalwarts to communicate

their views and learning about and from the recent developments from their respective fields of

business which in turn helps to create a collaborative learning base for its readers.

Pratibimb is committed in continuing this initiative by bringing in continuous improvement in the

magazine by including quality articles related to various management issues and eventually creating

a more engaging relationship with its readers by providing them a platform to showcase their

talent.

We invite all the best brains across country to be part of this initiative and help us take this to the

next level.

PRATIBIMB TAPMI’S MONTHLY e-MAGAZINE VOLUME 2, ISSUE XXIII OCTOBER, 2013

Pratibimb | October 2013 | 4

Research activities are very important element of student development. The purpose of research is to generate new

management thoughts. Thus, our study should seek to find the latest trends in management arena. A high quality research

will provide new insights into the student community as well as to the business world. Pratibimb is a platform for nurturing

the research activities among students. The articles published are the reflections of the immense knowledge potential of

management students across India. When the ideas presented in Pratibimb get implemented in actual business situations,

the purpose of the magazine will be realized.

I wish the magazine the very best and look forward to it achieving even greater excellence in the times to come.

Dr R C Natarajan

Director

Director’s

Message

Pratibimb | October 2013 | 5

Editor’s corner

Arun Stephen

Abhineet Rastogi

Bhavnita Nareshkumar

Devi Kailas

Kannan Venkat

Shubha Prabhu

Aditya Bhat

Lloyd George

Ayon Kumar Gayathri Mohan

Amruth C Debidatta Sathapathy

Priyam Goyal Debayan Bhattacharjee

Akash Gupta Pallavi Prasad Avni Mooljee

Prof. Chowdari Prasad Dean (PR) & Chairman-Admissions

Prof. Aparna Bhat

Editor in Chief

Marketing & Advertising

Creative & Cover Design

Communications

Operations

Publishing

Faculty Advisors

Dear Readers

Pratibimb is not just the name of an end-product, it is not just a magazine. It

has been much more, and it will be much more. It is a journey, which a

student undertakes in an attempt to connect to hundreds of other students,

whether in the form of contributing an article, or by contributing his/her

precious time to read and gain insights from the articles written by people

in the same journey, but with different experiences. Every issue aims to

make this experience as unique, as worthy and as meaningful to your time

as possible.

With this in mind, the October issue presents you with some valuable

additions to your store of knowledge. Ms. Rhea Joglekar from SIMS Pune

offers certain conclusions from her study of the intertwined aspects of

Graphology, Neuro Linguistic Programming and Organisational Behaviour

theories in her article “Maslow’s Higher Order Needs & Alphabet T”. Mr.

Arnab Mandal from IIM Shillong on the other hand, questions the well

accepted links between Performance and the Rewards, and leads you

through a series of logical arguments, to a final conclusion in his article

“Linking Rewards to Performance: Is it so very important?”.

Ms. Seerat Jangda from IIM Lucknow takes a very relevant look at the

Service Industry in terms of Marketing in her article “At your Service!!”.

Whereas, for all the Finance enthusiasts, two articles talk about very

important as well as relevant topics. The first one, “The future of Rupee:

The senior citizen (>60)” by Mr. Harshit Dedhia and Mr. Kaushal Shah from

SIMSREE, talks about the the value of Rupee currently, and how it might be

expected to behave in the near future and the factors that affect it. The

second article “Financial Independence: An Indian Perspective” by Mr.

Harshit Lamba and Ms. Shaguna Harbola talks about, as is evident from the

title, the Indian economy and how factors such as the FIIs, the rising level of

short-term external debt with respect to forex reserves and the NFSB affect

it, and what should be the future course of actions. Pratibimb will continue

to bring to you such meaningful insights in the months to come. Keep

reading, keep contributing, and most importantly, keep learning.

In order to know more about Pratibimb and its future endeavours, like our

page on Facebook- https://www.facebook.com/tapmi.pratibimb

Our sincere thanks to all the contributors of articles who make Pratibimb

what it is, to our readers who give us their most precious thing – their time,

and to our Faculty members at TAPMI, without whose valuable inputs and

critical insights Pratibimb would not be half as worthy as it is today. Kindly e

-mail us your suggestions, inputs or feedbacks at- pratibimb@tapmi.edu.in

Enjoy Reading!

Arun Stephen

Sub Editors

Pratibimb | October 2013 | 6

Contents At Your Service 7 by Seerat Jangda, IIM Lucknow

Financial Independence - An Indian Perspective 10 by Harshit Lamba & Shaguna Harbola, SIMS

The Future of Rupee: The Senior Citizen (>60) 13

by Harshit Dedhia & Kaushal Shah, SIMSREE

Linking Rewards to Performance: Is it so Very Important? 15 by Arnab Mandal, IIM Shillong

Maslow’s Higher Order Needs and Alphabet T 18 by Rhea Joglekar, SIMS Pune

What is Wrong with Management Theories: Revisiting Ghoshal 20 By Prof. Sushanta Kumar Sarma, TAPMI

Pratibimb | October 2013 | 7

At your service

True to the maxim by Philip Kotler- “Marketing takes a day to learn. Unfortunately it

takes a lifetime to master”, all the companies try to achieve the best of the marketing

practices in this vicious world. If one looks at service sector in particular, it is going

through a phase of rapid changes. The changes in government regulation, privatization,

globalization, internationalization, advances in IT, the role of manufacturers as service

providers have modified the face of service marketing. A question to ponder here is why

do we see the skewed nature of economies towards the service sector? Can there be an

economy which derives its GDP solely on services? If yes, then How? For example, we see

country like Malaysia which bases its economies solely on tourism. For such economy,

manufactured goods are usually imported. The probable pitfall to such an economy can

be that it may become less self-sufficient and may be a threat to national security. A

more apt question at this stage is why the economies are leaning towards the service

sector? Globalization drives international trade and tourism which in turn has increased

the demand of passenger transportation, communication, leisure activities, international

finance and food services. The rise in technology is the key driver in increasing service

component of the GDP.

If I were to draw a line between products and services, the first thing which is the most

important is the timing. The real time nature of delivery of services is unique to itself.

Either one takes the physical presence of the person into account or the speedy process

people want to see in services, both are novel to services. In the latter case where service

delivery takes place without the customer’s presence, they have expectations about how

long a specific service would take to complete. For example, repairing a dysfunctional

gadget, financial services from a bank, or preparing a legal document. If this takes more

than the expected time, this causes ‘consumer dissonance’, which is an uncomfortable

feeling and usually leads to the customer take his money elsewhere or experiencing

remorse over the purchase. A buyer can experience remorse over a product purchase at

any point in the entire purchase experience, including well after the consumer makes the

purchase decision. Companies seek to shore up the buyer's emotional status through

reassuring post-purchase services, which generally is a money-back guarantee or free

product service for the life of the asset purchased. These services form an important

part of customer relationship management. For example, many auto dealers have

service outlets to repair vehicle and offer free safety inspections of vehicles purchased

through the dealerships for the entire life of the cars. This post purchase behavior by the

companies can set them apart from competitors and allow buyers to make less-stressful

purchasing decisions in the future with these companies. If we compare the marketing,

HR, operations for a manufactured product vis-à-vis a service, we would know that in

case of a product, the marketing is segregated from other functions. On the other hand

in services, the customer becomes a part of the entire production process and hence

complicates the segregation between these functions.

At Your Service

Seerat Jangda, IIM-Lucknow

Pratibimb | October 2013 | 8

There is no tangible component to service, so the customers

rely on ‘physical’ clues, such as staff uniforms, the kind of

ambience, plastic or silver cutlery, in the restaurant.

Let’s take an example of a bank. To enhance its service deliv-

ery, it wants to contact its customers via email, internet,

phone, ATMs rather than the customers physically coming to

the bank. For this, the bank wants to know why people

don’t use certain delivery option for certain tasks. Suppose

people would withdraw money from an ATM but would not

like to deposit money at an ATM. For depositing the money,

one would want the “physical evidence” of the 7P’s. With

this idea in mind, we can see a lot of adaptation in the ser-

vice industry especially food, where customers can have a

peek at the backstage activities. One example is Mad Over

Donuts, where one could see his/her favorite donut being

prepared. Similarly, this can be extended to car repair facili-

ties where the service operations are fully visible through

glass windows. However, many of these backstage activities

could be boring for some customers. Still, to have an impact

upon the customer, this seems a viable option catering to

the 7th P.

The aforesaid points have been discussed with respect to

customer. The other half with complements the entire ser-

vices process is ‘people’ i.e. the employees providing the

service. If you are into a hospitality business, tourism indus-

try, banking, employees in your organization and their be-

havior towards the customers defines you. Relationship with

the seller is a major driver for purchase as the products is

intangible.

Another intriguing thought could be: ‘How the branding of a

service is different from a product?’ Service branding does

not differ much from customer perspective but rather on

the company side. Services are intangible, cannot be stand-

ardized. Therefore it is difficult to build brand management

models for the same. A service product is an experience re-

lated to service consumption, which may differ according to

people’s tastes and experiences with the brand, which

makes it difficult to standardize. With respect to branding of

products, marketing is assumed to communicate product

benefits and the organization handles production and logis-

tics. In service business, all levels of the organization are

involved in creating the customer experience. The organiza-

tion and its employees must be aware of the company val-

ues, otherwise the service experience will not be effective

and long lasting. Therefore, internal communications regard-

ing values, messages to be conveyed o the end customers

need to be taken care of, in order to deliver a consistent

service experience and be able to do successful marketing

efforts. There has been a change in the way services are be-

ing branded. Earlier, the service companies used to empha-

size the corporate name but today, in a highly competitive

environment where a lot of product proliferation is present,

product brand names (sub-brands) have been given greater

preference. A question which may come to someone’s mind

is: Why does British Airways use specific sub-brand names

like Club World? British Airlines wants its travelers to distin-

guish between the products and to know about the prolifer-

ation they have created. Club World is its intercontinental

business class brand, which offers a different type of experi-

ence from that of other airlines and also from that of its Eu-

ropean business class, known as Club Europe. In an ideal

scenario, every step of the branding process should repre-

sent a distinctive branded-service ideal scenario, every step

of the branding process should represent a distinctive

branded-service experience so as to create preference for a

specific offering.

What is that which differentiates between a services com-

munication and a product communication? When a commu-

nication is made for the promotion of a product, physical

evidence is used to add abstract ideas whereas in services

communication is made, abstract ideas have to be converted

to physical evidence in order to make effective communica-

tion. Next cue could be, what kind of promotional activities

should be carried out for such firms? For a quality leader

kind of firm, the best promotions could be done by “Word of

Mouth”(WOM). For a service product, people generally take

recommendations from their friends, relatives, because they

are considered a neutral person rather than the communica-

tions by the firm itself. Some of the ways for a better promo-

tion by WOM could be referral schemes, publicizing testimo-

nials, let people talk about the exciting offers, faster resolu-

tion of their complaints.

If we change places, and examine the situation from a cus-

tomer’s viewpoint, what factors create value for a customer

and how do these factors determine the pricing strategy?

Generally, the services process is a combination of mental

processing and people processing. It is a case of mental pro-

cessing because people expect something pre-purchase of

services and try to compare it with the service performed.

People processing refers to the involvement of people i.e.

employees in delivering services. Suppose, when you go to a

salon for a haircut you expect value in terms of more stylish

hair. You see price menu in front of you and pay an afore-

said price for every element of the service, e.g., this price for

a wash, so much for a cut, etc. Here is the branding which

comes into play. You may wish to pay more for a well-known

Pratibimb | October 2013 | 9

stylist eg Shahnaz Husain, or at a prestigious salon, say Lak-

me/Matrix. Some services are of the type which requires the

active participation of the customer, e.g. marriage counsel-

ing or a weight reduction program, here customers are

viewed as the co-producers of the services. Any delay in

performance by the customers may lead to a degraded out

Reference

http://jsr.sagepub.com/content/7/1/20

http://alexanderconsultingsbiz.com/art_s_m_challenge.html

http://www.marketingprofs.com/topic/articles/services-

marketing

bx.businessweek.com/customer-service-marketing

come of the service performed. So, managers should be

competent enough to educate their customers to co-

produce well in such situations.

With the 7P’s in-place and the growing use of technology in

every field, the nature of the service economy is bound to

change. So, what is the way ahead?

Pratibimb | October 2013 | 10

The year was 2009 when India’s audacity to global economic meltdown was the theme

of conversation from tea table to corporate meetings. The Ministries in North Block

were raising toast to impeccable decision-making and policies. The bold black inked

newspapers’ headlines enunciated in arrogance and overconfidence, the fable of Maha-

raja. Least was known that the black ink signified something else. There was something

mysterious, something hidden that was soon to be revealed.

Cut to 2012-13, and the statistics show that the road to achieve status of an irrepressi-

ble economy is dwindling. Stock markets are trembling in apprehension, rupee is gasp-

ing to catch up with the top currencies, current account deficit (CAD) and fiscal account

deficit are at peak, growth has hit the rock-bottom and rating agencies are only

hairsbreadth away to downgrade India to lower medium grade. The experts say that

India has slipped two decades back to 1991. Is it just an overstatement? How did the

outlook changed so drastically?

The concept of financial independence and the extent to which India is financially de-

pendent can offer an explanation for this change. So, what is financial independence

exactly in the context of nation? The term itself is subjective. For some nations, it simp-

ly means being debt free, while for others it means ensuring a life free of financial

stress for its citizens by empowering them. So, in order to evaluate the financial inde-

pendence of a nation, we need to take into account both internal and external factors.

Here, in the present Indian scenario, the three significant parameters that would deter-

mine the financial independence are investments in Indian markets by foreign institu-

tional investors (FIIs), external debt equation of the country and introduction of Nation-

al Food Security Bill (NFSB).

First, we’ll consider the effect of FIIs on Indian stock indices. As per a Business Today

Report (November, 2011), a trend analysis of stock indices since 2006 reveals that mar-

ket peaks when FII inflows are high and fall when FII inflows dry out or they start pulling

out their investments from Indian markets (see Table 1). This observation is reinforced

by a study conducted on the influence of FII flows on Indian stock market

(GYANPRATHA–ACCMAN Journal of Management, Volume 5 Issue 1, 2013) which sug-

gests that there exists a positive correlation between the FII flows and movement of

sensex (see Graph 1).

FIIs’ holdings in Indian stocks were close to 19% of overall market value of shares by

June 2013. Hence, theoretically, the FIIs hold the power to bring down Indian stock

market to shambles in one big exodus, which will have a ripple effect on value of home

currency, CAD, external borrowings by companies and costlier imports. So much for

unabated Indian stock market.

Second, the rising level of short-term external debt with respect to forex reserves from

5.1% in 2002-03 to 31.1% in December 2012 is ringing alarm bells.

Financial Independence –

An Indian Perspective Harshit Lamba & Shaguna Harbola, SIMS

Pratibimb | October 2013 | 11

Year FII Inflows/(Outflows) (in Percentage Increase/(Decrease) in

2008 (13 billion) (50%)

2009 19 billion (net) 85%

2010 30 billion 25%

2011 (uptil September) 281 million (11%)

Table 1: Effect of FII flows on Sensex

Graph 1: Trend of FIIs and Sensex from 2001 to 2010

(Source: accman.in/images/feb13/Shrivastav%20A.pdf )

The problem is further exacerbated by long-term debt,

which is also coming up for maturity. Moreover, the slow-

ing down exports, deceleration of industrial production and

growing appetite for imports, including non-essential com-

modities, is adding fuel to the fire. The debt that needs to

be repaid this fiscal is to the tune of USD 172.35 billion, i.e.

about 61% of India’s forex reserves. This will have serious

implications on balance of payments, which in turn will

have undesirable effect on sovereign ratings.

The underlying reasons for this problem are:

Lower rates at which credit can be obtained

from international markets

Surge of capital inflows during 2003-04 into

emerging economies like India

High interest rates in India, which led to ‘carry

trade’

During heydays, the rapid GDP growth and strengthening

rupee rendered these factors unnoticeable due to low ex-

ternal debt to GDP ratio. But now, as the rupee has depreci-

ated by almost 25% of its value, debt servicing burden has

greatly increased. In addition to this, there is non-

availability of cheap domestic credit to substitute now-

expensive external debts as domestic rates are riding high.

Hence, the definition of financially independent as “being

debt- free” does not hold quite well. Third, we’ll focus on

NFSB. The initial perception of NFSB seems to fit well with

one of the proposed explanations of financial independ-

ence.

But the numbers tell a different story. The fiscal deficit for

2013 is projected at 5.12% of the GDP by FICCI against the

target comfortable value of 4.6%. Clearly, the economy is

in bad shape and passing of this legislation will increase

the fiscal pressure by Rs. 10,000 crore in the first year

itself, which will only worsen (about Rs. 1.25 lakh crore

each year) when this measure would be fully rolled out.

To service the fiscal deficit, the government will either

have to raise funds from external sources or increase tax-

es or issue long-term government bonds. Neither of these

alternatives seem favorable and will pull the nation far-

ther from being financially independent.

The big question still remains. How to achieve, or rather

pursue financial independence? The solution lies in pro-

posing and implementing holistic approach as these prob-

lems are inter related. The first step should be cutting

down of unnecessary and politically motivated govern-

ment expenses such as undue waive offs and subsidies.

Instead, these capital resources should be diverted to

more important activities such as building world-class

infrastructure, and developing and enhancing food stor-

age facilities that will produce productive future results.

According to FOX news report, about USD 6.8 billion of

food is wasted every year in India. In 2011-12, there was a

storage gap of 32 million tons. Therefore, management of

resources coupled with rational positive intentions pose a

major obstacle, overcoming which would solve two finan-

cial problems. First, the surplus could be exported to earn

foreign exchange, thereby improving balance of trade

(B.O.T.), and second, government debt burden would red-

Pratibimb | October 2013 | 12

-uce. This would have a ripple effect on currency value, food

inflation, financial markets and economic growth.

Encouraging foreign direct investment (FDI) rather than FII

needs to be the focus of policy makers due to its long term

nature. Though FDI limits have been raised for many sec-

tors, the basic implementation framework is still missing

which is making companies reluctant to invest. A good quali-

ty physical infrastructure along with ease of doing business

are the two factors that would definitely inspire foreign in-

vestors. In addition to capital inflows, the FDI would bring

along employment opportunities, which in turn would em-

power people to rely less on subsidies. The inflows would

aid the battered state of home currency, set B.O.T. equa-

tions right and reduce external debt burden, especially for

corporates.

Jim Citrin, an expert on leadership, governance and profes-

sional success, once said, “Uncertainty can lead to paralysis.

And you if you become indecisive, you’re dead”. Indian econ-

omy has been sailing in troubled domestic waters under a

gloomy international economic environment for quite a

sometime. It is now when stern and thoughtful decisions

should be taken and more importantly, implemented effi-

ciently, so as to mitigate the effect of worldwide downturn,

create opportunities by developing optimistic investment

atmosphere and pursue financial independence.

References

Shrivastav, A. (2013). A Study Of Influence Of FII Flows On Indian Stock Market. GYANPRATHA–ACCMAN Journal of Manage-

ment, Volume 5, Issue 1.

ET Bureau. (August 23, 2013). The Economic Times. In Food Security Bill will eat into finances, growing subsidies to hurt invest-

ments: RBI. Retrieved 24 August, 2013, from http://articles.economictimes.indiatimes.com/2013-08-23/

news/41440859_1_iron-ore-central-bank-food-subsidies

Vikaraman, S. (August 24, 2013). The Economic Times. In Food security plan to increase govt's fiscal stress: Bimal Jalan. Re-

trieved 24 August, 2013, from http://articles.economictimes.indiatimes.com/2013-08-24/news/41443941_1_food-security-

plan-fiscal-deficit-bimal-jalan

Merwin, R. (June 22, 2013). The Hindu Business Line. In As the rupee sinks the LOSERS are.... Retrieved 21 August, 2013, from

http://www.thehindubusinessline.com/features/investment-world/as-the-rupee-sinks-the-losers-are/article4841002.ece

Vikaraman, S and Nayak, G. (June 26 2013). The Economic Times. In External debt growing to unmanageable proportions,

putting pressure on rupee. Retrieved 23 August, 2013, from http://articles.economictimes.indiatimes.com/2013-06-26/

news/40207079_1_external-debt-debt-service-ratio-debt-management/2

Padmanabhan, A. (January 27, 2013). Live Mint. In The perfect recipe for an external debt crisis. Retrieved 23 August, 2013,

from http://www.livemint.com/Opinion/h7cxYMVFLk9lF0Nsa07AtO/The-perfect-recipe-for-an-external-debt-crisis.html

Krishnan, A. (March 10, 2013). The Hindu Business Line. In Who’s afraid of FIIs?. Retrieved 21 August, 2013, from http://

www.thehindubusinessline.com/opinion/columns/aarati-krishnan/whos-afraid-of-fiis/article4496458.ece

Focus must be on FDI and not on FII inflows, says Raghuram Rajan. (September 25, 2012). Retrieved 21 August, 2013, from

http://www.thehindu.com/business/Economy/focus-must-be-on-fdi-and-not-on-fii-inflows-says-raghuram-rajan/

article3935783.ece

Varma, T. (November 2011). Business Today. In Flying in from Abroad. Retrieved 21 August, 2013, from http://

businesstoday.intoday.in/story/fii-inflows-sensex-movement-should-you-follow-the-trend/1/19525.html

Chandrasekhar C. P. (January 18, 2012). The Hindu. In Debt as burden. Retrieved 23 August, 2013, from http://

www.thehindu.com/opinion/columns/Chandrasekhar/debt-as-burden/article2726394.ece

Pratibimb | October 2013 | 13

It has taken more than 65 years for India to get this far after independence. Our GDP is

currently 10th largest in the world with $1.8 trillion. During last decade India ranked just

behind China in terms of fastest growing economy. But suddenly after coming this far

we have started facing serious problems. A period of high inflation, low growth rate,

high external debt is holding country back. During this journey of 65 years India has

seen many ups and downs. Two consecutive wars, one with China in 1962 and another

one with Pakistan in 1965 resulted in a huge deficit on India's budget, forcing the gov-

ernment to devalue the currency to 7.57 against the dollar. But no crisis is bigger than

balance of payment crisis of 1991. India faced a serious balance of payment crisis in

1991 and was forced to sharply devalue its currency. The country was in the grip of high

inflation, low growth and the foreign reserves were not even worth to meet three

weeks of imports. Under this situation, the currency was devalued to 17.90 against a

dollar. After the 1991 balance of payment problem key steps have been taken to ensure

that such a situation does not arise henceforth. But the dependence on the foreign in-

vestments has always been an issue. India imports much more than what it exports

which increase the trade deficit which in turn increase the Current Account Deficit. Dur-

ing the 3rd quarter of 2012-2013 fiscal India’s CAD reached astronomical figure of 4.8%

GDP. This has been a major reason why our economy has been under pressure.

India came out with minimum loss during the 2008 crisis when economies of the world

suffered heavily. This was because RBI which is the Central Bank of India has imple-

mented many strict laws for the commercial as well as private banks to function and

restricted exposure of banks from buying international assets. That is why the losses

suffered were very less during the economic crisis in 2008. It also gives minimal liberty

on spending unlike in U.S where the banks have the liberty to function as they want due

to which the crisis of 2008 occurred. But India faces a major issue of Liquidity. As men-

tioned above, there is a heavy dependence on the foreign investments and so any re-

dundancy in foreign currency creates a panic in the economy. This is one of the main

reasons for the rupee sliding below the 60 mark.

Firstly let us look at the factors which create necessity for heavy imports in our country.

According to the reports by the Government of India Crude Oil is the major importer in

our country. The price of crude puts tremendous stress on the Indian Rupee. India has

to import a bulk of her oil requirements to satisfy local demand, which is rising year-on-

year. Then comes the yellow metal which is Gold. Requirement of physical Gold is very

large in India which puts undue pressure on the rupee. Many such items when import-

ed create an unbalance between import and export which result in high current ac-

count deficit and the economy goes week. On the other side when exports are con-

cerned, majority of the exports are done through the service industry but because of

the recession in U.S and U.K there has been a reduction in services used by them which

has hit our export oriented service industry hard. Inflation is another key issue where

India is feeling the pinch. Due to high inflation, Interest rates have always been high-

The future of Rupee: The senior

citizen(>60)

Harshit Dedhiya & Kaushal Shah, SIMSREE

Pratibimb | October 2013 | 14

ranging from 9-11% whereas in other countries like U.S it is

1-2%. That is why our companies face a disadvantage as

they have to borrow money at higher rates.

The depreciation of rupee recently started when the FII’s

recently plunged out Rs 18500 crore (about USD 3 billion) in

July and 44,162 Crores (about USD 7.5 billion) in the month

of June from the Indian capital markets. This was because of

the Federal Reserve of U.S tapering its quantitative easing

(QE). This had a huge impact on the rupee as it slides from

54 to 60 in two week’s time. RBI took some stern steps to

bring back the rupee to its original position. Some steps tak-

en were as Hiked marginal standing facility (MSF) rate by

200 bps to 10.25%. This is the penalty rate at which banks

can borrow over repo rate (was at 100 bps over repo so far).

Restricted borrowing under LAF(Liquid Advance & Finance)

to 1 percent of NDTL(Net Demand and Time Liabilities) or

approx INR 75,000 Crores and conduct OMO(Off Market

operations) sale (sell securities to market and mop up liquid-

ity) of INR 12,000 Crores. This decision by the RBI brought a

stop to the sliding rupee but for a very short period and it

did not help in rupee gaining back strength. RBI thus decid-

ed to take more stern steps which included banks keeping a

minimum daily requirement of CRR at 99% of requirement

which was 70% so far. Also access to repo window restricted

for each bank at 0.5% of net demand and time liabilities

(NDTL) for that bank. It also announced cash management

bill (CMB) of INR 6,000 crores to drain liquidity.

After many such steps taken by both RBI and the Govern-

ment the liquidity issue could not be solved and rising inter-

est rates stopped the foreign investors from entering back

into the Indian market. The belief is lost and getting back

the confidence of the investors has been a hassle. Also in

the last six months US dollar index has strengthened by

3.52%. The strengthening of dollar is beyond government’s

control which is ultimately hammering the Indian currency.

Gradual recovery in US economy coupled with rising expec-

tations that Federal Reserve will withdraw its stimulus

package soon is underpinning the US dollar index. Thus

India is facing trouble from all sides when its economy is

concerned. Poor economic growth in the manufacturing,

agricultural and mining sector has dented investor senti-

ments and they have become vary of investing in India.

Reflecting a persistent slowdown, industrial production in

May contracted by 1.6 percent, lowest in the past 11

months. Last week RBI cut its growth forecast to 5.5 per-

cent for the fiscal year, from 5.7 percent. Unless a better

sentiment prevails, confidence. Thus as the days are pro-

gressing the rupee is sliding down to new levels. This is

putting pressure on the RBI as well as the government in

power to taken some quick and effective steps as people

are comparing this situation to the 1991 fiasco. The confi-

dence of the investor is losing and it will be tough to gain

momentum. Strong reforms will have to be introduced and

the RBI will also have to raise its hand as all their measures

are failing day by day. If India has to progress it has to stop

its heavy dependency on foreign investment and have a

control on its imports. It has to look beyond inflation and

concentrate on overall GDP growth and make the country

more independent. The rupee is falling by almost 2%on

every working day and it won’t be long when it will reach

the 70 mark if necessary actions are not taken.

Reference

http://www.rbi.org.in/home.aspx

http://www.finmin.nic.in/

http://data.worldbank.org/data-catalog/GDP-ranking-

table

Pratibimb | October 2013 | 15

Linking rewards to performance: Is it so very

Important

Arnab Mandal, IIM Shillong

Rewards are used to acknowledge employee behavior and performance in organizations

and include all forms of monetary and non-monetary compensation, promotions and

recognitions. Reward systems are one of the most potent modes of control and the crite-

ria of getting rewarded reflect organizational structure, culture and values. There is a

popular conception that rewards should be always tied to performance parameters. The-

se are generally in the form of incentives or variable pay and follows directly from defin-

ing and evaluating performance parameters for employees. The Compensation Trends

Survey of 2012 by Deloitte shows that average variable pay is 16% of the CTC across

different industries in India with the percentage increasing with senior managerial roles.

Different approaches to reward systems

Performance-based reward systems rely on quantifiable performance parameters like

profitability and revenue generation. There is no room for subjectivity in this system like

working style or methods adopted to reach the goal. Hence there is a bias for actions

that can push the numbers in the short-term as opposed to those that have a long-term

strategic consequence and are non-quantifiable. Interactions between superiors and

subordinates are infrequent and feedback is more evaluation oriented than towards em-

ployee development. Focus is more on individual performance than on the impact of the

team, which gets reflected during reward pay-out as well. The system promotes individu-

alistic culture where the organization shares a contractual relationship with the employ-

ees leading to decreased loyalty for the organization. Integration around a common goal

is absent leading to lack of inter-departmental or inter-personal cooperation though

there are personal initiatives and ownership of responsibility.

The opposite of this is the hierarchy-based reward system which relies on both quantita-

tive and qualitative aspects of performance. Superiors play the role of mentors and are

responsible for evaluation and development of their subordinates. Apart from just num-

bers the working scenario is also analyzed by the superior according to his understanding

leading to certain amount of subjectivity in the evaluation. Rewards are conferred upon

teams and not individuals leading to collaborative behavior and both tenure and perfor-

mance are analyzed to decide the nature of the reward. Thus this collaborative clan cul-

ture revolves around communication and integration with shared goals and behavior.

Employee loyalty increases but risk appetite decreases as does ownership and innova-

tion. Impact of Organizational Life Cycle (OLC) on rewards

OLC has a profound influence on rewards and compensation which in turn plays an im-

portant role in recruitment, retention and engagement of employees. A start-up firm has

limited financial resources and needs to adopt performance-based strategy to push sales

whereas in the growth stage diversification and expansion are the main characteristics

Pratibimb | October 2013 | 16

along with an improved balance sheet leading to more com-

plexity in jobs which call for increased proportion of salary.

This proportion rises further in the maturity stage where

business is marked by strong finances, operational success

and consolidation requiring a skilled workforce who has to

be attracted as well as guarded from poaching by competi-

tors. During decline stage the objective is to retain custom-

ers amidst dwindling finances and demand. To minimize

risk, organizations choose lower salary and increased incen-

tives to meet dual objectives of financial constraints and

employee motivation. The Figure explains variation in com-

pensation with changing job complexity along the OLC.

Impact of Business Cycle on rewards

Any business generally passes through business cycles i.e.

upward and downward movements of level of GDP and sub-

sequent expansion and contraction of economic activities

around a growth or decline trend. The reward system

should also be aligned to this change in economic activity.

This requires a well-structured but also a responsive reward

system. A few financial terms will help to make the concept

clear. In this respect let us look at two terms – Operating

Leverage and Degree of Operating Leverage (DOL)

Operating leverage = Contribution Margin/EBIT

Contribution Margin = Sales – Variable Cost

Thus, Operating Leverage = (Sales – Variable cost) / EBIT

DOL (Degree of Operating Leverage) = %∆EBIT / %∆Sales

DOL of 4 means Profit increases 80% with 20% increase in

sales. DOL of 4 also means Profit decreases by 80% with

20% decrease in sales.

High DOL implies high risk-high return profile. Low DOL

means low risk-low return profile. DOL increases when the

fixed component within a given compensation package

increases. So a company can do well if it can cleverly pre-

dict the near-future business trend and negotiate it through

its reward system. If the business risk is low a proactive firm

should increase the DOL (fixed component) and lower vari-

able component to increase the return. If the business risk

is high then a proactive firm should lower DOL (fixed com-

ponent) and increase the variable component (connected

to individual or group performance) to minimize the risk.

That is the company tries to transfer some of the business

risk to the employees by increasing the variable compo-

nent.

Strategy and Reward System (‘A’ positions and ‘A’ players)

Super performers give company a competitive edge. Star

players however cannot help achieve the bottom line un-

less they are deployed in strategic positions. Thus the com-

pany needs to first identify their ‘A’ positions (strategic po-

sitions) and deploy star performers (‘A’ players) in those

roles. Thus the company needs to identify and map the

positions and players accordingly (‘A’ positions-‘A’ players;

‘B’ positions-‘B’ players; ‘C’ positions- ‘C’ players). For ex-

ample , Nordstrom and Costco rely on customer satisfaction

but how they position themselves in market is different.

Nordstrom provides personalized service and advice while

Costco relies on low price. Thus Nordstrom’s ‘A’ positions

include frontline salesperson while Costco’s ‘A’

Pratibimb | October 2013 | 17

positions includes purchasing sales managers role. Thus

identification of ‘A’ positions etc. depends on the company

strategy. The reward system should also be tuned to the

strategic impact making capabilities of those positions not

simply on performance.

Sufficient investment should be made for ‘A’ players holding

‘A’ positions. ‘B’ players need to be nourished so that they

can take up ‘A’ positions in future and offer support and

feeder roles. ‘C’ players need to be trained or replaced if

necessary. So reward system should not only focus on only

on performance but on the strategic impact or economic

value addition (EVA).

Executive Pay: Long-term v/s short-term performance

Executive compensation tries to redress principal/agent

problem but it has failed miserably as is evident from nu-

merous scandals (e.g. Enron) or the recent recession fuelled

by mortgage defaults. [Principal/Agent problem states that

the Principal (owners or shareholders) needs the Agents

(Executives) to work for their interests]. So the executives

are often paid above the average and also given stock op-

tions and have seen continuous increase in compensation

whether the company performance increases or otherwise.

The executives have in fact been able to undercut the arm’s

length in negotiations due to tremendous power they they

enjoy [Managerial power theory]. Also if they leave they are

given hefty severance package (golden parachutes). The

reward system has failed miserably because the executives

could leverage their managerial power to manipulate the

earnings or are generally focused on short term perfor-

mance to increase their personal gain. Thus the executive

reward system should be designed so that it focusses on

long term performance and measures such as ‘claw backs’

needs to be incorporated in the reward system.

Hence we can say

A lot of factors play a major role to determine whether re-

wards should be attached to performance or otherwise, but

it is safe to say that it should be synchronized with organiza-

tional culture. Moreover reward systems should be a mix of

both hierarchy-based and performance-based systems,

which helps control behaviour and outcome respectively.

Nigel Piercy et al undertook a study in which they established

that behaviour control and outcome control are two sepa-

rate constructs which individually affect organizational effec-

tiveness and also interact with each other.(See Figure) Infact

effective interaction of both forms of control has a positive

influence on both performance and effectiveness. However,

the extent to which individual control forms should be pre-

sent in the mix needs to be determined by organizational

strategy and local cultural traits like individualism, collectiv-

ism, risk aversion, risk exposure, hierarchy or egalitarianism.

[The reward system should be dove-tailed with the Organiza-

tional and HR strategy to meet business Goals. Thus the re-

ward system should attract, retain and motivate employees

to perform. A sufficient and optimal mix of both behavioural

control and outcome control is necessary as is seen from the

works of Nigel Piercy et al. The reward system are also influ-

enced by factors such as Organizational Life Cycle stage,

Business cycle andEVA rather than only performance]

Reference

Realigning Fixed and Variable Pay Compensation Manage-

ment, Pankaj M. Madhani, SCMS Journal of Indian Manage-

ment

“A Players” or “A Positions”? The Strategic Logic of Work-

force Management , Harvard business review

The Managerial Power Theory of Executive Compensation

by Paul J. Schneider, JD, LLM, JOURNAL OF FINANCIAL SER-

VICE PROFESSIONALS

Compensation’s Role in Human Resource Strategy , Int.

Studies of Mgt. & Org., vol. 42, no. 1, Spring 2012, pp. 7–

23.© 2012 M.E. Sharpe, Inc.

Positions Determinant of Compensation

A positions (Strategic) Performance

B positions (Support) Job level

C positions (Surplus) Market

Pratibimb | October 2013 | 18

Introduction:

Despite of motivational theories and intervention techniques being successfully imple-

mented, research still shows an alarming lag in an organisation’s ability to retain its

employees. Studies show three main facts in workplaces- 1) Pervasive job dissatisfac-

tion, distrust, and disengagement 2) How people are managed and job attitudes as

significant predictors of a number of dimensions of organizational performance 3)

Most organizations have failed to take appropriate actions, thereby, in some sense,

“leaving money on the table.” [1] All these explain the ripple effect that hampers facets

beyond merely the employee’s performance.

The heavy bend towards predictive analysis and the research in the same has rendered

some tools inaccurate. However, no method can be completely written off for different

tools may offer varied perspectives on the same aspect. This article speaks of the simi-

larly intertwined aspects of Graphology, Neuro Linguistic Programming and Organisa-

tional Behaviour theories uncovered during my study of the three.

Background:

Graphology is a pseudoscientific study and research shows it as a tool with a low quo-

tient of accurate predictability [2] . One of the tenets explains that when we write, the

ego is active, but it is not always active to the same degree. Its activity waxes and

wanes; being at its highest level when an effort has to be made by the writer and at its

lowest level when the motion of the writing organ has gained momentum and is driven

by it.[3]

The second aspect NLP; emphasises upon development through neuro-linguistic pro-

gramming of an individual[4] Again a tool for psychotherapy and personal develop-

ment, NLP emphasises on body language, cognition, kinaesthetic, recall. [5]

The third aspect focuses on theories by Maslow and Alderfer with special emphasis on

the Self Actualisation level of an individual.

Concept:

Graphology and Maslow’s Theory: Something as simple as the alphabet ‘t’ speak vol-

umes about one’s personality. Following is a brief on how the t crossbar is in sync with

Maslow’s hierarchy. The position of the crossbar indicates which need level is the indi-

vidual aligned to. (Ref Fig 1)

Graphology and Alderfer’s ERG Theory: Alderfer’s ERG theory also applies to the T

crossbar. An individual can move to a higher need level without his/ her lower need

being satisfied.

Maslow’s Higher Order Needs & Alphabet T

Rhea Joglekar, SIMS Pune

Pratibimb | October 2013 | 19

A movement of T crossbar can be observed with it being

analogous to the level of need.

Graphology and Alderfer’s ERG Theory: Alderfer’s ERG theo-

ry also applies to the T crossbar. An individual can move to a

higher need level without his/ her lower need being satisfied.

A movement of T crossbar can be observed with it being

analogous to the level of need.

NLP and Maslow’s Theory: The eye assessing cue chart ex-

plains the movement of eyes in relation to construct and

recall. Left movement indicates recall and while the right

indicates construct(Ref Fig 2). Graphology too attributes left

to the past and right to future. Going beyond Maslow’s Self

Actualisation level, we encounter the three behavioural selfs

- Cognitive, Aesthetic, Transcendant.

Cognition refers to our ability to gain from the environment

while aesthetics refers to contributing to the present due to

past knowledge. Transcendent goes beyond these needs and

gives an overall perspective to the situation. An individual at

the transcendent level is highly intuitive and may also be

considered as a visionary. He however is less likely to achieve

tangible goals although his psychic self may be highly ad-

vanced. (Ref Fig 3)

Conclusions:

1. The level of an individual’s need can be deciphered from

the height of his T crossbar.

2. A person may move from a higher to a lower level or vice

versa if he feels deficiency of one. However, a person may

also stay at a higher order need without the lower order

need being satisfied.

3. A T crossbar tending towards the right indicates enhanced

cognitive ability while the one tending more on the left indi-

cates higher ability to recall or aesthetic sense

4. The above two being more pronounced when an individu-

al is in the self actualization bracket.

5. A Transcendent level crossbar may not necessarily indicate

that each of his material goals is achieved. Although he may

be termed a visionary or someone with higher connect with

the cosmos, his creativity would only be channelized if he

realises his goal in time and abides by a path to make it real.

References:

“Human Resources from an Organizational Behavior Per-

spective: Some Paradoxes Explained” , Jeffrey Pfeffer. Jour-

nal of Economic Perspectives—Volume 21, Number 4—Fall

2007

Retrieved from http://en.wikipedia.org/wiki/Graphology.

Accessed On: 24th August 2013

“The predictive accuracy of assessment and pre-screening

methods, Anderson and Shackleton, 1993

Retrieved From http://en.wikipedia.org/wiki/Neuro-

linguistic_programming. Accessed on 25th August 2013

“Eye accessing cue chart” - Frogs into Princes, Bandler &

Grinder, 1979

Pratibimb | October 2013 | 20

The admission process in all of the business school is over and the classroom sessions

have started. The demand for management education has not decreased significantly

despite economic slowdown and placement problems. There are more than 2 lakhs of

candidates appeared for CAT in 2012 and many them are hoping to transform their lives

with a management degree. However, in this ever growing demand for management

education because of higher job opportunities, the debate on quality of education has

taken a backstage. There are hundreds of business schools in the country imparting

management education, and teaching management theories to their students. But to

what extent are these theories helping the budding managers to solve real life issues?

How good are these theories proving to be when used to address issues of social con-

cern? As we search for answers to these questions, it may be appropriate to revisit the

teachings of Sumantra Ghoshal, the great management scholar who generated an en-

tirely new way of thinking on management education to make it more useful to the soci-

ety.

Sumantra Ghoshal, a radical management thinker and Professor of Strategy and Interna-

tional Management at the London Business School until his death in March 2004,

worked on the relevance of managerial education and was passionate about generating

useful knowledge. His last published work was on the quality of management education

currently being taught in business schools wherein he argued that bad management

theories taught in the business schools are overrunning best management practices.

Ghoshal’s core argument was that theories and research related to the conduct of busi-

ness and management had influenced the practice of management in an adverse man-

ner. These theories have corrupted the worldview of managers, especially those with an

MBA education. For example, Ghoshal takes the case of ‘agency problem’- a theory that

propounds the idea that managers are by nature opportunist and cannot be trusted for

their behavior. Such theories have, to some extent, legitimized the corrupt actions of

managers and CEOs of corporations when they placed their interest over and above the

shareholders. By this account, the likes of Rajat Gupta incident, and the recent chopper

scam by Agusta Westland (AW) seems to be all natural and expected. Apparently, in all

of these cases the accused have behaved in an opportunistic manner as expected by the

theory.

The danger with negative theories is that managers become both the consumer and the

subject of such theories and over a period of time start behaving in conformance with

the theory. A theory formulated on the presumption that managers are opportunist and

selfish by character and which draws its conclusion based on such presumptions can

gradually induce opportunistic managerial actions. The worst part is that while emu-

lating such behaviors, mangers will be acting in a guilt-free manner blaming everything

What is Wrong with Management Theories?

Revisiting Ghoshal

Prof. Sushanta Kumar Sarma, TAPMI

Pratibimb | October 2013 | 21

on the theoretical assumptions. Many a times people use

organizational resources (starting from stationeries to office

vehicles) for personal consumption and they engage in such

activities with a ‘catch me if you can’ kind of attitude. The

argument is that ‘we are going to use organizational re-

sources if you don’t have a foolproof monitoring system’.

This is the danger of bad theories that Professor Ghoshal

was referring to. That is, we involve in a wrongful act with-

out any guilt because we are taught that the practical man is

an opportunist looking for exploitative opportunities. As an

organization, it is the responsibility of senior management

to design a flawless system to protect the organization from

any selfish managerial actions.

Management theories indiscriminately apply methods of

physical science to study the problems of corporations. But

such applications of scientific method ignore the fundamen-

tal differences that exist between social science and physical

science. They are often ignored as two separate academic

disciplines. In case of physical science, the mode of explana-

tion relies heavily on causal and functional explanations.

While the causal explanation takes recourse to temporal

precedence, the functional explanation takes recourse in

notions like benefits, progress, etc. These modes of explana-

tion are extremely useful in physical science and are also

applicable in some stream of business studies like the capital

market, where a large number of diverse actors are inter-

acting simultaneously. But the major building block in social

science is the individual action laden with some intention.

Human intention is of primary importance to explain busi-

ness phenomenon. Overemphasis on mathematical ele-

gance to make theories appear to be more scientifically rig-

orous has led management scholars to undermine the role

of human intention in explaining business situations.

Ghoshal retorts that one of the significant casualties of in-

terpreting management theories with principles of physical

science is the oversight of moral and ethical considerations

inherently present in the conduct of business. Managers

often resort to the excuse of helplessness in the face of

competition in the market. They justify their actions by

blaming invisible market forces and claim that they take

certain actions in order to comply with forces of capital mar-

ket or competition. Ghoshal calls this as “dehumanization of

practice” through which management generally frees them-

selves from all kinds of moral and ethical considerations. We

often witness such dehumanization of practices in the con-

duct of business whereby corporations withdraws their busi-

ness from certain states or regions citing regulatory re-

strictions or political unrest and thereby avoid sticking to

any moral or ethical obligation towards the local communi-

ty.

The managerial theories have originated from diverse aca-

demic disciplines like sociology, psychology, economics, etc.

These theories have collectively developed a gloomy vision

about the human nature, and the role of organization in

society. Negative assumptions about human nature are re-

flected in theories like the resource based theory, institu-

tional theory, and transaction economics. Ghoshal points

that such a negative view of human nature has created a

despondent vision about the world and has led to a self full-

filling prophecy. For example, there is a fundamental flaw

about our assumptions on preferences. Borrowing from eco-

nomics, management theories always consider human be-

ings as self-interested. But according to Avner Ben-Ner and

Louis Putter (1998), people can have preferences in three

ways - self-regarding, other-regarding, and process-

regarding. Self- regarding preference is about a self-

interested individual who is bothered about self-

consumption and outcome of other’s. Other-regarding pref-

erences are concerned with both consumption and the out-

come of others. Process-regarding preferences are con-

cerned with how individuals in question and others achieve

the outcome of common interest.

Management theories rarely take into account the other-

regarding and process-regarding preferences. They always

treated individuals as a self-interest seeking opportunist. All

managerial explanations have come from the basic assump-

tion of human preferences for protecting self-interest.

Transaction cost economies assume human beings to be

interested in maximizing their benefit even at the cost of

others. The implication of such theory is that managers de-

vote a lot of time and energy in creating a hierarchical struc-

ture to prevent one individual from benefitting at the cost of

another. This kind of structure builds up distrust among em-

ployees and management. As a result of such structures,

employees develop a perception that they are not trusted

and become wary of working within such surveillance mech-

anisms. This leads to a damage of employee’s self-

perception and hampers the intrinsic motivation to work. A

possible consequence of such damage is a reduction in vol-

untary compliance and cooperation, and increased oppor-

tunism. Thus, the basic negative assumptions underlying the

theory have a conformance effect on the behavior of man-

Pratibimb | October 2013 | 22

agers and employees. Hence, it is suggested that preference

as a basis of decision-making should also take elementary

values of moral or social concerns into considerations. Like

self-interest seeking actions, concerns for society and con-

cern for right or wrong can also influence human actions

guided by their intentions.

The Ghoshal’s contention is that the negative assumption

about people ingrained in management theories influence

the action of the managers in a negative manner. As manag-

ers tend to adopt the worldviews of theorists, over a period

of time their behavior gradually transform to conform with

the negative assumption. Compared to physical science,

social science, especially the management theories, has a

larger responsibility towards society because they influence

human worldwide and can have far-reaching consequences.

In Indian context, at a time when business schools are con-

sidered as placement agencies and students look for certain

ROI (Return on Investment) before taking admission in an

MBA course, whose concern should it be to examine the

quality of management theory? In this rat race of placement

and business school ranking, who can afford the time to

pause and reflect on what we are learning at the business

schools?

Ghoshal is still relevant after nine years of his untimely

death and so is his half-finished work where he said that it is

the academia that needs to make the theories more useful

and positive. It is the core responsibility of academics to act

more consciously in building theories which can generate

more positive actions. Head of academic institutions need to

put additional effort in promoting research with a positive

assumption of human nature. In Indian context, the chal-

lenge is more acute because it suffers from a lack of ena-

bling environment for management research. We are yet to

see world class management theories borne out of Indian

context. We don’t have any management forum that is rec-

ognized all over the world like the Academy of Management

(AOM). So we need to work harder to create a research-

enabling environment before getting into generating posi-

tive management theories.

In Indian business schools, where there is always a crunch of

good faculty, the teachings of management theories have

been a challenge. Theories are often considered as some-

thing not relevant to our day-to-day conduct of business.

Many business schools prefer to stick to courses that are

more skill-based rather than theory-focused. It serves a pur-

pose for both the students as well as the institutes; students

perceive these courses to be more useful in their working

life and institutes also find it easier to offer these courses by

sourcing faculties with a blend of technical skills and indus-

try exposure. The teaching of management theories, howev-

er, demands a well-groomed background in management

research which many management faculties are lacking in

the current context.

The idea of developing best management theories should

not be misplaced as an act of delegitimizing the existing

management theories. Let the existing management theo-

ries remain as a part of the MBA education. The idea is to

create space for pluralism of theories where both types of

management theories can co-exist. The head of academic

institutions has to take the lead by creating organizational

space and resource for promoting scholarship on alternative

theories. Courses on ethics, and corporate governance are

not sufficient to inculcate the sense of moral or ethical re-

sponsibility among managers in conducting business; rather

support should be offered in a wider range of scholarships

covering discipline like organizational behavior, strategy,

marketing, etc.

The alumni of business schools also have a role to play. They

are the ones who are bridging the gap between theory and

practice; often applying and experiencing the role of theory

in the conduct of business. Based on their own experience

with regard to the usability of management theories, they

should press their alma mater to realign MBA courses with

practical experiences. The alumni interaction should not be

Sumantra Ghoshal

Pratibimb | October 2013 | 23

limited to the idea of networking and resultant placements. It should extend beyond the short-term goal of getting job

offers and should encompass long-term endeavors of making business education more positive and productive. Alumni

should interact with faculty on specific research agenda and should collaborate more often to generate better theories

which eventually will benefit their own business. After all, nothing is more practical and relevant than a good theory.

References

Ben-Ner,A & Putterman,L. (Eds) (1998). “Economics, values, and organization:7.” Cambridge, England:Cambridge University

Press.

Ghoshal, S. (2005), “Bad Management Theories Are Destroying Good Management Practices”, Academy of Management Learn-

ing & Education, 4(1):75-91.

Pratibimb | October 2013 | 24

Join us on:

pratibimb@tapmi.edu.in

Visit: http://www.tapmi.edu.in/student-life/pratibimb/overview/

Team Pratibimb

TAPMI

P. B. No: 9, Manipal - 576104, Karnataka