Management guru Ram Charan says companies need to invest in people, not numbers

Management guru Ram Charan believes that it is time for companies to stop focussing solely on the financial side, and start investing in the right talent. 

He is the corporate sage, the man with unparalleled access to global boardrooms and its CEOs, but one could say that management guru Ram Charan has a practical and minimalist lifestyle. 

Describing himself as a “one-person shop”, the globe-trotting Charan lives in hotels, has an office but reportedly has never stepped inside it, gets his clothes couriered to him every few days to the part of the world he is in, and writes his books on his smartphone during his travels. 

A “non-materalistic” person, Charan can afford expensive suits and cufflinks, but doesn’t care for them. Instead, he sticks to his Timex watch and admits to having splurged on a “bit costly shoes” because of a foot ailment. A believer of ‘I am no good unless I add value to individuals or the company’, Charan’s most prized possession is knowledge. 

During his recent visit to India, US-based Charan spoke to ETPanache over the phone about how companies need to rethink their talent management, the evolving role of HR, and why leaders need to upgrade their skills. 

What’s the most important skillset for a CEO? 

Diagnosing [the problem] precisely is extremely important. That’s a very critical skill. Unless you know how to do it, you may have some wrong solutions. 

You have proposed that the HR’s function needs to be included in macro decisions for effective talent management. Can you elaborate? 

In most companies, there is a rigour about the financial side, but numbers don’t drive the company, people do. I believe in bringing the CHRO (chief human resource officer) on a par with the CFO; put HR and money together. If you appoint the right people, you may use less money. If you appoint the wrong people, you may use more money. Right now, they are all in silos. The CEO, CFO, CHROs must diagnose together about operations and strategy. This [method] has been tested. It has necessitated that that the CHRO has worked in another function before he/she takes the position. In many US companies, the CEO will not hire a CHRO who hasn’t worked in at least one other function and done something constructive. Not just ticket punching. 

Have you seen this happening in India? 

Vinod Kumar, CEO, Tata Communications. (Image: Tata Communications) 

In Tata Communications, CEO Vinod Kumar and global CHRO Aadesh Goyal rotate the HR in in other functions. Every year, they take their people to Silicon Valley for four weeks, and the [staff’s] mindset changes. They’ve been doing this for the past five years. 

Global CHRO Aadesh Goyal, Tata Communications. (Image: Tata Communications). 

And the CHRO is a person who understands business extremely well. In Aditya Birla Group, Santrupt Misra runs a multibillion-dollar business and is also the CHRO. He brings those two things together 

We are allocating funds without attention to people. I say find people first, then allocate funds. And depending on the person, allocate funds differently. 

Older Indian firms who don’t have any MBAs [at the helm] do that. They talk in private at home, saying, ‘This guy will do this, turn this thing around. Give him $10 million more.’ They do this intuitively. But they have no respect for the HR guy. 

Although I have never met Dhirubhai Ambani, he had a nose for the right people. If you put the right person or a better person on a job, your money allocation will be different. 

How crucial is this for new-age tech companies? 

First of all, the speed of change is high compared to just a few years ago. Second, you have speed and technology combined making the change, so you have to get the right people for the right job faster. In one of those Silicon Valley companies, the HR person is an M&A expert. This is because they are buying a lot of small companies. They [the new employees] have to be assimilated and they pay a very high price to these small companies. So, you can’t have a CHRO who doesn’t understand people, cannot assimilate and is totally ignorant to technology, it’s not going to work. 

With automation, do you see leaders/CEOs of conventional companies upgrading their skill? 

Some are, some are not. The CEO of Singapore Telecommunications (Singtel), Chua Sock Koong, invests the time. A number of American CEOs are taking lessons. I don’t know about India, but they better learn. Leaders will never succeed unless they continue to learn. 

I have a CEO in America who is spending 20 per cent of his time to visit start-ups across the globe. That’s where you do the learning, not in the school. He says, ‘I am selling you nothing, I am buying nothing. But I can learn a lot from you and I can help you not with sales, but with contacts or with guidance to scale’. He loves it and says it’s the best education he can get. 

At times, businesses can get damaged due to family feuds. What’s your take on this? 

You have to come to terms that no two children have the same personace:lity and ambitions… You have to go with where children’s aptitude and ambition lies. And the families will split. There are few families that are intact in America. There are some in Scandinavia with the fifth or sixth generation. You better plan for it. Being intact for the sake of being intact is not going to last. 

Source:https://economictimes.indiatimes.com/small-biz/hr-leadership/leadership/management-guru-ram-charan-says-companies-need-to-invest-in-people-not-numbers/articleshow/63693318.cms