From the Desk of the Chairman

Opportunity for renewal through holistic and systemic approach for equitable benefit to all stakeholders with primacy to the society Can India Take the Lead?

Financial services play a crucial role in the lives of all the people as evidenced by the global economic meltdown that started in the September of 2008 and adversely impacted almost everyone in the world. It is almost like the anniversary of the event.

In the hindsight it is generally believed the policies, the systems and the practices of the Financial Services sector with primary focus on money making in the form of profit for the organization and salary and bonuses for the executives with lack of respect for the customer and more importantly total disregard for the welfare of the common people of the world is widely recognized to be the cause of this unprecedented catastrophe.

This has resulted in the liquidation and consolidation of various organizations in this sector to overcome the enormous losses, pain and disruption. However their pain is insignificant in comparison to the pain suffered by common person in the society.

It is good to see relatively early recovery by some of these financial institutions and hopefully the impact will be felt by the rest of the society as well in due course.

This provides a unique opportunity for financial service providers to overhaul their policies, systems and practices so as to make the whole system more customer oriented, productive, efficient, cost effective and above all concerned with the welfare of the common man in the society. Many organizations have renewed their effort for use of quality management concepts and techniques in variety of forms be they Six Sigma, Total Quality Management, Lean Management or a combination of these.

In reality there seems considerable resistance to such change. In most cases it is only tinkering of the old policies, systems and practices. Requirement is a much deeper cleansing operation including the following:

• Change in policy to define criteria for success other than profit. Could one of the criteria be differential between what we charge the borrower and what we pay the lender?
• Social obligation through clearly defined measures of impact of the organization’s action on the society.
• Lean management eliminating wasteful practices and waste
• Daily management through process standardization and control to ensure consistency of process and product / service delivery
• Six Sigma for continuous improvement of process and product/service quality while reducing cost.
• Executive compensation in line with the practice of other industries

The current attempt to make this happen with the help of people who have been part of the system for long is not likely to work. The Business schools are also part of the system and have a vested interest in the status quo with minor changes. This becomes a façade to show everyone something is happening while nothing changes.

Need people from outside the system including quality professionals who can give holistic and systemic perspective, challenge the current systems and seek answers. They obviously can not provide the answers. It would challenge executives to change the paradigms and perspective and look for new radically different ways of working.

Financial services sector in India has been relatively safe and could take the lead in radically changing the system