“The ease of doing business is not about making it easier for big corporates”

Donning multiple hats comes easily to Arun Maira, who has spent his career holding leadership positions in several private and public institutions. He also served as a member of the Planning Commission of India for five years till June 2014 and is an eminent author and thought leader. In a free-wheeling chat with Outlook Business’ Shruti Venkatesh, he talks about the importance of ‘human resource’, the reasons behind the floundering economy and the democratic way of doing business

What constitutes a great workplace?
We tend to measure corporations by how much wealth they produce. But, the idea of a great place to work was born out of the work of California-based Robert Levering in the 1990s. He found that what mattered to people was a sense of purpose, relationships that they had with each other at work and trust they placed in their colleagues or employers. So, he developed a trust index — the Levering Trust Index — an instrument to help businesses listen to employees and gauge their sentiment about the workplace.

Could you give us an example of a great workplace from your experience?
JRD Tata was always a people’s person who had wonderful ideas and management skills. He would listen to everyone — from the driver and the support staff to his employees. The Tatas have built a very ‘human’ organisation, and people like to work with them. Whenever JRD had to make a decision, he first thought about what would be good for India, and then what would be good for the Tatas. Invariably, what was good for the country turned out to be good for the company as well.

So, it is important to care for the system around you. You cannot be an oasis looking after your little organisation when the world around you is suffering. Therefore, we need to introduce ethics and equity into a world where we talk about economy and efficiency.

Essentially, human resource is one of the most important resources…
We need to remember that a human being is the only business resource that has the power to improve itself. That is what distinguishes us from machines. So, institutions have to help empower them to boost efficiency. There’s a popular quote by Henry Ford: “When I am looking for just a pair of hands, why am I getting a full human being?” He said that because human beings have emotions and demand rights. This prompted the introduction of automation. But, the world is about human beings. In our country particularly, there are millions of young people, and we must create an environment where they can experience their power.

How can that be done?
Technology is just a means. To use it effectively, we need to listen. Unless we listen to people who are not like us, we will not learn. We have not been able to shape a collective response to inequality and poverty. While some call for capitalist solutions, some suggest a socialist one. There are many ideological, historical and religious divisions, but the beauty of India is in its diversity and democracy. 

What do you think are the biggest hurdles to India’s growth journey?
Making great workplaces in a few tech companies is hardly the solution. It should be across workplaces. People will call it a ‘Gandhian’ idea. That’s why I believe we have gone wrong since 1950s. The whole world was going the way of big capital, big enterprises, scale and people being engaged as ‘hands’. Gandhi’s model was about people working where they live, doing productive work, producing things other people need, and in turn, creating something you want — an economy. Gandhi had a vision of a democratic capitalist economy whereas today, we have capitalist economies, which are not democratic.

What is your view on the debate about inflation?
Economists, who are questioning the paradigm of economics over the past 50 years, are saying that the issue of inflation is hard one to gauge. This is because inflation can be caused either by too much demand when there is no supply, or by cornering production and releasing it at the right time. Small suppliers, such as farmers, do not have the ability to hoard and sell when the time is right. But people buying from them are not selling it immediately because they know it is not a good time to sell. 

Taking a broader view, there is debate about the role of central banks, which is to control inflation. If there is inflation, the value of currency is diminished. If you are a foreign investor, you don’t like that. You want it to be still, solid and secure.

Is the current slowdown more challenging than the 1991 or 2008 crisis?
It is a continuation of those crises because there is a problem with the fundamentals. Unless people are earning enough to spend, save and invest, there will be no demand growth. The problem has been building up. You can give investors all kinds of incentives you want, but they have not been coming over the past four to five years. A sensible investor would not come unless there is a prospect of healthy return. Plus, to enjoy the concession of no tax on profit, first, I need to make a profit and to do that, I have to make a sale. People who are earning money will pay for a product or service. So, you have got to stimulate income at the bottom.

Are the government’s current measures enough to revive the economy?
It is not enough. They are doing quite a few good things for small sectors by recognising the need to help start-ups and clusters of small enterprises. At the same time, they have tax incentives for the rich and are making it easy to hire and fire. We have to do a lot more to listen to smaller businesses. The ease of doing business is not to make it easier for big corporates, but to help small businesses do business.

What should the government do to revive growth?
If we have to measure our progress, it should not consider growth alone, but also include societal and environmental progress. We need local systems solutions for global systemic problems. Policies cannot be one-size-fits-all. It should start from the bottom and then move upwards. This form of governance is the solution. Unless we get it, I am afraid that any expert solution that does not understand a complex system is not going to work.