Satyashri Mohanty - Hello everyone, India wants to be a developed nation by the year 2047. Now one of the sectors that need to fire up is manufacturing. From the current levels of 16% it has to go up to as high as 25%. Now the common narrative has been that there are a lot of things that the government needs to do and for last 5 years government is doing a lot of things but today we're going to discuss a counterpoint. What should individual organisations do to meet these kind of numbers. Now that is in the realm of management, to discuss this counterpoint, we have with us Mr. R C Bhargava, Chairman, Maruti Suzuki, and who has seen the revolution, the auto revolution happening in the country from being almost nothing in the 80s to what it is today. In his latest book ‘Impossible to Possible’ while he's narrating the story of Maruti he's also indirectly telling us the story of the need to change the management practices his view is we need to lean towards the eastern philosophy more away from the western philosophy.

Satyashri Mohanty – Welcome, Mr. Bhargava to this Counterpoint.

R C Bhargava - Thank you

Satyashri Mohanty - So my first question, Mr. R C Bhargava, is why there is a need to change. The western philosophy of management, which is well-researched, well-documented, and on the face of it, it looks like the best thing to do and why should we change, particularly in manufacturing?

R C Bhargava - Well, let me put it to you this way Satya, the western management practices developed in number of countries but at a time when there was very little competition either within the country or between countries. And it was more or less all protected markets, there was little international trade, there were no bilateral or multilateral arrangements for regulating international trade and the system worked well because essentially competition requires you to maximise your efficiency, maximise your output with minimum inputs. There was no compulsion to do that. The same thing was true of India for a long time because we were a very closed market and our policy was guided towards self-sufficiency and making ourselves independent of external trade. All that has changed, and it is obvious now that not only do we have to compete strongly with people within the country but if we are going to get our manufacturing growth changing from 14%,15%, 16% to 25%, international trade has to play a major part, which means competition.

Because all countries in the world today are doing their best to grow their manufacturing industry and to get as large a share of the global market as possible which means more and more competition. All the evidence of the last 40 years, 50 years from when competition has developed shows that the western manufacturing practices have failed to be successful when pitted against what was developed in Japan and what has been happening in the more authoritarian kind of regimes in the east and the need for change therefore arises that if India is to grow the rate of its manufacturing growth and get into double figures and get into 14%, 15% annual increases it has to become far more competitive.

The question therefore is that can we become competitive with the existing system. There my answer is that why did Japan change and develop a new manufacturing system, because after the war they realised that all the other inputs of manufacturing whether it was raw materials or machines and things were more or less at the same cost as anybody else would get. The only thing which was different, and which could make a difference to manufacturing in Japan compared to other countries was their human resources, could they maximise the output from their human beings, so that they could actually overcome all their other disadvantages of not having raw materials and energy and still becoming more competitive. And the Japanese management system, as it evolved, was essentially based on this need for maximising the output using human resources and getting maximum efficiency in the whole system.

Satyashri Mohanty – Yeah. That's a very interesting thought and the western philosophy would claim that you know, maximising profit is also what they tend to do, so I think let's get into specifics of what are the changes that you are highlighting, maybe we start with the workers themselves. And I think you have a very strong view of how the workers need to be managed in a very different way.

R C Bhargava - Yes, I think it comes down to that ultimately because in any manufacturing company normally about 60%-70% of total employees are workers and the rest are the supervisors and the young managers and the senior management. The western management practices have always been managed in a way, if I put it, where the workers who are 60%-70% have been looked upon as adversaries to the owners of the company and the management and the total human resources in a company are actually divided into two - in terms of management and workers. Workers then form unions because they need more bargaining strength. Now what are the implications of this we have seen that this system firstly leads, frequently, not so much now but, it used to lead frequently to industrial relations problems. We've had a lot of it in our history strikes lockouts sit-downs gheraos, even violence. Now all of that ultimately takes a toll of the working efficiency of the company - output comes down costs go up the customers are unhappy because there is disruption of supplies all that kind of thing happens that's one part of it. The second part of it is that the workers themselves do not feel that they are part of the company.

They feel that they have to work for their eight hours a day for which they are paid a certain salary which they have negotiated and as long as they keep doing what they have to do or what they are told to do over those eight hours they're fine. They do not look upon it as part of their responsibility to see how to do their work more efficiently or get more output out of these eight hours. In fact if you remember a lot of wage negotiations centered around what should be the hourly production or the daily production, the workers wanted to reduce it the management wanted to increase it.

Satyashri Mohanty - It's still on in many companies.

R C Bhargava - Still happening, so there's no common objective of growing the company. So the third thing is therefore that workers need to be policed in a sense that they come in on time, that they work, when they're supposed to work, they don't go off and take some cigarette time or something else.

Satyashri Mohanty - The lunch breaks are becoming much bigger than intended.

R C Bhargava – Fourthly, there is no need for the workers to at all bother that if they do work, are they doing it as well as it should be done so that defects and quality problems are minimised if not eliminated. They don't do that because they just have to do something, there's always a department of inspection, a department of quality control and those are the guys who do that work so the worker is not responsible for that either all of which adds to the cost of manufacturing. The workers take a lot of leaves, which is allowed under the law, the attendance levels in companies are what 85%-87% something like that. Within the company itself the working hours, actual productive working hours instead of being the full 7 and 1/2 hours in a shift rarely go beyond 6 and 1/2 hours or so because something breaks down or some tool is missing, or some supply is not there and the workers are not interested in taking the initiative and getting that deficiency remedied.

Satyashri Mohanty - Yeah

R C Bhargava – So all of that leads to lower output. Now the Japanese realised that in, I'm talking of 1950 now, that if all these deficiencies could be overcome and if the workers became part of the whole production team of the company and was actually convinced that being part of the company would be of benefit to them then there would be a huge increase in the productivity and efficiency of what was being done in the company. And that seemed to the Japanese to be the only way in which they could overcome their other resource and energy deficiencies. And that's where the management then worked out the system by which they flipped the whole thing and instead of workers and the unions being opponents actually became partners of the management in the company.

When we started Maruti, we were in somewhat of a similar situation, you know everyone, everywhere including in Japan and the rest of the automobile industry gave Maruti no chance of success. It is supposed to be a political project; cars were a taboo project in the socialist system. Market was 35,000-40,000 cars a year, where was 100,000 cars going to be sold and that too produced by a public sector company. So we had really no way that if we continued with business as usual and did what everybody else was doing we would have, I think zero chance of success and that's where Mr. Suzuki and Mr. Krishnamurthy and I felt that we had to do something different and the different obviously was what was before us in Japan, where Japan had turned round a seemingly hopeless situation into a highly winning situation by creating this total partnership in the company. And that's what we did in Maruti and surprisingly as you know we succeeded in changing the attitudes the workers and they became partners with us, and you've seen the result of where Maruti instead of being a failure has become one of the greatest wealth creators in the country.

Satyashri Mohanty – Yeah. I think what you're saying makes a lot of sense when you have 70% of your employees not using their brain, they're just using their muscle then you're losing out on a lot of opportunities for wealth creation. Now the point is, if I look at you know various promoters is they'll always see that how do I make this happen, this is something I also want. So how do we, how do we change the environment because as you rightly pointed out in vast majority of organisations, manufacturing organisations the relationship is very adversarial, it is very transactional, it is like I sign a contract so there are companies who face issues of expansion of the lunch breaks, not getting adequate time and always, the workers have excuse, the management have an excuse, and it's not always a partnership right. What should be done and what is lacking? Let's put it this way - what is really lacking in the management approach that prevents us from getting this benefit?

R C Bhargava – See. Why did Japan do what they did? And why did Maruti do what it did? Both of us did what we did because we were faced with a situation that if we did not change, we would go under. Now most of Indian industry and most of the promoters and the capitalists don't feel that they are in any risk of going under, none of them are losing their businesses. Competition still is not that strong and now you're seeing some push back from the government but as you, when FTAs and others were proposed there was a great objection from industry that “no, no don't reduce duties because it would hurt us.” So Indian industry has always wanted a certain element of protection. With that element of protection they have been in a reasonable comfort zone so that they didn't feel threatened at all. Even now I don't think they will really be threatened. But the need for change is not really because I think businesses are going to feel the threat of somebody coming and wiping them out because they have a much more efficient company because it's not happened it's not likely to happen. It did happen to an extent in the car industry and Hindustan Motors and Premier went under, but otherwise it's not really happening.

Why should they do it? The only reason today why I'm saying we need to do it is what you started by saying that we have a national goal of becoming a developed country by 2047. The present government and the present prime minister have clearly shown that they understand the issues relating to competitive manufacturing and the importance of manufacturing far better than any government has done in the past. A lot of reforms have happened a lot of changes have happened government is receptive to hearing how to make it easier to do business, so government is fully behind the industry. I think for the first time in our lives in trying to promote manufacturing because it wants manufacturing to become a much bigger contributor to the national development targets. Industry has to realise or think, whether they want to play that role or not.

Satyashri Mohanty - I think a lot of promoters would say at least quite a few that I know would say I want to do it now. Tell me what changes I should do in the way I deal with workers in general, what changes I need to do so that I make them engaged because the key thing is they're not as engaged as let's say what you have in Maruti. And I read your book and you talk about a lot of things about creating an egalitarian workspace, so can you talk about it, that how do I make this transition suppose somebody says “okay I need to make the change because there is a value gain in terms of productivity”, all those things are there on the table. Even if there is let's say no pressure of competition, but there is money to be made, as you have highlighted in your book. So, can you tell the promoters who are saying, “Okay, hey guys I'm willing to make a change. Tell me, what is the big change that I need to do with my workers?”

R C Bhargava – I think the first change is the promoter must genuinely accept that if workers become part of his team there's a very substantial amount of value which will be added to the company not only because you will get the brains of the 60% people but because of all the negative costs which are associated with policing an adversarial chunk of people.

Satyashri Mohanty - The layer of supervision and auditing.

R C Bhargava – All of that, attendance, and this and that, you know.

Satyashri Mohanty – Yeah there are so many indirect costs like for example in pharma industry, so there's a lot of things about data integrity and so the workers do a lot of data entry so if you're not engaged, it impacts on the data itself. That’s a cost.

R C Bhargava – The quality is hugely impacted if the person actually doing the job is not concerned about what he's doing. So, I think, the promoter has to recognise that there's a huge amount of value to be added. Now he has to then make up his mind that he wants, actually wants this value add and that is his first objective. I am saying this Satya because a lot of promoters are quite happy with the amount of money which they are making from their companies today. They lead a life which is comparable to the lives of industrialists in the most developed countries so there is no feeling that they are being deprived of something which they could get if they had more growth of the company. So there has to be a different mindset if I may say or a change in what they want in life.

If they want that instead of just making money and leading a life of opulence and luxury, they actually want to become known as one of the biggest manufacturing companies in the globe, in India, contribute to the national wealth become recognised for what they are doing, that's a different kind of approach. So, the biggest change which is required is in what is the objective of the entrepreneur. What does he really want in life? Once that happens then the question then which you asked is how does he go about it. The answer is actually not so difficult.

I think in all our experience whether your mine or anybody else's we've seen that unless another person is convinced that what you're asking him to do is in his interest he will never do it willingly. He may do it because he wants to keep his job, he wants to get his salary he wants to keep on your right side, all of that, but that involvement in the job will only come if he finds that doing what he is being suggested he should do will actually benefit him. Now if you think a little bit about workers and industry. The question I have is what creates security of employment for a worker obviously the only security of employment of a worker is not the law, it's the company remaining a going organisation, which means the company must be competitive, must be profitable must be able to continue to work in the place, marketplace without getting run over by other companies.

So a worker if he wants to protect his job in the long term has a personal interest in his company being competitive. In India, if you get thrown out of a job in a company let's say in Haryana where do you go, it's not easy for these guys who still have roots in their villages to pack up and go and settle down in some village in Maharashtra, can't happen here. So that's one part of it.

Second part is that if workers over their career are going to get improvements in their remuneration in their facilities - let's say in their schooling in their housing and things, where are the resources from that going to come. The answer is again obvious that it has to come from the surpluses generated by the company. It cannot come from anywhere else. The days when government used to take over private companies and protect jobs of people or give housing and other things to workers irrespective of whether the company was making a loss or making a profit are gone it's no longer possible to do that, so the worker has to be dependent on the company's ability to generate surpluses to be able to have any chance of improving his future.

Now having said this then it becomes quite obvious, that actually the health of the company and the progress of the company is a vital interest to the worker, it's not so difficult to convince the worker of this but convincing him of this is not adequate. I may believe that, that my resources all come from the company, but if the company keeps generating all these profits and not sharing anything with me then I'll lose my motivation pretty soon - why am I doing it? So, then the promoter has to realise that if the worker is going to become a part of the company, all his policies and actions of the promoter and the management have to be such as would firstly convince the worker that the management is all serious about growing the company and increasing its profitability and resources. And so, all your actions must be first company first.

Secondly that when the company starts increasing its output and profits and things growing, part of the growth benefits will be shared with the workers, because I will do things to improve the company if some of that benefit comes to me. I have of course to explain to the worker that all the profits can't be given to them. I have to explain to them how profits are made, where all profits are required to be allocated and why.

Satyashri Mohanty – It's like opening up the entire P&L, and the way you are managing the numbers.

R C Bhargava – They have to be fully in the picture of what are the management’s actual options and compulsions. There's no reason, if he's a partner in your company he must also know why you're doing what you're doing. I can't be a partner with you Satya if you keep me in the dark, that's a black box how I manage the company you don't need to know anything. Then how will I know what you're doing?

Satyashri Mohanty – You know that's a big change you are saying, complete transparency about where the company's going, what are the challenges, and how you're managing your P&L. That's a big change for many companies. What you highlighted is that there has to be a wealth sharing, a win-win, where the company's workers see that as the company grows, I also grow...

R C Bhargava – With the company.

Satyashri Mohanty – With the company. Now a lot of companies have these bonuses like you know attendance, bonus productivity bonus but what I see a difference between them and what you're suggesting is there's like a kind of upper cap there it's like okay, your attendance is let's say at the high 90s you get this kind of a bonus that's fixed that's not really linked to the company making money so they don't, what you're highlighting is not just having another bonus program linked to some kind of a very local parameter. You're highlighting that let's create wealth, as the company's doing more and more, you start to gain more and more and make it very transparent. I think you wrote about interestingly in Maruti at one point of time you have this that if the workers cross the 25 cars per person dispatched, end-to-end dispatch they start to make more and it is very interesting for the audience to know that at one point of time you wrote in the book that they made more than their basic salary.

R C Bhargava – This productivity-linked scheme

Satyashri Mohanty – That’s a big change.

R C Bhargava – Originally, when we suggested to government, they wouldn't accept it. They said no, the total amount of bonus which can be given to a worker is limited, I think to 24% or something, some figure, I may be wrong in that. We got stuck. Then they came up with this Memorandum of Understanding (MOUs) with the public sector companies in that memo we proposed that we want to have a companywide productivity linked bonus scheme.

Satyashri Mohanty – Without upper cap.

R C Bhargava - Wait. What we said was that the product, the project report which you approved and which Suzuki prepared said that maximum output in the company would be 100,000 cars with 4,000 employees, so 25 cars. We were proposing that if our output goes beyond 25 per worker then 75% of the additional labor savings, first 25% is excluded that's part of your, 75% of that will be shared by all the employees, it is not any section wise or product wise, it's all company wise because he was emphasising teamwork. Now government approved this probably they thought.

Satyashri Mohanty – This will not happen

R C Bhargava – That in no public sector company has output really ever crossed 100%. So even if these guys cross 100% 25 may go to 28 or 29 or 30, it's okay. They didn't realise that this 25 would go to 75 and more, but ultimately Satya the answer is profit sharing.

Satyashri Mohanty – Yes, that's the big deal.

R C Bhargava – The ultimate goal should be that workers should participate in the profit sharing of the company. In a sense they should be treated like shareholders. And, Japan does that by the way. They don't have all these bonus schemes and things. But here we had to do this because initially if we did profit sharing it would become very difficult for workers to understand what we were doing, whereas this output thing they understood very clearly and hours per work also they understand clearly. But ultimately the thing should move to profit sharing. Along with this then you also have to keep giving some benefits to workers - you know like I've written in the book about housing and school, we have a benevolent fund for their employees, and things like that, because there's enough money available.

Satyashri Mohanty – So you're doing improve their quality of life in general. So interestingly you also have talked about basic hygiene factors of creating a egalitarian workspace, things like - they don't feel that there is a cast system existing in the company. How do I take all that away and so they feel that we are equals as a human and that's a very important part of feeling engaged that ‘I'm, as a human being I'm same as you’.

R C Bhargava – See, if you are wanting to create a team, partnership, trust with each other can you do that if you treat the guy – “look you are something, not equal to me in terms of being human beings, that my food needs are better, my clothing needs are better” can I do that with you if you look at any team anywhere is there a differentiation in the team uniform, the captain of the team, you may be Virat Kohli, but Virat Kohli doesn't get anything special on the field, he's like anybody else he's treated like anybody else, you may be an outstanding performer. So what, you're still part of the team; the rewards which you get as a team come to you as a team.

Satyashri Mohanty – so while the match is on, everybody is equal, so while you come to the workspace, ensure that everybody feels equal, and that is lot of hygiene factors that need to be corrected for.

R C Bhargava – Especially when you're talking of what the management has to do. The attitude of many of the promoters in this respect will have to change. I don't see some of the older time management leaders or the promoter/big promoters mixing and eating with the workers. We used to eat sitting on the same table as the workers, eating the same food, in the same utensils as the workers were eating. Now that's something which you have to do it's your contribution towards growing the company, because remember as the promoter or the manager of the company, you don't expect to get 100% growth in your profit by doing nothing, you also have to contribute in some way to the whole exercise of winning over workers. So I'm not saying that the Maruti way was the only way it's certainly not the only way. I would say that under the circumstances of each factory where it is located, what the people are, the promoter and his top management need to find policies and ways of doing things which will actually convince the worker and keep them convinced that management:

(A) is only devoted to the growth of the company and not themselves

(B) the management is sincere in its saying that we will be beneficiaries of the growth of the company

And how to make people convinced of this that's the task of the management. They can be as I, as you have seen management has many ways of doing things, even in today's western style of management, it's not that all are managed in the same way. In many companies the owner goes around the shop floor he knows a large number of workers by their first name, Mr. Keshub Mahindra used to do that he knew most of the people there on the shop floor, so it creates a different feeling amongst them so but each company has to work out…

Satyashri Mohanty – find out

R C Bhargava – But provided he has that objective that I have to bring the workers to feel that they are part of the company.

Satyashri Mohanty – I think to make the communication sharper to many of these promoters there is money on the table. I remember you talking about how in Maruti you wanted to increase the output of the bottleneck machine which is the paint shop and you could actually get workers to come one shift before and to set up that paint line.

R C Bhargava – Yeah, a few hours they came an hour or so before fired up the furnace.

Satyashri Mohanty – And also you know leave give that a little bit later

R C Bhargava – Little bit later.

Satyashri Mohanty – Now this is very difficult for many companies by the way what we have seen is to get them to increase the output of the bottleneck machine

R C Bhargava – They will do it if they see that it's a benefit to them. There the workers saw that if we did this our output per head will increase so we'll get more money.

Satyashri Mohanty – Absolutely. In fact just to quickly do a math you know in terms of the number that could be on the table, so I just quickly did a maths and if you look at a company which is like ₹500 crores and assuming a gross contribution of 40%, so let's say ₹200 crores is the gross contribution. And let's take the operating expense as about ₹150 crores, so you make let's say ₹50 crores of profit. Now suppose on the bottleneck machine by getting highly engaged workers they are able to increase the output by 20% assuming that entire output is sold throughout the year as well, you're getting ₹100 crores plus additional top line and that 40% of that which is ₹40 crores goes straight to your bottom-line so you're jumping your profits from ₹50 crores.

R C Bhargava – Actually, more will go because fixed costs

Satyashri Mohanty – Yeah has already been taken care of

R C Bhargava – Already been taken care of…

Satyashri Mohanty – So that's a dramatic jump that from ₹50 crores

R C Bhargava – that's what happened to Maruti.

Satyashri Mohanty – Yeah and so you're jumping.

R C Bhargava – For years Satya our capacity of the unit was 100,000 cars a year we were constantly doing about 140,000 steadily. So for years and years because we couldn't expand capacity.

Satyashri Mohanty – So you're getting that additional output for the overheads which has already been kind of

R C Bhargava – for virtually, no investment. There were no overheads that's

Satyashri Mohanty – That's free money into your bottom line and if I just take you know let's assume that 7% of ₹500 crores goes into your worker salary so that's about ₹35 crores and you just increase that by 10% or let's say even 20% it's just ₹7 crores what you're getting is close to ₹40 crores additional what you're giving out is something that they are very delighted. So here it is not just you know a moral thing that you are preaching here…

R C Bhargava – There’s no moral here.

Satyashri Mohanty – it is actually hardcore money on the table

R C Bhargava – Money for everyone

Satyashri Mohanty – For everyone on the table. And that's really the big deal that “hey guys if you are struggling with workers not giving you the full touch time…

R C Bhargava – Satya, just calculate over period of years how much is lost in ensuring compliance of workers with the requirements of punctuality and working time and all of that.

Satyashri Mohanty – In fact the companies which are at, you know there are companies who think that having an attendance of 85% is good, now I think Maruti is touching 90% plus

R C Bhargava – We are about 97% or so

Satyashri Mohanty – 97% attendance! I think unheard of in many industries that we have seen, 90s is like a very big thing that they have achieved but to have attendance of…

R C Bhargava – 95% was the minimum target which was set in 1982 that we have to get to minimum of 95%. It took us 2, 3, 4 years to get there, we got there. We had to give various incentives and various ways of motivating workers. See partly also, Satya like as I said policies and action. Maruti has a system where we have 2 six monthly shutdowns for preventive maintenance. Now most factories in India do not have a preventive maintenance shutdown. The advantages of preventive maintenance shutdown, firstly at that time all the workers can go on leave, they need not come, only the maintenance people have to come. So not taking leave for this 6 month period they can plan their outing with their families or whatever they have to do in that it's

Satyashri Mohanty – While you're taking care of the machines as well, so it's like a…

R C Bhargava – No the work this maintenance staff is different from the production.

Satyashri Mohanty – The action of the maintenance, the machines are becoming healthier and

R C Bhargava – So when we don't have breakdowns during the year

Satyashri Mohanty – So it's like a double whammy

R C Bhargava – So, our productivity is far higher. And we lose nothing we actually gain.

Satyashri Mohanty – So for a company which is let's say I'm just trying to make an economic case for doing all the things that you're talking about for the workers - a company which is at a 97% attendance on a day-to-day basis versus a company which is at 90% there is lot of value loss.

R C Bhargava – Look at it in terms of the improvement in productivity

Satyashri Mohanty – Improve in productivity, the backlogs that get suddenly created you planned for 10 and three landed up…

R C Bhargava – Against even 90% if I have 97% I have about 8% improvement in productivity. Again working hours our people actually work for the full 8 hours of the shift, minus 15 minutes which is a tea break - so 7 hours 45 minutes actual working time. Now if you compare 7 hours 45 with let's say 6 hours, 1 hour 45 minutes every day against 6 hours

Satyashri Mohanty – Additional production on the table

R C Bhargava – That's good 20%

Satyashri Mohanty – So, that's a huge amount of money on the table and the company gains a lot, the profitability improves dramatically.

RC Bhargava – All of which will happen if the worker feels.

Satyashri Mohanty – Engaged

R C Bhargava – So if I make ultimately let's say ₹100 crores extra profit. What is the problem in giving ₹5 crores or ₹6 crores or ₹7 crores out of that to the workers, but that was all ₹100 crores extra.

Satyashri Mohanty – I think a lot of companies today will struggle, if they try to enforce the strictness of the lunch break times, the strictness of starting work on time, they would have a strike. And I know of companies which tried to, you know, the promoter went around saw some company other company and they say this they are working you know close to so many hours in a day, which is close to 7- 7.5 hours, so why can't we do that. So it has to be mandated, so when you go for a mandate you would land in trouble with the union. But what you highlighting is, don't try to solve the problem that way, you got to solve the problem by making the workers engaged so that they do it on their own you don't have to police it and make it happen.

R C Bhargava – One of the beliefs which I have developed over all these years first in government and then in industry, is that most rules and regulations if they are just mandated are very difficult to enforce. If you give an economic incentive for people to follow that, the compliance levels are very high, so wherever it is possible make the system one where you can give an economic incentive for people to follow that rule.

Satyashri Mohanty – So in a way what you're saying is spend more, eventually your cost will be less - that's the paradox. Now, what you have also highlighted is the kind of stuff that you have done in Maruti I read in your book - sending workers for training in Japan, now that's really spending money to train.

R C Bhargava – It's part of the system of how do you convince workers that this system actually works. if I was to tell the worker “hum yeh karenge, ye karenge,” they say “aise hi baat karta rehete hain”. When they went to Japan and they saw that this was actually happening, they talked to the Japanese workers and the Japanese unions and those guys told them this is done because this we have all gained out of this, then they come away convinced, “ki haan yeh to hota hai”, “kar sakte hai.” so often as the saying goes seeing is believing. So this was part of that exercise. It's not only the workers by the way. The biggest requirement in this area is your own managers, for making managers believe in many of these things - discipline, cleanliness, punctuality and all of these things, you know in India we've got used to the idea that cleanliness ‘theek hai’ to some extent, punctuality ‘haan, what is a few minutes this way or that way…chalta hai’. They go to Japan and they see that everyone, everywhere in all walks of life, all, including social activities and everything punctual to the minute.

Satyashri Mohanty – But the interesting part is, you know when we talk about Japan people say “that's Japan we are Indians” but the point is you made that happen in India, at a time where things were not great in terms of labor relations So, and that's really fascinating that when we look at human behaviour, it is not country dependent it gets triggered by basic.

R C Bhargava – Self-interest

Satyashri Mohanty – Basic principles and you trigger.

R C Bhargava – Self-interest

Satyashri Mohanty – Yes

R C Bhargava – My belief is that human behavior is ultimately dependent on self-interest.

Satyashri Mohanty – Yeah. So how do I ensure… I think you are highlighting two parts - one is okay that win-win game that you're talking about. The other thing is lot of hygiene factors that needs to be maintained like, and then I see that happening in many companies, for example you know you have these factories which are located a little far away - now not many companies now create colonies so you have people who travel close to 1 hour and that's because somebody has optimised on the bus and you need to pack up everybody and that bus goes you know in many directions so you what you ending up doing is that when the worker is coming is 1 hour plus on the bus, let's say on a hot summer day he's already tired. So when he lands up in the factory he is not at his best self, so you can expect what can happen there. So taking care of these hygiene factors is also very important to ensure that hey guys let's make your work-life first get the hygiene factors right in terms of feeling that I'm equal, you know getting all these things off the table and then create this wealth creation game, and that's when the magic will happen. I think coming from your mouth is very important because you have seen it otherwise it seems very idealistic, it seems like another socialistic speech, but coming from, having seen it and having done it and to create a wealth for everyone in this game I think that's really very interesting.

R C Bhargava – See these words socialism and capitalism all are much misused words

Satyashri Mohanty – I agree.

RC Bhargava - And, I’m not sure what socialism really means, but, what I believe we need is how to find a system which maximises the efficiency of all resources which you have. And you will find that any system which maximises that will have a certain element of what you call socialism in it, you cannot maximise resource utilisation especially human resource utilisation if you treat a large part of those human relations, human resources as people who can be ignored and neglected.

Satyashri Mohanty – I think that's a fundamental need to feel as equal…

R C Bhargava – It won't work…

Satyashri Mohanty – Because all humans have this fundamental need so you can't violate that need.

R C Bhargava – The system won't work you have to be more equitable. Nobody says that you should divide everything equally, that's absurd.

Satyashri Mohanty – Yeah. That doesn't work yeah, we have seen it those experiments have failed

R C Bhargava - But if you want. No, because somebody has to have the money, somebody has to invest, somebody has to educate himself more, somebody has to work harder, somebody has to have better capacity to take decisions, he wants some differentiation there and everybody recognises that. The worker recognises that he's not capable of doing everything which his manager is capable of doing

Satyashri Mohanty – I read somewhere people say that inequality is acceptable unfairness is not acceptable exactly and I think you are highlighting that part that when you are talking about let's say that equitable let's make the system fair, that's the magic word.

RC Bhargava - As fair as one can make it.