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Building loyalty through the stomach

A problem affecting the IT sector relates to the high rate of attrition. In India even top companies in this sector like TCS and Infosys struggle to tackle this issue. They try to crack this issue by recruiting new hands in large numbers continuously and keep supplies in abundance that will not affect work in progress.

I understand from Bala Swaminathan at Chicago that such a problem is of concern to Silicon Valley as well. He refers to the offer by several top software companies in San Francisco to offer for free or at highly subsidised rates a variety of food as part of the service package. He says it seems to be working well in improving the retention rate.

I travel back six decades. I notice the effectiveness of building loyalty through the stomach.

S Anantharamakrishnan (SA), who pioneered setting up the auto component sector, effectively adopted this practice. SA built his empire after the acquisition of Simpson & Co. Addisons Paints and Chemicals and India Pistons promoted by Simpsons were set up within a couple of years of independence. SA continued with his spree of acquiring a number of companies from the British who were packing up and were in a hurry to dispose off their businesses. In quick time he acquired over a dozen of these that ranged from Addison & Company to George Oakes, Stanes Tyres, Stanes Coffee, SRVS, The Mail… which came under the umbrella of Amalgamations Ltd. In the late 1960s the group had 26 companies that employed over 16,000.

I remember a few factors that contributed to harmonious industrial relations and growth of this conglomerate. One was the ability of SA to spot, encourage and retain highly dedicated business managers. Till the demise of SA in 1964 the group had such leaders in profuse and these were picked across nationalities and states.  If WW Ladden was the initial inspiration and supporter, SA continued to retain and benefit out of the brilliance of other managers like H B Stanford, R K Stanford, E O Austin, V A Watts, M V Venkatraman,  P L Kumar, A K Bose, J V P Rao, M K Raju… who helped not just to expand production and the range of services but, more importantly, in setting up new companies.

The second factor of great value related to the sumptuous bonus offered for the employees. Of course wage levels were low and a bonus of a few months on basic wages did not make a deep dent in the overall earnings of the companies concerned. But this was an important factor to attract and retain workers. This was helped by progressive trade union leaders - R Venkataraman and K Gurumurti.

Yet another factor in this regard relates to the company providing sumptuous food to all employees. This proved to be another big attraction in building loyalty and retaining the workforce. This became the trend and has been practised by other industrial units. The TVS group entered into manufacturing in a big way in 1962. I remember the focus on providing quality food here as well. Same quality of food was served from the chief executive to workers down the line. I remember enjoying such food with Suresh Krishna at Sundram Fasteners, Hosur.

The Hindu canteen also earned a reputation for offering food cheap and an incentive to call on your friend at Kasturi Building.

With increasing costs and pressures on top line, such practices of free food or food at heavy subsidy are under strain. Srihari Balakrishnan of the KG Group of companies in Coimbatore mentions that his companies do not offer free transport or subsidised food and that it does not suffer any disadvantage. With wages no longer low or modest in companies of comparable sizes, such benefits are bound to be under threat. In a way this should be welcome as a corporate can focus on its core activity and not spend energies on managing canteens.

 

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