Changing the smell of the place

Changing the smell of the place

There is a misconception about culture that culture can be copied, that all large companies must have a similar culture. It takes weeks, months, years to evolve a culture. We have an unique culture because we had no standards to go by. For years after Independence, India did not have housing societies, mortgage banks. We were the first. So our success story was learning by doing: we made mistakes and we corrected them.

What we said in the first day of the first week of our company was that HDFC is going to be a principle-centered company. We would try to build a company which is fair, kind, effective and efficient. Today, we are in a highly competitive market. We have to have integrity as our main source of competitive advantage. We deal with money: cash is our raw material. We have 130 offices. Anything can happen anywhere in the country. We are not a rich nation: greed is always there, and there are too many borrowers with the attitude that if I give something to the lender, I will get a larger loan, I will get a quicker loan. It’s a part of our life.

To remain above board in such a system, how do you operate? It’s in the training process. And in the leadership. I may be the leader here but every branch manager has to be a leader. He is the CEO of the branch, he must inspire confidence, and he must be totally above board. He must have a passion to work, he must sleep, dream, think about HDFC from morning to night as I do. And the leaders have to travel, I tell all our senior people, in order to pass on the culture.

HDFC’s objective is helping ordinary people. The average size of our loans is Rs 400,000, our clients are mostly lower middle class. Normally, the lender is king and the borrower is way down. But from day one, we did not follow this practice. We were the only player in town, but we gave the borrower respect. We try to understand the problems. We treat borrowers not like borrowers but like clients.

It’s the senior management who has to percolate down this culture to others in the organization. You cannot identify ‘kind’ people before they join. But if a senior manager is kind, others take their cues from the way he or she behaves, communicates with people, be it the staff or the public. If there is a huge crowd at the information counter, I go and ask, “Can I help you?” We all do that. And this is what makes the organization so unique.

There is a great difference between leadership and management. Management optimizes results, management introduces improvements at the edges by cutting cost and other measures. Leaders drive change. Leaders have to have leadership qualities like vision, passion and integrity. There are different rules for leaders and different rules for managers. Now a case in point is a branch manager. He or she is a leader because a large number of people report to the branch manager. He has to make budget; he has to have a vision for the area; he must show growth not only in number but also in the quality of loans; his non-performing loans cannot exceed a certain percent; he must set targets and ensure that the targets are met.

He is a leader in his territory but he cannot design a vision for the company because the exposure is not there. HDFC is run by ordinary people who in a particular environment perform exceptionally well, as a result of which HDFC has become a special success story. We work together as a team and we produce results. In the last ten to twelve years, we have grown enormously, and not just within HDFC.

At the same time, we have created many leaders. HDFC has grown well but how do you tackle ambition? We started five new companies and our own senior people are running these companies. Take the life insurance company or the asset management company both of them are run by HDFC-grown people who have been with us for 20 to 25 years.

When Deepak Satwalekar went to insurance, two or three others also went, and they have done well for themselves. When Milind Barve went as CEO of the asset management company, he took half dozen people, and they too have done well. We don’t hire much from outside because we develop people. Because of diversification, people have got an opportunity to move out, to move into independent organizations which still carry the HDFC brand.

Leaders have to be visible, have to spend evenings at the branches, have to call 20 to 40 people. Six monthly budget meetings and quarterly review meetings are a must, but over and above that senior managers must go to the territories. They must meet people, sometimes even the families, always in the evening after office hours, when they can talk to them in an informal atmosphere about what is happening globally, what is happening at HDFC and its group companies.

All of us do that regularly. It is not easy. You have to stay days away from home. You spend weekends away. Even if you leave in the morning and come back home in the evening, it is difficult. It is a part of the leader’s agenda, part of a manager’s agenda. And a leader will never win a popularity contest. The more successful you are, the more enemies you create. It’s lonely at the top.

Author: Deepak Parekh
Source: The Smart Manager