U GRO Capital founder Shachindra Nath has adopted a unique cultural strategy to give his venture a long life. He shares philosophical and practical perspectives in an extended interaction with Manoj Agrawal:
Manoj Agrawal: The internal and external risks that NBFCs face are becoming more frequent. As the chairman of U Gro Capital, what HR risks are you are mindful of?
Many areas of financial services are very transactional in nature. You do the transaction and at the end you know the result, then and there. In lending, the effect of your work is seen many years down the line, perhaps even 10 years later. The biggest problem, particularly with people of our generation, is that they are impatient, and therefore human capital is misaligned when it comes to long-term business. In the financial services space, if you compare the more successful vs less successful organizations, in the former, the top management comprising say 50 people, would have stayed for at least 5-7 years. They would have thought and built that business with a long-term vision. Now people want to come in today, earn everything tomorrow and then go somewhere else. Nobody wants to wait to see the outcome. So, if I have to reward somebody, I want to reward at that outcome, not for today’s effort. Finding such people is the most difficult challenge, more so for NBFCs. As an analogy, people want the fruit right after planting the seed. They are not willing for the tree to grow and bear fruits.
What approach have you adopted to attract millennials and maximize their motivation?
Mil l e nni a l s would b a s i c a l l y b e youngsters with around 10 years of experience. We do not hire Generation Z. Financial services, especially lending, is a serious business. It’s a business of intellect, knowledge, process, rigor and experience. It is not a headcount business, unlike BPOs. There are defined processes, but there is an intellectual activity going on which results from years of experience. So, we need experienced people at all levels and that is why we don’t hire Gen Z.
As far as millennials are concerned, I have tried attracting a team or a talent base, saying that this is a place where you get certain things. First, if you do well and you create shareholder value, there is an opportunity for wealth creation for all of you, but for which you have to stay the course for 5-7 years. You should think it seriously and ask if you can build something up.
Second biggest motivation with which I drive people is saying that this the place where you can do what I have done. I spend x number of years as a professional, I came out and become an entrepreneur. I want my top leadership team to do the same. I say I want each one of them to have the confidence, because what they lack is the confidence to leave their jobs and comforts and try doing something of their own. They fear losing the regular earning. Becoming an entrepreneur is a big fear which keeps increasing as you grow older. As you get married and have children, your risk seeking appetite keeps falling. I tell my leadership team that I want you to feel confident by virtue of being here and doing almost everything which is possible, and that you should be able to take that call of becoming an entrepreneur whenever you want. Whether you do it or not is a different matter, but at least have that confidence. Look at the examples of some of the leading global successes among financial institutions. Goldman Sachs has the philosophy that if you’re leaving the institution, it supports your venture. It supports it because it thinks that if it had confidence when the people were within the system, it should have the confidence in the same people going out. We are too small compared to Goldman Sachs, but at least philosophically I want these people to have the ability to become an entrepreneur.
Our study had found that stress levels is minimal for people in their 20s and peaks in a decade, and then declines. Have you observed this? What is your prescription for highly stressed employees?
I think that stress has nothing to do with age. I believe my 17-year old daughter has more stress than I have, because stress is a factor of what you want to achieve, so it is about managing expectations. The reason why younger people actually have more stress is because they have too
much expectation from life. 20 years ago, to graduate from a scooter to a car was a big achievement. Now, somebody who is passing out of a college wants to become a Bill Gates or Michael Dell. It is expectation mismatch which is actually killing people. So I tell people don’t have too much of expectations, just live your life daily and have reasonable expectations. Second, I think people should be happy doing their job, enjoy when they come to work and feel motivated. When they are not, I tell them this is not the right place for them. There is something wrong when you don’t look forward to coming to office and there’s something wrong at home if you don’t look forward to going back to your home.
What do you seek in character and personality in a potential employee to be a successful business and team leader?
I look only to character. We are not NASA or ISRO, so I don’t need top quartile brain quality. What I want is persistent, honest and hardworking people. They should be able to do the same – we don’t want volatile people. Honesty is most important – in fact, it’s critical. I don’t want them to slog, but they should be able to commit themselves to work. In terms of the personality, we seek people who are collaborative and believe in really working together - one person can be a super star but winning still requires a team effort.
Did you have a tough time attracting key employees? Did you do something special or different to win them over?
The answer is yes and no. We have very tough yardstick on whom we would take. I remember that even when looking for middle and junior management, whosoever I met, I always used to spend first half an hour selling the idea. People used to say you need not sell to say a regional guy or a level 2 or 3 guy. What I want is people should feel attracted and motivated to work here. Even if a person does not want to join me, I want him/her to be impressed and leave as a brand ambassador. We created an ESOP structure that was available from the first day. A sizable 8% of the company’s equity is with the management team. Also, we are fair pay masters - we neither underpay nor overpay.
There are l ots and l ots of successful people out there in the job market. But not all of them are effective. What is your formula to identify the effective ones from the successful ones?
As I said, people who are collaborative can make success in organizations. It’s not like a game of tennis or badminton – it is more like basketball or football. So, unless they can’t work together, it’s impossible.
Given the dynamic nature of the financial sector, there have been a lot of people movements. Have you worked out something to enhance the stability of the human capital?
All our senior management staff are on a 3-year lock-in period. For CEO-1, there is a 3-year notice period. We cannot fire them, and they cannot leave us. This is the first time this is happening in the financial services industry, and this was a combined call. When you are setting up a business, you need stability, you can’t judge people for their respective work. The big difference between 2 similar set of experienced people would be marginal today. What is the difference is their ability to work together. So, I have to force them to work together and they have no other choice. Within the ESOP, the way the legality has been created is such that a majority of the vesting is in year 4 and 5.
What have you done to make strengthen integration?
We a r e trying to be an over communicative organization. For example, I run this program called ‘ Coffee with Shachin’. The reason for that is in any organization there are hierarchies. I am not directly hiring people; they are being hired by others within the organization. I do this every week - whenever I go to a location and I spend an hour outside the office with any 1 or 2 employees. It’s a formal thing. The HR would send invitation for it and I would get their background. The rule of the game is that we will chat about life and interests and aspirations and all that, but not work. I largely talk about myself. I talk about why I did so, what risks I took, what was the confidence I had and why I felt that I should be able to do it. It is not easy after 20-25 years of getting salary every month to all of a sudden leave everything and remain unpaid and unemployed for 3 years at a time when my daughter was in grade 10 and my son was in grade 6. I only tell them why I was able to do it and what gave me that confidence. It is just for people to think that this is possible, and not impossible. The general perception among mid-level people in financial services is that leaders are unapproachable. I want to make them feel this is not the case. The difference between me and many others is only that I had the opportunity and the perseverance and the rigor. Anyone with these can do it. It’s not that I am God’s gift to mankind. It’s just a matter of chance.
What about integration and collaboration among employees?
We do 3 things. One is communication, second is the culture which we are building of descent (saying no to your boss), and that
would not be taken as an offense. Third is the disagreement that has to be sorted on an immediate basis. We have put the seeds of all these and are developing it all over a period of time. We are ethical, we are transparent, we are energetic, and we have aspirations. So this is our culture.
There is a lot of comparison going on between Indian and western management philosophies. Which works better for you?
Financial services in India is a sector where Indian companies have succeeded and outperformed foreigners. There is no global financial services powerhouse which is in a leadership position in India. This is true across sectors like banking, insurance, asset management, etc. So I don’t think that we have to look at west, we have role models here itself and we have to emulate them.
Corporate culture seems to be something that successful organizations are good at doing? How is creating corporate culture in today’s age different from 10-20 years ago?
One of the things is that lot of corporates have to realize that the overfocus on physical connect is gone. The earlier technique was to take people offsite. I think that is no longer relevant. The cultural development now is happening in a digitized world. Today, majority of the people are connected to their schoolmates and relatives over social media. Same for connecting with the larger family. I think the key digitization is here. It’s a new cultural way. Companies have to build their culture in the digital world in a digitized way; conventional methods are gone.
As we grow older, we discover new things about ourselves. Is there something new you have discovered about yourself and how are you using it to be a better business leader and a better entrepreneur?
The biggest learning is that this whole process has humbled me. I want to make sure that I remember this time 2.5-3 years ago when I was trying to become an entrepreneur and raise capital. You never realize that when you’re working for somebody and when you are part of a large corporate and you are in a position of power, at that time people don’t come to you because of who you are, they come because the power of the seat which you enjoy. When I left and when I was on my own, I came to realize that people who would otherwise wait for 5-7 days to get an appointment to meet me or come and wait at the office, didn’t return my calls or my emails. It is only your own caliber, skillset and confidence which actually make you succeed – this is a very humbling experience. I came to realize that all this power, position, car, etc, have no meaning. If you don’t have substance, you can be thrown out from the place any day because nobody cares. You have people in financial services industry who were CEOs of very large banks. Do people ask them how they are now? Do people call on them and enquire about their wellbeing? I got all my help from people with whom I had no relationship when I was in the position of power. I think that I want to make sure that I remember that.
Shachindra Nath has a vision to create a company with a long life, and every strategy is woven around that vision