We don't hire a person, we hire a family

If you have worked in an Indian business family (including Reliance),  you would have noticed one or both of these things:
A. When an employee has an issue with the family (finances, child not listening etc) , they come to their manager (bade babu or seth ji), and a loan or a counselling session is arranged pronto. Sometimes, rules are bent to make this happen.
B. When a child graduates, the seth ji or bade babu calls the father and tells them to send the resume. The child is usually absorbed by the company.

You may also have observed this in domestic staff in India. We hire one person, then her relative joins as driver, another relative joins as cleaner, and the family is engaged. In villages, we are aware of entire generations of 2 families engaged in an employment relationship.

We're all in this together

If you come from Western business practices, you have possibly heard of a word - Nepotism. It is viewed as something negative. Something that takes opportunity away from a qualified person and gives it to someone who is friends or family with the decision maker.

So it will surprise you to know that in the Indian style of business, reference is the best qualification a person can have.

This is practised in two ways

A. We don't hire a person. We hire the family. 

During the industrialisation era, industries were built in the middle of nowhere. It was, therefore, important to build townships near the factories also. This led to bonhomie among the families of those working together.
Contrast that with Electronic City in Bangalore, where employees are expected to spend upto 4 hours a day in buses.

Whenever there was a company event, the entire family was invited to it. The manager made it a point to speak to the wives and convey his compliments. When a person got an award, usually, his wife and family were asked to come up to the stage with them to collect that award.
Contrast that with today, when the families go to ONE family day a year and all award functions are usually held without the family in attendance.

B. Other things being equal, we hire someone we know. 

This was EXTREMELY important. This is why the entire social and religious structure of India is based on professions. Each profession was specialised. Training began early, and by the time a person was ready to join the workforce, they had already had over 10,000 hours of real training on it.

Even when education went from vocational to professional (read: 3R and formal schooling based), companies continued to hire from the family pool of employees if possible. When a child graduated, the father came first to Bade Babu to see if a vacancy was available in the same company.

Surat diamond industry labour is always hired from a certain community, and all the families are interlinked. So one individual cannot even dream of stealing and getting away with it.

The family sort of hangs out together

Why was this done? 

I am, of course, only hazarding a guess. 

1. It ensured employment stickiness 

Just like in story telling, we engage as many senses as possible, to make the experience richer for the audience, in employment, we need to ensure stickiness. After work, the person goes back to their family. If the family is also engaged with their employment, the employee's stickiness goes up many notches. The decision to leave is not an individual one. The wife has friends, the kids have friends, the boss's wife knows your wife. Its a complex web that one needs to extricate oneself from. Much harder than a resignation to one boss or even looking out for a job. 

2. Oh, the beauty of reference checks! 

Today, professional organisations struggle to do reference checks. They get identity proofs , they check educational qualifications online. And they still dont get relevant, qualitative information like whether the person has been corrupt or a predator in the past. Has the person demonstrated any domestic violence tendencies? Was he a bully in the previous organisation? 

In this method, which sustained for thousands of years before it became possible to do formal ref checks. A person would only recommend another if they were absolutely certain of their ability to deliver and their integrity. One puts one's personal credibility at stake. Its personal. 

Companies today try to hire through employee referral programs. Some of them are successful. However, in some key points, these programs differ from the Indian method of hiring who we know. 

For starters, the engagement level of the referrer is not so high that they feel that they are staking their personal credibility. Its a purely professional transaction. 

Secondly, the referrer and the referee are usually not allowed to work together, which beats the entire purpose of referring. Why would I want to bring my friends into the company if I can't work with them? 

Conclusion 

Was it the best way to hire? 

We don't know. But unlikely. There is no one best way to do things. We do what works for us. We learn from multiple sources. This is one of them. 

Is it applicable today? 

Depends. On the industry, company, and the organisation culture. 

Should i use it?
Not without adequate checks and balances, and training. Indian business practices cannot be applied piecemeal. They have to be understood deeply, imbibed, practised in everyday life, and then used as a specific method in business. Business empathy comes from personal empathy. We first spend years being empathic in our homes, putting people first. Then, when we listen to an employee, we do that with genuine concern, not to put a tick on the HR checklist.
I leave you with that thought.

Wealth Management in Punjabi agrarian communities

The Punjabis are largely an agricultural community. Trading was left to their southern neighbours - Jhangis, and finance to the Sindhis. Though Mahajan is a Punjabi surname (Mahajan is one who lends money on interest), it is not preponderant bcs the Punjabi considers debt to be the worst form of affliction. We are actively discouraged from taking even a penny in debt. And the Mahajans are, of course, universally disliked because they squeeze people's blood in the form of interest. There is a story of Guru Nanak based on this popular metaphor - the story of Bhai Lehna.

So, money management of the Punjabis is largely based on this wisdom, and the fact that the Punjabi has had to deal with multiple foreign invasions from the West.

ਤੱਲੀ ਉੱਤੇ ਰੱਖਣੀ ਚਾਹੀਦੀ, ਥੱਲੇ ਨਹੀਂ
Tali utte rakhni Chahidi, Thalle nahi

- Be a giver, not a borrower

Most of our wealth was in gold, because gold could be put in pots and buried in the ground. This appears to be the banking principle applied by the Punjabis. After 1947, my grandmother could only indicate the size of the pateelas in which they buried gold jewelry.

We were ok to eat less, and not have a penny of debt on our heads.

The Padta System of Accounting

This absolute gem was narrated by my father in law.
Once, he was sitting at a lecture being delivered by a senior person at Tata Steel. The lecture spoke a lot about the Padta system of accounting.

After the lecture was over, the floor was open for questions. My father in law raised a hand. He said, "Sir, you have spoken a lot about the Padta system of accounting. But I do not know what it is. Can you please tell us what is the Padta system of accounting?"

The speaker was stunned. "You have heard me speak for so long, but you didnt know what the Padta system of accounting was for all that time?"

"No sir", my father in law confessed.

The speaker looked across the room and asked, "Who else does not know what is the Padta system of accounting?"

Most of the hands in the room went up.

The speaker then asked them to site and explained, "Every morning, when we open the factory, we look at the order book and the production schedule, and decide, 'पड़ता है, के नहीं पड़ता है?" The room burst into loud laughter.

पड़ता है, के नहीं पड़ता है? is trade jargon in West India for "Is it profitable for me to do this, or not?"

But the lesson is deep. A factory, esp of capital goods like steel, can afford to look at cyclical demand and also suffer losses for a while. But if the general manager is asking, on a daily basis, Am I profitable today? That completely flips the perspective. To be profitable, even a little bit, everyday, is the key to being a sustainable, profitable business.

I have used this lesson in all my business advisories - Padta hai, ke nahi paDta hai.

The startup ecosystem now calls it positive unit economics.

The Marwadi Accounting Principle

I don't know whether this is true or not. Heard this from my father.

So, apparently, among the Marwadis, this is one way of accounting.

Suppose the maximum profit that can be made on an enterprise is 100. The actual profit is 80. The Marwadi will log that, not as 80 rs profit, but as 20 rs loss.

Interesting way of looking at things, no? 

The Daily Collection practice of the Sindhis

The Sindhis are largely the bankers of the subcontinent. They provide business loans. I've rarely seen a Sindhi delve into loans for marriages etc.
Obviously, they charge a hefty interest, and the Indian average of 3% per month is not unheard of.
However, for collection, the Sindhis have a very unique method.
They do not do monthly EMIs. They travel to the Asami's (debtor's) place of business every evening, just after the bulk of the day's earnings have come in, and before it is time to do the accounting for the evening, and they take the day's share.

This system has many benefits. Here are a few that I could see:
A. Businessmen make their earning everyday. So a small daily contribution pinches less than a bulk monthly instalment. This is the greatest advantage of this system. It aligns itself to the cash flow cycle of the debtor.

B. Frequent Contact. Usually, these visits also become a time for small talk, perhaps a chai some day, etc. This allows the creditor to remain in touch with the debtor and also, as the confidant, become privy to business fluctuations before they become apparent to the market. The creditworthiness of the debtor is also assessed everyday. The creditor can, when he goes there, see how well the shop is doing, how many visitors appear, how stress free the debtor appears etc.

C. Low loss. Because the EMI is divided into 30 small parts, in the event of non payment, at least some part of the EMI has been recovered.

Has anyone in the corporate sector used this?
I think that Sahara India had this, but for their daily savings scheme, not for their loan collections.
I am not aware of anyone else.

The businessmen NEVER sends an employee to do this daily collection. It is always the seth himself. That is a very improtant point. The Munim can do the paperwork, but the daily collection is always physically done by the seth or his family member.

The First Post - The Historical Perspective, and the current Imperative

Even though the first known treatise on wealth management and public administration - The Arthashastra, was created in India, our track record of documenting our wealth management practices has been marred much by the subsequent actions focused on burning the libraries and then the noble efforts of Macaulay.

I don't think that, as is normally claimed, Indians are inherently bad at documentation and record keeping. Rajatarangini, Ashtadhyaya, Mahabharata, Ramayana, and Arthashastra, among others, prove our ability to document and record both our history and our body of knowledge.

But Indian history has had a long period where such records were meticulously and systematically destroyed. And therefore, we have what is left to us in the form of:
A. Proverbs
B. Folk Songs
C. Folk Tales
D. Whatever is left of our manuscripts.

The Buddhists, on the other hand, have done exceptionally well when it comes to both conservation of wealth and preservation of manuscripts.
A separate chapter on that. Perhaps. Some day.

For now, welcome to this blog. It is just a hobby today. Who knows what it might blossom into.
Wishing us all luck.