With the exception of a few dozen companies, mostly multinationals, the corporate sector in Pakistan operates on a ‘seth’ approach, which can be categorized as a management style and corporate culture, but certainly neither efficient nor. effective.
It is probably not the lack of knowledge and skills to adopt an effective corporate culture, but a mindset of company ownership, assets and human resources that acts as a barrier to much needed change.
The lack of corporate culture, or the prevalence of mindset, negatively affects three aspects, i) innovation and growth, ii) efficient management of resources and iii) efficient use of human resources .
Starting with innovation and growth, it is rare for an individual or a family (Seth culture) to think outside the box and venture into new paths. Often times, these businesses and their owners support the “contentment / apathy” rather than the “urge” to grow and develop.
An interesting fact about this aspect is that many companies in the industrial poles of Faisalabad and Sialkot do not take out bank loans, due to their personal beliefs and preferences, to the detriment of the growth of the company.
In addition, the lack of fresh / innovative ideas and management approaches hinders the growth of the company. Even when the business is technically a legal person, i.e. a limited company, the board of directors is often made up of family members and friends, thus preventing any outside approach.
Such an approach, seth, may not focus on efficient management of resources due to the savings mindset and may not go towards a cost-benefit analysis. It has a negative impact on investment in research and development and on the efficient use of resources.
Most of the time, the marginal benefit of deploying additional resources is sacrificed due to the perception / approach of costs rather than investments. One of the highlights of this approach is that most of the time, there is no middle management in these companies.
It is not even a skewed management pyramid, which puts pressure on top management to tackle issues on the ground, which could have been managed more effectively by a middle level.
Probably the cost savings and turning a blind eye to the long term impact are the reasons there is no extra layer of management.
The area that is probably the most affected due to the lack of approach of the company is that of human resources. The seth approach leans towards the “owner and worker” model rather than the “employee as stakeholder and contributor”.
One can witness very low levels of employee satisfaction and workforce retention in companies that do not operate on business models. The owners, in this case, strive to get the most out of the work, without actually getting the loyalty, dedication and full contribution in return.
It is quite rare to see an employee planning or aspiring for a career in such a company / business.
Mobility is encouraged in current management practices, but this should not be mixed with the uncertainty that most private sector employees face in Pakistan.
Work-life balance is quite rare when it comes to corporate culture in Pakistan, especially in the seth management style. Most employee incentive programs, where they exist, are monetary in nature in order to extract more productivity and output, thereby keeping employees running.
One wonders why there are still not many followers of effective corporate culture if it pays better than the traditional seth approach.
For starters, it may be a simple act of ignorance. Second, there is a clear lack of entrepreneurship, so there is less room to introduce innovative management approaches.
Third, there is a visible absence of mid-sized businesses and enterprises, which are for the most part the beacons of effective corporate cultures. We in Pakistan have either very large corporations and groups or small family businesses.
It is interesting to note that the seth approach is more prevalent in the service sector than in the industrial sector. Intuitively, one would expect the raw workforce in the industrial sector to be more prone to raw corporate culture than the relatively skilled and sophisticated service sectors, such as lawyers, consultants, accountants. approved, etc.
Unfortunately, this is counterintuitive. Employees in professional services sectors are treated fairly unprofessionally and face the “owner” and “seth” mindset more directly and more often than employees in the industrial sector.
It’s not just the limited (private) words that make a business a business, but rather the management style and approach of seeing a business and a business as a separate entity. Saving a small amount at the expense of long-term growth doesn’t make business or economic sense.
It is better to buy people than to buy their trust and effort by treating employees as stakeholders rather than servants. Much can be accomplished by changing the mindset and corporate culture in Pakistan.
The writer is an international economist
Posted in The Express Tribune, March 29e, 2021.