The New World of Work and its Varied Challenges: Uday Kotak

It's quite amazing that on a holiday we're seeing such a wonderful gathering. It just proves HR works 24 by 7. Friends, how many chartered accountants in this room? Okay, so don't take it or miss what I'm going to say next. I was reading an article in The Economist magazine about the future of jobs. I think 10 years from now, and this is how it went: the most sought-after area of jobs is going to be the leisure trainer, individual leisure trainer. That's going to be the number one job. The number two is the dentist, because it's very difficult for non-humans to really get it with reference to the peculiarity of the teeth. And the jobs which are not likely to exist, one of them, friends, unfortunately, was that of the accountant. Unfortunately, the survey did not have this comparison for two categories of jobs: one was the HR professional and the second was the banker. So we can all live in hope that our jobs will still be around.

So friends, when we think about the future of jobs, which I think is at the heart of how we are seeing the future of HR evolve over time, it is pretty, pretty nebulous what shape or form it will take. I was recently reading an article. We all know that the computer beats the world champion in chess, but recently I was reading about a competition between the computer, programmed computer which beat the world champion in chess, versus Google artificial intelligence. And between the two, Google won, and it was lightly as the head of the computer. So friends, one of the things which is very clear is that let's not waste our time trying to compete with technology in order to save jobs. I don't think we'll win that battle. The battle which we need to do is how do we adapt our lives to where we believe, and this is pretty unclear, where we believe is the future of our vocation, our well-being in a sense, in a very fast-changing world. And I really do believe that this requires imagination. I think getting straight-jacketed in terms of how the future will be is not what is going to get us there. We will really have to imagine how the future will be.

But there are some pretty critical trends which come to my mind and which most of us feel on our day-to-day basis. Number one, human interactions have become two clear paths: one is one-to-one, and I think technology has facilitated one-to-one very much easily 24 by 7. And the second is one-to-many and many-to-one without having complexity of layers. So historically, when we had to do some of this, we would have to have layers, complexity. I think what has changed is the way communication is happening, and whether it's WhatsApp, you can have a group, or whether you're doing one-to-one, the way communication is changing is pretty significant. And I think each of us in our lives and our basic communication approach need to change. I just think about my day job. Whether at an average in the past, I would have my secretary give me 20 phone calls I had to make to outsiders in a day, I think it's now probably two or three or even less, because most of the time the way we communicate has very significantly changed. And what are we doing to adapt this to how we run firms and institutions, and where will this ultimately take us?

I therefore see the whole nature of jobs, and I'm just trying to again imagine where are the future jobs going to be. I see huge number of future jobs coming in the area of privacy. I don't think organizations have organized themselves around a privacy department. We've not thought about it that way. Things like, of course, security is a big thing in any case, but privacy as the basis of how we deal with our future is going to be an extremely important thing. And it worries me because there is so much intrusion of privacy which I see in our lives and our jobs. It's unbelievable. If I want to meet somebody and I don't want it to be known, and I'm talking about say a professional meeting, I can't call him to office or I can't go to his or her office because there are cameras, there is security, there's a log. There is no way for human beings, or if you do it, if you want to communicate on digital, there is a trail which will remain in perpetuity, well beyond your lives. So how do you enable the ability, the fundamental human comfort, ability to discuss things between people in a secure environment without intrusion? I don't think there are easy answers for that. And I think the organizations which are beginning to, at one end want transparency, but at the other end respect privacy of people in terms of their lives, I think it's going to be an extremely important aspect about how the HR function will go in the future.

And also the nature of jobs, therefore, as I said, privacy is going to be a big area. I think the entire area of leisure is going to be a big area of jobs. I think the area of sports, another big area. And I can see that our family has now a KKR team, which is not doing very well right now, but that really upsets my wife and my son who are crazy about it. But the way sports is changing lives and the way it's creating completely new jobs, people who would not have earned more than 10 or 15,000 rupees a month are now worth lakhs and crores because that's the kind of money a player is getting. So that's the future of how jobs will be, and businesses will be built around it. Therefore, sports, leisure, gaming, completely different entertainment, I think is going to be at a completely different level, and integration of all this. So how are we preparing ourselves for the new kinds of jobs in this world? Are we too straight-jacketed? Are we thinking about jobs and our futures in a very structured manner because that's how we have been taught to behave?

And it reminds me about an example in the late 1800s, I think it was 1890, in the city of New York. And in those days there was no automobile. Automobile came in early 1900s. So the way for carriage was the horse and the horse cart. And an analyst in one of the leading financial firms made a prognosis in 1890 that this is the speed at which horses are growing in the city of New York, because as prosperity increases, more and more people want horse carriages. And along with horses, we know what comes in is horse manure. So this analyst actually gave a plan to show that in the year 1915 or 1920, if this way horses keep on growing in the city of New York, horse manure will reach the first story of all New York buildings. And he said this is a huge area of pollution and unsustainable. And that's when the automobile came, and the automobile was hailed as an anti-pollution device. So in the 1900s, automobile was an anti-pollution device and changed the way lives function. We all know the big cause of pollution. So I'm just saying, how are we changing our minds to this new era which is in front of us? And most of us will find it difficult. And I think the cycles have gone shorter. In those days, what took change to more than 10 or 15 years will now happen in three to five. And it is this kind of change which we should be ready for.

But in this entire change, I think we also got to keep some things which will remain constant, and that is the human being. Everything around us will change, but the way human mind works, the patterns remain similar, which is why he said history repeats itself. And I, on that, believe very much in what I call as the traditional middle-class values. And I come from a sector which is prone to incentives and bonuses, and I have an example for that. A family did not have a dog. So this is about 14 years ago. Our dog is now 14 and is probably in his very last stages. Our younger son convinced the mother to get a dog at home. So the dog came at home and became a part of the family. But whenever I would come home in the evening, the dog would sit in the corner and give me no bow. Well, one more guy, forget it, I don't want to waste my time. So one day the trainer of the dog was at home, and the trainer said, 'How is this possible? If the master of the house comes home, the dog must come to the door and spend, mingle with the master.' So he said, 'Whenever you come home, the first thing you must do is give the dog a biscuit.' And when you give the biscuit, the dog must jump. So I started doing that, and I got the results I needed. I would come home very often, dog started waiting for me. So he's there at the door before I come, because he knew approximate time. And moment I came in, I would say, 'Here, get the biscuit, jump.' The dog would jump and get the biscuit. A few months passed, and one day on a Sunday in the afternoon, without any biscuit in my hand, I asked the dog to jump. The dog refused to jump. So this dog who would otherwise love to jump stopped jumping till he got the biscuit.

Compensation in today's times, particularly in sectors like the financial sector, the biscuit matters more than just the joy of jumping. And I joke in my firm, everyone gets a salary. You also have to work for a salary, not just for the bonus. And I genuinely feel, at least in some sectors, the balance between variable comp and fixed comp has so dramatically changed. I think we need to get a balance. And I am more and more of the view that if there is compensation which is two parts, there is something which is known as jumping without a biscuit, which is the base comp. And the excessive variable compensation is something I'm getting more and more uncomfortable with. Of course, a lot of variable compensation can be in terms of long-term ESOPs and stock plans, but we have seen behavioral issues around that also. Therefore, a better balance in terms of how we manage compensation is extremely important. And I, you know, in recent times I've had more interactions even with some people in government, and I ask myself the question, what motivates many of these bureaucrats? It's the pleasure of the work, and it's not just wanting that biscuit at the end of a job well done. And we need to fundamentally change behavior on compensation.

The third part, I think, the role of HR and boards, and we are seeing more and more the responsibility of the NRC significantly increasing in managing firms. And it is here that, of course, I think it must be, it's true for most sectors, but we're seeing it particularly in the financial sector, the importance of the role of boards in senior leadership and management, and how do you get right long-term leadership over long periods of time as the basis of our leadership and succession. And the role of boards, I think, will continue to increase. I would love to see a lot more HR people get onto boards. So give me a hand for that at least. And really play a significantly more active role in the future.

Next point, which is I think again something on my mind, is the importance of age and hierarchy. How do you balance this in the context of the future? And this is a big challenge. A lot of the structures are pretty rigid. There is a whole area, if you remove grades, so many years in a grade, otherwise you can't be eligible for promotion. At the same time, how do you be fair? The trouble about speed of getting some people higher up also has to be balanced with fairness. And it is here that HR and the whole leadership development has a major role, because if we don't change this, we will have a situation where a lot of companies will miss out on the opportunities of the future. And I give again our own example. We have a concept of the leadership team, and I struggle to try and get people below the age of 40 onto that team, which is the top 50 or 60 people in that group. How can we break these barriers, which is mindsets about age and experience versus the quality of leadership? Of course, there's the other side to it, which is the risks of aggression and how some of them are playing out in terms of leaders not having enough experience, sleeping on the job. And I have two examples in that context. Both of them very successful companies but have gone through their challenges. One example is that of Uber, the founder. Finally, as it reached a point of time, they had to change the founder because he was not able to handle the management of change as the firm became larger. And more recently, I've been reading about Facebook and a lot of the issues around privacy and the change in stance which is getting important. And I saw an article, I think in the Bloomberg or the FT a few days ago, that the leadership under Mark Zuckerberg and his team are finding it difficult to adapt to changing the model and driving behavior of their people from the old or from the way they started. So one of the things is how do we make sure, number one, that age is not a barrier. Number two, how do we fit in the importance of experience, because we could see a few years of blazing performance and then poor risk management or slippage leading to significant destruction of value. And this balance between age, hierarchy, knowledge, skills is another new dimension. And I have also seen what I call as over time leadership getting obsessed that I must get younger people, I'm getting the other side of it, and move them fast. And this is also at times can be blinding people from the fact that there is the other side to the coin. So I don't have an answer, I'm just putting this as a question: the importance of allowing people to have faster career paths on the one hand, at the same time the importance of managing risk and unknown unknowns, which is what the future is going to be as we go forward. And therefore, at some level, many leaderships also believe safer hands are needed as a balance. So how do we get that balance? Through all that, and risks, I mean, we see in financial services, I'm sure all of you are seeing it, the risk of poor risk management as one of the major issues in front of us, and which has led to poor practices on financial management and even accounting.

And as a finance guy, let me end by saying that despite all that The Economist or everybody else may have said, though I am not a chartered accountant, I respect chartered accountants, and I think at least in the foreseeable future, the accountant will have a major role. So with that, friends, maybe I'm giving you perspectives which give both sides of the coin, but I do feel excited and nervous about our future. Thank you very much, ladies and gentlemen.

And while you're thinking of your... yeah, so while the microphone reaches another, the other job, you know, I think this was in Davos or something where the tailor said that the only job which is safe was that of a hairdresser. And he said, obviously, he hadn't seen me when they said that.

I think my view is emotion will always matter, because the ability of the human being to stretch out for emotion is disproportionate and at times immeasurably. And the power of an idea coming out of an emotional quotient is something which technology has still not figured out. At least artificial intelligence doesn't seem to have gone that far. And I am a great believer that the rubber band of the human mind is stretchable beyond belief, and that rubber band stretches itself mainly because of positive or negative emotions, as the case may be. And machines have still not reached that point where they can stretch themselves.

So I am of the view that finally the human being does not completely... a human being ultimately, through his or her emotional position, will find use of technology to drive human progress. So is that kind of hope and nervousness, embrace human emotion.

Okay, I think it's a fair point. You know, if I talk of Tata Steel for instance, when I joined the company, we were, if I look at it from even India perspective, we were producing 2 million tons of steel. We are producing today with two and a half times the workforce. Right, so in the last 30 years that I've been with the company, production of the company is 2.5 times and the workforce has come down to 40% of what it was. Right, so the productivity or the tons of steel per employee is like POSCO in Korea. So to me, that journey continues. And in our kind of industry, which is capital-intensive, capital is in some sense being invested more, say, on labor. So there is that. But at the same time, in fact, those days, 30 years back, when I joined the group, the biggest employer of the Tata group was Tata Tea, and understand that he had about 70,000 employees because of the fact that there are about 60,000 employees in the plantations. But today, Tata Tea is a far more valuable company because it's buying tea from wherever they want, and you know, the value is in the marketing and the branding and the distribution. Right, so the value has changed. So the value per employee, as you said, would be, I don't know what it is, but would be significantly higher. But the largest employer in the group is TCS, and TCS also, if you look at it today as compared to 10 years back, the developer per employee is moving, and they have to move because the model which worked 15 years back is not the model which will work in the future. So this journey, I think, is kind of inevitable. The question is, what can HR professionals do? I think one of the themes in this conference is also about what is the role HR can play beyond HR. And I think HR needs to be very much part of the strategic discussions in organizations, very much part of looking at the trends which are happening, and work with management to see how do we deal with this issue, because fundamentally it's about competitiveness. When you look at all of our employees, fewer employees, while at the same time addressing the needs of the employees who are there, making sure that they are not overworked beyond the stage when they're not productive. And at the same time, in a place like India, we need to also think about the social impact. You know, because ultimately you need to create jobs. If you have millions of people joining the workforce every month, there's some reports saying, where do those jobs come from? And here I take some sort of comfort from what Mr. Bradford said: industries like leisure are great employers. If you look at a country like Thailand, unemployment almost zero. So tourism, construction, some of the other industries like textiles, etc., these are very labor-intensive.

Of the thought process of organization and business leaders making this transformation, I completely agree with the points. I'll just add a couple more. I think it also depends on the business model of operations to a certain extent of the country as well. And if you look at these software services, India's model is more services. Some of the global corporations which you are talking about will be more product-oriented. And once the product starts working, you don't need that many bodies for the service part of the job. So the business model makes a big difference on revenue per employee. The second area, which I think, this is back to India's model being more services-oriented in this area versus product, the second area which actually concerns me is a lot of the revenues are also globally linked to the power of brands. And from an Indian point of view, we need to have a lot more global brands which enable us to get disproportionate revenues per person. So the whole area of product model versus services, plus the power of brands in the global scheme of things, may also be the reasons for the differential of revenue per employee.

I think it's a very good question. Next time any of the businesses fail their targets, I'm going to say, HR, you make up the difference. But I think it's a very fair point. I think the... I agree that there is a blurring of roles between what is business and what is HR, and I don't think organizations have only grasped the importance of it. Let me turn around the question: how many HR professionals think that it is one function, it doesn't matter whether it's HR or business, and how integrated does HR feel? And this is back to a... maybe it's also an issue about leadership at the top. There is too much of verticalization in many organizations, and these walls, and over time the vertical walls become even thicker. And I think breaking those walls, not just there, but across, is a very important aspect about the future organization structure. Referred to the whole need of being flat and more far more nimble, I think unless we can break the wall, not just at the higher level when head of HR wants to say hi to the head of the business, but right at the bottom where, I don't know, how do you create that structure? Maybe I'll leave it to your genius, maybe figure out how do you create mini organizations which work in a hierarchy, because one of the other challenges is if you start having too many dualities at the lower levels, how does it function? So I think there is a challenge to marrying science and art, and we need a little more modern art rather than traditional art in HR as we go into the future.

You know, you said that you started by saying that all people cannot be leaders. I'm turning it around to say, all people who aspire to be leaders cannot believe in people when they become leaders. And leadership is not an ivory tower. Leadership is about you are actually bearing the cross, you're taking responsibility, you have integrity, humility, the desire to find newer solutions in a simple way in a more complex world. And that I think is possible only when leaders continue to believe and continue to have connect as humans and with humans, keeping in mind that the changes of the world around are something which will be absorbed. But leadership is not about anything else. It is not about a popularity contest. It is about doing it right. That's what I believe. That people, you know, you don't chase, you don't get to leadership by changing the outcome. You get to leadership because you do the right things with conviction, not just merely because your boss wants to do it. Okay, thank you very much.