The fortune which nobody sees makes a person (company?) happy and unenvied.
— Sir Francis Bacon
The titles of C K Prahalad’s book The Fortune at the Bottom of the Pyramid and Jody Heymann’s Profit at the Bottom of the Ladder are curiously similar. The latter seeks inclusive growth for the producers (workers — unskilled and low wage) and the former seeks to bring low-income consumers to the attention of marketers and strategists.
Dr Prahalad’s book was published in 2005, but he began thinking about this and writing about it from 1995, when liberalisation in India began to take off, and he wanted to see how all of India could participate in the unfolding growth story — in other words, he was talking about strategies for inclusive capitalism.
Heymann, in fact, also seeks to address the ills of capitalism by saying that the speculation-driven growth of the last many years in America and Europe needs to be replaced by growth fuelled by value creation. Partly funded by the Ford Foundation, the book advocates corporate and government action for the unemployed and bottom-of-the-ladder employees, as the economic slow-down hit them even harder.
The corporations she and her team have painstakingly researched are role models of companies that invested in and improved the quality of life of people at the bottom of the corporate ladder. The case studies make for good reading with employees at that level offered stock options, training and health care. Companies engage with them and their communities, bringing immense long-term gain to the corporation.
Interestingly, the shining example of this gain is none other than Associated Cement Companies (ACC) and its community-building initiatives developed over the last 50 years or more!
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Heymann talks about how ACC needed limestone quarries for its cement plants and, for that, it needed villagers willing to sell their lands. So, ACC built physical infrastructure like roads, provided water and electricity, and went beyond to invest in facilities for the community like schools and clinics. This not only stemmed migration and reduced worker unrest, it also created a better-educated and healthier workforce in the long run.
Heymann, however, is on weaker ground when she compares this effort at community engagement with that of Costco’s community development work. Costco set up stores and provided jobs for communities that were losing jobs that were being outsourced to India and other countries. The comparison doesn’t seem to stand because Costco, a retailer, happened to be expanding at a bad time in the US. Jobs were few and the cost of health care high. So, when Costco happened to come along and offer jobs that enabled people with only high school education to work, and also provided access to health care, it was really par for the course, since a retail job doesn’t require a college degree. And while wages at Costco were higher than the competition, (read Wal-Mart and Sam’s Club), this was necessary because Costco could see that communities were actively disallowing Wal-Mart from setting up shop in their neighbourhoods because of its perceived monopolistic practices. So, Costco needed to make its offering more attractive to local communities.
I guess that it is in trying to be a solution to all corporate ills that the book fails in its otherwise laudable objective. In today’s day and age, many of the strategies the book talks about are standard tools to improve retention and boost productivity. In fact, the recent examples of Vedanta, Posco and Lavasa all show how important it now is to combine the corporate objective with sustainable development and the environment for corporate growth.
Finally, while it is good to upgrade skills and eventually the job profile of those at the bottom of the ladder, experience shows that it is often difficult to fit a skilled line job person into a staff job person. For example, try getting a really successful LIC sales agent to become a manager and sit at the regional office pushing files. The person would be a misfit and be miserable and the organisation would lose on that account. It is as Zig Ziglar, considered the foremost trainer on selling, says: “Salespeople are a power in society and in the public economy… be careful whom you call a salesman, lest you flatter him.”
To paraphrase a proverb, I guess you can take the man away from sales but you cannot take selling away from the man.
The reviewer is director, Asian Retail Institute, a training and education entity.
She can be contacted at: namita@asianretailinstitute.com
PROFIT AT THE BOTTOM OF THE LADDER
Jody Heymann
Harvard Business Press
268 pages