Barring a few dozen companies, mostly multinationals, the corporate sector in Pakistan is working through a “seth” approach, which may be categorised as one style of management and corporate culture, but certainly neither an efficient nor an effective one.
It is probably not the lack of knowledge and skills for adopting an efficient corporate culture, but a mindset of ownership of businesses, assets and human resources that acts as a barrier to the much-needed change.
The lack of corporate culture, or the prevalence of seth mindset, negatively affects three aspects, i) innovation and growth, ii) efficient management of resources, and iii) effective use of human resources.
Starting with innovation and growth, it is rare for an individual or family (seth culture) to think beyond the box and venture into new avenues. Often, such businesses and their owners uphold the “contentment/ apathy” rather than “urge” to grow and expand.
An interesting fact of this aspect is that many of the businesses in industrial clusters of Faisalabad and Sialkot do not take bank loans, due to their personal beliefs and preferences, at the cost of business growth.
In addition, the absence of fresh/ innovative ideas and management approaches stall business growth. Even when the business is technically a corporate entity, ie limited company, the board of directors often consists of family and friends, thus impeding any outside approaches.
Such an approach, seth, may not focus on efficient management of resources due to the savings mindset and not going for a cost-benefit analysis. It impacts negatively the investment in research and development and 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 noticeable points in this approach is that most of the time there is no middle management in such companies.
It is not even a skewed management pyramid, thus putting pressure on top management to engage with ground-level issues, which could have been more efficiently managed through a middle tier.
Probably, cost saving and turning a blind eye to the long-term impact are the reasons for not having an extra layer of management.
The area that probably gets the most affected due to the lack of corporate approach is the human resources. The seth approach leans towards the “owner and worker” model rather than the “employee as a stakeholder and contributor”.
One can witness very low levels of employee satisfaction and manpower retention in the businesses that do not operate on corporate models. The owners, in this case, strive towards extracting the most from the labour, resultantly not getting loyalty, dedication and full contribution in return.
It is quite rare to see any employee planning or aspiring to build a career in one such company/ business.
Mobility is encouraged in present day management practices, but this should not be mixed with uncertainty that most of the private sector employees face, in Pakistan.
Work life balance is quite a rarity when it comes to corporate culture in Pakistan, particularly in the seth management style. Most of the employee incentive schemes, wherever these exist, are monetary in nature in order to extract more productivity and output, whereby the employees keep on running a rat race.
One wonders why there are still not many takers of the efficient corporate culture if it yields better than the traditional seth approach.
To start with, it may be a simple fact of ignorance. Secondly, there is a clear lack of entrepreneurship, thus less margin for introducing innovative management approaches.
Thirdly, there is a visible absence of medium-sized companies and businesses, which are mostly the beacons of efficient corporate cultures. We, in Pakistan, have either very big corporate houses and groups or small and family business concerns.
Interestingly enough, the seth approach is more prevalent in the services sector than the industrial sector. Intuitively, one would expect that the raw labour in the industrial sector would be more prone to the rough corporate culture than the relatively skilled and sophisticated services sectors, such as lawyers, consultants, chartered accountants, etc.
Unfortunately, it is counterintuitive. Employees of professional services sectors are treated quite unprofessionally and face the “owner” and “seth” mindset more directly and often than the industrial sector employees.
It is not just words of (private) limited that makes a business corporate rather it is the management style and approach of taking an enterprise and business as a separate entity. Saving a small amount at the cost of long-term growth does not make business or economic sense.
Buying people is better than buying their trust and efforts by treating employees as stakeholders rather than servants. A lot can be achieved by changing the mindset and corporate culture in Pakistan.
The writer is an international economist
Published in The Express Tribune, March 29th, 2021.